Instruction N°001/08-CSBF on Financial Transparency of Microfinance Institutions

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Having regard to Law No. 95-030 of February 22, 1996, relating to the activity and supervision of credit institutions, as amended,

Having regard to Law No. 2005-016 of September 29, 2005, relating to the activity and supervision of microfinance institutions,

Having regard to Decree No. 2007-027 of January 29, 2007, appointing the Governor of the Central Bank of Madagascar,

Having regard to Decree No. 2008-446 dated May 5, 2008, appointing the members of the Banking and Financial Supervision Commission (CSBF),

Having regard to Instruction No. 001/2005-CSBF of June 1, 2005, relating to the accounting plan for credit institutions,

Having regard to Instruction No. 002/2005-CSBF of June 1, 2005, relating to the conditions for periodic and annual closing, and the publicity of accounting documents for credit institutions,

Having regard to Instruction No. 007/2007-CSBF of December 7, 2007, setting the minimum operating and control structures for microfinance institutions,

In application of the provisions of Article 41 of Law No. 95-030 and Article 68 of Law No. 2005-016, which empower the CSBF to set rules regarding the conditions for periodic closing, presentation and communication of financial information, and certification of accounts for credit institutions,

Having regard to the opinion formulated by the profession pursuant to the last paragraph of Article 36 of the aforementioned Law No. 95-030,

DECIDES

Article 1

This Instruction sets the rules regarding the financial transparency of microfinance institutions (MFIs), namely the information to be provided, the conditions for periodic and annual closing, as well as the procedures for establishing the sector database at the General Secretariat of the CSBF.

Section I Data and Transmission Modalities

Article 2

Data relating to the financial transparency of microfinance institutions include, in addition to accounting statements, prudential and management indicators, general information, and statistical information. The nature of the information to be communicated differs according to the nature and level of the MFI.

Article 3

Any MFI must communicate to the General Secretariat of the CSBF the information stipulated in Article 2 according to the templates and transmission modalities set out in the annex to this Instruction.

For mutualist MFIs holding a collective license, all declarations are ensured by the central body, in accordance with the provisions of the microfinance law in its Article 41.

Article 4

The following information must be communicated to the General Secretariat of the CSBF with the annual documents:

• the name of the person responsible for the management and transmission of the information referred to in Article 2, and that of their deputy;
• the name of the person responsible for the management information system and that of their deputy.

Article 5

Any modification relating to the information communicated to the General Secretariat of the CSBF must be made in accordance with this Instruction and explicitly indicated during the periodic transmission.

Section II Conditions for Annual Closing of Accounts and Publication Rules

Article 6

The end-of-year accounts as well as the entirety of the reports relating to these documents prepared by the statutory auditor must be transmitted to the General Secretariat of the CSBF at the latest one (01) month before their presentation to the Ordinary General Meeting.

The Ordinary General Meeting of shareholders or members called upon to rule on the annual accounts must be held before March 31 of each year. The convocation of this Meeting is subject to obtaining authorization from the General Secretariat of the CSBF for MFIs 2 and 3.

The approved annual accounts as well as a copy of the minutes of the Ordinary General Meeting approving these accounts must be transmitted to the General Secretariat of the CSBF within thirty (30) days following the meeting of said Assembly. The certified accounts must be accompanied by the various prudential ratio control statements verified by the statutory auditor, for MFI2 and MFI3.

Article 7

The annual accounts approved by the Ordinary General Meeting are published at the expense of each institution in the Official Journal of the Republic of Madagascar, and in a newspaper of legal announcements, within a period of 30 days from the approval of the accounts.

This publication must notably include the opinion of the statutory auditor or the body acting in their place on the sincerity and regularity of the information given, as well as an extract of the financial statements according to the model provided in the annex. The headings may be subdivided, at the initiative of the MFIs, in order to ensure better information for the public. These documents are kept available to clients and more generally to third parties.

A copy of the documents thus published must be sent to the General Secretariat of the CSBF within 30 days after publication.

For institutions benefiting from a collective license, the mandatory publication concerns the combined financial statements according to the model provided in the annex. These documents must be displayed in all operational premises of the institution.

Each institution remains free to carry out other complementary individual publications.

Section III Miscellaneous Provisions

Article 8

Information specific to an MFI, available in the database held at the General Secretariat of the CSBF, may be made available to it.

It is for the latter to assess the consolidated information of the MFI sector likely to be communicated.

Article 9

Correspondence relating to the information subject to this Instruction must bear the signature of one of the executive managers of the MFI or the grouping structure, union or federation, for mutualist MFIs organized in a network.

Article 10

Non-compliance with the provisions of this Instruction entails the application of the sanctions established by Articles 49 and/or 52 of Law No. 95-030 of February 22, 1996 and by Article 41 of Law No. 2005-016 of September 29, 2005.

Section IV Transitional and Final Provisions

Article 11

This Instruction repeals all contrary provisions, notably those relating to mutualist financial institutions in Instruction No. 002/2005-CSBF of June 1, 2005 relating to the conditions for periodic and annual closing, and the publicity of accounting documents for credit institutions.

Article 12

The first declarations will cover the periodic statements for the end of 2008. Information on the financial years closed on December 31, 2005, December 31, 2006, and December 31, 2007 must be presented according to the models provided by this Instruction and reach the General Secretariat of the CSBF before the end of the first quarter of 2009.

Any other information consistent with the certified accounts and necessary for supervision may be requested from the institution.

Article 13

This Instruction enters into force upon notification to the professional association.

Done in Antananarivo, on November 14, 2008

For the Banking and Financial Supervision Commission, The President,

Frédéric RASAMOELY

ANNEXES:

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