The Basic System of The Libyan Stock Market (December 10, 2006)

The Great Socialist People's Libyan Arab Jamahiriya General People's Committee

General People's Committee Decision No. (134) of the year 1374 A.H. (2006 A.D.) Regarding the establishment of the Securities Market and issuing its Basic System

The General People's Committee,

• Having reviewed Law No. (1) of the year 1369 A.H., concerning Popular Conferences and Popular Committees, and its executive regulation.
• And the Law of Civil Procedure and its amendments.
• And the Law of the State Financial System, and the regulation of Budget, Accounts, and Stores.
• And the Libyan Commercial Law.
• And the Civil Law and its amendments.
• And Law No. (65) of the year 1970 A.D., determining some special provisions regarding merchants and commercial companies, their supervision, and its amendments.
• And Law No. (8) of the year 1988 A.D., concerning some provisions related to economic activity and its executive regulation.
• And Law No. (9) of the year 1992 A.D., concerning the practice of economic activities, and its executive regulation.
• And Law No. (21) of the year 1369 A.H., determining some provisions regarding the practice of economic activities, its amendments, and its executive regulation.
• And Law No. (6) of the year 1372 A.H., concerning the regulation of commercial agency work, and its executive regulation.
• And Law No. (1) of the year 1373 A.H., concerning Banks.
• And General People's Committee Decision No. (122) of the year 1372 A.H., determining research regarding the establishment of joint-stock companies.

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• And General People's Committee Decision No. (52) of the year 1373 A.H., issuing the regulation on ownership of companies and economic units.
• And General People's Committee Decision No. (91) of the year 1373 A.H., determining some provisions regarding the establishment of companies.
• And General People's Committee Assembly Decision No. (105) of the year 1372 A.H., regarding entrusting the establishment of the Securities Market to the General People's Committee Assembly for Economy and Trade.
• And based on what was presented by the Secretary of the General People's Committee for Economy, Trade, and Investment in his letter No. (2779 - 1 - 5) dated 1374/5/22 A.H.
• And based on what the General People's Committee concluded in its second ordinary meeting of the year 1369 A.H.
• And based on what was decided in the sixteenth ordinary meeting of the General People's Committee Assembly of the year 1374 A.H.

Decided

(1) Article In implementation of the provisions of Article (Ten) of Law No. (21) of the year 1369 A.H. mentioned above, according to the provisions of the attached Basic System, a market for regulating trading in securities is established, called the "Libyan Securities Market," taking the form of a joint-stock company, and subordinate to the General People's Committee for Economy, Trade, and Investment.

(2) Article The capital of the Libyan Securities Market shall be (twenty million Libyan Dinars), divided into (2,000,000) shares with a nominal value of (10) ten Libyan Dinars per share, fully subscribed by the General People's Committee for Economy, Trade, and Investment. The General People's Committee Assembly for Planning shall manage the specified amount to pay the aforementioned capital, deducted from the financial budget of the transformation for the year 1374 A.H.

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(3) Article The funds of the Libyan Securities Market shall be public funds and enjoy all facilities and exemptions determined by the effective legislations for public entity funds, and in particular, the exemption of their returns from fees and taxes of all kinds.

(4) Article This Decision shall be implemented from the date of its issuance, and all provisions conflicting with it are repealed. It shall be published in the Codex of Procedures.

Issued in: Jumada al-Awwal Corresponding to: 3 / 6 / 1374 A.H. (2006 A.D.) Legal (M.Sh.G) (1) J.B. 5/R

The Great Socialist People's Libyan Arab Jamahiriya General People's Committee

The Basic System of the Securities Market attached to General People's Committee Decision No. (134) of the year 1374 A.H. (2006 A.D.)

(1) Article Definitions The following words and phrases shall have the corresponding meanings unless the context indicates otherwise:

• Competent Committee: The General People's Committee for Economy, Trade, and Investment.
• Competent Secretary: The Secretary of the General People's Committee for Economy, Trade, and Investment.
• The Market: The Libyan Securities Market.
• Registration: Entry in paper books or electronic entry.
• Broker: A natural or legal person licensed by the Market to practice brokerage activities in securities according to the provisions of the Commercial Law and its amendments, the attached Basic System, and the instructions issued for its implementation.
• Member: A legal or natural person who has paid membership and annual subscription fees.
• Market Committee: The Market Management Committee.
• Listing: Entry of the security in the tables designated for that purpose.
• Trading Hall: The place designated in the Market building for executing buy and sell operations of listed securities.
• Trading: The process of buying and selling securities through Market brokers.
• Issuance Market: The market where securities are offered to the public for the first time within the framework of prevailing laws, regulations, and commercial customs.
• Trading Market: The market where buy and sell operations of securities are conducted through brokers.

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Connection and Settlement: The process by which the net rights and obligations of the parties to securities trading operations are determined, by delivering securities against payment of their price on the specified settlement date and transferring ownership of the securities involved in the operation. Central Deposit: A system by which securities are deposited, stored, traded, and ownership is transferred via book or electronic entry. Central Registry: A system by which paper or electronic records related to the ownership of securities and the rights derived from them are kept.

(2) Article The Securities Market shall regulate trading in securities, and its main headquarters shall be in the city of (Tripoli) in the Great Jamahiriya, and it shall have a main branch in the city of (Benghazi) in the Great Jamahiriya. The Market Management Committee may establish branches in other cities within the Great Jamahiriya, provided they are electronically connected to the main headquarters.

(3) Article Objectives and Functions of the Market The objectives and functions of the Market are determined as follows:

1. Creating an investment climate for securities that serves the national economy.
2. Encouraging savings and promoting investment awareness to ensure the direction of savings to economic sectors with optimal returns.
3. Supervising the regulation and monitoring of securities trading and ownership transfer operations.
4. Serving economic and social development goals by utilizing individual savings through allowing share buy and sell operations and conducting investment operations.
5. Assisting in the implementation of the program for transferring ownership of public economic units, facilities, and companies to broaden the ownership base.

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6. Conducting studies, collecting information, and statistics on companies whose securities are traded, publishing reports on them, and establishing professional conduct rules in the Market.
7. Establishing necessary rules to protect and ensure the integrity of trading in the Market, achieving trading based on economic efficiency.
8. Improving the efficiency of workers and intermediaries working in the capital market through organizing and supervising necessary training courses.
9. Developing cooperative links and relations between the Market and Arab, regional, and global markets to enhance investor confidence in the national economy.
10. Regulating the offering of subscriptions for shares of new joint-stock companies.

(4) Article Market Members Market membership consists of the following entities:

1. Commercial and specialized banks.
2. Insurance companies.
3. Financial funds.
4. Listed companies with a capital not less than the limit determined by the Market Management Committee.
5. Brokers accepted in the Market according to the provisions of this System. The rules for members' fees and subscriptions shall be determined by a decision of the Competent Secretary.

(5) Article The General Assembly The General Assembly of the Market consists of the members specified in Article (4) of this System, and the Competent Secretary shall preside over its meetings.

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(6) Article The General Assembly of the Market is competent to exercise the powers granted by the Commercial Law to General Assemblies, and in particular:

1. Reviewing and approving the Market Management Committee's report on the Market's operations and future plans.
2. Reviewing the Monitoring Committee's report.
3. Considering the budget and profit and loss accounts and approving them.
4. Appointing the Market's Legal Auditor for a term not exceeding (3) three years and determining their fees based on the proposal of the Market Management Committee.
5. Approving a system to ensure fulfillment of obligations arising from trading settlement, specifying therein the membership system, how to calculate subscriptions, and other related matters.

(7) Article Market Management Committee The appointment of members of the Market Management Committee shall be issued by a decision from the General Assembly, and their appointment shall be for a term of three years, renewable. The decision shall specify the ranks and allowances of the Committee.

(8) Article The Market Management Committee shall be formed as follows:

1. The General Manager of the Market "as President".
2. The Deputy General Manager of the Market "as Vice President".
3. A representative of commercial banks, chosen by the banks collectively.
4. A representative of brokers accepted in the Market.
5. A representative of joint-stock companies and partnerships with shares in the Market.
6. A financial expert.

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7. An economic expert.
8. A legal expert. The General Manager and their deputy shall perform their duties on a full-time basis.

(9) Article Membership is mandatory for each member subject to a judgment for a felony or misdemeanor involving honor and trust, or declared bankrupt. The General Assembly of the Market may also suspend the membership of anyone who fails to pay annual subscriptions for two consecutive times, with membership lapsing if payment is not made for the third time.

(10) Article Committee's Work and Powers The Committee is competent for the following:

1. Preparing draft laws, issuing regulations and decisions organizing the Market's work, and necessary instructions for practicing activities related to securities trading, financial brokerage, and other matters required by trading in the Market.
2. Studying reports and documents related to the capital market and commenting on them.
3. Issuing administrative and financial regulations and professional conduct instructions organizing the Market's work and its employees.
4. Coordinating with financial institutions and other bodies on matters related to the Market's work and management.
5. Taking necessary measures to follow up the implementation of this System and the instructions issued for its implementation, including instructions regulating activities related to managing investment portfolios for others.
6. Approving a special system for salaries and allowances for Market employees based on the General Manager's proposal.

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(11) Article Monitoring Committee The Market shall have a Monitoring Committee consisting of three active members and two alternates appointed by the General Assembly of the Market. They must possess expertise in financial and accounting affairs, and the General Assembly of the Market shall determine the annual allowances they receive. The monitors shall have all rights and duties prescribed for the Monitoring Committee specified in the Libyan Commercial Law.

(12) Article The General Manager of the Market shall exercise the powers granted by law to the Chairman of the Board of Directors and the General Manager of joint-stock companies, and in particular:

1. Implementing decisions of the Market Management Committee and presenting appropriate proposals contributing to the development and growth of the Market.
2. Inviting members of the Management Committee to attend its meetings.
3. Supervising the Market's technical, administrative, and financial departments and issuing appointment decisions for Market managers and employees, defining their tasks.
4. Representing the Market personally or through legal proxy in relations with third parties and when reviewing cases where the Market is a party. He shall have the right to sign individually on behalf of the Market, including contracts imposing financial obligations. The Manager may delegate his deputy to exercise the powers granted by this System and the provisions, regulations, and instructions issued under it, including the delegation to sign documents imposing financial obligations on the Market.

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(13) Article The General Manager of the Market shall submit a quarterly report to the Market Management Committee containing a comprehensive summary of the Market's activities and any measures he deems helpful to achieve its goals in light of the state's general policy.

(14) Article The Market's organizational structure shall consist of the following departments:

1. Trading Operations Department.
2. Clearing and Settlement Department.
3. Membership and Brokers Affairs Department.
4. Administrative and Financial Affairs Department.
5. Research, Studies, and Development Department.
6. Supervision, Oversight, and Disclosure Follow-up Department.
7. Legal Affairs Department. The Market Management Committee may establish new departments and define their jurisdictions according to the Market's needs and work requirements.

(15) Article Any interested party may appeal decisions issued by competent departments before the Market Management Committee, and its decision shall be final. The Market's administrative regulations shall determine the procedures, timing, and deadlines for ruling on such appeals.

(16) Article Supervisory Body A supervisory body called the (Supervision and Monitoring Authority) shall be formed by a decision of the Competent Secretary to follow up and monitor the Market's operations and ensure the proper conduct of Market operations according to this System. Its membership shall consist of representatives as follows:

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1. As President: The Secretary of the General People's Committee for Economy, Trade, and Investment.
2. As Member: The Secretary of the General People's Committee for Planning.
3. As Member: The Secretary of the General People's Committee for Finance.
4. As Member: The Central Bank of Libya. A decision by the Competent Secretary, based on a proposal from the Market Management Committee, shall determine the duties and tasks of the Authority.

(17) Article The Market's resources shall consist of the following: A. Members' subscriptions. B. The consideration received by the Market for trading operations. C. Broker admission fees. D. Returns from Market publications and dissemination of information about listed companies and securities. E. Fees for services provided by the Market. F. Donations granted by the State or any other entity with the approval of the General Assembly. G. Any other financial resources approved by the General Assembly.

(18) Article The budget and profit and loss accounts shall be prepared annually, reviewed by the Market's Legal Auditor, and presented to the General Assembly of the Market for ratification.

(19) Article Scope of Market Work Trading in the Market in securities shall be based on what is stipulated in the Libyan Commercial Law and the Public Debt Law, applying the rules specified therein, as well as the provisions of the Market's Basic System and the instructions issued by the Market, provided they do not conflict with effective legislations.

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(20) Article Securities covered by the provisions of this System include: (a) Shares of joint-stock and partnership companies. (b) Founders' shares. (c) Bonds issued by joint-stock and partnership companies. (d) Treasury bills and bonds, and other bonds issued by the State. (e) Units of funds and investment portfolios. (f) Any other securities determined by subsequent legislations.

(21) Article Trading in listed securities outside the Market is prohibited, and trading by proxy is invalid.

(22) Article Taxes and fees of all kinds, and capital gains resulting from buy and sell operations of securities, as well as profits realized from investing in them, shall be exempt according to the provisions of this System.

(23) Article Rules of Trading in the Market Trading in the trading market shall be according to the instructions issued by the Market Management Committee and the following rules: A. Trading in listed securities shall take place inside the Market's trading hall. B. Transactions conducted on securities inside the Market shall be recorded in registers prepared for this purpose. C. Verifying ownership percentages determined by effective legislations. The Market Management Committee may decide by a two-thirds majority of its members to temporarily suspend trading in the trading market or on a specific security if exceptional circumstances arise threatening the proper conduct and regularity of work or the interests of traders in the trading market. It may also set a maximum or minimum limit for the movement of security prices based on reasons for omission on the previous day. It may cancel operations conducted in violation of this System and the instructions issued under it, and those based on undisclosed information. The General Manager of the Market may take immediate measures to suspend trading on a specific security, which shall be presented to the Management Committee at its first meeting.

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(24) Article The following shall be recorded in special registers indicating the number of securities traded in the Market and their trading prices: A. Operations to sell listed securities in the Market ordered by competent courts. B. Operations canceled by judicial ruling. C. Buy and sell operations of securities not listed in the Market. The Committee shall determine the documents and data necessary for registration in the aforementioned registers, and it shall not disclose information contained in these registers except to the extent required by aggregate statistical operations.

(25) Article Ownership of securities shall be transferred completely by their entry in the Market according to the central deposit and registry system. The entry of securities at the Market shall replace the shareholders' registers or the securities ownership registers at the issuing entity. The Market shall use documents replacing securities certificates for trading, attending General Assemblies of Shareholders, distributing dividends, pledging, and exercising pre-emptive rights according to the conditions and procedures specified in this System and decisions issued for its implementation. The Market Management Committee shall issue detailed instructions for clearing, settlement, and central deposit operations. The General Assembly may entrust the central deposit and registry task to an expert entity according to conditions determined by the Market Management Committee.

(26) Article Certificates may be issued in exchange for securities listed in the Market, which may be traded outside the Market, under the conditions and procedures determined by the Market Management Committee and approved by the General Assembly.

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(27) Article The competent department shall register trading operations executed on the day of their execution. Trading operations shall be registered in the Market's registers electronically, and a copy of this entry may be given to interested parties according to the Market Management Committee's instructions. The Management Committee shall issue detailed instructions for trading.

(28) Article The Clearing and Settlement Department of the Market shall conduct collection operations and settle transactions conducted on listed securities to determine the net rights and obligations of each party. Negotiation shall be based on delivery against payment during the period determined by the Market Management Committee. The interested party shall be delivered a document certifying the settlement of the operation on the form approved by the Management Committee. The Market department shall issue detailed instructions regarding this.

(29) Article Listing of Securities Listing securities in the Market is mandatory for public and private sector companies with a capital not less than (1,000,000) million dinars, provided the following conditions are met: A. There are no restrictions on the transfer of ownership of the securities. B. The security is named and its value is fully paid.

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A listing agreement shall be signed between the Market and the issuing entity, specifying the rights and obligations of both parties regarding the listing and continued listing of securities and the consequences of breach.

(30) Article Companies meeting the conditions specified in Article (29) of this System shall provide the Market Management Committee with the following documents: A. The company's charter and bylaws. B. The budget and profit and loss account for the last financial year approved by the legal auditor. C. A list of the names of board members and their ownership percentage in the capital. D. A list including the names of the company's shareholders and their ownership percentage in the capital. E. The name and expertise of the person responsible for contacting clients and competent authorities regarding listing. F. The company's relationship with other companies, whether holding or subsidiary. G. Any other information or documents specified by the instructions for listing and delisting securities issued by a decision of the Market Management Committee.

(31) Article The Market Management Committee shall issue necessary instructions regarding the listing of securities for companies with capital less than (1,000,000) million dinars.

(32) Article The Market Management Committee shall determine the necessary conditions for companies offering their shares for subscription through the issuance market.

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(33) Article The company whose shares are listed in the Market is obliged to apply for the listing of its shares in a capital increase within one month of completing the issuance procedures. These shares shall be listed after the company completes all necessary procedures and allocates the increase shares to their owners.

(34) Article Any company wishing to issue named securities must notify the Market thereof. If there is no objection from the Market Management Committee within the following three weeks, the company may proceed with the issuance procedures according to effective legislations.

(35) Article The entity wishing to list bonds issued by it in the issuance market must apply for the listing of these bonds after completing issuance procedures, adhering to providing the Market with the data and documents determined by the Market Management Committee as prescribed for shares.

(36) Article Companies whose securities are traded in the Market are classified as: A. Companies whose shares are registered in the Market's main tables. B. Companies whose shares are registered in the Market's secondary tables, as determined by Market instructions. The instructions for listing and delisting securities shall specify how to trade the securities of these companies. The instructions for listing and delisting securities shall specify how to trade the securities of these companies.

(37) Article Suspension of Trading Trading in listed securities may be suspended if one of the suspension cases occurs according to the instructions for listing and delisting securities. These securities shall be returned to trading after the causes of suspension are removed by a decision of the Market Management Committee.

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(38) Article Delisting The listing of securities shall be canceled by a decision of the Market Management Committee in the following cases: A. A final decision to dissolve the company is issued. B. The company's term expires unless renewed by a decision of the company's General Assembly. C. One or more listing conditions are lost and not completed within the period determined by the Market Management Committee. D. Violation of instructions issued by the Market Management Committee, including disclosure instructions. E. Upon request of the security issuing entity, provided that for companies, this is with the approval of the General Assembly.

(39) Article The listing of listed bonds in the Market shall be canceled on their maturity date, redemption, or before that date according to effective legislations.

(40) Article Market Brokers Trading in securities listed in the Market is not permitted except through a broker accepted by the Market Management Committee.

(41) Article The profession of brokerage remains governed by the provisions of the Commercial Law according to Articles (45) to (56), with the necessity of observing the instructions of the Market Management Committee, without conflicting with the provisions of the effective law.

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(42) Article Conditions for Accepting Brokers The broker trading in securities in the Market may be a natural or legal person, provided they submit a written request to practice the brokerage profession on forms approved by the Market Management Committee, and the following conditions are met regarding them: First: Conditions specific to the natural person: A. Must be a citizen of the Great Jamahiriya. B. Must be at least (25) twenty-five years old. C. Must hold a university degree in Management, Economics, or Accounting, and possess sufficient experience to practice brokerage activities as determined by the Market Management Committee. D. Must not have been declared bankrupt or sentenced for a felony or misdemeanor involving honor within the five years preceding the date of application. E. Must provide the financial guarantee in the amount determined by the Market Management Committee. Second: Conditions specific to the legal person:

1. The brokerage company must be a Libyan joint-stock company.
2. The person responsible for its management must hold a university degree in Economics, Management, or Accounting, possess sufficient experience to practice the brokerage profession as determined by the Market Management Committee, and no member of its board of directors shall have been sentenced for crimes involving honor within the five years preceding the date of application.
3. The company's capital must not be less than one hundred thousand dinars fully paid. The Market Management Committee may increase this limit according to the Market's work requirements.
4. The company must provide a bank guarantee in the amount determined by the Market Management Committee.

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(43) Article Brokers and their employees may trade in securities according to the instructions placed by the Market Management Committee. The broker is obliged to submit to the Market Management Committee the names of his employees, including his representative and assistants, and their signature samples, and a written undertaking committing to his responsibility for their actions related to their activity. He must obtain their certification of commitment to professional conduct rules. The brokerage company must have an internal auditor appointed by a decision of its board of directors, and the Market Management Committee shall determine the auditor's tasks and jurisdiction.

(44) Article The broker must ensure that the agreement concluded with his employee contains the following information and data: A. The name and address of both the broker and the client. B. A statement of the services the broker will provide to his client. C. A statement of the commissions the broker will receive for his services. D. The method of dispute settlement. E. Any other information determined by the Market Management Committee.

(45) Article The broker must ensure that the transactions he concludes are conducted according to the orders issued by his clients. He must verify the validity of the orders, the client's ownership of the securities involved in the trade, and that they are not prohibited from trading. The broker is liable for the integrity of the operation and responsible for its correctness, whether regarding the securities or the payment of their price. The order may be written, verbal, or electronic according to the instructions placed by the Market Management Committee.

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(46) Article The broker is not permitted to use the client's funds except to execute orders issued by him. He is not permitted to use them in any form to execute operations for the benefit of the broker or third parties. He is also not permitted to dispose of the client's securities except within the limits of the orders issued to him.

(47) Article The broker is obliged, in addition to what is stipulated in the previous articles, to:

• Execute all operations inside the trading hall according to the times determined by the Market Committee.
• Not perform any act that threatens the stability of the Market or causes harm to its traders.
• Not conduct any operations in the Market for the account of his traders if he has received orders from them to execute them within their limits.
• Treat his clients equally in executing operations and avoid any conflict of interest.
• Adhere to the provisions of this System and the instructions issued under it and the professional conduct rules placed by the Market Management Committee.

(48) Article Brokers must keep paper and electronic registers indicating the orders and operations they perform according to their dates. They must close these registers daily. These registers shall be subject to Market supervision. Brokers must also provide the information, data, and statistics requested by the Committee according to the forms and within the deadline determined by it.

(49) Article Brokers are entitled to receive compensation for