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New regulations for updating minimum capital stock in Nicaraguan insurance companies, general warehouses and credit rating agencies

The Superintendence of Banks and Other Financial Institutions (hereinafter "SIBOIF") recently issued regulations that order to update the minimum capital stock with which regulated financial companies can operate, being affected the insurers, general warehouses and credit rating agencies.

1) Insurers

On December 19, 2016, the "Regulation for the Capital Stock of Insurance Companies" entered into force, contained in Resolution No. CD-SIBOIF-971-1-NOV24-2016, published in the Gazette, Official Journal No. 237 of the referred date.

Such Norm was issued by the Board of Directors of SIBOIF empowered by art. 34 of Law No. 733 "General Law on Insurance, Reinsurance and Bail Bonds". The Norm establishes the new minimum Capital Stock required for insurance companies, which will depend on the insurance group in which it operates, meeting the following minimums:

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Insurers with an authorized capital stock below the minimum will have a period of 7 days to update as well as to subscribe and pay for it starting from the next Ordinary General Shareholders Meeting held in accordance with art. 2 of the Norm. In case of non-compliance with this provision, insurers will not be able to distribute profits as long as the obligation to update the Minimum Capital Stock has not been fulfil, pursuant to art. 3 of the Norm.

The Norm repeals the Norm for the Update of the Capital Stock of Insurance Companies, contained in Resolution No. CD-SIBOIF-866-1-DEC 3-2014, published in the Gazette, Official Journal No. 4 of January 8, 2015.

2) General Warehouses

On December 19, 2016, the "Norm for Updating the Capital Stock of General Warehouses" entered into force, contained in Resolution No. CD-SIBOIF-971-2-NOV24-2016, published in the Gazette, Official Journal No. 237 of the referred date.

Such Norm was issued by the Board of Directors of SIBOIF, empowered by art. 23 of Law No. 733 "Law of General Warehouse". The Norm establishes the new minimum Capital Stock required for General Warehouses and branches of foreign warehouses, which according to art. 1 of the Norm shall be thirty-two million three hundred and fourteen thousand Cordobas (C $ 32,314,000.00).

General Warehouses that have an authorized Capital Stock below the minimum will have a period of 7 days to update as well as to subscribe and pay for it starting from the next Ordinary General Shareholders Meeting held in accordance with art. 2 of the Norm. In case of non-compliance with this provision, warehouses will not be able to distribute profits as long as the obligation to update the Minimum Capital Stock has not been fulfil, pursuant to art. 3 of the Norm.

The Norm repeals the Norm for Updating the Capital Stock of General Warehouses, contained in Resolution No. CD-SIBOIF-866-2-DIC3-2014, published in the Gazette, Official Journal No. 4 of January 8, 2015.

3) Credit Rating Agencies

On December 19, 2016, the "Norm for Updating the Capital Stock of Credit Rating Agencies" entered into force, contained in Resolution No. CD-SIBOIF-971-3-NOV24-2016, published in the Gazette, Official Journal No. 237 of the referred date.

Such Norm was issued by the Board of Directors of SIBOIF, empowered by art. 170 of Law No. 587 "Law of Capital Markets". The Norm establishes the new Minimum Capital Stock required for Credit Rating Agencies, which according to art. 1 of the Norm shall be one million seven hundred thirty-three thousand Cordobas (C $ 1,733,000.00).

The Norm repeals the Norm for the Update of the Capital Stock of Credit Rating agencies, contained in Resolution No. CD-SIBOIF-866-3-DIC3-2014, published in the Gazette, Official Journal No. 5 of January 9, 2015.

At CENTRAL LAW Nicaragua we have advised financial companies both national and international, counting with an experienced legal team, ranked as one of the best firms in the country by the most prestigious specialized magazines.

If you require additional information, do not hesitate to contact us.

Avil Ramírez Mayorga
Associate Attorney
CENTRAL LAW Nicaragua

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