INTERNAL CONTROLS, SYSTEMS AND PROCEDURES. Direct Lending Post Approval Amendments & Pre- Disbursement Process

Transcription

1 INTERNAL CONTROLS, SYSTEMS AND PROCEDURES Direct Lending Post Approval Amendments & Pre- Disbursement Process 1

2 TABLE OF CONTENTS 1. DEFINITIONS AND ABBREVIATIONS GUIDING PRINCIPLES POST APPROVAL AMENDMENTS & PRE- DISBURSEMENT PROCESS FLOW CHART ACCOUNTABILITY AND RESPONSIBILITIES SUPPORTING NARRATIVE ANNEXURES DECISION RECORD (COVER SHEET) AMENDMENT MEMORANDUM

3 1. DEFINITIONS AND ABBREVIATIONS Abbreviation / term Description / Definition Approval An approval is only valid once the decision record has been duly signed by all authorised signatories CPs Conditions Precedent these are the conditions that must be met by the client before a disbursement is made Disbursement A disbursement occurs when a pay-out is made from sefa to the client s and/or suppliers bank account Decision Record This is a record that reflects the decision of the Credit Committee as well as applicable covenants Loan Sheet A document that is prepared to guide the legal unit when drafting loan agreements Material changes Changes that: o negatively affect the viability of the client s business (e.g. changes in profitability ratios, gearing and liquidity position of the business enterprise, contract expiry date, etc.) o alter the legal status of the client o affect regulatory and/or industry compliance PIM Post Investment Monitoring Sanctioning authority Authority that is mandated to take decisions in terms of the Delegations of Authority and/or other related documents (e.g. Mancom, SME Credit, EXCO) IO Investment Officer HoR Head of Regions RM Regional Manager 3

4 2. GUIDING PRINCIPLES This section outlines guidelines and principles that must be adhered to at all times when managing facilities that have been approved but not yet disbursed: Regional Offices are responsible for managing all approved facilities prior to disbursement The IO must ensure that the decision record reflects the CP s as well as other relevant covenants as set by the relevant Credit Committee The IO must ensure that the CPs are clearly defined and can be practically implemented before a loan sheet is prepared to draft the legal agreements IOs will be responsible for managing the undrawn facilities All sefalas tasks have to be completed in respect of facilities that have been approved by the respective Credit Committees once a decision is taken by the relevant Credit Committee The IO must ensure that the relevant Credit Analyst has altered the status on sefalas from Credit Committee to Credit Committee Approved IOs must communicate with the approved clients on a weekly basis to ensure that they are made aware of any material changes to the business operations. A verbal confirmation with the client with respect to material changes is to be followed by a written ( ) communication All changes to the business operations must be recorded on sefalas Material changes must be compiled by an IO and be presented by the RM to the relevant sanctioning authority for approval and/or noting No disbursements will be made unless any material changes have been approved by the relevant sanctioning authority Upon receipt of an official request for disbursement from the client, an IO must write an to the Operations Hub unit informing the unit about such a request The handover drafted by the IO must alert the Administration Hub of any unique circumstances that the Operations Hub must be aware of (e.g. purchase order or supplier quote about to expire,) Post Disbursement an must be sent by the IO to the client advising of the PIM official to be involved with the client going forward (the IO must copy the relevant Post Investment Monitoring official with the ) A handover memo is to be drafted by the IO and addressed to Head: PIM, when the first disbursement takes place to be allocated to the relevant PM for the respective region. 4

5 All facilities not disbursed within 6 months will lapse and the new application will have to be lodged for approval in respect of the release of the unutilized facility 5

6 3. POST APPROVAL AMENDMENTS & PRE- DISBURSEMENT PROCESS FLOW CHART 1. Confirm the (approval) decision of the Credit Committee 2. Ascertain that the deal details have been accurately captured and uploaded on sefalas 3. Liaise with the client to establish if there are any changes to the original application 4. Are there changes to the original applications? No 9. No material changes to the client s business Yes 5. Draft a memo seeking necessary approvals 6. Present the memo to the sanctioning authority Process Ends 8. Inform the client No 7. Memo request approved? Yes Process Ends 11. Transfer the file to the Operations Hub 10. Inform the Operations Hub about the details of the approval 6

7 4. ACCOUNTABILITY AND RESPONSIBILITIES A = Accountable / R = Responsible / C = Consult Activity / Task IO RM HoR Credit 1. Confirm the (approval) decision of the Credit Committee R A 2. Ascertain that the deal details have been accurately captured on sefalas R A 3. Liaise with the client to establish if there are any changes to the original R A application 4. Are there changes to the original applications? R A 5. Yes Draft a memo seeking necessary approvals R A C 6. Present the memo to the sanctioning authority R A 7. Memo request approved? R A 8. Yes Transfer the file to the Operations Hub R A 9. No Inform the client R A 10. No material changes to the client s business R A 11. Inform the Operations Hub about the details of the approval R A 12. Transfer the file to the Operations Hub R A 7

8 5. SUPPORTING NARRATIVE Activity / Task linked to flow diagram 1. Confirm the (approval) decision of the Credit Committee Narrative Tools Document output Turnaround time IO need to liaise with Credit and get a Decision record copy of the decision record and/or Minutes minutes of the Credit Committee meeting 2. Ascertain that the deal details have been accurately captured on sefalas 3. Liaise with the client to establish if there are any 8 The IO must also inform the Operations Hub to commence with the compilation of the loan sheet which triggers the drafting of legal documents the compilation of the loan sheet must commence after the finalisation of the decision record Upon receipt of the decision record/minutes, IO need to verify that the information on sefalas was correctly captured in accordance with the signed decision record IO need to telephonically liaise with the applicant on a weekly basis to establish 48 hours (2 business days)

9 changes to the original the status of the applicant s business application and establish when will the client request the disbursement 4. Are there changes to the The IO need to establish if there are original applications? material changes to the client s business 5. Yes Draft a Memo In case where there are material seeking necessary changes, the IO must compile a memo approvals outlining such changes and forward to the RM for sign-off The RM must consult with Credit in cases where there are material changes and (Credit) must be co-signatories to the memo that outlines the material changes before it s presented to the Sanctioning Authority 6. Present the memo to the The RM must then present such sanctioning authority changes to the relevant sanctioning authority 7. Memo request approved? Upon approval of the amendments by 8. Yes Transfer the file to the sanctioning authority, the IO must the Operations Hub transfer the file to the Operations Hub 9. No Inform the client In cases where the amendments are not 9 Memo template Once Weekly 48 hours (2 business day) 24 hours (1 business day)

10 10. No material changes to the client s business 11. Inform the Operations Hub about the details of the approval 12. Transfer the file to the Operations Hub Process Ends approved by the sanctioning authority, the IO must inform the client and the client have the right to appeal if not satisfied with the sanctioning authority s decision In cases where there are no material changes, the IO must handover the file to the Operations Hub Unit and inform the client regarding the PIM official who will be responsible for managing the client s account Once all the material changes have been approved (if any) and the IO has communicated with the client regarding the PIM official who will be handling the application, the file must be transferred to the Operations Hub. 24 hours (1 business day) The RM will have to draft an to the Operations Hub informing the unit that the client has made a request for disbursement and there are no material changes in the business that that have 10

11 not been approved by the Sanctioning Authority. 11

12 6. ANNEXURES 6.1. DECISION RECORD (COVER SHEET) Name of the Committee: (SME Credit Committee / Mancom) Membership: Committee Members Members - see signed record sheet Date : (of the Credit Committee meeting) Declaration of Interest: Name Nature and extent of Interest Action Taken Signature Represented at Credit Committee by: (Name of Investment Officer and Credit Analyst) Approved Declined Deferred Recommended to Mancom 12

13 6.2. AMENDMENT MEMORANDUM INTERNAL MEMORANDUM TO : Indicate the relevant approval authority FROM : Indicate the name of the regional office DATE : Date the memo was drafted SUBJECT : Name of client 1. BACKGROUND a) Client Brief Background and Nature of Business (Here provide brief details of the company, when was it established & what does it do) b) Attach extract of the minutes where the facility was approved c) sefa s Involvement (Here provide details of the sefa funding, when was it approved, how much was approved, what type of funding & what was it to be used for) Approval Amount Undrawn Current Facility Application of Date Approved Amount Exposure Type Funds Security Details Security Type Value Status (indicate whether registered) 13

14 2. REQUEST a) Outline the nature of the material change 3. MOTIVATION a) Motivate the impact of the material change to sefa s risk exposure 4. RECOMMENDATION a) Tabulate your recommendation(s) Compiled by: (Name of Investment Officer) Supported by: (Name of Credit Analyst) Recommended by: (Name of Regional Manager) Approved by: (Sanctioning Authority Chairperson) Signature Date 14