Regulation of the Financial Markets Council on Common Debt Funds and Their Management Companies

---

Regulation of the Financial Markets Council on Common Debt Funds and Their Management Companies 49 REGULATION OF THE FINANCIAL MARKETS COUNCIL ON COMMON DEBT FUNDS AND THEIR MANAGEMENT COMPANIES General Provisions Article 1: The provisions of this regulation apply to:

• the common debt funds hereinafter referred to as FCC;
• the management companies of the FCC;
• the depositaries of the FCC;
• stockbrokers and persons who, due to their professional activity, intervene in accounting control or legal or financial structuring operations on securities or financial products placed through a public offering;
• persons responsible for issuing opinions on information intended for the public;
• the securities deposit, clearing and settlement company;
• investors in securities and financial products;
• persons making a public offering to the retail market;
• statutory auditors;
• distributors of the FCC shares.

TITLE I The Management Companies of the FCC CHAPTER I General Provisions Article 2: The management company must, at all times, possess means adapted to its activities and in compliance with current legislative and regulatory provisions. The obligation to possess such means notably includes:

• the presence of competent staff;
• sufficient technical resources;
• adequate internal organization.

Article 3: The registers used by the management company may be in electronic form, subject to the following conditions:

• communicating to the Financial Markets Council all indications regarding the nature of the hardware and programs to be used, their technical characteristics, as well as the location of its establishment;
• undertaking to inform the Financial Markets Council of any modifications to the deposited programs.

CHAPTER II The Approval Procedures Article 4: The approval file for FCC management companies includes the following documents: 1- the draft articles of association of the management company;

Regulation of the Financial Markets Council on Common Debt Funds and Their Management Companies 50 2- a presentation document of the management company containing the following information:

• social capital of the management company;
• distribution of the social capital of the management company;
• names, surnames, addresses, nationalities, dates and places of birth, and curricula vitae of the legal representatives and corporate officers of the company, as well as a recent extract from their criminal record;
• the identity and qualifications of each shareholder, whether natural or legal persons, who directly or indirectly hold at least 5% of the capital or voting rights; When close links exist between the company and other natural or legal persons, the Financial Markets Council grants approval only if these links do not hinder the proper exercise of its supervisory mission. "Close links" refers to the cases provided for in Article 10 of Law No. 94-117 of November 14, 1994. The company must declare any changes regarding persons with whom it has close links.
• the composition of deliberative corporate bodies and the identity of the members of the board of directors or executive board, and the supervisory board. The senior management must meet the following conditions:
• having their residence in Tunisia;
• enjoying civil and political rights;
• being physically and mentally capable of performing their activities;
• holding a degree or equivalent qualification;
• having at least 3 years of professional experience in the financial sector, or having successfully passed a professional aptitude test organized by an organization chosen by and under the control of the Financial Markets Council. The sworn curricula vitae of these managers are attached to the file.
• the file describes the management company's activity program, notably its business, human resources, material means and data retention methods, the adequacy of the management company's resources relative to managed assets, indication of the amount of managed or potentially manageable assets, as well as the number of corresponding FCCs;
• presentation of the management company's technical means: • indication of the hardware owner; • clarification if the hardware is used jointly with another company for other functions; • presentation of the characteristics of the management software used.
• corporate governance and control elements: The file includes a detailed organizational chart showing the managers of the exercised activity. The file includes a presentation of monitoring and control procedures for management, in line with the exercised activity. The file indicates the name and hierarchical reporting of the person(s) in charge of internal controls, and describes the periodicity and nature of permanent and ad hoc FCC controls. Procedures for transmitting information to company management and procedures for reacting in case of malfunction are also specified. Documents attesting to the diligence carried out regarding internal control, and where applicable, measures taken following the identification of anomalies, are retained by the establishment.

Article 5: The Financial Markets Council may request from the applicant additional information elements necessary to make its decision. The Financial Markets Council processes the approval request within a maximum period of three months from the date of submission of the application accompanied by the necessary documents. This period is suspended until receipt by the Financial Markets Council of the additional information or diligence requested.

51 Article 6: The minimum social capital of an FCC management company must be fully paid in cash. Article 7: Any modification affecting the elements of the initial approval file as provided for in Article 4 of this regulation must be brought to the attention of the Financial Markets Council. The Financial Markets Council assesses whether these modifications are likely to result, where applicable, in the withdrawal of the granted approval or if they should be subject to information for FCC shareholders, and determines the medium. Article 8: The management company must submit to the Financial Markets Council, within three months following the close of the financial year, its audited financial statements, the annual management report, as well as the general and special reports of the statutory auditor. Article 9: The decision to permanently cease the management company's activity must be notified to the Financial Markets Council. The latter takes all necessary measures to ensure the security of managed assets. Article 10: When the Financial Markets Council decides to withdraw the approval of an FCC management company, its decision is reasoned and notified to the company by registered letter with acknowledgment of receipt. The Financial Markets Council informs the public of the approval withdrawal by insertion in the official bulletin of the Financial Markets Council. This decision specifies the time limits and implementation conditions for the approval withdrawal. The withdrawal of approval prohibits the management company from continuing its activities, other than those necessary for the continuity of the routine management of the FCCs under its charge, until their transfer to another management company, under the conditions provided for in the last paragraph of this article. In case of approval withdrawal, the depositary or depositaries of the FCCs under the charge of the management company must choose, within a two-month period, in agreement with the Financial Markets Council, one or more management companies accepting to ensure the continuity of the management of these FCCs.

CHAPTER III: Organization of FCC Management Companies Article 11: The management company must act independently. It must provide sufficient guarantees regarding its organization, technical and human resources, the integrity and professional experience of its management. The management company must have autonomous capacity to assess the evolution of debts acquired by the common debt funds under its charge and to implement guarantees granted to the funds, if necessary. The continuity of the execution of the management company's missions requires that it possess appropriate personnel and material resources. For the exercise of its tasks, the management company may however rely on the provision of personnel and equipment from external organizations by contract, provided that these resources are permanently allocated to its activity.

52 The management company may further rely on external services for the execution of certain tasks, provided it has resources enabling it to assume responsibility for controlling their execution. The management company's directors must comply with professional ethical rules and good conduct standards. They must ensure compliance with these rules and have them applied by personnel working under their responsibility.

CHAPTER IV: Good Conduct Rules Applicable to FCC Management Companies Article 12: The management company must exercise its functions with the diligence of a prudent entrepreneur and a loyal agent. It must keep confidential information secret, even after ceasing its functions. Article 13: The management company must promote the interests of FCC shareholders. To this end, it must conduct its activities in respect of market integrity, transparency, and security. The management company must refrain from any initiative aimed at favoring its own interests, or those of its shareholders, to the detriment of shareholders' interests. Article 14: The management company must prevent conflicts of interest and, where applicable, resolve them equitably in the interests of shareholders. It must take all necessary measures, particularly regarding the separation of functions, to guarantee management autonomy. Article 15: The management company must adopt an organization reducing the risk of conflicts of interest. Functions likely to cause conflicts of interest must be strictly separated. Article 16: The management company must ensure equal treatment among shareholders of the same category. Article 17: The management company must refrain from exploiting, directly or indirectly, for its own account or on behalf of others any inside information, as it must ensure within its structure the avoidance of undue circulation of inside information it holds due to its functions. Article 18: The management company's remuneration conditions must not include terms contradictory to the primacy of shareholders' interests. Article 19: The selection of debts is made independently in the interest of shareholders. Article 20: The management company must put in place means and procedures to control its activities. Internal control notably consists of ensuring compliance with good conduct rules in all aspects of the relationship with clients. 53 Article 21: The management company's remuneration must exclude any gratification that could impair the independence of its management. Article 22: The management company's organization must enable it to conduct its activities with loyalty, diligence, neutrality, and impartiality exclusively for the benefit of shareholders, in respect of market integrity and transparency. Article 23: The management company establishes an internal regulation for the exercise of its activity. This internal regulation mentions:

• the control mechanism for operations put in place by the management company to ensure transparency;
• the obligations imposed on its employees to avoid undue circulation or abusive use of confidential information. Article 24: Fees and commissions received in the context of management must be subject to complete information for shareholders. Article 25: The management company must provide shareholders with all necessary information regarding the management performed. Article 26: The management company communicates to the Financial Markets Council planned advertisements before their dissemination, presenting the relevant mockups and projects in forms appropriate to the different selected media. Where such advertising does not comply with this regulation, the Financial Markets Council issues a formal notice to the company to suspend such advertising.

TITLE II: The FCC CHAPTER I: Constitution of the FCC Article 27: The approval file for the FCC submitted to the Financial Markets Council includes the following documents:

• the approval of the management company;
• an approval form (Annex No. 1); it contains the identification of the FCC and its actors, the concerned investors, the characteristics of management, as well as the operating procedures of the FCC;
• a draft prospectus if the fund's shares will be publicly placed, or a draft information note if the fund's shares will be privately placed. The information note must contain information regarding the FCC, issued shares, as well as its asset composition;
• a draft internal regulation of the FCC;
• the procedure retained for the issuance of FCC shares;
• a description of contractual relations between the various parties to the operation;
• the commercialization procedures for FCC shares;

54

• information regarding the management company;
• information regarding the depositary institution;
• a description of treasury management tools;
• a description of procedures for controlling the regularity of the management company's decisions by the depositary;
• the rating document. The Financial Markets Council processes the approval request within a maximum period of three months from the date of submission of the application accompanied by the necessary documents. This period is suspended until receipt by the Financial Markets Council of the additional information or diligence requested. Article 28: In case of a public offering, the FCC's management company is required to insert in the Official Journal of the Tunisian Republic the date of approval, the public opening date, the name and registered office of the institution where the FCC's portfolio and funds will be deposited, as well as the name and registered office of the management company and distributor. Article 29: The public offering made by an FCC is subject to the notification of its approval by the Financial Markets Council and the establishment of a prospectus according to the model presented in Annex No. 2, submitted to the visa of the Financial Markets Council in accordance with Article 2 of Law No. 94-117 and the provisions of the regulation on public offerings. Article 30: The prospectus must contain the following statement: "This document contains important information and should be read carefully before subscribing to any investment." Article 31: The prospectus must be made available to the public and delivered prior to any subscription, at the registered office of the FCC manager. Investors may obtain communication from the management company. Furthermore, investors may obtain free of charge communication of the FCC's internal regulation. Article 32: The prospectus indicates the name and function of the persons responsible for it. The prospectus contains information regarding the FCC's name, its management company, its depositary, its statutory auditor, as well as its financial characteristics and operating procedures. The prospectus further mentions the rules for acquiring debts and issuing shares, as well as risk coverage mechanisms borne by the shares. The persons assuming responsibility for the prospectus attest that, to their knowledge, the data in the note are accurate and do not contain omissions likely to alter its meaning. The rating document must be attached to the prospectus. Article 33: The dissemination and advertising of the prospectus follows the same conditions as those provided by the Financial Markets Council regulation on public offerings.

55 Advertising related to placement must meet the requirements of the Financial Markets Council regulation on public offerings. Article 34: The depositary addresses to the Financial Markets Council the deposit certificate corresponding to subscriptions.

CHAPTER II: Issuance of Shares Article 35: Within a maximum period of one month from the date of notification of the Financial Markets Council's visa and the fund's approval, the establishment of one or more guarantee syndicates is carried out, with notification made to the Financial Markets Council by the management company within this same period. The placement of FCC shares with the public is carried out within a maximum period of one month from the date of establishment of the guarantee syndicate(s) if the issuance is reserved exclusively for institutional investors, and two months in other cases. At the end of the subscription period, the management company acquires, for the account of the fund, debts conforming to the criteria provided in the prospectus . The management company must submit to the Financial Markets Council notification of the acquisition of debts; the fund is constituted on this acquisition date. Article 36: The management company must, within a two-week period following the end of the subscription period, notify the Financial Markets Council of the amount of subscriptions collected. At the end of the subscription period, the management company requests, where applicable, from the Tunis Stock Exchange, the admission of the common debt fund's shares to the stock exchange listing. These shares must be taken over by STICODEVAM.

CHAPTER III: Documents Published by the Management Company Article 37: I. Six weeks after the close of each first semester of the financial year, the management company publishes in the official bulletin of the Financial Markets Council, for each fund it manages, under the control of their depositary, a semi-annual activity report containing the following information: a- the asset inventory; b- the percentage of shares held by UCITS; c- the amount and percentage of debts possessing an early repayment clause; d- the evolution of early repayment rates; e- the average life duration of the debt portfolio held by the fund; f- the amount and percentage of debts subject to payment defaults; g- the triggering of guarantees; h- the evolution of quoted share prices; i- any modification made to the rating document and characteristic elements of the prospectus. The statutory auditor attests to the sincerity of the information contained in the semi-annual activity report. II. For funds not subject to public placement, six weeks after the close of the first semester of the financial year, the management company publishes in the official bulletin of the Financial Markets Council, for

56 each fund it manages, under the control of their depositary and after verification by their statutory auditor, the information mentioned in a and e of I of this article. Article 38: I. Six weeks after the close of the financial year, the management company publishes in the official bulletin of the Financial Markets Council, for each fund it manages, under the control of their depositary, an annual activity report containing the following information:

• the annual financial statements prepared by the management company with indication of their certification by the statutory auditor;
• a management report comprising, in addition to the information mentioned in I of Article 37, the following: • a detailed analysis of the fund's results and explanatory factors for this result; • the share of debts amortized relative to initial assets; • the amount and percentage of management fees and commissions applied during the financial year. The statutory auditor attests to the sincerity of the information contained in the annual activity report.

II. For funds not subject to public placement, six weeks after the close of the financial year, the management company publishes in the official bulletin of the Financial Markets Council, for each fund it manages, under the control of their depositary, an annual activity report containing the following information:

• the annual financial statements prepared by the management company with indication of their certification by the statutory auditor;
• a management report comprising, in addition to the information mentioned in a and e of I of Article 37, the following: • a detailed analysis of the fund's results and explanatory factors for these results; • the share of debts amortized relative to initial assets; • the amount and percentage of management fees and commissions applied during the financial year. The statutory auditor attests to the sincerity of the information contained in the annual activity report. Article 39: The documents referenced in Articles 37 and 38 must be transmitted to any shareholder making a request. They must also be made available to the public at the establishment's premises.