CENTRAL BANK OF THE CONGO

THE GOVERNOR

INSTRUCTION NO. 18 ON THE APPROVAL CONDITIONS FOR CREDIT INSTITUTIONS, THEIR MANAGEMENT, AND AMENDMENTS TO THEIR STATUTORY SITUATIONS

(Modification No. 3)

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The Central Bank of the Congo,

Having regard to Law No. 18/027 of 13 December 2018 on the organization and functioning of the Central Bank, particularly Articles 10, 11, and 25;

Having regard to Law No. 22/069 of 27 December 2022 on the activity and supervision of Credit Institutions, particularly Article 21;

Having regard to Law No. 22/068 of 27 December 2022 on the fight against money laundering and terrorist financing and the proliferation of weapons of mass destruction, particularly Titles I and III;

Enacts the following provisions:

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TITLE I: GENERAL PROVISIONS

CHAPTER I: OBJECT AND SCOPE OF APPLICATION

Article 1:

This Instruction aims to define the required conditions and the applicable procedure for obtaining, from the Central Bank of the Congo, the approval of Credit Institutions referred to in Article 2, their management, as well as authorizations for modifications to the elements that contributed to the granting of approval.

It also defines the operations and decisions that must be subject to prior notification to the Central Bank of the Congo by these credit institutions.

Article 2:

This Instruction applies to the following Credit Institutions, referred to as "subject institutions":

• banks;
• savings banks.

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CHAPTER II: DEFINITIONS

Article 3:

For the purposes of this Instruction, the following terms are understood as:

• administrator: member of the deliberative body designated by the General Meeting of Shareholders;

• executive administrator: an administrator who is also a member of the executive body of the subject institution;

• non-executive administrator: an administrator who is not a member of the executive body of the subject institution;

• independent administrator: a non-executive administrator not affiliated with the subject institution. A member of free interest on the Board of Directors who contributes, through their expertise and independent judgment, to the board's capacity to fulfill its missions. They must be free from particular professional (significant shareholder, employee, business relationship, service provider, etc.) or personal ties of interest with the subject institution and its shareholders.

• risk committee: a governance committee, emanating from the deliberative body, created to assist it in determining risk appetite, monitoring the executive body's implementation of the risk appetite statement, and ensuring oversight of the risk management function;

• deliberative body: the body responsible, on behalf of the shareholders, for defining the strategic direction of the institution and effective oversight of activity management. It takes the form of a Board of Directors;

• executive body: the body responsible, on behalf of the deliberative body, for the day-to-day management of the institution's activities and the effective steering of implementing the strategic objectives and risk policy set by the deliberative body. It corresponds to the General Management, Management Committee, Executive Committee, or Management Board, and is composed of at least two members, namely: the Chief Executive Officer and the Deputy Chief Executive Officer;

• sensitive function: an operational function related to the core banking business or a support function requiring proven expertise, the disruption of which could cause significant risks to the subject institution;

• head of sensitive function: a senior executive of a credit institution whose appointment is subject to approval by the Central Bank of the Congo, due to the operational sensitivity of their role given the risks inherent in their activity;

• essential services: the financial services offered by the subject institution, on the one hand, and the sensitive functions, on the other hand, the interruption of which would seriously impair the normal functioning of said institution.

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CHAPTER III: OPERATIONS AND ACTS SUBJECT TO PRIOR APPROVAL AND AUTHORIZATION

Article 4:

The creation of a credit institution and/or the exercise of credit institution activity in one of the categories listed in Article 2 of this Instruction are subject to prior approval by the Central Bank of the Congo.

Furthermore, credit institutions must request prior approval from the Central Bank of the Congo for the following operations:

• change of category of a Credit Institution;
• participation in the share capital of a Credit Institution;
• appointment of members of the deliberative body;
• appointment of members of the executive body;
• appointment of heads of internal control functions;
• appointment of heads of sensitive functions.

Article 5:

Subject institutions must request prior authorization from the Central Bank of the Congo in the following cases:

• amendment of their statutes;
• merger, demerger, or divestment of an activity branch affecting a credit institution;
• divestment, by a credit institution, of all or, within limits set by the Central Bank of the Congo, part of its assets, client base, or activity;
• acquisition, by a credit institution, of holdings in a foreign enterprise;
• investment operations involving securities issued or guaranteed by a foreign state, an international organization, or a foreign enterprise;
• opening, transfer, or closure of a branch or agency of the credit institution on national territory or abroad;
• voluntary dissolution of a credit institution;
• any acquisition or sale of shares or equity interests, whether or not representing capital, of a credit institution that would lead the transferee to acquire or lose, directly or indirectly, alone or in concert with others, a significant portion of the share capital or voting rights;

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CHAPTER IV: PROCEDURE FOR PRIOR APPROVAL AND AUTHORIZATION

Section 1: File Preparation

Article 7:

Any request for prior approval or authorization, and any prior notification or information, must be submitted in French to the Governor of the Central Bank of the Congo.

This request or notification must be accompanied by a file meeting the requirements of this Instruction, along with the minutes of the deliberation by the competent body related to the request made.

Documents submitted in support of the file referred to in paragraph 2 of this article must be authenticated by a notary, except for those issued by competent public authorities.

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CHAPTER IV: PROCEDURE FOR PRIOR APPROVAL AND AUTHORIZATION

Section 2: File Examination

Article 8:

The Central Bank of the Congo notifies the applicant of the receipt of their request for prior approval or authorization.

It informs them, after preliminary examination, either of the completeness of their file or of the need to supplement it with additional elements.

Article 9:

The Central Bank of the Congo renders its decision within 90 days from the receipt of the letter informing the applicant of the completeness of the file.

During its examination, the Central Bank of the Congo may request the applicant to transmit additional elements. In this case, the transmission period for these elements is added to the initial 90-day period.

When a decision requires obtaining the opinion of a national or foreign regulatory authority, the period for the Central Bank of the Congo to issue its decision is extended by the response time observed by said authority.

Article 10:

The Central Bank of the Congo, if it deems it useful, may summon the applicant's representative(s) for an interview upon submission of a request for prior approval or authorization or during a prior notification.

Depending on the risk profile of the requesting institution (new or existing), the Central Bank of the Congo may attach additional conditions to its approval or prior authorization decision, particularly concerning share capital, governance structures, or operational organization.

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TITLE II: APPROVAL

CHAPTER I: APPROVAL OF CREDIT INSTITUTIONS

Article 11:

Approval as one of the two categories of Credit Institutions covered by this Instruction or a change of category is subject to compliance with the requirements of applicable legal texts and the entire prudential regulatory framework.

The approval request must be supported by a file consisting of the following elements:

• a letter of approval request drafted in French and addressed to the Governor of the Central Bank of the Congo;
• an original notarized copy of the applicant's statutes;
• the duly notarized minutes of the constituent general meeting of the new company and the notarized mandate of the representatives of legal persons, shareholders, partners, or members of the requesting company, authorizing them to represent it at this constituent meeting;

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Article 12:

The approval request must also include a description of the procedures for selecting shareholders, members of the deliberative and executive bodies, heads of control functions, and other sensitive functions as outlined in Chapters II and III of this Title.

Article 13:

The applicant's statutes must ensure appropriate governance, in accordance with Instruction No. 21 of the Central Bank of the Congo.

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CHAPTER II: APPROVAL OF SHAREHOLDERS, PARTNERS, OR MEMBERS

Article 14:

The applicant must communicate to the Central Bank of the Congo, for approval, the identity of all its actual shareholders, partners, or members.

To this end, it transmits to the Central Bank of the Congo the identity, accompanied by a related document issued by an authorized public administration, of the natural or legal persons who, directly or indirectly, acting alone or in concert with others, hold at least one share of the share capital. This communication must indicate the proportions of share capital and voting rights held by these persons.

Banks and savings banks must be established with at least four (4) shareholders, partners, or members, each holding at least 15% of the share capital.

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Article 15:

Credit Institutions covered by this Instruction must be established as multi-person public limited companies with a Board of Directors.

Article 16:

Any participation by a fund, consortium, or holding company in the capital of a subject institution requires the resolutive condition that it accepts, in advance, that the following related entities be subject to both documentary and on-site supervision by the Central Bank of the Congo, under its prerogatives as the Regulatory and Supervisory Authority for financial institutions of the Democratic Republic of Congo:

• legal persons that directly or indirectly control the institution, established in the Democratic Republic of Congo or abroad;
• subsidiaries of these legal persons, established in the Democratic Republic of Congo or abroad;
• any other enterprise or legal person belonging to the same group, established in the Democratic Republic of Congo or abroad.

Article 17:

The Central Bank of the Congo may refuse approval when:

• even in the absence of a conviction, it considers that one or more shareholder(s) of the requesting institution present(s) significant risks, particularly in the fight against money laundering, terrorist financing, and proliferation;
• the exercise of its supervisory mission over the requesting institution is likely to be hindered either by the existence of direct or indirect capital or control links between the requesting institution and other natural or legal persons, or by the existence of legislative or regulatory provisions of a State to which one or more of these persons are subject;
• the communicated information does not allow identifying the beneficial owner(s) up to the highest level of the control chain, or when the shareholding structure does not provide all guarantees of transparency;
• persons established in high-risk and non-cooperative jurisdictions as defined by the Financial Action Task Force take participations in a financial institution in the Democratic Republic of Congo.

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Article 18:

The applicant must have a reference shareholder, partner, or member, being a legal or natural person, providing all guarantees of reputation, ethical standing, financial capacity, and/or professionalism in the banking, economic, financial, or any other sector. This party must be able to meet its support obligations, particularly in times of difficulty.

A shareholder or partner, being a legal or natural person, holding a participation exceeding 50% of the institution's capital, possessing adequate financial capacity, but not demonstrating professionalism in the banking and/or financial sector, is deemed a reference shareholder and must conclude a technical assistance contract with a partner of international renown operating in the banking and/or financial sector. This assistance contract must be concluded for a minimum duration of ten (10) years and submitted for prior approval by the Central Bank of the Congo.

When no shareholder holds a fraction exceeding 50% of the institution's capital, the applicant must submit to the Central Bank of the Congo for approval a reference shareholder chosen among the legal persons holding its share capital, meeting the conditions set out in the first paragraph of this article. In this case, all other shareholders are required to provide necessary support at the deliberative bodies. If the Central Bank of the Congo refuses to approve the designated shareholder, the approval of the requesting institution cannot be granted.

Article 19:

The reference shareholder is notably required to:

• prioritize involvement, without prejudice to the role of other shareholders, in the effective determination of the applicant's organization and in the effective oversight of its management, particularly through the administrators representing them within the deliberative body;
• provide operational and financial support to the applicant to ensure permanent means for its development, in accordance with the business plan submitted to the Central Bank of the Congo during the approval request and subsequently modified, if applicable;
• provide all elements establishing the adequacy of their expertise in the financial and banking sectors, particularly information on banking or financial companies they have been associated with in management. Failing this, the reference shareholder must provide partnership contracts with third-party entities possessing recognized expertise through which they will provide the applicant with the necessary professionalism and experience;
• prioritize providing operational and financial support to the applicant to ensure its solvency, liquidity, and exchange position, particularly in times of difficulty, without prejudice to the responsibility expected of all shareholders who are also required to contribute to the common effort.

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CHAPTER III: APPROVAL OF MEMBERS OF THE DELIBERATIVE AND EXECUTIVE BODIES AS WELL AS HEADS OF CONTROL FUNCTIONS AND OTHER SENSITIVE FUNCTIONS

Section 1: Common Provisions

Article 20:

Members of the deliberative and executive bodies, as well as heads of control and other sensitive functions, must present all guarantees of integrity, professionalism, and competence necessary for the exercise of their assigned missions, as defined in Instructions No. 17, 21, and 22 of the Central Bank of the Congo.

They must have a good command of the French language and must not hold the status of Politically Exposed Person, as defined by Law No. 22/068 on the fight against money laundering and terrorist financing and the proliferation of weapons of mass destruction. If they acquire this status during their term, they must immediately resign from their positions within the credit institution.

Article 21:

The deliberative body and the executive body must each be composed of a majority of Congolese nationals. Heads of control functions must also be predominantly of Congolese nationality.

The subject institution may request a derogation from the preceding paragraph. In support of its derogation request, the subject institution must transmit to the Central Bank of the Congo a compliance plan whose timeline must not exceed the deadline set in Article 193 of Law No. 22/069 of 27 December 2022 on the activity and supervision of Credit Institutions.

Article 22:

The requesting institution is required to submit to the Governor of the Central Bank of the Congo a file for the approval request for any member of the deliberative and executive bodies, as well as any head of control and other sensitive functions, comprising in particular the following elements:

• curriculum vitae;
• certified copies of obtained diplomas;
• a criminal record extract dated less than three months ago, and for persons who have resided abroad during the three years preceding the approval request, an equivalent document, duly legalized, issued by the host country;
• proof of residence;
• proof of nationality or a certified copy of a valid passport;

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Article 23:

The termination of functions of persons covered by Article 20 of this Instruction must be communicated without delay to the Central Bank of the Congo.

The subject institution must transmit the minutes of the meeting of the competent body approving the termination of the functions of the concerned head, as well as the reasons for this termination. It must inform the Central Bank of the Congo of any subsequent or prior litigation.

Section 2: Approval of Members of the Deliberative Body

Article 24:

The exercise of the mandate of members of the deliberative body is subject to prior approval by the Central Bank of the Congo.

The duration of the mandate of members of the deliberative body and the conditions for its renewal are fixed in Instruction No. 21 of the Central Bank of the Congo on corporate governance of Credit Institutions.

Article 25:

When a member of the deliberative body is a legal person, the requirements of Article 20 of this Instruction apply to the natural person representing it.

Article 26:

Independent administrators must present all guarantees of independence from approved shareholders and related persons. They must declare under oath that their situation complies with the requirements of Instruction No. 21 regarding the governance of credit institutions.

Article 27:

The renewal of a mandate for an administrator of foreign nationality is subject to the transmission of elements on the composition of the deliberative body attesting that it is predominantly composed of Congolese nationals.

Article 28:

Credit institutions are required to pay particular attention to gender parity in the composition of the deliberative body by reserving a quota of 50% of administrators for the female gender, to be achieved in stages within a five-year horizon. Credit institutions must ensure the achievement of this quota during the renewal of administrators' mandates.

Section 3: Approval of Members of the Executive Body

Article 29:

The exercise of the mandate of members of the executive body is subject to prior approval by the Central Bank of the Congo.

The duly notarized minutes of the appointment of members of the executive body must clearly specify the extent of each member's powers, employment contracts, and clauses related to remuneration and benefits in kind, in accordance with the provisions of Instruction No. 21 of the Central Bank of the Congo.

Article 30:

The duration and conditions for the renewal of members of the executive body are fixed in Instruction No. 21 of the Central Bank of the Congo on corporate governance in Credit Institutions.

Article 31:

Upon the renewal of the mandate of a member of the executive body, the requesting institution must communicate to the Central Bank of the Congo, in particular, the notarized minutes of the deliberative body that decided on the renewal, a criminal record extract dated less than three months ago, and the performance contract evaluation report as provided for by Instruction No. 21 of the Central Bank of the Congo.

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Article 32:

Appointments to the functions of head of second-level operational activity control, compliance, risk management, and internal audit are subject to prior approval by the Central Bank of the Congo.

The functions of head of permanent second-level control across its three components and those of head of periodic third-level control must be entrusted to senior executives presenting all guarantees of morality, integrity, competence, and professional experience.

Heads of compliance, risk management, and internal audit must hold a hierarchical rank immediately below the General Management.

Article 33:

The approval of heads of control functions is subject to the following conditions:

• not be affiliated with the subject institution, as defined by the Central Bank of the Congo's regulations;
• not be in a case of ascendant and descendant links of the first degree with members of the deliberative and executive bodies, and not present any conflict of interest risk with these persons, nor with the subject institution;
• not be a representative/agent of the subject institution, nor of an enterprise within the group to which said institution belongs;
• not be a corporate officer in a company affiliated with the subject institution;
• not be a supplier to the subject institution;
• not have served as an auditor or statutory auditor for several subject institutions of the same category as the one requesting approval during the last three (3) years.

Article 34:

In support of an approval request, the applicant transmits the minutes of the re...