PARAGUAY Law and Practice Contributed by: Juan Fiorio, Alejandra Corrales and Jean Saavedra, Fiorio, Cardozo & Alvarado
4. Governance 4.1 Corporate Governance Requirements Resolution No 16, Act 04, dated 20 January 2022 (the “Resolution”), establishes the mini - mum standards for corporate governance appli - cable to financial institutions. The guidelines set forth by this Resolution are mandatory for banks. According to this Resolution, members of the board of directors must be qualified to perform their duties, clearly understand their mission, their functions within the framework of corpo - rate governance, dedicate sufficient time to their roles, and be capable of exercising independent judgement in matters concerning the supervised entity. To this end, they must: • understand each type of financial and com - mercial activity that the supervised entity intends to undertake; • have the necessary experience to govern the supervised entity and monitor compliance by all members of the institution; and • make decisions independent of any natural or legal persons, whether or not linked to the supervised entity, that involve or could involve conflicts of interest; no director shall exert, directly or indirectly, undue influence over the board of directors or executive management as a whole; • implement a structure that includes the estab - lishment of auxiliary committees appropriate to the volume and complexity of the activities of the supervised entity, ensuring participa - tion from the various sectors involved in significant decisions; the Superintendency of Banks or the Superintendency of Insurance, as applicable, may require the establishment of specific committees;
• engage in continuous training, where applica - ble, in banking, finance, economics, regula - tion, accounting, risk management, informa - tion technology, communication, or other related areas; and • seek advice from specialised committees when necessary. The Resolution imposes the following restric - tions on board members: • Board members may not hold manage - ment or administrative positions in entities of another financial economic group supervised by the BCP, the National Securities Commis - sion, the National Institute of Cooperativism, or others deemed appropriate by the Superin - tendency of Banks or Insurance. • Board members may not hold executive or managerial positions in more than three enti - ties, unless an exemption is granted by the Superintendency of Banks and Insurance, as determined in the application guidelines. • Board members cannot simultaneously serve as general manager or hold other positions in executive management, except in cases approved by the relevant superintendencies, taking into account the complexity of the entity’s operations and services and the sec - tor to which they belong. • A director may chair no more than three committees, provided this does not result in conflicts of interest or involve committees overseeing strategic areas of the entity, in accordance with the limitations and require - ments established in the specific regulations governing the supervised entity. • Each supervised entity must annually evalu - ate whether its board members are devoting sufficient time to their roles.
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