Instruction No. 39/2009 on the Establishment Conditions for UMOA Financial Market Participants Outside Their Home State

UNION MONETAIRE OUEST AFRICAINE crepmf CONSEIL REGIONAL DE L'EPARGNE PUBLIQUE ET DES MARCHES FINANCIERS

INSTRUCTION N° 39/ 2009
ON THE ESTABLISHMENT CONDITIONS FOR COMMERCIAL PARTICIPANTS OF THE UMOA FINANCIAL MARKET OUTSIDE THEIR HOME STATE

The Regional Council for Public Savings and Financial Markets,

Having regard to the Convention establishing the Regional Council for Public Savings and Financial Markets (hereinafter the "Council");

Having regard to the Annex to the Convention on the Composition, Organization, Operation and Functions of the Regional Council;

Having regard to the General Regulation on the Organization, Operation and Supervision of the UMOA regional financial market;

Having regard to the resolutions of the Regional Council at its ordinary session on 17 November 2009;

HAS ADOPTED

Article 1: Definitions For the purposes of this Instruction, the following terms shall mean:

a) "Liaison or Representation Office": an office whose exclusive purpose is to prospect a market, establish contacts, gather information, and ensure publicity and promotion of the Commercial Participant;

b) "Activity Delegation": a method whereby all or part of an activity is entrusted to another entity, the delegate;

c) "Subsidiary": any entity defined under Article 179 of the Uniform Act on commercial companies and GIE law;

d) "Commercial Participants": the participants referred to in Article 3 of this Instruction having their principal establishment in one of the countries of the Union;

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Instruction No. 39 / 2009

e) "General Regulation": the General Regulation on the organization, operation and supervision of the regional financial market;

f) "Branch": any entity defined under Article 116 of the Uniform Act on commercial companies and GIE law.

Article 2: Subject Matter This Instruction sets out the establishment conditions for Commercial Participants outside their home State.

Article 3: Scope of Application This Instruction applies to all Commercial Participants approved by the Regional Council.

Article 4: Forms of Establishment The establishment of a Commercial Participant in another State of the Union may take the form of a Subsidiary, a Branch or a Representation Office.

The applicable legal regime is determined by the form of establishment.

Article 5: Subsidiary The establishment by a Commercial Participant of a Subsidiary for the purpose of exercising a regulated activity on the regional financial market is subject to prior approval by the Regional Council.

Regarding Investment and Intermediation Companies (SGI), when the Subsidiary is 100% owned, it is exempt from any approval procedure if it was established exclusively for the purpose of an activity delegation in accordance with Article 37 of the General Regulation. However, the delegation must be previously authorized by the Regional Council.

Article 6: Branch The opening of a Branch by a Commercial Participant is subject to prior authorization from the Regional Council.

The Commercial Participant must declare in advance to the Regional Council any closure or transfer operation of a Branch. In this context, it is required:

• to assume responsibility for securities domiciled in the Branch's books, without any case imposing costs on clients regarding the transfer or closure of their securities accounts;

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Instruction No. 39 / 2009

• to inform clients attached to the Branch individually by any written communication means, at least 90 days before the closure date;

• to inform the public within the same period by means of a press release published in the Official Bulletin of the Cote (BOC) of the Regional Securities Exchange (BRVM) and in a legal announcements newspaper.

Article 7: Liaison or Representation Office Any project to open a Liaison or Representation Office is subject to prior declaration with the Regional Council.

This declaration must include the precise address of the Liaison or Representation Office, the identity of the persons responsible for its management, and details on the objectives pursued by opening the Liaison or Representation Office. The premises housing the Liaison or Representation Office must be identifiable to the public and meet minimum security requirements.

The following documents must be attached to the declaration, specifically copies of:

• the decision to open taken by the competent body;
• a detailed description of the activities of the Liaison or Representation Office and its control system;
• curriculum vitae and criminal record extracts dated less than three months for the persons responsible for its management;
• proof of registration of the Liaison or Representation Office in the commercial and movable credit registers.

Article 8: Approval Conditions for Subsidiaries A Commercial Participant establishing a Subsidiary must submit an approval application to the Regional Council.

The approval request letter must be signed by a duly authorized executive of the Commercial Participant. It must be accompanied by a complete file containing all constituent documents defined by Council Instruction for each category of Commercial Participant.

Article 9: Authorization Conditions for Branches 9.1 The authorization issued by the Regional Council to open a Branch is subject to the establishment of human and technical resources including:

For Investment and Intermediation Companies (SGI):

• Regarding human resources

• a Managing Director, authorized to represent the company,
• an Internal Controller,
• a Trader and Clearing Agent,
• an Accountant and Custodian,
• a Client Relations Officer, where applicable.

• Regarding technical resources

• trading software,
• client management and account maintenance/custody software.

For Wealth Management Companies (SGP), Collective Investment Scheme Management Companies (SGO) and UCITS:

• Regarding human resources

• a Managing Director, authorized to represent the company,
• an Internal Controller,
• a Portfolio Manager,
• a Client Relations Officer, where applicable.

• Regarding technical resources

• portfolio management software.

For other Commercial Participants:

• proof of professional competence of the person authorized to manage the Branch,
• adequate technical resources.

The Branch must also comply with all legal, administrative and fiscal obligations resulting from its opening.

Furthermore, the Commercial Participant must commit to transmitting to the Regional Council a certificate of extension of the insurance policy covering its operational risks.

The premises housing the Branch must be identifiable to the public, meet minimum security requirements and be permanently connected to the head office via any communication and data exchange means.

9.2 The agencies or Branches of a bank approved as an Accountant/Custodian on the UMOA financial market may only exercise account/custody activities after being authorized by the Regional Council. This authorization is subject to the existence of

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Instruction No. 39 / 2009

necessary human and technical resources for conducting this activity, including:

• a dedicated person for account management,
• an account/custody software.

Article 10: Conditions for Activity Delegation Activity delegations by an Investment and Intermediation Company (SGI) made in accordance with Article 37 of the General Regulation are only authorized under the following conditions:

1. In case of delegation of trading/clearing activity The Subsidiary must be established as a public limited company with a Board of Directors and a minimum capital of fifty million (50,000,000) FCFA and must demonstrate all necessary human and technical resources for conducting this activity, including:

• a Managing Director, duly authorized to represent the company,
• a Trader/Clearing Agent,
• an Internal Controller,
• management and trading software.

2. In case of delegation of account/custody activity The Subsidiary must be established as a public limited company with a Board of Directors and a minimum capital of one hundred million (100,000,000) FCFA and must demonstrate all necessary human and technical resources for conducting these activities, including:

• a Managing Director, duly authorized to represent the company,
• an Accountant/Custodian,
• an Internal Controller,
• management and account/custody software.

Article 11: Entry into Force This Instruction, which enters into force as of the date of signature, shall be published wherever necessary.

Done in Abidjan, on 23 November 2009

The President Léné SEBGO