Notice No. 08/2012 of March 30

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Published in the Official Gazette, I.ª Series, No. 62, of March 30 NOTICE NO. 08/2012 of March 30 Given the need to establish supplementary rules for the regulation of the application processing procedure for the establishment of micro-credit companies, as well as to establish the minimum operational requirements for such companies, thereby developing the provisions 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; In accordance with 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 National 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 National Bank of Angola Act, DETERMINE:

Article 1.
(Object)
This Decree regulates the application processing procedure for authorization, and 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 person, on a joint and several or individual liability 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 consultancy 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.
(Authorization Application)

1. In addition to the provisions of Article 4 of Presidential Decree No. 28/11 of February 2, the application for authorization to establish and operate a micro-credit company must be submitted via a petition addressed to the Governor of the National Bank of Angola, as per Annex I to this Decree, accompanied by all documents and information useful for its assessment, including the following minimum elements:
   a) certificate of admissibility of company name, issued by the competent authority; 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, as per Annex II to this Decree; 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 to State bodies for all shareholders or partners; f) personal identification of proposed members of the management and supervisory bodies; g) declaration signed by members of the management and supervisory bodies, attesting that companies or firms whose control they ensure or have ensured, or in which they have served as administrators, directors, or managers, were not declared bankrupt or insolvent; h) evidence of technical capacity (curriculum vitae) of proposed members for management and supervisory positions; i) criminal record certificate of proposed members for management and supervisory positions, issued within the last 90 (ninety) days; j) proof of prior deposit corresponding to 5% (five percent) of the minimum share capital, in a domestic banking financial institution, or a bank guarantee of equal value, accepted by the National Bank of Angola; k) anticipated 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;
   iv. detailed policies for fund raising, granting, management, and collection of micro-credits;
   v. technologies to be used in product and service placement, as well as the sizing of the service network;
   vi. projection of preliminary expenses, including all costs related to establishment and set-up;
   vii. projected balance sheets and income statements, including:

2. interest and commission income;

3. provision for overdue credits;

4. expenses of projected operations, including salaries, staff benefits, cost of fund raising, IT investments, and fixed expenses;

5. other income, including consultancy services provided to clients and third-party services;

6. investments to be made;
   viii. corporate governance standards to be observed, which must include:

7. identification of responsibilities assigned to various organizational levels;

8. remuneration and incentive policy;

9. internal control structure;

10. Regarding founding shareholders or partners that are legal entities, the authorization application must also be accompanied by the following elements:
    a) certificate issued by the competent entity of the country where the registered or effective administrative headquarters 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 in which it participates; d) authorization document from the competent corporate body or legal representatives with sufficient powers, for that entity's participation in the institution to be established.

11. Applicants must designate one among themselves, via power of attorney, to represent them all before the authorities responsible for assessing the authorization application, and indicate a domicile in Angola for notification or correspondence purposes.

12. The National 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.

13. The National 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 National Bank of Angola may conduct an inspection of the premises of micro-credit companies prior to the commencement of activity.

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 granted guarantees 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.
(Credit Classification and Provisioning)

1. Micro-credit companies must classify granted credits and provided guarantees, creating respective provisions according to the assumed risk level, as per 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 provision calculation, accounting balances of credits are considered.

3. The National Bank of Angola may, upon finding inadequate credit methodology or high overall portfolio risk, determine additional provisions to the levels established in this article.

4. Micro-credit companies must write off credits classified as Risk Level “E” for more than 360 days, with a minimum monthly frequency.

Article 9.
(Accounting)

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

Article 10.
(Information Reporting)

1. Micro-credit companies subject to this Decree must submit quarterly balance sheets to the National Bank of Angola, according to Annex III.

2. The annex referred to in the preceding paragraph may be amended, via an Instruction from the National 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;
x. Micro-credit companies must annually publish by April 30 of the following year the balance sheet and income statement for each financial year in an easily accessible medium to their shareholders/partners and clients, as well as submit such information to the National 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 National Bank of Angola;
xii. Micro-credit companies must ensure 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 National 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 chartered accountant duly 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 comply with its provisions within 12 (twelve) months.

Article 13.
(Revocation Clause)
All legislation contrary to the provisions of this Decree is hereby revoked, 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