Law No. 003/2002 of February 2, 2002 on the Activity and Control of Credit Institutions

LAW NO. 003/2002 OF FEBRUARY 2, 2002 ON THE ACTIVITY AND CONTROL OF CREDIT INSTITUTIONS

Source: Official Journal No. special May 2002

Important notice to users This document is made available online to allow a quick first approach to legal information in Congo. Its consultation must in no case be intended to replace that published in the Official Journal of the Democratic Republic of Congo

STATEMENT OF REASONS

The banking profession has undergone profound changes in recent years due notably to the globalization of financial activities, the interconnection of markets, and the increasingly advanced computerization of management. These changes amplify the traditional risks of the profession as well as giving rise to new ones, thus making it necessary to put in place adequate regulatory frameworks focused on prudential control rather than ex post sectoral verifications.

Since the Democratic Republic of Congo is embarking on profound reforms of its monetary management, this necessity is felt all the more acutely because the success of these reforms rests largely on the good health of the financial sector in general and the banking system in particular as the main vector of monetary policy.

The implementation of these devices involves the establishment of an adapted legal framework, intended to replace Ordinance-Law No. 72-004 of January 14, 1972 on the protection of savings and the control of financial intermediaries, known as the "Banking Law".

This Law aims to define a single framework covering all activities of the financial sector, some of which fall outside the provisions of the aforementioned Ordinance-Law No. 72-004 of January 14, 1972.

The present statement of reasons explains the new provisions brought by the new law.

TITLE ONE: SCOPE OF APPLICATION AND GENERALITIES

The scope of application of Ordinance-Law No. 72-004 of January 14, 1972 covers only partially the activities of companies in the financial sector, so that a significant part of them escapes the regulation and control of the monetary authority.

This Law has the advantage of covering all companies in the financial sector and defines them based on their economic function, which is the performance of banking operations.

Banking operations are subdivided into three distinct categories, namely:

• the receipt of public funds;
• credit operations;
• payment operations and the management of payment means.

Ancillary operations are listed non-exhaustively in Article 9.

The new "Banking Law" groups, under the new term of Credit Institution, the companies identified limitatively below:

1. banks;
2. savings and credit cooperatives;
3. savings banks;
4. specialized financial institutions;
5. financial companies.

The extension of the scope of application of the new law is inspired by a concern for universality and does not affect either the diversity of the national financial system or the particularities of each category of Credit Institutions, which are governed by specific provisions.

This concern appears through Articles 2 and 3.

TITLE TWO: APPROVAL, PROTECTION AND WITHDRAWAL OF APPROVAL OF CREDIT INSTITUTIONS

This title comprises three chapters which deal successively with the approval, protection, and withdrawal of approval of Credit Institutions.

1. APPROVAL

Credit Institutions are required, before exercising their activity on national territory, to obtain the approval of the Central Bank (Article 10).

The obtaining of approval is subject to certain substantive conditions whose existence and combination are controlled by the Central Bank during the processing of the approval application. These conditions are of a legal and economic nature.

a. Legal conditions The legal conditions are three in number:

• The Credit Institution must be a legal person. Except for banks which must, in principle, be constituted as limited liability companies, the legislator prescribes no specific corporate form. It leaves to the Control Authorities the task of assessing "the adequacy of the legal form of the enterprise to the activity of the Credit Institution";
• The Credit Institution must justify a minimum paid-up capital determined by the Central Bank.
• The managers of the Credit Institution must not be subject to the professional ban provided for in Article 15.

b. Economic conditions During the processing of the approval file, the Central Bank verifies if the establishment of the Credit Institution responds to an obvious economic need. It ensures the security of the clientele by controlling the adequacy of the technical and financial means of the Credit Institution to its activity program.

When a Credit Institution approved in a foreign country wishes to establish a subsidiary in the Democratic Republic of Congo, the Central Bank consults the Supervision Authorities of the country of origin of this Credit Institution to ensure the credibility of the promoters, notably to avoid the introduction into the financial circuit of funds of criminal origin (Article 13).

2. PROTECTION

The legislator reserves the monopoly of the performance of banking operations solely to Credit Institutions, just as it establishes protection against the abusive use of the terms bank, savings and credit cooperative, savings bank, financial company, specialized financial institution.

Articles 20 and 21 delimit, however, the extent of activities thus reserved to Credit Institutions.

3. WITHDRAWAL OF APPROVAL

The withdrawal of approval is pronounced by the Central Bank by virtue of the administrative and disciplinary powers it exercises over Credit Institutions (Article 22).

The withdrawal of approval entails the removal from the list of Credit Institutions.

The removal carries with it the dissolution of the Credit Institution by operation of law.

TITLE THREE: REGULATION OF CREDIT INSTITUTIONS

Although it remains subject to common law, banking activity is subject to specific regulation justified by the need for efficient control of Credit Institutions to justify their solvency and the security of public savings, a sure guarantee of balanced growth of the national economy.

The new banking law favors the prudential regulation of Credit Institutions to reinforce their solidity and, thereby, to ensure the stability of the financial system as a whole.

The legislator poses the fundamental principles of this prudential regulation, leaving to the Central Bank the task of regulating, as necessary, the procedural details to support an appropriate regulatory device.

TITLE FOUR: RULES RELATING TO ANNUAL ACCOUNTS

The legislator subjects Credit Institutions to uniform rules for the keeping of their accounts and the establishment of their financial statements to ensure transparency in their management and to facilitate, moreover, the regulatory and control work to be performed by the Supervision Authority.

Thus, Credit Institutions are, for example, required to set up a legal reserve under the conditions and according to the modalities fixed in Article 31.

The legislator also recognizes to the Control Authority the power to have communicated to it any information relating to the organization, functioning, situation, and operations of a Credit Institution (Article 34).

All Credit Institutions must end their fiscal year on December 31. They are required to establish their summary statements on this date and deposit them for publication before June 15 of the following year.

TITLE FIVE: CONTROL BODIES

This title comprises two chapters:

• The Central Bank of Congo
• The Statutory Auditor

1. THE CENTRAL BANK OF CONGO

The legislator invests the Central Bank of Congo with a general mission of surveillance of all Credit Institutions.

In this framework, it monitors the application of the regulation based on periodic documents established by Credit Institutions, reports resulting from inspection inquiries, and reports from statutory auditors.

Also, when the Central Bank notes notably that a Credit Institution does not function in conformity with the law and regulations taken for its execution, or that its administrative and accounting organization or its internal control presents serious shortcomings, it can, depending on the gravity of the facts, address a warning to the managers of this Credit Institution or deliver an injunction to the effect, notably, to take, within a determined deadline, all appropriate corrective measures.

The Central Bank can also designate a Provisional Representative with a Credit Institution or appoint a Provisional Manager or a Provisional Administrator at the head of it, in case of default in its administration or management.

2. THE STATUTORY AUDITOR

The legislator makes it obligatory for every Credit Institution to designate as Statutory Auditors two natural persons or one legal person among the statutory auditors approved by the Central Bank (Article 50).

The body authorized to appoint the statutory auditors is the General Meeting of shareholders, partners, or members. In the absence of the General Meeting fulfilling this legal obligation, the Central Bank can proceed to an ex officio designation.

The Statutory Auditors are designated for a duration of three years, renewable. The Central Bank monitors the activity of the statutory auditors.

The Statutory Auditors cannot guarantee the good outcome of the issuance of securities for which Credit Institutions are responsible where they exercise their functions (Article 54).

TITLE SIX: DISSOLUTION AND LIQUIDATION

The dissolution of a Credit Institution can be decided by the General Meeting of shareholders, partners, or members (voluntary dissolution) or by the Central Bank (forced dissolution). Dissolution is also said to be forced when it results from a judicial decision (Article 56).

The dissolved Credit Institution is deemed to exist for its liquidation.

The liquidation of a Credit Institution dissolved by decision of the General Meeting of shareholders, partners, or members is carried out in accordance with common law (Article 59).

Furthermore, the liquidation of a Credit Institution being a delicate operation susceptible of compromising social peace if necessary measures are not taken to protect public savings and avoid the disturbance of the entire financial system as a whole, notably by contagion, a reinforcement of the power of the Supervision Authority was carried out by an increase in legal means placed at its disposal for the recovery of the claims of the Credit Institution in liquidation.

Thus, the legislator confers the privilege of the Treasury to the claims of Credit Institutions whose forced dissolution was decided by the Central Bank in order to maximize the chances of savers and other Credit Institutions in business relationship with them to recover their rights (Article 69).

Liquidation operations are carried out under the supervision of the Central Bank. The closure of the liquidation is published in the Official Journal and in at least one of the main organs of the national press (Article 72).

TITLE SEVEN: RELATIONSHIPS BETWEEN CREDIT INSTITUTIONS AND THEIR CLIENTELE

This title is subdivided into three chapters whose provisions translate the legislator's will to protect the deposits of the clientele of Credit Institutions.

The three chapters deal respectively with professional secrecy, the deposit protection system, and prevention measures.

1. PROFESSIONAL SECRECY

The new banking law emphasizes the obligation of professional secrecy incumbent on any person who participates or has participated in the management or control of a Credit Institution.

The legislator has however brought limitations to this obligation, which is criminally sanctioned, not to reveal professional secrecy.

Thus, professional secrecy cannot be opposed either to the Central Bank or to the Judicial Authority acting within the framework of a criminal procedure (Article 73).

2. DEPOSIT PROTECTION SYSTEM

The new banking law provides for the establishment of one or several deposit protection systems to preserve the integrity of the financial system when the situation of a Credit Institution in difficulty requires it. The objective aimed at is to limit the probability of mass withdrawals (Article 74).

3. PREVENTION MEASURES

Credit Institutions are required to put in place appropriate policies and procedures, notably strict criteria for customer due diligence, in order to avoid that they are used by criminal elements, notably in money laundering operations (Article 75).

Furthermore, in order to confer on the Monetary Authority a dissuasive power towards delinquent economic operators, the new law consecrates the practice of blacklisting.

TITLE EIGHT: SANCTIONS

Alongside criminal sanctions, the new Banking Law provides for a battery of disciplinary sanctions to contribute to the cleansing of the financial system and the security of savers.

In the framework of its jurisdictional function, the Central Bank may be called to sit as a jurisdiction of administrative order according to very strict procedural rules.

When an offense has been noted against a Credit Institution, the Central Bank can, after deliberation, render a decision to close the case without further action or pronounce one of the disciplinary sanctions provided for in Article 77, which range from a warning to the withdrawal of approval.

In addition, the Central Bank can impose, in addition to these sanctions, administrative fines to which the Credit Institution is subject (Article 79).

Furthermore, the Central Bank can intervene at all stages of the procedure and become a civil party (Article 83).

The new Banking Law brings another innovation in that the control authority no longer has the monopoly of the triggering of prosecutions. The implementation of this is now subject to common law.

TITLE NINE: ORGANIZATION OF THE PROFESSION

The legislator obliges every Credit Institution to adhere to the Professional Association of establishments of the category to which it belongs.

The professional association has notably as its object to represent the collective interests of its members before the Public Authorities and to organize services of common interest.

TITLE TEN: TRANSITIONAL AND FINAL PROVISIONS

Regarding transitional and final provisions, all previous provisions contrary to this Law are repealed.

A period of one year is however granted to banks, savings and credit cooperatives, as well as to institutions approved under the authority of Ordinance-Law No. 72/004 of January 14, 1972 on the protection of savings and the control of financial intermediaries, to comply with the provisions of the new banking law.

LAW

The Constituent and Legislative Assembly, Transitional Parliament, has adopted; The President of the Republic has promulgated the law whose content follows:

TITLE ONE: SCOPE OF APPLICATION AND GENERALITIES

CHAPTER 1: SCOPE OF APPLICATION

Article 1: The Credit Institutions referred to by this Law are legal persons who perform banking operations as a habitual profession.

Banking operations include:

• the receipt and collection of public funds;
• credit operations;
• payment operations and the management of payment means.

Article 2: This Law applies to Credit Institutions, whatever their legal form, which exercise one or the other of the activities mentioned in Article 1 as a habitual profession.

It distinguishes five categories of Credit Institutions to which specific regulations apply, namely: 1° banks; 2° savings and credit cooperatives; 3° savings banks; 4° specialized financial institutions; 5° financial companies.

Article 3: Banks are the only Credit Institutions authorized both generally and in a general way, to receive from the public funds on demand, fixed-term, or with notice and to perform all other banking operations.

Savings and credit cooperatives as well as savings banks can, within the limits of the legislative and regulatory texts governing them, handle public funds on demand, fixed-term, or with notice.

Financial companies and specialized financial institutions cannot receive from the public funds on demand or for less than one year unless they are authorized to do so as an ancillary activity under the conditions defined by the Central Bank.

Financial companies can only perform banking operations resulting either from the approval decision concerning them or from the legal and regulatory provisions specific to them.

Specialized financial institutions are Credit Institutions to which the State has entrusted a mission of public interest. They cannot perform any other banking operations than those related to their mission, except as an ancillary activity.

Article 4: This Law is not applicable:

• to the Central Bank;
• to the Treasury;
• to the Postal Checking Services, subject to the provisions of Articles 34 and 35.

Article 5: The following are not Credit Institutions:

• insurance companies;
• retirement funds;
• agents and/or exchange offices;
• lotteries and companies collecting for social purposes which are subject to prior authorization by public authorities;
• financial messengers;

However, the companies, organizations, and persons referred to in this article are required, in the exercise of their activities, to transmit, at any requisition of the Central Bank, the documents and information provided for in Article 34.

Article 6: Funds received from the public are considered to be funds that a person collects from a third party, notably in the form of a deposit, with the right to dispose of them for their own account, but subject to the obligation to return them.

However, the following are not considered as funds received from the public:

1. funds received or left in account by partners in name or commanditaires of a partnership, shareholders holding at least 5 percent of the share capital, administrators, members of the management committee and supervisory board, or managers, as well as funds from participatory loans;
2. funds that a company receives from its employees provided that the amount does not exceed 10 percent of its equity. For the appreciation of this threshold, funds received from employees under specific legal provisions are not taken into account.

Article 7: A credit operation constitutes any act by which a person acting for consideration makes or promises to make funds available to another person or undertakes, in the interest of that person, an obligation by signature such as an aval, a guarantee, or a surety.

Leasing operations are assimilated to credit operations and, in a general manner, any leasing operation accompanied by an option to purchase.

Article 8: Payment means are considered to be all instruments, whatever the support or the technical method used, which allow any person to transfer funds.

Article 9: Credit Institutions can also perform ancillary operations to their activities such as:

1. exchange operations;
2. operations on gold, precious metals, and coins;
3. placement, purchase, management, custody, and sale of securities and any financial product;
4. shareholdings within the limits fixed by the Central Bank;
5. advice and assistance in asset management;
6. advice and assistance in financial management, engineering, and in a general manner all services intended to facilitate the creation and development of enterprises, subject to provisions relating to the illegal exercise of certain professions.

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7. Simple leasing operations of movable or immovable property for companies authorized to conduct leasing operations.

TITLE TWO: APPROVAL, PROTECTION AND WITHDRAWAL OF APPROVAL OF CREDIT INSTITUTIONS

CHAPTER 1: APPROVAL

Article 10: Credit Institutions covered by this Law must, before exercising their activities on national territory, obtain approval from the Central Bank.

This approval is subject to the conditions contained in Articles 11 to 16.

Article 11: Credit Institutions must necessarily be constituted as a legal entity.

Subject to specific legal provisions, banks must be constituted as limited liability companies.

Credit Institutions must:

• Justify a minimum paid-up capital, determined by the Central Bank;
• Respond to a local or general economic need.

Article 12: The application for approval is submitted to the Central Bank.

It must include:

• An original copy of the statutes drafted in French;
• The list of shareholders and executives;
• Forecasts of activities, establishment, and organization;
• The details of the technical and financial means that the Credit Institution intends to implement;
• All other elements likely to clarify the decision of the Central Bank.

The Bank verifies the conformity of the application with the requirements of this Law.

It assesses the ability of the Credit Institution to achieve its development objectives under the conditions required for the proper functioning of the banking system and the security of depositors.

In the process of examining the approval application, the Central Bank is authorized to collect any information deemed useful for the processing of the application.

Article 13: When approval is sought by a Credit Institution that is a subsidiary of a Credit Institution approved in a foreign country, the Central Bank consults, before granting approval, the banking supervisory authorities of the country of origin to ensure, in particular, the credibility of this Credit Institution.

Article 14: The day-to-day management of Credit Institutions must be entrusted to at least two natural persons, justifying honorability, competence, and the professional experience necessary for the exercise of this function.

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Article 15: When the decision results from one of the prohibitions referred to in this article being subsequently lifted or overturned in the final instance, the prohibition ceases by operation of law.

Without prejudice to the legal provisions relating to commercial companies, no one may directly or indirectly:

• Propose to the public the creation of a Credit Institution;
• Administer, direct, or manage a Credit Institution;

1° If he has been convicted for an offense under this Law or exchange regulations; 2° If he has been declared bankrupt and has not been rehabilitated, even when the bankruptcy was opened in a foreign country; 3° If he has been convicted in the Democratic Republic of Congo or abroad as a principal, accomplice, or for attempted commission of any of the following offenses: a) Counterfeiting; b) Counterfeiting or falsification of banknotes, public instruments, shares, bonds, interest coupons; c) Counterfeiting or falsification of seals, stamps, punches, and marks; d) Forgery and use of forgery in writing; e) Corruption of public officials or extortion; f) Theft, extortion, misappropriation or abuse of confidence, fraud or handling stolen goods; g) Bankruptcy, fictitious circulation of commercial instruments; h) Issuance of checks without provision; i) Money laundering; 4° If he has been convicted for common law crimes and for offenses assimilated by law to any of those listed above; 5° If he has participated in the administration, direction, or day-to-day management of a Credit Institution whose forced dissolution has been ordered or whose bankruptcy has been declared.

Article 16: Approval is notified by a decision of the Central Bank.

The latter has a period of 90 days, from the date of receipt of the file, to rule and make a decision.

The approval act is published, at the expense of the Credit Institution, in the Official Journal and in at least one of the main organs of the national press.

It specifies the category in which the Credit Institution is classified and lists, as necessary, the banking operations authorized for it.

The refusal of approval is notified to the promoter by the Central Bank.

Article 17: The Central Bank draws up and maintains a list of approved Credit Institutions to which a registration number is assigned. This list, as well as the modifications made to it, are published annually in the Official Journal.

Credit Institutions must include their registration number on all correspondence or publications.

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Article 18: On December 31 of each year, the Central Bank classifies Credit Institutions into the following categories:

• Credit Institutions whose entire capital is held by private individuals;
• Credit Institutions whose capital is mixed;
• Credit Institutions whose entire capital is held by the State.

This list, as well as the modifications made to it, are published annually in the Official Journal.

CHAPTER II: PROTECTION

Article 19: No enterprise other than a Credit Institution may:

• Conduct banking operations as a regular activity;
• Receive funds from the public on demand, for a fixed term, or with notice;
• Claim the status of a Credit Institution, nor create the appearance of this status, notably by using terms such as bank, banker, savings and credit cooperative, savings bank, financial company, specialized financial institution, or using expressions that suggest it is approved as a Credit Institution.

It is prohibited for a Credit Institution to conduct operations not authorized for its category.

Article 20: Without prejudice to the specific provisions applicable to them, the prohibitions defined in Article 19 do not apply to the enterprises, bodies, persons, and services listed in Articles 4 and 5.

The prohibition regarding credit operations does not apply: 1° To non-profit organizations that, within the framework of their mission and for social reasons, grant loans on preferential terms to certain of their members from their own resources; 2° To organizations that, exclusively as an ancillary activity to their construction or service provider activity, grant deferred payment of the price of housing acquired or subscribed to by individuals; 3° To companies that grant their employees, for social reasons, advances on salaries or loans on an exceptional basis.

Article 21: The prohibitions defined in Article 19 do not prevent a natural or legal person from:

1. In the exercise of their professional activity, granting payment delays or advances to their contractors;
2. Concluding real estate lease contracts with an option to purchase;
3. Conducting treasury operations with companies that have, directly or indirectly, capital links conferring effective control power on one of the linked enterprises over the others;
4. Issuing securities as well as negotiable short-term bonds or bills on a regulated market;

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5. Issuing vouchers and cards delivered upon purchase from them of a specific good or service.

CHAPTER III: WITHDRAWAL OF APPROVAL

Article 22: Withdrawal of approval is pronounced by the Central Bank when the Credit Institution:

• Renounces the approval;
• No longer meets the conditions under which the approval was granted;
• Has not commenced its operations within twelve months from the date of its approval;
• Has ceased to exercise its activity for at least six months.

Withdrawal of approval may, in addition, be pronounced for infringement of the provisions of this Law and its implementing measures.

Article 23: Withdrawal of approval entails removal from the list of Credit Institutions.

Removal entails the dissolution of the Credit Institution by operation of law.

Removal entails the dissolution of the Credit Institution by operation of law.

Withdrawal of approval is notified to the Credit Institution concerned and published in the Official Journal and in at least one of the main organs of the national press.

Any Credit Institution whose approval has been withdrawn enters liquidation.

TITLE THREE: SETTLEMENT OF CREDIT INSTITUTIONS

Article 24: The own funds of Credit Institutions, as defined by regulatory means by the Central Bank, may at no time become lower than the amount of the minimum capital referred to in Article 11.

Article 25: Under the conditions defined by the Central Bank, Credit Institutions are required to respect management standards intended, in particular, to guarantee their liquidity and solvency towards depositors and third parties, as well as the balance of their financial structure.

They are particularly required to respect coverage and risk diversification ratios.

Article 26: Credit Institutions may, under the conditions and limits defined by the Central Bank, take or hold participations in existing or newly created enterprises.

Article 27: Credit Institutions may not grant, within the limits and conditions defined by the Central Bank, credits or guarantees to persons participating in their direction, administration, or operation, or stand as guarantor in their favor for a total amount exceeding 20% of their own funds.

The same applies to enterprises in which the persons referred to above or the Credit Institutions themselves hold any interest.

Article 28: It is prohibited for Credit Institutions to use the funds and assets they possess to exercise, directly or indirectly, an interested influence on public opinion.

This prohibition does not apply to regular commercial advertising.

Credit Institutions keep a compliant and detailed accounting of their advertising expenses as well as all indemnities or subsidies and all other liberalities.

Article 29: The following are subject to prior authorization from the Central Bank: a) Any modification of the statutes of a Credit Institution; b) Any merger or absorption operation involving a Credit Institution; c) Any operation of taking a participation, exchange of shares, or any other operation that would have the effect of concentrating directly or indirectly at the benefit of the same natural or legal person at least 20% of the voting rights of a Credit Institution; d) Any transfer, by a Credit Institution, of the entirety or, within the limits fixed by the Central Bank, of a part of its assets, clientele, or activity; e) Any acquisition, by a Credit Institution, of participations in a foreign enterprise; f) Any investment operation involving securities issued or guaranteed by a foreign State, an international organization, or a foreign enterprise; g) The opening, transfer, or closure of a branch or agency of the Credit Institution on national or foreign territory.

Authorization is granted within eighty days from the date mentioned on the receipt notice delivered by the Central Bank.

The absence of a decision at the expiration of this period constitutes authorization.

Article 30: When the situation of a Credit Institution so requires, the Central Bank may invite its shareholders to provide the necessary support.

It also calls upon all Credit Institutions to determine with them the necessary measures for the protection of the interests of depositors and third parties, the proper functioning of the financial system, and the preservation of the reputation of the market.

To this end, the Central Bank and Credit Institutions resort, in particular, to the deposit protection system referred to in Article 74 of this Law.

TITLE FOUR: RULES RELATING TO ANNUAL ACCOUNTS

Article 31: Credit Institutions are required, before any decision on the allocation of their net result by the General Meeting, to credit each year to a legal reserve account an amount at least equal to 10% of the credit balance of their profit and loss account, after deducting only the withholding tax on income.

This obligation is suspended when the balance of the legal reserve account reaches the amount of the paid-up capital.

Article 32: No Credit Institution may announce or pay a dividend as long as its preliminary expenses, such as organization costs, share placement commissions, brokerage fees, losses incurred, and all capital expenses that do not correspond to the acquisition of a realizable asset, have not been amortized, or as long as its capital is reduced by losses.

Article 33: Credit Institutions are required to submit to the Central Bank, before March 31 of each year, in accordance with Law No. 76/020 of July 16, 1976 on the standardization of accounting in Zaire and the accounting rules in force, their summary statements closed on December 31 of the previous year.

Article 34: The Central Bank may require Credit Institutions, in the forms and in accordance with the rules it fixes, all information or data it deems necessary concerning their advertising, their claims and commitments, and their summary statements.

The Central Bank may publish, in whole or in part, the information and data provided to it in accordance with the provisions of this Law, provided that such publication does not involve any disclosure of the particular affairs of a Credit Institution, its client, and generally all parties involved, without prior consent.

The Central Bank requires Credit Institutions to prepare and communicate all analysis and control documents.

Article 35: Credit Institutions are required to deposit, before June 15 of each year, for publication in the Official Journal and in one of the main organs of the national press, their summary statements closed on December 31 of the previous year, in the forms prescribed by accounting law.

TITLE FIVE: CONTROL BODIES

CHAPTER 1: CENTRAL BANK OF CONGO

Section 1: Generalities

Article 36: The Central Bank is charged, in particular, with:

1. Granting approval to Credit Institutions, their executives, and statutory auditors, as well as individual authorizations or derogations, within the limits fixed by the legal and regulatory provisions applicable to Credit Institutions;
2. Issuing the regulations applicable to Credit Institutions;
3. Ensuring compliance by Credit Institutions with the legal and regulatory provisions applicable to them;
4. Examining the operating conditions of Credit Institutions;
5. Ensuring the quality of the financial situation of Credit Institutions and respect for good conduct in the profession;
6. Sanctioning breaches of the legal and regulatory provisions applicable to Credit Institutions;

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• That the administrative and accounting organization or internal control of a Credit Institution presents serious deficiencies;
• That a Credit Institution refuses to submit to control or otherwise obstructs this control, and depending on the seriousness of the facts, it may either:
  1. Issue a warning, after having summoned its executives to present their explanations;
  2. Issue an injunction to the effect of taking, within a specified period, all appropriate corrective measures;
  3. Take any safeguard measure deemed necessary, notably the appointment, for a period not exceeding six months, of a Provisional Representative of the Central Bank;
  4. Appoint a Provisional Administrator or Provisional Manager at the head of the Credit Institution;
  5. Withdraw approval.

Article 37: The Central Bank regularly, or whenever it deems necessary, has one or more persons mandated by it for this purpose conduct file and on-site inspections of any Credit Institution to establish whether the latter is sound and respects the legal and regulatory provisions governing the activity and control of Credit Institutions.

Article 38: Credit Institutions are required to submit their cash holdings, securities and assets in their portfolio, as well as their books, minutes, accounts, receipts, and other documents to the control of any person mandated for this purpose by the Central Bank, and to provide any person conducting this control with all information and explanations they deem necessary.

Article 39: The inspectors of the Central Bank establish:

• That the operations of a Credit Institution are conducted contrary to this Law, the laws, and regulations in force;
• That the management structures of a Credit Institution present serious deficiencies;

Section 2: Provisional Representative

Article 40: The Provisional Representative of the Central Bank has the essential mission of ensuring that the managers of the Credit Institution do not perform acts likely to aggravate the general situation of the latter. To this end:

• He attends, in an advisory capacity, the meetings of the Board of Directors or any other body authorized to manage the Credit Institution to which he is delegated;
• He may suspend any decision of the bodies mentioned above and reports immediately to the Central Bank. If the suspension of the decision is not confirmed by the Central Bank within eight days following the date of the decision, it becomes executable by operation of law;
• He ensures the execution of the program defined by the Central Bank to which the Credit Institution concerned is subject. At the end of his mission, he draws up a report for the Central Bank stating the results arising from the execution of this program.

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Section 3: Provisional Administrator or Provisional Manager

Article 41: When the affairs of the Credit Institution are conducted in a manner that compromises its solvency, the interests of savers as well as those of shareholders, partners, or members, the Central Bank may, ex officio or at the request of shareholders, partners, or members, appoint at the head of this Credit Institution a Provisional Administrator or a Provisional Manager.

The appointment of a Provisional Administrator has the effect of depriving the Board of Directors of the Credit Institution of its management powers.

In the performance of his mission, the Provisional Administrator has the widest powers for the management of the Credit Institution. He has in particular the power to pursue or interrupt operations, to cease or limit commitments, to employ the necessary personnel, and to conduct any action or judicial procedure to which the Credit Institution might be a party.

Article 42: The decision ordering the placement of a Credit Institution under the management of a Provisional Administrator or a Provisional Manager is published by the Central Bank in the Official Journal and in a widely circulated newspaper.

It is also posted in the premises of the Credit Institution subject to the measure.

No statute of limitations runs against the claims and legal actions of a Credit Institution placed under the management of a Provisional Administrator or a Provisional Manager.

The Credit Institution under the management of a Provisional Administrator or a Provisional Manager has a period of 10 clear days, from the day of posting the notice provided for in the preceding paragraph, to file an appeal for annulment before the Court of First Instance of the jurisdiction.

This appeal is not suspensive of the execution of the decision challenged.

Article 43: The Provisional Administrator or the Provisional Manager has the essential mission:

• To ensure the good management of the Credit Institution;
• To draw up a recovery plan;
• To propose, if necessary, the liquidation of the Credit Institution.

Article 44:

Article 45 The assets of a Credit Institution under the management of a Provisional Administrator or a Provisional Manager cannot be executed. However, the Court may authorize, up to an amount of 1% of the paid-up capital, the execution on these assets of any judicial decision rendered before the decision designating the Provisional Administrator or Provisional Manager takes effect.

Article 46: The Central Bank may, at any time, terminate the mission of a Provisional Administrator or a Provisional Manager. Unless in cases of force majeure or for any other duly motivated reason, the mission of a Provisional Administrator ends three months from its designation if, in the meantime, the latter has not filed a restructuring plan, nor proposed the liquidation of the Credit Institution concerned.

Section 4: Restructuring Plan Article 47: The restructuring plan is drawn up by the Provisional Administrator or the Provisional Manager with the involvement of all interested parties. It is approved by the Central Bank.

Article 48: The restructuring plan is executed by the Provisional Administrator, the Provisional Manager, or any other mandatee designated for this purpose by the Central Bank. The duration of the restructuring plan is fixed by the Central Bank, on the proposal of the Provisional Administrator or the Provisional Manager. During the period of execution of the restructuring plan, modifications may be reported to it by the Provisional Administrator, the Provisional Manager, or the mandatee in charge of its execution, subject to the prior approval of the Central Bank.

CHAPTER II: AUDITORS Article 49: The General Meeting of shareholders, partners, or members of each Credit Institution is required to designate as Auditors either two natural persons or one legal entity among those approved by the Central Bank. The conditions for approval are:

1. for natural persons

• having Congolese nationality;
• being resident in the Democratic Republic of Congo;
• exercising an independent professional activity in the field of accounting;
• being affiliated with a recognized professional organization.

2. for legal entities

• being of Congolese law and with capital held majority by Congolese;
• being managed by Nationals;
• exercising an independent professional activity in the field of accounting control;
• being affiliated with a recognized professional organization.

Article 50: The duration of the mandate of the auditors is fixed at three years, renewable. Except in the case of voluntary resignation, the mandate of an auditor cannot be terminated prematurely by order or authorization of the Central Bank for reasons of incompetence or immorality.

Article 51: If the Central Bank opposes the designation of an auditor or if his mandate is terminated in one of the circumstances provided for in Article 50, the Credit Institution has a period of ninety days from the date of receipt of the Central Bank's decision opposing the designation or terminating the functions of the auditor, or from the date on which the auditor's mandate took effect, to designate a new auditor under the conditions provided for in Article 50. If a Credit Institution abstains from designating its Auditors in accordance with the provisions of Articles 53 and 54, the Central Bank proceeds to an ex officio designation.

Article 52: The remuneration of the auditors, whether designated by the General Meeting or by the Central Bank, is borne by the Credit Institution to which they are attached. The amount of the remuneration is fixed by the Credit Institution in agreement with the Central Bank for the auditors designated by the General Meeting, and by the Central Bank for the auditors designated by it. Outside of this remuneration, no direct or indirect advantage may be granted to them, in any form whatsoever.

Article 53: No one may be an Auditor for a Credit Institution: 1° if he is in one of the cases provided for in Article 15; 2° if he has or acquires, otherwise than as a depositor, any interest in the Credit Institution or if he has exercised or exercises another function likely to call his independence into question.

Article 54: Auditors cannot guarantee, directly or indirectly, the good outcome of the securities issuances for which the Credit Institutions before which they exercise their functions are responsible.

Article 55: Auditors submit annually to the General Meeting of shareholders a report on the annual accounts of the Credit Institution in accordance with professional standards in this matter. A copy of this report is communicated to the Central Bank.

SIXTH TITLE: DISSOLUTION AND LIQUIDATION CHAPTER I: GENERALITIES Article 56: The dissolution of a Credit Institution may be voluntary or forced. Dissolution is said to be voluntary when it is decided by the General Meeting of shareholders, partners, or members of the Credit Institution. It is only acquired if it is adopted by two-thirds of the shareholders, partners, or members holding the right to vote and representing at least half of the share capital. Dissolution is said to be forced when the decision emanates from the Central Bank or the Judicial Authority.

Article 57: The dissolved Credit Institution is deemed to exist for its liquidation. It cannot undertake new operations, but may do everything necessary to bring its liquidation to a successful conclusion. During the liquidation period, the Credit Institution remains subject to the control of the Central Bank. It cannot state its quality as a Credit Institution except by specifying that it is in liquidation.

Article 58: Actions pending against Credit Institutions in liquidation on the day of their dissolution and their entry into liquidation are definitively stayed. Dissolution stops the running of interest on any claim vis-à-vis the creditors of the Credit Institution. It does not entail forfeiture of the term.

Article 59: Subject to contrary provisions of this Law, the liquidation of a Credit Institution dissolved by decision of the General Meeting of shareholders, partners, or members is carried out in accordance with common law.

Article 60: The liquidation of Credit Institutions that have been the subject of forced dissolution is carried out in accordance with Articles 62 to 72.

CHAPTER II: THE LIQUIDATOR AND LIQUIDATION OPERATIONS Article 61: In the event of voluntary dissolution of a Credit Institution, the liquidators are appointed by the General Meeting of shareholders, partners, or members, subject to the prior approval of the Central Bank. The liquidators appointed by the General Meeting are subject to the control of the Central Bank and are subject to disciplinary sanctions provided for by the provisions of Article 77. The Central Bank may also relieve of their functions any liquidator appointed by the General Meeting who does not show, in the liquidation operations, the competence and professional experience necessary for the accomplishment of his mission. In this case, it requests the General Meeting to provide for his replacement or proceeds, if necessary, to an ex officio designation.

Article 62: The Central Bank may appoint a liquidator for Credit Institutions whose license has been withdrawn in accordance with the provisions of Articles 22, 39, and 77, as well as for companies that irregularly exercise the activity defined in Article 1 or infringe one of the prohibitions defined in Article 19.

Article 63: Creditors must assert against the liquidator of the Credit Institution or its mandatees the amount of their claims with a production receipt bearing a signature accredited with the Credit Institution and indicating the sums claimed and, where applicable, the documents submitted.

Article 64: The liquidator ensures wide dissemination of this statement before transmitting it for approval to the Central Bank. The creditor whose claim has been rejected in whole or in part may refer, within ten days of the publication of the statement, to the President of the High Court of the registered office of the Credit Institution in liquidation, who rules by order, after adversarial debate. All creditors must, under penalty of inadmissibility, assert their claims against the Credit Institution with the liquidator or his mandatees, within a period of two months from the posting of the notice specified in Article 63. A supplementary period of two months is granted to creditors not residing in the Democratic Republic of the Congo.

Article 65: Within a period of thirty days from his appointment, the liquidator sends by registered letter to any depositor, creditor, and person having any right over the funds or assets conserved or held by the Credit Institution, a notice of liquidation containing all the information that the Central Bank may prescribe. The notice is also visibly posted in the premises of each office and branch of the Credit Institution and is the subject of any other publicity measure that the Central Bank may prescribe.

Article 66: The liquidator carries out the verification of claims and establishes the order of claims within a period of four months following the last day specified in the notice provided for in Article 64 for the registration of claims. If there is a dispute over all or part of a claim, the liquidator notifies the creditor by registered letter with acknowledgment of receipt and invites him to provide all written or oral explanations, within a period of thirty days from receipt. The notice is also visibly posted in the premises of each office and branch of the Credit Institution and is the subject of any other publicity measure that the Central Bank may prescribe.

Article 67: After verification of claims and examination of objections, the liquidator establishes, within the period provided for in Article 66, a statement of verified and settled claims. The liquidator ensures wide dissemination of this statement before transmitting it for approval to the Central Bank. The creditor whose claim has been rejected in whole or in part may refer, within ten days of the publication of the statement, to the President of the High Court of the registered office of the Credit Institution in liquidation, who rules by order, after adversarial debate.

Article 68: The recovery operations of the Credit Institution's claims are conducted by the liquidator or his mandatees. They are carried out amicably or by any legal means.

Article 69: The privilege of the Treasury in matters of withholding taxes on income is granted to the Central Bank. This privilege is exercised for the recovery of due claims from credit institutions whose forced dissolution has been decided in virtue of the provisions of Article 56, paragraph 3. This privilege is also exercised for the recovery of due claims from credit institutions in restructuring in virtue of Articles 47 to 48. The conditions for exercising this privilege are defined by decree.

Article 70: The realization of tangible and intangible assets is carried out by the liquidator or his mandatees by way of amicable sale or auction. The proceeds from these realizations serve to settle, after deduction of liquidation costs, the debts as they appear from the statement of verified and settled claims.

Article 71: The liquidator reports monthly to the Central Bank on the realizations of the previous month and those he intends to initiate during the following month. The liquidator establishes each month, for the attention of the Central Bank, an activity report tracing the operations of the preceding month.

Article 72: A closing balance sheet of the liquidation is established by the liquidator and submitted, in the case of voluntary dissolution, to the General Meeting of shareholders, partners, or members to obtain discharge. The closing balance sheet of the liquidation of an establishment that has been the subject of forced dissolution is transmitted to the Central Bank for approval. The closure of the liquidation is published in the Official Journal and in at least one of the main organs of the national press.

SEVENTH TITLE: RELATIONSHIPS BETWEEN CREDIT INSTITUTIONS AND THEIR CLIENTELE CHAPTER 1: PROFESSIONAL SECRECY Article 73: Any person who, in any capacity, participates or has participated in the management or control of a credit establishment is bound by professional secrecy under penalty of sanctions provided for in Article 73 of the Congolese Penal Code, Book II. Outside the cases provided for by law, professional secrecy cannot be opposed either to the Central Bank or to the judicial authority acting in the context of a criminal procedure.

CHAPTER 2: DEPOSIT PROTECTION SYSTEM Article 74: The Central Bank may allow the establishment of one or more deposit protection systems to which credit establishments are required to adhere and whose organization and financing modalities are fixed by regulatory texts.

CHAPTER 3: PREVENTIVE MEASURES Article 75: Under the conditions determined by the Central Bank, credit establishments are required to declare:

1. the sums of money recorded in their books and which appear to originate from drug trafficking or other criminal activities;
2. the operations that involve sums of money which appear to originate from drug trafficking or other criminal activities.

Article 76: With a view to better protecting public savings and the financial system, the Central Bank may, at any time or at the request of credit establishments, take conservatory measures, notably blacklisting, against natural or legal persons who maintain unpaid debts, issue checks without provision, or infringe the provisions relating to exchange regulation. Blacklisting implies the suspension or prohibition of services and facilities with all credit establishments. It may be the subject of publication under the conditions fixed by the Central Bank.

EIGHTH TITLE: SANCTIONS CHAPTER 1: DISCIPLINARY AND ADMINISTRATIVE SANCTIONS Article 77: If a credit establishment infringes a legal or regulatory provision relating to its activity, does not comply with an injunction, or does not take into account a warning, the Central Bank may impose one of the following disciplinary sanctions:

1. the warning;
2. the censure;
3. the prohibition to carry out certain operations or activities;
4. the suspension or ex officio dismissal of responsible executives;
5. the revocation of the auditor(s);
6. the withdrawal of the license.

Article 78: Without prejudice to the provisions of Articles 39 and 77, the Central Bank may fix a deadline for a credit establishment within which it must: a) comply with certain provisions of this law or the regulations taken in execution thereof; b) carry out the adaptations imposed on its organization and functioning. Failing to do so, the credit establishment concerned exposes itself to an administrative fine the rate of which is fixed by the Central Bank.

CHAPTER II: PENALTIES Article 79: Credit establishments that do not respect the ratios fixed by the Central Bank are subject to a penalty the rate of which is fixed by regulatory means. The product of the penalty is paid to the Central Bank for the account of the Treasury.

CHAPTER III: CRIMINAL PROVISIONS Article 80: Subject to a penalty of imprisonment from one month to one year and a fine of 50,000 to 500,000 Congolese francs or one of these penalties only:

1. any person who, directly or in his capacity as administrator, executive, or manager of a credit establishment, contravenes the provisions of Article 29;
2. any person who contravenes the provisions of Articles 1, 15, 19, 75, and 87;
3. any person who, participating directly or indirectly in the administration, direction, control, or management of a credit establishment: a) hinders the mission of persons mandated by the Central Bank to carry out an inspection provided for in Articles 37 and 37; b) hinders the mission of the Provisional Representative provided for in Article 39; c) communicates to the public, the Central Bank, or persons mandated by it knowingly false or incomplete information; d) any person who, participating directly or indirectly in the administration, direction, control, or management of a credit establishment, contravenes the provisions of Articles 15, 27, 53, and 54;
4. any person who refuses to submit his books, accounts, and files to the examination of the Central Bank in accordance with the provisions of Article 34.

Article 81: Credit establishments are civilly liable for fines pronounced in virtue of the provisions of Articles 80 and 85 against any person who participates, directly or indirectly, in their administration, management, or control. However, the civil liability of credit establishments does not apply in respect of administrators, managers, and provisional representatives as well as auditors designated by the Central Bank.

Article 82: Any information relating to an offense under this law must be brought to the knowledge of the Central Bank by the judicial or administrative authority seized thereof.

Article 83: The courts seized in the context of offenses provided for in this law may, at any stage of the proceedings, request from the Central Bank all useful opinions and information. For the application of the provisions of this law, the Central Bank may constitute itself as a civil party.

Article 84: The Central Bank is authorized to settle and fix itself the conditions of the settlement for offenses committed in violation of the provisions of this law. The settlement accepted by the Public Ministry extinguishes the public action even as far as penalties of imprisonment are concerned.

Article 85: Without prejudice to the provisions of Articles 79 and 80 above, any offense committed in violation of the provisions of this law is subject to a fine of 300,000 to 3,000,000 Congolese francs.

NINTH TITLE: ORGANIZATION OF THE PROFESSION Article 86: Every credit establishment is required to adhere to the Professional Association of Credit Establishments of the category to which it belongs. The latter has for object:

• the representation of the collective interests of its members before the public authorities;
• the information of its members and the public;
• the study of any question of common interest and the elaboration of recommendations relating thereto with a view, where appropriate, to favor cooperation between networks;
• the organization and management of services of common interest. Its statutes are subject to the approval of the Central Bank.

TENTH TITLE: PARTICULAR PROVISIONS Article 87: Any person, agent or non-agent of a foreign credit establishment, who, in a habitual manner, without exercising on the territory of the Democratic Republic of the Congo one of the activities referred to in Article 1 of this law, represents this credit establishment on the territory of the Democratic Republic of the Congo and wishes to undertake any activity in the name, for the account, or in favor of this credit establishment on this same territory, must be expressly authorized by the Central Bank to exercise this activity or this representation. This authorization, which is in no case transferable, is fixed for a period not exceeding one year. The authorization is renewable and may be canceled at any time by the Central Bank if its holder exceeds its limits.

Article 88: When there are indications that an unregistered entity performs the operations provided for in Article 1 of this law, the Central Bank may examine the books, accounts, and files of this company and determine if it has contravened or is contravening the provisions of this Law. The refusal to submit its books, accounts, and files to the examination of the Central Bank constitutes a presumption of violation of the provisions of this law.

Article 89: The President of the Republic, on the motivated recommendation of the Council of the Central Bank, may, by decree, suspend at any time the operations and activities of credit establishments on the territory of the Republic for a period not exceeding five working days, a period which may be prorogued only once for a new period not exceeding five working days.

Article 90: Outside legal holidays and general closure days, the days and hours of public access to credit establishments are fixed by them in agreement with the Central Bank.

Article 91: The Central Bank collects control fees from each credit establishment.

ELEVENTH TITLE: TRANSITORY AND FINAL PROVISIONS Article 92: Credit Institutions that already exercise their activity on the territory of the Republic at the time of the entry into force of this Law are considered as approved and inscribed ex officio on the list of credit institutions. They have a period of one year from the entry into force of this Law to comply with its provisions.

Article 93: This law repeals all previous provisions contrary to it and enters into force on the date of its promulgation. Done at Kinshasa, on 02 February 2002 Joseph KABILA Major General