Revised Laws of Saint Lucia (2023)

THE CREDIT GUARANTEE SCHEME

ARTICLE 38
ESTABLISHMENT OF THE CREDIT GUARANTEE SCHEME

(1)     There is established and maintained a Credit Guarantee Scheme, the purposes of which are set out in this Part.

(2)     The Credit Guarantee Scheme shall be administered by the Credit Guarantee Corporation.

ARTICLE 39
OPERATION OF THE CREDIT GUARANTEE SCHEME

(1)     The Credit Guarantee Scheme shall be operated in the manner authorised by this Agreement.

(2)     For the purposes of paragraph (1), details of the measures and procedures provided in this Part shall be prescribed to support the implementation of this Agreement.

(3)     The Credit Guarantee Corporation shall prepare or cause to be prepared an Operations Manual to provide guidance on the operation of the Credit Guarantee Scheme under this Agreement.

(4)     The Operations Manual shall —

1.  

   (a)     receive the approval of the Board prior to its first publication;

1.  

   (b)     be modified only after the amendments have been approved by the Board;

1.  

   (c)     be published on the website of the Credit Guarantee Corporation.

ARTICLE 40
GENERAL FRAMEWORK OF THE CREDIT GUARANTEE SCHEME

(1)     The Credit Guarantee Scheme shall address all or any of the following matters —

1.  

   (a)     thresholds that lenders that wish to become Participating Lenders shall meet to participate in the Credit Guarantee Scheme;

1.  

   (b)     the approval methods and procedures for assessing the suitability of lenders who wish to become Participating Lenders;

1.  

   (c)     the type of information required to be provided to the Credit Guarantee Corporation for purposes related to making a credit guarantee agreement;

1.  

   (d)     the extent of the Credit Guarantee Corporation's liability to a Participating Lender in accordance with a credit guarantee agreement in the circumstances where the Participating Lender fails or refuses to comply with the conditions applicable to the Credit Guarantee Scheme;

1.  

   (e)     variation of the terms of a credit guarantee agreement in circumstances where a Participating Lender fails or refuses to comply with the Credit Guarantee Scheme;

1.  

   (f)     the imposition of terms and conditions for the payment of fees and charges, if any, by the Participating Borrower or Participating Lender to the Credit Guarantee Corporation, as a contribution towards the provision of the Credit Guarantee Scheme;

1.  

   (g)     the preparation and maintenance of records, books of account and such other documentation as may be specified in the Credit Guarantee Scheme by Participating Lenders;

1.  

   (h)     the giving of documents, information and reports by lenders to the Credit Guarantee Corporation;

1.  

   (i)     the information required to be provided by Participating Lenders to the Credit Guarantee Corporation on their activities with regard to qualifying loans;

1.  

   (j)     requirements in relation to the transfer of any rights and liabilities under a Qualifying Loan Agreement;

1.  

   (k)     any other matters that the Credit Guarantee Corporation considers necessary or expedient.

(2)     The Credit Guarantee Scheme shall contain applicable conditions with which a lender shall, for the purposes of the granting of approval to be a Participating Lender, comply, relating to —

1.  

   (a)     the policies and practices of the lender applicable to —

   1.  

      (i)     lending money;

   1.  

      (ii)     giving loans to Qualifying Enterprises;

   1.  

      (iii)     recovering moneys borrowed from the lender;

   1.  

      (iv)     providing security for moneys borrowed from the lender;

1.  

   (b)     the administration and management practices of the lender;

1.  

   (c)     the procedures in relation to the supervision of transactions entered into on the lender's behalf by members of staff of the lender; and

1.  

   (d)     the proportion that moneys borrowed from the lender bears to the capital reserves of the lender.

(3)     The Credit Guarantee Scheme shall include —

1.  

   (a)     the categories of Qualifying Enterprises to which the Credit Guarantee Scheme shall apply;

1.  

   (b)     the conditions that shall be complied with for lenders and Qualifying Enterprises that enter into a Loan Agreement;

1.  

   (c)     loan agreements to which the Credit Guarantee Scheme shall apply;

1.  

   (d)     the purposes for which moneys borrowed pursuant to a Loan Agreement may be applied; and

1.  

   (e)     the maximum on the aggregate of money to be guaranteed by the Credit Guarantee Corporation.

ARTICLE 41
PARTICIPATING LENDER

(1)     For the purposes of this Agreement, a lender is a Participating Lender if —

1.  

   (a)     it is an institution that is regulated by a Regulator and operates in the Currency Union;

1.  

   (b)     it provides or intends to provide loans in the ordinary course of business to Qualifying Enterprises;

1.  

   (c)     it is approved by the Credit Guarantee Corporation in accordance with terms and conditions required in this Agreement; and

1.  

   (d)     it agrees to comply with the Credit Guarantee Scheme requirements.

(2)     For the purposes of this Agreement, the following shall be prescribed in providing for the assessment of an application by a lender that wishes to become a Participating Lender —

1.  

   (a)     the contents of the application form for approval as a Participating Lender;

1.  

   (b)     the method for assessing the financial status, operations, management and lending policies of the lender by providing information to assess the following aspects of the conduct of its business —

   1.  

      (i)     its strategic positioning, by reviewing its financial products, its role in providing financing to micro enterprises, small enterprises and medium enterprises, and the extent to which it targets or intends to target specific micro, small and medium enterprise markets;

   1.  

      (ii)     its lending policies and procedures, by reviewing the extent to which its credit, security and recoveries policies and procedures, and its standard documentation and ancillary business services support access to loans by micro enterprises, small enterprises and medium enterprises; and

   1.  

      (iii)     its additionality, by reviewing the manner in which it will use the Credit Guarantee Scheme to support lending over and above that currently being provided to micro enterprises, small enterprises and medium enterprises;

1.  

   (c)     the manner of notifying the decision relating to an application;

1.  

   (d)     the fees payable, if any, in relation to an application, which shall not exceed the amount prescribed by law.

(3)     The Credit Guarantee Corporation may approve a lender as a Participating Lender under this Article if —

1.  

   (a)     the lender agrees in writing to comply with and be bound by the terms of the Credit Guarantee Scheme; and

1.  

   (b)     in the case of a Participating Lender who applies to continue to be a Participating Lender, the Credit Guarantee Corporation is satisfied that the Participating Lender has complied with the terms of the Credit Guarantee Scheme.

(4)     The Credit Guarantee Corporation —

1.  

   (a)     may, as a term of the Credit Guarantee Scheme —

   1.  

      (i)     vary the fee that may be imposed on Participating Lenders based on criteria such as the legal structure of Participating Lenders and the types of loans they offer;

   1.  

      (ii)     provide for an initial fee to be paid when applying for approval as a Participating Lender, which shall not exceed the amount prescribed by law;

   1.  

      (iii)     provide for an annual fee, which shall not exceed the amount approved by the Board, to be paid by a single payment or by instalments at intervals and at a rate as may be specified, whether based upon a loan granted or the average annual loans granted by the Participating Lender under a Qualifying Loan Agreement;

1.  

   (b)     may have regard to the following factors in establishing the fees to be imposed —

   1.  

      (i)     the size and quality of the Participating Borrowers;

   1.  

      (ii)     the risks associated with the Participating Borrowers;

   1.  

      (iii)     the risks associated with the business sector of the use of funds;

   1.  

      (iv)     the duration of credit guarantees given under the Credit Guarantee Scheme;

   1.  

      (v)     the expenses incurred or likely to be incurred, or both, in relation to administering the Credit Guarantee Scheme and ensuring its viability.

(5)     The Credit Guarantee Corporation may withdraw an approval under this Article if a Participating Lender ceases to comply with the applicable conditions or contravenes any other provisions of the Credit Guarantee Scheme.

ARTICLE 42
QUALIFYING ENTERPRISE

(1)     For the purposes of this Agreement, an enterprise is a Qualifying Enterprise —

1.  

   (a)     if it is a micro enterprise, being an enterprise that —

   1.  

      (i)     has an annual revenue or projected revenue of less than seventy-five thousand dollars; and

   1.  

      (ii)     employs or intends to employ less than five permanent employees; or

1.  

   (b)     if it is a small enterprise, being an enterprise that —

   1.  

      (i)     is not a micro enterprise; and

   1.  

      (ii)     has an annual revenue or projected revenue of less than four hundred thousand dollars; and

   1.  

      (iii)     employs or intends to employ less than twenty-five permanent employees; or

1.  

   (c)     if it is a medium enterprise, being an enterprise that —

   1.  

      (i)     is not a micro enterprise; and

   1.  

      (ii)     is not a small enterprise; and

   1.  

      (iii)     has an annual revenue or projected revenue of less than two million dollars; and

   1.  

      (iv)     employs or intends to employ less than fifty permanent employees,

1.  

        whether or not it —

   1.  

      (A)     is a juristic person or is an individual;

   1.  

      (B)     has commenced operation at the time of applying for a loan from the Participating Lender; or

   1.  

      (C)     intends to commence operation within eight months of applying for a loan from a Participating Lender.

(2)     A Start-up is eligible to be a Qualifying Enterprise.

(3)     For the purposes of this Part, a “Start-up” means an entity —

1.  

   (i)     incorporated or registered in a Member Territory; and

1.  

   (ii)     not older than two years.

(4)     The Board may develop a list of sectors or activities in which Qualified Enterprises are prohibited from conducting business for the purposes of this Agreement.

(5)     A micro enterprise, a small enterprise or a medium enterprise shall not conduct business in contravention of the list of prohibited sectors or activities developed under paragraph (4).

ARTICLE 43
CREDIT GUARANTEE AGREEMENT

(1)     The Credit Guarantee Corporation shall enter into a credit guarantee agreement with a Participating Lender to guarantee repayment to that Participating Lender of such part of the loan principal and interest specified under a Qualifying Loan Agreement.

(2)     The credit guarantee agreement shall —

1.  

   (a)     set out the rights and obligations of each person under the Credit Guarantee Scheme, including the amount guaranteed, currency, term, and coverage; and

1.  

   (b)     be in accordance with the terms and conditions and in the manner required by this Agreement.

(3)     Subject to paragraph (4), the Credit Guarantee Corporation shall not, pursuant to a credit guarantee under this Article, be liable, in relation to any particular Qualifying Loan Agreement, to pay an amount exceeding the credit guarantee threshold prescribed by law, in addition to up to 90 days of accrued interest at the agreed interest rate.

(4)     For the purposes of this Article —

1.  

   (a)     the maximum aggregate liability of the principal and interest of all annual qualifying loan agreements shall be determined by the Board;

1.  

   (b)     a loan is deemed to have been made on the date of the making of the Qualifying Loan Agreement concerned whether or not, pursuant to that agreement, the loan is payable on a later date or the happening of a subsequent event.

(5)     The Credit Guarantee Corporation may notify a Participating Lender in writing that the Participating Lender may no longer submit applications for a credit guarantee to the Credit Guarantee Corporation. This action shall not affect the validity of previous credit guarantee agreements.

ARTICLE 44
WITHDRAWAL OF CREDIT GUARANTEE

(1)     If a Participating Lender fails or refuses to comply with the terms of the Credit Guarantee Scheme, the Credit Guarantee Corporation may withdraw any credit guarantee given by it to the Participating Lender.

(2)     A term of a Qualifying Loan Agreement that permits a Participating Lender to —

1.  

   (a)     alter any of its terms or conditions upon the withdrawal of a credit guarantee as a consequence of paragraph (1); or

1.  

   (b)     impose less favourable terms and conditions on the Participating Borrower upon the withdrawal of a credit guarantee in accordance with paragraph (1),

     shall be null and void.