Instruction No. 22/99 on the Approval of Collective Investment Schemes in Securities and Public Information

WEST AFRICAN MONETARY UNION REGIONAL COUNCIL FOR PUBLIC SAVINGS AND FINANCIAL MARKETS

INSTRUCTION NO. 22/99 ON THE APPROVAL OF COLLECTIVE INVESTMENT SCHEMES IN SECURITIES AND PUBLIC INFORMATION

---

Having regard to the Convention of 3 July 1996 establishing the Regional Council for Public Savings and Financial Markets, hereinafter referred to as the Regional Council; Having regard to Articles 18, 19 and 20 of the Annex to said Convention; Having regard to the General Regulation on the Organization, Operation and Supervision of the regional financial market of the UMOA, adopted by decision No. 001/97 of the Council of Ministers on 28 November 1997; Having regard to Articles 72 to 89 of said General Regulation; Having regard to the decision of the Regional Council in its session on 02 July 1999; THE REGIONAL COUNCIL HAS ADOPTED:

Article 1 Collective Investment Schemes in Securities are required to apply for the approval of the Regional Council for Public Savings and Financial Markets prior to commencing their activities.

Article 2 The application for approval of a Collective Investment Scheme in Securities addressed to the Regional Council must include the following elements:

1. the name and legal form of the Collective Investment Scheme in Securities, the promoting institution, the management company, where applicable, and the Depositary;
2. the articles of association, if it is a Variable Capital Investment Company (SICAV);
3. the regulations, if it is a Common Investment Fund (FCP);
4. a specification sheet for the management company or Variable Capital Investment Company containing the following information elements:
   • the distribution of share capital describing the proportion held by natural persons and that held by legal entities. For the latter, institutions holding the status of Depositary will be listed;
   • an extract from the criminal record and a curriculum vitae of the corporate officers and main executives of the Variable Capital Investment Company or management company, showing their financial experience, other activities exercised notably with the depositary institution and/or the promoting group of the Variable Capital Investment Company;
   • the number and hierarchical level of persons holding responsibilities in the company, as well as persons collaborating in the management of the Variable Capital Investment Company or Common Investment Fund who are not employed by the Variable Capital Investment Company and/or management company, mentioning the organization to which they belong;
   • the detailed organizational chart of the Variable Capital Investment Company or Common Investment Fund;
   • the remuneration terms for employees and collaborators holding responsibilities in the management of the Variable Capital Investment Company or Common Investment Fund;
   • the nature of the contract; ethical provisions applicable to employees, corporate officers and collaborators of the Variable Capital Investment Company or Common Investment Fund;
   • a copy of the delegations granted when salaried personnel of the depositary institution exercise functions in the Variable Capital Investment Company or management company;
   • the list of equipment used by the Variable Capital Investment Company or management company, distinguishing own equipment from equipment used jointly with other companies. For computer equipment, the main characteristics of the software used will be specified;
   • the description of procedures relating to entry or exit rights, issuance and redemption fees for Variable Capital Investment Companies, management fees, and issuance and redemption fees.

Article 3 A Collective Investment Scheme in Securities applying for approval must undertake in writing to submit to the Regional Council for prior authorization: a) any project modifying the methods of valuing shares or units recorded in its assets compared to the method initially communicated to the Regional Council; b) any project for legal and financial restructuring.

Article 4 A Collective Investment Scheme in Securities applying for approval must undertake in writing to comply with the prudential rules defined by the Regional Council, in terms of risk coverage and diversification. Generally, Collective Investment Schemes in Securities (CIS) must provide sufficient guarantees regarding their organization, technical and financial resources, the integrity and experience of their executives. They must take measures to ensure the security and transparency of operations.

Article 5 The Regional Council may, if it deems necessary, require that a simulation of operations be carried out prior to the opening to the public of the Collective Investment Scheme in Securities.

Article 6 Management delegations granted to external bodies must be brought to the knowledge of the Regional Council before they enter into force. The management mandate must specify: a) the type of delegation granted (administrative and/or financial management); b) the distribution of remuneration between the Collective Investment Scheme in Securities and the institutions holding this delegation; c) the presentation of the institution(s) holding a delegation; d) the procedures implemented by the Collective Investment Scheme in Securities or management company to ensure control over operations performed by the delegated institution(s), as well as the conditions for revocability of delegations and the duration for which the management mandate was concluded; e) the criteria used to select intermediaries responsible for executing orders of the Collective Investment Scheme in Securities, notably indicating the conditions under which managers of the relevant Collective Investment Scheme in Securities are associated with these choices; f) the name of the proposed statutory auditor, with an annex summarizing the CIS and management companies for which the statutory auditor already holds a mandate, as well as the dates of appointment to the functions exercised.

Article 7 For any issuance of units, Collective Investment Schemes in Securities must prepare an information note bearing the visa of the Regional Council for Public Savings and Financial Markets and kept available to the public. This information note must include:

• for Variable Capital Investment Companies, the Articles of Association;
• for Common Investment Funds, the Regulations of the Common Investment Fund;
• for any other form of Collective Investment Scheme in Securities, a Regulations document for this structure.

Article 8 The information note may, at the choice of bodies ensuring the marketing of units of the Collective Investment Scheme in Securities to the public, be distributed according to one of the following methods:

• if these bodies have chosen to record subscriptions using forms, said forms must include statements indicating: • that the subscriber has received the fact sheet of the Collective Investment Scheme in Securities; • that the subscriber may obtain, from the headquarters of the Collective Investment Scheme in Securities or from institutions authorized to receive subscriptions, the articles of association of the Collective Investment Scheme in Securities, if it is a Variable Capital Investment Company, or the regulations, if it is a Common Investment Fund.
• if these bodies have opted for the subscription form procedure, the distribution methods for articles of association (SICAV) or regulations (FCP) envisaged will be subject to the Regional Council's approval. The same applies to unit redemption methods.

Article 9 Collective Investment Schemes in Securities must publish quarterly and annual reports containing the following information:

• the composition of net assets;
• a reminder of the investment policy orientation;
• the portfolio distribution in percentage and total asset amount at the end of the quarter;
• the evolution of net assets, number of shares and net asset values;
• the income distributed over the last three (3) years.

Article 10 The granting of approval to a Variable Capital Investment Company is subject to the payment of an amount of two million (2,000,000 FCFA).

Article 11 The granting of approval to a Common Investment Fund is subject to the payment of an amount of one million FCFA (1,000,000 FCFA).

Article 12 The publication of the approval decision must take place no later than 90 days after its notification by the Regional Council, in the bulletin of the Regional Council and that of the stock exchange.

Article 13 This instruction shall be published wherever necessary.

Done in Abidjan, on 02 July 1999 For the Regional Council The President L. NAKA