Instruction No. IGR/2008 Defining Conditions for Bank Approval, Shareholding Acquisition or Extension, and Rules for Bank Executives

REPUBLIQUE ISLAMIQUE DE MAU RITANIE
BANQ UE CENTRALE DE MAU RITANIE
LE GOUVERNEUR
Honneur - Fraternité - Justice
Nouakchott, le 11 FEB 2008
INST RUCTION N° IGR/2008 DEFINISSANT LES CONDITIONS ET CRITERES D' AGREMENT, LES MODALITES DE PRISE OU D'EXT ENSION DE PARTICIPATION DANS LE CAPITAL D'UNE BANQUE ET LES REGLES RELATIVES AUX DIRI GEANTS DE BANQUE

The Governor of the Central Bank of Mauritania

Having regard to Law No. 73-118 of May 30, 1973 establishing the Central Bank of Mauritania; Having regard to Ordinance No. 004/2007 of January 12, 2007 on the status of the Central Bank of Mauritania; Having regard to Ordinance No. 020/2007 of March 13, 2007 on credit institutions, repealing and replacing Law No. 95-011 of July 17, 1995; Having regard to Decree No. 19/2007 of February 07, 2007 appointing the Governor of the Central Bank of Mauritania; Having regard to the deliberation of the Monetary Policy Council dated January 30, 2008;

Decides:

ARTICLE 1:
The purpose of this instruction is to define the conditions and criteria for the approval of banks in Mauritania, the acquisition or extension of participation in their capital, legal modifications, and the designation of executives.

CHAPTER 1: Approval of Banks

ARTICLE 2:
The establishment of any Mauritanian law banking entity must be authorized by the Monetary Policy Council, based on a file comprising, in particular, a 5-year business plan consistent with the country's development objectives, with justification of:

The lawful origin of funds. The Bank may request the opinion of the Commission for the Analysis of Financial Information (CANIF); The honorability of the contributors by producing adequate documents, in particular a legalized criminal record as needed by the competent authority. Article 3 of this instruction applies to fund contributors; The competence of persons called to administer, direct, and manage the credit institution (academic training and experience).

The main shareholders must provide proof of the settlement of their debts within the Mauritanian banking system, if they are engaged therein.

Article 3:
It is absolutely prohibited to found, direct, administer, manage, control, or engage in any capacity a bank or even a bank agency, any person finally convicted for an offense against credit and exchange regulations, crime and common law offenses, in particular:

• Forgery of commercial or bank documents provided for in articles 143 and 144 of the Commercial Code;
• Theft, breach of trust, or fraud or offense punished by the fraud law;
• Subtraction committed by a public depositor or extortion of funds or valuables;
• Issuance in bad faith of checks without provision;
• Failure of a debtor recognized by justice.

Article 4:
The withdrawal of approval is pronounced by the Monetary Policy Council, either at the request of the Bank, or ex officio when the beneficiary:

no longer meets the conditions under which the approval was granted; has not paid up the capital within a period of six months from the date of notification of said approval after a formal notice has gone unheeded; has not begun its activity with the opening of counters to the public within a period of twelve (12) months from the date of notification of the approval; no longer exercises its activity regularly for at least six consecutive months; does not comply with the regulations in force.

Article 5:
The Central Bank of Mauritania reserves the right to require any document likely to support or motivate its decision. It then has a period not exceeding six months to rule on the approval request and notify its decision.

Article 6:
The minimum capital is set at six billion ouguiyas. This capital must be fully paid into an account opened for this purpose in the books of the Central Bank and paid up in a single lump sum before the establishment enters into activity. The share of the capital held by foreign shareholders must be paid in foreign currency. Any increase in the capital of a banking establishment must be made under the same conditions.

Article 7:
The approved banking establishment must contribute, exceptionally, to the deposit guarantee fund for banks at a date to be fixed by the Central Bank, for an amount of 1.75% of the minimum capital.

Article 8:
The bank's development plan must provide for the opening and permanent operation of a minimum of 3 agencies in 3 different cities in the country, over a period not exceeding two years from the date of the effective start of its activities.

Article 9:
The Central Bank of Mauritania may define specific conditions for granting approval with regard in particular to the business plan presented to it. These conditions may relate in particular to:
The bank's development conditions;
The number and geographical location of the agencies; The profitability conditions of the activities; The recruitment policy; The financial products and services offered; The share of capital reserved for Mauritanian holders; The minimum number of Mauritaniens sitting on the bank's board of directors.

Article 10:
The opening in Mauritania of representative offices of foreign banks or branches must be authorized by the Central Bank of Mauritania. The prior agreement (or non-objection) of the supervisory authority of the country of origin is required. These branches and offices are subject to the provisions of this instruction.

Article 11:
The branch must have a permanent capital endowment of at least 6 billion ouguiyas.

CHAPTER 2: CONDITIONS FOR ACQUISITION OR EXTENSION OF PARTICIPATION
IN THE CAPITAL OF BANKS.

Article 12:
The realization of any operation of acquisition, extension, or transfer of participation, direct or indirect, in a bank must be previously authorized by the Central Bank of Mauritania, when this operation has the effect of allowing a person or a group of persons:
to acquire or lose effective power of control or management of the credit institution; to acquire or lose a share of the shares greater than one-tenth of the capital.

In addition, any transaction having the result of allowing a person or a group of persons, acting in concert, to acquire less than 1/10 (one-tenth) of the voting rights, must be declared immediately to the CBM.

When, by virtue of legislative and statutory provisions, the number or distribution of voting rights is limited with respect to the number or distribution of the shares to which they are attached, the percentages provided for in this chapter and the provisions described below are, respectively, calculated and implemented in terms of shares.

The Central Bank of Mauritania then has a period of six months to inform the declarant(s) that, given the need to guarantee sound and prudent management under the same conditions as during approval, this operation is likely to lead to a re-examination of the bank's situation.

Any operation of acquisition, extension, or transfer of direct or indirect participation in a bank that must be previously authorized by the Central Bank of Mauritania is deemed null without the express agreement of the Central Bank of Mauritania.

Article 13:
Banks must inform the Central Bank of Mauritania, within a period of one month from its realization, of any significant movement affecting the distribution of voting rights held by their shareholders subject to the provisions of Article 12 above.

Article 14:
Voting rights held by the person subject to the obligations mentioned in Article 12 above are assimilated to:
a) voting rights held by other persons on behalf of this person; b) voting rights held by companies under the effective control of this person, i.e., whose decisions she can legally influence; c) voting rights held by a third party with whom this person acts; d) voting rights that this person or one of the persons mentioned in points a, b, and c) above has the right to acquire at her sole initiative pursuant to an agreement; e) voting rights held by the spouse(s) and ascendants of this person.

Persons who have concluded an agreement to acquire or transfer voting rights or to exercise rights to implement a common policy vis-à-vis the bank are considered to be acting together. Such an agreement is presumed to exist:
Between a company, the president of its board of directors and its general managers or the members of its executive board or its managers; Between a company and the companies of which it holds directly or indirectly the effective power of control; Between companies under the effective control of the same or same persons.

Article 15:
Banks are required to transmit at the time of approval, and then annually, to the Central Bank of Mauritania financial information on each of the persons who hold at least 10% of their capital and a copy of the shareholders' register. The aforementioned information includes, for each partner or shareholder:
a) if it is a legal entity seeking public savings; all the documents it is required to make available to the public; b) if it is a legal entity not seeking public savings; the social accounting documents, if any consolidated, certified for the last closed fiscal year and their annex notes, as well as any information relating to facts likely to significantly affect its financial situation; c) if it is a natural person; all useful information relating to its financial situation.

Article 16:
The Central Bank of Mauritania may request any credit institution to communicate to it all the necessary financial information for the exercise of its mission concerning its ten most important partners or shareholders each holding less than 10% of the capital.

Article 17:
Banks must, at the time of their approval and at any time, be able, in the event of a capital increase, to justify the lawful origin of the capital available to their shareholders. The Central Bank may request at the time of approval or a change in shareholding subject to its authorization, that the main shareholders of the establishment commit to providing them with financial support in case of difficulties. It may ask them to justify their capacity to provide this support.

CHAPTER 3: OTHER MODIFICATIONS THAT MUST BE AUTHORIZED OR DECLARED

Article 18:
Modifications to be made to the situation of banks and relating to:
the legal form; the corporate name; the trade name; the type of bank operations for which the bank has been approved. are subject to prior authorization of the Central Bank.
The realization of one of the modifications defined above, in the absence of prior authorization from the Central Bank, is deemed without effect.

Article 19:
Must be declared to the Central Bank of Mauritania within a period of one month:
a) the modifications made:
to the amount of capital, any increase must be made by payment into an account opened for this purpose at the Central Bank to the rules for calculating voting rights to the composition of the boards of directors or supervisory boards of banks to the address of the registered office b) the conclusion or modification of any agreement passed between shareholders and relating to the elements referred to in Articles 12 and 18 of this instruction.

CHAPTER 4 DESIGNATION AND CESSATION OF EXECUTIVE FUNCTIONS

Article 20:
The designation of the presidents of the boards of directors, general managers, deputy general managers, or any person called to administer, direct, and ensure the effective determination of the orientation of the bank's activity must be declared without delay to the Central Bank of Mauritania. This declaration is accompanied by all elements allowing to assess the honorability, competence, and experience of the person concerned. If the Central Bank of Mauritania considers that the conditions of honorability, competence, and experience of the proposed person are not met, it may oppose this designation. It has a period of one month to notify its decision.

Article 21:
In any bank, the cessation of functions of the persons referred to in Article 20 above must be immediately declared to the Central Bank of Mauritania.

CHAPTER 5: GENERAL PROVISIONS

Article 22:
Authorization requests as well as declarations provided for by this instruction must include all elements of appreciation suitable to enlighten the Central Bank of Mauritania on the causes, objectives, and implications of the modifications to be made.

Article 23:
The decisions of the Central Bank of Mauritania taken in application of this instruction are notified in writing to the interested parties.

Article 24:
Banks must ensure that the provisions of this instruction are observed by their shareholders, in particular by asking them for all useful justifications.

Article 25:
When an authorization must be obtained in application of this instruction, it must result from an express act of the Central Bank of Mauritania.

Article 26:
The provisions of this instruction apply to all banking establishments in activity in the Islamic Republic of Mauritania.

Article 27:
Requests relating to the provisions of this instruction must conform to the model files attached to this instruction.

Article 28:
This instruction takes effect from the date of its signature and repeals any prior contrary provisions.