Circular 124 on Modifications of Certain Post-Approval Situations

Bank of the Republic of Haiti
CIRCULAR
No. 124

TO FINANCIAL INSTITUTIONS

Pursuant to Articles 83, 84, 89, 164, and 165 of the Act of 14 May 2012 on Banks and Other Financial Institutions, the financial institutions referred to in Article 2 of said Act are required to notify the BRH of modifications to certain post-approval situations under the conditions set forth in this Circular.

1. Modifications Requiring Prior Authorization

The financial institutions covered by this Circular must submit to the BRH's authorization any project likely to significantly modify their situation relative to the elements considered during their approval.

The significant modifications requiring prior authorization are as follows:
a) any modification of the corporate purpose, corporate name, or trade name; b) amendment of the bylaws; c) merger or division of the institution; d) transfer of the business; e) partial transfer of assets representing 25% or more of the institution's total balance sheet; f) increase or decrease of share capital; g) engagement in activities other than those outlined in the approval application, or abandonment of activities stipulated therein; h) any acquisition, expansion, or reduction of shareholding or voting rights by a shareholder or a group of affiliated shareholders, as defined in the Circular on Cross-Ownership of Capital, resulting in crossing, in either direction, a holding threshold of 20%, 33%, or 50% of the institution's share capital or voting rights by said shareholder or group.

The prior authorization request shall be addressed to the Governor of the BRH, indicating the reasons for the transaction and all relevant information for assessment. The BRH's decision shall be based on an evaluation of the transaction's impact on the institution's risk profile. It shall be communicated to the financial institution within a maximum of two (2) months from the date of receipt by the BRH, including a statement of reasons for any refusal.

2. Modifications Requiring Prior Declaration

The following modifications must be declared to the BRH via a letter addressed to the Governor at least one (1) month prior to their intended effective date:

a) crossing, in either direction, by a shareholder or a group of affiliated shareholders, without reaching the thresholds requiring prior authorization, the 10% threshold of the institution's share capital or voting rights, which confers the status of qualified shareholder pursuant to Article 12 of the Act of 14 May 2012. In the event of reaching or exceeding this threshold, the information prescribed by the Circular on Cross-Ownership shall be attached to the declaration; b) appointment of new directors, executives, or members of specialized board committees, under the conditions set forth in the Circular on Governance of Financial Institutions; c) change of independent auditor, under the conditions set forth in the Circular on Verification of Annual Financial Statements; d) outsourcing of activities covered by the granted approval or of services contributing to these activities, provided the project is likely to have a significant impact on risk management, in accordance with the provisions of the Circular on Minimum Internal Control Standards.

3. Other Modifications Requiring Ex Post Declaration

Financial institutions are required to notify the BRH, within thirty (30) days of their occurrence, via a letter addressed to the Governor, of the following modifications:
a) amendments to or revocation of shareholders' agreements, where applicable; b) modification of voting rights allocation rules; c) events likely to significantly modify the situation of the institution's qualified shareholders or their affiliated group, or their risk profile; d) change of heads of risk management, compliance, and internal audit functions, indicating the reason for the change and the curriculum vitae of the new appointees, specifying in particular training completed, degrees obtained, professional career, and reasons for changes in employment.

4. Sanctions

Failure to meet the notification deadlines to the BRH for modifications of situation shall be subject to a penalty of fifty thousand gourdes (HTG 50,000.00) per day of delay. The penalty period shall run from the date of the infraction until the information is made available to the BRH. In the event of a late declaration of a modification subject to prior declaration, the effective date must be deferred to ensure the BRH a minimum review period of thirty (30) days.

Failure to notify the BRH of modifications subject to prior authorization or declaration shall expose the institution, its directors, and its executives to the sanctions provided for in Article 109 of the Act of 14 May 2012, without prejudice to other sanctions provided by legislation and to the civil or criminal liability of the parties involved arising from the infraction.

Pursuant to Article 55 of the Act of 14 May 2012, transactions resulting in a shareholder or a group of affiliated shareholders crossing the thresholds for holding share capital or voting rights, or the direct or indirect acquisition of a holding conferring qualified shareholder status, if carried out without the prior authorization of the BRH, shall be null and void; the exercise of voting rights attached to said shares may be suspended by the BRH, and the transfer of said shares may be required by the BRH under the conditions set forth in Article 111 of the Act of 14 May 2012.

5. Entry into Force

The provisions of this Circular shall enter into force on 13 January 2022.

Port-au-Prince, 13 January 2022.

Jean Baden Dubois
Governor