On November 5th, the Governor of the Central Bank for Central African States (the “BEAC”) issued a decision to extend the moratorium period granted to extractive companies to comply with CEMAC Regulation No. 02/18/CEMAC/UMAC/CM relating to foreign exchange (the “New CEMAC Regulation”) until 31 December 2021.
This is rather good news for mining and petroleum companies, which were bound to comply with the New CEMAC Regulation from early next year, although this concession from the BEAC should not necessarily be construed as evidence that the BEAC is giving up its intention to fully enforce the New CEMAC Regulation towards extractives companies.
The New CEMAC Regulation was adopted on 21 December 2018 and entered into force on 1 March 2019. Companies were originally granted a six month period (starting from the New CEMAC Regulation’s effective date) in order to comply with the New CEMAC Regulation.
Following the expression of various concerns by the extractive companies relating to the impacts of the regulation on the conduct and financing of their operations (especially with regards to the restrictions on the opening of offshore accounts), as well as lobbying initiatives at BEAC level, the BEAC agreed to enter into discussions with the extractive companies regarding the postponement of the date for compliance with the New CEMAC Regulation.
As a result, the Governor of the BEAC issued a decision, dated 12 November 2019, whereby it granted to extractive companies a moratorium period up to 30 December 2020 in order to comply with the New CEMAC Regulation. The rationale of that decision was to allow the BEAC and extractive companies to discuss the conditions in which the New CEMAC Regulation would be applied to extractive companies.
The decision also provided for the extractive companies’ obligation to share sensitive information with the BEAC no later than 31 January 2020, including but not limited to:
- information on their onshore and offshore accounts and agreements thereto related;
- loans, borrowings and other agreements entered into with banks located outside of the CEMAC area; and
- contracts entered into with CEMAC Member States (including oil and mining contracts).
The discussions reached a dead end in the first quarter of 2020, as BEAC representatives and extractive companies were having difficulties to hold meetings due to the COVID-19 pandemic and, consequently, the Governor of the BEAC issued a decision to extend the moratorium period granted to extractive companies, thus giving them additional time to comply with the New CEMAC Regulation.
Interestingly, this decision expressly provides in its preamble that the extension is granted for the purposes of allowing the BEAC and extractive companies to resume workshops relating to the enforcement of the New CEMAC Regulations which could not be convened due to COVID-19.
This approach suggests that the BEAC has not given up its intention to enforce the New CEMAC Regulation towards extractive companies. The following also seem to be strong indications which further suggest that the BEAC intends to pursue a strict application of the regulation:
- the new decision, unlike the previous one, expressly provides that extractive companies will lose the benefit of this new extension and will be subject to the New CEMAC Regulation with immediate effect if they fail to send to the BEAC the information referred to above before 30 April 2021; and
- the new decision includes an additional provision (in comparison with the previous one) whereby, upon the expiry of the moratorium period, extractive companies will be bound by the obligation to regularise the situation of their accounts as well as all operations which were performed before the entry into force of the New CEMAC Regulation and during the moratorium period by complying with all the relevant obligations and formalities set out under the New CEMAC Regulation.
For more information, please contact Bertrand Montembault, Louis de Longeaux and Sina Abadie or your usual Herbert Smith Freehills contact:
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