CENTRAL BANK OF THE COMOROS

REGULATION NO. 002/2015/BCC/DSBR

RELATING TO THE DEFINITION OF OWN FUNDS OF CREDIT INSTITUTIONS, IN APPLICATION OF LAW 13-003/AU.

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Having regard to Law 80-08 of June 26, 1980, relating to currency and the role of the Central Bank of the Comoros in the control of banks and financial establishments, credit, and foreign exchange, specifically Article 7;

Having regard to Law 13-003/AU of June 12, 2013, regulating the activities of Financial Institutions, specifically Article 48;

Having regard to Law 12-011/AU of June 26, 2012, regulating and organizing leasing;

Having regard to Law 12-008/AU of June 28, 2012, combating money laundering and the financing of terrorism;

THE GOVERNOR OF THE CENTRAL BANK OF THE COMOROS

Sets the rules for the definition of own funds of credit institutions in application of Article 3 of Law 13-003/AU.

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Article 1:

For the purposes of this article, the regulatory own funds (ROF) of credit institutions, calculated on a consolidated basis, are composed of basic own funds and supplementary own funds, determined in Articles 2 to 8 of this regulation.

Article 2:

The basic own funds of credit institutions are obtained by the sum of the elements listed in paragraph A, from which the elements listed in paragraph B below are deducted.

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A) Elements to include:

• Share capital,
• Non-refundable capital endowment provided by Unions of Decentralized Financial Institutions (DFIs) to primary caisses,
• Share premiums related to capital,
• Legal reserves,
• Other reserves, excluding revaluation reserves,
• Credited brought forward balance,
• General nature provisions (FRBG) and guarantee funds, not allocated to the coverage of identified risks and charges,
• Net profit pending allocation, approved by the statutory auditors, reduced by the amount of dividends to be distributed,
• Provisional result of the current fiscal year.

B) Elements to deduct:

• The unpaid portion of share capital and/or endowment,
• Treasury shares held, evaluated at their net book value,
• Debited brought forward balance,
• Organization expenses,
• Net intangible fixed assets after amortization and depreciation provisions,
• Net deficit result of the last fiscal year pending approval, certified by the statutory auditors,
• Provisional deficit result of the current fiscal year.

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Article 3:

Supplementary own funds consist of the following elements:

• Non-refundable private or public subsidies intended to finance investments and not current expenses;
• Donations and bequests, provided they are definitively acquired by the institution, approved and certified by the statutory auditors, and intended to finance investments and not current expenses;
• Allocated guarantee funds constituted using non-refundable resources, up to a limit of 10% of their amount. This component must not represent more than 50% of supplementary own funds;
• Indefinite-term subordinated debts, subject to prior agreement of the Central Bank;
• Definite-term subordinated debts, for their residual part greater than or equal to five years, subject to prior agreement of the Central Bank, limited to 50% of supplementary own funds.
• Revaluation reserves approved and certified by the statutory auditors, subject to the agreement of the Central Bank, limited to 50% of supplementary own funds.

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Article 4:

Indefinite-term subordinated debts must be subject to a contract whose clauses explicitly stipulate that:

• Their repayment can only be effected at the initiative of the borrowing institution, subject to a minimum notice period of five years and after the agreement of the Central Bank;
• The payment of interest may be deferred, when the financial situation of the borrowing institution so requires, at its request;
• The principal and unpaid interest can be used to absorb potential losses, without the borrowing institution being obliged to cease its activities;
• The repayment of capital and interest is, in the event of liquidation of the borrowing institution, subordinate to the repayment of all other debts.

Article 5:

Definite-term subordinated debts with a duration greater than or equal to five years must be subject to a contract whose clauses explicitly stipulate that:

• Early repayment can only be effected at the initiative of the borrowing institution and after the agreement of the Central Bank;
• Early repayment must not result in the payment by the borrower of a compensatory indemnity;
• The repayment of capital and interest is, in the event of liquidation of the borrowing institution, subordinate to the repayment of all other debts.

Article 6:

The amount of definite-term subordinated debts with a duration greater than or equal to five years, taken into account in supplementary own funds, is reduced by an annual discount of 20% during the four years preceding their final maturity.

Article 7:

The subordinated loan contract provides for the capitalization of interest, stipulating that:

• Their degree of subordination is identical to the principal;
• Their repayment maturity is at least equal to five years;
• An annual discount of 20% is applied in the case of a definite-term subordinated debt during the four years preceding their final maturity;
• An annual discount of 20% is applied to the amount of capitalized interest, during the four years preceding the final maturity, in the case of a definite-term loan.

Article 8:

The supplementary own funds defined in Article 3 may be included in regulatory own funds up to a maximum limit equal to the amount of basic own funds as defined in Article 2.

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Article 9:

The following elements must be deducted from the total amount of regulatory own funds:

• The total outstanding amount of credits granted directly or indirectly to a shareholder, by a credit institution, to the exception of DFIs;
• The total outstanding amount of credits granted directly or indirectly to directors or responsible managers, within the meaning of Article 21 of Law 13-003/AU, by a credit institution, to the exception of DFIs, provided that the unit amount of such a credit is greater than or equal to 3% of basic own funds;
• Participation shares in another financial institution whose acquisition has been authorized by the Central Bank of the Comoros, provided that the participation exceeds 10% of the basic own funds of the declaring credit institution.

Regarding credits to directors and managers of DFIs, a specific regulation of the Central Bank will set the authorized engagement limits.

Article 10:

The regulatory own funds of Decentralized Financial Institution (DFI) networks must be calculated on a consolidated basis, for the entire network, and individually, for each primary caisse:

• For the calculation of consolidated own funds of a DFI network, reciprocal capital operations must be adjusted, in particular to exclude endowments from the Union to primary caisses;
• An individual declaration of the own funds of each primary caisse must be attached to the declaration of consolidated own funds of the network.

Article 11:

The Central Bank of the Comoros may oppose the inclusion of certain elements in the regulatory own funds of credit institutions if it considers that they do not meet the conditions defined by this regulation.

Article 12:

Credit institutions must communicate the statement of calculation of their regulatory own funds every semester, no later than 30 days following the date of the closing of accounts, according to the model attached as an annex to this regulation.

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Article 13:

This regulation annuls and replaces Instructions No. 003/2004/COB, No. 008/2004/COB, and Circular No. 005/2004/COB.

It enters into force as of its date of signature.

Moroni, January 28, 2015

Mzé Abdou Mohamed Chanfiou

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Place de France. BP 405 MORONI
TEL : (269) 773 18 14 - (269) 773 10 02 – FAX : (269) 773 03 49 E-mail : secretariat@banque-comores.km Site : www.banque-comores.km

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DECLARATION OF OWN FUNDS OF CREDIT INSTITUTIONS

(Semi-annual Declaration)
(Regulation No. 002 /2015/BCC/DSBR)

ID	DENOMINATION	Ponderation	MONTANT
1	BASIC OWN FUNDS
1.1	Share capital
1.2	Non-refundable capital endowment of DFI Unions provided to primary caisses
1.3	Share premiums related to capital
1.4	Legal reserves
1.5	Other reserves excluding revaluation reserves
1.6	Credited brought forward balance
1.7	General nature provisions (FRBG) and guarantee funds, not allocated to risk coverage (unallocated provisions)
1.8	Net profit pending allocation approved by statutory auditors and after estimated dividends
1.9	Guarantee funds of Decentralized Financial Institutions not allocated to risk coverage
1.10	Provisional result of the current fiscal year
	Sub-total (1) Basic Own Funds		0
1.11	Unpaid share capital or endowment
1.12	Treasury shares held evaluated at their net book values
1.13	Debited brought forward balance
1.14	Organization expenses
1.15	Net intangible fixed assets
1.16	Net deficit result of the last fiscal year pending approval
1.17	Provisional deficit result of the current fiscal year
	Sub-total (2) Elements to be deducted from basic own funds		0
2	TOTAL A = (1) - (2) Basic Own Funds		0
	SUPPLEMENTARY OWN FUNDS

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ID	DENOMINATION	Ponderation	MONTANT
2.1	Non-refundable public or private investment subsidies
2.2	Donations and bequests definitively acquired and approved by statutory auditors
2.3	Allocated guarantee, solidarity, and financing funds
2.4	Indefinite-term subordinated debt fully paid and approved by the CBB		10%
2.5	Definite-term subordinated debt
2.6	Revaluation reserves
	TOTAL B (Supplementary Own Funds)		0
2.7	TOTAL C (ACCEPTED SUPPLEMENTARY OWN FUNDS)		0
2.8	IF B > A, C = A
2.9	IF B < A, C = B
2.10	TOTAL D (DEDUCTIONS FROM OWN FUNDS)
2.11	Loans to shareholders and/or associates		0
2.12	Loans to directors and/or managers
2.13	Participation shares		10%
	REGULATORY OWN FUNDS = A + C - D		0
	Date

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