Instruction No. 67/2021 on the Approval of Management and Intermediation Companies on the UMOA Regional Financial Market and Related Specific Requirements

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UNION MONETAIRE OUEST AFRICAINE crepmf
CONSEIL REGIONAL DE L'EPARGNE PUBLIQUE ET DES MARCHES FINANCIERS

INSTRUCTION N°67/CREPMF/2021

ON THE APPROVAL OF COMPANIES AS MANAGEMENT AND INTERMEDIATION COMPANIES ON THE UMOA REGIONAL FINANCIAL MARKET AND SPECIFIC REQUIREMENTS RELATED TO THEIR APPROVAL

The Regional Council for Public Savings and Financial Markets,

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

Having regard to General Regulation No. 001/97 of November 28, 1997 on the organization, functioning, and supervision of the UMOA regional financial market, as amended in Articles 37 and 136 by the UMOA Council of Ministers in its sessions of March 27, 1998 and September 5, 2005;

Having regard to the revised OHADA Uniform Act on commercial company law and economic interest grouping of January 30, 2014, particularly its provisions applicable to public limited companies;

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

Having regard to the resolutions of the Regional Council at its 52nd extraordinary session on December 21, 2021;

HEREBY ADOPTS

Avenue Joseph ANOMA 01 B. P. : 1878 Abidjan 01/Côte d'Ivoire TEL.: (225) 2720215742/2720215179 Fax: 2720221657 presidence@crepmf.org www.crepmf.org 1

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Instruction n° 67/CREPMF/2021

TITLE I: DEFINITIONS AND GENERAL PROVISIONS

Article 1: Definitions

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

• Ancillary activities: All operations or activities conducted by Management and Intermediation Companies that do not constitute their main activities but remain linked in one way or another to them;
• Core business software: Any IT solution operated by the Management and Intermediation Company that has a direct link to its regulated activities. This includes, in particular, account keeping, trading, and custody software;
• OHADA: Organisation for the Harmonisation of Business Law in Africa;
• Management and Intermediation Company (MIC): Any financial institution granted the status of Management and Intermediation Company by approval from the Regional Council for Public Savings and Financial Markets, in accordance with the provisions of the General Regulation on the organization, functioning, and supervision of the UMOA regional financial market;
• Market central structures: The Regional Securities Exchange (BRVM) and the Central Depository/Settlement Bank;
• Control System: The set of rules, methods, and control measures governing the organizational and operational structure as well as the reporting and control process of a Management and Intermediation Company;
• WAEMU: West African Economic and Monetary Union;
• UMOA: West African Monetary Union;
• Union: West African Economic and Monetary Union or West African Monetary Union.

Terms not defined in this Instruction shall have their usual meaning.

Article 2: Purpose

This Instruction aims to regulate the approval of companies as Management and Intermediation Companies (MICs) and determine the conditions for exercising MIC activities on the UMOA regional financial market.

Avenue Joseph ANOMA 01 B. P. : 1878 Abidjan 01/Côte d'Ivoire TEL.: (225) 2720215742/27 20215179 Fax: 2720221657 presidence@crepmf.org www.crepmf.org 2

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Instruction n° 67/CREPMF/2021

Article 3: Main activities

Management and Intermediation Companies (MICs) are authorized, upon approval by the Regional Council, to exercise:

• exclusively, securities trading activities for third parties;
• account keeping/custody activities;
• the placement of securities issued or to be issued on the UMOA regional financial market or any other market admitted by the Regional Council.

The above activities must be included in the MIC's corporate object.

These activities must account for at least one-third of the MIC's turnover over three (03) consecutive financial years.

If the MIC finds that revenue from its main activities falls below the required threshold for three (03) consecutive years, it must submit a recovery plan to the Regional Council within thirty (30) days following the adoption of the third year's annual accounts by the General Meeting.

This plan must include a corrective measure by the closing of the following year's annual accounts. Failing this, the Regional Council shall withdraw the MIC status from the company.

Article 4: Ancillary activities

MICs are permitted to exercise the following ancillary activities, subject to specific rules established by the Regional Council:

• discretionary portfolio management;
• financial engineering advisory;
• financial operations arrangement and structuring;
• Treasury Market Maker (Specialist in Treasury Securities);
• firm commitment underwriting of securities to be issued on the UMOA regional financial market;
• depositary for approved Collective Investment Schemes (CIS);
• listing sponsor.

Avenue Joseph ANOMA 01 B. P. : 1878 Abidjan 01/Côte d'Ivoire TEL.: (225) 2720215742/27 20215179 Fax: 2720221657 presidence@crepmf.org www.crepmf.org 3

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Instruction n° 67/CREPMF/2021

TITLE II: CONDITIONS FOR APPROVAL AND EXERCISE OF MIC ACTIVITIES

Article 5: Legal form

Any entity applying for MIC status must be incorporated as a public limited company with a board of directors.

Article 6: Share capital and net assets

The share capital consists of different types of contributions.

Cash contributions to the share capital must be fully paid up upon issuance of the corresponding shares.

In-kind contributions may not exceed 50% of the minimum share capital amount as set by a Council Instruction at the time of the MIC approval application.

The company's net assets, as fixed by a Council Instruction, must not be lower than the floor established by said Instruction.

Article 7: Organizational principle

The MIC must permanently possess the organizational and human resources necessary for its activities. It must provide sufficient guarantees, particularly regarding its organization, technical and financial means, and the experience of its management.

Article 8: Organizational resources

8.1 The MIC's organizational chart must be detailed, showing the heads of exercised activities and the company's hierarchical organization.

8.2 The MIC's organization must enable the exercise of its activities in compliance with professional best practices.

It is designed in particular to enable:

• exercising activities with diligence and impartiality in the exclusive interest of clients;
• preventing conflicts of interest;
• ensuring the separation of business lines, particularly among different departments, specifying responsibilities, powers, and scope of action;
• preserving the confidentiality of information related to account and cash holders;
• tracing securities transactions executed by the MIC;

Avenue Joseph ANOMA 01 B. P. : 1878 Abidjan 01/Côte d'Ivoire TEL.: (225) 2720215742/27 20215179 Fax: 2720221657 presidence@crepmf.org www.crepmf.org 4

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Instruction n° 67/CREPMF/2021

• ensuring transparency regarding related-party transactions, which must be appropriately published.

8.3 The MIC must possess a procedures manual containing at minimum administrative, financial, accounting, IT, anti-money laundering and counter-terrorist financing (AML/CFT), internal control procedures, as well as operational procedures related to account keeping, trading, placement, and ancillary activities. The manual must be periodically evaluated and updated within a timeframe not exceeding three (03) years. It must also comply with applicable regulatory provisions governing MIC activities.

8.4 The company appoints board members with good standing and adequate skills to fulfill their roles. It must submit to the Regional Council, within fifteen (15) days of their appointment, criminal record extracts dated less than three (03) months ago and their curriculum vitae.

8.5 The company must submit to the prior authorization of the Regional Council subsequent amendments to its bylaws when they concern:

• a change in capital distribution among shareholders;
• a change in the scope or nature of guarantees provided by the MIC or its shareholders;
• a change in the corporate object;
• a change in accounting methods and information used.

8.6 The company undertakes to understand its clients' expectations and provide them with clear, prompt, and complete information on operations processed or to be processed on their behalf.

8.7 The company must join any Fund established on the UMOA regional financial market to which MICs are required to contribute.

Article 9: Human resources

9.1 The MIC must be managed by persons possessing the required standing, competence, and experience appropriate to their functions.

At least one of these persons must be a corporate officer authorized to represent the company in dealings with third parties and working full-time within the company.

9.2 The MIC must have staff whose skills are adapted to its activities and are regularly updated to follow market development.

9.3 The MIC's workforce must be compatible with its level of activity and development prospects.

Avenue Joseph ANOMA 01 B. P. : 1878 Abidjan 01/Côte d'Ivoire TEL.: (225) 2720215742/27 20215179 Fax: 2720221657 presidence@crepmf.org www.crepmf.org 5

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Instruction n° 67/CREPMF/2021

9.4 For its main activities, the MIC must have at minimum the following staff:

• one executive as defined by applicable regulations;
• two internal auditors, one responsible for internal control and the other for permanent control;
• one officer in charge of risk management and IT security;
• two officers in charge of trading or market operations supervision, one designated as head;
• two officers in charge of account keeping/custody, one designated as head;
• one client relations officer.

9.5 The officers and heads mentioned above cannot hold incompatible concurrent positions.

9.6 Administrative, commercial/client follow-up, IT, and accounting management may be outsourced. To this end, the MIC must formalize its relationship with these organizations through service contracts detailing the providers, tasks performed, and resources to be deployed.

9.7 The organization must be structured to ensure service continuity even in the absence of the person responsible for a function. A replacement system must therefore be provided for all essential functions listed in point 9.4.

9.8 The MIC ensures the permanent adaptation of its human resources.

Article 10: Professional premises

10.1 The MIC's premises must be organized to facilitate information flow between its different departments.

10.2 The MIC's premises and technical means must be exclusively dedicated to it and cannot be shared with any other structure. Access must be secured. Personnel holding the functions listed in Article 8.4 must, at least by function category, have separate offices.

Article 11: Technical means

11.1 The MIC's various departments must be equipped with professional or reliable dedicated software/applications useful for carrying out their activities. Core business software must comply with the minimum specifications defined by a Council Circular.

Avenue Joseph ANOMA 01 B. P. : 1878 Abidjan 01/Côte d'Ivoire TEL.: (225) 2720215742/27 20215179 Fax: 2720221657 presidence@crepmf.org www.crepmf.org 6

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Instruction n° 67/CREPMF/2021

11.2 The MIC is required to carry out regular maintenance and renewal of equipment and IT applications to ensure their reliability and compatibility with regulatory requirements and market best practices.

11.3 The MIC must possess a backup system compliant with specifications defined by a Council Circular.

11.4 The MIC must have an IT security policy adapted to its activities, containing at minimum the sections defined by a Council Circular.

11.5 The MIC must ensure that its organization, systems, and procedures are designed to maintain or restore critical functions as quickly as possible to fulfill its obligations regarding the preservation of clients' interests and rights. To this end, it must have a business continuity plan approved by its Board of Directors. This plan must respect at minimum the aspects defined by a Council Circular.

TITLE III: APPROVAL PROCEDURES

Article 12: Application for MIC approval

Any company must obtain the Regional Council's approval as an MIC before commencing its activities.

The application for MIC approval, addressed to the Regional Council, must include the following elements:

• a request letter to the Secretary General of the Regional Council;
• a duly completed application form;
• the company's bylaws;
• proof of completion of registration with the Trade and Movable Credit Register (RCCM) and legal publication;
• minutes of General Meetings appointing the Directors and the statutory auditors (principal and alternate);
• minutes of the Board of Directors appointing the Chairman, Chief Executive Officer, and Deputy CEO (if applicable);
• criminal record extracts dated less than three (03) months ago and curriculum vitae of executives, directors, or permanent representatives showing their financial experience;
• share capital distribution showing shareholders' identities, number of shares, amount, and percentage held;

Avenue Joseph ANOMA 01 B. P. : 1878 Abidjan 01/Côte d'Ivoire TEL.: (225) 2720215742/27 20215179 Fax: 2720221657 presidence@crepmf.org www.crepmf.org 7

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Instruction n° 67/CREPMF/2021

• financial statements for the last three (03) years accompanied by statutory auditors' reports or certificates issued by a Chartered Accountant, for each corporate shareholder holding at least 10% of the share capital, as well as the identity of the natural persons who ultimately control them exclusively or jointly;
• a detailed presentation of each natural person shareholder holding at least 10% of the share capital, accompanied by a wealth declaration filed with a notary;
• for pre-existing companies, financial statements for the last three (03) years audited by a statutory auditor or Chartered Accountant registered with the Order of Chartered Accountants of a UMOA member state;
• a business plan containing financial forecasts, projected financial statements, and the projected status of prudential standards over five (05) years, as well as a comfort letter from a statutory auditor or Chartered Accountant registered with the Order of Chartered Accountants of a UMOA member state, attesting to the accuracy of the data in the business plan;
• the projected tariff schedule, defined according to the format provided by a Council Circular;
• an administrative organization presentation document containing the following information:
  • detailed organizational chart,
  • description of roles, hierarchical and functional links;
  • company workforce specifying occupied functions;
  • outsourced functions mentioning the responsible organization;
  • remuneration terms for employees and managers holding responsibilities;
• criminal record extracts dated less than three (03) months ago and curriculum vitae of persons designated or nominated to fulfill the functions listed in Article 9.4;
• internal regulations;
• code of ethics applicable to executives and staff;
• administrative, financial, accounting, and IT procedures manual with proof of Board approval;
• operational procedures manual with proof of Board approval. This manual must cover all activities envisaged by the company as an MIC and contain model client agreements;

Avenue Joseph ANOMA 01 B. P. : 1878 Abidjan 01/Côte d'Ivoire TEL.: (225) 2720215742/27 20215179 Fax: 2720221657 presidence@crepmf.org www.crepmf.org 8

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Instruction n° 67/CREPMF/2021

• internal control system including the control procedures manual, a description of assigned human and technical resources, and the internal audit charter with proof of Board approval;
• anti-money laundering and counter-terrorist financing (AML/CFT) system with proof of Board approval. This system must include an AML/CFT procedures manual describing the company's policy and assigned human/technical resources;
• acceptance letter from principal and alternate statutory auditors;
• presentation brochures for principal and alternate statutory auditors;
• a technical means file including:
  • a copy of the duly registered lease contract or property title for headquarters premises;
  • list of equipment used by the Company, distinguishing proprietary from jointly used equipment;
  • detailed description of portfolio management software functionality and its operating manual, as well as data security measures;
  • hardware configuration of computers and servers for hosting management software;
  • data backup (on-site and off-site) and restoration plan (method and frequency of restoration tests);
  • access method to BRVM and/or DC/BR systems;
  • internet connection type for computers accessing BRVM and/or DC/BR systems, as well as bandwidth;
  • functional organization of core business software users;
  • audit trail of the core business software;
  • password strategy (configuration) of the management software;
  • draft contract for acquisition or license of the core business software operating license;
  • draft contracts for maintenance of software and IT equipment;
  • references of the core business software publisher;
  • Business Continuity Plan with proof of Board approval;

Avenue Joseph ANOMA 01 B. P. : 1878 Abidjan 01/Côte d'Ivoire TEL.: (225) 2720215742/27 20215179 Fax: 2720221657 presidence@crepmf.org www.crepmf.org 9

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Instruction n° 67/CREPMF/2021

• a commitment letter to submit subsequent amendments to the company's bylaws to the prior authorization of the Regional Council when they concern:
  • a change in capital distribution among shareholders;
  • a change in the scope or nature of guarantees provided by the MIC or its shareholders;
  • a change in the corporate object;
  • a change in accounting methods and information used;
• a company commitment letter to understand client expectations and provide clear, prompt, and complete information on operations processed or to be processed;
• a company commitment letter to join any Fund established on the UMOA regional financial market to which MICs must contribute;
• any other document deemed necessary by the Regional Council following preliminary examination of the application file.

Article 13: Subsequent modifications to MIC status

Management and Intermediation Companies (MICs) must inform the Regional Council of modifications concerning characteristic elements of their status included in the initial approval application file.

Article 14: Payment of approval fees

Granting of approval is subject to the payment of a sum fixed by a Decision of the UMOA Council of Ministers. Payment procedures are defined by a Council Instruction.

Article 15: Publication of approval

The approval of an MIC is subject to a decision by the Regional Council published in the Official Bulletin of the BRVM Stock Exchange.

The approval number assigned by the Regional Council must appear on all MIC publications and documents.

Article 16: Shareholding in Central Market Structures

16.1 Every approved MIC must acquire, within a maximum period of twelve (12) months from the date of notification of its approval, shares in the share capital of the Regional Securities Exchange (BRVM) and the Central Depository/Settlement Bank, amounting to at least four thousand (4,000) and two thousand (2,000) shares respectively.

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Instruction n° 67/CREPMF/2021

The MIC must submit to the Regional Council, within nine (9) months following the date of notification of its approval, a detailed report on the progress of its shareholding acquisitions in the Regional Securities Exchange and