Instruction No. 069/AMF-UMOA/2023 on Collective Investment Undertakings Compliant with Islamic Finance Principles and Rules on the UMOA Regional Financial Market

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INSTRUCTION NO. 069/AMF-UMOA/2023

RELATING TO COLLECTIVE INVESTMENT UNDERTAKINGS COMPLIANT WITH THE PRINCIPLES AND RULES OF ISLAMIC FINANCE ON THE UMOA REGIONAL FINANCIAL MARKET

The UMOA Financial Markets Authority

Having regard to the revised Treaty of the West African Monetary Union (UMOA) of July 12, 2019, which entered into force on October 1, 2022, modifying the name of the Regional Council for Public Savings and Financial Markets (CREPMF) to the UMOA Financial Markets Authority (AMF-UMOA);

Having regard to the Convention of July 3, 1996 establishing the Regional Council for Public Savings and Financial Markets, particularly its Annex relating to the composition, organization, functioning, and powers of the Regional Council for Public Savings and Financial Markets;

Having regard to General Regulation No. 001/97 of November 28, 1997 relating to the Organization, Functioning, and Control of the UMOA regional financial market, as modified by Decision No. CM/15/09/2022 of September 30, 2022;

Having regard to Regulation No. 10/2022/CM/UEMOA relating to Islamic financial securities, Self-Managed Sukuk Issuance Companies, and Sukuk Issuance Funds in UEMOA;

Having regard to Decision No. 004 of April 29, 2021/CM/UMOA appointing the President of the Regional Council for Public Savings and Financial Markets;

Having regard to Instruction No. 66/CREPMF/2021 of December 16, 2021 relating to Collective Investment Undertakings and their Management Companies on the UMOA regional financial market;

Having regard to the deliberations of the AMF-UMOA in its session of November 18, 2022;

HAS DECIDED:

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Instruction No. 069/AMF-UMOA/2023

Article 1: Definition

For the purposes of this Instruction, "Islamic CIUs" means Collective Investment Undertakings compliant with the principles and rules of Islamic finance as set forth by the Compliance Council. Islamic CIUs are created in accordance with Article 3 below.

Article 2: Purpose

This Instruction sets the rules relating to Islamic CIUs and their Management Companies on the UMOA regional financial market.

Without prejudice to the provisions of this Instruction, other existing provisions applicable to market participants apply to Islamic CIUs, insofar as they are not derogated from by this Instruction.

Article 3: Typology of Islamic CIUs and Applicable Texts

Islamic CIUs may be created in one of the legal forms provided for in the Instruction relating to Collective Investment Undertakings and their Management Companies on the UMOA regional financial market.

The provisions of the Instruction referred to in the first paragraph above apply to Islamic CIUs insofar as they are not derogated from by the provisions of this Instruction.

Article 4: Approval Application File

When applying for the approval of an Islamic CIU, the file must be constituted in accordance with the Circular relating to the documents and information to be attached to the approval application for a CIU and the procedures for filing registration applications and periodic reports.

In addition to the documents requested in Annex 1 of the aforementioned Circular, the approval file must include:

• the composition of the Compliance Council foreseen for the Islamic CIU;
• the letter of mission and the charter of the Compliance Council;
• the audit plan for compliance with the principles and rules of Islamic finance;
• the Key Information Document including the investment strategy, compliant with the principles and rules of Islamic finance;
• the certificate of compliance issued by the Compliance Council.

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Instruction No. 069/AMF-UMOA/2023

Article 5: Information to be Provided to the AMF-UMOA

The Islamic CIU is subject to compliance with the Circular relating to key information for investors and the Circular relating to the content of the CIU prospectus.

In addition to the requirements of the aforementioned Circular, the statutes or regulations of the Islamic CIU and the Prospectus must notably mention the following information:

• the CIU was created and operates in accordance with the principles and rules of Islamic finance as defined and approved by the Compliance Council;
• the identity of the members of the Compliance Council and a synthetic summary of their competencies;
• the investment strategy approved by the Compliance Council and applied in the Islamic CIU;
• the internal or external Sharia compliance audit unit and its composition;
• the method for managing revenues non-compliant with the principles and rules of Islamic finance as defined and approved by the Compliance Council, where applicable;
• the determination and calculation methods for the share to be paid, where applicable, by the Islamic CIU to a charitable organization, the name and contact details of the charitable organization benefiting from said share;
• the costs of compliance with the principles and rules of Islamic finance borne by the Islamic CIU and, where applicable, included in the management fee amount.

An Islamic CIU is subject to compliance with the requirements of the Circular relating to information to be provided to the AMF-UMOA. The table relating to semi-annual and annual information must include:

• the composition of the Compliance Council and any changes in this composition;
• any significant changes occurring in the Islamic CIU.

Article 6: Fees of the Islamic CIU

An Islamic CIU is subject to compliance with the requirements of the Circular relating to CIU fees. In addition to the commissions and fees provided for in the aforementioned Circular, the Islamic CIU may levy fees related to compliance with the principles of Islamic finance and must mention them in the prospectus, where applicable.

Article 7: Modification of the Characteristics of the Islamic CIU

In the event of a modification in the composition of the Compliance Council or a modification in the investment strategy or management modalities of the Islamic CIU, the General Assembly of the Islamic CIU or the Management Company of the Islamic CIU

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Instruction No. 069/AMF-UMOA/2023

submits to the AMF-UMOA the approval form as provided for by the Circular relating to key information for investors and the Circular relating to the content of the CIU prospectus mentioned in Article 10, adding the modifications in the composition of the Compliance Council.

Article 8: Compliance Council

Each Islamic CIU must have a Compliance Council for the principles and rules of Islamic finance, whose missions, conditions, and modalities of intervention are fixed in the Instruction relating to Compliance Councils for the principles and rules of Islamic finance for Actors and Issuers on the regional financial market.

The Compliance Council is established by the Regulations of the Islamic CIU.

The Board of Directors or the Supervisory Board of the Islamic CIU or the Management Company ensures that the Compliance Council has the means and information necessary to perform its functions independently and objectively. In particular, it must ensure that the Compliance Council is not subject to any influence from the Executive Body or its own members.

The decisions and/or certificates of the Compliance Council are binding on the Islamic CIU.

Article 9: Audit of Compliance with the Principles and Rules of Islamic Finance

The Islamic CIU must have an internal or external audit unit for compliance with the principles and rules of Islamic finance, responsible for examining and controlling the compliance of the Islamic CIU with the principles and rules of Islamic finance in accordance with the compliance certificates and decisions of the Compliance Council, and for producing periodic reports to be presented to said Council and to the Board of Directors or the Supervisory Board of the Islamic CIU or to the Management Company.

The audit unit is composed of one or more members specializing in Islamic finance.

The Compliance Council must ensure, once a year, the effectiveness of the compliance audit system.

The Board of Directors or the Supervisory Board of the Islamic CIU or the Management Company must guarantee to said audit unit all documents and explanations it deems necessary for the exercise of its missions.

When said audit is outsourced, the choice of the auditor is previously approved by the Board of Directors or the Supervisory Board of the Islamic CIU or the Management Company.

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Instruction No. 069/AMF-UMOA/2023

Article 10: Annual Audit Report on Compliance with the Principles and Rules of Islamic Finance

The Compliance Council presents an annual audit report on compliance with the principles and rules of Islamic finance on the activities of the Islamic CIU to the General Assembly of the Islamic CIU or to the Management Company.

The Compliance Council may rely on the audit unit provided for in Article 8 below for the preparation of said report.

This annual report must notably contain in the annex:
a. The list of members of the Compliance Council; b. The Certificate of Compliance issued by the Compliance Council;
c. A synthesis and conclusions of the audit report on compliance with the principles and rules of Islamic finance;
d. Proof of payment, where applicable, of the donation share to the charitable organization approved by the Compliance Council as provided for in the Regulations of the Islamic CIU.

All provisions relating to financial statements regarding the modalities and deadlines for making them available to shareholders or unit holders, dissemination, and filing with the AMF-UMOA apply to the annual report of the Compliance Council, in accordance with the existing regulations relating to each form of Collective Investment Undertaking.

Article 11: Evaluation and Periodic Reports

In addition to the preparation of the annual Sharia compliance report on the activities of the CIU established by the Compliance Council, Islamic CIUs are subject to compliance with the requirements of the Circular relating to periodic reports of CIUs.

The Board of Directors or the Supervisory Board of the Islamic CIU or the Management Company evaluates the functioning of the Compliance Council on an annual basis. This evaluation is carried out using a collective and individual approach of the members and the President of the Council. An evaluation report is established for this purpose.

Article 12: Risk Management

An Islamic CIU must respect the provisions relating to its organization as set out in the Circular relating to risk management of CIUs and must take into account the risk of non-compliance with Sharia in its risk management policy.

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Instruction No. 069/AMF-UMOA/2023

Article 13: Entry into Force

This Instruction enters into force as of its date of signature. It will be published wherever necessary.

Done in Abidjan, on FEB 20, 2023

For the UMOA Financial Markets Authority,
The President

[Signature]
Badanam PATOKI