BANQUE DE LA REPUBLIQUE DU BURUNDI

LE GOUVERNEUR

CIRCULAIRE N° 09/2018 ON THE ACQUISITION AND HOLDING OF SHAREHOLDINGS BY CREDIT INSTITUTIONS ISSUED PURSUANT TO LAW NO. 1/17 OF AUGUST 22, 2017 GOVERNING BANKING ACTIVITIES

In view of Law No. 1/34 of December 2, 2008 establishing the Statutes of the Banque de la République du Burundi, particularly Articles 7 (paragraphs 4 and 6) and 8;

In view of Law No. 1/17 of August 22, 2017 governing banking activities, particularly Articles 3, 7, 25, 49, and 50;

In view of Circular No. 01/2018 on the mandatory minimum capital for credit institutions;

In view of Circular No. 02/2018 on the own funds of credit institutions;

Having reviewed Circular No. 09/06 on the acquisition and holding of shareholdings by banks and financial institutions;

The Banque de la République du Burundi, hereinafter referred to as the "Central Bank", hereby enacts:

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Article 1 : Object

This circular aims to determine the conditions for the acquisition or holding of shareholdings by credit institutions in existing or newly established companies other than subsidiaries.

Article 2 : Conditions for the Acquisition of Shareholdings

A credit institution may acquire or hold shareholdings in the capital of an existing or newly established company in Burundi or abroad, provided that:

• it complies with banking regulations;
• it maintains net total assets effectively exceeding its due liabilities by at least the minimum capital or its allocation.

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Article 3 : Authorization for the Acquisition of Shareholdings

The acquisition of a shareholding by a credit institution requires, prior to its execution, authorization from the Central Bank.

The concerned credit institution submits a file to the Central Bank comprising, among other things, the following information and documents:

• a presentation note on the company in which the shareholding is acquired, as well as an investment presentation note specifying its objective and relevance to the credit institution;
• the terms and value of the shareholding acquisition;
• a three-year projected business plan for a newly established company, or the balance sheets of the last three years for an existing company, along with a quantification of the impact on its balance sheet, income statement, and prudential ratios (solvency, liquidity, and major risks) before and after the acquisition.

The Central Bank may refuse any shareholding acquisition if it considers that the investment presents risks in itself and/or to the credit institution.

Article 4 : Limits on Shareholdings

The shareholdings of a credit institution may not exceed the following limits:

• 10% of the core own funds amount of the credit institution for each shareholding;
• 30% of the core own funds amount of the credit institution for all shareholdings combined;
• 20% of the capital of the company in which the credit institution holds a shareholding.

Article 5 : Entry into Force

This circular replaces Circular No. 09/06 of November 24, 2006 and enters into force on the day of its publication on the Central Bank's website and in the Official Gazette of Burundi.

Done at Bujumbura, on August 17, 2018

Jean CIZA
Governor.

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