BANQUE CENTRALE DU CONGO

LE GOUVERNEUR

INSTRUCTION N° 18 RELATIVE AUX CONDITIONS D'AGREMENT DES ETABLISSEMENTS DE CREDIT, DE LEURS DIRIGEANTS ET MODIFICATION DE LEURS SITUATIONS STATUTAIRES

(Modification n° 3)

The Central Bank of Congo,

Having regard to Law No. 18/027 of December 13, 2018, on the organization and functioning of the Central Bank, particularly Articles 10, 11, and 25;

Having regard to Law No. 22/069 of December 27, 2022, on the activity and supervision of Credit Institutions, particularly Article 21;

Having regard to Law No. 22/068 of December 27, 2022, on the fight against money laundering and the financing of terrorism and the proliferation of weapons of mass destruction, particularly Titles I and III;

Enacts the following provisions:

TITLE I: GENERAL PROVISIONS

CHAPTER I: OBJECT AND SCOPE

Article 1:

This Instruction aims to define the required conditions and the applicable procedure for obtaining, from the Central Bank of Congo, the approval of Credit Institutions referred to in Article 2, their directors, as well as authorizations for the modification of elements that contributed to the granting of approval.

It also defines the operations and decisions that must be subject to prior information to the Central Bank of Congo by these credit institutions.

Article 2:

This Instruction applies to the Credit Institutions listed below, referred to as "subject institutions":

• banks;
• savings banks.

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CENTRAL BANK OF CONGO

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CHAPTER II: DEFINITIONS

Article 3:

For the purposes of this Instruction, the following terms are understood as:

• administrator: member of the deliberative body designated by the General Meeting of shareholders;

• executive administrator: administrator who is also a member of the executive body of the subject institution;

• non-executive administrator: administrator who is not a member of the executive body of the subject institution;

• independent administrator: non-executive administrator not related to the subject institution. A member of free interest of the Board of Directors who contributes, through their competence and freedom of judgment, to the board's capacity to ensure its missions. They must be devoid of particular interest links of a professional (significant shareholder, employee, business relationship, service provider, etc.) or personal nature with the subject institution and its shareholders.

• risk committee: a governance committee, emanating from the deliberative body, created to assist it in determining risk appetite, monitoring the implementation by the executive body of the risk appetite statement, and ensuring supervision of the risk management function;

• deliberative body: body responsible, on behalf of shareholders, for defining the strategic direction of the institution and effective supervision of activity management. It is constituted as a board of directors;

• executive body: body responsible, on behalf of the deliberative body, for the day-to-day management of the institution's activities as well as the effective steering of the implementation of strategic objectives and risk policy set by the deliberative body. It corresponds to the General Management, Management Committee, Direction Committee, or management, and is composed of at least two members, namely: the General Manager and the Deputy General Manager;

• sensitive function: operational function linked to the core banking business or support function requiring proven expertise, the disruption of which could cause significant risks to the subject institution;

• head of sensitive function: senior executive of a credit institution whose appointment is subject to approval by the Central Bank of Congo, due to the sensitive operational nature of their function given the risks implied by their activity;

• essential services: financial services offered by the subject institution, on the one hand, and sensitive functions, on the other hand, the interruption of which would seriously harm the normal functioning of said institution.

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CENTRAL BANK OF CONGO CONTINUED, PAGE 3.

CHAPTER III: OPERATIONS AND ACTS SUBJECT TO PRIOR APPROVAL AND AUTHORIZATION

Article 4:

The creation of a credit institution and/or the exercise of credit institution activity in one of the categories listed in Article 2 of this Instruction is subject to prior approval by the Central Bank of Congo.

Furthermore, credit institutions are required to request prior approval from the Central Bank of Congo for the following operations:

• the change of category of a Credit Institution;
• participation in the share capital of a Credit Institution;
• the appointment of members of the deliberative body;
• the appointment of members of the executive body;
• the appointment of heads of internal control functions;
• the appointment of heads of sensitive functions.

Article 5:

Subject institutions are required to request prior authorization from the Central Bank of Congo in the following cases:

• the modification of their statutes;
• the merger, split, or sale of business units of interest to a credit institution;
• the sale, by a credit institution, of all or, within limits set by the Central Bank of Congo, part of its assets, clientele, or activity;
• the acquisition, by a credit institution, of participations in a foreign enterprise;
• investment operations involving securities issued or guaranteed by a foreign state, an international organization, or a foreign enterprise;
• the opening, transfer, or closure of a branch or agency of the credit institution on national territory or abroad;
• the voluntary dissolution of a credit institution;
• any acquisition or sale operation of shares or parts, representing or not representing the capital of a credit institution, which would lead the transferee to acquire or lose, directly or indirectly, alone or in concert with other persons, a significant portion of the share capital or voting rights;

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CENTRAL BANK OF CONGO CONTINUED, PAGE 4.-

• any other strategic decision, such as derogations from the principles of organization of the internal control system, outsourcing of internal control functions, outsourcing of other essential service provisions; derogations from the organization of governance committees and any other operation resulting in a significant modification of the situation of the subject institution.

Article 6:

The following are subject to prior information to the Central Bank of Congo:

• any development, modification, or extension of activities exercised by the credit institution;
• at least one month before this operation, any acquisition or sale of shares or parts, representing or not representing the capital of a credit institution, with indication of the identity of the credit institution and the transferee, which does not fall within the scope of operations subject to prior authorization defined in Article 5;
• the opening, transfer, or closure of a counter of a subject institution carrying out exclusively cash operations.

Furthermore, the credit institution notifies the Central Bank of Congo of its intention:

• to acquire or create, directly or indirectly, a subsidiary abroad exercising an activity referred to in Article 60 of this law; this notification must contain information on the activities, organization, shareholding, and directors of the concerned enterprise;
• to open a branch on the territory of another State to exercise all or part of the activities authorized to it in the Democratic Republic of Congo. This notification is accompanied by an activity program in which are indicated in particular the categories of operations envisaged, the structure of the branch's organization, the domiciliation of correspondence in the concerned country, and the names of the branch's directors.

CHAPTER IV: PROCEDURE FOR PRIOR APPROVAL AND AUTHORIZATION Section 1: File Preparation Article 7:

Any request for prior approval or authorization and any prior notification or information must be addressed in French to the Governor of the Central Bank of Congo.

This request or notification is supported by a file meeting the requirements of this Instruction, accompanied by the minutes of the deliberation of the competent body related to the request made.

The documents transmitted in support of the file referred to in paragraph 2 of this article must be authenticated by a notary, with the exception of those issued by competent public authorities.

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CENTRAL BANK OF CONGO

CONTINUED, PAGE 5.

Section 2: Examination of the File

Article 8:

The Central Bank of Congo notifies the applicant of the receipt of their request for approval or prior authorization.

It informs them, after preliminary examination, either of the completeness of their file or of the need to complete it with additional elements.

Article 9:

The Central Bank of Congo renders its decision within a period of 90 days from the receipt of the letter informing the applicant of the completeness of the file.

During its examination, the Central Bank of Congo may be led to request the applicant to transmit additional elements. In this case, the transmission period for these elements is added to the initial 90-day period.

When a decision involves obtaining the opinion of a national or foreign regulatory authority, the period for the pronouncement of the Central Bank of Congo's decision is extended by the response time observed by said authority.

Article 10:

The Central Bank of Congo, if it deems it useful, may summon the representative(s) of the applicant for an interview as soon as a request for approval or prior authorization is introduced or on the occasion of prior information.

Depending on the risk profile of the requesting institution, whether new or existing, the Central Bank of Congo may attach additional conditions to its decision of approval or prior authorization, concerning in particular the share capital, governance structures, or operational organization.

TITLE II: APPROVAL

CHAPTER I: APPROVAL OF CREDIT INSTITUTIONS

Article 11:

Approval as one of the two categories of Credit Institutions covered by this instruction or the change of category is subject to compliance with the requirements of legal texts and the entire prudential regulation applicable to it.

The request for approval is supported by a file consisting of the following elements:

• a letter of request for approval written in French and addressed to the Governor of the Central Bank of Congo;

• an original copy of the notarized statutes of the applicant;

• the duly notarized minutes of the constituent general meeting of the new company and the notarized mandate of the representatives of legal entities, shareholders, partners, or members of the requesting company, authorizing them to represent it at this constituent assembly;

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CENTRAL BANK OF CONGO CONTINUED, PAGE 6.-

• the minutes of the extraordinary general meeting of legal entity shareholders, partners, authorizing them to participate in its share capital;
• the national identification number and an extract from the Commercial and Movable Credit Register of the applicant;
• the certificate of deposit, with a local bank, of the paid-up share capital at an amount at least equal to the minimum capital fixed by the Central Bank of Congo;
• the list of shareholders, partners, or members and directors;
• elements allowing the assessment of the honorability of shareholders, partners, or members, notably the sworn declaration of non-involvement in money laundering and terrorism financing operations;
• elements allowing the assessment of the honorability of members of the deliberative body, directors, heads of control functions, and other sensitive functions, notably the criminal record extract and the sworn declaration of non-involvement in money laundering and terrorism financing operations;
• the curriculum vitae of members of the deliberative body, directors, heads of control functions, and other sensitive functions or any other element attesting to their professional competence and experience;
• the notarized statutes as well as the certified financial statements of the last three accounting years of legal entity shareholders, partners, or members;
• a document from the banking supervisory authority of the country of origin or residence, for foreign natural and legal persons, attesting to compliance with exercise conditions in said country;
• the location of the registered office, agencies, and other commercial establishments;
• a business plan for a minimum period of 3 years including the following elements:
  • the envisaged business model;
  • the strategic plan including the indication of envisaged partnerships and hypotheses for commercial, geographic, and sectoral development, the typology of products and services offered to clients as well as realistic forecast financial statements, prepared according to current accounting standards;
  • standard contracts for products and services offered to clients;
  • realistic projections regarding compliance with prudential regulation in the short and medium term;
  • the governance system;

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CENTRAL BANK OF CONGO CONTINUED, PAGE 7.-

• the internal control and risk management system;
• the system for fighting money laundering and terrorism financing;
• the operational organization, including the organizational chart, adequacy of staff, skills, technical and financial resources, and information systems;
• the envisaged schemes for outsourcing essential service provisions, in conformity with the modalities defined in section 3;
• of this Instruction 18 and section 6 regarding the outsourcing of essential service provisions) of Instruction 22 on risk management of credit institutions;
• the duly notarized minutes of the meeting of the deliberative body setting the activities to be developed and determining tolerance and risk appetite policy.

Article 12:

The request for approval must also include a description of the modalities of the selection process for shareholders, members of deliberative and executive bodies, heads of control functions, and other sensitive functions as set out in the provisions of Chapters II and III of this Title.

Article 13:

The statutes of the applicant must ensure appropriate governance, in accordance with Instruction 21 of the Central Bank of Congo.

CHAPTER II: APPROVAL OF SHAREHOLDERS, PARTNERS, OR MEMBERS

Article 14:

The applicant communicates to the Central Bank of Congo, for approval, the identity of all its effective shareholders, partners, or members.

To this end, it transmits to the Central Bank of Congo the identity, accompanied by a related document issued by the competent Public Administration, of natural or legal persons who, directly or indirectly, acting alone or in concert with others, hold at least one share of the share capital. This communication includes the indication of the portions of share capital and voting rights held by these persons.

Banks and savings banks must be constituted with at least four (4) shareholders, partners, or members each holding at least 15% of the share capital.

MCM

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CENTRAL BANK OF CONGO CONTINUED, PAGE 8.-

The four (4) shareholders, partners, or members each holding at least 15% of the share capital must not be related persons or affiliated parties within the meaning of Instruction No. 51 setting rules regarding transactions of Credit Institutions and financial companies with related persons.

Article 15:

The Credit Institutions covered by this Instruction are constituted as a plural-person anonymous company with a Board of Directors.

Article 16:

Any participation by a fund, consortium, or holding in the capital of a subject institution requires the resolutive condition that it accepts, in advance, that the following linked entities be subject to both documentary and on-site control by the Central Bank of Congo, under its prerogatives as Regulatory and Supervisory Authority of financial institutions of the Democratic Republic of Congo:

• legal persons that directly or indirectly control the institution, installed in the Democratic Republic of Congo or abroad;
• subsidiaries of these legal persons, installed in the Democratic Republic of Congo or abroad;
• any other enterprise or legal person belonging to the same group installed in the Democratic Republic of Congo or abroad.

Article 17:

The Central Bank of Congo may refuse approval when:

• even in the absence of a conviction, it considers that one or more shareholder(s) of the requesting institution present(s) significant risks, particularly in matters of fighting money laundering and terrorism financing and proliferation;
• the exercise of its mission of supervision of the requesting institution is likely to be hindered either by the existence of capital or control links, direct or indirect, between the requesting institution and other natural or legal persons, or by the existence of legislative or regulatory provisions of a State to which one or more of these persons belong;
• the communicated information does not allow identifying the effective owner(s) up to the highest level of the control chain or when the shareholding structure does not provide all guarantees of transparency;
• persons installed in high-risk and non-cooperative jurisdictions within the meaning of the Financial Action Task Force take participations in a financial institution in the Democratic Republic of Congo.

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CENTRAL BANK OF CONGO CONTINUED, PAGE 9.

Article 18:

The applicant must possess a reference shareholder, partner, or member, a legal or natural person, providing all guarantees of reputation, ethical standing, financial surface and/or professionalism in the banking, economic, financial, or any other sector. The latter must be able to meet its support obligations, particularly in case of difficulty.

The shareholder or partner, a legal or natural person, holding a participation greater than 50% of the institution's capital, enjoying adequate financial surface and not justifying professionalism in the banking and/or financial sector, is deemed a reference shareholder and must conclude a technical assistance contract with a partner of international renown operating in the banking and/or financial sector. This assistance contract must be concluded for a minimum duration of ten (10) years and submitted for prior approval by the Central Bank of Congo.

When no shareholder holds a fraction greater than 50% of the institution's capital, the applicant submits for approval by the Central Bank of Congo a reference shareholder chosen among the legal entities holding its share capital meeting the conditions set out in paragraph 1 of this article. In this case, all other shareholders are required to provide him with the necessary support at the deliberative bodies. In the event of refusal by the Central Bank of Congo to approve the designated shareholder, the approval of the requesting institution cannot be granted.

Article 19:

The reference shareholder is notably required to:

• prioritize involvement, without prejudice to the role of other shareholders, in the effective determination of the applicant's organization and in the effective supervision of its management, notably through the administrators who represent it within the deliberative body;

• provide operational and financial support to the applicant to ensure permanent means for its development, in accordance with the business plan submitted to the Central Bank of Congo during the approval request and subsequently modified, if necessary;

• produce all elements allowing to establish the adequacy of its expertise in the financial and banking field, notably information on banking or financial companies in the management of which it has been associated. Failing this, the reference shareholder must produce partnership contracts with third-party entities possessing recognized expertise through which it will provide the applicant with the necessary professionalism and experience;

• prioritize providing operational and financial support to the applicant to ensure its solvency, liquidity, and exchange position, notably in case of difficulty, without prejudice to the responsibility expected of all shareholders who are also required to contribute to the common effort.

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CENTRAL BANK OF CONGO CONTINUED, PAGE 10.

CHAPTER III: APPROVAL OF MEMBERS OF THE DELIBERATIVE BODY AND EXECUTIVE BODY AS WELL AS HEADS OF CONTROL FUNCTIONS AND OTHER SENSITIVE FUNCTIONS

Section 1: Common Provisions

Article 20:

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Members of the deliberating body and the executive body, as well as heads of control functions and other sensitive functions, must present all guarantees of honorability, professionalism, and competence necessary for the exercise of the missions assigned to them, as defined in Instructions 17, 21, and 22 of the Central Bank of Congo.

They must have a good command of the French language and must not have the status of Politically Exposed Person, within the meaning of Law 22/068 on the fight against money laundering and the financing of terrorism and the proliferation of weapons of mass destruction. If they acquire this status during their term of office, they must immediately resign from their positions within the credit institution.

Article 21:

The deliberating body and the executive body must each be composed of a majority of members of Congolese nationality. Heads of control functions must also be of majority Congolese nationality.

The regulated institution may request a derogation from the provisions of the preceding paragraph. In support of its derogation request, the regulated institution transmits to the Central Bank of Congo a compliance plan whose timeline must not exceed the deadline provided for in Article 193 of Law n° 22/069 of December 27, 2022, relating to the activity and control of Credit Institutions.

Article 22:

The requesting institution is required to submit to the Governor of the Central Bank of Congo, an application file for approval in favor of any member of the deliberating body and the executive body as well as any head of control functions and other sensitive functions, including the following elements:

• the curriculum vitae;
• certified copies of obtained diplomas;
• the criminal record extract dated less than three months ago and for persons who have resided abroad during the three years preceding the approval request, an equivalent document, duly legalized, issued by the host country;
• the residence certificate;
• the nationality certificate or certified copy of the currently valid passport;

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BANQUE CENTRALE DU CONGO

• the certificate of good conduct;
• copies of the notarized minutes of the meetings of the deliberating and executive bodies that ruled on his/her appointment;
• a document from the banking supervisory authority of the country of origin or residence, for foreign natural persons, attesting to compliance with the approval conditions in said country;
  • a sworn declaration signed by the interested party summarizing all administrative or judicial procedures ongoing or closed, the lawsuits ongoing or closed in which he/she was a party, the list of decisions taken by any regulatory authority against him/her, including, where applicable, refusals of admission to a professional organization and the status of disciplinary decisions ongoing or closed taken against him/her;
• the remuneration and other benefits related to the function;
• any element allowing to attest to his/her capacity to exercise the functions for which approval is sought.

The Central Bank of Congo may refuse the approval of a member of the deliberating body, a member of the executive body, a head of control functions, or a head of other sensitive functions when:

• it considers that the candidate presents significant risks notably in the field of combating money laundering and the financing of terrorism and proliferation, and this, even in the absence of a conviction;
• the applicant does not have a document from the banking supervisory authority of the country of origin or residence attesting to compliance with the approval conditions in said country for foreign natural persons. In this case, the applicant must proceed with the recruitment of a candidate of Congolese nationality and submit his/her approval file to the Central Bank of Congo.

Article 23:

The cessation of functions of the persons referred to in Article 20 of this Instruction must be communicated without delay to the Central Bank of Congo.

The regulated institution transmits the minutes of the meeting of the competent body approving the cessation of functions of the responsible person as well as the reasons for this cessation of function. It informs the Central Bank of Congo of any subsequent or prior litigation.

Section 2: Approval of members of the deliberating body

Article 24:

The exercise of the mandate of members of the deliberating body is subject to the prior approval of the Central Bank of Congo.

The duration of the mandate of members of the deliberating body and the conditions for its renewal are fixed in Instruction 21 of the Central Bank of Congo relating to the corporate governance of Credit Institutions.

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BANQUE CENTRALE DU CONGO SUITE, PAGE 12.

Article 25:
When a member of the deliberating body is a legal entity, the requirements of Article 20 of this Instruction apply to the natural person who represents it.

Article 26:
Independent directors must present all guarantees of independence with respect to approved shareholders and related persons. They must swear on oath that they meet the requirements of Instruction 21 relating to the governance of credit institutions.

Article 27:
The renewal of a mandate of a director of foreign nationality is subject to the transmission of elements on the composition of the deliberating body attesting that it is predominantly composed of Congolese nationals.

Article 28:
Credit institutions are required to pay particular attention to gender parity in the composition of the deliberating body by reserving a quota of 50% of administrators for the female gender, to be achieved in stages within a five-year horizon. Credit institutions ensure the achievement of this quota during the renewal of the mandate of Directors.

Section 3: Approval of members of the executive body

Article 29:
The exercise of the mandate of members of the executive body is subject to the prior approval of the Central Bank of Congo.
The duly notarized minutes of the appointment of members of the executive body must clearly specify the extent of the powers of each of them, the employment contracts and the clauses relating to remuneration and benefits in kind in accordance with the provisions of Instruction 21 of the Central Bank of Congo.

Article 30:
The duration and conditions for the renewal of members of the executive body are fixed in Instruction 21 of the Central Bank of Congo relating to corporate governance in Credit Institutions.

Article 31:
Upon the renewal of the mandate of a member of the executive body, the requesting institution communicates to the Central Bank of Congo in particular the notarized minutes of the deliberating body that decided on the renewal, the criminal record extract dated less than three months ago, and the performance contract evaluation report as provided for by Instruction 21 of the Central Bank of Congo.

MOM

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BANQUE CENTRALE DU CONGO SUITE, PAGE 13.-

Credit institutions are required to pay particular attention to gender parity in the composition of the executive body by reserving a quota of 33% minimum of the members of the executive body for women, to be achieved in stages within a five-year horizon. Credit institutions ensure the achievement of this quota during the renewal of the mandate of members of the executive body.

Section 4: Approval of heads of internal control functions

Article 32:

Appointments to the functions of head of second-level control of operational activity, compliance, risk management, and internal audit are subject to the prior approval of the Central Bank of Congo.

The functions of head of permanent second-level control in its three components and those of head of periodic third-level control must be entrusted to senior management executives, presenting all guarantees of morality, honorability, competence, and professional experience.

Heads of compliance, risk management, and internal audit must hold a hierarchical rank immediately below general management.

Article 33:

The approval of heads of control functions is subject to the following conditions:

• not be related to the regulated institution, within the meaning of the regulations of the Central Bank of Congo;

• not be in the case of ascendant and descendant links of the 1st degree with the members of the deliberating and executive bodies, and not present any risk of conflict of interest with these persons, nor with the regulated institution;

• not be an agent of the regulated institution, nor of a company belonging to the group to which said institution belongs;

• not be a corporate officer in a company related to the regulated institution;

• not be a supplier of the regulated institution;

• not have been an auditor or statutory auditor during the last three (3) years of several regulated institutions of the same category as the one soliciting it.

Article 34:

In support of an approval request, the applicant transmits the minutes of the meeting of the deliberating body approving the nomination proposed by the executive body as well as the employment contract, the remuneration elements, and the other elements required in accordance with this Instruction.

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BANQUE CENTRALE DU CONGO SUITE, PAGE 14.

The requesting institution must, in addition, annex to the file, in particular the charter governing the function, the job description, the internal procedures, the staff and resources allocated to the function as well as the organizational chart showing the hierarchical and functional attachment, in addition to the reinforced functional link with the deliberating body.

Section 5: Approval of heads of sensitive functions

Article 35:

Appointments to the sensitive functions below are subject to the prior approval of the Central Bank of Congo. These include in particular:

• the head of IT security; the head of IT;

• the head of combating money laundering and the financing of terrorism;

• the head of credit;

• the head of finance and accounting;

• the head of treasury;

• the head of foreign services;

• the head of national currency payments;

• the head of foreign currency payments.

TITLE III: PRIOR AUTHORIZATIONS

CHAPTER I: STATUTORY MODIFICATIONS

Article 36:

Any modification of the statutes of a regulated institution is subject to the prior authorization of the Central Bank of Congo. To this end, the applicant presents a file, accompanied by the minutes of the deliberation of the competent body in relation to the request made, showing the proposed modifications and the detailed statement of the reasons for the decision.

CHAPTER II: MERGER, SPLITTING OR SALE OF BUSINESS UNIT OPERATIONS AFFECTING A CREDIT INSTITUTION

Article 37:

When two approved credit institutions, or an approved institution and a non-approved legal entity, envisage a merger, split, or sale of a business unit operation, each of the approved entities must present a complete file, validated by the deliberating body, indicating the conditions under which this operation will take place.

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BANQUE CENTRALE DU CONGO SUITE, PAGE 15.

The file must include a detailed analysis relating to the legal consequences, including a compliance analysis, notably with regard to legislation on the prevention of money laundering, the financing of terrorism, and the proliferation of weapons of mass destruction, the impact on governance, changes in the business model, the consequences on the internal control and risk management framework, as well as the effects on the financial structure and the prudential situation.

The Central Bank of Congo, after analysis of the file including obligatorily the report of complete evaluation of the assets, liabilities, and off-balance sheet commitments of the two entities by an approved statutory auditor or an accredited external auditor, where applicable, prior authorization to proceed with the operation.

CHAPTER III: TAKING PARTICIPATION IN AN ENTITY REGISTERED ABROAD

Article 38:

Any taking of participation by a regulated institution in an entity registered abroad is subject to the prior authorization of the Central Bank of Congo. To this end, the applicant is required to transmit a complete file comprising:

• the description of the economic and legal logic of the operation, validated by the deliberating body, notably showing the impact on the financial and prudential situation, on the risk profile as well as any remediation measures;

• detailed information on the entity in which a taking of participation is envisaged, notably its statutes, an extract from the commercial register dated less than three months ago, the detailed list of its shareholding, the indication of its beneficial owners with their identity documents, its activity, its certified financial statements covering the last three financial years, where applicable, the identity of the supervisory authority from which it depends;

• the result of the due diligence;

• the description of the measures taken to ensure effective internal control of the entity namely first, second, and third-level control;

• the analysis of the money laundering and terrorism financing prevention framework.

The Central Bank of Congo may request any additional information deemed useful.

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BANQUE CENTRALE DU CONGO                                                                 SUITE, PAGE 16.-

# CHAPTER IV: OPERATIONS OF SALE OR ACQUISITION OF ASSETS, CLIENTELE OR ACTIVITY

## Article 39:

Any operation below of sale or acquisition of assets, clientele, or activity beyond the limits set by this Instruction must be subject to prior authorization from the Central Bank of Congo:

- operation concerning patrimonial assets: amount equivalent to 10% of Category 1 own funds;

- operation concerning operating financial assets, activity, or clientele: amount equivalent to 10% of the total balance sheet, whether it concerns financial assets or liabilities, deposits, or credits concerned.

Operations having a common overall logic must be assessed in a globalized manner.

Below the aforementioned thresholds, any operation significantly modifying the activity or risk profile notably in the field of money laundering and the financing of terrorism and weapons of mass destruction, or the financial balances of the applicant must be subject to a prior authorization request to the Central Bank of Congo.

## Article 40:

The prior authorization request file must include in particular the following information:

- the notarized minutes of the deliberating body;

- the description of the economic logic of the operation;

- the description of the legal conditions of the operation;

- the compliance analysis of the operation, notably with regard to legislation on the prevention of money laundering and the financing of terrorism;

- the asset, liability, or goodwill elements evaluation report, prepared by a statutory auditor, listing the elements acquired or sold, and justifying their recognition at fair value;

- the evaluation of the impact of the operation on the financial structure, forecast results, prudential situation, operational configuration, and risk profile as well as consequent risk management measures.

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BANQUE CENTRALE DU CONGO SUITE, PAGE 17.

CHAPTER V: PLACEMENT IN FOREIGN SECURITIES

Article 41:

Any placement operation involving foreign securities is subject to the prior authorization of the Central Bank of Congo.

These operations can only be authorized for securities issued or guaranteed by a foreign State, an international organization, or a foreign company listed on a regulated market or securities that present the necessary guarantees of liquidity and valuation.

Article 42:

The authorization request file must include in particular the following information:

• the notarized minutes of the deliberating body that ruled on the matter;
• the characteristics of the projected operation, namely: the nature of the securities, the listing venue, the prospectus or the characteristics of the securities, the liquidity of the securities, the volume of the operation, the valuation methods, the compliance analysis; notably with regard to legislation on the prevention of money laundering and the financing of terrorism;
• the internal control framework to be put in place for the monitoring and control of market risks.

CHAPTER VI: OPENING, TRANSFER OR CLOSURE OF A SUBSIDIARY, BRANCH, AGENCY AND REPRESENTATION OFFICE ON NATIONAL TERRITORY OR ABROAD

Article 43:

Any modification in the list of locations of the network of branches or agencies of a regulated institution is subject to the prior authorization of the Central Bank of Congo.

These modifications concern:

• any opening of a subsidiary, branch, agency, or representation office abroad;
• any transfer of a subsidiary, branch, agency, or representation office abroad;
• any closure of a subsidiary, branch, agency, or representation office abroad.

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BANQUE CENTRALE DU CONGO SUITE, PAGE 18.

The prior authorization of the Central Bank of Congo for the opening of a subsidiary or representation office abroad is given to the requesting institution under the suspensive condition of obtaining, within a period of one year, the necessary authorizations from the supervisory authority of the host country.

Article 44:

The prior authorization request file accompanied by information relating to the objectives pursued and the conditions for the exercise of the activities of the regulated institutions must include in particular the following elements:

• the notarized minutes of the deliberating body that ruled on the matter;
• the forecast profitability statements and evaluation of assets and liabilities over a period of at least three years, notably with regard to deposit collection and credit distribution, supported by underlying assumptions;
• the methods for taking into account the modification of the location network of the regulated institution in the risk management and internal control structure.

CHAPTER VII: GENERAL ORGANIZATION OF THE CREDIT INSTITUTION

Section 1: Derogation from internal control organization principles

Article 45:

Any regulated institution may request, subject to the cumulative conditions below, a derogation to merge certain second-level internal control functions in accordance with Instructions 17 and 22 of the Central Bank of Congo:

• be of small size;
• not belong to a group;
• not be of systemic importance;
• have a low risk profile and carry out simple operations.

To this end, the regulated institution accompanies the request with a complete file comprising in particular the following documents:

• the notarized minutes of the deliberating body that ruled on the matter;
• an organizational chart showing hierarchical and functional links;
• the internal control charter and internal procedures relating to control and the functionalities of automated internal control systems;
• the job description, mission letter and/or employment contract as well as the curriculum vitae of the head of the merged functions, showing their diplomas, training received, and professional experience.

563, Boulevard Colonel Tshatshi - Kinshasa – Gombe
Courriel : sgouverneur@bcc.cd - Web site : http://www.bcc.cd

BANQUE CENTRALE DU CONGO                                                                 SUITE, PAGE 19.

Article 46:
In the event of a change of holder of a mandate or function subject to approval or significant modification in the risk tolerance strategy, the risk appetite policy, or the geographical or functional scope of activities carried out, the regulated institution must request a new authorization to maintain, if applicable, the merger of second-level permanent control functions.

Article 47:
The Central Bank of Congo reserves the right to reject the merger request. In this case, a maximum period of two years is granted to the regulated institution to comply with the provisions of Instruction 17 of the Central Bank of Congo.

Article 48:
The Central Bank of Congo may withdraw an authorization granted at any time if circumstances require it, notably in the event of a modification of the institution's risk profile, the applicant's development strategy, or the legal or economic environment.

Section 2: Outsourcing of internal control functions

Article 49:
In application of Instruction 17 of the Central Bank of Congo, first-level control and compliance control cannot be outsourced.


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Article 50:
Outsourcing of second-level control of operational activity and risk management can only take place within the group of belonging, after prior agreement from the Central Bank of Congo, subject to the conformity of the processes to be implemented on site by the requesting entity, in application of Instructions 17 and 22 of the Central Bank of Congo.

Article 51:
In application of Instruction 17 of the Central Bank of Congo, the partial outsourcing of third-level control is subject to prior agreement from the Central Bank of Congo.

The use by the subsidiary of a group audit resource on its own initiative or on that of said group for the conduct of a specific mission requires prior authorization from the Central Bank of Congo.

The use of an audit resource outside the group of belonging for the conduct of a specific mission requires prior authorization from the Central Bank of Congo.

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CENTRAL BANK OF CONGO CONTINUED, PAGE 20.

Article 52:

The regulated institution is required, in support of the authorization request for partial outsourcing to the group of belonging of certain second or third-level internal control functions, to produce all elements demonstrating that its organization respects all relevant provisions as provided for by Instructions 17 and 22 of the Central Bank of Congo.

Article 53:

The intra-group organization of outsourced functions must provide all guarantees regarding the following requirements in particular:

- supervision by a supervisory authority, under conditions at least equivalent to those of the Central Bank of Congo, of the group of belonging to which the internal control functions will be outsourced;

- the capacity of the group of belonging to carry out internal control and risk management missions remotely with shared steering with the subsidiary licensed in the Democratic Republic of Congo and respecting current standards and required quality standards;

- the capacity of the group to make regular visits within the subsidiary, in order to guarantee sufficient presence of internal controllers or risk managers regarding activities carried out in the Democratic Republic of Congo;

- the implementation of an appropriate reporting system ensuring appropriate information flow to the group and information feedback to the subsidiary;

- the access of the Central Bank of Congo to all necessary documentary and on-site information for the exercise of its mission, including, where applicable, within the group of belonging. The contacts of the group of belonging responsible for the implementation of outsourced functions must be available to the Central Bank of Congo by all means and at first request within the framework of its supervisory mission.

To this end, the applicant accompanies their request with a complete file including in particular the following documents:

- the notarized minutes of the deliberative body having ruled on the organization, with a detailed statement of the reasons for the decision;

- the hierarchical and functional organizational chart;

- the internal control charter, internal procedures related to control and the functionalities of automated internal control systems;

- the job description, the mission letter and/or the employment contract, the curriculum vitae of the responsible person(s) for the outsourced functions, showing their diplomas, training received and professional experience;

563, Boulevard Colonel Tshatshi - Kinshasa – Gombe
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