Central Bank of Lebanon Basic Decision No. 8052: Reporting of Residents' Investments in Securities Issued by Non-Residents

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Basic Circular No. 91 Addressed also to financial institutions and financial intermediation institutions and to factoring companies

We enclose herewith a copy of Basic Decision No. 8052 dated 13/02/2002 concerning information on investments by residents in securities issued by non-residents.

Beirut, 13 February 2002 Governor of the Central Bank of Lebanon Riad Tawfiq Salamah

632 Basic Decision No. 8052 Information on investments by residents in securities issued by non-residents

The Governor of the Central Bank of Lebanon,

Pursuant to the Monetary and Discount Law, particularly Articles 146 and 179 thereof,

Pursuant to Law No. 160 dated 27/12/1999 concerning the regulation of factoring operations, particularly Article 20 thereof,

Pursuant to Law No. 234 dated 10/06/2000 concerning the regulation of the financial intermediation profession, particularly Article 10 thereof,

Pursuant to Basic Decision No. 6170 dated 17/05/1996 concerning the definition of "resident and non-resident" in Lebanon and the classification of accounts, operations, and statistics based on it,

Pursuant to the decision of the Central Council of the Central Bank of Lebanon taken in its session held on 06/02/2002,

Decides as follows:

Article 1: All banks, financial institutions, financial intermediation institutions, and factoring companies must declare quarterly the investments of residents in securities issued by non-residents, according to the attached "Mem" and "Jim" questionnaires, in light of the explanatory guide attached to this decision.

Article 2: The institutions listed in Article 1 above must, within a period of one month following the end of each quarter, provide the Economics Department at the Central Bank of Lebanon:

• On a magnetic disk, the questionnaires mentioned in Article 1 above.
• In writing, the respondent identification form attached to this decision.

1 - The name of this directorate was amended to become "Economics Department" instead of "Directorate of Statistics and Economic Research" pursuant to Decision No. 13779 dated 28/11/2025.

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The declaration regarding the investments referred to in Article 1 above must be made for the first time as they appear in the balance sheet as of 31/12/2001, within a period of one month from the date of issuance of this decision.

Article 3: Institutions that do not comply with the provisions of this decision are subject to the administrative penalties stipulated in Article 208 of the Monetary and Discount Law.

Article 4: This decision shall be enforced upon its issuance.

Article 5: This decision shall be published in the Official Gazette.

Beirut, 13 February 2002 Governor of the Central Bank of Lebanon Riad Tawfiq Salamah

634

Special Coordinator for Portfolio Investments

• Investments in securities issued by non-resident entities -

Chapter One: General Introduction

1-1 Definition of Investment in Securities

Investment in securities includes purchases and subscriptions of equity securities, debt securities, and money market instruments. The essential feature that makes a financial asset an investment in securities is its tradability. If a security is non-transferable, its holding cannot be considered an investment in securities.

Thus, investment in securities is limited to securities tradable in organized or unorganized markets.

However, securities held as direct investments should not be considered investments in securities. In this regard, holding a minimum of 10% of the capital of a business entity is considered a direct investment.

2-1 Scope of the Survey

The survey covers all investments in securities issued by non-resident entities in the form of equity securities, debt securities, and money market instruments, which were made by the following categories of residents in Lebanon:

• 1 Commercial banks,
• 2 Medium and long-term financing banks,
• 3 Financial institutions,
• 4 Financial intermediation companies,
• 5 Factoring companies,
• 6 Insurance companies,

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or which were deposited with the first four categories.

The survey collects balance data for the various elements constituting investments in securities as of 31 December 2001, distinguishing between deposited securities and those held by the declarants themselves, according to the country of the non-resident issuing entity. This information must be sent periodically as of the end of each quarter.

3-1 Practical Objectives of the Survey

The main objective of the survey is to provide the authorities responsible for balance of payments statistics with reliable information enabling the creation of the necessary database for balance of payments statistics regarding investments in securities. Regarding investments by resident entities in securities, the data extracted from the survey will be used to determine the elements constituting the international investment position in Lebanon, noting that this position is part of balance of payments statistics.

This survey, applied for the first time in Lebanon, also attempts to achieve the following two objectives:

• Improve statistics related to bond holdings at the international level, and ensure coverage of financial flows related to investments in securities and data on revenues generated thereby.
• Exchange comparable data compiled among participating countries in the survey, enabling them to more accurately estimate and geographically identify their external liabilities in securities, as well as to conduct a better estimate of investment revenues associated with them.

636 4-1 Types of Questionnaires

Two types of questionnaires have been developed:

• The "Mem" questionnaire, for use by holders of securities (owners).
• The "Jim" questionnaire, for use by custodian entities.

5-1 Level of Detail

The declaration must be based on aggregates by financial instrument type and place of deposit (with non-resident custodians, with resident custodians, or self-custody), supplemented by geographic distribution according to the country of the non-resident issuing entity.

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Chapter Two: General Guidelines Regarding Declaration

1-2 Who fills out the questionnaires?

All resident entities belonging to the categories mentioned in paragraph 2-1, which hold, as of 31 December 2001, and subsequently on the last day of each quarter, securities issued by non-resident entities, or which hold as a custodian such securities on behalf of resident entities, or both, must declare this to the Central Bank of Lebanon.

The owner is any resident entity holding for its own account an investment in securities issued by non-resident entities, and must fill out the "Mem" questionnaire.

The custodian entity is any business institution with investments in securities issued by non-resident entities deposited on behalf of a third-party resident entity, and must fill out the "Jim" questionnaire.

When a resident entity is, at the same time, an owner and a custodian because it holds securities for its own account and receives securities from a third-party resident entity for deposit, it must fill out both the "Mem" and "Jim" questionnaires.

2-2 Geographic Classification

When filling out the questionnaire, securities must be assigned to the country of residence of the non-resident issuing entity, not to the place where the securities were issued. Geographic classification must be based on the residence of the issuing entity. If there is doubt about the country of residence of the issuing entity, the general rule is that the country where the business entity was legally established is considered the country of residence.

Securities issued by international organizations should not be linked to the country codes of the countries where these organizations operate, but to specific country codes dedicated to these international organizations (see the attached model for country codes - 2 alpha ISO - for countries and international organizations).

638 3-2 Definition of Equity Securities and Debt Securities (See also, in Chapter Four, a brief list of terms)

• Equity Securities

Equity securities include all instruments and documents that grant holders rights to the residual value of a business entity after the rights of all creditors have been satisfied.

Equity securities include:

• Shares: Ordinary shares, preferred shares, participating shares...
• Capital shares.
• Bearer certificates representing deposited equity securities.
• Shares or capital shares in mutual investment funds.
• Equity securities sold with a repurchase agreement (sell with repurchase option - REPO).
• Equity securities lent under a securities lending agreement.

Excluded from this:

• Non-participating preferred shares (considered debt securities).
• Rights, options, and put or call contracts (Warrants) and other financial derivative instruments.
• Equity securities purchased with a repurchase agreement (Reverse REPO).
• Equity securities received as a loan under a securities lending agreement.

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• Debt Securities

Debt securities include obligations and other borrowing instruments that generally grant holders an unconditional right to receive a fixed cash yield or a variable cash yield determined by contract.

Short-term debt securities include debt securities with a maturity of one year or less. Long-term debt securities include debt securities with a maturity exceeding one year.

Any negative position of a security held via a repurchase agreement or securities lending agreement and subsequently sold must be recorded in the questionnaire with a negative sign.

Debt securities include:

• Medium and long-term treasury bonds, zero-coupon bonds, strips, currency-option bonds, floating-rate bonds, equity-linked bonds (e.g., convertible bonds), perpetual bonds, and bonds with optional maturity.
• Debt securities linked to debts, such as mortgage-backed bonds.
• Index-linked debt securities.
• Non-participating preferred shares.
• Short-term Euronotes.
• Negotiable certificates of deposit.
• Bearer certificates representing deposited debt securities.
• Treasury bills.
• Commercial paper.
• Debt securities sold with a repurchase agreement.
• Debt securities lent under a securities lending agreement.
• Other borrowing instruments.

640 Excluded from this:

• Rights, options, and other financial derivative instruments.
• Trade credits and receivables from other entities.
• Rights related to the issuance of money market instruments, including bill issuance facilities, renewable subscription guarantee facilities, and promissory or bearer notes.
• Debt securities purchased with a repurchase agreement.
• Debt securities received as a loan under a securities lending agreement.

• Special Cases: Depository Receipts for Equity or Debt Securities, and Strips

● Depository Receipts for Equity or Debt Securities

Depository receipts, which include holding equity or debt securities issued by non-resident entities, must be assigned to the country of residence of the issuer of the underlying security.

Resident entities issuing such receipts are not required to declare the holding of the underlying securities on which these receipts are based, which were issued or transferred.

Example: An American bank issuing in the US market certificates representing French bonds previously purchased by the bank. Such certificates must be assigned to France, not to the United States.

● Strips

Strips are debt securities whose principal is separated from periodic interest coupons, so that both the principal and the interest coupons become independent, coupon-free securities tradable on this basis.

If these coupon-free securities result from the issuance by a resident entity, in its own name, new strips based on securities belonging to a third party, the residence of the issuing entity is the residence of this entity. This entity must then declare the holding of the underlying securities issued by non-resident entities.

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4-2 Valuation Rule 1

When declaring the holding of any security, its nominal value should not be used, but its market value at the close of operations on the last day of each quarter. Note that market value will also be used to reconcile with balance sheet items as of the same date. Regarding debt-linked securities such as mortgage-backed bonds, the prevailing market value on that date must be declared, taking into account amounts paid. The market value of a security is the quoted exchange price in an organized market. If the market price is not available, the value of the securities must be estimated based on the latest pricing, or based on the value recorded in the balance sheet. All amounts must be expressed in their equivalent in US Dollars (in units), based on the prevailing exchange rates on the last day of each quarter.

1 - This paragraph was amended pursuant to Article 1 of Intermediate Decision No. 13544 dated 28/03/2023 (Intermediate Circular No. 665), effective from the first quarter of 2023.

Chapter Three: Notes on Main Items in the Questionnaires

1-3 Questionnaire "Mem", for use by Owners

Investments in equity/debt securities issued by non-resident entities and not linked

Investments in short-term equity/debt securities / long-term debt securities issued by

• non-resident entities and not linked , expressed in their equivalent in Lebanese Lira (in thousands), according to market value, and classified by countries of non-resident issuing entities. Statistical data must be distributed by place of deposit of the securities (with non-resident custodians, resident custodians, or self-custody).

Mem1- Investments in equity securities Mem2- Investments in short-term debt securities Mem3- Investments in long-term debt securities

642 2-3 Questionnaire "Jim", for use by Custodian Entities

Equity/debt securities issued by non-resident entities

The market value of equity/debt securities is mentioned and expressed in their equivalent in Lebanese Lira (in thousands). Equity/debt securities, short-term debt securities, and long-term debt securities must be classified into three categories: A - Held on behalf of resident entities other than custodians. B - Held on behalf of other resident custodian entities (generally banks or financial institutions).**

Jim1- Equity securities received for deposit Jim2- Short-term debt securities received for deposit Jim3- Long-term debt securities received for deposit

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C - Held for own account. If the holding of securities is on behalf of resident entities other than custodians, they must be divided by countries of non-resident issuing entities. On the other hand, totals must be distributed according to the place of deposit of the securities (with non-resident custodians, resident custodians, or self-custody). Note: The figures for sub-item C (Held for own account) must correspond to the total value of investments recorded in item Mem1- from the questionnaire dedicated to owners.

Notes:

• The phrase "not linked" used in this text must be interpreted as "no direct investment relationship".

** To avoid double counting, declarants must mention here the total value of securities received for deposit on behalf of these other custodian entities, whether these securities belong to the custodian entities themselves or to their resident clients.

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Chapter Four – Brief List of Terms

Share ➟ Any equal share into which the ownership of a company can be divided. Action / Part sociale / Share / Stock

Certificate of deposit ➟ A tradable certificate issued by a bank as proof of a time deposit earning interest. Certificat de dépôt / Certificate of deposit

Global depositary receipt ➟ A document confirming ownership of a security deposited with a custodian. Certificat représentatif de titres en dépôt / Global depositary receipt

Short-term Euro-note ➟ A short-term security issued under a bond issuance program or commercial paper issuance program. Euro-note / Euronote

Money market instrument ➟ An instrument that generally grants the holder an unconditional right to receive a fixed and specified amount of money on a certain date. This instrument is generally traded in organized markets at a price lower than par. Instrument du marché monétaire / Money market instrument

Convertible bond ➟ A bond convertible into a share at a specified conversion price. Obligation convertible / Convertible bond

Zero coupon bond ➟ A long-term security with a single payment, without periodic interest payments. These bonds are sold at a price lower than par, and the yield is realized entirely at maturity. Obligation à coupon zéro / Zero coupon bond

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Deep discounted bond ➟ A bond with coupons sold at a price much lower than par (generally a bond whose value has dropped in the secondary market). Obligation à forte décote / Deep discounted bond

Floating rate note ➟ A medium-term bond with a variable interest rate determined at regular intervals according to a pre-determined reference rate. Obligation à taux variable / Floating rate note

Bonds and notes ➟ Long and medium-term bonds generally grant the holder an unconditional right to benefit from a fixed or variable yield determined by contract. Except for perpetual bonds, they grant the holder an unconditional right to benefit from a fixed monetary amount as repayment of principal, on a specific date or several specific dates. Obligations à long et à moyen termes / Bonds and notes

Mortgage-backed bonds ➟ A security traded particularly in the United States. It earns semi-annual interest, and the principal is repaid periodically or at maturity, and is backed by a group of mortgages. Obligation adossée à créances hypothécaires / Mortgage-backed bonds

Commercial paper ➟ An unconditional short-term promise to pay a specified amount on a certain date and at a certain place. Papier commercial / Commercial paper

Security lending ➟ An agreement under which ownership of a security is transferred against collateral, with the condition that the security returns to its original owner on a certain date. Prêt de titres / Security lending

Repurchase agreement ➟ An agreement involving the sale of securities at a specified price, with a promise to repurchase these securities or similar securities, on a certain date and at a specified price (generally for a very short period). Repurchase agreement / Repurchase agreement

Debt securities ➟ Any tradable security, except equity securities (see details in section 3-2). Titre d’emprunt / Debt securities

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Equity securities ➟ Any instrument or document that grants the holder rights to the residual value of a business entity after the rights of all creditors have been satisfied (see details in section 3-2). Titre de participation / Equity securities

Index-linked security ➟ An instrument whose coupons or capital are linked to a specific price index, in order to maintain purchasing power during a period of inflation. Titre rattaché à un indice / Index-linked security

Warrant ➟ A tradable instrument that grants the holder the right to sell to or buy from the issuer of the guarantee contract a bond with a fixed yield or a share, under certain conditions and for a limited period. Warrant / Warrant

647 Text / Section / 1 / 91 / Date / 2023-12-31 CNCDE ENGLISH FRENCH ARABIC AD Andorra Andorre أندور AE United Arab Emirates Émirats Arabes Unis الإمارات العربية المتحدة AF Afghanistan, Islamic State of أفغانستان Afghanistan AG Antigua and Barbuda Antigua et Barbuda أنتيغوا وبربودا AI Anguilla Anguilla أنغويلا AL Albania Albanie ألبانيا AM Armenia Arménie أرمينيا AN Netherlands Antilles Antilles Néerlandaises أرخبيل نيرلندي AO Angola Angola أنغولا AQ Antarctica Antarctique أنتاركتيك AR Argentina Argentine الأرجنتين AS American Samoa Samoa américaines ساموا الأمريكية AT Austria Autriche النمسا AU Australia Australie أستراليا AW Aruba Aruba أروبا AZ Azerbaijan Azerbaïjan أذربيجان BA Bosnia and Herzegovina Bosnie et Herzégovine البوسنة والهرسك BB Barbados Barbade بربادوس BD Bangladesh Bangladesh بنغلاديش BE Belgium Belgique بلجيكا BF Burkina Faso Burkina Faso بوركينا فاسو BG Bulgaria Bulgarie بلغاريا BH Bahrain Bahreïn البحرين BI Burundi Burundi بوروندي BJ Benin Bénin بنين BM Bermuda Bermudes برمودس BN Brunei Darussalam Brunei بروني BO Bolivia Bolivie بوليفيا BR Brazil Brésil البرازيل BS Bahamas, The Bahamas باهاماس BT Bhutan Bhoutan بوتان BU Birmania Birmanie برما BV Bouvet Island Île Bouvet جزيرة بوفيت BW Botswana Botswana بوتسوانا BY Belarus Biélorussيا روسيا البيضاء BZ Belize Belize بليز CA Canada Canada كندا CC Cocos (Keeling) Islands Îles Cocos (Keeling) جزر الكوكوس CD Congo, Democratic Republic of (Zaire) Congo, République Démocratique (Zaïre) جمهورية الكونغو الديمقراطية (زائير) CE Economic European Community (E.E.C.) Communauté Economique Européenne (C.E.E.) السوق الأوروبية المشتركة

648 CNCDE ENGLISH FRENCH ARABIC CF Central African Republic Afrique centrale أفريقيا الوسطى CG Congo, Republic of Congo كونغو CH Switzerland Suisse سويسرا CI Côte d'Ivoire Côte d'Ivoire ساحل العاج CK Cook Islands Îles Cook جزر كوك CL Chile Chili تشيلي CM Cameroon Cameroun الكاميرون CN China Chine الصين CO Colombia Colombie كولومبيا CR Costa Rica Costa Rica كوستاريكا CS Czechoslovakia Tchécoslovaquie تشيكوسلوفاكيا CU Cuba Cuba كوبا CV Cape Verde Cap Vert الرأس الأخضر CX Christmas Island Îles Christmas جزيرة الكريسماس CY Cyprus Chypre قبرص CZ Czech Republic République Tchèque تشيكيا DE Germany Allemagne ألمانيا DJ Djibouti Djibouti جيبوتي DK Denmark Danemark الدنمارك DM Dominica Dominique دومينيكا DO Dominican Republic République Dominicaine جمهورية الدومينيكان DZ Algeria Algérie الجزائر EC Ecuador Equateur الإكوادور EE Estonia Estonie إستونيا EG Egypt Egypte مصر EH Western Sahara (Spanish Sahara) الصحراء الغربية Occidental Sahara ER Eritrea Eryhtrée إريتريا ES Spain Espagne إسبانيا ET Ethiopia Ethiopie إثيوبيا FI Finland Finlande فنلندا FJ Fiji Fidji فيجي FK Falkland Islands Îles Falkland جزر فوكلاند FM Micronesia, Federal States Micronésie, Etats Fédérés جزر الميكرونيزيا إتحاد FO Faeroe Islands Îles Firoy جزر الفيروي FR France France فرنسا GA Gabon Gabon الغابون GB United Kingdom Royaume Uni المملكة المتحدة GD Grenada Grenade غرينادا GE Georgia Georgie جورجيا GF French Guiana Guyane française غويانا الفرنسية GG Guernsey, C.I. Guernesey غيرنسي

649 Text / Section / 1 / 91 / Date / 2023-12-31 CNCDE ENGLISH FRENCH ARABIC GH Ghana Ghana غانا GI Gibraltar Gibraltar جبل طارق GL Greenland Groenland غرينلاند GM Gambia, The Gambie غامبيا GN Guinea Guinée غينيا GP Guadeloupe Guadeloupe غوادلوب GQ Equatorial Guinea Guinée équatoriale غينيا الاستوائية GR Greece Grèce اليونان GS South Georgia and Sandwich Island Georgie Sud et Iles Sandwich جنوب جورجيا وجزر سندويتش GT Guatemala Guatemala غواتيمالا GU Guam Guam غوام GW Guinea-Bissau Guinée-Bissau غينيا بيساو GY Guyane غيانا HK Hong Kong Hong Kong هونغ كونغ HM Heard and McDonald Islands جزر هيرد وماكدونالد McDonald Heard HN Honduras Honduras هندوراس HR Croatia Croatie كرواتيا HT Haiti Haïti هايتي HU Hungary Hongrie هنغاريا ID Indonesia Indonésie إندونيسيا IE Ireland Irlande أيرلندا IM Isle of Man Île de Man جزيرة مان IN India Inde الهند IO British Indian Ocean Territory Territoires de l'Océan Indien جزر المحيط الهندي البريطانية IQ Iraq Iraq العراق IR Iran, Islamic Republic of Iran إيران IS Iceland Islande آيسلندا IT Italy Italie إيطاليا JE Jersey, C.I. Jersey جيرسي JM Jamaica Jamaïque جامايكا JO Jordan Jordanie الأردن JP Japan Japon اليابان KE Kenya Kenya كينيا KG Kyrgyz Republic (Kyrgyzstan) كرغيزستان Kyrghistan KH Cambodia Kampuchéا كمبوديا KI Kiribati Kiribati كيريباتي KM Comoros Comores جزر القمر KN Saint Kitts and Nevis Saint Kitts et Nevis سانت كيتس ونيفيس KP Korea, Democratic People's Republic of (North) Corée du Nord كوريا الشمالية

650 CNCDE ENGLISH FRENCH ARABIC KR Korea, Republic of (South) Corée du Sud (جمهورية كوريا الجنوبية) KW Kuwait Koweït الكويت KY Cayman Islands Îles Caïman جزر كايمان KZ Kazakhstan Kazakhstan كازاخستان LA Lao People's Democratic Republic Laos لاو الديمقراطية LB Lebanon Liban لبنان LC Saint Lucia Sainte-Lucie سانت لوسي LI Liechtenstein Lichtenstein ليختنشتاين LK Sri Lanka Sri Lanka سريلانكا LR Liberia Liberia ليبيريا LS Lesotho Lesotho ليسوتو LT Lithuania Lituanie ليتوانيا LU Luxembourg Luxembourg لوكسمبورغ LV Latvia Latvia لاتفيا LY Libya, S.P.A.J. Libye الجماهيرية الليبية MA Morocco Maroc المغرب MC Monaco Monaco موناكو MD Moldova Moldavie مولدوفا MG Madagascar Madagascar مدغشقر MH Marshall Islands Îles Marshall جزر مارشال MK Macedonia, FYR of Macédoine مقدونيا ML Mali Mali مالي MM Myanmar Birmanie برما MN Mongolia Mongolie منغوليا MO Macao Macao ماكاو MP Northern Mariana Islands Îles Mariannes du Nord مارياناس الشمالية MQ Martinique Martinique مارتينيك MR Mauritania Mauritanie موريتانيا MS Montserrat Montserrat مونتسرات MT Malta Malte مالطا MU Mauritius Île Maurice موريشيوس MV Maldives Îles Maldives المالديف MW Malawi Malawi مالاوي MX Mexico Mexique المكسيك MY Malaysia Malaisie ماليزيا MZ Mozambique Mozambique موزمبيق NA Namibia Namibie ناميبيا NC New Caledonia Calédonيا كاليدونيا الجديدة NE Niger Niger النيجر NF Norfolk Island Îles Norfolk جزر نورفولك NG Nigeria Nigeria نيجيريا

651 Text / Section / 1 / 91 / Date / 2023-12-31 CNCDE ENGLISH FRENCH ARABIC NI Nicaragua Nicaragua نيكاراغوا NL Netherlands Hollande هولندا NO Norway Norvège النرويج NP Nepal Népal نيبال NR Nauru Nauru ناورو NT Neutral Zone Zone neutre منطقة محايدة NU Niue Island Niue نيوي NZ New Zealand Nouvelle-Zélande نيوزيلندا OM Oman Oman عمان PA Panama Panama بنما PE Peru Pérou بيرو PF French Polynesia Polynésie française بولينيزيا الفرنسية PG Papua New Guinea Papouasie بابوا غينيا الجديدة PH Philippines Philippines الفلبين PK Pakistan Pakistan باكستان PL Poland Pologne بولندا PM Saint Pierre and Miquelon Saint-Pierre-et-Miquelon سانت بيير وميكلون PN Pitcairn Pitcairn جزر بيتكيرن PR Puerto Rico Porto Rico بورتوريكو PS Palestinian territory, occupied فلسطين Palestine PT Portugal Portugal البرتغال