Circular 127 on Procedures for Applying for Authorization

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Central Bank of Haiti

CIRCULAR
No. 127

TO FINANCIAL INSTITUTIONS

In application of Articles 20 to 31, 155 to 158 of the Law of May 14, 2012 on banks and other financial institutions and Articles 6 to 13 of the Decree of November 25, 2020 on exchange intermediaries, applications for authorization in one of the categories of financial institutions defined by Article 2 of the 2012 Law, Article 2 of the 2020 Decree, as well as the exercise of activities assimilable to the ancillary banking operations set forth in Article 4 and the activities of other financial institutions as defined in Article 5 of the 2012 Law are subject to the following provisions.

1. Composition of the Authorization Application File

The authorization application is addressed to the Governor of the Central Bank of Haiti (BRH) by registered letter with acknowledgment of receipt, using the form in Annex I and in conformity with the model defined by Annex II. The person submitting the application must prove their authorization to do so by producing a notarized deed conferring the necessary powers. The application must be accompanied by a complete file, hereinafter referred to as the "Authorization File".

Shareholders who will hold a stake conferring 5% or more of the capital or voting rights of the institution subject to the application, directors and members of specialized committees of the board of directors, executives of the future institution, as well as independent auditors who will certify its accounts, transmit the required information by letter conforming to the model in Annex III, certifying the sincerity of the information provided and including the commitment to inform the BRH of any significant change in their situation and the information communicated.

The applicant is required to submit the authorization file to the BRH in two (2) copies. The authorization file must satisfy the information requests and must include all documents specified in Annex I of this circular. When the original version of a document is not expressly required, the applicant must provide photocopies duly certified as conforming to the original by a notary. The applicant must provide the required information in the most detailed and complete manner possible.

To compile the authorization file, applicants are requested to provide the information and documents in the order presented in Annex I and to separate them by section using dividers. The authorization file must be signed by the person in charge of presenting the file.

The applicant is required to notify the BRH without delay of any changes made to the project or that would modify the information communicated, as well as of any new facts likely to influence the authorization decision.

2. Authorization Criteria

The BRH ensures compliance with the following conditions relating to the project, capital contributors, governance body members, and independent auditors to rule on the authorization application.

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2.1. Criteria relating to the project

2.1.1. Economic and financial interest

The BRH assesses the economic and financial interest of the project and the company's ability to achieve its objectives under conditions compatible with development and financial inclusion goals, preservation of financial stability, and promotion of competition, while respecting consumer protection imperatives and combating money laundering and terrorist financing. It verifies that the proposed activities conform to those authorized for the category of financial institution for which authorization is sought.

2.1.2. Business viability

The BRH evaluates the viability of the project based on a business plan with a minimum three (3) year horizon to be produced by the promoters, taking into account the following key elements:

• the realism of the assumptions used to prepare the business plan and financial forecasts;
• the robustness of the financial balances in the projected balance sheet;
• profitability prospects;
• sustainable compliance with prudential standards.

2.1.3. Governance

The BRH examines whether the governance framework of the institution defined by the articles of association or draft articles of association complies with legal and regulatory provisions. It verifies the composition, qualifications, and powers of the board of directors, and the organization of executive management, notably the non-cumulation of the general manager role with that of board chairman and the definition of executive management operating rules.

2.1.4. Organization and resources

The BRH verifies the adequacy of the organization, human resources, technical, accounting, and IT systems relative to development objectives and the nature of the envisaged activities. It ensures the quality of the main managers designated to head the various directorates and departments and their capacity to perform their functions, based on their curricula vitae.

2.1.5. Internal control system

It evaluates the compliance and quality of the internal control system planned for implementation, by examining its general organization and the identification, measurement, and management mechanisms for each type of risk to which the institution could be exposed (credit, market, foreign exchange, interest rate, liquidity, compliance, operational, and outsourced activities risks). It ensures in particular that any envisaged operations, if applicable, with related parties to the institution, as defined in the circular on risk concentration, will be subject to an appropriate authorization and control mechanism.

The BRH examines the compliance and robustness of the planned anti-money laundering and terrorist financing prevention framework, ensuring proper management of the risks associated with the proposed activities.

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2.2. Criteria relating to shareholding, directors, and executives

2.2.1. Honesty and integrity conditions

The BRH ensures the honesty and integrity of shareholders, future directors, and executives of the institution, as well as members of specialized committees to be established by the board of directors, by verifying that they are not subject to any of the prohibitions or incompatibilities defined in Article 28 of the Law of May 14, 2012 and Article 11 of the Decree of November 25, 2020.

2.2.2. Quality of shareholding

The BRH assesses the quality of shareholders expected to hold 5% or more of the capital or voting rights of the future institution based, for natural persons, on their curricula vitae and, for legal persons, on financial information to be provided by them, as well as, in both cases, on the responses provided to the questionnaire to be completed by the interested parties and any other information brought to its attention.

It assesses the objectives of their participation and their actual level of involvement in the development and governance of the company. It evaluates the ability of major shareholders to provide financial support if needed to the institution, based notably on a wealth declaration for natural persons, and on certified financial statements, on an individual basis and, if applicable, on a consolidated basis, for legal persons.

In the event of exclusive or joint control of the future institution by a shareholder or a group of shareholders, the BRH ensures the publication of consolidated financial statements by the shareholder(s) in question and the existence of an adequate internal control mechanism at the group level.

The BRH verifies the origin of the funds contributed to establish the institution's regulatory capital, requiring all appropriate supporting documents.

2.2.3. Directors

The BRH evaluates the competencies of directors sitting individually and of persons designated as representatives of legal persons, and ensures their capacity to perform their functions, based on their curricula vitae as well as any other information brought to its attention.

It also ensures the absence of conflict of interest situations by examining the list of mandates held in other companies by the interested parties, based on the declaration to be produced by them.

2.2.4. Executives

The capacity of persons designated to manage the institution and their ability to effectively perform executive functions is evaluated based on their curricula vitae, outlining their training, skills, professional experience, and achievements, the responses provided to the questionnaire to be completed by the interested parties, and any other information brought to the BRH's attention.

The BRH ensures the absence of conflict of interest situations by examining, if applicable, the list of mandates and positions that would be held in other companies by the interested parties, based on the declaration to be produced by them.

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2.3. Criteria relating to independent auditors

The BRH verifies compliance with the rules regarding the appointment of independent auditors defined by Articles 58 and following of the Law of May 14, 2012 and the circular on the verification of annual financial statements. The examination is conducted based on professional attestations and information to be provided by the interested parties, who must also swear under oath to the absence of incompatibility to perform these functions for the concerned institution and commit to ensuring the absence of potential conflict of interest for their collaborators during the execution of their mission.

3. Exercise of activities assimilable to those of institutions subject to authorization

The exercise of activities assimilable to the operations set forth in Articles 4 and 5 of the aforementioned Law of May 14, 2012 must be subject to prior notification to the BRH, outlining the envisaged activities, the target clientele, the products to be marketed, and the origin and nature of the planned financial resources. The notification is submitted against receipt to the BRH.

Within three (3) months following receipt of the notification, the BRH notifies the declarant, by registered letter with acknowledgment of receipt, its decision on whether authorization is required for the exercise of the envisaged activities, under the conditions indicated.

4. Exercise of leasing activities by authorized banks

The direct exercise by authorized banks of leasing activities as an ancillary activity to their main activity must be subject to prior notification to the BRH by registered letter with acknowledgment of receipt. Its indirect exercise, within the framework of a subsidiary, requires prior authorization in accordance with the provisions of this circular.

The notification must be supported by a file including a presentation of the envisaged operations and target clientele, the business plan and financial forecasts with a minimum three (3) year horizon, the description of the operational organization and management procedures, as well as the internal control and risk management framework related to this activity.

Within three (3) months following receipt of the notification, the BRH notifies the declaring bank, by registered letter with acknowledgment of receipt, its decision of non-objection or reasoned refusal.

The provisions of this section do not apply to authorized banks exercising leasing activities on the date of this circular.

5. Authorization Decision

The BRH rules within a period not exceeding twelve (12) months from receipt of the complete file. Any refusal of authorization, with its reasons, is notified to the applicant.

The authorization granted by the BRH is confirmed by a certificate duly bearing the Governor's signature, attesting to the fulfillment of the authorization conditions.

The decision to grant authorization may be subject to conditions, which must be fulfilled and the supporting documents transmitted to the BRH before the institution commences activities. This is subject to the BRH sending the applicant a letter confirming compliance with the conditions and confirming the authorization.

6. Extension of the scope of authorization

The exercise of activities subject to authorization under the Law of May 14, 2012 other than those authorized by the issued authorization is subject to the submission to the BRH of an application to extend the latter. This is transmitted according to the forms defined by this circular, with the business program defined in Annex I, the strategic plan supporting it, and the presentation of the conditions for exercising and controlling the proposed activities.

7. Entry into force

The provisions of this circular enter into force on January 13, 2022.

Port-au-Prince, January 13, 2022

[Signature]
Jean Baden Dubois
Governor

Annex I: Authorization Application File
Annex II: Models of authorization application letters
Annex III: Models of transmission letters by concerned persons of prescribed information
Annex IV: Model of joint consent declaration
Annex V: Model of fund origin declaration

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ANNEX I

Authorization Application File
Financial institutions referred to in Article 5 of the Law of May 14, 2012 and exercise of activities assimilable to the operations referred to in Articles 4 and 5 of said Law, and to Article 2 of the Decree of November 25, 2020

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NAME OF THE COMPANY FOR WHICH AUTHORIZATION IS SOUGHT [Blank field]

CONTACT DETAILS OF THE PERSON(S) IN CHARGE OF PRESENTING THE FILE PERSON IN CHARGE OF PRESENTING THE FILE

Title
Last Name
First Name
Address
Phone 1
Phone 2
Email 1
Email 2

OTHER PERSONS IN CHARGE OF PRESENTING THE FILE (if applicable)

Title
Last Name
First Name
Address
Phone 1
Phone 2
Email 1
Email 2

Title
Last Name
First Name
Address
Phone 1
Phone 2
Email 1
Email 2

DATE:
SIGNATURE:
IDENTITY AND TITLE OF SIGNATORY:

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A – AUTHORIZATION SOUGHT AND PROPOSED ANCILLARY ACTIVITIES

1. Nature of authorization sought
Check the box corresponding to the authorization sought

Bank	[ ]
Other Financial Institution	[ ]

In case of application for authorization as Other Financial Institution, specify the category for which authorization is sought

Development finance company	[ ]
Credit card company	[ ]
Factoring company	[ ]
Trust company	[ ]
Investment promotion company	[ ]
Leasing company	[ ]
Money transfer house	[ ]
Foreign exchange bureau	[ ]
Other - Specify	[ ]

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2. Proposed ancillary activities (Article 4 of the Law of May 14, 2012)

Factoring with or without recourse	[ ]
Leasing	[ ]
Issuance and management of payment instruments	[ ]
Granting guarantees and underwriting commitments	[ ]
Money market instrument transactions	[ ]
Spot foreign exchange market transactions	[ ]
Financial derivatives and options transactions	[ ]
Foreign exchange or interest rate instrument transactions	[ ]
Securities transactions	[ ]
Participation in securities issuances	[ ]
Interbank market intermediation	[ ]
Wealth management	[ ]
Safekeeping and administration of securities	[ ]
Safe deposit box rental	[ ]

3. Project implementation schedule
Indicate the main steps of project implementation, their completion dates, and the expected date of commencement of the company's activities, specifying the activities that will be immediately exercised and those whose launch will occur later (in this case, indicate the reasons for the delay and the planned start date).

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B - IDENTITY OF THE APPLICANT COMPANY

1. Company presentation

Company in formation
Incorporated company
Date of incorporation	(dd/mm/yyyy)
Legal name
(Enter text here)
Trade name (if different from legal name)
(Enter text here)
Corporate purpose and activities
(Enter text here)
Legal form	(Enter text here)
Tax identification number (TIN)
Registered office address
(number, street, city, commune, department)
Main place of business address (if different from registered office)
(street, city, commune, department)
Telephone and electronic contact details
Registered office phone number(s)	(509)... ... ... ...
Registered office email	(Enter text here)
Company website	(Enter text here)
Cities or places of activity exercise

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Initial locations	(city, commune, department)
Planned subsequent locations in the next 3 years (indicate expected date)	(city, commune, department)

2. Share capital
a. Amount and composition of capital

Capital (amounts in HTG)
Nominal amount	Number of shares
Amount paid up at date of file submission	Amount paid up at date of commencement of activities

Capital distribution by share type (amounts in HTG)
Share type	Voting rights attached (x per 1 share)	Number of shares	Nominal amount	Amount paid up at date of commencement of activities
Ordinary shares	Enter text here	Enter text here	Enter text here	Enter text here
Enter other share type	Enter text here	Enter text here	Enter text here	Enter text here
Enter other share type	Enter text here	Enter text here	Enter text here	Enter text here

b. List of shareholders holding 5% or more of share capital or voting rights

Name and First Name or Legal Name	Natural/Legal person	Nationality	Residence	Number of shares(1)	% of capital	% of voting rights
Name or legal name	Enter text here	Country of nationality	Country of residence		% with 2 decimals	% with 2 decimals

(1) Detail by share type if applicable

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c. Shareholders' agreement
Has a shareholders' agreement been signed or is it planned? [ ]

If yes, List of concerned shareholders

Name and first name or Legal name	% of capital	% of voting rights
Shareholder A	% with 2 decimals	% with 2 decimals
Shareholder B	% with 2 decimals	% with 2 decimals
Shareholder C	% with 2 decimals	% with 2 decimals
TOTAL	% with 2 decimals	% with 2 decimals

3. Board of Directors
a. List of Board of Directors members (or equivalent body)

Title, Name and First Name or Legal Name	Natural/Legal person	Nationality	Residence	ID number NIN / TIN	Number of shares
Name or legal name		Country of nationality	Country of residence	Enter number	Enter number

b. Information on natural person directors

Title, Name and First Name	Role within the Board	Address	Date of birth
Enter identity		Enter address	Enter date of birth

c. Information on legal person directors

Legal Name	Registered office address	Tax identification number TIN (1)
Enter identity	Enter address

(1) Or similar identifier for foreign companies

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d. Information on representatives of legal persons

Legal person represented	Title, Name and First Name of representative	Role within the Board	Permanent residence address
Enter legal name	Enter identity		Enter country name

4. Executive Management

Title, Name and First Name	Role	Permanent residence address	Date of birth	Number of shares held
Enter identity		Country name	Enter date of birth	Enter number
Enter identity		Country name	Enter date of birth	Enter number

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C – BUSINESS PROGRAM

The following presentation of the business program must be supported by a strategic plan established for the first three years of activity and attached to the application. This plan must include a precise description of the project, an analysis of the target market, a presentation of the envisaged commercial strategy, an economic and financial feasibility study, forecasts for organization and location, detailed forecast financial statements (balance sheets and income statements) with the underlying assumptions, as well as capital adequacy ratio projections.

1. Description of proposed activities
1.1. Reasons for establishing the institution Briefly explain the promoters' motivations and, for subsidiaries of foreign groups, the purpose of the establishment in Haiti.

1.2. Target clientele
1.2.1. Types of targeted clients.
1.2.2. Economic or professional sectors of intervention.

1.3. Nature and volume of proposed activities 1.3.1. Proposed activities 1.3.2. Services and products marketed

1.4. Development forecasts for different activities over 3 years 1.4.1. Annual growth assumptions (rate and volume) 1.4.2. Market share

1.5. Holdings or planned holdings in other financial institutions or non-financial companies Provide the following information: identity of entities, sector of activity, reason for holding, amount and percentage of participation, other partners

2. Use of additional financing sources
Indicate the amounts, currency, dates, and characteristics of the different financing sources other than deposits planned

3.1. Undistributed earnings and shareholder contributions 3.1.1. Forecast results and planned allocation 3.1.2. Capital contributions by shareholders

3.2. Borrowings
3.2.1. Subordinated borrowings from shareholders ( 3.2.2. Subordinated borrowings from third parties 3.2.3. Other medium and long-term borrowings

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3.2.4. Short-term borrowings

3.3. Other proposed financing sources
3.3.1. International donors
3.3.2. Other financing

3. Forecast balance sheets
4. Forecast income statements

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D – OPERATIONAL FRAMEWORK

1. General organization
1.1. General organizational chart of the company In the form of an organizational chart, with indication of the names of managers of the different units and departments.

1.2. Organization of main directorates or departments Description of functions and the o