Instruction No. 53 on Approval Conditions for Financial Companies, Their Directors, and Statutory Modifications

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BANQUE CENTRALE DU CONGO

LE GOUVERNEUR

INSTRUCTION NO. 53 ON THE APPROVAL CONDITIONS FOR FINANCIAL COMPANIES, THEIR DIRECTORS, AND MODIFICATIONS TO THEIR STATUTORY STATUS

The Central Bank of the Congo,

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

Pursuant to Law No. 22/069 of December 27, 2022 on the activity and supervision of Credit Institutions, particularly Article 167;

Pursuant to Law No. 15/003 of February 12, 2015 on leasing activity, particularly Articles 6 and 7;

Pursuant to Law No. 22/068 of December 27, 2022 on combating money laundering and terrorism financing 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 applicable procedure for obtaining approval or authorization from the Central Bank of the Congo by the financial companies referred to in Article 2.

Article 2:

Without prejudice to specific contrary provisions, this Instruction applies to financial companies, including:

• leasing companies;
• factoring companies;
• guarantee companies;
• payment institutions providing the payment services referred to in Article 168 of Law No. 22/069 of December 27, 2022 on the activity and supervision of Credit Institutions, including electronic money institutions and financial messaging services;
• specialized financial institutions, including investment banks, development banks, etc.

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CHAPTER II: DEFINITIONS

Article 3:

For the purposes of this Instruction, the following terms mean:

• administrator: member of the deliberative body designated by the General Assembly of shareholders;
• executive administrator: administrator who is also a member of the financial company's executive body;
• non-executive administrator: administrator who is not a member of the financial company's executive body;
• independent administrator: non-executive and unrelated administrator. A free-interest member of the Board of Directors who contributes, through competence and independent judgment, to the board's ability to fulfill its missions. Must be free of particular professional (significant shareholder, employee, business relationship, service provider, etc.) or personal interest links with the financial company and its shareholders;
• development bank: financial institution that grants medium- and long-term credits for the realization of economic development projects;
• investment bank: specialized financial company engaged in financial engineering operations, particularly mergers and acquisitions, initial public offerings, and financial placements;
• risk committee: governance body emanating from the deliberative body, created to assist in determining risk appetite, monitoring the executive body's implementation of the risk appetite statement, and ensuring oversight of the risk management function;
• deliberative body: body responsible, on behalf of shareholders, for defining the strategic direction of the financial company and effectively supervising activity management. It takes the form of a Board of Directors;
• executive body: body responsible, on behalf of the deliberative body, for the day-to-day management of the financial company's activities and effective steering of strategic objectives and risk policy set by the deliberative body. It corresponds to the General Management, Management Committee, Executive Committee, or Board of Managers, and consists of at least two members: the General Manager and the Deputy General Manager;
• sensitive function: operational function linked to core banking business or support function requiring proven expertise, the disruption of which may cause significant risks to the financial company;

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• sensitive function manager: senior executive of a financial company whose appointment is subject to approval by the Central Bank of the Congo, due to the operational sensitivity of their function given the risks involved;
• essential services: financial services offered by the financial company, on the one hand, and sensitive functions, on the other hand, whose interruption would seriously affect the normal functioning of said company;
• financial company: Congolese legal entity whose activity consists, excluding any receipt of repayable funds from the public, in carrying out credit operations, performing payment operations, managing payment instruments, or conducting foreign exchange;
• factoring company: financial company that habitually performs operations by which it undertakes to collect and mobilize commercial claims, either by acquiring said claims or by acting as agent for the creditors, with a guarantee of good performance in the latter case;
• guarantee company: financial company that habitually performs operations consisting of substituting for the debtor in case of default, in exchange for remuneration.

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

Article 4:

Any Congolese legal entity wishing to carry out banking operations as a financial company in one of the categories listed in Article 2 must obtain approval from the Central Bank of the Congo.

Furthermore, financial companies must request prior approval from the Central Bank of the Congo for the following operations:

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

Article 5:

Financial companies must request prior authorization from the Central Bank of the Congo in the following cases:

• modification of their statutes;

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• merger, demerger, or transfer of business activities affecting a financial company;
• sale by a financial company of all or, within limits set by the Central Bank of the Congo, part of its assets, clientele, or business;
• acquisition by a financial company of participations in foreign enterprises;
• placement operations involving securities issued or guaranteed by a foreign state, international organization, or foreign enterprise;
• opening, transfer, or closure of a branch or agency of the financial company on national territory or abroad;
• voluntary dissolution of a financial company;
• taking of participation, exchange of securities, or other operation that would have the effect of concentrating directly or indirectly, in favor of the same natural or legal person, at least 20% of voting rights in the financial company;
• any other strategic decision, such as derogations from internal control device organization principles, outsourcing of internal control functions, outsourcing of other essential service provisions, derogations from governance committee organization, or any other operation resulting in a significant modification of the financial company's situation.

Article 6:

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

• any development, modification, or extension of activities carried out by the financial company;
• opening, transfer, or closure of a counter operated exclusively for cash operations by a financial company.
• at least one month prior to this operation, any acquisition or sale of shares or interests representing capital, with indication of the identity of the transferor and transferee.

Furthermore, the financial company notifies the Central Bank of the Congo of its intention:

• to acquire or create, directly or indirectly, a foreign subsidiary exercising an activity covered by Article 60 of Law No. 22/069 of December 27, 2022 on the activity and supervision of Credit Institutions. This notification must contain information on the activities, organization, shareholding, and management of the concerned enterprise;

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• to open a branch on the territory of another State to exercise all or part of its authorized activities in the Democratic Republic of Congo. This notification, accompanied by an activity program indicating among others the categories of operations envisaged, the organizational structure of the branch, the correspondence domicile in the concerned country, and the names of the branch's managers.

CHAPTER IV: PROCEDURE FOR PRIOR APPROVAL AND AUTHORIZATION

Section 1: File Preparation

Article 7:

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

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

Documents submitted in support of the file referred to in paragraph 2 of this article must be authenticated by a notary, except those issued by competent public authorities.

Section 2: File Examination

Article 8:

The Central Bank of the Congo notifies the applicant of the receipt of their application 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 the Congo renders its decision within a period of 90 days from receipt of the letter informing the applicant that the file is complete.

During its examination, the Central Bank of the Congo may 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 requires consulting the opinion of a national or foreign regulatory authority, the time limit for the Central Bank of the Congo's decision is extended by the response time observed by said authority.

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Article 10:

The Central Bank of the Congo, if it deems useful, may convene the applicant's representative(s) for an interview upon submission of a prior approval/authorization application or during prior information. The Central Bank of the Congo, based on the risk profile of the requesting institution (new or existing), may attach additional conditions to its approval or prior authorization decision, particularly concerning share capital, governance structure, or operational organization.

TITLE II: APPROVAL

CHAPTER I: APPROVAL OF FINANCIAL COMPANIES

Article 11:

Approval as a financial company or change of category is subject to compliance with legal texts and the entire applicable prudential regulation.

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

• an application letter in French addressed to the Governor of the Central Bank of the Congo;
• an original copy of the applicant's notarized statutes;
• the duly notarized minutes of the general meeting constituting the new company and the notarized mandate of representatives of legal entity shareholders, partners, or members, authorizing them to participate in this constitutive meeting;
• the minutes of the extraordinary general meeting of legal entity shareholders or 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 deposit certificate, with a local bank, of the fully paid share capital at least equal to the minimum amount fixed by the Central Bank of the Congo;
• the list of shareholders, partners, or members and managers;
• elements to assess the honorability of shareholders, partners, or members, including the sworn declaration of non-involvement in money laundering, terrorism financing, and weapons of mass destruction proliferation operations;
• elements to assess the honorability of members of the deliberative and executive bodies, heads of control functions, and other sensitive functions, including the Criminal Record Extract and the sworn declaration of non-involvement in money laundering, terrorism financing, and weapons of mass destruction proliferation operations;

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• the curriculum vitae of members of the deliberative and executive bodies, 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 for the last three accounting years of legal entity shareholders, partners, or members;
• a document from the banking supervision authority of the country of origin or residence, for foreign natural and legal persons, attesting 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:
  • the envisaged economic model;
  • the strategic plan indicating envisaged partnerships and commercial, geographic, and sectoral development hypotheses, 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 short- and medium-term prudential regulation;
  • the governance device;
  • the internal control and risk management device;
  • the anti-money laundering, terrorism financing, and weapons of mass destruction proliferation fight device;
  • the operational organization, including the organizational chart, adequacy of staff, competencies, technical and financial resources, and information systems;
  • envisaged schemes for outsourcing essential service provisions;
  • the duly notarized minutes of the deliberative body meeting setting the activities to be developed and determining tolerance and risk appetite policy.

Article 12:

The application for approval must also include a description of the procedures for selecting shareholders, members of deliberative and executive bodies, heads of control functions, and other sensitive functions.

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Article 13:

The applicant's statutes must ensure appropriate governance, in accordance with current regulatory provisions.

CHAPTER II: APPROVAL OF SHAREHOLDERS, PARTNERS, OR MEMBERS

Article 14:

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

To this end, it transmits to the Central Bank of the 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 jointly with others, hold at least one share of the share capital. This communication includes an indication of the proportions of share capital and voting rights held by these persons.

Article 15:

Unless otherwise specifically provided, financial companies are established as pluripersonal anonymous companies with a Board of Directors.

Article 16:

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

• 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 the 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 significant risks, particularly in combating money laundering, terrorism financing, and weapons of mass destruction proliferation;

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• the exercise of its supervision mission over the requesting institution may be hindered either by the existence of direct or indirect capital or control links 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 transparency guarantees;
• persons installed in high-risk and non-cooperative jurisdictions as defined by the Financial Action Task Force take participations in a financial institution in the Democratic Republic of Congo.

Article 18:

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

A legal or natural person shareholder or partner holding a participation exceeding 50% of the financial company's capital, enjoying adequate financial capacity and not demonstrating professionalism in the banking and/or financial sector, is considered a reference shareholder and must conclude a technical assistance contract with an internationally renowned partner operating in the banking and/or financial sector. This assistance contract must be concluded for a minimum duration of ten (10) years and submitted to the prior approval of the Central Bank of the Congo.

When no shareholder holds a fraction exceeding 50% of the financial company's capital, the applicant submits to the Central Bank of the Congo for approval a reference shareholder chosen among the legal entities holding its share capital and meeting the conditions listed in paragraph 1 of this article. In this case, all other shareholders are required to provide necessary support at the deliberative body level. If the Central Bank of the Congo refuses to approve the designated shareholder, the approval of the requesting financial company cannot be granted.

Article 19:

The reference shareholder is notably required to:

• prioritize involvement, without prejudice to the role of other shareholders, in effectively determining the applicant's organization and effectively supervising its management, particularly through administrators representing them within the deliberative body;

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• 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 the Congo during the approval application and subsequently modified, if applicable;
• produce all elements to establish the adequacy of its expertise in the financial and banking sector, including information on banking or financial companies with 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 necessary professionalism and experience;
• primarily provide operational and financial support to the financial company to ensure its solvency and liquidity, particularly in case of difficulty, without prejudice to the responsibility expected from all shareholders who are also required to contribute to the common effort.

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

Section 1: Common Provisions

Article 20:

Members of the deliberative and executive bodies as well