Forward Exchange Policy Notice No. 22/2020 of December 23

PUBLISHED IN THE OFFICIAL GAZETTE, 1ST SERIES, NO. 190, OF NOVEMBER 27 NOTICE NO. 22/2020 of November 23 SUBJECT: EXCHANGE RATE POLICY

• Forward Exchange Operations

Whereas it is necessary to establish criteria and procedures for the contracting of forward exchange operations; Pursuant to the combined provisions of Article 40 and paragraph 1 of Article 51, both of Law No. 16/10 of July 15, the Law of the Banco Nacional de Angola. I DETERMINE:

Article 1.
(Subject and Scope)

1. This Notice establishes the criteria and procedures to be observed by Banking Financial Institutions (hereinafter referred to as Commercial Banks) when contracting Forward Exchange Operations with their Clients.
2. Forward Exchange Operations are considered to be operations agreed between a Commercial Bank and its Client for the purchase (sale) of Kwanzas and sale (purchase) of a foreign currency, in specific amounts, exchange rate, and future maturity date.

Article 2.
(Purpose of Forward Exchange Operations)
Commercial Banks may only contract forward exchange operations with their Clients, namely corporate entities, importers, exporters, oil and diamond companies, and state entities, to hedge exchange rate risk related to specific and identified operations for the import or export of goods.

Article 3.
(Currency and Term)

1. Forward Exchange Operations may be contracted between the national currency and any other freely convertible foreign currency.
2. Forward Exchange Operations must have a maximum term of 1 (one) year.

Article 4.
(Contracting Formalization)

1. Prior to the execution of any Forward Exchange Operation, Commercial Banks must enter into a forward exchange contract with their Clients, establishing the general conditions applicable to such operations in the format of Annex I, contained in this Notice and forming an integral part thereof, with any adaptations they deem necessary.
2. Prior to the execution of each Forward Exchange Operation, Commercial Banks must agree with their Clients on the particular conditions thereof, including the amount, currency, term, exchange rate, and other elements, in the format defined in Article 5 of this Notice, according to the operation's negotiation method.
3. The forward exchange contract is composed of general conditions and particular conditions for each operation.

Article 5.
(Negotiation, Confirmation and Registration of Operations) The particular conditions of each Forward Exchange Operation are negotiated, confirmed by the Client and registered as follows:
a) Transactions negotiated outside the FXGO platform – registered by the Commercial Bank in a physical document using the model of Annex II contained in this Notice and forming an integral part thereof, confirmed through the Client's signature on the document; b) Transactions negotiated on the FXGO platform – confirmed through interactions on FXGO, registered using the CNF FXGO – Trade Affirmation command, with all fields required to be completed except for the Client's banking coordinates.

Article 6.
(Questions and Omissions)
Questions and omissions arising from the interpretation of this Notice are clarified by the Banco Nacional de Angola.

Article 7.
(Penalties)
Non-compliance with the provisions of this Notice is punishable under Law No. 5/97 of June 27 - Exchange Rate Law, and Law No. 12/15 of June 17 - Framework Law on Financial Institutions.

Article 8.
(Entry into Force)
This Notice enters into force on the date of its publication.
PUBLISHED.
Luanda, November 23, 2020.
THE GOVERNOR
JOSÉ DE LIMA MASSANO

ANNEX I
Forward Exchange Contract Model
(General Conditions)

Between:
[Bank Identification], represented by ……., with powers to act, hereinafter abbreviated as Bank; and [Client Identification] or [Bank Identification], represented by ……., with powers to act, hereinafter abbreviated as Client; The Bank and the Client/Bank, collectively hereinafter referred to as Parties;

Whereas:
The Parties intend to contract between themselves the terms and conditions that will govern Forward Exchange Operations; This Forward Exchange Contract is freely and in good faith entered into, governed by the terms and conditions of the following clauses, and subsidiarily:
a) By the General Conditions of current accounts subscribed by the Client; b) By Exchange Rate Regulations.

Clause 1.
(Definitions)

1. Forward Exchange Contract – a contract entered into between the Bank and its Client establishing:
   a) The General Conditions applicable to forward exchange operations; and b) The Particular Conditions of each operation, including the amount, currency, term, exchange rate, and other elements.
2. Business Days – the days on which Institutions are open to the public and operating in the main financial center of the two currencies in question.
3. Forward Exchange Operation – an operation agreed between a Commercial Bank and its Client for the purchase (sale) of Kwanzas and sale (purchase) of a foreign currency, in specific amounts, exchange rate, and future maturity date (hereinafter also referred to as operation or operations).

Clause 2.
(Purpose of Operations)
Operations contracted under this contract must have as their sole purpose the mitigation of exchange rate risk resulting from the obligation to settle an import or receive payment at term for an export of goods.

Clause 3.
(Confirmation by the Client of Acceptance of Particular Conditions) a) The Bank:
i. Registers the particular conditions of the operation agreed with the Client in accordance with the model attached to this contract;
ii. Sends the document to the Client via the agreed channel, and the Client must return it duly signed via the agreed channel within a maximum of 24 hours.
b) The particular conditions of each operation and their acceptance are registered on the FXGO platform. c) The Parties agree that they shall be bound by the conditions of each operation on the date of acceptance of the particular conditions signed by the Client, in accordance with the preceding subparagraphs of this article. Note: The Bank must eliminate the option that is not applicable to its Client - In the case of Clients who do not trade on the FXGO platform, the Bank must retain subparagraph a) and eliminate subparagraph b), and vice versa for Clients who trade on FXGO.

Clause 4.
(Guarantees)
The Commercial Bank may subject the contracting of any forward operation to the provision of guarantees whenever deemed necessary.

Clause 5.
(Settlement of Each Operation)

1. The Client must ensure a sufficient balance in their current account until 11:00 on the second business day prior to the maturity date of each operation, in the amount due in the selling currency, so that the Bank can proceed to debit the amounts owed on said maturity date.
2. Non-compliance with the preceding paragraph entails the same consequences as early maturity, as provided in Clause 7 of this Annex.
3. The Client assumes full responsibility for any delays in fund transfers not attributable to the Commercial Bank.

Clause 6.
(Declarations)
The Client declares to the Commercial Bank that:
a) The risks resulting from the execution of this contract and the contracting of operations are fully known to them, having been duly weighed and considered in the process of forming and deciding their intent to contract. b) The Client further declares that:
i. All necessary authorizations and resolutions for the execution of this contract have been obtained and comply with their statutes and applicable legislation;
ii. The execution of this contract does not violate or will not violate, either the provisions of their statutes or any obligations undertaken with third parties in contracts or agreements, nor will it constitute the Client in default or non-compliance with any obligations undertaken;
iii. They are aware of no litigation, judicial or extrajudicial, that may influence or modify the conditions and legal requirements necessary for the execution of this contract;
iv. They will immediately notify the Bank of any situations or events that may in some way affect the punctual fulfillment of their obligations arising from this contract or that, under Clause 7 of this Annex, may give rise to early maturity;
v. The responsibilities assumed in this contract constitute direct and unconditional obligations, which rank at least equally with all other present or future responsibilities of the Client that are not specially guaranteed;
vi. They will provide information regarding their economic and financial evolution when so requested by the Commercial Bank;
vii. They will keep up to date all contributions, fees, and taxes to which they are subject, namely before the General Tax Administration and Social Security, and, when requested by the Bank, will provide the relevant certificates proving the regularity of said situations.

Clause 7.
(Early Maturity)

1. Without prejudice to any other rights conferred by law, the Bank may consider all operations contracted with the Client under this contract to have matured early if the Client fails to comply with any obligation arising therefrom, including the obligation set forth in paragraph 1 of Clause 5 of this Annex, if not regularized within two business days following its occurrence, whereupon the Bank must notify the Client in writing as provided in Clause 11 of this Annex.
2. The Bank may also consider obligations under this Contract to have matured early upon the occurrence of any of the following situations on the date they occur, or, if capable of being regularized, if not so within two business days following their occurrence:
   a) Failure to comply with any other contract of any nature with the Bank; b) Failure to meet commitments to Social Security, the General Tax Authority, or any entity within the national financial system; c) Occurrence of any circumstance that constitutes, or may come to constitute, a substantial change in the Client's financial capacity to fulfill its obligations under this contract.
3. The Commercial Bank notifies the Client of the occurrence of early maturity under the preceding paragraphs, which applies from the date of receipt of notification by the Client, as provided in Clause 11 of this Annex.

Clause 8.
(Cancellation of Pending Operations)

1. Upon early maturity as provided in Clause 7 of this Annex, the Commercial Bank shall proceed to immediately cancel all pending Operations contracted under this contract.
2. The cancellation date will occur 5 (five) business days after the Client's receipt of the written notification referred to in paragraph 3 of the preceding clause of this Annex.
3. The Commercial Bank shall calculate the amount relating to cancellation, which consists of any exchange rate differences resulting from the variation between the forward exchange rate stipulated in the particular conditions of each operation and the hedging exchange rate in the market for that position on the calculation date, with the global cancellation amount determined by the sum of the exchange rate differences calculated for all operations not yet matured.
4. If the amount required to cover the position results in a loss for the Bank, the Client shall pay the respective value to the Commercial Bank; if it results in a profit for the Bank, the Bank shall pay that value to the Client.
5. The calculated cancellation amount shall be paid to the entitled Party within 5 (five) business days after its calculation, with the Commercial Bank obligated, in case the value is due by the Client, to notify them of the calculated amount with sufficient advance notice to allow the Client to comply with the deadline.
6. The Bank, in cases provided for in Clause 7 of this Contract, and after settling any cancellation amount due by itself, is discharged from all its obligations arising from this contract, and nothing may be claimed against it by the Client under this contract, regardless of title.
7. The Commercial Bank may debit any current account held by the Client for any amounts arising from the execution of operations under this contract, due and not paid on time, as well as expenses incurred due to the Client's breach of contract, including the calculated cancellation amount.
8. In case of delay in payment by the Client of any amount due under this contract, default interest at a rate to be defined by the Commercial Bank shall accrue daily on the outstanding amount for the period of delay.

Clause 9.
(Voluntary Early Performance)
Without prejudice to the provisions of the preceding Clauses, either Party may propose to the other Party early performance of any operation, which shall be agreed upon on a case-by-case basis under terms and conditions to be defined by written agreement between the Parties.

Clause 10.
(Information Provision to Clients)

1. The Commercial Bank must provide the Client monthly with a list of pending operations, identifying the essential commercial terms of each, including their respective valuation.
2. If the Client identifies discrepancies, they must notify the Commercial Bank in writing of such fact, and both Parties shall make the necessary efforts to resolve these discrepancies as promptly as possible.
3. If the Client does not communicate any discrepancies within five business days from the date of receipt of the operations list, it shall be considered correct.

Clause 11.
(Notifications and Communications)

1. All communications between the Parties must be sent to the coordinates indicated below, under penalty of being considered not made:
   CLIENT BANK
   Attn:
   Address:
   Electronic Mail Address:
2. Written communications to be made under this contract must be sent to the recipient by:
   a) Registered letter with proof of receipt; b) Registered mail with acknowledgment of receipt; c) Transmission via electronic mail with read receipt, or by publication through internet banking if the Client has previously subscribed to this service and agreed to receive notifications regarding this contract through this means.
3. Any communication shall be deemed made:
   a) If delivered by registered letter or mail with acknowledgment of receipt on the date of signing that evidences receipt; b) If sent by electronic mail, on the date of the read receipt; c) If made available via internet banking, on the date the Client accesses the application and/or 5 business days after the information is made available by the Commercial Bank in said application.
4. If communication is received by the Client after 16:30 (sixteen hours and thirty minutes) on a business day at the location of receipt, it is considered to have been effected on the following business day.
5. The Parties undertake to immediately communicate any change to their physical address or electronic mail.

Clause 12.
(Expenses)
Expenses inherent to this contract shall be borne by the Client, including those introduced by law subsequently to its execution and which burden them due to retroactive application, as well as judicial and extrajudicial expenses, including attorney fees, that the Commercial Bank must incur to secure or obtain payment of its credits.

Clause 13.
(Contract Amendments)

1. In the event of any change in a law, regulation, or operational requirement resulting from compliance with requirements imposed by legislation or regulation applicable to the Commercial Bank or Client, the Commercial Bank reserves the right at any time to modify the provisions of this contract, with amendments communicated to the Client as provided in Clause 11 of this Annex.
2. The amendments referred to in the preceding paragraph shall only apply to operations contracted between the Parties after 15 (fifteen) days from the date of receipt by the Client of the communication referred to in paragraph 1, unless within that period the Client communicates non-acceptance to the Commercial Bank, with such communication serving as termination of this contract, applying in this situation the provisions of Clause 14 of this Annex.
3. Any amendment or modification to the contract shall only be valid if reproduced in a written document signed by the Parties, so that if the Client does not communicate acceptance within the period referred to in paragraph 1, it shall be considered that there has been a termination of the contract, applying in this situation the provisions of Clause 14 of this Annex.
4. If this contract is later judged null or voidable, in whole or in part, or if its performance becomes impossible due to legal provision or third-party fact, the Parties undertake to perform all acts and enter into all agreements deemed necessary to achieve the same result without the verification of the defects that determined the nullity or voidability of the contract, to make its full performance possible.

Clause 14.
(Duration and Termination)

1. This contract is valid for an indefinite period, and either Party may at any time terminate it by sending written communication to the other Party by registered or certified letter, with such termination taking effect 15 (fifteen) days from the date of receipt by the respective Party of said communication.
2. If operations are in force whose maturity date occurs after the termination date of the contract, this remains in force until the maturity date of said operations, and no new operations may be contracted after the date of receipt of the communication referred to in paragraph 1.

Clause 15.
(Applicable Law and Jurisdiction)

1. This Contract is governed by Angolan Law.
2. The jurisdiction agreed upon by the Parties, with express exclusion of any other, is competent to resolve any issues arising from this contract.

Clause 16.
(Effects)
This Contract takes effect from the date of its signature, and is drawn up in two original copies, with each party holding one copy.
Luanda XX of XXXXXX of XXXX.

ANNEX II
Particular Conditions
(Note to Commercial Banks: Include only in the case of contract execution with Clients who do not trade on the FXGO Platform) Date Currency to be Sold by the Bank Currency to be Purchased by the Bank Client's Current Account in Kwanzas Client's Foreign Currency Current Account Deadline for Return of Signed Particular Conditions by the Client (24 hours after being sent) Maturity Date Term Forward Exchange Rate Amount to be Sold by the Bank Amount to be Purchased by the Bank Required Guarantee Value Default Interest Rate Other Conditions:

We Confirm Our Agreement to the Terms of the Operation By the Bank / By the Client Date: / Date:
Received by the Bank
Signed:
Date: