Instruction No. 10/GR/2007 on the Approval and Registration Procedures for Microfinance Institutions

REPUBLIC OF MAURITANIA CENTRAL BANK OF MAURITANIA GOVERNOR 2007, Nouakchott on [Date] Instruction No. 10/GR/07 Governing the approval and registration procedures for Microfinance Institutions.

The Governor of the Central Bank of Mauritania, Having regard to Ordinance No. 2007-004 of January 12, 2007 establishing the statute of the Central Bank of Mauritania, Having regard to Ordinance No. 2007-005 of January 12, 2007 regulating Microfinance Institutions, Having regard to Decree No. 019-2007 of January 7, 2007 appointing the Governor of the Central Bank of Mauritania, Decides

Article 1: This Instruction applies to the approval of Category A and B Microfinance Institutions (MFIs) and to the registration of Category C MFIs, as well as to the conditions for merger, demerger, affiliation, and de-affiliation of Category A MFIs.

Article 2: The application file for approval submitted to the Banking and Financial Supervision Department of the Central Bank of Mauritania must contain the following elements:

• total subscription and full payment of the minimum capital or endowment fixed by this Instruction;
• list of members or shareholders, with indication, where applicable, of full name, national identity card number, registration number, domicile, and subscribed and paid amount;
• certificate of good moral character (extract from the criminal record or any equivalent document) in the name of each member of the board of directors, supervisory board, credit committee, and manager;
• one notarized copy of the articles of association and one copy of the internal regulations;
• operational regulations (credit regulations) detailing general policy and credit procedures;
• financial regulations of the network, if applicable; the financial regulations specify financial relations within networks and notably the management of liquidity of affiliated MFIs;
• list of administrators and the manager (or general director) with indication of profession and domicile;
• curriculum vitae of the manager or general director;
• a feasibility study covering a five (05) year period, highlighting: • conditions for financial balance; • compliance with prudential standards; • calculation of performance indicators.
• where applicable, the curriculum vitae of the technical operator and a letter of commitment from them, in accordance with Article 3 of this Instruction;
• where applicable, the curriculum vitae of the reference shareholder(s) for Category B MFIs. The Central Bank is authorized to request any documents or proofs it deems necessary.

Article 3: Approval of Category A MFIs Category A MFIs organized in a network are collectively approved. The approval is granted to the umbrella structure of the network and covers the Union or Federation and all affiliated MFIs. The approval file for a union or federation must contain, in addition to the constitutive texts of the body subject to the approval application, the articles of association of its affiliated members. The information on persons requested in Article 2 applies only to the umbrella structure, union or federation. Non-affiliated Category A MFIs must demonstrate:

• either a minimum subscribed and paid capital of at least 1 million ouguiyas, and a minimum number of 500 members;
• or a minimum subscribed and paid capital of at least 1 million ouguiyas (or equivalent capital endowment), and the support of a competent technical operator committing for a minimum period of three (3) years; the operator then provides a description of the financial and technical means it commits to implement for the considered period. When a Category A MFI must affiliate with a network and faces refusal from existing networks, the Central Bank may designate a Union or Federation that will be required to admit it as a member.

Article 4: Any merger between two or more Category A MFIs or demerger of a Category A MFI into two or more institutions within the same network of Category A MFIs does not require a new approval, provided that the entire operation takes place within the same collective approval. The umbrella structure informs the Central Bank of the operation in accordance with the procedure provided for in case of merger or demerger. Other cases of merger and demerger of MFIs require a new approval or registration.

Article 5: Affiliation The affiliation of an approved Category A MFI to a network of Category A MFIs requires simplified approval. The network submits an application containing:

• consolidated financial statements of the network including, for the previous year and the current year, the new entity;
• application for withdrawal of approval from the MFI seeking affiliation;
• application for extension of collective approval. The extension of a network by creating new institutions or by affiliating non-approved Category A MFIs requires prior authorization from the Central Bank under Article 22, paragraph 2 of the Ordinance regulating MFIs. The network submits an application containing:
• consolidated financial statements of the network including, for the previous year and the current year, the new entity;
• application for extension of collective approval. Failure to respond within one (1) month from receipt of the application file constitutes authorization.

Article 6: De-affiliation The de-affiliation of a member entity from a network of Category A MFIs removes it from the scope of collective approval. De-affiliation initiated by an affiliate is subject to prior approval by the Central Bank, which processes this application appropriately depending on whether the institution wishes to affiliate with another network or operate independently. The Central Bank's decision specifies if:

• the MFI can de-affiliate and simultaneously affiliate with another network;
• the MFI will benefit from an individual approval as of its de-affiliation date;
• the MFI will not benefit from a new approval, must immediately cease all financial activities and enter liquidation; in this case, the financial solidarity rules applicable within networks continue to apply until the closure of liquidation operations. De-affiliation initiated by a network's umbrella structure is subject to prior approval by the Central Bank, which processes this application appropriately depending on whether the institution can affiliate with another network or operate independently. The Central Bank's decision specifies if:
• the MFI may be de-affiliated under penalty of simultaneously affiliating with another network;
• the MFI will benefit from an individual approval as of its de-affiliation date;
• the MFI will not benefit from a new approval, must immediately cease all financial activities and enter liquidation; in this case, the financial solidarity rules applicable within networks continue to apply until the closure of liquidation operations.

Article 7: Failure to comply with certain rules set by the statutes of the financial cooperative results in withdrawal of the approval granted by the Central Bank. In this case, and after a formal notice addressed to the financial cooperative and failure by it to rectify the identified anomaly(ies), the Central Bank may withdraw its approval in the following cases:

• the number of members has been below the minimum number fixed by the statutes for more than three (3) years;
• absence of regular activity during a financial year and non-compliance with mutualist action rules defined by the statutes.

Article 8: Approval of Category B MFIs Category B MFIs must demonstrate a minimum fully paid-in cash capital of at least:

• 50 million ouguiyas for public limited companies seeking approval authorizing them to receive funds from the public;
• 25 million ouguiyas for public limited companies seeking approval authorizing them to conduct credit operations and not collecting public savings, with the exception of guarantee deposits and deposits constituting a prerequisite for credit, held in a dedicated account until realization of the financing operation. Subscription and payment of capital must be carried out in an account opened for this purpose in the books of the Central Bank. Furthermore, the capital of Category B MFIs authorized to receive public funds must be held by at least 35% by one or more shareholders, legal persons, demonstrating a minimum of 10 years of successful experience in banking or microfinance. Any transfer of shares leading to a downward crossing of the threshold mentioned in the previous paragraph may lead the Central Bank to re-examine the approval if it considers that the transfer endangers public savings or the financial or organizational sustainability of the institution.

Article 9: Registration of Category C MFIs Category C MFIs must submit an application file for registration as provided in the Annex.

Article 10: Exercise of Activity Any MFI that, after receiving approval or registration, does not exercise activity for twelve (12) months has its approval withdrawn.

Article 11: Central structures for network animation and promotion When the Central Bank observes the de facto exercise of network microfinance activity by Category A MFIs, approved or not, it orders the concerned MFIs and the entity identified as the organizer of the de facto network to:

• take a collective decision regarding the maintenance or not of the network organization;
• in case of maintenance, initiate procedures for the constitution of one or more unions or a federation; and submit an application file for collective approval as a union or federation of Category A MFIs to the Central Bank. The Central Bank notifies the organizing entity of the de facto network operation and sets a deadline not exceeding six (6) months for submitting an application file for collective network approval. After this deadline, or when the submitted application for collective approval to the Central Bank does not result in approval, the Central Bank:
• designates the central structure for network animation and promotion;
• specifies, if necessary, restrictions on their powers compared to those vested in Unions and Federations;
• sets the deadline within which said structure must prepare and submit, on behalf of the network, an application for collective approval for a union or federation and transfer its powers to it. The powers of the central network animation and promotion structure cease:
• with the approval of the Union or Federation replacing it as the network structure;
• or by decision of the Central Bank.

Article 12: This Instruction repeals and replaces all contrary provisions or those duplicating it, and enters into force as of its signature date.

Annex 1 to Instruction No. __/GR/07 on the approval and registration of MFIs: Descriptive form to be completed for Category C MFIs

Field	Details
Name/Corporate name of the MFI	[To be filled]
Legal Form	(statutes and internal regulations attached)
Registration number	in the competent administrative register (attach receipt if registration is pending)
Registered office address	[To be filled]
Administrative office address	(if different)
Number and address of agencies/branches	[To be filled]
Name and function of responsible managers	(attach any proof of identity and organizational chart)
Contact details	Telephone(s): [ ]<br>FAX: [ ]<br>Email (electronic address): [ ]
Where applicable, attach:	YES / NO<br>IF YES, description:<br>- technical assistance agreement,<br>- agreement with the State or development and solidarity organizations.

Description of means implemented, financial policy, and perspectives for development and balance over 5 years, including:

• Financial operations to be carried out
• Non-financial operations (if any)
• Interest rates and commissions charged
• Opening hours and days

Credit Operations: 1. to 10. (type of credit, duration, target clientele, financial operations, guarantees used)

1. Consumer credit, welding credit, campaign credit, storage credit, working capital credit, LVM, GCV, etc.
2. This refers to the economic or social operation financed by credit (equipment purchase, agricultural inputs, food, working capital for urban commerce, etc.)

Mandatory deposits & funds made available to the MFI for granting credit Interest rates and commissions Other operations Days and opening hours IT means and accounting means Others, including financial perspectives

I, the undersigned, in my capacity as manager of the MFI authorized to submit the registration application, hereby certify on honor the veracity and sincerity of the communicated information.