Iraqi Capital Markets Authority Regulatory Instructions and Regulations 2022: Listing Requirements for the Second Market

Iraqi Capital Markets Authority Regulatory Instructions and Regulations 2022 Regulatory Instruction (15) Conditions and Requirements for Company Listing in the Capital Markets / Second Market

Article (1) Definitions: a. The Authority: The Capital Markets Authority. b. The Market: The Iraq Stock Exchange. c. The Main Market: The market through which trading in securities issued in accordance with the provisions of laws, regulations, and Regulatory Instruction No. (6) (Requirements for Company Listing in the Iraq Stock Exchange) takes place. d. The Second Market: That part of the Market through which trading takes place in securities governed by specific listing conditions and trading regulations.

Article (2) Conditions for Listing in the Second Market: a. The Company shall submit a listing application to the Capital Markets Market, signed by the Chairman of the Board of Directors and the Managing Director, accompanied by a certified certificate and memorandum of association from the Companies Registration Department, confirming its knowledge of and acceptance of the listing conditions approved by the Market and the Authority. b. It must be a joint-stock company that has been conducting its business activities for a period of not less than one year, and must have issued at least one audited annual financial statement audited by an independent external auditor. c. The Company's financial statements shall include the following: First: The annual financial statements for the year preceding the date of submission of the listing application, accompanied by the report of the Board of Directors and an independent auditor legally authorized in Iraq, and shall include: • The General Balance Sheet. • The Income Statement. • The Cash Flow Statement. • Necessary explanations regarding these statements.

Second: The quarterly financial statements covering the time period from the end of the previous financial year to the date of submission of the listing application until the end of the last quarter preceding that date, compared with the corresponding period in the previous year, and shall include: • The General Balance Sheet. • The Income Statement. • The Cash Flow Statement.

Third: Equity shall not be less than 50% of the capital. Fourth: Approval of the Company's Board of Directors for the listing application in the Second Market, supported by a resolution of the General Assembly regarding the listing. In the event that the General Assembly does not grant approval, the Company shall be listed on the condition that the matter be presented to the first meeting of the General Assembly following the listing date, and the General Assembly's approval shall be submitted to the Authority and the Market; otherwise, the Company shall be delisted. Fifth: The Company shall submit confirmation regarding legal restrictions on the transfer of ownership of the securities, signed by the Chairman of the Board of Directors and the Managing Director of the Company. Sixth: The Company shall deposit its shares in the Depository Center and commit to complying with the deposit conditions. Seventh: Payment of the prescribed annual membership and subscription fees.

Article (3) Trading Regulations in the Second Market: a. Client mandates issued for trading securities listed in the Second Market and used by brokerage firms must follow the form prepared by the Market. b. The closing price or opening price of any security shall not be calculated. c. The average share price for each company shall be calculated separately in each trading session. d. The price shall be free for three actual trading sessions after listing. The upper and lower limits for the increase and decrease of the share price during the session shall be within 20% of the average share price of the previous session, and a reference price with a 50% change rate shall apply when the Company's shares are returned to trading in the Market immediately after the General Assembly meeting, with the reference price reduced by the amount of the dividend distribution. e. The Market shall be responsible for publishing reports and transferring data as follows: First: Publishing trading data in the daily bulletin, including the number of trades, the number of shares traded and their value, as well as the highest and lowest trading price for each security and the average price. Second: Publishing trading data in the monthly bulletin, including the same data currently included for securities listed in the Main Market, except for information regarding the opening and closing prices. Third: Sending trading data to the Authority. Fourth: Sending trading data regarding automatically executed orders to the Depository Center, and completing the deposit and storage process on the settlement day. Fifth: Printing daily execution reports as done in the Main Market. f. The same trading regulations in effect in the Main Market shall be followed, unless a provision in these regulations states otherwise. g. Orders shall be entered and executed through the trading stations of each authorized entity in the trading hall, through a trading system specific to the Second Market. h. The Market and the Depository Center shall be committed to the procedures of financial clearing and share settlement according to the mechanisms and procedures of the systems used.

Article (4) Descent from the Main Market to the Second Market: a. The Company shall descend from the Main Market to the Second Market in one of the following cases: First: The Company's failure to fulfill one of the conditions for continuing listing in the Main Market (Regulatory Instruction No. 6), by a decision of the Board of Governors approved by the Authority's Council. Second: A decrease in the number of contracts executed on the Company's shares to less than 25 contracts annually, or a decrease in the annual trading volume to less than 1% of the Company's capital, and a decrease in the number of trading days to less than 25 days during the year. b. The Company shall descend from the Main Market to the Second Market by a decision of the Board of Governors after a recommendation is raised by the Managing Director of the Market and with the Authority's approval.

Article (5)* Ascent from the Second Market to the Main Market: The Company shall ascend to the Main Market upon request from the Company's Board of Directors in the event that the listing conditions set forth in the Instruction issued by the Authority applicable to companies listed in the Main Market (Regulatory Instruction No. 6) are met, while observing the trading period conditions in the Main Market. When trading indicators are achieved that are commensurate with the trading indicators of Main Market companies: a. The number of contracts executed on the Company's shares shall not be less than 25 contracts annually. b. The annual trading volume shall not be less than 1% of the Company's capital, or the number of trading days shall not be less than 25 days during the year.

Article (6) Disclosure Requirements Submitted by Companies Listed in the Second Market: a. Submission of annual financial statements audited by a legally authorized auditor to the Authority and the Market, and their publication within a period of 150 days from the end of the year. b. Submission and publication of quarterly financial statements every three months to the Authority and the Market. c. Disclosure of material events that affect the performance, activity, ownership, and continuity of the Company, which have a direct or indirect effect on the value and movement of the security in the Market.

Article (7) Delisting from the Second Market: The Company shall be delisted by a Council decision in the following cases: a. Non-compliance with listing continuation conditions. b. Non-trading of its shares for one year without justified cause. c. Upon the issuance of a decision to liquidate or merge it.

Article (8) General Provisions: a. The Company shall complete all listing requirements in the Second Market within a period not exceeding 60 days from the date of notification to the Company of the approval of the listing; otherwise, the approval shall be considered void. b. The Market shall issue the trading mechanism for the Second Market. c. The Market shall periodically issue a list of companies listed in the Main Market and companies listed in the Second Market. d. The Authority and the Market shall monitor the compliance of companies listed in the Second Market with the application of the prevailing Capital Markets Law and the rules and regulations issued thereunder.

*Article (5) was amended by the Authority's Council meeting held on 1/3/2022, and the Authority's Council decision No. 137 was issued on 13/1/2022