Name of the Regulations and Commencement

These Regulations shall be called the “Regulations Governing the Operations of Development and Investment Banks for the Year 2011” and shall come into force as of the date of their approval.

Interpretation

In these Regulations, unless the context otherwise requires, the following words and expressions shall have the meanings assigned to them below:

Bank: Means the Central Bank of Sudan.

Governor: Means the Governor of the Bank.

Bank: Means any company registered under the provisions of the Companies Act of 1925.

Development and Investment Bank: A bank engaged in investment banking, financing investment projects, providing advisory services, conducting securitization activities, and participating in the establishment of companies.

Investment: An economic activity that leads to the addition of new productive capacities to the existing productive capacities in the country.

Act: Means the Banking Business Organization Act of 2004 or any other law replacing it.

Board: Means the Board of Directors of the Bank.

Person: Means a natural or legal person.

Customer: A natural or legal person, including public and private companies, institutions, and government-owned companies, who approaches the bank to benefit from one or more of the services provided by the bank.

Investment Projects: Projects that lead to the addition of new productive capacities to the existing productive capacities in the country.

Securitization (Tashkeek): The conversion of tangible assets, usufructs, and debts related thereto, where tangible assets and usufructs constitute the predominant proportion compared to the debts, into tradable Sukuk.

Preliminary License

The Governor shall grant preliminary approval to persons wishing to establish public shareholding companies operating in the field of investment and development, or branches of foreign banks.

The application shall be signed by the founders and accompanied by the following:

A feasibility study covering the next three years and including the following:
Sources of financing and areas of investment.
Projected profit and loss statements.
Projected balance sheets.
Projected cash flow.
A resolution of the Board of Directors of the foreign bank approving the opening of a branch in Sudan to operate in the field of investment and development.
The licensing application shall be submitted to the Governor, signed by the founders or by the parent bank in the case of applications for foreign branches and subsidiaries. The application shall be accompanied by the original and three copies of the following documents:
Proof of identity and a brief curriculum vitae for each founder, the representative of the foreign bank, and the persons expected to be assigned senior management responsibilities.
Statements signed by the founders specifying the financial obligations of each founder or the representative of the foreign bank.
The percentage contribution of each founder to the bank's capital.
A statement indicating any direct or indirect relationship, if any, between the proposed bank and any institution, group, or economic groups in Sudan or abroad in which any of the founders has a substantial interest.
A statement indicating the percentage of participation of the bank or its founders in other similar institutions.
The financial position of the bank, or of the parent bank in the case of foreign branches, shall be sound.
Payment of the licensing fee determined by the Governor.
A certified copy issued by the official authorities in the home country, including the following:
A certificate from the competent authority confirming that the bank is classified as a first-class bank, supported by the competent regulatory authority.
A decision by the competent regulatory authority in the home country approving the opening of the branch or subsidiary in Sudan to conduct banking business.
A resolution of the bank's Board of Directors appointing a representative of the bank in Sudan and specifying his/her powers.
A written undertaking by the parent bank to assume all obligations of the branch existing at the time of liquidation. This undertaking shall remain binding on the head office in the event of any merger undertaken by the head office with any other banks or companies.
The annual reports on the operations of the foreign bank for the last three years, together with the audited balance sheets for those years.
Final Licensing Requirements

The bank shall not commence operations under the preliminary approval granted to it until it obtains final approval in accordance with the following requirements:

Submission of the following documents:

Certificate of registration of the bank, together with its Memorandum and Articles of Association.
In the case of foreign bank branches, a certificate of registration of the bank in its country of origin, together with the Board of Directors' resolution approving the opening of the branch and specifying its representatives in Sudan.
A comprehensive system for operations.
Obtaining the approval of the Khartoum Stock Exchange.
Payment of the paid-up capital determined by the Governor.
Formation of the Board of Directors and appointment of the executive management after obtaining the Governor's approval, and establishment of the functional and administrative structures.
Submission of the basis and controls for internal control.
Preparation of the bank's premises.
Licensing Authority
No banking business in the field of development and investment may be conducted until final approval is obtained from the Governor.
The Governor shall have the authority to grant a license to the bank in accordance with the requirements set forth in these Regulations.
The Governor may refuse to grant a license if the applicant does not satisfy the licensing requirements.
The Governor may include in the license any conditions he deems appropriate.
The Governor shall have the authority to suspend or cancel the license granted to conduct the business of development and investment banks if:
The bank violates any directive issued under the Banking Business Organization Act of 2004, these Regulations, or any of the applicable conditions.
The bank incurs losses and fails to take corrective action to restore its financial position.
The bank fails to increase its capital to the level determined by the Governor.
The bank declares bankruptcy or reaches a settlement with its creditors.
The shareholders request such action after all previous obligations have been confirmed by a legal auditor accredited by the Bank.
In exercising his authority under paragraph (1) above, the Governor may issue an order for liquidation and appoint the official liquidator. He may also request the court to approve the appointment of such official liquidator.
The license granted to the bank shall be deemed cancelled if the bank does not commence its operations within six months from the date on which the license was granted.
Capital
The paid-up capital shall not be less than the amount determined by the Governor, provided that the foreign capital is registered with the Bank.
Banks registered in Sudan shall deposit their entire paid-up capital with the Bank, and such capital shall be utilized in accordance with the capital uses prescribed by the Bank.
The Governor may, from time to time, direct an adjustment to the paid-up capital as he deems appropriate.
The Governor may determine the maximum percentage of the bank's capital that may be owned by a shareholder.
Insurance
The bank shall deposit an insurance amount equivalent to 15% to 20% of the paid-up capital in any of the following forms:
A deposit equal to the insurance amount held with the Bank.
A bank guarantee equal to the insurance amount, issued by a bank acceptable to the Bank and renewed annually.
Shahama certificates or any other equivalent securities acceptable to the Bank, pledged in favor of the Bank.
The insurance amount shall be taken into consideration when calculating the minimum required paid-up capital.
The Governor may, from time to time, direct an adjustment to the insurance amount for any investment bank as he deems appropriate.
The Governor may deduct any amount from the insurance if it is held as a deposit with the Bank, claim payment of any amount from the guarantee-issuing institution, or dispose of the securities pledged to it, for any amount determined as settlement for any violation committed by the bank. The bank shall replenish the insurance within the period specified by the Governor.

Areas of Operations

Development and investment banks shall operate exclusively in the following areas:

Providing medium- and long-term investment financing for new and existing investment projects.
Establishing investment portfolios to finance investment projects, infrastructure projects, and real estate projects.
Providing advisory services to clients, excluding investment advice and guidance regarding securities unless provided in accordance with the provisions of paragraph (N) of this Article.
Providing advisory services related to the merger, acquisition, and restructuring of companies and banks.
Providing advisory services related to the development of banking services.
Promoting investment awareness.
Financing investment projects of all types and through various financing structures, for different terms, including medium- and long-term financing.
Conducting securitization activities with the prior approval of the Bank and in accordance with specific controls established by the Bank for this purpose.
Purchasing and selling shares of public shareholding companies for their own account in accordance with the controls prescribed by the Bank.
Participating in the establishment, management, and ownership of companies, provided that such participation does not exceed fifteen percent of the bank's capital.
Participating in the establishment and ownership of investment funds, provided that such participation does not exceed fifteen percent of the bank's capital.
Issuing medium- and long-term financing Sukuk.
Accepting investment deposits for a term of not less than six months against the issuance of Sukuk in local and convertible foreign currencies. They shall not be permitted to accept current deposits in local or foreign currencies.
Cooperating with the competent authorities to improve the overall investment climate in Sudan and encourage the flow of domestic and foreign capital.
Engaging in financial services and financial intermediation activities.
Conducting import and export operations to the extent necessary to enable the bank to perform its business.
Owning buildings and equipment and leasing them to third parties, subject to the regulations governing the activities of leasing companies issued by the Bank.
Any other activities or businesses approved by the Bank as activities of development and investment banks.
Bank Resources

The resources of the bank shall consist of:

Its paid-up capital.
Retained earnings.
Financing from banks and financial institutions, provided that the financing term is not less than one year.
Medium- or long-term Sukuk.
Reserves.
Investment deposits.
Provisions.

The total amount of financing obtained from the sources referred to in paragraphs (3) and (4) shall not, at any time, exceed ten times the bank's capital. The Board shall have the right to amend this ratio and determine the necessary exceptions for a specified period, to the extent required by necessity.

The Bank may, on a case-by-case basis, permit the bank to utilize other financing methods where necessary.

The bank may obtain funds from development funds allocated by the Government or donor agencies for projects in which the bank participates in financing.

The bank may participate in the local component of loans and grants for the development of projects in which the bank participates in implementation.

Uses of Resources

The bank may use its resources for the following:

Providing medium- and long-term financing to new and existing projects that are economically viable and have a development impact, using all Islamic financing modes.
Issuing bank guarantees and sureties.
Maintaining deposits with and providing financing to other banks.
Importing the machinery, equipment, and machines required for the purposes of financed projects.
Direct investment in the shares and bonds of public shareholding companies operating in the investment sector, as well as in investment funds and portfolios.
Establishing subsidiaries and participating in the establishment of companies operating in the investment sector.
Protection of Customers

The bank shall be responsible for protecting its customers and shall:

Provide the customer with material information relevant to the investment transaction.
Clearly and fully explain the nature and scope of the contractual relationship between the bank and the customer and disclose the fees charged for the services provided to the customer.
Where the customer grants the bank discretionary authority to act on his/her behalf, both parties shall sign an agreement specifying the scope and conditions of such authority before commencing any activity.
Not enter into any transaction that creates, or may potentially create, an actual or potential conflict of interest between the bank or any person associated with it, on the one hand, and its customers, on the other hand.
Maintain complete and continuous segregation between its assets and the assets of its investing customers.
Prohibited Activities

The following activities are prohibited for development and investment banks and their subsidiaries:

Accepting deposits of any kind, except investment deposits with a term of not less than six months.
Providing short-term financing.
Making transfers into or out of Sudan, except those related to their business activities.
Dealing in foreign currency except to the extent permitted for the conduct of their business.
Engaging in retail banking.

1. The bank shall maintain all data and financial statements at the bank's premises, and they shall be available for inspection at any time by the Bank or any person appointed by the Governor. The data shall accurately reflect the bank's activities.

2. The bank shall provide the Bank with data and information regarding its activities at such times and in such manner as may be determined by the Bank.

3. The bank shall appoint an external legal auditor approved by the Governor. The auditor shall not be replaced during the period prescribed by law except with the Governor's approval.

4. The Governor may, in the public interest, appoint a legal auditor to audit the bank's accounts in respect of any specific transaction or transactions.

• The bank shall comply with all laws, regulations, directives, and policies governing banking activities in Sudan.
• The management of the bank, including the Board of Directors and executive management, shall be entrusted to persons who meet the requirements of eligibility, integrity, and honesty, and who possess the necessary experience and qualifications in the financial, economic, and banking fields, in accordance with the circulars issued by the Bank. The bank shall provide the Bank with the curricula vitae of the persons who will be entrusted with managing the bank for the purpose of obtaining approval for their appointment.
• Branches and subsidiaries of foreign banks may appoint a foreign General Manager or Deputy General Manager. For other positions, the percentage of foreign employees shall not exceed the limit determined by the Governor.
• Banks and branches of foreign banks shall comply with the provisions and controls stipulated in the laws governing the combating of money laundering and terrorist financing, as well as any international or local controls issued in this regard.
• The Bank shall have the right to reject any founder, member of the Board of Directors, or holder of a senior executive management position.
  The bank shall notify the Bank of any significant changes in its ownership structure and obtain the Bank's approval thereof.
  A Sharia Supervisory Board shall be established consisting of at least three persons, provided that two-thirds of its members are specialists in Islamic Sharia.
  The bank shall at all times rectify its status in accordance with the program prescribed by the Bank.
  The Bank may order the suspension of any transaction or transactions that it considers the bank unable to execute due to insolvency or any other impediment.
• The Bank may cancel the license or amend or add any condition to the above requirements whenever it deems such action necessary.
• Certification
• I hereby certify that the Board of Directors of the Central Bank of Sudan issued and approved these Regulations on the first day of Safar 1433 AH, corresponding to the twenty-sixth day of December 2011.