Palestine Monetary Authority

Palestine Securities Exchange

Quality and Restructuring Department

Pledging and Unpledging Procedures

Procedure Name: Pledging and Unpledging
Procedure Number: CDS-19
Procedure Definition: Placing/removing a pledge flag upon the request of the "Pledgor" investor on a number of their shares submitted as collateral for a debt (the Bank) in exchange for obtaining the loan.

Implementation Requirements:

Documents and Records:

1. A stamped and duly signed share pledge request form, if the pledgee is a bank.
2. A judicial pledge deed issued by the court's notary public, or a pledge request filled out according to regulations and authenticated by the notary public, if the pledgee is an individual or legal entity other than a bank.
3. Share ownership certificate or ownership notice, if the company whose shares are to be pledged issues certificates or notices.
4. A clearance certificate from the securities company if the shares are under its control, or from the listed company if the shares are under the exchange's control.
5. A copy of the pledgor's identification document.
6. A slip/bank deposit receipt for the share pledge commission.
7. For unpledging, a share unpledge form signed by the pledgee.

Conditions and Rules:

1. Shares of a minor (acquired through inheritance) may not be pledged except with permission from the Sharia judge, whether the pledge is to secure a debt owed by the minor or by a third party.
2. The commission is not waived; the market value of the pledged shares is calculated based on the closing price on the date the pledge transaction is executed.
3. After the pledge transaction is completed, the pledgor may not take any action on the pledged securities while they remain pledged, to avoid compromising their status as collateral for the pledgee in respect of the pledgor's debt.
4. The pledgor has the right to retain the returns and distributions of their pledged shares, unless otherwise agreed upon with the pledgee.
5. The secured creditor (pledgee) may not unilaterally sell the pledged securities, even if the debt for which the pledge was made has matured. However, the pledgee and pledgor may agree to unpledge and sell the securities, remitting the sale proceeds to the secured creditor. If such agreement cannot be reached, the pledge will not be lifted, and the pledged securities may only be sold by a final court order.

Depository and Clearing Department Procedures Manual 2009-07-29 Page 74 of 47

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Palestine Securities Exchange

Quality and Restructuring Department

Pledging and Unpledging Procedures

Procedure Name: Pledging and Unpledging
Procedure Number: CDS-19
Procedure Definition: Placing/removing a pledge flag upon the request of the "Pledgor" investor on a number of their shares submitted as collateral for a debt (the Bank) in exchange for obtaining the loan.

Implementation Requirements:

Documents and Records:

1. A stamped and duly signed share pledge request form, if the pledgee is a bank.
2. A judicial pledge deed issued by the court's notary public, or a pledge request filled out according to regulations and authenticated by the notary public, if the pledgee is an individual or legal entity other than a bank.
3. Share ownership certificate or ownership notice, if the company whose shares are to be pledged issues certificates or notices.
4. A clearance certificate from the securities company if the shares are under its control, or from the listed company if the shares are under the exchange's control.
5. A copy of the pledgor's identification document.
6. A slip/bank deposit receipt for the share pledge commission.
7. For unpledging, a share unpledge form signed by the pledgee.

Conditions and Rules:

1. Shares of a minor (acquired through inheritance) may not be pledged except with permission from the Sharia judge, whether the pledge is to secure a debt owed by the minor or by a third party.
2. The commission is not waived; the market value of the pledged shares is calculated based on the closing price on the date the pledge transaction is executed.
3. After the pledge transaction is completed, the pledgor may not take any action on the pledged securities while they remain pledged, to avoid compromising their status as collateral for the pledgee in respect of the pledgor's debt.
4. The pledgor has the right to retain the returns and distributions of their pledged shares, unless otherwise agreed upon with the pledgee.
5. The secured creditor (pledgee) may not unilaterally sell the pledged securities, even if the debt for which the pledge was made has matured. However, the pledgee and pledgor may agree to unpledge and sell the securities, remitting the sale proceeds to the secured creditor. If such agreement cannot be reached, the pledge will not be lifted, and the pledged securities may only be sold by a final court order.

Depository and Clearing Department Procedures Manual 2009-07-29 Page 74 of 47

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Palestine Securities Exchange

Quality and Restructuring Department

Execution Procedures:

Responsible Party	Execution Steps
Pledgor	1. If the pledgee is a bank, the pledgor fills out and signs the share pledge request form, and the pledgee signs their portion of the pledge request form.<br>2. If the pledgee is not a bank, the form is authenticated by the notary public after being filled out and signed by both parties (pledgor, pledgee). If this is not possible, the pledgor issues a judicial pledge deed authenticated according to regulations by the notary public.<br>3. The following documents are attached to the request or original pledge deed:<br>• Copy of the pledgor's identification document<br>• Share ownership certificate or ownership notice, if issued by the listed company.<br>• Clearance certificate from the securities company or the listed company.<br>• Slip/bank deposit receipt for the share pledge commission.<br>4. The pledgor sends the pledge request and attachments to the Depository and Clearing Center to execute the share pledge transaction.
	5-2 Verify that all necessary attachments are present with the request.<br>5-3 The pledgor deposits the share certificates (if available).<br>6. Use the system to execute the pledge transaction via the "Pledges" screen in the Depository and Clearing Center system.<br>7-1 Place the pledge flag on the shareholders' page in the system's shareholder register.<br>7-2 Prepare the pledge reference letter to the relevant party according to the case.<br>7-3 The pledgor transfers the pledge request and pledge letter to the Department Head or Director for authentication.
Department Head	7. Receive the pledge request and attachments and do the following:<br>1-7 Verify that attachments are complete.<br>2-7 Verify the correctness of the pledge commission calculation and its proper payment.<br>3-7 Verify the correctness and completeness of the pledge request form data compared to the attachments.<br>4-7 Verify the correct entry of the pledge request into the system and the presence of the pledge flag on the shareholder's (pledgor's) page.<br>5-7 The pledgor authenticates the pledge transaction.<br>6-7 The pledgor reviews and signs the pledge letter.<br>7-7 The pledgor transfers the request to the Center Auditor.

Depository and Clearing Department Procedures Manual 2009-07-29 Page 74 of 48

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Palestine Securities Exchange

Quality and Restructuring Department

Center Director

8. Receive the pledge request and attachments and do the following:<br>1-8 Verify the correctness of the pledge commission calculation and its proper payment to the Exchange's account.<br>2-8 Verify the correctness and completeness of the pledge request form data compared to the attachments.<br>3-8 Verify the correct entry of the pledge request into the system and the presence of the pledge flag on the shareholder's (pledgor's) page.<br>4-8 The pledgor reviews and signs the pledge letter.<br>5-8 The pledgor transfers the request to the Center Auditor.

Depository and Clearing Department Procedures Manual 2009-07-29 Page 74 of 48