Region

Jurisdiction

Regulator

2023-12-29

Instruction No. 75/AMF-UMOA/2023 on the Governance of the West African Securities Exchange (BRVM)

The West African Monetary Union Financial Markets Authority (AMF-UMOA) has issued Instruction No. 75/2023 to establish minimum corporate governance standards for the West African Securities Exchange (BRVM). The directive mandates a balanced Board of Directors comprising at least 75% non-executive members and two independent directors, while defining strict independence criteria and continuous training requirements. It further outlines comprehensive board responsibilities regarding strategic oversight, risk management, executive supervision, and the mandatory adoption of a formalized corporate governance charter.

Senegal

Autorite des Marches Financiers de l'UMOA

AMF-UMOA

WEST AFRICAN MONETARY UNION FINANCIAL MARKETS AUTHORITY

INSTRUCTION NO. 75/AMF-UMOA/2023 ON THE GOVERNANCE OF THE WEST AFRICAN SECURITIES EXCHANGE (BRVM)

The West African Monetary Union Financial Markets Authority,

Having regard to the Revised Treaty of the West African Monetary Union (UMOA) of July 12, 2019, which entered into force on October 1, 2022, modifying the name of the Regional Council for Public Savings and Financial Markets (CREPMF) to the West African Monetary Union Financial Markets Authority (AMF-UMOA) ;

Having regard to the Convention of July 3, 1996 establishing the Regional Council for Public Savings and Financial Markets (hereinafter the "Regional Council") and its Annex on the composition, organization, functioning, and powers of the Regional Council for Public Savings and Financial Markets, particularly Article 21 ;

Having regard to General Regulation No. 001/97 of November 28, 1997 on the organization, functioning, and oversight of the regional financial market, particularly Articles 10 and 16 ;

Having regard to the OHADA Uniform Act on commercial companies and economic interest groups of January 30, 2014 ;

Having regard to Instruction No. 2/97 of November 29, 1997 on the authorization of the Regional Securities Exchange ;

Having regard to Decision No. 004 of April 29, 2021/CM/UMOA on the appointment of the President of the Regional Council for Public Savings and Financial Markets ;

Having regard to the deliberations of the AMF-UMOA during its 98th ordinary session held on December 23, 2023, in Cotonou, Republic of Benin ;

HAS ADOPTED THIS INSTRUCTION:

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TITLE 1. GENERAL PROVISIONS

Article 01: Definitions For the purposes of this Instruction, the following terms shall mean:

a) Director: a natural person designated by the articles of association or by the General Meeting, in accordance with the provisions of the commercial company law applicable to the West African Securities Exchange. He or she is a member of the deliberative body. A natural person serving as the permanent representative of a corporate director shall be treated as a director.

b) Independent Director: a director who has no relationship of any kind with the BRVM or its group that could impair his or her judgment or place him or her in a situation of actual or potential conflict of interest.

c) Non-Executive Director: a director who has no management responsibilities within the BRVM.

d) General Meeting: the body bringing together the shareholders holding the share capital of the BRVM. It has the power to take any decision concerning the BRVM, subject to powers legally vested in the executive body or the deliberative body. To this end, it deliberates under the quorum conditions defined by the applicable company law and the articles of association.

e) West African Securities Exchange or BRVM: the company authorized by the AMF-UMOA to exercise, throughout the territory of the UMOA member states, functions related to the organization of the securities market and the dissemination of market information.

f) Conflicts of Interest: a situation where the personal interests of a member of the governance bodies or a member of staff, or of persons with whom they have a family relationship, are incompatible with the interests of the BRVM and could, therefore, influence the impartiality expected of them in the performance of their duties.

g) Corporate Governance Statement: a statement covering all key information related to the application of the BRVM's corporate governance rules over a given year.

h) Managing Director: a natural person appointed by the body legally empowered to do so, notably the Board of Directors, to manage the BRVM and represent it in its relations with third parties. The Managing Director is vested with the broadest powers to act on behalf of the BRVM, within the limits of the corporate purpose and subject to those expressly attributed to the General Meetings or specifically reserved for the deliberative body by legal or statutory provisions.

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i) Senior Management: persons who are members of the executive body, notably those holding the title of director, head of branches or representative offices or subsidiaries, provisional administrator, and liquidator.

j) Corporate Governance: the set of relationships between the executive body of the BRVM, its deliberative body, its shareholders, and other stakeholders that establish the framework within which the BRVM's objectives are set, along with the means to achieve them and monitor their implementation. Governance determines the allocation of powers and responsibilities as well as decision-making mechanisms within the framework of the internal regulations governing the BRVM ;

k) Family Relationship: the relationship between two persons belonging to the same family, notably spouses, direct and collateral relatives up to the fourth degree, including parents, grandparents, great-grandparents, children, grandchildren, great-grandchildren, brothers and sisters, uncles and aunts, great-uncles and great-aunts, nephews and nieces, first cousins ;

l) Duty of Care: the obligation, for any director and any member of the executive body, to make decisions and act in an informed and prudent manner regarding the BRVM. The duty of care refers to the prudence with which the director or member of the executive body would manage his or her own affairs ;

m) Duty of Loyalty: the obligation, for any director and any member of the executive body, to act in good faith in the interest of the BRVM. Under this obligation, the director or member of the executive body must not act in his or her own interest or in the interest of a person or group, to the detriment of the BRVM and the entire regional financial market of the UMOA ;

n) Governance Bodies: the deliberative body, including its specialized committees, as well as the executive body ;

o) Deliberative Body: the Board of Directors in joint-stock companies or the collegiate body in companies constituted under another form. It is vested with all powers to act in all circumstances on behalf of the BRVM, within the limits of the corporate purpose and the powers reserved for the General Meeting ;

p) Executive Body: the set of structures that contribute to the day-to-day management of the BRVM and ensure the effective implementation of the activity direction defined by the deliberative body. In particular, the Managing Director, Deputy Managing Directors, Secretary General, Heads of control functions, Directors of Departments grouping together Directorates, and Directors of Directorates directly attached to the Managing Director are considered members of the executive body.

q) Related Parties: natural and legal persons who are directly or indirectly linked to the BRVM. Related parties include in particular :

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iii. a natural person who exercises exclusive control, joint control, or significant influence over the BRVM ; iv. a natural or legal person who holds at least 10% of the voting rights within the BRVM ; v. the directors and senior management of the BRVM ; vi. private companies in which the natural persons referred to in points iii), iv) and v) above exercise management, administration, or directorship functions, or hold more than 25% of the share capital ; vii. persons having a family relationship with the natural persons referred to in points iii), iv) and v) above.

Terms not defined in this Instruction or its Annexes shall have their usual meaning.

Article 02: Subject Matter and Scope This instruction sets out the minimum corporate governance rules to be observed by the West African Securities Exchange (BRVM).

TITLE 2. GOVERNANCE FRAMEWORK AND GUIDING PRINCIPLES

Article 03: Guiding Principles of Corporate Governance The BRVM must :

have objectives focused on its security and efficiency that explicitly support the stability of the financial system and the development of the regional financial market ;
have governance provisions that are documented and define clear and direct levels of responsibility. These provisions should be communicated to shareholders, competent authorities, stakeholders, and, more generally, to the public ;
clearly state the roles and responsibilities of the Board of Directors and the procedures governing its functioning, including procedures for identifying, managing, and resolving conflicts of interest among its members. The board must annually review both its overall performance and the performance of its various members ;
designate within its Board of Directors members possessing the appropriate skills, integrity, and incentives to fulfill their roles.

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Article 04: Principles of Proportionality and Transparency The BRVM shall establish a transparent governance framework adapted to its size, structure, the nature and complexity of its activities, as well as its risk profile, and where applicable, that of the group to which it belongs.

The governance framework must be adapted to its scale and the potential consequences of its failure on the stability of the UMOA regional financial market.

The governance framework must in particular :

be developed and implemented taking into account information system security, coverage of all risks incurred by the BRVM, and potential conflicts of interest ;
establish and formalize the strategies, policies, and procedures to be implemented to define and organize the various means necessary to achieve sound governance ;
define the roles and obligations of stakeholders ;
meet the needs of the BRVM as a whole and of each of its organizational and operational units ;
integrate mechanisms aimed at maintaining and/or restoring its functioning in the event of disruption ;
reflect, over time, changes resulting from the characteristics of the BRVM and its external environment, as well as developments in best practices in governance ;
provide mechanisms to ensure the integrity and commitment of stakeholders, who must be sufficiently numerous, competent, and have a good knowledge of the BRVM's activities, its risks, and its legal obligations.

The articles of association of the BRVM must incorporate the principle of transparency regarding the dissemination of information to stakeholders.

Article 05: Corporate Governance Organizational Structure The BRVM is equipped with a Board of Directors and Specialized Committees. It is led by a Chairman of the Board of Directors and a Managing Director.

Article 06: Corporate Governance Charter The BRVM must have a Corporate Governance Charter, which sets out the principles and rules on which the Board, its directors, and its committees operate. This charter must be approved by the company's Board of Directors.

This charter must include at a minimum the provisions of the model in the annex to this Instruction.

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TITLE 3. BOARD OF DIRECTORS AND SPECIALIZED COMMITTEES

Article 07: General Responsibilities of the Board of Directors The Board of Directors of the BRVM must :

define and approve the overall strategy of the BRVM, its general governance framework, its corporate culture, as well as its principles and values ;
clearly state the roles and responsibilities of the executive body ;
define a clear and documented risk management framework, including the BRVM's risk tolerance policy, assigning responsibility for risk-related decisions and addressing decision-making in crisis or emergency situations. Governance provisions should enable risk management and internal control functions to have sufficient authority, independence, resources, and access to the board ;
ensure that the design, rules, overall strategy, and major decisions of the BRVM appropriately take into account the legitimate interests of its direct and indirect participants, as well as those of other concerned stakeholders. Major decisions should be clearly communicated to concerned stakeholders and made public if they impact the market as a whole.

The Board of Directors bears ultimate responsibility for the financial soundness of the BRVM and its compliance with the legal and regulatory provisions governing its activities.

It must effectively engage in the BRVM's activities, in accordance with its legal, regulatory, and statutory powers. To this end, it is required to stay informed of significant changes arising from the BRVM's economic or operational environment and to act promptly to protect the long-term interests of the regional financial market and the BRVM.

Article 08: Specific Responsibilities of the Board of Directors In the context of implementing its specific responsibilities, the Board of Directors must in particular :

continuously ensure the adequacy of capital levels relative to defined commitments, particularly within the framework of the public service concession granted to the BRVM ;
monitor the design and implementation of the BRVM's remuneration system and the associated control processes ;
ensure that transactions with related parties, including intra-group transactions, are identified, assessed, and subject to appropriate requirements ;
promote a corporate culture that values ethical behavior, adhere to these

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values, and ensure their compliance by the executive body and staff of the BRVM ; 5. ensure that the BRVM maintains regular relations with the AMF-UMOA ; 6. ensure the implementation of necessary investments to guarantee business continuity and achieve performance objectives ; 7. review the reports and Decisions of the AMF-UMOA and monitor the implementation, within required deadlines, of the Decisions and recommendations contained therein.

The Board of Directors must in particular approve : 8. all BRVM policies ; 9. the BRVM General Regulations and their implementing texts ; 10. the BRVM's risk appetite level and risk limits ; 11. decisions on outsourcing activities and the use of new products or services, substantial modifications to existing products or services, as well as important strategic initiatives and operations such as major acquisitions, changes to systems, processes, and the business model ; 12. risk and internal control governance frameworks. It is required to ensure that the implementation of said frameworks complies with all requirements set out respectively in the Instruction on risk management and the Instruction on internal control.

Article 09: Obligations of the Deliberative Body towards the Executive Body In addition to the powers and obligations vested in it, the Board of Directors must supervise the management of the BRVM's General Management activities.

To this end, the Board of Directors must in particular :

monitor and evaluate the performance of General Management, including the heads of control functions ;
ensure compliance with the requirements of the public service concession granted by the member States of the Union to the BRVM ;
ensure the assessment of the tariffs applied by the BRVM ;
ensure the implementation of innovative actions and development activities ;
set performance objectives and remuneration levels for the executive body that are adequate and consistent with the long-term strategy and financial soundness of the BRVM.

Article 10: Delegation of Powers and Competences of the Board of Directors The Board of Directors may delegate certain of its powers and competences to specialized committees.

The delegation of powers or the outsourcing of certain BRVM activities does not exempt the deliberative body from its responsibilities.

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Article 11: Composition of the Board of Directors The Board of Directors must be composed, in a balanced manner, of directors with complementary skills and experiences in areas of interest to the BRVM. Without prejudice to legal or statutory provisions, the number of Board of Directors members takes into account the principle of proportionality and is subject to periodic reviews.

Non-executive directors must represent, at all times, at least three quarters (3/4) of the members of the Board of Directors.

The Board of Directors must include at least two (02) independent directors.

Article 12: Criteria for Qualifying an Independent Director Without prejudice to the definition set forth in Article 01, the criteria to qualify a director as independent are as follows :

not be or have been, during the four preceding years, an employee or member of the executive body of the BRVM ;
not be an employee or director of the BRVM's parent company or a company it controls during the four preceding years ;
not be a member of the executive body of a company where the BRVM holds directly or indirectly a mandate within the deliberative body or in which a member of the BRVM's executive body, currently serving or having served during the last four years, holds a mandate within its deliberative body ;
not be a member of the deliberative and executive bodies of a significant client, member, affiliate, or supplier of the BRVM or its group, or for which the BRVM or its group represents a significant portion of activity ;
not have had, directly or indirectly, with the BRVM, an ongoing business relationship during the four preceding years ;
not have a close family link with a member of the executive body or a member of the Board of Directors representing a private shareholder of the BRVM ;
not have been the statutory auditor of the BRVM during the four preceding years ;
not have been a member of the Board of Directors of the BRVM for more than ten years ;
not hold an elective political office or ministerial functions ;
be free from any influence, of a political or financial nature originating internally or externally to the BRVM, that could compromise the exercise of his or her freedom of judgment.

The status of independent director is reviewed annually by the Board of Directors or the dedicated nomination committee, where applicable.

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The AMF-UMOA may decide that a director, although meeting the above criteria, should not be qualified as independent when he or she is in a situation of actual, apparent, or potential conflict of interest. In the event that this decision does not allow for the required minimum number of independent directors, the BRVM must proceed, within six (06) months, to the co-option or appointment of a new independent director taking into account the observations justifying the AMF-UMOA's decision.

Article 13: Competences of Board of Directors Members Members of the deliberative body must individually or collectively possess appropriate skills in the areas of securities operations, depositary services, banking, financial analysis, information technology, strategic planning, governance, risk management, internal control, capital markets, or remuneration policies, or any other area deemed relevant for the development of the BRVM.

Article 14: Process for Selecting Board of Directors Members The Board of Directors must have a formalized process to identify, evaluate, and select directors who will be designated by the articles of association or, where applicable, by the General Meeting.

Board of Directors members have obligations towards the interests of the BRVM as a whole, regardless of the body that appoints them. In this regard, the Board of Directors must be endowed with powers enabling it to ensure that directors appointed by shareholders are qualified for the position.

Article 15: Capacity Building for Board of Directors Members The Board of Directors is required to put in place continuous training programs for directors or take all measures aimed at ensuring their access to the knowledge necessary to fully exercise their respon