Título III. Grupos financieros

A financial group is the grouping of two or more legal persons that engage in activities of a financial nature, one of which must be a bank, among which common control exists through ownership, management or corporate image use relationships, or, in the absence of such relationships, they decide common control by agreement.

A company that has as shareholders companies of different financial groups, where it is not possible to determine which of them exercises control over it, shall form part of the groups with which it must be financially consolidated, in accordance with the corresponding accounting standards on the matter.

Financial groups shall be organized under the common control of a controlling company incorporated in Guatemala specifically for that purpose, or of a company responsible for the financial group, which shall be the bank; in the latter case, in accordance with the organizational structure authorized by the Monetary Board, upon prior opinion of the Superintendency of Banks, based on the reasoned application submitted for that purpose to the latter by the interested parties.

Where a controlling company exists, financial groups shall be comprised of such company and two or more of the following companies: banks, finance companies, exchange houses, general deposit warehouses, insurance companies, bonding companies, companies specializing in the issuance and/or administration of credit cards, financial leasing companies, factoring companies, brokerage houses, offshore entities or off shore entities and others qualified by the Monetary Board. Where common control is held by the responsible company, financial groups shall be comprised of such company and one or more of the aforementioned companies.

The Monetary Board shall authorize the formation of financial groups, upon prior opinion of the Superintendency of Banks.

Each and every member company of financial groups shall be subject to consolidated supervision by the Superintendency of Banks.

It is the surveillance and inspection carried out by the Superintendency of Banks over a financial group, with the purpose that the entities comprising the same conform their activities and operation to the legal, regulatory and other provisions applicable to them, and that the risks assumed by the companies of said group, which may affect the bank, be evaluated and controlled on a per-company and global basis. For such purposes, the Superintendency of Banks shall have access to information on the operations and activities of the financial group, on a per-company and consolidated basis, safeguarding the identity of depositors and investors as established in this Law.

Only companies forming part of a financial group may:

a)Act jointly before the public;

b)Use the same or similar denominations, common corporate image, symbols, visual identification or visual identity, which identify them before the public as members of the same group, or use their own corporate name or denomination. In any case, they shall add the expression “Financial Group” and the denomination of said group; and,

c)Use in their corporate name or denomination, in their trade name or in the description of their businesses, the expression “Financial Group” or others derived from said terms.

It is presumed that a financial group exists when, among the companies indicated in Article 27 of this Law, there is a relationship of affinity and of interests, such as: the carrying out of activities inherent to a financial group, the common presence of shareholders, members of boards of directors or management boards and principal officers, or executives; the granting of loans for significant amounts, in relation to the borrower's equity or without adequate guarantees; the possibility of exercising the right of veto over business; the frequent assumption of shared risks; which allow the existence of common control among them to be inferred.

For purposes of the presumption of the existence of financial groups, the Superintendency of Banks shall determine the same. Companies that state that they are not in the foregoing situation must prove it before the Superintendency of Banks, following a prior hearing granted by the latter.

The Superintendency of Banks, in accordance with the provisions of the preceding article, and once due process has been exhausted, shall, if applicable, declare the existence of a de facto financial group, which shall be obligated to organize itself as such in accordance with this Law, within the six-month time limit counted from the date on which the corresponding decision is notified to the companies of the group. The Superintendency of Banks, upon justified request of the interested parties, may extend the time limit for up to the same period, only once.

The controlling company shall be incorporated as a sociedad anónima with registered shares and shall observe the provisions of this Law. Its exclusive corporate purpose shall be the direction, administration, control and representation of the financial group. The functions of the controlling company shall be regulated by the Monetary Board. The controlling company may only invest in shares of the companies indicated in Articles 27 and 38 of this Law, and may not carry out transactions that are proper to such companies.

In no case may the controlling company participate in the capital of a company of a different nature from the companies comprising financial groups and companies supporting banking business, in accordance with this Law.

The controlling company shall ensure that the companies forming part of the financial group comply with the provisions of this Law relating to financial groups, and with those issued on this matter by the Monetary Board. The foregoing is without prejudice to the liability that each of the member companies of the group has with respect to compliance with the indicated provisions.

When the organizational structure of the financial group does not include the formation of a controlling company, the bank as the company responsible for the group shall have the same powers and obligations of the controlling company, as established in the preceding paragraph, without prejudice to the liability that each of the member companies of the group has with respect to compliance with the provisions established in this Law.

The Monetary Board shall grant or deny the authorization for the formation of the controlling company. Authorization for the formation of the controlling company may not be granted without a prior opinion of the Superintendency of Banks. The notarial copy of the incorporation deed together with the certification of the decision issued for such purpose by the Monetary Board shall be presented to the Mercantile Register, which, based on such documents, shall proceed, without further proceedings, to effect its definitive registration.

The procedure for this authorization, and all matters relating to the corporate deed, impediments, board of directors and management, share certificates and transfer of shares, shall be governed by the provisions governing banks, as applicable.

The Superintendency of Banks, at the expense of the interested parties, shall order the publication in the official gazette and in another newspaper of wide circulation in the country of the authorization applications submitted to it, including the names of the organizers and shareholders, so that whoever considers himself affected may assert his rights before the competent authority.

The merger of holding companies and the incorporation of a company into or the separation of a company from the financial group shall be authorized or denied by the Monetary Board. The aforementioned merger, incorporation or separation may not be authorized without a prior opinion of the Superintendency of Banks.

The controlling company shall maintain a shareholding of more than fifty percent (50%) of the paid-in capital in each of the group companies that allows it effective control thereof.

The shareholders of the companies that are part of a financial group may exchange their shareholding in the other companies that make up the financial group for shares of the controlling company or, as applicable, of the responsible company.

Companies specialized in financial services, which are part of financial groups, shall be subject to consolidated supervision by the Superintendency of Banks. Each of these companies shall have as its exclusive corporate purpose one or more of the following:

a)Issue and administer credit cards;

b)Carry out financial leasing operations;

c)Carry out factoring operations; or,

d)Others qualified by the Monetary Board, subject to prior opinion of the Superintendency of Banks.

The companies referred to in the preceding article may finance their operations with resources derived from their own capital, from bank credit, and from the creation and placement of securities in a public stock-market offering, provided that they are not susceptible to early redemption, that they are created in series and that the securities have the same characteristics when they form part of the same series, and other sources of financing authorized by the Monetary Board.

Banking support companies are those that, without assuming any credit risk, provide to banks automated teller machine services, electronic data processing or other services qualified by the Monetary Board, upon prior opinion of the Superintendency of Banks. Investments by the holding company or the bank in banking support companies shall be authorized by the Monetary Board, upon prior opinion of the Superintendency of Banks, and the holding company or the bank, as applicable, shall consolidate the financial information of the banking support companies within its financial statements, in accordance with the corresponding accounting standards.

The Monetary Board shall regulate in a general manner the accounting operations, the information to be disclosed to the public and the minimum requirements to be incorporated in the contracting and scope of the external audits of the companies referred to in this chapter; likewise, that the external auditors be duly registered in the register kept for such purpose by the Superintendency of Banks.

The companies referred to in this chapter that do not form part of a financial group shall not be subject to the supervision and inspection of the Superintendency of Banks; however, they shall be obligated to provide to such supervisory body all information and periodic or occasional reports that it may require from them. Likewise, they shall be obligated to allow the Superintendency of Banks free access to all their sources and information systems so that it may verify the information provided by them, by a bank, or by companies that form part of financial groups to which they provide services.