REPUBLIC OF GUINEA

CENTRAL BANK

BCRG INSTRUCTION NO. I/DGSIF/DSIMF/01/2018

ON THE APPROVAL CONDITIONS FOR MICROFINANCE INSTITUTIONS, ELECTRONIC MONEY ESTABLISHMENTS, AND POSTAL FINANCIAL SERVICES AS WELL AS THEIR EXECUTIVES AND AUDITORS

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The Governor

Having regard to Ordinance No. D/2009/046/CNDD of 7 February 2009, establishing the statute of the Central Bank of the Republic of Guinea; Having regard to Decree No. D/2010/010/PRG/SGG of 27 December 2010, appointing the Governor of the Central Bank of the Republic of Guinea; Having regard to Law No. L/2017/031/AN of 4 July 2017 on inclusive financial institutions in the Republic of Guinea, particularly Articles 12, 17, 18, and 23.

DECIDES

Article 1:

This Instruction applies to Microfinance Institutions (hereinafter, "MFIs"), Electronic Money Establishments (hereinafter, "EMEs"), and Postal Financial Services (hereinafter, "PFS").

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Chapter 1: Legal Forms of MFIs, EMEs, and PFS

Article 2: Legal forms of MFIs

MFIs authorized to collect deposits are established as:

• public limited company with a Board of Directors,
• cooperative or mutual society, as provided by the Uniform Act on cooperative company law in OHADA.

MFIs not authorized to collect deposits are established as:

• public limited company with a Board of Directors,
• non-profit association governed by the provisions of the Law establishing the regime for associations in Guinea.

Article 3: Legal forms of EMEs and PFS

EMEs and PFS are established as public limited companies with a Board of Directors.

Chapter 2: Approval of MFIs, EMEs, and PFS

Section 1: List of constituent documents for approval applications

Article 4: Documents and information common to financial institutions regardless of their form

The approval application file for financial institutions, prepared in two paper copies and one electronic copy, includes the following documents and information:

• A request specifying the applied-for category (with or without savings; individual or collective approval);
• A registration or inscription certificate from the commercial and movable credit register (RCCM) or any equivalent register;
• The minutes of the constituent general meeting;
• The duly signed articles of association of the entity;

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• The notarized list of founding members or shareholders, along with the following information regarding directors and general managers: name, address, nationality, references or professional experience, criminal record extract dated less than three months at the time of submission;
• The list of Board of Directors members with:
  • The Curriculum Vitae of each director detailing degrees and other training as well as professional experience, supported where relevant by evidence (notably copies of diplomas, employer certificates);
  • The criminal record extract for each director, from their country or countries of residence and nationality;
  • The proof, provided by the credit bureau, of no outstanding unpaid claims in the Republic of Guinea;
• Documents proving payments regarding the release of subscribed shares, accompanied by bank statements or any equivalent document;
• The Business Plan for a minimum of three years, including in particular:
  • The economic study of the market and implementation zones, with forecasts for activities and expansion
    • The details of technical and human resources to be implemented,
  • The details of forecasted products (revenues),
  • The details of forecasted expenses,
  • Financial projections (including the cash flow plan, balance sheet, and forecasted income statement). The balance sheet and income statement must comply with the accounting framework established by BCRG for MFIs.

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• As well as any other document likely to clarify the Approval Committee or the Central Bank; calculation spreadsheets and financial projections used for the Business Plan are provided in Excel or equivalent format.
• Procedure manuals governing in particular operations, internal control, anti-money laundering and counter-terrorist financing management, administration (including purchasing, investments, and management control), accounting, and financial management.
• The methodology for calculating the effective global rate.
• Proof of the necessary means to conduct activities.
• A description of the Information and Management System (IMS); which includes:
  • The IT master plan presenting the architecture of the information and management system, and software intended to carry out envisaged operations and support the production of accounting, financial, or management-related information;
  • The contract(s) granting license rights on the transactional and accounting software or any document proving eventual ownership, where applicable;
  • User manuals or any equivalent documents.

For applicants planning to conduct payment operations, notably electronic payments, particular emphasis is placed on the IMS's ability to process transactions in real time and preserve payment system integrity.

Article 5: Documents and information specific to cooperative or mutual societies

The applicant additionally provides:

• The notarized list of founding members as well as the notarized deed proving the release of share capital;

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• The affiliation contract with a Parent Institution (Faitière), as well as the general meeting decisions of the Base Fund and the Parent Institution authorizing this affiliation,
• The minutes of the general meeting adopting the affiliation for individual approval requests as a base institution affiliated with a parent structure.
• The training plan for Executives and Staff.

Article 6: Documents and information specific to public limited companies

The applicant additionally provides:

• The notarized deed proving the release of the required share capital upon submission (25%) of the minimum capital in accordance with OHADA law
• The minutes of the constituent general meeting;
• Documents proving payments made regarding share subscriptions;
• Financial statements and activity reports of corporate shareholders for the last three (3) financial years, where applicable;
• All additional information attesting to the banking and financial capacity of reference shareholders (activity reports, expertise, etc.);
• The commitment of reference shareholders to retain their shares for a minimum period of five years and to provide reasonable financial and technical support to the company;

Reference shareholders are those holding, alone or concertedly, the majority of share capital and voting rights, or failing that, exercising decisive influence over the company's management.

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Article 7: Complementary list of documents and information constituting the approval file for a network

In the case of a Parent Institution (Faitière), the following additional documents must be provided:

• The list of affiliated institutions;
• The minutes of the general meeting of each affiliated institution authorizing its membership in the network;
• The registration certificate of each affiliated entity with the Parent Institution.
• Where applicable, the individual approval deeds of affiliated institutions when some have previously obtained them individually;
• The duly signed membership contracts by the concerned parties establishing reciprocal rights and obligations (or referring to internal network texts, including the Parent Institution's articles of association).
• The description of the monitoring mechanism for affiliated institutions, compliant with applicable regulations;

Article 8: Documents and information specific to associations

The applicant additionally provides:

• The administrative authorization issued by the competent authority
• The bank certificate issued by a local bank regarding the availability of funds in an account opened with them.

Section 2: APPROVAL PROCEDURE

Article 9:

The approval application is submitted by promoters to the Central Bank in two paper copies, accompanied by an electronic version on a USB drive.

Financial forecasts contained in the Business Plan and opening balance sheet are provided in Excel format, integrating account linkages and applicable calculation formulas.

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Article 10:

The Approval Committee or the Central Bank may request any additional information deemed necessary regarding capital contributors and, where applicable, their guarantors to verify the origin of funds.

Article 11:

When the approval application file is complete, the Central Bank issues a clearance certificate (quitus).

The approval deed specifies, among other things, the company's name, its category, and, where applicable, special conditions for exercising the institution's activities.

Article 12: Criteria for granting approval

Approval is granted or refused based on the following cumulative criteria:

• completeness of the file,
• economic quality of the project,
• consistency of invested funds with objectives,
• technical and human competencies, particularly regarding management executives and members of the executive and deliberative bodies;
• quality of organization,
• quality of shareholding for public limited companies, or membership for associations.

Chapter 3: Constituent documents for the approval application of executives and auditors of financial institutions

Article 13: Approval and withdrawal of approval for three executives

Public limited companies and MFIs collecting deposits are managed by two approved executives.

The approved executives of financial institutions are:

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• The General Manager ("GM"),
• The Deputy General Manager ("DGM"),
• The Internal Control Manager ("ICM") or any equivalent position.

They are approved by the Approval Committee.

They may be dismissed:

• By the Central Bank, as a sanction,
• By the competent body in accordance with legal, regulatory, and statutory provisions.

Their dismissal by the competent body is notified without delay to the Central Bank, accompanied by necessary justifications.

Article 14: Approval procedure for three executives

The approval application file for persons serving as General Manager (GM), Deputy General Manager (DGM), and Internal Control Manager (ICM) or any equivalent position of financial institutions is prepared in two copies and includes the following documents and information:

• A written request from the President of the Deliberative Body;
• A curriculum vitae including the following details: full name, date of birth, nationality, domicile, educational and university training with certified true copies of higher education diplomas, professional experience with, as needed, employment certificates;
• A certificate or proof of nationality;
• A criminal record extract dated less than three months ago issued by the competent court of the person's place of birth or residence;
• Where applicable, a clearance certificate issued by the deliberative body to outgoing executives.

Article 15: Deadlines and interim situations

The complete file is submitted to the Central Bank at least two months before the planned start date of the concerned persons.

Failure to meet the deadline in the preceding paragraph results in a daily penalty equal to the scheduled salary for said GM, DGM, or Interim Manager (monthly salary / 30).

This standard does not prevent the appointment of an interim GM, DGM, or Interim Manager by the financial institution in an emergency when a GM, DGM, or Interim Manager ceases functions without notice or with insufficient notice to allow the recruitment and validation of a GM, DGM, or Interim Manager in accordance with this Instruction.

Any decision to appoint an interim GM, DGM, or Interim Manager is notified without delay to the Central Bank.

The interim period may in no case exceed three months after the predecessor's functions cease; after this period, the penalty stipulated in paragraph 2 becomes applicable.

Article 16: Approval of auditors

The approval application file for auditors of financial institutions is prepared in two copies and includes:

• A certificate of inscription in the commercial and movable credit register (RCCM);
• A certificate of inscription in the roll of approved chartered accountants of Guinea;
• A certificate of inscription on the list of auditors maintained at the Court of Appeal;
• The list of auditor mandates entrusted to the concerned persons;
• For natural persons: a curriculum vitae including the following details: full name, date of birth, nationality, domicile, educational and university training with certified true copies of chartered accountancy diplomas, professional experience with employment certificates;

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• For legal persons: copy of articles of association, list of partners, curriculum vitae of executives with certified true copies of diplomas and criminal record extract issued by the competent court of the habitual place of birth or residence of the concerned persons, the list and experience of staff working on auditor missions for financial institutions.

The complete file is submitted to the Central Bank at least two months before the planned start date of the concerned auditor.

Chapter 4: Final provisions

Article 17

This Instruction enters into force on the date of its signature.

Dr Louncény Nabé