On the Establishment of a Legal Reserve

CENTRAL BANK OF DJIBOUTI

INSTRUCTION No. 2022-16/IMF

ON THE ESTABLISHMENT OF A LEGAL RESERVE

The Governor of the Central Bank of Djibouti,

Having regard to Law No. 118/AN/11/6th L of 22 January 2011 amending the statutes of the Central Bank of Djibouti;

Having regard to Law No. 179/AN/07/5th L of 16 May 2007 regulating microfinance activities on the territory of the Republic of Djibouti;

Having regard to Law No. 117/AN/11/6th L of 25 May 2011 regulating financial cooperatives;

Having regard to the Commercial Code, Book 3 on Company Law;

Having regard to Law No. 119/AN/11/6th L of 22 January 2011 on the establishment and supervision of credit institutions and financial auxiliaries;

Having regard to Decree No. 2018-171/PRE of 8 May 2018 appointing the Governor of the Central Bank of Djibouti.

Orders:

Article 1: With a view, in particular, to promoting a systematic strengthening of their equity through the allocation of surplus results, microfinance institutions shall establish a reserve, funded by an annual levy on net surpluses generated, after offsetting, where applicable, any carried-forward deficit.

Article 2: For all microfinance institutions, the legal reserve rate is set at 15% of net surpluses after offsetting the carried-forward deficit. Funding the reserve is mandatory, regardless of the level reached by the cumulative amount of this reserve relative to the share capital of the concerned institution.

Article 3: The legal reserve does not exclude statutory and voluntary reserves.

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Article 4: The legal reserve may be used to cover losses, provided that all other available reserves are utilized beforehand.

Article 5: This instruction shall enter into force as of its signature.

Done in Djibouti, on 14 March 2022

The Governor

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