Regulation (NAP) - Provisional Special Administration

Central Bank of S.T.P.	P A N PERMANENT APPLICATION NORM	CODE EO 99
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE
C.A.	22/09/2014	22/09/2014

SUBJECT: Provisional Special Administration

Considering that the legal responsibility for overseeing and ensuring the proper functioning of the National Financial System (NFS) rests with the Central Bank of São Tomé and Príncipe (BCSTP), which is empowered to adopt measures deemed necessary to correct situations that may jeopardize its stability;

Considering that the need to preserve the stability, soundness, credibility, and efficiency of the NFS requires the BCSTP to adopt remedial measures for financial institutions, with the aim of normalizing the situation or preserving the NFS;

Furthermore, considering that the national legislative framework, which currently only provides for intervention and judicial liquidation as measures to address distressed banks, is quite misaligned with advances in international financial supervision and regulation that provide for other resolution mechanisms;

Since "Provisional Special Administration" is one of the alternative resolution mechanisms applicable to financial institutions, provided for in the framework of international financial supervision and regulation and in force in some legal systems close to our own, aiming to prevent imbalances and thus protect the stability of the financial system;

Since the BCSTP has encountered, in recent years, situations requiring resolution measures that do not necessarily and immediately involve intervention, but rather call for the implementation of intermediate solutions;

In these terms, the BCSTP, exercising its powers under letters d) and f) of paragraph 2 of Article 8 of its Organic Law, Law No. 8/92, hereby determines the following:

Article 1 Provisional Special Administration

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Central Bank of S.T.P.	P A N PERMANENT APPLICATION NORM	CODE EO 99
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE
C.A.	22/ 09 /2014	22 / 09/ 2014

1. Provisional Special Administration constitutes a precautionary measure that does not interrupt or suspend the normal activities of the financial institution, characterized by the appointment by the BCSTP of a new Administration for the financial institution, with the central objective of eliminating irregularities that determined the adoption of such measure.

2. The Provisional Special Administration appointed by the BCSTP shall consist of no more than three (3) members.

Article 2 Suspension of the governing body and appointment of provisional administration

The BCSTP may determine the suspension of a financial institution's governing body and appoint a Provisional Special Administration when any of the following situations occur, which may constitute a risk to the stability of the financial system or to the institution's solvency:

a) Serious or repeated violation of legal or regulatory norms governing the institution's activities; b) Well-founded suspicion of serious irregularities in the institution's management; c) Imprudent or fraudulent management; d) Existence of uncovered liabilities (net deficit); e) Existence of other irregularities that seriously jeopardize the interests of depositors and creditors; f) Circumstances capable of triggering intervention.

Article 3 Powers and duties of the Provisional Administration

1. In addition to the powers conferred by law, the financial institution's statutes on the governing body and/or BCSTP directives, the Provisional Special Administration also holds the following powers:

a) Submission to the BCSTP of proposals for corporate reorganization measures of the institution; b) Convening of the institution's General Assembly and setting the agenda; c) Conducting a detailed assessment of the institution's asset and financial position, in accordance with the assumptions defined by the BCSTP; d) Submitting to the BCSTP proposals for the financial recovery of the institution, including capitalization measures and/or transfer of assets, rights, and obligations; e) Adoption of corrective measures for any irregularities committed by the institution's governing bodies or by some of their members;

Reviewed | Revocation Data:

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Central Bank of S.T.P.	P A N PERMANENT APPLICATION NORM	CODE EO 99
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE
C.A.	22/09/2014	22/09/2014

f) Adoption of other measures conducive to the interests of depositors and the institution; g) Facilitating agreements between the institution's shareholders and creditors regarding measures that enable financial recovery, namely debt condition renegotiation, conversion of debt into equity, reduction of share capital to absorb losses, increase in share capital, or divestment/transfer of part of the activity to another authorized institution.

2. The Provisional Special Administration shall: a) Keep the BCSTP informed regarding its activities and the institution's management, notably through periodic reports as defined by the BCSTP; b) Observe, in performing its functions, the general guidelines and strategic objectives defined by the BCSTP; c) Provide all information and cooperation requested by the BCSTP regarding any matters related to its activities and the administered institution.

Article 4 Appointment

1. The members of the Provisional Special Administration are appointed by the BCSTP based on the following criteria: a) Integrity/fitness; b) Experience in holding positions within the financial sector; c) Other requirements stipulated by the Standard on Administrator Qualification.

2. The BCSTP may designate technical staff and consultants to support the Provisional Special Administration team.

3. The BCSTP may subject certain acts to be performed by the members of the Provisional Special Administration to its prior approval.

4. The appointment of a Provisional Special Administration is not dependent on the prior application of corrective intervention measures, nor does it prejudice the application at any time of one or more corrective intervention measures.

5. The appointment of a Provisional Special Administration shall be published for the knowledge of depositors and the general public.

Article 5 Remuneration

1. The remuneration of the members of the Provisional Special Administration and contracted technical staff or consultants is fixed by the BCSTP, with the payment responsibility attributed to the financial institution subject to the measure.

Reviewed | Revocation Data:

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Central Bank of S.T.P.	P A N PERMANENT APPLICATION NORM	CODE EO 99
PROPOSER(S)	EFFECTIVE DATE	ISSUANCE DATE
C.A.	22/ 09 /2014	22 / 09/ 2014

2. The payment referred to in the preceding paragraph is effected via automatic debit from the account of the administered institution held at the BCSTP.

Article 6 Term/Duration

1. The members of the Provisional Special Administration shall exercise their functions for a term determined by the BCSTP, which may not exceed six (6) months.

2. The BCSTP may, at any time, replace the members of the Provisional Special Administration or terminate their functions whenever deemed appropriate.

Article 7 Liability

The members of the provisional administration are liable for damages resulting from unlawful acts or omissions committed by them with intent (dolo) or with diligence and care manifestly lower than those to which they were bound by virtue of their office.

Article 8 Additional measures

With the appointment of a Provisional Special Administration, the BCSTP may also: a) Appoint an Audit Board or a single auditor, applying the specific regime established by law or the institution's statutes; b) Temporarily dispense with the punctual fulfillment of obligations previously incurred by the institution.

Article 9 Duties of Suspended Administrators

The members of the governing body suspended under Article 2 shall immediately provide all information and render cooperation as requested by the BCSTP or by the new members of the governing body.

Article 9 Entry into Force

This PAN enters into force immediately.

Central Bank of São Tomé and Príncipe, in São Tomé, on September 22, 2014.

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