GENERAL OVERVIEW OF BANKING LEGISLATION IN THE REPUBLIC OF GUINEA [1]

Banking activities in the Republic of Guinea are regulated by Act L/2013/060/CNT of August 12, 2013.

Under this Act, banking institutions are corporate bodies licensed to conduct regular business in at least one of the following activities:

·         Receive deposits from the public, and / or

·         Give out loans, and / or

·         Provide payment instruments to customers and management [2].

In accordance with the legislative and regulatory provisions in the sector, banking institutions may also provide, on their behalf or on behalf of third party, the following incidental services:

·         Trade in foreign currency;

·         Invest in, subscribe for, purchase, manage, keep and sell securities and financial products;

·         Trade in gold and / or any precious stones;

·         Sell health insurance, assistance and credit insurance to the public;

·         Serve as intermediary for electronic funds transfer;

·         Provide leasing operations in accordance with the leasing legislation;

·         Undertake brokerage and commission transactions; and

·         Provide consultancy and assistance in asset or financial management, and generally all services intended to facilitate the creation and development of banking institutions, subject to the provisions of some unauthorized services.

Any service(s) not listed above must receive prior approval of the Licensing Committee as stipulated in the Banking Regulations.

        I.            AUTHORIZATION

To undertake any of the activities listed above, a bank must obtain different authorizations:

a.       Credit institution license (Permit)

To be a registered bank, an institution must have at least another bank as major shareholder. This major shareholder must hold minimum 20% stake of that institution.

Companies wishing to do business in the Republic of Guinea as a credit institution must submit application to the Central Bank of Guinea (CBG). The license application form for credit institutions registered under the category “Bank” must be done in five (5) copies and must comprise:

·         Copies of the company bylaws and the minutes from the Constituent General Meeting;

·         List of shareholders sealed with a notary public seal, be it a limited liability company or a cooperation with variable capital;

·         Information on the directors and people appointed in management positions: full name, address and nationality;

·         A certificate of incorporation in the register of economic activities;

·         A note presenting the economic and financial objectives, and the technical and financial resources at the disposal of the institution in accordance with Article 12 of Act L/2005/010/AN of July 4, 2005;

·         A cost-estimated Action Plan, particularly the balance sheet and income statement forecasts for the first three years;

·         A Certificate of Deposit of the minimum share capital amount issued by a local bank;

·         Justification that the procurement of goods and services had been made in the interest of the credit institution being set up and that the minimum capital requirement is actually shown in the asset table list, with non-operating assets value deducted if any or part of the capital was used for the acquisition of other goods and services; and

·         For credit institutions registered under the category "Bank", in addition to the requirements above, they must provide the bylaws and the financial statements of the last three (3) years for the credit institution (bank reference) referred to in Article 44 of Act L/2005/010/AN of July 4, 2005, committing itself to purchasing at least 20% of the capital.

Applications for banking license are reviewed by the Licensing Committee, which ensures that the company meets all requirements stipulated in the Banking Regulations.

If the company submitting the application is wholly owned by a foreign bank or an overseas holding company, the granting of license in this case is subject to other terms and conditions stipulated in Article 13 of the Banking Regulations.

Within three (03) months, upon receipt of the last documentation required to submit the application, the Licensing Committee deliberates and decides based on objective criteria which may include the lawful origin of investment funds serving as share capital. The deadline is six (6) months if the opinion of a foreign supervisory board has to be sought. Within this time frame, an applicant institution shall be notified of being granted or refused the license. Any refusal must be justified and may not be subject to appeal. At the behest of the Central Bank, license granted to an applicant institution is subject to publication in the Official Gazette of the Republic of Guinea.

Credit institutions are given license to provide services as bank, financial institution, specialized financial institution or decentralized financing system [3].

b.        Professional banker certification

All credit institutions must be run by at least two professional bankers approved by the Licensing Committee and who should meet the following requirements:

·         Be of first eminence and have the necessary skills;

·         Be of Guinean nationality except under a reciprocity agreement signed between their country of origin and the Republic of Guinea [4];

·         Be a holder of at least a Master’s Degree in Economics, Banking and Finance, Legal or Management Science or any related degree when submitting the application, and must have good references and solid professional experience of at least five (5) years at senior management positions; and

·         If s/he does not have degrees of higher learning, must at least show evidence of a professional experience of ten (10) years in senior management positions in credit institution(s).

Like the application for Credit Institution License, Professional Banker Certification of people to serve in the capacity of Managing Director and Deputy Managing Director of credit institutions must be done in five (5) copies and must contain the following information and materials:

·         A written request by the Chairman of the Board of Directors to the Central Bank Governor and President of the Licensing Committee;

·         A copy of the identification document;

·         An updated and dated resume, French version;

·         A certificate of nationality;

·         A criminal record dating less than three months [5];

·         A filed and signed questionnaire (template available upon request);

·         A written declaration of intent (sample available upon request); and

·         An excerpt of minutes of the deliberative body clearly stating the applicant's powers.

c.       Certified financial services auditor certification

Credit institutions must appoint one or two statutory auditors. Junior auditors must also be hired. Both the statutory and junior auditors must be certified by the Licensing Committee.

Certified auditor application for banking institutions must also be done in five (5) copies and must comprise:

·         A certificate of registration in the register of economic activities;

·         A certificate of registration to the roll of the Order of Guinea Certified Public Accountants;

·         A certificate of registration on the list of Statutory Auditors held by the Court of Appeal;

·         A list of auditing missions undertaken in the past;

·         For corporate bodies: copy of the bylaws, list of associates, resume of the manager/s

·         For natural persons: a resume

The Licensing Committee must decide within three (3) months from the receipt of all the documents. After this period, the application is deemed accepted. The refusal to grant an authorization shall be justified and may not be subject to appeal.

     II.            SUPERVISION OF SOME OPERATIONS

a.       Transactions requiring approval

Some credit institution transactions are subject to the prior approval of the Licensing Committee. The same should be done for any changes in the legal form; name; merging or starting a new company; etc. [6]

b.       Transactions requiring notification

Some credit institution transactions must be notified to the Licensing Committee. The appointment of Board members should be notified to the Committee at least one month before it becomes effective. [7] Must also be notified to the Committee any amendments relating to the increase or reduction of capital, bylaws, etc. [8]

  III.            BOARD OF DIRECTORS OF CREDIT INSTITUTIONS

Banking institutions must be run by a Board comprising of minimum six (6) members. Financial institutions or specialized financial institutions must be run by a Board comprising of minimum three (3) members. A maximum number of three (3) directors or any of the staff members may be appointed to assume the daily management of any of the credit institutions.

  IV.            REVOCATION OF LICENSE

A license granted to a credit institution may be revoked upon the request of that credit institution or upon the initiative of the Central Bank in case such license has not been used for at twelve (12) months or if such license was granted on the basis of false declarations or false documentation [9]. The revocation decision entails the conduct of operations by the bank strictly aimed at discharging its outstanding debts and other obligations.

     V.            RESTRICTION ON SOME POSITIONS

The positions of directors and managers in credit institutions are prohibited to people who have been sentenced for: crimes; forgery and falsification in business or banking transactions; theft, fraud and breach of trust; bankruptcy and fraudulent bankruptcy; misappropriation of public funds; extortion; issuance of uncovered check; concealment of things obtained through such offenses; irrevocable radiation for disciplinary action in a highly regulated profession and for which s/he was not reinstated; money laundering or financing terrorism. Being an accomplice in any of the foregoing offenses may equally lead to the ineligibility of such person/s to the position/s of director/s or manager/s. [10]

The prohibition described above may also apply to ministers and members of Government, National Assembly, Constitutional Court, Court of Auditors and Supreme Court. Similarly, it may apply automatically to bankruptcy conviction or dismissal by a foreign Court.

  VI.            INSTITUTIONAL FRAMEWORK

a.       National Council of Savings and Credit

It is an advisory body responsible to deliberate and issue opinions on the running of credit institutions, savings and how to give loans. It is chaired by the Minister of Economy and Finance.

b.       Licensing Committee

An independent decision-making body composed of resource persons within several agencies, including the Ministry of Economy and Finance, Ministry of Justice, the Governor of the Central Bank, etc. The role of the Licensing Committee is to promote the safety and soundness of the Guinean banking system.

As such, it:

·         Issues and revokes licenses of credit institutions, managers and auditors;

·         Approves the opening of representations / agencies; and

·         Sets regulations regarding the amount of share capital of credit institutions [11].

c.       Professional Association of Credit Institutions in Guinea

Membership for credit institutions is mandatory. It must be done immediately in the month following the granting of your license. The main aim of the Association is to represent the collective interests of credit institutions to Authorities and promote cooperation within the profession.

VII.            MODUS OPERANDI OF CREDIT INSTITUTIONS

a.       Legal form and minimum share capital

The required legal form of banks is cooperation (LTD) with a Board of Director or a mutual company under the Guinean Law.

For Financial institutions, the required form is cooperation with a Board of Directors.

Minimum share capital for under the category “Bank” is one hundred billion Guinean Francs (GNF 100 billion).

b.       Relationship between credit institutions and customers

Anyone with the Guinean nationality or residing on the territory of Guinea has the right to have a bank account.

The services below must be offered by banks to customers free of charge:

·         Opening of account;

·         Issuance and replacement of passbook;

·         Issuance of checkbook;

·         Salary domiciliation;

·         Transfer from one account to another between customers in the same bank;

·         Receipt of national transfer;

·         National provisioning within the same institution;

·         Monthly preparation and sending of a copy of customer account statement;

·         Cash withdrawal from all branches of the same institution and at ATM machines.

A deposit guarantee scheme is established and funded by contributions from banks, investment earnings and any other sources.

c.       Other general rules pertaining to the functioning of credit institutions

1-      Managers or directors and auditors of credit institutions are required to inform the Central Bank of any anomaly or serious events likely to endanger or harm the reputation of the profession and if such anomalies occurred in the management of their institution.

2-      A credit institution may proceed with dividend distribution unless it respects the minimum capital representation determined by the Central Bank after coverage of supply shortfalls.

3-      Credit institutions must close their accounts on December 31 of each year and submit to the Central Bank before June 30 of each year the following documents that should be certified as true by the auditor:

·         Balance sheet and off-balance sheet commitments;

·         Income statement;

·         Notes to regulatory financial statements.

They must also publish their balance sheets and annual income statements at their own expense in the Official Gazette.

4-      The Central Bank may, under bilateral reciprocal agreements, authorize the Supervision Authority of a foreign credit institution to perform an on-site check on its subsidiary based in the Republic of Guinea. The Central Bank may conduct similar missions abroad for Guinean Banks and financial institutions. Moreover, the transmission of information by the Central Bank to other foreign authorities with possibly similar powers is subject to a reciprocal agreement and such authorities must equally be subject to professional secrecy.

5-      Credit institutions shall refrain from actively or passively facilitating the receipt or return of funds derived from crime. They are guided by prudential requirements regarding any transactions bearing the slightest doubt about its economic cause or legality.

6-      Banking Law also sets a kind of penalty system to guarantee safe operation of credit institutions. See in this regard Articles 86 to 100 of the Banking Law

[1]        This note does not summarize the Banking Law in its entirety. It is therefore advisable to consult this Law for more information on the matter.

[2]        The concepts of funds received from the public, credit transaction, and payment instruments and schemes are defined by the Law in Articles 3, 4 and 5.

[3]        The concepts of bank, financial institution, specialized financial institution or decentralized financing system are defined by the Law in Article 15.

[4]        Under Article 17 of the Banking Law, the Licensing Committee may waive this requirement for a given period of time.

[5]        For people who have not been residing in Guinea for at least three months, a statement in lieu of criminal record, containing the title (name and previous job title) issued by the Authority of their last country of residence.

[6]        For a complete list of transactions subject to approval of the Committee, refer to Articles 20, 21, and 22 of the Banking Law.

[7]        The Committee may object to any appointment made by the Board. The refusal decision must be reasoned. It cannot be appealed.

                [8]        For a complete list of operations to be notified, refer to Article 25 of the Banking Law.

[9]        For a list of reasons that may lead to the revocation of license, refer to Article 27 of the Banking Law.

[10]      Other grounds for ineligibility for violations are also provided by Article 87 of the Banking Law.

[11]      Articles 45, 46, 47, 48 of the Banking Law provide information relating to other powers and functions of the Licensing Committee.