Amendments to the general framework for drawdowns Law 1902/2018.

I. The scope of the object of the libranza indicated in Article 1 of Law 1527 of 2012 was modified, excluding associates, cooperatives and precooperatives to be beneficiaries of libranza operations.

II. Pursuant to Article 2 of the aforementioned Law, entities supervised by the Financial Superintendence of Colombia authorized to grant credits, Family Compensation Funds, associations of pensioners or personnel with retirement allowance of the Public Force, clubs of officers, non-commissioned officers and agents of the Public Force and Educational Institutions that provide services to families of members of the Public Force, only for the educational services provided, were included as entities authorized to carry out libranza operations.

III. Likewise, the new Law included as an additional obligation of all the Libranzas operators to have a financial risk department within the entity. The purpose of this is to analyze the viability, sustainability, operability, and further studies for the purpose of prognosis and evaluation of the financial risk and in turn the laundering of assets that may be generated due to the participation or improper use of the businesses managed under the modality of libranza.

IV. Article 4 of the referred Law clarifies that, with the exception of the libranza operating entities supervised by the Financial Superintendence of Colombia, the authority in charge of overseeing consumer protection in libranza operations, and in contracts for the acquisition of goods or services will be the Superintendence of Industry and Commerce (SIC), unless such supervision has been attributed to another administrative authority.

V. For its part, Article 6 adds to Article 17 of Law 1527 of 2012 a limitation in the sale of libranza credit portfolio consisting in that the libranza operating entity not supervised by the Financial Superintendence of Colombia that intends to dispose of equity rights of credit content derived from libranza operations, in favor of persons or entities not subject to the supervision of such Superintendence, may only make such sale in favor of: (a) Autonomous Patrimonies administered by Trust Companies subject to the surveillance of the Financial Superintendency of Colombia; and (b) Collective Investment Funds.

Additionally, said article includes a paragraph modifying numeral 3 of literal a) of article 25 of the Tax Statute, in the sense of including as income that is not considered of national source and therefore does not generate income within the country, the credits obtained abroad by the mercantile companies subject to the surveillance of the Superintendence of Companies under a prudential regulation regime, whose exclusive purpose is the origination of credits and whose indebtedness is destined to the development of their corporate purpose.

VI. The new Law adds a function to the Single National Registry of Libranza Operators (RUNEOL), consisting in the fact that it must contain the information of the purchase, sale and encumbrance operations that have been carried out with respect to the equity rights of credit content derived from libranza operations, carried out by entities not supervised by the Superintendence of Finance of Colombia, according to the legal requirements. It also establishes the obligation of such entities to proceed with the registration of the operations in the RUNEOL.

In conclusion, Law 1902 of 2018 aims to remedy the inconveniences presented with the libranza operations in the market, protecting users and consumers who acquire goods and services through this system, filling the gaps of Law 1527 of 2012, and providing greater tools to the entities of surveillance and control, to regulate the proper functioning of the libranza operating entities, as well as, the natural or legal persons that perform investment operations with libranza credits.