COBAC Regulation R-2016/01 on Approval Conditions and Procedures for Credit Institutions, Executives, and Statutory Auditors

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COMMISSION BANCAIRE DE L’AFRIQUE CENTRALE

COBAC REGULATION R-2016/01 ON THE CONDITIONS AND PROCEDURES FOR GRANTING APPROVALS TO CREDIT INSTITUTIONS, THEIR EXECUTIVES, AND THEIR STATUTORY AUDITORS

The Central African Monetary Commission (COBAC);

Having regard to the Convention of 16 October 1990 establishing a Central African Monetary Commission (COBAC) and its Annex;

Having regard to the Convention of 17 January 1992 on the harmonization of banking regulation in Central African States, its Annex and subsequent relevant texts, notably:

• Regulation No. 01/00/CEMAC/UMAC/COBAC of 27 November 2000 establishing the single approval for credit institutions in the Economic and Monetary Community of Central Africa (CEMAC);
• Regulation No. 04/08/CEMAC/UMAC/COBAC of 6 October 2008 on corporate governance in CEMAC credit institutions and COBAC Instruction I-2009/02 on the prior information procedure for the appointment of a member of the Board of Directors of a credit institution;
• Regulation No. 02/15/CEMAC/UMAC/COBAC of 27 March 2015 amending and supplementing certain conditions relating to the exercise of the banking profession in the Economic and Monetary Community of Central Africa;

Having regard to the Treaty on the Harmonization of Business Law in Africa (OHADA) and relevant Uniform Acts;

Meeting on 16 September 2016 in Yaoundé;

DECIDES:

TITLE I – OBJECT

Article 1 The present regulation, issued in application of the provisions of Regulation No. 02/15/CEMAC/UMAC/COBAC of 27 March 2015 amending and supplementing certain conditions relating to the exercise of the banking profession in the Economic and Monetary Community of Central Africa, determines the composition of approval application files submitted to the monetary authority and specifies the procedures for their processing.

TITLE II – COMPOSITION OF THE APPROVAL APPLICATION FILE FOR CREDIT INSTITUTIONS AND PROCEDURES FOR PROCESSING

Chapter I: Composition of the approval application file for credit institutions

Article 2 The application for approval as a credit institution is submitted to the monetary authority against receipt. For information purposes, a copy of said application accompanied by the receipt is transmitted by the applicant to the Commission Bancaire.

The approval application must specify the category of credit institution for which the applicant applies and be accompanied by a complete file whose composition is specified in Articles 5 and below.

Article 3 The approval application file must contain all information elements enabling COBAC to verify compliance with the exercise and approval conditions set by Regulation No. 02/15/CEMAC/UMAC/COBAC, to assess the viability of the project and to evaluate the quality of the shareholders, administrators, executives, and statutory auditors of the credit institution.

Article 4 The approval application file as a credit institution must contain information elements relating, respectively, to the establishment itself, the shareholders of the credit institution, the administrators as well as the executives and statutory auditors.

Article 5 The information elements relating to the establishment include in particular:

• a form containing general information about the credit institution, conforming to the model defined by COBAC instruction;
• a notarized copy of the articles of association of the credit institution;
• a notarized copy of the minutes of the constituent general meeting;
• the list of shareholders, detailing for each: number of shares held, nominal value of shares, paid-up shares, corresponding participation percentage and voting rights equivalence;
• information elements on shareholders as set out in Articles 7 and 8 of this regulation;
• the notarized declaration of subscription and payment of share capital;
• the report of the statutory auditor for any contributions in kind;
• the statement from the bank account that received the paid-up capital;
• the projected composition of the board of directors, distinguishing executive administrators, non-executive administrators and independent administrators;
• information elements on persons nominated as administrators as set out in Article 12 of this regulation;
• information elements on persons nominated for the functions of Managing Director and Deputy Managing Director as set out in Article 20 of this regulation;
• the list and composition of specialized committees to be established within the board of directors and their respective responsibilities;
• the list and composition of specialized committees intended to assist general management in the day-to-day management of the credit institution and their respective responsibilities;
• the projected organizational chart including information defined in Article 16 of this regulation;
• the five-year projected business plan including project description, strategic market analysis, commercial strategy, organizational and deployment forecasts, and financial projections;
• the detail of technical, financial and human resources to be deployed;
• projected balance sheets and income statements for five years;
• draft procedure manuals concerning in particular the internal control system, risk management, information system management, business continuity plan, anti-money laundering and counter-terrorist financing measures, monitoring of outsourced operations and corporate governance charter;
• projected staff evolution (national and expatriate);
• the technical assistance contract with a reference partner, where applicable;
• the certificate of prior approval or letter of non-objection from the banking supervisory authority of the home country, where applicable.

Article 6 To assess shareholder quality and honorability, COBAC evaluates their financial capacity and ensures they are not subject to any of the prohibitions and incompatibilities provided by current regulations.

Article 7 Information elements relating to a natural person shareholder include in particular:

• an undertaking letter addressed to the President of COBAC by the majority shareholder, conforming to the model established by current regulations;
• a tax compliance certificate issued by the tax authority of the country of taxation;
• a curriculum vitae drafted in French, duly dated and signed;
• a certified copy of an official identity document (national ID card or passport) currently valid;
• a criminal record extract dated less than three months ago, issued by the competent authorities of the country of nationality and the country of residence;
• a notarized certificate of patrimonial situation. This certificate must be certified by the consular authority if the potential acquirer is of a nationality other than that of a CEMAC country;
• the list of participations held in other credit institutions and any other company with its headquarters in CEMAC or abroad;
• a sworn declaration by which the shareholder indicates the origin of funds to be invested and attests that they do not originate from illicit activities.

Article 8 Information elements relating to a private law legal entity shareholder include in particular:

• a notarized copy of the company's articles of association;
• the minutes of the deliberative body of the entity authorizing subscription to the share capital of the credit institution being created or the establishment of a subsidiary;
• the list of shareholders of the company and, where applicable, their economic beneficiaries, detailing for each: number of shares held, nominal value of shares, corresponding participation percentage and voting rights equivalence;
• the annual certified financial statements including balance sheets and income statements for the last three fiscal years;
• the list of participations held in other credit institutions and any other company with its headquarters in CEMAC or abroad;
• a sworn declaration by its legal representative indicating the origin of funds to be invested and attesting that they do not originate from illicit activities;
• a document by which the private law legal entity, when it is the majority shareholder, undertakes to support the development of the credit institution.

Article 9 The approval application file from banking groups, financial holding companies, any other parent entity or credit institutions belonging to such entities must additionally include:

• the organizational chart of the group to which the applicant belongs;
• the list of shareholders and, where applicable, their economic beneficiaries, of the parent holding company of the applicant's group and each affiliated company;
• certified consolidated financial statements, including balance sheets and income statements for the last three fiscal years;
• the list of participations held in the capital of credit institutions and any other company with its headquarters on the territory of a Member State or abroad, by the applicant, by its group or by the financial holding company it belongs to;
• the minutes of the deliberative body of the applicant entity authorizing the creation or acquisition of capital in the subsidiary.

Article 10 Information elements relating to a public law legal entity shareholder include in particular:

• the act establishing the legal entity;
• the act authorizing the legal entity to take participations in the capital of the establishment;
• a document by which the public law legal entity, when it is the majority shareholder, undertakes to support the development of the credit institution.

Article 11 To assess the quality of future administrators, COBAC ensures that they are able to properly discharge their duties and are not subject to any of the prohibitions and incompatibilities provided by current regulations.

Article 12 Information elements relating to each natural person administrator or the representative of a legal entity administrator include in particular:

• where applicable, the minutes of the general meeting appointing the interested party as a member of the board of directors;
• a certified copy of an official identity document (national ID card or passport) currently valid;
• a curriculum vitae drafted in French, duly dated and signed;
• a criminal record extract dated less than three months ago, issued by the competent authorities of the country of nationality and the country of residence;
• a sworn declaration regarding functions and administrative mandates held outside the concerned establishment, by which the candidate administrator attests not to be subject to any of the prohibitions or incompatibilities provided by current regulations.

Article 13 COBAC verifies that the nominated statutory auditors present all guarantees of independence with regard to the credit institution and all persons affiliated with said establishment.

Article 14 The approval application file as a credit institution must also contain the information elements provided for in Article 22 for each nominated natural person statutory auditor and in Article 23 for each nominated legal entity statutory auditor.

Article 15 COBAC verifies the governance structure of the future credit institution and ensures the professional competence, honorability, and absence of any conflicts of interest, prohibitions or incompatibilities of persons nominated for the functions of Managing Director and Deputy Managing Director. To this end, the approval application file as a credit institution must also contain the information elements provided for in Article 20 of this regulation for each nominated executive.

Article 16 In addition to the information elements provided for in Article 5 of this regulation, the credit institution must provide a detailed projected organizational chart describing in particular:

• the distribution of functions and responsibilities within general management, operational services and the various committees created;
• for each activity, the identity of the responsible person(s) and the number of persons assigned to them.

Chapter II: Procedures for processing approval applications for credit institutions

Article 17 In the context of processing an approval application for a credit institution, COBAC assesses the company's ability to achieve its development objectives under the conditions required for the proper functioning of the banking system and depositor security.

Article 18 COBAC must in particular:

• verify the consistency between the nature of projected activities and the category of credit institution requested, as well as the adequacy of human, technical and financial resources envisaged regarding in particular the activity program that the applicant intends to implement;
• ensure compliance with the provisions of Articles 4 and 5 of Regulation No. 02/15/CEMAC/UMAC/COBAC cited above;
• evaluate the quality of shareholders, administrators, executives and statutory auditors;
• verify the origin of funds contributed by promoters for the initial capital of the credit institution as well as the capacity of major shareholders to provide financial support to their establishment if needed;
• assess the solidity of the projected situation of the credit institution in relation to the proposed strategy, the adequacy of envisaged own funds to the risk profile, in order to determine the establishment's ability to subsequently comply with prudential standards;
• ensure that the shareholding and governance structures of the credit institution and its group will not prevent effective control, both on an individual and consolidated basis, and are not likely to hinder, in the future, the effective implementation of corrective measures;
• evaluate the internal control and risk management devices that the credit institution intends to implement, regarding foreseeable risks, nature, volume and complexity of projected activities.

Article 19 When approval applications come from credit institutions or banking groups with headquarters abroad, COBAC additionally verifies that the home country's banking supervisory authority ensures consolidated control at the level of the entire group internationally.

TITLE III – COMPOSITION OF THE APPROVAL APPLICATION FILE FOR EXECUTIVES AND STATUTORY AUDITORS OF CREDIT INSTITUTIONS AND PROCEDURES FOR PROCESSING

Chapter I: Composition of the approval application file for executives and statutory auditors of credit institutions

Article 20 The approval application file for an executive of a credit institution must contain in particular the following elements:

• a curriculum vitae drafted in French, duly dated and signed;
• certified copies of diplomas;
• certified copies of work certificates as well as the list of previously held functions specifying the size, staff and nature of activities of concerned companies;
• a certified copy of the birth certificate;
• two identity photographs;
• a certified copy of an official identity document (national ID card or passport) currently valid;
• a criminal record extract dated less than three months ago, issued by the competent authorities of the country of nationality and the country of residence;
• the list of current mandates as administrator held in other companies, including companies of the group to which the future credit institution is affiliated or linked;
• a sworn declaration by which the applicant executive attests not to be subject to any of the prohibitions or incompatibilities provided by current regulations;
• the list of participations held in other companies detailing, for each: number of participations held, nominal values and corresponding percentage and voting rights equivalence;
• a residence certificate dated less than three months ago;
• a valid residence permit for foreigners;
• an extract of the minutes of the board of directors or general meeting appointing the person as executive;
• where applicable, copies of previous approvals for executives approved in the banking sector outside CEMAC;
• a tax compliance certificate issued by the tax authority of the country of taxation;
• a certificate of non-bankruptcy or non-subjection to a collective debt clearance procedure.

Article 21 The submission of an application receipt for a residence permit is accepted in the absence of a home certificate and residence permit.

Article 22 The approval application for a natural person statutory auditor must contain in particular the following elements:

• an extract of the minutes of the ordinary general meeting of shareholders appointing the interested party as statutory auditor;
• a certified copy of an official identity document (national ID card or passport) currently valid;
• a criminal record extract dated less than three months ago, issued by the judicial authorities of the country of nationality and the country of residence;
• two identity photographs;
• a certified copy of the approval issued by CEMAC as chartered accountant;
• a certificate of registration in the National Order of Chartered Accountants for countries with such an organ;
• a curriculum vitae drafted in French, duly dated and signed, accompanied by a statement of services or missions performed, highlighting intervention periods, clients, sectors of activity supported where applicable by certificates issued by clients;
• where applicable, copies of previous approvals for statutory auditors already approved in the banking sector outside CEMAC;
• a sworn declaration by which the statutory auditor attests not to be subject to any of the prohibitions or incompatibilities provided by current regulations;
• a sworn declaration by which the statutory auditor indicates direct or indirect social, financial or business links with the credit institution to be audited or any affiliated company, and family ties with executives or shareholders holding at least 5% of the capital of the credit institution;
• a tax compliance certificate issued by the tax authority of the country of taxation;
• a non-liability certificate issued by the social security organization of the country of taxation;
• a certificate of non-bankruptcy or non-subjection to a collective debt clearance procedure;
• the professional civil liability insurance policy.

Article 23 The approval application for a legal entity statutory auditor must contain in particular the following elements:

• an extract of the minutes of the ordinary general meeting of shareholders appointing the interested party as statutory auditor;
• a form containing general information about the company conforming to the model defined by COBAC instruction;
• an extract from the Commercial and Movable Credit Register;
• a copy of the articles of association;
• a certified copy of the approval issued by CEMAC as an accounting firm;
• a certificate of registration in the National Order of Chartered Accountants, for countries with such an organ;
• certified annual financial statements of the last three fiscal years including balance sheets and income statements as well as the detail of turnover realized with credit institutions;
• a description of services or missions performed, highlighting intervention periods, clients, sectors of activity supported where applicable by certificates issued by cited clients;
• where applicable, copies of previous approvals for statutory auditors already approved in the banking sector outside CEMAC;
• a sworn declaration by which the statutory auditor attests that none of the partners is subject to any of the prohibitions or incompatibilities provided by current regulations;
• a sworn declaration by which the statutory auditor indicates direct or indirect social, financial or business links that the legal entity or its partners maintain with the credit institution to be audited or any affiliated company, and family ties with executives or shareholders holding at least 5% of the capital of the credit institution;
• a tax compliance certificate issued by the tax authority of the country of taxation;
• a non-liability certificate issued by the social security organization of the country of taxation;
• a certificate of non-bankruptcy or non-subjection to a collective debt clearance procedure;
• the professional civil liability insurance policy.

Chapter II: Procedures for processing approval applications for executives and statutory auditors of credit institutions

Article 24 The functions of Managing Director and Deputy Managing Director of a credit institution are incompatible with the exercise of the function of corporate officer or any salaried employment in an entity other than said credit institution.

Article 25 Executives of credit institutions must:

• either hold at least a master's degree in economic, banking, financial, legal or management sciences or any other diploma recognized as equivalent at the time of filing the application, and demonstrate solid references as well as a professional experience of at least five years in high-level management functions;
• or, in the absence of the aforementioned diploma, hold at least a bachelor's degree in economic, banking, financial, legal or management sciences or any other diploma recognized as equivalent at the time of filing the application, and demonstrate solid references as well as a professional experience of at least ten years in management functions;