Instruction No. 003/2007-CSBF of May 11, 2007 on the Approval of Level 2 and Level 3 Microfinance Institutions

Follow us on: The Banking and Financial Supervision Commission (CSBF),

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

Having regard to Law No. 2005-016 of September 29, 2005 on the activity and control of microfinance institutions (MFIs),

Having regard to Decree No. 2007-012 of January 9, 2007 fixing the legal forms of microfinance institutions and the procedures for their registration in the trade and companies register,

Having regard to Decree No. 2007-013 of January 9, 2007 fixing the minimum capital of credit institutions and the nominal value of participation securities,

DECIDES

Article 1: Procedures for submitting the application

Any application for approval shall be prepared in duplicate and signed by a duly authorized person.

It shall be deposited with the General Secretariat of the CSBF, which shall only issue a receipt attesting to the filing of the file when the elements provided for in Articles 4 or 8 of this instruction are actually received.

Article 2: Procedures for processing applications

2.1 In the context of processing the file, the General Secretariat of the CSBF may request the production of additional information. It shall notify the applicant of the closure of the processing and the transmission of the file to the Commission, no later than six (6) months after the issuance of the aforementioned receipt.

2.2 The Commission has a period of one (1) month from the date of the notification letter referred to in point 2.1 above to rule. The Commission's decision shall be reasoned. A favorable decision shall state the classification level and the authorized operations. It shall specify the suspensive conditions imposed by the Commission and grant the applicant a deadline for their fulfillment.

SECTION I: INDIVIDUAL APPROVAL

Article 3:

Any application for individual approval must be submitted to the General Secretariat of the CSBF in accordance with the provisions of Article 1.

Article 4:

The application file for individual approval must contain all elements likely to enlighten the Commission in its decision. It notably includes:

a letter of application for approval conforming to the model in Annex I;

a certified document signed jointly by the capital providers expected to hold at least 5% of the capital;

a certified document signed jointly by the capital providers designating the representative(s) to carry out the necessary formalities;

information on the institution and the description of the projected activity indicated in Annex II;

a letter conforming to the model given in Annex III and information on the capital providers as defined in Annex III bis;

all information allowing the assessment of the identity and activities of the project promoters. In the case of a natural person, attach a criminal record extract (bulletin n° 3) or a certificate in lieu thereof, issued by the competent authority of the interested party's country of origin, dated less than three (3) months ago;

all information allowing the assessment of the identity and activities of the local or foreign funders associated with the project. In the case of a natural person, attach a criminal record extract (bulletin n° 3) or a certificate in lieu thereof, issued by the competent authority of the interested party's country of origin, dated less than three (3) months ago;

a letter conforming to the model given in Annex IV and information on the executives in Annex IV bis.

SECTION II: COLLECTIVE APPROVAL

Article 5:

Collective approval is granted to a network comprising a central body and affiliated mutualist MFIs, within the meaning of Article 26 of Law No. 2005-016, each having legal personality.

Regardless of its level of development, a network can only be grouped around a single central body.

Article 6:

Basic mutualist MFIs affiliated to a network cannot have a classification level provided for in Article 13 of Law No. 2005-016 higher than that of the central body.

Article 7:

The central body prepares and submits the application for collective approval for itself and for the MFIs affiliated to it. To this end, it:

constitutes its own file;

collects and carries out an exhaustive analysis of the information relating to each affiliated mutualist MFI necessary to obtain collective approval;

summarizes the required information in table format in accordance with the models provided in Annex VIII of this instruction.

The central body is required to ensure at all times the sincerity, availability, and completeness of information relating to the network, notably those required in this instruction.

Article 8:

The application file for collective approval must contain all useful information on the central body and on each of the affiliated MFIs. It includes the following documents:

a letter of application for collective approval following the model in Annex V;

information on the network as defined in Annex VI;

a letter conforming to the model given in Annex VII and information on the quality of each executive officer of the central body contained in Annex VII bis;

the minutes of the meeting of the assembly authorized to constitute the central body;

pro forma financial statements, prepared according to the Chart of Accounts for Credit Institutions (PCEC), for the central body for its own operations and for the affiliated mutualist MFIs.

The decision of collective approval shall state the approved central body and the affiliated MFIs to whom the effects of the collective approval are extended.

SECTION III: FULFILLMENT OF SUSPENSIVE CONDITIONS

Article 9:

Before the expiration of the deadline set by the Commission, the promoters must justify the fulfillment of the suspensive conditions fixed by the decision notified to them.

To this end, they must communicate to the General Secretariat of the CSBF the documents relating thereto, notably:

the deed of incorporation or modification of the company;

the definitive statutes;

the original certificate of deposit or transfer of funds constituting the capital or endowment;

the receipt of the application for publication in the Official Journal;

the extract of the registration in the trade and companies register.

In particular, the promoters must justify the effective constitution of the company in Madagascar and the release of the minimum capital required by the institution.

The approval becomes effective after notification of the lifting of the suspensive conditions by the President of the Commission. The institution is then registered in the register of approved credit institutions.

In addition to the requirements of general law, the following information must appear on all official documents of the MFI:

classification level (MFI2 or MFI 3);

mutualist or non-mutualist status;

registration number in the register of approved credit institutions.

If the suspensive conditions are not fulfilled by the end of the deadline set by the decision and if no request for extension has been made, the decision becomes null and void.

SECTION IV: FINAL PROVISIONS

Article 10:

Any non-approved body carrying out microfinance activities has a period of one (1) year, after the publication of Law No. 2005-016, to submit an application for approval provided for in Article 80 of the aforementioned law.

Article 11:

This instruction, which repeals all previous provisions of the same object and contrary thereto, notably Circular No. 001/99-CSBF of March 5, 1999, shall enter into force upon notification to the professional association.

Done in Antananarivo, on May 11, 2007

For the Banking and Financial Supervision Commission,

THE PRESIDENT, Frédéric RASAMOELY

ANNEXES:

SYNTHESIS OF INFORMATION ON THE NETWORK

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