Notice No. 07/2011, of July 15

NOTICE NO. 07/2011 of July 15
Whereas it is necessary to establish supplementary rules for the regulation of the application process for establishment, as well as to establish the minimum operational requirements for micro-credit companies, thereby developing the discipline contained in Presidential Decree No. 28/11 of February 2, which regulates this type of non-bank financial institution; Considering further the need to harmonize existing norms in the Angolan financial system with international standards; Pursuant to paragraph 2 of Article 6, combined with item f) of paragraph 1 of Article 5, both of Law No. 13/05 of September 30, the Financial Institutions Act, which mandates the Bank of Angola to regulate the exercise of activity by non-bank financial institutions; In the exercise of the competence attributed by item f) of Article 51 of Law No. 16/10 of July 15, the Bank of Angola Act, IT IS DETERMINED:

Article 1.
(Object)
This Decree regulates the application process for authorization, as well as establishes the minimum operational requirements for micro-credit companies.

Article 2.
(Definition of Micro-credit)

1. For the purposes of this Decree, micro-credit is a loan granted to a small entrepreneur, individual or collective entity,
   on a joint and several or individual basis, the amount of which must not exceed Kz 1,000,000.00 (One Million Kwanzas), per client or joint group.
2. In addition to granting credit, the companies subject to this Decree may also carry out the following operations:
   a) provide consulting services to their clients; b) grant guarantees and other commitments; c) provide payment services to their clients, through a licensed financial institution.

Article 3.
(Minimum Share Capital)
Micro-credit companies must be established with a minimum share capital of Kz 2,500,000.00 (Two Million Five Hundred Thousand Kwanzas).

Article 4.
(Application for Authorization)

1. In addition to the provisions of Article 4 of Presidential Decree No. 28/11 of February 2, the application for authorization for the establishment and operation of a micro-credit company must be submitted to the Governor of the Bank of Angola, according to Annex I to this Decree, accompanied by all documents and information useful for its assessment, including the following minimum mandatory elements:
   a) certificate of admissibility of the corporate name, issued by the competent authority; CONTINUATION OF NOTICE NO. 07/2011

b) copy of the Identity Card, passport or other identification document of shareholders or partners; c) shareholder/partner structure, reflecting the distribution of share capital in cash and percentage, according to Annex II; d) evidence of the economic-financial capacity of shareholders or partners, according to their subscribed share in the share capital; e) certificate of non-existence of overdue debts with State bodies for all shareholders or partners; f) personal identification of the proposed members of the management and supervisory bodies; g) declaration signed by the members of the management and supervisory bodies, attesting that companies or enterprises they control or have controlled, or in which they have served as administrators, directors, or managers, have not been declared bankrupt or insolvent; h) evidence of technical capacity (curriculum vitae) of the proposed members for management and supervisory positions; i) criminal record certificate of the proposed members for management and supervisory roles, issued within less than 90 (ninety) days; j) proof of prior deposit corresponding to 5% (five percent) of the minimum share capital, in a domestic financial institution or a bank guarantee of equal value, accepted by the Bank of Angola; k) proposed shareholders' agreements; l) business plan and feasibility study for the first three (3) years of activity, including:
i. analysis of the target market;
ii. proposed organizational structure;
iii. services offered and target audience;
CONTINUATION OF NOTICE NO. 07/2011

iv. detailed policies for fund raising, granting, management, and collection of micro-credits;
v. technologies to be used in product/service placement, as well as the sizing of the service network;
vi. projection of preliminary expenses, including all costs related to establishment and setup;
vii. projected balance sheets and income statements, including:
1. interest and commission income;
2. provision for overdue credits;
3. expenses of projected operations, including salaries, staff benefits, cost of fund raising, IT investments, and fixed expenses;
4. other income, including consulting services provided to clients and services provided to third parties;
5. investments to be made;
viii. corporate governance standards to be observed, including:
1. identification of responsibilities assigned to various organizational levels;
2. remuneration and incentive policy;
3. internal control structure.
2. Regarding founding shareholders or partners that are legal entities, the application for authorization must also be accompanied by:
CONTINUATION OF NOTICE NO. 07/2011

a) certificate issued by the competent entity of the country where the registered office or effective place of administration is located, attesting that the applicant, if foreign, is legally established and authorized to exercise its activity, as well as authorized to participate in the micro-credit entity to be established or that such authorization is not required; b) articles of association or partnership agreement and shareholder structure of the applicant; c) organizational chart of the economic group to which it belongs; d) authorization document from the competent corporate body or legal representatives with sufficient powers, for the entity's participation in the institution to be established.
3. Applicants must designate one among themselves, by power of attorney, to represent all before the authorities responsible for assessing the authorization application and indicate a domicile in Angola for notification or correspondence purposes.
4. The Bank of Angola may request any supplementary information or procedures from applicants, conduct investigations it deems necessary or useful for the decision on the application, and convene proposed founding shareholders/partners and administrators, directors, or managers of micro-credit companies for interviews.
5. The Bank of Angola may waive the submission of elements referred to in this article if it already possesses or has knowledge thereof.

Article 5.
(Inspection)
The Bank of Angola may conduct an inspection of the premises of micro-credit companies before the commencement of activities.
CONTINUATION OF NOTICE NO. 07/2011

Article 6.
(Minimum Own Funds and Credit Limits)

1. It is the responsibility of the micro-credit company to maintain adequate own funds relative to the volume of its active and passive operations.
2. Without prejudice to the preceding paragraph, the total volume of active credits and guarantees provided per client must not exceed 15% of the micro-credit company's own funds.

Article 7.
(Interest Rates)
Interest rates are freely negotiable between the micro-credit company and its respective clients.

Article 8.
(Classification and Provisioning of Credits)

1. Micro-credit companies must classify granted credits and provided guarantees, creating respective provisions based on the assumed risk level, according to the table below:

RISK LEVEL	PROVISION
None (overdue 0 to 7 days)	A 0%
Very Low (Overdue 8 to 15 days)	B 1%
Low (overdue 15 to 30 days)	C 3%
Moderate (overdue 30 to 45 days)	D 10%
High (overdue 45 to 75 days)	E 20%
Very High (overdue 75 to 90 days)	F 50%
Loss (overdue more than 90 days)	G 100%

2. For the calculation of provisions, accounting balances of credits are considered.
3. The Bank of Angola may, upon finding inadequate credit methodology or high overall portfolio risk, determine additional provisions beyond the levels established in this article.
4. Micro-credit companies must write off credits classified at Risk Level 'E' after more than 360 days, with a minimum monthly frequency.

Article 9.
(Accounting)

1. Micro-credit companies must record their operations in accordance with the current Chart of Accounts for Financial Institutions, adopting headings that address these operations, according to the format provided in Annex III.

Article 10.
(Information Reporting)

1. Micro-credit companies under this Decree must submit quarterly balance sheets to the Bank of Angola, according to Annex III.
2. The annex referred to in the preceding paragraph may be amended, via an Instruction from the Bank of Angola.
   ix. For the purposes of the preceding paragraph, reference dates are March 31, June 30, September 30, and December 31, with information to be submitted by the 8th day of the following month in XML format through the Financial Institutions Supervision System - SSIF.
   CONTINUATION OF NOTICE NO. 07/2011

x. Micro-credit companies must annually publish by April 30 of the following year the balance sheet and income statement of each financial year in an easily accessible publication medium for their shareholders/partners and clients, as well as submit the said information to the Bank of Angola by that date.
xi. Micro-credit companies must appoint a qualified spokesperson to respond to any questions regarding information reported to the Bank of Angola.
xii. Micro-credit companies must ensure the permanent availability of the designated spokesperson, obligatorily appointing 1 (one) substitute, definitive or temporary, in case of the designated spokesperson's impediment.

Article 11.
(External Audit)

1. Micro-credit companies must submit their financial statements annually to external audit, conducted by 1 (one) independent auditor.
2. The independent auditor must report to the Financial Institutions Supervision of the Bank of Angola on the work performed and respective results, infractions, and facts that may affect the continuity of the micro-credit company's activity.
3. For the purposes of this article, the independent auditor may be a duly authorized audit firm or a qualified accountant registered with the competent authority.

Article 12.
(Transitional Provision)
Legal entities already authorized to exercise micro-credit activity at the date of publication of this Decree must, within 12 (twelve) months, comply with the provisions contained herein. CONTINUATION OF NOTICE NO. 07/2011

Article 13.
(Repealing Clause)
All legislation contrary to the provisions of this Decree is hereby repealed, notably the first part of item c) of paragraph 1 of Article 1 of Notice No. 04/2007 of September 12.

Article 14.
(Entry into Force)
This Decree enters into force 30 days after the date of its publication.
PUBLISHED
Luanda, July 15, 2011

THE GOVERNOR
JOSÉ DE LIMA MASSANO
CONTINUATION OF NOTICE NO. 07/2011

Annex I to Notice No. 07/2011, of July 15
APPLICATION FOR ESTABLISHMENT OF A MICRO-CREDIT COMPANY Pretended Corporate Name:

Pretended Address for Registered Office:
Principal responsible for conducting the authorization project with the BNA:
Name:
Telephone: Fax:
E-mail:
The undersigned, members of the organizing group of the micro-credit company identified above:
I - Hereby request the Bank of Angola's favorable expression regarding the project for establishment and commencement of the aforementioned company. II - They inform that the founding shareholders or partners of the micro-credit company are:
(list name, identity document, full address, telephone-email of all founding members) III - They attach the documents indicated below:
Business plan and economic-financial feasibility study, according to item l), of paragraph 1, of Article 6 of Legal Decree No. 07/2011 of July 15; Certificate of admissibility of the pretended corporate name, issued by the competent authority; Draft articles of association for the micro-credit company; Shareholder/partner structure, reflecting the distribution of share capital in cash and percentage; Identification (identity document, address) of all proposed shareholders or partners;

Evidence of the economic-financial capacity of shareholders or partners, according to their subscribed share in the share capital; Identification (identity document, address) of all proposed members for management and supervisory bodies; Curriculum vitae of the members of the management and supervisory bodies; Evidence of technical capacity of the proposed members for management and supervisory roles; Proof of prior deposit corresponding to 5% of the minimum share capital; Shareholders' agreements; In case of founding shareholders or partners that are legal entities;

Certificate from the competent foreign authority; Articles of association; Organizational chart of the economic group to which it belongs; Declaration by competent corporate bodies regarding participation in the proposed company;

They also attach the following documents or information necessary for the analysis of this application:
(list documents not indicated in the above items) Place and date.
Signatures:

(full name) (full name)

Annex II to Notice No. 07/2011, of July 15
Shareholder or Partner Structure
Share Capital
No.
Order Name of Shareholder or Partner No. of Shares or Quotas Value Kwanzas Percentage