Law No. [Number]/PR Amending, Repealing and Replacing Certain Provisions of Law No. 2018-036 bis of 16 August 2018 on the Regulation of Credit Institutions

REPUBLIQUE ISLAMIQUE DE MAURITANIA Honor - Fraternity - Justice

PRESIDENCY OF THE REPUBLIC VISA: D.G.L.E.J.O VISA LEGISLATION

2025-003

Law No. [Number]/PR Amending, Repealing and Replacing Certain Provisions of Law No. 2018-036 bis of 16 August 2018 on the Regulation of Credit Institutions

The National Assembly has adopted; The President of the Republic promulgates the law as follows:

Article 1: This law supplements the provisions of Article 3 and repeals and replaces those of Articles 28, 80, 86, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 106, 107, 109, 111, 112, 113, 114, 115, 116, 117, 118, 120, 121, 127, 128 and 149 of Law No. 2018-36 bis of 16 August 2018 on the Regulation of Credit Institutions as follows:

Article 2: The provisions of Article 3 of Law No. 2018-36 bis on the Regulation of Credit Institutions are supplemented by the following points 13, 14, 15, 16, 17, 18 and 19:

13. Resolution: an orderly process for managing the failure of a systemic bank in particular, or any credit institution, so as to minimize the impact on depositors, the financial system and public finances;

14. Internal bail-in (« bail-in »): write down uninsured and unsecured claims or convert these claims into equity in accordance with the hierarchy of claims in the event of liquidation. Internal bail-in may be carried out either to recapitalize the entity, or to capitalize a new entity or a bridge bank to which these functions have been transferred after the closure of the non-viable bank. When internal bail-in is used to recapitalize the failing bank, it will be accompanied by the adoption of a new business plan, which may provide for the sale of problematic assets, the reduction of functions and the replacement of management.

15. Purchase and assumption: The Central Bank fully or partially transfers the shares, assets, rights or liabilities of the failing credit institution to a private purchaser. The purchaser may assume deposits on the liability side and purchase liquidity and liquidity-like assets, "good" loans and other high-quality assets of the credit institution. If non-performing loans and other risky investments must be transferred to the purchaser, an arrangement must be found to mitigate the resulting risk. Unsold assets are liquidated under the control of the Central Bank.

16. Use of a bridge institution: The Central Bank may close the fragile bank and approve a third-party "bridge bank" to which it transfers the shares or assets and liabilities of the credit institution subject to resolution proceedings and which are intended to endure. This institution then carries on the "good bank" activities of the bank and ensures the transition between the failure of the credit institution and the time to evaluate and sell it to a third party under satisfactory conditions.

17. Transfer to an asset management company: The Central Bank may transfer the poor-quality assets and liabilities of the credit institution subject to resolution proceedings and intended to be sold or liquidated to an asset management structure. This structure is treated as a "bad bank".

18. Systemic risk: any risk of the effects of the failure or bankruptcy of a credit institution spreading to the stability of the financial system or to the social plan;

19. Financial stability: a situation represented by a solid financial system, capable of fully performing its key functions and resisting potential internal and external shocks.

Article 3: The provisions of Articles 28 and 80 of Law No. 2018-36 bis of 16 August 2018 are repealed and replaced as follows:

Article 28 (new): Funds received by payment institutions shall be deposited in an escrow account with a credit institution authorized to receive demand deposits from the public.

The Central Bank may authorize, under certain conditions, the investment of these funds in low-risk, liquid and safe assets.

The escrow account is protected against any recourse by other creditors of the payment institution, including in the event of enforcement proceedings or resolution or liquidation proceedings.

Article 80 (new): Based on the results of the control and assessment procedure carried out by the Central Bank under this law and in order to take into account the risks to which the concerned credit institution is or may be exposed, the Central Bank may impose on this credit institution a specific capital requirement, which shall be added to the capital requirements required by or under this law. The Central Bank specifies the modalities according to which the concerned credit institution must cover this specific capital requirement.

Article 4: The title of Chapter III of Title VI is amended and the provisions of Article 86 of Law No. 2018-36 bis of 16 August 2018 are repealed and replaced as follows:

CHAPTER III: RESTRUCTURING MEASURES

Article 86 (new): When the Central Bank finds that:

1. the implementation of the restructuring plan referred to in Article 85 above is not likely to remedy the situation of the credit institution, or

2. the credit institution is not operating in compliance with the provisions of this law or the regulatory texts adopted for its implementation, or risks no longer operating in compliance with these provisions over the next 12 months, or

3. the management or financial situation of the credit institution is likely to jeopardize the proper fulfillment of its commitments or does not offer sufficient guarantees regarding its solvency, liquidity or profitability, or

4. the management structures, administrative or accounting organization or internal control of the credit institution present serious shortcomings, or

5. the credit institution obtained its approval through false declarations or any other irregular means,

it may by decision:

1. require, regarding solvency, liquidity, risk concentration, risk positions and other limitations, additional requirements, other than those provided by or under this law and notably impose the application of specific rules regarding valuation or value adjustment for the purposes of the capital requirements provided by or under this law;

2. suspend for the duration it determines the direct or indirect exercise of part of the activity of the credit institution that it determines or prohibit this exercise, including ordering the sale of business branches. Members of the administrative and management bodies and persons in charge of management who perform acts or take decisions in violation of the suspension or prohibition are jointly liable for the resulting damage to the credit institution or third parties;

3. order the credit institution to sell participations it holds or assets and liabilities;

4. appoint a special commissioner;

5. order the replacement of all or part of the directors and managers of the credit institution within a time limit it determines and, failing such replacement within this time limit, dismiss the concerned director(s) or replace them ex officio or substitute one or more provisional administrators for all administrative and management bodies of the credit institution who shall have, alone or collectively depending on the case, the powers of the replaced persons. When circumstances justify it, the Central Bank may appoint one or more provisional administrators without first ordering the replacement of all or part of the management. With the authorization of the Central Bank, the provisional administrator(s) may convene a general meeting and establish its agenda. The functions, notably the mandate as board member or general manager, of the replaced persons shall terminate upon notification of the Central Bank's decision substituting one or more provisional administrators. The credit institution shall carry out the publicity formalities required for the termination of the concerned functions. The remuneration of the provisional administrator(s) shall be fixed by the Central Bank and borne by the concerned institution. The Central Bank may, at any time, replace the provisional administrator(s), either ex officio or at the request of a majority of shareholders or partners when they justify that the management of the interested parties no longer provides the necessary guarantees;

6. require the total or partial reservation of distributable profits as well as limit or prohibit any distribution of dividends or any payment, notably of interest, to shareholders or holders of equity instruments;

7. require limiting the remuneration allocated to executives and/or the variable remuneration of employees of the credit institution to a percentage of profit;

8. order the credit institution to convene, within the time limit it sets, a general meeting of shareholders, the agenda of which shall be established by the Central Bank;

9. require the entry of new shareholders into the capital;

10. require any other measure necessary to remedy the situation of the credit institution;

11. withdraw the approval.

Depending on the severity of the credit institution's situation, the Central Bank may set in advance a time limit within which the observed situation must be remedied before taking one of the measures referred to in paragraph 2 of this article.

Article 5: The provisions of Chapter III of Title VI of Law No. 2018-36 bis of 16 August 2018 are supplemented as follows:

Article 86 bis: The special commissioner referred to in Article 86 (new) shall cooperate with the control exercised by the Central Bank in accordance with the provisions of this law and the Central Bank's directives.

The Central Bank's special commissioner's essential mission is to ensure that the management of the credit institution does not perform acts likely to worsen its overall situation.

For the purposes of its mission, the special commissioner:

• attends, in an advisory capacity, meetings of the general meeting and the decision-making bodies of the credit institution where he is appointed;

• may submit to the deliberation of all decision-making bodies of the credit institution, including the general meeting, any proposals he deems appropriate;

• may suspend any decision of the aforementioned bodies, including the general meeting, and shall report immediately to the Central Bank. If the suspension of the decision is not confirmed by the Central Bank within 5 working days following the date of the decision in question, the suspension shall cease to have effect;

• ensures the execution of any injunctions from the Central Bank to which the concerned credit institution is required to comply. At the end of his mission, he draws up a report for the Central Bank stating the results arising from the execution of this program.

The Central Bank may provide that the written, general or special authorization of the special commissioner is required for all acts and decisions of all decision-making bodies of the credit institution, including the general meeting, and for those of persons in charge of management. The Central Bank may however limit the scope of operations subject to authorization.

In this case, members of the decision-making bodies who perform acts or take decisions without having obtained the required authorization from the special commissioner are jointly liable for the resulting damage to the credit institution or third parties.

The remuneration of the special commissioner shall be fixed by the Central Bank and borne by the credit institution.

Article 86 ter: The special commissioner and the provisional administrator(s) referred to in Articles 86 (new) and 86 Bis contribute to the exercise of the Central Bank's statutory mission, on its behalf and benefit, for this purpose, from the regime provided for in Article 103 of Law No. 2018/034 on the Statutes of the Central Bank of Mauritania. Within the framework of this mission,

• they act exclusively within the framework of the purpose provided for in Article 1, paragraph 1 of this law;

• they follow the instructions of the Central Bank regarding how to carry out the particular mission entrusted to them;

• they are subject to the same professional secrecy obligations as those applicable to the Central Bank regarding the control mission provided for by this law, the use of legal exceptions being subject to prior authorization by the Central Bank;

• they shall, at the request of the Central Bank, according to the modalities it determines, report on the financial situation of the credit institution and on the measures taken within the framework of their mission, as well as on the financial situation at the beginning and at the end of this mission.

Their status as auxiliaries of the aforementioned control authority specified in paragraph 1 of this article implies that they cannot, as such, be considered as an administrative authority.

The substitution of all administrative and management bodies of the credit institution by provisional administrators carried out under Article 86 (new) does not imply that the latter must be considered as directors within the meaning of the Commercial Code but only that they benefit from the powers of the replaced persons, notably for the purpose of performing acts enabling the credit institution to comply with its legal and regulatory obligations, in particular those provided by or under the Commercial Code. For this purpose, they are not subject to a decision or vote on discharge as provided by the Commercial Code but are accountable for their mission exclusively to the Central Bank which grants them discharge if appropriate.

Article 86 quater: Any total or partial transfer between credit institutions or between credit institutions and other establishments whose activity falls under the financial sector of the rights and obligations resulting from the operations of credit institutions and imposed under Article 86 (new) shall be enforceable against third parties, including any third party holding a right of preemption or benefiting from an approval clause regarding an asset subject to such transfer, and this, whether this right or clause finds its source in a contract, in the articles of association or in the law from the publication by the Central Bank of the transfer on its website.

Transfers imposed by the Central Bank under Article 86 (new) cannot be subject to nullity or unenforceability, notably under Articles 107 (new) to 109 (new) of this law or a Paulian action.

Notwithstanding any contrary contractual provision, the total or partial transfers referred to in paragraph 1 cannot have the effect of justifying a modification of the terms of an agreement concluded between the credit institution and one or more third parties, or of terminating such an agreement, nor give any party the right to unilaterally terminate it, or to render a debt of the credit institution due.

Article 6: The provisions of Articles 88 and 89 of Law No. 2018-36 bis of 16 August 2018 are repealed and deleted.

Article 7: The title of Chapter IV of Title VI is amended and the provisions of Articles 90, 91, 92, 93, 94, 95 and 96 of Law No. 2018-36 bis of 16 August 2018 on the Regulation of Credit Institutions are repealed and replaced as follows:

CHAPTER IV: RESOLUTION MEASURES

Article 90 (new): The Central Bank may appoint a resolution commissioner for a period not exceeding one year, renewable once, when the difficulties of the credit institution are likely to threaten its viability and/or likely to seriously harm the rights of depositors and other creditors. This situation is notably presumed as soon as the Central Bank finds:

1. a) that the net asset value of the credit institution is less than 100% of its minimum capital determined under Article 9, or b) that the solvency ratio reaches 50% of the minimum required by or under applicable legal and regulatory provisions; or c) that the capital of the credit institution is less than 50% of the amount of regulatory capital as fixed by the calculation of the solvency ratio under applicable legal and regulatory provisions, or

2. that restructuring measures are not respected or are found insufficient to ensure the viability of the credit institution.

The resolution commissioner shall be chosen based on his morality, academic training, skills and proven experience in the banking and financial sector.

The professional bans provided for in Article 68 of this law shall apply to the resolution commissioner.

The Central Bank shall develop an individual resolution plan for each supervised credit institution. For financial companies and parent credit institutions, resolution plans cover the entire group and provide for resolution measures applicable at both the parent and subsidiary levels.

Article 91 (new): The decision appointing the resolution commissioner shall determine the nature and duration of his mission in accordance with paragraph 1 of Article 90 (new) above as well as the obligations to which he is subject towards the Central Bank. It shall also determine his remuneration which shall be borne by the concerned credit institution.

The Central Bank may at any time replace the resolution commissioner or terminate his mission.

The decision appointing and revoking the resolution commissioner shall be published in the Official Journal of the Islamic Republic of Mauritania and on the Central Bank's website.

Article 92 (new): The decision appointing the resolution commissioner shall automatically suspend general meetings of shareholders and administrative and management bodies, the powers of which shall be transferred to the resolution commissioner.

The resolution commissioner shall act in the name and on behalf of the concerned credit institution. He shall contribute to the mission of the Central Bank in accordance with the provisions of this law and the Central Bank's directives.

The shares of the concerned credit institution held by members of the board of directors and persons referred to in Article 44 of this law may not be transferred or alienated by them under penalty of nullity; the resolution commissioner shall have the blocking of these shares noted on the register of shareholders held by the credit institution.

Article 93 (new): Within the framework of his mission, the resolution commissioner shall determine the financial situation of the credit institution and settle its accounting status, manage and restructure the credit institution and, if necessary, prepare its liquidation.

In the exercise of his mission, he may, with the approval of the Central Bank:

1. reduce, including down to zero, the nominal value of shares or other ownership securities of a credit institution or cancel these shares or other ownership securities;

2. carry out a capital increase in derogation from the rules provided by the Commercial Code regarding form, procedure conditions and the prerogatives of current shareholders and this, notwithstanding any possible statutory limits of the concerned credit institution;

3. suspend totally or partially the execution of ongoing contracts for the duration he determines. This decision suspends all forced execution measures by creditors of the credit institution regarding the commitments of the credit institution determined by the resolution commissioner in consultation with the Central Bank. This measure does not prevent the resolution commissioner from executing, on a voluntary basis, an obligation of the credit institution;

4. convert, irrevocably, debts of the credit institution into shares, except:

a) claims secured by a real security up to the value of this security; b) claims arising from an employment relationship; c) deposits eligible for the intervention of the Deposit and Resolution Guarantee Fund; d) claims of natural or legal persons regarding their claims arising from the supply of goods or services, up to an amount determined by Central Bank regulatory texts; e) other claims determined by the Central Bank, the exclusion of which is justified with regard to the need to guarantee the stability of the financial system, and for this purpose, proceed to the reduction, up to the amount of carried-forward losses, of the equity securities issued by the credit institution. The use of this prerogative respects the hierarchy of claims provided for in Article 117 (new) but may however provide for differentiated treatment regarding claims benefiting from the same rank under said Article 117 (new);

5. adopt any act of disposition, in favor of the State or any other person, of national or foreign law, public or private law, including companies created specifically for this acquisition, whether it be an act of transfer, sale or contribution regarding:

a) assets, liabilities or one or more business branches and more generally, all or part of the rights and obligations of the concerned credit institution; b) securities, representing or not the capital issued by the credit institution, if applicable by way of merger and this, in derogation from the rules provided by or under the Commercial Code regarding form, procedure conditions and the prerogatives of current shareholders, notably those resulting from possible statutory limits of the concerned credit institution.

Any transfer, notably of liabilities including deposits, carried out under this article benefits from the enforceability against third parties including creditors, provided for in Article 86 quater from the publication of the Central Bank's approval on its website.

Contractual clauses under which an agreement concluded with the credit institution is terminated or which authorize a party to an agreement concluded with the credit institution to modify or terminate it or to render a debt of the credit institution due or to proceed to set-off solely on the grounds that the Central Bank has n