Regulation No. 01-09 Establishing the Central African Deposit Guarantee Fund

COMMUNAUTE ECONOMIQUE ET MONETAIRE DE L'AFRIQUE CENTRALE Regulation No. 01/09/CEMAC/UIMC/COBAC establishing the Central African Deposit Guarantee Fund MONETARY UNION OF CENTRAL AFRICA

Having regard to the Monetary Cooperation Convention of 22 November 1972; Having regard to the revised Treaty on the Economic and Monetary Community of Central Africa (CEMAC); Having regard to the revised Convention governing the Monetary Union of Central Africa (UMAC); Having regard to the Convention of 16 October 1990 establishing a Central African Banking Commission (COBAC); Having regard to the Convention of 17 January 1992 on the Harmonization of Banking Regulation in the States of Central Africa; Having regard to Regulation No. 01/04/CEMAC/UIMC/COBAC establishing the Central African Deposit Guarantee Fund of 31 March 2004; Having regard to the Banking Commission Regulations on the Net Own Funds of Credit Institutions; Having regard to the Statutes of the Bank of Central African States (BEAC);

After the conforming opinion of the BEAC Board of Management, delivered during its session on 02 April 2009 in Bata, Equatorial Republic of Guinea; On the proposal of the BEAC Governor; In its session on 03 April 2009 in Bata, Equatorial Republic of Guinea.

PRELIMINARY TITLE ON THE ESTABLISHMENT OF A DEPOSIT GUARANTEE FUND IN CENTRAL AFRICA

Article 1.- A Central African Deposit Guarantee Fund is hereby established, hereinafter referred to as "the Fund", abbreviated FOGADAC, charged with:

• compensating depositors of a credit institution in the event of unavailability of their deposits as defined by a Banking Commission Regulation;
• providing assistance to a credit institution whose situation gives cause to fear, in the near future, total or partial unavailability of deposits or all other refundable funds.

1. The conditions and modalities for the Fund's intervention are specified by this Regulation and subsequent texts.

Article 2.- The Central African Deposit Guarantee Fund is a public establishment of sub-regional scope, endowed with legal personality and enjoying financial autonomy.

Article 3.- The Fund's headquarters are established within the General Secretariat of the Central African Banking Commission (COBAC).

TITRE I ON CREDIT INSTITUTIONS AND ELIGIBLE DEPOSITS

The deposit guarantee mechanism applies mandatorily to all credit institutions located in the territory or territories of one or more States of CEMAC.

Article 5.- Guaranteed for the benefit of natural or legal persons, within the intervention limits set forth in Article 23 of this Regulation, are credit balances denominated in CFA francs resulting from funds left on account or transitional situations arising from normal banking operations, which the credit institution must return in accordance with applicable legal and/or contractual conditions. These include: a) sight or time deposits; b) passbook accounts; c) credit balances of current or ordinary accounts; d) guarantee deposits when they become due; e) sums due in representation of nominal treasury bills, payment instruments of any nature, or other banking credit titles denominated in F.CFA issued by the concerned credit institution; f) any other sums due to clients in respect of banking operations ongoing on the date of account closing.

Article 6.- The following deposits are excluded from any reimbursement by the Guarantee Fund:

1. Deposits made by the following persons: a) States, central administrations, state branches, and local authorities; b) credit institutions and investment companies, in their own name and for their own account; c) insurance companies; d) collective investment schemes in securities; e) retirement and pension funds; f) personally liable partners and limited partners; g) shareholders holding at least 10% of the capital of the credit institution; h) members of the Board of Directors, approved managers, and statutory auditors of the institution, as well as any depositor holding the same qualities in other group companies and any third party acting on behalf of these persons; i) companies having with the credit institution, directly or indirectly, capital links conferring on one of the affiliated enterprises effective control over the others; j) other financial institutions.
2. Deposits resulting from operations for which a final criminal conviction has been pronounced against the depositor for money laundering or terrorism financing;
3. Deposits for which the depositor has obtained from the credit institution, individually, preferential rates and financial benefits that have contributed to worsening the financial situation of said institution;
4. Deposits for which the depositor has obtained advances and financial support of any nature from the institution, up to the amount of such support;
5. Eligible deposits and other assets for which the holder has made false declarations regarding the application of the deposit guarantee system or has committed fraud, particularly with respect to this system or applicable laws and regulations governing credit institutions or between them and their clientele.
6. By virtue of their own nature: a) elements of the liability side entering into the definition of the credit institution's own funds as provided by Banking Commission Regulations on Net Own Funds; b) non-nominal deposits other than sums due in representation of payment instruments issued by the institution; c) negotiable credit titles; d) other credit titles against the credit institution and obligations arising from own acceptances and promissory notes; e) foreign currency deposits.

TITRE II ON THE GOVERNING BODIES OF THE CENTRAL AFRICAN DEPOSIT GUARANTEE FUND

Article 7.- The Fund comprises two bodies: the Management Committee and the Permanent Secretariat.

Chapter I The Management Committee

Article 8.- The Management Committee is composed as follows:

• the Governor of the Bank of Central African States, President; or, in case of absence, the Vice-Governor as substitute;
• the Presidents of the Professional Associations of Credit Institutions. The Secretary General of the Central African Banking Commission, or in case of absence, the Deputy Secretary General, attends the Fund's meetings with a consultative vote. When called upon to rule on the Fund's interventions in a CEMAC State, the Management Committee is enlarged by the national Monetary Authority and the National Director of the Bank of Central African States. The Monetary Authority participates in voting within the Management Committee, while the National Director holds only a consultative vote.

Article 9.- The Management Committee's mission is to:

• define the Fund's general policy;
• rule on the Fund's interventions in CEMAC States;
• decide on indemnification modalities for depositors, within limits set by Banking Commission Regulation;
• and adopt the Internal Regulations as well as the Financial Regulations determining the collection, use, management, and investment modalities of the Fund's resources.

Article 10.- Upon receipt of sums collected for travel, transportation, and other expenses incurred in the Fund's interest after written approval by its President, members of the Management Committee serve gratuitously. These expense reimbursements give rise to a special report by the statutory auditor.

Article 11.- Members of the Management Committee, as well as all persons authorized to act on behalf of the Fund or its structures, are bound by professional secrecy, which cannot be opposed to judicial authorities acting within the framework of criminal proceedings, nor to the Central African Banking Commission.

Chapter II The Permanent Secretariat

Article 12.- Day-to-day management of the Fund is entrusted to a Permanent Secretariat headed by a Permanent Secretary.

Article 13.- The Permanent Secretary is appointed and removed by the Management Committee upon proposal of the COBAC Secretary General.

Article 14.- The Permanent Secretary reports on matters inscribed on the agenda of Fund meetings.

Article 15.- The Management Committee specifies the attributes and operating modalities of the Permanent Secretariat.

TITRE III ON THE ORIGIN AND PROTECTION OF THE FUND'S RESOURCES

Article 16.- The Fund is funded by contributions from credit institutions, income from the investment of these contributions, donations, and subsidies.

Article 17.- Credit institutions' contributions are based on collected deposits and net doubtful claims. Credit institutions not collecting public deposits or those receiving deposits not eligible for coverage by the Guarantee Fund in case of loss pay a flat-rate contribution. The methods of determination as well as the amounts of annual contributions and flat-rate contributions for credit institutions are fixed by Banking Commission Regulation.

Article 18.- In case of insufficiency of the Guarantee Fund's resources, supplementary contributions from credit institutions are called upon, and if applicable, State guarantee, according to modalities defined by Banking Commission Regulation.

Article 19.- An account is opened in the name of the Fund within the books of the Bank of Central African States.

Article 20.- Credit institutions' contributions, definitively acquired by the Fund and regardless of the form in which they appear, are current charges deductible from the tax base.

Article 21.- The Fund's claims in principal and accessories against a credit institution regarding the resources of the deposit protection system are privileged over the general movable and immovable property of said institution. For unpaid contributions, the rank of this privilege is that enjoyed by fiscal, customs, and social security institution claims. Following a preventive intervention, the Fund's privilege ranks with that of creditors for expenses incurred to preserve the debtor's property in the interest of other creditors.

Article 22.- The Fund's resources are protected against any act of seizure (garnishment) practiced in its hands or through those of a third party.

Article 23.- The Fund's resources, as well as income derived from the investment of these resources, are exempt from all taxes, duties, and other fees.

Article 24.- The Fund is subrogated to the rights of beneficiaries of its intervention up to the amount it has paid.

Article 25.- The Guarantee Fund may bring any liability action against the de jure and de facto directors of credit institutions for which it intervenes, in order to obtain reimbursement of all or part of the sums paid by it, and informs the Banking Commission.

TITRE V ON THE LIMIT AND MODALITIES OF INDEMNIFICATION

Article 26.- The indemnification limit for holders of deposits and other eligible assets protected by the guarantee mechanism is fixed at 5 million F.CFA per beneficiary and per credit institution.

Article 27.- Depending on particular circumstances, the Management Committee ruling unanimously may adjust the reimbursement amounts according to the Fund's intervention capacity, following modalities defined by Banking Commission Regulation.

Article 28.- A Banking Commission Regulation describes the indemnification procedure for depositors and other eligible holders.

Article 29.- Voluntary appeals regarding depositor indemnification fall under the competence of the Management Committee.

Article 30.- The Management Committee's decisions on indemnification are subject to judicial appeal before the Court of Justice of CEMAC, which rules as court of first and last instance.

TITRE IV ON THE PREVENTIVE ACTION OF THE FUND

Article 31.- The Guarantee Fund may provide assistance to enable the financial rehabilitation or total or partial takeover of a credit institution's activities when the sound completion of its commitments is compromised, provided that the institution's situation gives cause to fear in the near future total or partial unavailability of deposits or all other refundable funds. The modalities for the Guarantee Fund's preventive intervention benefiting credit institutions are fixed in a Banking Commission Regulation.

TITRE VI ON SANCTIONS

Article 32.- Without prejudice to sanctions provided by national legislations, violation of the provisions of this Regulation as well as those of texts taken by the Banking Commission in application of its provisions, are subject to sanctions provided for in Articles 15, 39, 45 and following of the Annex to the Convention of 16 October 1990, and Articles 39, 45 and following of the Annex to the Convention of 17 January 1992.

Article 33.- Without prejudice to sanctions provided by the Penal Codes of member States, imprisonment of one month to one year, and a fine of 100,000 to 5,000,000 CFA francs shall be imposed on any person who has carried out maneuvers with the aim of fraudulently claiming the benefit of the indemnity provided for in Article 23 of this Regulation, either for their own account or on behalf of a third party.

TITRE VII ON DIVERSE AND FINAL PROVISIONS

Article 34.- The organizational and operating modalities of the Guarantee Fund are specified by Banking Commission Regulation.

Article 35.- Provisions of this Regulation may be modified by the Ministerial Committee of the Monetary Union of Central Africa, upon proposal of the BEAC Governor after conforming opinion of the Management Committee.

Article 36.- This Regulation enters into force as of the date of its signature and is published in the Official Bulletin of the Economic and Monetary Community of Central Africa.

20 APR 2009