Law No. 03-04 of 17 February 2003 Amending and Complementing Legislative Decree No. 93-10 Relating to the Securities Exchange

Law No. 03-04 of 16 Dhou El Hidja 1423 corresponding to 17 February 2003 amending and complementing Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, relating to the Securities Exchange.

The President of the Republic,

Having regard to the Constitution, particularly its Articles 119, 122, and 126;

Having regard to Organic Law No. 98-01 of 4 Safar 1419 corresponding to 30 May 1998 relating to the competencies, organization, and functioning of the Council of State;

Having regard to Ordinance No. 66-154 of 8 June 1966, as amended and supplemented, establishing the Civil Procedure Code;

Having regard to Ordinance No. 66-155 of 8 June 1966, as amended and supplemented, establishing the Criminal Procedure Code;

Having regard to Ordinance No. 66-156 of 8 June 1966, as amended and supplemented, establishing the Penal Code;

Having regard to Ordinance No. 75-58 of 26 September 1975, as amended and supplemented, establishing the Civil Code;

Having regard to Ordinance No. 75-59 of 26 September 1975, as amended and supplemented, establishing the Commercial Code;

Having regard to Law No. 90-10 of 14 April 1990, as amended and supplemented, relating to currency and credit;

Having regard to Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, relating to the Securities Exchange;

Having regard to Ordinance No. 95-06 of 23 Chaâbane 1415 corresponding to 25 January 1995 relating to competition;

Having regard to Ordinance No. 96-08 of 19 Chaâbane 1416 corresponding to 10 January 1996 relating to collective investment undertakings in securities (SICAV) and (FCP);

Having regard to Ordinance No. 01-03 of Aouel Joumada Ethania 1422 corresponding to 20 August 2001 relating to the development of investment;

Having regard to Ordinance No. 01-04 of Aouel Joumada Ethania 1422 corresponding to 20 August 2001 relating to the organization, management, and privatization of public economic enterprises;

After adoption by Parliament;

Promulgates the law whose text follows:

Article 1. — This law aims to amend and complement Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above.

Art. 2. — Article 3 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended and drafted as follows:

"Art. 3. — The Securities Exchange comprises: ...... No change...... ...... No change...... — The central securities depository."

Art. 3. — The last paragraph of Article 5 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is repealed.

Art. 4. — The first paragraph of Article 6 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended and drafted as follows:

"Art. 6. — The activity of stock exchange intermediary is exercised, after approval by the Commission for the Organization and Supervision of Stock Exchange Operations (COSOB), by commercial companies constituted primarily for this purpose, banks, and financial institutions."

Art. 5. — Article 7 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended and drafted as follows:

"Art. 7. — Stock exchange intermediaries may, within the limits of the legislative and regulatory provisions governing them, essentially exercise the following activities:

• trading on behalf of third parties;
• investment advice regarding securities;
• individual portfolio management under a written contract;
• portfolio management of collective investment undertakings in securities;
• placement of securities and financial products;
• performance guarantees and firm commitment to issue securities;
• trading on own account;
• custody and administration of securities;
• advisory services to companies regarding capital structure, mergers, and acquisitions.

However, the Commission for the Organization and Supervision of Stock Exchange Operations (COSOB) may limit the approval granted to a stock exchange intermediary to a part of the activities cited above.

In case of dispute, the aggrieved applicant for approval may file an appeal according to the procedures provided for in Article 6 below.

A regulation of the COSOB will specify the conditions and procedures for approval."

Art. 6. — Article 9 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended, supplemented, and drafted as follows:

"Art. 9. — Stock exchange intermediaries are approved by the Commission for the Organization and Supervision of Stock Exchange Operations (COSOB) under the conditions set by the regulation mentioned in Article 31 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above.

In case of refusal or limitation of approval, the Commission's decision must be reasoned.

The applicant may file an appeal for annulment before the Council of State within a period of one (1) month from the notification of the Commission's decision.

The Council of State has a period of three (3) months to rule on the appeal for annulment from its registration."

Art. 7. — The title of Title IX of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended as follows:

— "of the securities exchange management company and the central securities depository"

Art. 8. — Title IX of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is supplemented by Chapter 1 titled as follows:

• "The securities exchange management company."

Art. 9. — Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is supplemented by Article 19 bis drafted as follows:

"Art. 19 bis. — The statutes and their amendments, as well as the appointment of the General Director and senior management of the securities exchange management company, must be approved by the Minister in charge of Finance after opinion from the Commission for the Organization and Supervision of Stock Exchange Operations.

Based on a reasoned report from the Commission for the Organization and Supervision of Stock Exchange Operations, the Minister in charge of Finance may, on a provisional basis, dismiss the General Director and/or senior management of the company and provide for their replacement pending the designation by the Board of Directors of a new General Director and/or new management.

The statutes and organs of the existing company must be brought into compliance with the provisions of this law within six (6) months of its publication."

Art. 10. — Title IX of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is supplemented by Chapter 2 titled as follows:

• "The central securities depository"

Art. 11. — Chapter 2 of Title IX of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is supplemented by Articles 19 ter, 19 quater, 19 quinquiès, and 19 sexies drafted as follows:

"Art. 19 ter. — When an issuer of securities, whether State, local authorities, public body, or joint-stock company, exercises the option to issue securities registered in account, bearer securities may only be registered with an intermediary authorized by the Commission for the Organization and Supervision of Stock Exchange Operations as a securities account-keeping custodian.

The conditions for authorization to keep securities accounts and for control of the activity are specified by a regulation of the Commission for the Organization and Supervision of Stock Exchange Operations."

"Art. 19 quater. — The functions of the central securities depository are exercised by an entity established in the form of a joint-stock company.

The statutes and their amendments, the appointment of the General Director, and the senior management of the central securities depository must be approved by the Minister in charge of Finance after opinion from the Commission for the Organization and Supervision of Stock Exchange Operations.

Based on a reasoned report from the Commission for the Organization and Supervision of Stock Exchange Operations and on a provisional basis, the Minister in charge of Finance may dismiss the General Director of the central securities depository and/or senior management and provide for their replacement pending the appointment by the Board of Directors of a new General Director and/or new management.

The missions of the central securities depository that may allow for the settlement of transactions contracted on the organized market or amicably consist of:

• the custody of securities which allows for the opening of accounts in the name of approved participants,
• the monitoring of the movement of securities from one account to another,
• the administration of securities to allow approved participants to exercise their related rights,
• the legal numbering of securities,
• the publication of information relating to the market."

"Art. 19 quinquiès. — The capital of the central securities depository, assessed at sixty-five (65) million dinars, is constituted by the participations of its founders, which are:

• the External Bank of Algeria,
• the Popular Credit of Algeria,
• the National Bank of Algeria,
• the Agricultural and Rural Development Bank,
• the National Savings and Prevision Bank,
• the SAIDAL group,
• the El-Aurassi hotel management company,
• the ERIAD - Sétif company.

The capital of the central securities depository company is open only to:

• the securities exchange management company,
• securities issuing companies,
• stock exchange intermediaries.

The Public Treasury and the Bank of Algeria are deemed holders of participations in the company by virtue of the law and may, upon their request, exercise this right.

Any new request for participation in the capital of the central securities depository is subject to the approval of the Commission for the Organization and Supervision of Stock Exchange Operations on the proposal of the Board of Directors of the central securities depository.

The application procedures for this article, particularly the conditions relating to participation in the capital of the company, are specified by a regulation of the Commission for the Organization and Supervision of Stock Exchange Operations."

"Art. 19 sexies. — The activities of the central securities depository referred to in Article 19 quater above are exercised under the control of the Commission for the Organization and Supervision of Stock Exchange Operations."

Art. 12. — Article 20 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended, supplemented, and drafted as follows:

"Art. 20. — An independent regulatory authority for the organization and supervision of stock exchange operations is established, possessing legal personality and financial autonomy.

It is composed of a President and six (6) members."

Art. 13. — Article 22 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended, supplemented, and drafted as follows:

"Art. 22. — The members of the Commission are appointed based on their financial and stock exchange expertise for a term of four (4) years under the conditions set by regulatory means according to the following distribution:

• a magistrate proposed by the Minister of Justice;
• a member proposed by the Minister in charge of Finance;
• a university professor proposed by the Minister in charge of Higher Education;
• a member proposed by the Governor of the Bank of Algeria;
• a member chosen among the senior management of legal entities issuing securities;
• a member proposed by the National Order of Chartered Accountants, Statutory Auditors, and Approved Accountants."

Art. 14. — Article 30 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended, supplemented, and drafted as follows:

"Art. 30. — The Commission for the Organization and Supervision of Stock Exchange Operations is tasked with organizing and supervising the securities market, ensuring in particular:

• the protection of savings invested in securities or any other financial product subject to a public offering.
• Financial products traded on a market under the authority of the Bank of Algeria are not subject to the Commission's control.
• the proper functioning and transparency of the securities market.
• To this end, the Commission for the Organization and Supervision of Stock Exchange Operations submits an annual report to the Government on the activity of the securities market."

Art. 15. — Article 31 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended, supplemented, and drafted as follows:

"Art. 31. — The Commission for the Organization and Supervision of Stock Exchange Operations regulates the functioning of the securities market by issuing regulations concerning in particular:

• the capital that may be invested in stock exchange operations;
• the approval of intermediaries in stock exchange operations as well as the professional rules applicable to them;
• the extent and content of the liability of intermediaries and the guarantees they must provide to their clients;
• the conditions and rules governing the relations between the central securities depository and the beneficiaries of its services cited in Article 19 quater above;
• the rules relating to the custody of securities, the functioning, and the administration of securities current accounts;
• the rules relating to the management of the settlement and delivery system for securities;
• the qualification and exercise conditions for the activity of custody and administration of securities."

Art. 16. — Article 41 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended, supplemented, and drafted as follows:

"Art. 41. — Any company or public establishment that issues, through a public offering, financial securities or any other financial product referred to in Article 30 above, must beforehand publish a notice intended for public information regarding its organization, its financial situation, and the evolution of its activity.

Any company requesting the admission of its securities to stock exchange trading must beforehand publish a notice.

• The notice must be approved by the Commission for the Organization and Supervision of Stock Exchange Operations prior to its publication."

Art. 17. — Article 43 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended, supplemented, and drafted as follows:

"Art. 43. — Companies whose securities are admitted to stock exchange trading, from the date of their registration, or which, for the placement of their securities whatever they may be, resort to banks, financial institutions, or intermediaries, are deemed to be making a public offering."

Art. 18. — Article 57 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended, supplemented, and drafted as follows:

"Art. 57. — Decisions of the chamber ruling in disciplinary matters are subject to an appeal for annulment before the Council of State within a period of one (1) month, from the notification of the contested decision.

• The appeal is processed and judged within a period of six (6) months from its registration."

Art. 19. — Article 60 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, is amended, supplemented, and drafted as follows:

"Art. 60. — Shall be punished by imprisonment of six (6) months to five (5) years and a fine of thirty thousand dinars (30,000 DA), the amount of which may be raised beyond this figure up to four times the amount of the profit potentially realized, without the fine being less than that same profit, or by one of these two penalties only:

• any person who, in the course of exercising their profession or function, possesses privileged information regarding the perspective or situation of a securities issuer or the perspective of evolution of a security, and who has realized or knowingly allowed the realization, on the market either directly or through an intermediary, one or more operations before the public has knowledge of this information;
• any person who has knowingly spread to the public, by any means whatsoever, false or misleading information regarding the perspectives or situation of an issuer whose securities are traded on the stock exchange or regarding the evolution prospects of a security admitted to stock exchange trading, likely to influence the prices;
• any person who, directly or through an intermediary, has exercised or attempted to exercise a maneuver intended to hinder the regular functioning of the securities market by inducing or keeping others in error.

Operations realized on this basis are null and void."

Art. 20. — Articles 65 bis, 65 ter, 65 quater, and 65 quinquiès are created after Article 65 of Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, drafted as follows:

"Art. 65 bis. — Any natural or legal person, acting alone or in concert, who comes to possess more than one-twentieth, one-tenth, one-fifth, one-third, one-half, or two-thirds of the capital or voting rights of a company whose shares are admitted to stock exchange trading is required to declare to the company, to the Commission for the Organization and Supervision of Stock Exchange Operations, and to the securities exchange management company, within a maximum period of fifteen (15) days from crossing the participation threshold, the total number of shares it possesses as well as the voting rights.

Shareholders of variable capital investment companies are not subject to the provisions of the first paragraph above.

A regulation of the Commission for the Organization and Supervision of Stock Exchange Operations will specify the conditions for the application of this article."

"Art. 65 ter. — For the purpose of determining the participation thresholds provided for in Article 65 bis above, the following are assimilated to shares or voting rights: the shares and voting rights possessed by the person required to make the declaration provided for in Article 65 bis above:

• shares or voting rights possessed by other persons on behalf of this person;
• shares or voting rights possessed by companies controlled by this person;
• shares or voting rights possessed by a third party with whom this person acts in concert;
• shares or voting rights that this person or any of the persons mentioned above has the right to acquire at their sole initiative pursuant to a prior agreement."

"Art. 65 quater. — Concerted action is an agreement between natural or legal persons with the aim of acquiring or ceding voting rights to implement a common policy vis-à-vis the company.

Such an agreement is presumed to exist:

• between a company and its legal representatives;
• between a company and the companies it controls within the meaning of Article 731 of the Commercial Code;
• between companies controlled by the same or the same persons."

"Art. 65 quinquiès. — In the absence of regular declaration, the shares possessed upon crossing thresholds are deprived of the right to vote for any shareholders' meeting held within three (3) years following the date of regularization performed by the person concerned.

This declaration is also made within the same period and to the same entities when the participation in the capital becomes lower than the thresholds provided for in the first paragraph above, regarding the company's voting rights."

Art. 21. — In Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, referenced above, the following replacements are made in the Arabic version:

• "la société d'administration (إدارة) de la bourse des valeurs mobilières" by "la société de gestion (تسيير) de la bourse des valeurs mobilières";
• "le profit (المغنم)" by "le profit (الربح)".

Art. 22. — This law shall be published in the Official Journal of the People's Democratic Republic of Algeria.

Done in Algiers on 16 Dhou El Hidja 1423 corresponding to 17 February 2003.

Abdelaziz BOUTEFLIKA.

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Law No. 03-04 amending and complementing Legislative Decree No. 93-10 relating to the securities exchange (rectification)

Law No. 03-04 of 16 Dhou El Hidja 1423 corresponding to 17 February 2003, amending and complementing Legislative Decree No. 93-10 of 23 May 1993, as amended and supplemented, relating to the securities exchange (rectification).

Official Journal No. 11 of 18 Dhou El Hidja 1423 corresponding to 19 February 2003.

1. Page 18, 1st column:

• 1st line: instead of "le statut" read "les statuts";
• 9th line: instead of "à titre prévisionnel" read "à titre conservatoire".

2. Page 18, 1st column, Article 19 quater:

• 4th line: instead of "le statut" read "les statuts";
• 18th line: instead of "....la régulation" read "..le dénouement";
• 19th line: instead of ".... à l'amiable" read "..........de gré à gré".

3. Page 18, 2nd column, 5th line: Instead of "la numérotation" read "la codification".

4. Page 19, 2nd column:

• 6th line: instead of "conditions de qualification" read "conditions d'habilitation".
• Read after the 7th line:
• the conditions for authorization of agents authorized to conduct stock exchange trading;
• public offerings;
• admission to trading of securities, their removal, and suspension of quotations;
• the organization of clearing operations;
• the conditions under which securities are traded on the stock exchange and delivered;
• the management of portfolios of securities admitted to the stock exchange;
• the content of mandatory clauses to be included in mandate contracts between stock exchange intermediaries and their clients;
• public takeover bids for securities;
• the periodic publication of information concerning companies whose securities are listed.

5. Page 20, 1st column, 15th and 16th lines: Instead of ".... ou tenir en erreur" read "...... autrui en erreur".

6. Page 20, 1st column, Article 65 bis: Read paragraphs 1 and 2 of Article 65 bis as follows: "Art. 65 bis ...... no change ...... until .......... the total number of shares it possesses. This declaration is also made within the same period and under the same conditions when the participation in the capital becomes lower than the thresholds provided for in the first paragraph above. .................... the rest remains unchanged...................."

7. Page 20, 2nd column, Article 65 quinquiès: The second paragraph of Article 65 quinquiès is deleted.