Resolution No. 025-2023 - Minimum Requirements of Supervised Institutions

The purpose of this Regulation is to establish the procedures and minimum requirements that must be followed and complied with for authorization, opinion, or ruling before the Competent Authority, as appropriate, regarding applications to establish, organize, convert, merge, split, or any other equivalent arrangement of institutions supervised by the Commission, listed in Article 2 of this Regulation; as well as for the incorporation of new partners into an already established supervised institution.

The provisions contained in this Regulation shall apply to natural or juridical persons that intend to organize, establish, convert, merge, split, or implement any other equivalent arrangement requiring authorization from the Commission or another Competent Authority to establish any of the following institutions:

• a)

  Private Banks;

• b)

  Branches and Representative Offices of Foreign Institutions;

• c)

  Savings and Loan Associations;

• d)

  Financial Societies;

• e)

  Insurance or Bonding Institutions;

• f)

  Reinsurers and Reinsurance Bond Companies;

• g)

  Pension Fund Administrators;

• h)

  Stock Exchanges;

• i)

  Investment Fund Management Societies;

• j)

  Mutual Fund Management Societies;

• k)

  General Deposit Warehouses;

• l)

  Currency Exchange Houses;

• m)

  Centralized Depositories for Custody, Clearance, and Settlement of Securities;

• n)

  Private Credit Risk Centers or Credit Bureaus; o. Risk Rating Societies; p. Private Development Organizations engaged in Financial Activities (OPDF's); q. Credit Card Issuer Societies; r. Money Remittance Societies; s. Mutual Guarantee Fund Management Societies; t. Non-Bank Electronic Money Institutions (INDEL); and, u. Any others that, in accordance with the Law governing the entity, or as qualified by the Commission, remain subject to its supervision. In the authorization processes to operate the institutions included in the foregoing list, as well as the incorporation of new partners into an already established institution, where legislation requires that the Commission issue a ruling or opinion at the request of the Competent Authority, it shall be understood that the requested information and other provisions contained in this Regulation comprise the requirements to be satisfied for the issuance of the corresponding ruling or opinion by the Commission, without prejudice to compliance with other requirements established in the applicable Law and its Regulations.

For the purposes of this Regulation, the following shall be understood as:

• 1)

  Competent Authority: The institution to which, by Law, corresponds the authorization for the establishment and organization of any of the Institutions listed in Article 2 of this Regulation;

• 2)

  Commission or CNBS: National Commission of Banks and Insurance;

• 3)

  Officials: Persons responsible for the daily, sound, and prudent management of the Supervised Institution before the Board of Directors, Board of Administration, or equivalent body, in accordance with the organizational structure of the Institution;

• 4)

  Suitability: Qualities relating to capacity, ability, or financial, moral, and technical competence to be a partner of a corporation, hold a position at the Board of Administration, Board of Directors, or equivalent, as well as to be a member of the senior management of a Supervised Institution;

• 5)

  Financial Suitability: Relating to solvency in the payment of obligations, level of indebtedness, and patrimonial declaration required to be a partner of a corporation, hold the position of director, board member, or equivalent, as well as to be a member of senior management in a Supervised Institution;

• 6)

  Moral Suitability: Regarding integrity and ethical, honest, diligent, and independent conduct required to be a partner of a supervised corporation, hold the position of director, board member, or equivalent, as well as to be a member of senior management in a Supervised Institution; and,

• 7)

  Technical Suitability: Professional aptitude and capacity, intellectual development, knowledge, abilities, and experience in the business required to be a partner of a corporation, hold the position of director, board member, or equivalent, as well as to be a member of senior management in a Supervised Institution.

The institutions subject to these provisions must be established as joint-stock companies with fixed capital, divided into ordinary and preferred registered shares, as appropriate. Mutual Guarantee Fund Management Societies shall be joint-stock companies with variable capital. OPDF's are exempt from compliance with the provisions contained in this Article.

The Commission, prior to issuing authorization, opinion, or ruling as appropriate, regarding authorization applications for the establishment of an institution subject to compliance with this Regulation, shall evaluate that the partners meet the requirements determined in the respective legislation and this Regulation, possess the characteristics of technical, financial, and moral suitability, as well as the competence and capacity necessary to manage the supervised institution with due prudence, responsibility, and diligence, under the principles of management and mitigation of risks inherent to the business, as well as the fulfillment of its strategic objectives. The foregoing shall be based on investigation, review, and analysis of the corresponding documentation, as established in the Annexes of this Regulation.

Natural or juridical persons organized to establish the institutions referred to in Article 2 of this Regulation must submit an application through a duly authorized Legal Representative before the Competent Authority, by the means it deems appropriate, accompanied by the requested documents detailed in the annexes of this Regulation, according to the type of institution to be organized. The foregoing is without prejudice to any other documentation required by the specific regulations applicable to each type of Institution. In the case of foreign institutions intending to establish a corporation using the same corporate name, the word "HONDURAS" must be included within the corporate name of the corporation in formation in order to establish a differentiation of country of origin.

The documentation attached to the authorization application must be presented in Spanish or translated into Spanish, duly legalized or apostilled as appropriate, with the endorsement of the competent State Department. Likewise, the signatures of the organizing partners on any document presented, and copies of documents attached, must be authenticated. The provisions of this Article are also applicable to natural or juridical persons interested in becoming part of an institution supervised by the Commission that is already authorized to operate.

Prior to admission of the authorization application submitted to the Commission, or of the request for ruling or opinion from the Competent Authority as appropriate, the General Secretariat of the Commission must verify that each of the documents listed in the annexes of this Regulation is attached to the application in question, meeting the basic requirements established in said annexes, as well as in applicable legislation, for which the Secretariat shall have a period of three (3) business days, counting from the day following the date of receipt. In the event that the Secretariat determines the unjustified omission of any required document, or that the information presented does not meet the established requirements, the application shall be returned through the corresponding notification to the interested party, or to the corresponding competent institution, without prejudice to the petitioner or petitioners being able to submit the application again.

Upon admission of the authorization application, request for ruling or opinion, as appropriate, the proceedings shall be initiated, which must be resolved within the period stipulated in the applicable legislation for each type of institution. In the event that applicable legislation does not establish a deadline, the application must be resolved within a maximum of ninety (90) business days.

If during the authorization process, request for ruling or opinion as appropriate, supplementation of aspects determined in the analysis of the supplied information is required, the Commission when authorization corresponds to it, or through the competent authority, shall require that the aspects that gave rise to the matter be supplemented. This process shall be conducted jointly with the competent authority in applicable cases, granting a period of up to twenty (20) business days for compliance, depending on the complexity of the aspects required, a period which may be extended in accordance with what is established in the Administrative Procedure Law, for a single time only. The aforementioned period shall begin to run from the next business day following notification to the Legal Representative. The legal period to resolve the authorization application, the request for ruling or opinion, as appropriate, shall restart from the date when the supplementation requirement is met within the granted period. If by the end of the aforementioned period the supplementation requirement has not been addressed, the respective proceedings shall be filed without further action.

Within the timeline of the authorization process, the Legal Representative of the organizing partners must communicate to the Commission any fact or situation that affects or modifies the information contained in the submitted documentation. Said communication must be made no later than the next business day after learning of the fact or situation. As of this communication, the period for resolution of the application is interrupted for a maximum of thirty (30) business days, until the new documentation is presented. If the documentation is not presented within the aforementioned period, the proceedings shall be filed without further action. In those cases where the Commission, during the analysis process of the authorization application, determines that the aforementioned fact or situation was not communicated by the organizing partners in the proper time and manner, and in the Commission's judgment, it significantly affects or modifies the content of the submitted documentation, it shall proceed to file the respective proceedings without further action, and must communicate this to the interested parties.

When for any reason the petitioners decide not to continue with the authorization application proceedings submitted, they must inform this in writing through their Legal Representative to the Competent Authority before which the application was originally submitted. In such case, the General Secretariat of the Competent Authority shall render the application void and without effect through the issuance of the corresponding Order and shall proceed to file the proceedings.

Upon admission of the authorization application or request for ruling or opinion before the Competent Authority as appropriate, the organizing partners must publish only once in one (1) newspaper of national circulation, within a period not exceeding ten (10) business days, counted from the business day following admission of the application by the Competent Authority, a summary of the main elements related to the authorization application submitted, in accordance with the information supplied according to the type of institution, which must be published with a letter size of no less than 10 points, allowing easy reading, containing the following:

• a)

  Type of Institution;

• b)

  Corporate name of the corporation in formation;

• c)

  List of main organizing partners;

• d)

  Initial capital;

• e)

  Address;

• f)

  Purpose of the corporation in accordance with what is established in the Draft Public Deed of Incorporation; and, g. Any other element that the corporation in formation deems important. Once the summary referred to in the previous paragraph is published, the Legal Representative of the organizers of the corporation in formation shall submit a copy of said publication to the institution before which the authorization application was submitted so that it is attached to the respective file. Said summary shall likewise be published by the Commission on its website and shall be available for public consultation until the time when the authorization process is resolved by the Supervisory Entity or the Competent Authority. In case there are objections from any person regarding said application, written evidence pertaining thereto must be submitted to the Commission or the Competent Authority as appropriate, such objections being confidential in nature. If any of the objections received deal with matters of proven gravity related to the impossibility of fulfilling the duties of the organizing partners, the authorization application for the new Institution may be denied without further action, communicating the corresponding resolution to the interested parties, without the Commission or the Competent Authority being obliged to detail the reasons for its decision. Likewise, registration of a new partner to an already established institution may be denied. During the process of analysis and resolution of any objection filed against the establishment of the corporation in formation, the legal period granted for its resolution by the Commission, or for the issuance of the corresponding opinion or ruling before the Competent Authority, shall remain suspended. The suspension and subsequent resumption of said period must be communicated to the Legal Representative of the organizing partners.

The Commission may grant exceptions to one or more of the information requirements established in the Annexes of this Regulation to partners that are:

• a)

  Public law institutions with capacity to do so;

• b)

  Bilateral or multilateral international organizations, organizations, or non-profit institutions dedicated internationally to development;

• c)

  Financial institutions with first-tier international rating issued by an internationally recognized risk rating agency;

• d)

  Institutions supervised by the Commission; and, e. Foreign financial institutions supervised by Authorities with which the Commission has executed information exchange agreements. These exceptions may be applied by the Commission to partners not listed in the foregoing list, as well as to members of the Board of Directors or Board of Administration and Principal Officials of Supervised Institutions, when the corresponding information is already available and duly updated.

At the time of commencement of operations, the required minimum paid capital amount must be covered entirely in cash or cash equivalent of easy conversion, in national currency, according to the type of institution to be organized, merged, converted, or any other arrangement to be adopted. The Commission and/or Competent Authority must verify the origin, source, and legitimate ownership of the resources and must reasonably ensure that the organizing partners have sufficient assets for the contribution they intend to make to the capital of the corporation. However, in order to evidence the capacity to make any additional contribution required to the institution in formation during the first years of operation, the organizing partners of Banking Institutions, Financial Societies, Insurance Institutions, Pension Fund Administrators, Investment Fund Management Societies, and Mutual Fund Management Societies must evidence that they have additional assets equivalent to at least two (2) times the amount of the contribution they intend to make to the initial capital of the corporation, with at least fifty percent (50%) of these corresponding to liquid assets (cash or cash equivalent).

REVIEW OF AVAILABLE DATABASES The Commission is authorized to consult databases or any other source of information at the national and international level, for the purpose of evaluating and verifying that the organizing partners meet suitability conditions related to the prevention of the crime of money laundering and the financing of terrorism. The information shall be confidential and its content may be sufficient grounds to deny the authorization request or to issue an unfavorable opinion or judgment, as applicable, without the Commission being obligated to detail the reasons for its decision.

AUTHORIZATION AND PUBLICATION In the event that the requested authorization is granted, the Competent Authority shall issue a certification of the resolution and shall order the authorized institution to publish the authorization resolution by the means it deems appropriate, in accordance with applicable legislation.

REGULARIZATION PROCESSES TO BE DESIGNATED AS A SUPERVISED INSTITUTION Societies that do not require authorization to operate, whether from the Commission or from another Competent Authority, but that, by virtue of applicable legislation or regulations, are considered supervised institutions by this Supervisory Entity, must submit to the Commission within a maximum period of 10 business days following their registration in the corresponding Commercial Registry, the registration notification in said Registry accompanied by at minimum the following documentation:

• a)

  Deed of incorporation and bylaws, which must comply with the provisions of the Commercial Code and other legal provisions, in particular those regulating corporate governance;

• b)

  Organizational chart of the institution, with details that allow understanding of the structure of governance, administration, and oversight of the company;

• c)

  Detail of the shareholding participation of the company, which shall include at minimum the following information: i. Name of Shareholders; ii. Number of shares to be subscribed; iii. Value of shares to be subscribed; and, iv. Percentage of participation;

• d)

  Detail of the structure of the Board of Directors of the company.

• e)

  Sworn Statement and authenticated documentary evidence of the legality of the resources invested in the capital of the institution, indicating its origin;

• f)

  Authenticated Sworn Statement by which it is certified that the partners have not had and do not have pending lawsuits in civil or criminal matters, either in Honduras or abroad, or failing that, which details the type of lawsuit to which they have been subject and the status thereof; and,

• g)

  Projections of financial statements and principal quarterly financial indicators for at least the first three (3) years of operation. The foregoing notwithstanding any other information that the Commission may require. Societies whose purpose corresponds to the Commission to exercise supervision and regularization of these, must submit the authorization request before the Competent Authority in order to be designated as a supervised institution; for which it must comply with the minimum requirements established in Annex A of this Regulation. The Commission may, at any time, require additional information to have sufficient elements to conduct the corresponding supervision. This Supervisory Entity shall issue the respective resolution, which shall be notified to the legal representative of the company subject to the regularization process; likewise, it must be communicated in parallel to the origin of the company in question. CHAPTER III AUTHORIZATION OF FOREIGN INSTITUTIONS

AUTHORIZATION OF BRANCHES OR REPRESENTATIVE OFFICES OF FOREIGN INSTITUTIONS The Foreign Institution that intends to operate a branch or representative office in Honduran territory must submit the authorization request through a duly accredited Legal Representative before the Commission or the Competent Authority, accompanied by the corresponding documentation, in accordance with what is established in Annex D of this Regulation. The Commission shall grant authorization, favorable opinion or judgment before the Competent Authority to operate branches or representative offices, solely to Institutions with physical presence and parent company established abroad, with substantial administration and operations in their country of origin, at the discretion of CNBS, which must be subject to the supervision, control, and inspection of a Supervisory Authority of their jurisdiction. The Commission shall not grant authorization or issue favorable opinion or judgment before the Competent Authority to establish branches or representative offices in Honduras to foreign Institutions that cannot demonstrate, at the discretion of CNBS, reasonable compliance with the prudential standards established by the legislation or the Supervisory Authority of their jurisdiction or those applicable in Honduras.

ADDITIONAL CONDITIONS FOR AUTHORIZATION Without prejudice to other requirements established in this Regulation, Institutions incorporated abroad and under the supervision of a Regulatory Entity homologous to the Commission, that aspire to obtain from the latter the authorization, favorable opinion or judgment before the Competent Authority to operate a branch or representative office in Honduras, must have proven and recognized financial strength in the financial system of their country of origin and meet at least the following conditions:

• a)

  The legislation of the country of origin of the Institution must permit consolidated supervision of the Honduran institution by the Supervisory Entity of said parent company;

• b)

  The operational structure of the branch or representative office subject to the application must permit unrestricted access to the Commission for the performance of its supervisory duties;

• c)

  The applicant must demonstrate that the Institution that will be the holder of the respective authorization maintains physical presence, administration and substantial operations in its country of origin, as well as reasonable compliance with the prudential standards established by the legislation or the Supervisory Authority of its jurisdiction, as applicable; and, d. In the case of Representative Offices, they must commit to maintaining permanently in Honduras, at least one representative with broad and sufficient power to perform acts and legal transactions, especially regarding the obligation of the represented financial institution to respond unlimitedly within and outside the country for the acts carried out and the contracts entered into.

RESTRICTED OPERATIONS OF REPRESENTATIVE OFFICES The authorization to operate representative offices does not grant rights to perform any passive operations in or from the office in Honduras, with residents or non-residents, or intermediation in collections and payments or administration of capital or property held in trust. The violation of this provision shall be considered irregular financial intermediation and shall give rise, without further proceeding, to the immediate cancellation of the authorization granted and the imposition of the corresponding sanctions.

TRANSITIONAL PROVISION Societies that as of the effective date of this Regulation have not made the notification established in Article 18 of this Regulation, must submit it within the period established in that Article, attaching the respective information.

UNFORESEEN CASES Cases not provided for in this Regulation shall be resolved by the Commission, through Resolution, in accordance with international practices and the current legal and regulatory framework.

REPEAL As of the effective date of this Regulation, Resolution GE No. 461/26-03-2014 containing the Regulation of Minimum Requirements for the Establishment of New Supervised Institutions, issued on March 26, 2014, becomes null and void; as well as any other provision that contradicts it.

EFFECTIVE DATE This Regulation enters into force as of the date of its publication in the Official Gazette La Gaceta. 2. Communicate this Resolution to the Supervised Institutions, for the corresponding legal purposes and to the Banking Superintendency and Other Financial Institutions, Insurance Superintendency, Pensions and Securities Superintendency, Risk Management, and Legal Management, for their information. 3. Instruct the General Secretariat of this Commission to remit this Resolution to the Administrative Management for it to send it to ENAG for its publication in the Official Gazette La Gaceta. 4. This Resolution shall enter into force as of its publication in the Official Gazette La Gaceta.