Companies and Financial Intermediaries eligible for Norsad financing shall be commercially viable.
- have a solid track record or in the case of Greenfield investments, the promoter must demonstrate ability to implement and manage the company;
- present a business plan and financial projections demonstrating a strong positive cash flow to cover the debt repayments for the duration of the loan and/or acceptable level or total return for Norsad; and
- be adequately capitalized to reflect risk taking by the promoters/main shareholders of the investee company.
Financial Intermediaries (FI) shall:
- have a good performance record and the management of the F.I shall have acceptable experience in appraisal, credit approval, monitoring and risk management;
- be in compliance with the Liquidity and Capital Ratio requirements and/or guidelines of the relevant regulatory authorities in its host country or the international best practice guidelines (e.g. Basel II) in a case of shortcomings in the regulatory authority actions or defects in the regulations for the specific FI (e.g. microfinance, leasing);
- comply with more stringent Liquidity and Capital Ratios set by Norsad Finance based on the risk assessment of the FI or the operating and regulatory environment; and
- have a business/strategic plan that demonstrates acceptable Performance, Liquidity and Capital Ratios, especially if the FI is planning for major expansion (e.g. new segments, expansion of branch network) in the near future.
Commitment to Social and Environmental Sustainability
All investee companies and financial intermediaries shall comply or be committed to comply with the sustainability criteria outlined in the Social and Environmental Sustainability Policy of Norsad. The sustainability of all clients shall be assessed prior the investment decision and monitored during the investment period to ensure that sustainability objectives and activities will become fully anchored in business strategies of Norsad’s investee companies and integrated into their procedures and operations.
Corporate Governance Principles
Good corporate governance is a priority for Norsad because it provides opportunities to manage risks and add value to its clients. In addition to the benefits to individual clients, working to improve corporate governance contributes more broadly to the mission to promote sustainable private sector investment in Southern African Countries. The basic requirement is that the client is duly incorporated and registered in the relevant registry and/or authority of the host country.
Norsad shall apply the international best practice anti-money laundering and terrorism financing standards. Norsad shall identify and assess all shareholders of an unlisted investment company and major shareholders of a listed investment company, as well as individuals with major decision making powers in the company. In addition, in a case where a shareholder of the investment company is/are legal entity (ies), Norsad shall duly identify and assess the major shareholders of such entities as well.
Companies shall demonstrate strong commitment to adopt a governance model that ensures:
- The basic aspects of corporate governance are in place (Shareholders Agreement/ Articles of Association, Annual Shareholders Meeting and identified and registered Shareholders):
- Structured and functioning Board of Directors (preferably with an independent Director(s)):
- Adequate internal controls and limitations on the participation of owners, their families and other related parties:
- Accountability, transparency and disclosure (adequate accounting and auditing system in place – Audited Financial Statements); and
- Fair treatment of minority shareholders.
Financial Intermediaries shall:
- be duly registered and licensed by the relevant regulatory authorities in the host country and comply with all disclosure requirements under applicable law, regulations and listing rules (fair disclosure);
- be committed to good corporate governance;
- have a formal and functional Board of Directors with an independent Director(s);
- have adequate controls and processes;
- prepare its financial statements in accordance with internationally recognized accounting standards and be audited by a recognized independent auditing firm; and
- ensure fair and equal treatment of minority shareholders.
In its investments, Norsad Finance will prioritize companies demonstrating positive development impact to the local community and economy of the host country. In cases where a financing partner applies the same S&E sustainability criteria as Norsad and has established equivalent or more stringent policies, procedures and capacity, Norsad can rely on that partner’s S&E due diligence.