Circulaire No. 17/AMF-UMOA/2025 on the Application of the Proportionality Principle for Collective Investment Management Companies in the Regional Financial Market

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CIRCULAIRE NO. 17/AMF-UMOA/2025

ON THE APPLICATION CONDITIONS OF THE PROPORTIONALITY PRINCIPLE APPLICABLE TO COLLECTIVE INVESTMENT MANAGEMENT COMPANIES IN THE REGIONAL FINANCIAL MARKET

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The UMOA Financial Markets Authority (AMF-UMOA) wishes to inform prospective or already approved Collective Investment Management Companies on the UMOA Regional Financial Market that they may benefit from the proportionality principle when applying Articles 10 to 15 of Instruction No. 66/CREPMF/2021 concerning Collective Investment Schemes and their Management Companies, taking into account in particular their resources, staff, and assets under management.

This Circulaire specifies the implementation modalities of the proportionality principle, in accordance with Article 16 of the aforementioned Instruction No. 66/CREPMF/2021.

For the purposes of this Circulaire, the term "Instruction" refers to Instruction No. 66/CREPMF/2021 concerning Collective Investment Schemes and their Management Companies on the UMOA regional financial market.

I- SCOPE OF APPLICATION

1. Collective Investment Management Companies with a net average assets under management over twelve rolling months of less than or equal to 10 billion FCFA may benefit from the proportionality principle.
2. A Collective Investment Management Company that exceeds the threshold mentioned in paragraph 1 has a period of thirty (30) days to notify the AMF-UMOA and a period of six (6) months to comply with Instruction 66/CREPMF/2021. Consequently, it may no longer apply the provisions under the proportionality principle.
3. By way of derogation from paragraph 2, when the threshold mentioned in paragraph 1 is exceeded and the Collective Investment Management Company considers that the situation is of a temporary nature, it notifies the AMF-UMOA by indicating in the notification provided for in paragraph 2 that the situation is considered temporary. The notification includes information justifying the Collective Investment Management Company's opinion on the temporary nature of the situation, including a description of the situation and an explanation of why it should be considered temporary.
4. When a Collective Investment Management Company is in the situation provided for in paragraph 3, it may continue to benefit from the proportionality principle.
5. A situation is not considered temporary if it is likely to last more than six (6) months.
6. The Collective Investment Management Company performs, six (6) months after the date on which the average total value of assets under management exceeded the applicable threshold, a new calculation of the total value of assets under management to demonstrate to the AMF-UMOA that it is below the applicable threshold or to show that it has ceased applying the proportionality regime.

II- PROVISIONS RELATIVE TO PROPORTIONALITY

1. Remuneration Policy

A Collective Investment Management Company benefiting from the proportionality principle may not be required to impose, as part of implementing its remuneration policy under Article 10 of the Instruction:

a) multi-year performance assessment; b) payment of variable remuneration in units or shares of Collective Investment Schemes or equivalent instruments; c) deferral of a substantial portion of variable remuneration; d) establishment of a remuneration committee.

2. Risk Management

a) A Collective Investment Management Company benefiting from the proportionality principle is not required to establish and maintain an ongoing risk management function as required by Article 11 of the Instruction. It may have its risk management function performed by one of its portfolio managers, provided that the procedures allow for the oversight of this dual role. b) In the case mentioned in paragraph a), the internal controller of the Collective Investment Management Company conducts an annual review of this function's activities. It must, each year, review the risk management procedures and their applications by the Collective Investment Management Company. The actions taken, the results of the risk management function review, and the procedure examination must be recorded in the annual internal control report, which is submitted to the AMF-UMOA.

3. Liquidity Management

A Collective Investment Management Company benefiting from the proportionality principle may conduct the crisis simulations required by Article 12.1 of the Instruction once a year.

4. Asset Valuation

a) The independent evaluator function provided for in Article 13 of the Instruction may be entrusted to one of the management directors of the Collective Investment Management Company, provided that the latter's procedures allow for oversight of this dual role and that the director demonstrates to the AMF-UMOA sufficient skills and experience to perform this function. b) In the case mentioned in paragraph a), the compliance officer and the internal controller must, each year, review asset valuation procedures and their applications.

5. Delegation

a) Collective Investment Management Companies authorized to apply the proportionality principle may delegate the portfolio management of their Collective Investment Schemes, provided they justify objective reasons and do not seek to circumvent the regulations in force within the UMOA. b) The following situations may be considered objective reasons:

• optimization of corporate functions and processes;
• cost savings. c) The delegate must necessarily possess:
• expertise in administration, markets, or specific investments;
• the ability to trade on markets outside the UMOA zone. d) The delegation must not hinder the proper exercise of supervision to which the Collective Investment Management Company is subject and, in particular, must not prevent the management company from acting, or the Collective Investment Scheme from being managed, in the best interests of investors. e) The Collective Investment Management Company must be able to prove that the delegate is qualified and capable of performing the relevant functions, that all due diligence has been exercised in its selection, and that the Collective Investment Management Company can effectively monitor the delegated task at all times, issue additional instructions to the delegate at any time, and withdraw the delegation with immediate effect when in the best interests of investors. f) In the case mentioned in paragraph a), the Collective Investment Management Company may not delegate risk management. It must, in this case, appoint a dedicated person to the risk management function. g) The Management Company's liability towards Collective Investment Schemes and their investors is not affected by the fact that it has delegated functions to a third party. The Collective Investment Management Company does not delegate its functions to the extent that it can no longer be substantively considered as a Collective Investment Management Company and become a "mailbox" company.

6. Investor Complaint Handling Mechanisms

In accordance with Article 15 of Instruction No. 66/CREPMF/2021, Collective Investment Management Companies provide the AMF-UMOA with information on received complaints and their handling, including processing timeframes and any potential compensations, each quarter and no later than the last day of the month following the end of the quarter. However, Collective Investment Management Companies benefiting from the proportionality principle may transmit said information on a semi-annual basis.

This Circulaire takes effect from its publication date.

Done in Abidjan, on 16 APR. 2025

The President Badanam PATON [Seal of the UMOA Financial Markets Authority]