Procedure for Application for Authorization of Credit Institutions

PROCEDURE FOR APPLICATION FOR AUTHORIZATION OF CREDIT INSTITUTIONS Banque Centrale de Djibouti CIRCULAR NO. 02/BCD/2012

The Governor of the Banque Centrale de Djibouti, Having regard to Law No. 118/AN/11/6ème dated January 22, 2011, amending the statutes of the Banque Centrale de Djibouti; Having regard to Law No. 119/AN/11/6ème dated January 22, 2011, concerning the establishment and supervision of credit institutions and financial auxiliaries; Having regard to Decree No. 02/2011-10/PRE dated January 24, 2011, appointing the Governor of the Banque Centrale de Djibouti;

1. Application for Authorization
   The application for authorization is prepared on plain paper by a duly authorized officer (corporate director or expressly mandated person), in accordance with the attached procedures. The application for authorization is addressed to the Governor of the Banque Centrale de Djibouti. A standard letter template is provided in Annex No. 1. The application file must include the following elements:

• A copy of the legal statutes or a draft of the legal statutes,
• The organizational chart of the group to which the applicant belongs,
• The curriculum vitae of persons heading management or departments, or responsible for main business lines,
• A copy of all contracts with service providers (in case of outsourcing of resources),
• A detailed enumeration of forecasted operational flows over three years,
• Overall assessment of allocated resources,
• Templates of agreements signed with clients,
• Forecasts and income statements for the next 3 years,
• The latest certified balance sheets and income statements (in case the legal person is already constituted),
• Declaratory statement for the appointment of statutory auditors (cf. Instruction No. 08-2011),
• Sworn declaration to be completed by the statutory auditors (cf. Instruction No. 08-2011),
• Declaration regarding the professional experience of statutory auditors (cf. Instruction No. 08-2011).

2. Documents related to Capital Contributors:

• A certified copy of a valid identity document for capital contributor(s) who are natural persons,
• The organizational chart of each group to which each capital contributor belongs,
• Certified accounts of the last three financial years for each contributor's group,
• Certified (consolidated) accounts of the last three financial years for each contributor's group,
• List of participations in credit institutions and financial-activity establishments, in Djibouti and abroad: by the capital contributor and by the group to which they themselves belong,
• A copy of the authorization to operate, if the capital contributor or any/all affiliated companies exercise a financial activity,
• A copy of decision(s) of sanctions, in case of criminal proceedings,
• List of mandates already held by the future representatives of the capital contributor within the establishment,
• Letter from the capital contributor, template presented in Annex No. 2,
• Economic and financial situation of the capital contributors,
• Certificate of their banking experience,
• "Sponsorship" letter from an existing CI if contributors do not meet the conditions listed above.

3. Documents related to Management:

• A copy or scanned version of a valid identity document for the manager,
• Curriculum vitae in French or Arabic, updated, dated and signed by the manager,
• Certified copy of the manager's appointment document,
• Extract from the minutes of the deliberating body, specifying the scope of powers of the manager (if not legal representative), which will necessarily determine the effective orientation of the credit institution's activity, financial and accounting information, internal control, determination of own funds,
• For managers not residing in Djibouti for at least one year, a certificate serving as an extract from the criminal record, issued by the competent authority of the country where the declarant previously resided and specifying the signatory authority and concerned country,
• Manager's letter (cf. Annex No. 3).

4. Documents related to Corporate Bodies:

• Identity documents, curriculum vitae in French or Arabic, updated and dated for members of corporate bodies,
• Exhaustive list of members of corporate bodies,
• For members not residing in Djibouti for at least one year, a certificate serving as an extract from the criminal record, issued by the competent authority of the country where the declarant previously resided and specifying the signatory authority and concerned country,

After receipt and examination of the file, the Banque Centrale de Djibouti may require supplementary documents from applicants. The documents, duly completed and signed, must be sent in triplicate to the Banque Centrale de Djibouti.

5. Questionnaire for Capital Contributors:
6. Promoters must submit a list of all shareholders of the credit institution to be created, including the following information:
   Name:
   First names:
   Other first names:
   Nationality:
   Date of birth:
   Country, city, postal code of birth place:
   Address (street, city, postal code, country):
   Certified copy of identity document:
   Share of capital in %:
   Share of voting rights in %:

For legal persons:
Company name:
Trade register:
Interbank code (CIB):
Registered office address:

• Street:

• City:

• PO Box:

• Country:
  Other addresses (branches):
  Share of capital in %:
  Share of voting rights in %:

• Distribution of shares/partnership interests and voting rights
  Type (Public, Private, Employees, Others)
  Share of capital in %
  Share of voting rights in %

2. In addition, the following information is required for any holder of at least 5% of capital:
   (As presented in Annex No. 4;
   Comfort letter, as presented in Annex No. 6, stating that they would support the authorized bank if it encounters difficulties.

3. Specify whether a shareholders' agreement has been signed by the shareholders: yes/no. Attach certified copy.

4. Questionnaire for Information to be Produced by Each Manager:
   The following information is required for any holder of at least 5% of capital, as presented in Annex No. 5.

II. Presentation of the Entity:

1. Constituted company: yes/no
   Date of creation:
   Company name:
   Trade name:

2. Company in course of constitution: yes/no

3. Type of authorization required for the future credit institution:
   Bank
   Define main activity orientation: .
   Financial Company
   Define main activity orientation: .
   Specialized Financial Institution 3 0
   1 Reception of public funds, granting of credits or commitments by signature, making available or managing payment means 2 Granting of credits or commitments by signature, making available or managing payment means 3 Depending on the object of authorizations granted, financial companies may carry out banking operations (art. 4 of the law), such as consumer credit, equipment credit, real estate financing, movable leasing, real estate leasing, factoring, guarantee.

Define main activity orientation: .
4. Company coordinates:
Registered office address:

• Street:
• PO Box:
• City:
• Country:
• E-mail:
• Website:
• Tel:
• Fax:

Main place of operation (if different from registered office):
Street:
PO Box:
City:
Country:
E-mail:
Website:
Other addresses
Tel:

5. Coordinates of BCD interlocutors:
   Interlocutor (first):
   Name:
   First names:
   Position:
   Address:
   Telephone:
   E-mail:
   Comment:

Interlocutor (second):
Name:
First names:
Position:
Address:
Telephone:
E-mail:
Comment:

All concerned interlocutors

II. Activity Program
Briefly describe the envisaged activity or activities (attach any document or study capable of informing the Central Bank): . A. Banking Operations Describe nature and volume of envisaged operations:
Different types of funds received from the public Different types of balance and off-balance sheet support (credits, leasing, guarantees...) For financial companies, specify the financing technique(s) used and their object. Payment banking services (payment systems); Other services offered to clients Provide a detailed breakdown of forecasted operational flows over three years.

B. Ancillary Operations to Banking Operations (refer to art. 8, Law No. 119/AN/11/6ème L) Wealth and financial management advice and assistance, Financial engineering Manual foreign exchange activity Cross-border fund transfer activity Cash transport Safe deposit box rental Operations on gold, precious metals and coins Placement, subscription, purchase, management and custody of securities and any financial product Other envisaged activities (within the framework of current legislative and regulatory provisions)

Briefly describe the envisaged operations and provide an overall assessment of flows and allocated resources.

C. Target Clientele
Composition: individuals, commercial enterprises, credit institutions, institutional investors, local authorities, associations, households specifying residence criteria; For financial companies, specify the economic or professional intervention sector. Approach methods: creation of counters, use of intermediaries or sales agents, electronic services... Organization and resources provided in particular regarding client approach, accounting and IT equipment.

III. Resources and Controls Implemented
A. Forecasted Staff
Personnel likely to be employed during the first three years of activity and corresponding salary mass, distributed by personnel category.

B. Number of Resources Envisaged
Respective share of own funds, shareholder contributions, negotiable or bond instruments, public deposits, interbank market loans...:

C. Forecasted Statements (over three years)
Attach forecasted balance sheets and income statements, Indicate the forecast level of main prudential norms that may apply to your company:

Title of instruction | Instruction No. 2011-02 Number of instruction | Forecast level Minimum capital representation | Solvency ratio (including Tier 1) | Instruction No. 2011-03

In case the legal person is already constituted, describe its activity and attach its last three certified balance sheets and income statements: .

D. Short-term Participations Envisaged in Other Companies or Establishments (Law No. 119/AN/11/6ème L, art. 51 para. 4) Indicate:
Company or establishment name
Economic activity sector of the targeted company Percentage of envisaged participation Any document related to the participation.

E. General Company Organization
Draw a detailed organizational chart.
Indicate, apart from responsible managers, the heads of main business lines (attach their curriculum vitae). All documents (agreements) related to participation.

F. Global System Architecture
Describe the global architecture of systems (including subcontracting), providing the information flow diagram and indication of internal or external software used; Describe backup/redundancy measures put in place; Describe IT security procedures and tools (data/system access, network security, audit trails, backup...); Describe classification and archiving modalities for information (periodicity, form, location, duration); If it is a project mainly comprising internet services, also describe:
Technical and organizational means envisaged to prevent, detect or correct system failures and guarantee security; Communication protection methods; Human resources and devices put in place to ensure security and risk surveillance; Physical security means put in place for the protection of premises and equipment.

Specify whether the company has subscribed to an insurance policy covering operational risks.
If yes, provide a description of the guarantees.

G. Outsourcing of Resources
Indicate concerned domains:
Indicate name of provider(s) and main contract characteristics (duration, respective responsibilities, audit clauses, information access, backup plans, expected quality level of provider, monitoring device for outsourced activities, termination conditions). Provide a copy of these contracts.

H. Internal Control

1. Organization of internal control and compliance
   / Name of internal control manager
   / Name of compliance verification manager
   / Alternatively, name of executive organ member in charge / Name of internal compliance control manager (if exists) / Specify the device provided to comply with Instruction No. 2011-01 on internal control of credit institutions / Specify in particular the level 1 and 2 control procedures put in place, internal controller work program (provide internal control procedure manual if requested), risk control procedures and compliance verification procedures.

Risk Committee yes D
Composition and role Describe: .
Audit Committee yes D non D
Composition and role Describe: .

Other Committee(s) created by deliberating organ (Application of corporate governance principles.) Yes D non D Composition and role Describe: .

Other management information modalities and reaction procedures in case of malfunction.

2. AML Monitoring

Describe the device:
Anti-money laundering device,
Staff training,
Operational procedures.

3. External Control
   In application of Instruction 2011-08 regarding statutory auditors, complete the following documents:

Declaratory statement to be completed by the future establishment,
Declaration to be completed by prospective statutory auditor(s).

I. Headquarters/Parent Company Control (Case of branches or subsidiaries of foreign establishments):

Description of parent company control procedures over its branch or subsidiary,
Description of surveillance exercised by competent authorities of the country of origin: nature and extent of parent company authorization, existence of consolidated-based surveillance.

Enumerate the competent authority(ies) specifying their responsibility.
Specify:
Project realization date
Envisaged operation realization date
Effective start of activities date.

Made in Djibouti, October 30, 2012

TO BE ADDRESSED TO THE GOVERNOR OF THE BANQUE CENTRALE DE DJIBOUTI TEMPLATE OF APPLICATION LETTER
ANNEX 1:
(Date and place)

Mr. Governor,
In my capacity as (1): .
I have the honor to request:
authorization in the capacity of (nature of authorization) for the company (name) authorization of (name of banking establishment) to operate a branch or agency in Djibouti. Please accept, Mr. Governor, the expression of my high consideration.

Signature
(1) Indicate the capacity of the signatory: president, manager, other corporate director specially authorized (attach justification of this authorization).

TEMPLATE OF LETTER TO BE ADDRESSED TO THE GOVERNOR OF THE BANQUE CENTRALE DE DJIBOUTI BY SHAREHOLDERS (NATURAL OR LEGAL PERSONS) WITH INFORMATION ENUMERATED IN ANNEX 4 (Date and place)

Mr. Governor,
In capacity as (1): .
I have the honor to send you enclosed the information requested regarding the shareholding that (name of shareholder) proposes to realize in the capital of (name of establishment). I certify that this information is sincere and faithful and that there are, to my knowledge, no other important facts of which you must be informed. I commit to informing you immediately of any change that would modify the information provided. Please accept, Mr. Governor, the expression of my high consideration.

Signature
(1) Indicate capacity of signatory: president, manager, other corporate director specially authorized (attach justification of this authorization).

ANNEX 3:
INFORMATION TO BE PROVIDED BY MANAGERS OF CREDIT INSTITUTIONS TEMPLATE LETTER TO BE ADDRESSED TO THE GOVERNOR OF THE BANQUE CENTRALE DE DJIBOUTI WITH INFORMATION ENUMERATED IN ANNEX 5 (Date and place)

Mr. Governor,
Having been appointed as responsible manager within the meaning of Article 24 of Law No. 119/AN/11/6ème L concerning the establishment and supervision of credit institutions and financial auxiliaries, for (name of credit institution) to exercise the function of ( ), I have the honor to send you enclosed the information requested. I certify that this information is sincere and faithful and that there are, to my knowledge, no other important facts of which you must be informed. I certify in particular that I am not subject to the prohibitions stipulated in Article 18 of the aforementioned law. In this regard, I enclose (an extract from the criminal record) 5 or a certificate serving as an extract from the criminal record. 6 I commit to informing you immediately of any change that would significantly modify the information already provided. Furthermore, I commit to ensuring that the establishment in which I am called to exercise managerial responsibilities provides the Banque Centrale de Djibouti with information required by Law No. 119/AN/11/6ème L concerning notably its administrative and accounting organization, financial situation as well as that of its partners or shareholders. Please accept, Mr. Governor, the expression of my high consideration.

Signature
5 An extract from the criminal record must be sent by persons resident in Djibouti for three years. 6 A certificate serving as an extract from the criminal record issued by the competent authority of the country where the declarant previously resided and specifying the signatory authority and concerned country must be sent by persons not resident in Djibouti for at least three years.

INFORMATION TO BE PROVIDED BY SHAREHOLDERS (NATURAL PERSONS) CALLED TO HOLD AT LEAST 5% OF THE CAPITAL OF THE CREDIT AND FINANCIAL ESTABLISHMENT TO BE CREATED.
ANNEX 4-A:

1. Identity of the shareholder:
   Name
   First names
   Date and place of birth:
   Nationality:

2. Possible representation of the shareholder on the board of directors of the establishment to be created in accordance with Article 24 of Law No. 119/AN/11/6ème L concerning the establishment and supervision of credit institutions and financial auxiliaries:
   Yes / No

3. Any other function that the shareholder is likely to hold within the entity:
   Yes / No

4. Amount and percentage of envisaged participation:

5. Equivalence of participation in voting rights:

6. Shareholder's patrimonial situation for the last three years:
   Forecast for current year:

7. List of participations held by the shareholder in other credit institutions:

8. Professional, administrative or judicial inquiry or procedure opened against the shareholder during these last five years:

9. Administrative, judicial or amicable procedure likely to have a significant impact on its financial situation:

10. Objectives of the creation of the entity or taking of participation:

11. Any complementary information necessary for the evaluation of the application:

INFORMATION TO BE PROVIDED BY SHAREHOLDERS
(LEGAL PERSONS) CALLED TO HOLD AT LEAST 5% OF THE CAPITAL OF THE CREDIT AND FINANCIAL ESTABLISHMENT TO BE CREATED.
ANNEX 4-B:

1. Name and address of the establishment for which this information is provided:

2. Possible representation of the establishment on the board of directors of the entity to be created: compliance by representatives with Article 24 of Law No. 119/AN/11/6ème L dated January 22, 2011 concerning the establishment and supervision of credit institutions and financial auxiliaries:
   Yes / No

3. Any other function that the shareholder is likely to hold within the requesting entity:
   Yes / No

4. Objectives of the creation of the entity or taking of participation:

5. Amount and percentage of envisaged participation:
   Equivalence of participation in voting rights:

6. Distribution of the establishment's capital:

7. Names, first names and positions of main managers of the shareholder establishment:

8. Activity of the shareholder establishment:
   Organizational chart of main group entities:

9. Participations of the shareholder establishment or group in other credit institutions

10. Financial nature of the activity of the shareholder establishment and affiliated companies: Yes/No

11. Existence of internal and external control procedures within the shareholder establishment: Yes/No

12. Administrative, judicial or amicable procedure pending and likely to have a significant impact on its financial situation: Yes/No

13. Name of the establishment for which this information is provided
    QUESTIONNAIRE FOR INFORMATION TO BE PRODUCED BY EACH MANAGER
    ANNEX 5:

14. Identity of the manager:
    Name and first names:
    Date and place of birth:
    Nationality:
    Professional address:

15. Diplomas and experiences:
    Provide a Curriculum Vitae indicating notably:

• The date and place of obtaining diplomas
• Functions held during the last six years with name, location and nature of activity by type of responsibilities exercised.

4. Level of French language knowledge.

5. Exact nature of functions exercised:
   Description of management tasks:
   Modalities for associating other managers with entrusted responsibilities:

6. Professional, administrative or judicial procedure conducted in the course of professional activity resulting in a sanction: Yes/No

7. Disciplinary procedure or dismissal by one of your employers: Specify modalities

8. Personal or professional operations carried out directly or indirectly or through an intermediary with the establishment.

9. Other information capable of clarifying the Central Bank's decision.

In my capacity as (1), I confirm that the company, incorporated within the framework of the authorization application in the capacity of (nature of credit institution), has committed to:
CONFORT LETTER
ANNEX 6:
(Date and place)

Mr. Governor, maintaining its majority participation durably in the authorized establishment, and supporting it financially if necessary.

Please accept, Mr. Governor, the expression of my high consideration.

Signature