SENEGAL Law and Practice Contributed by: Franck Olivier Allessie, SCP Houda & Associés
Institutions or rating agencies. In addition, the Annex to the Decision also provides for the rein - forcement of the core capital to be mobilised by the banks under Pillar 1 requirements (minimum capital requirements). Banks must hold a level of core capital corresponding to a minimum thresh - old of 5% of the amount of their exposure to credit, market and operational risks. This ratio is reinforced by the introduction of a conservation buffer established at a maximum level of 2.5% of the bank’s total exposure to risk, following the example of the threshold defined by Basel III. By the end of2022, WAEMU banks had to meet a minimum common equity tier 1 capital ratio of 7.5% and a minimum total capital ratio of 11.5%, both inclusive of a 2.5% capital conser - vation buffer. Regarding the thresholds of banks’ share capi - tal, Decision No 003 of 30/03/2015/CM/WAEMU fixing the minimum share capital of credit institu - tions of the member states of the WAEMU has set the minimum share capital of credit institu - tions of the member states of the WAEMU at XOF10 billion for banks and XOF3 billion for financial institutions of a banking nature. Article 36 of the Law of 2008 stipulates that banks and financial institutions must at all times have equity capital at least equal to the minimum capital determined under Article 34.
(the “Uniform Act”) and more specifically by the Law of 2008. The Uniform Act specifically organises three pro - cedures for dealing with companies in difficulty: preventive settlement, judicial recovery and liq - uidation of assets. Preventive settlement is a procedure intended to avoid the insolvency or closure of business and to enable the discharge of the company’s liabilities by means of a preventive composition agreement. This procedure is applicable to any person who, whatever the nature of their debts, is in a difficult but not in an irremediably compro - mised economic and financial situation and thus allows the company to be exempted from the payment of most of its debts in order to prepare a recovery plan for the company. The procedures of judicial recovery and liquida - tion of assets presuppose the cessation of pay - ments of the company. There is a cessation of payments when “the debtor is unable to meet its current liabilities with its available assets”. Judicial recovery is a procedure designed to safeguard the company and for it to pay off its liabilities. In order to implement this procedure, the company must be likely to be saved. The liquidation of assets is a procedure whose pur - pose is to realise the debtor’s assets in order to pay off its liabilities. The purpose of the liqui - dation of assets is to ensure the best possible payment of the creditors of the company that is to disappear. The procedures of preventive settlement, judicial recovery and liquidation of assets instituted by the Uniform Act can only be opened against a credit institution after the assent of the Banking Commission (Article 88, Law of 2008).
9. ESG 9.1 ESG Requirements
The legal and regulatory framework governing the insolvency, recovery and resolution of banks is in general governed by the OHADA Uniform Act on the Organization of Collective Procedures
529 CHAMBERS.COM
Powered by FlippingBook