Law No. 89-9 of February 1, 1989

1 LAW NO. 89-9 OF FEBRUARY 1, 1989 ON PUBLIC PARTICIPATIONS, COMPANIES AND PUBLIC INSTITUTIONS AS AMENDED AND COMPLETED BY LAW NO. 94-102 OF AUGUST 1, 1994, LAW NO. 96-74 OF JULY 29, 1996, LAW NO. 99-38 OF MAY 3, 1999, LAW NO. 2001-33 OF MARCH 29, 2001 AND LAW NO. 2006-36 OF JUNE 12, 2006 In the name of the people, Having been adopted by the Chamber of Deputies, The President of the Republic promulgates the law whose text follows:

TITRE I: GENERAL PROVISIONS Article 1. A number of seats proportional to their respective participations is reserved in the boards of directors of companies in which they participate, for the State, local public authorities, public institutions and companies whose capital is entirely owned by the State.

Article 2. The methods and conditions for appointing representatives of the State, local public authorities, public institutions and companies whose capital is entirely owned by the State are fixed by decree insofar as specific laws do not provide particular provisions to this effect. These representatives are exempt from providing a security deposit and cannot be individual shareholders. By way of derogation from the provisions of Article 75 of the Commercial Code, the State, local public authorities, public institutions and companies whose capital is entirely owned by the State are exempt from the obligation to deposit guarantee shares on behalf of their representatives to the boards of directors of companies in which they participate.

Article 3. Civil liabilities arising from the exercise of these representatives' mandates are borne by the State, local public authority, public institution or company whose capital is entirely owned by the State, while criminal liabilities are incurred personally by the representatives.

Article 4. Acting as a representative of the State, a local public authority, a public institution or a company whose capital is entirely owned by the State in a company does not constitute a direct or indirect interest within the meaning of Article 97 of the Penal Code and Article 11 of the Decree of January 1, 1953 relating to mines.

Article 5. It is prohibited for a public official who has represented the State, a local public authority, a public institution or a company whose capital is entirely owned by the State to join the concerned company in any capacity before the expiration of a three-year period from the date on which they ceased their functions as representative, unless special authorization is granted by the Minister directly concerned by the company's activity. Offences against the provisions of this article are punishable by a fine of 100 dinars to 10,000 dinars and imprisonment of six months to two years or one of these two penalties only. The directors of the concerned company are subject to the same penalties as accomplices.

Article 6. The State is represented at general assemblies by a special proxy. Appointment as a special proxy in a company is incompatible with that of the company's general manager. The powers and conditions for appointing special proxies are fixed by decree.

Article 7. Public industrial and commercial institutions, as well as companies or enterprises of any nature directly or indirectly seeking the financial support of the State in the form of capital participations, subsidies, loans, advances or guarantees are subject to general control of public services, general financial control and departmental inspection control.

2 TITRE II: OBLIGATIONS IMPOSED ON PUBLIC COMPANIES Article 8. - (new) (Law No. 96-74 of July 29, 1996) The following are considered public companies within the meaning of this law:

• non-administrative character public institutions, whose list is fixed by decree;
• companies whose capital is entirely owned by the State;
• companies whose capital is held by the State, local authorities, public institutions and companies whose capital is entirely owned by the State at more than 50% each individually or jointly. Public participations are defined as the participations of the State, local authorities, public institutions and companies whose capital is entirely owned by the State.

Article 9. (modified by Law No. 94-102 of August 1, 1994 and repealed by Law No. 2001-33 of March 29, 2001)

Article 10. (new) (Law No. 96-74 of July 29, 1996) The number of members of the boards of directors of public companies may not exceed 12 members. The powers of these boards are those provided by the Commercial Code; however, their resolutions take effect only after approval by the supervisory authority. They are responsible in particular for:

• setting general technical-commercial and financial policy and ensuring its implementation monitoring.
• approving management accounts, balance sheets and income statements.
• approving provisional operating and investment budgets and monitoring their implementation.
• approving the company's program contracts and monitoring their implementation.
• approving, within the framework of existing regulations, contracts concluded by the company as well as their final settlement.
• approving arbitration agreements and arbitral clauses, as well as settlements resolving disputes in accordance with applicable legislation and regulations.
• proposing the organization of the company's services and, where appropriate, the specific status of its personnel. The aforementioned powers may not be delegated. Members of the boards of directors of public companies may, for the execution of their mission, request communication of all documents or accounts and examine them on site.

Article 10 bis – (Law No. 96-74 of July 29, 1996) The organizational chart of public companies as well as the conditions and methods for appointing functional positions are fixed by decree. Their staffing plan is approved by order of the supervisory authority.

Article 11. The operating procedures for the boards of directors of public companies are fixed by decree.

Article 11 bis - Law 96-74 of July 29, 1996. Recruitment by competition is the essential rule for hiring permanent, contractual and temporary personnel of public companies. Derogation from this rule is only possible under the conditions and according to the procedures fixed by decree.

Article 12. Public companies are required to periodically communicate certain documents to the public authorities, whose nature and conditions for preparation, communication and approval are fixed by decree.

Article 13. The accounts of public institutions not having an administrative character and companies whose capital is entirely owned by the State are subject to a review carried out by a member of the Tunisian Order of Chartered Accountants, under conditions and procedures fixed by decree.

Article 14. Public companies must publish before August 31 of each year in the Official Journal of the Tunisian Republic, at their own expense, their balance sheets and management accounts and income statements relating to the previous financial year.

Article 15. 3 State Controllers, who are active civil servants, are attached to the public companies defined under this law and are responsible for exercising a general control mission. This mission consists in particular of controlling:

• compliance with the obligations imposed on public companies by existing legislation and regulations;
• implementation of decisions taken by the deliberative bodies of public companies;
• monitoring the operation and evolution of the situation of controlled companies;
• control of any transaction likely to have a financial impact on the company. The State Controller may, for the execution of his mission, request communication or examine on site all documents or books. (last paragraph repealed) Law 96-74 of July 29, 1996, art.5.

Article 16. State Controllers are regularly summoned to board of directors meetings and general assemblies. To this end, they give their opinions on matters included in the agenda of board meetings and in particular on provisional budgets as well as program contracts which they monitor.

Article 17. (new) Law 96-74 of July 29, 1996. The specific status of the State Controllers corps is fixed by decree. This status may derogate from certain provisions of Law No. 83-112 of December 12, 1983, establishing the general status of State personnel, local public authorities and administrative character public institutions, to the extent they do not correspond to the nature of the functions of agents in the State Controllers corps. Active civil servants not belonging to the aforementioned corps may be assigned missions as State Controllers.

Article 18. Contracts for works, supplies, services or studies of public companies are governed by commercial legislation, subject to the provisions of this law. Orders for supplies of goods or services from public companies operating in a competitive environment, whose list is fixed by decree, may be excluded from the scope of these provisions. However, these companies are required to ensure competition when concluding their contracts.

Article 19. Contracts of public companies are concluded by way of competitive bidding. However, they may be concluded by direct agreement under conditions fixed by decree.

Article 20. A written contract is obligatorily concluded for studies, works, services and supplies whose value exceeds an amount fixed by decree.

Article 21. Unless impossible, and under conditions provided by decree, the specifications and terms of reference for public company contracts must include clauses favoring national production and subcontracting. They may also provide, for the settlement of disputes, recourse to arbitration.

Article 22. The rules for concluding, executing and controlling contracts of public companies are fixed by decree.

Article 22 bis - Law 96-74 of July 29, 1996. Notwithstanding contrary legislative and regulatory provisions, the supervisory authority over public companies may be designated and replaced by decree. The supervisory authority is responsible in particular for:

• approving provisional budgets and program contracts of public companies and monitoring their implementation.
• approving resolutions of the boards of directors of public companies. For public companies without general assemblies, the supervisory authority exercises the powers thereof.

4 The procedures for approving the aforementioned documents are fixed by decree. Article 22 ter. (Law No. 2006-36 of June 12, 2006) Public companies operating in a competitive environment or which have been the subject of a restructuring program under Article 23 of this law may be excluded from the scope of application of Articles 10, 10 bis, 11, 11 bis, 15, 18, 19, 20, 21, 22 and 22 bis of the same law. The concerned public companies are fixed by decree.

TITRE III RESTRUCTURING OF COMPANIES WITH PUBLIC PARTICIPATIONS Article 23. The restructuring of companies with public participations is carried out in accordance with the orientations of the economic and social development plan. It concerns companies in which the level of public participations can be revised taking into account the nature and degree of development of the economic sector in which these companies operate. The government is, within this framework, authorized to transfer all or part of the State's participations in these companies.

Article 24. A Sanitation and Restructuring Commission for Publicly Participated Enterprises is established, responsible in particular for giving its opinion on the restructuring operations designated below:

• transfer or exchange of shares or titles held by the State.
• merger, absorption or demerger of companies in which the State holds a direct capital participation.
• transfer of any asset element capable of constituting an autonomous operating unit in a company in which the State holds a direct capital participation.

Article 25. The opinion of the Sanitation and Restructuring Commission for Publicly Participated Enterprises covers:

• the sanitation and restructuring scheme of the concerned company, and its implementation conditions.
• fiscal, parafiscal or financial advantages to be granted within the framework of implementing the sanitation and restructuring scheme.

Article 26. The composition and operation of the Sanitation and Restructuring Commission for Publicly Participated Enterprises are fixed by decree.

Article 27. Decisions regarding sanitation, restructuring and the aforementioned advantages are adopted by the Prime Minister upon proposal of the Sanitation and Restructuring Commission for Publicly Participated Enterprises.

Article 28. For the implementation of restructuring operations as defined by Article 24 of this law, an evaluation of the shares or asset elements subject to restructuring is carried out beforehand. This evaluation is performed by specialized public bodies or accredited expert firms.

Article 29. To encourage the development of small shareholding and the activity of the Tunis Stock Exchange(1), specific advantages may be granted, when transferring shares held by the State in the capital of companies with public participations under this law, to employees and former employees who intend to participate in the capital of the concerned companies:

• a priority purchase right accompanied by particular settlement terms. The exercise period for this priority purchase right may not exceed three months from the date of the Prime Minister's decision.

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• acquisition of shares at a reduced price;
• distribution of shares free of charge.

Article 30. Restructuring operations carried out under this law are eligible, upon decision of the Prime Minister and after opinion of the Sanitation and Restructuring Commission for Publicly Participated Enterprises, to the following advantages:

• tax relief on reinvested profit or income in accordance with Law No. 62-75 of December 31, 1962. To this end, employers and social security organizations are authorized to withhold at source the taxes due on the portion of salary or pension allocated to the payment of shares subscribed by employees and former employees. In case of overpayment, employees and former employees benefit from an accelerated and specific refund procedure whose application procedures will be fixed by decree.
• registration at a fixed rate for instruments constituting companies or confirming modifications in their capital structure, within five years from the date of the Prime Minister's decision referred to in paragraph 1 of this article.
• exemption from share division duties related to capital reduction.
• exemption from registration duties on real estate and business transfer operations.
• exemption from corporate income tax for the first five financial years of effective activity.
• exemption from capital gains on transfers realized by selling companies.
• total or partial exemption from stock exchange transaction taxes.

Article 31. Payment of shares held by the State and acquired under this law may be made, up to 50% of their amount, through equipment bonds and obligations issued by the State based on their nominal value.

Article 32. The State and organizations benefiting from the Treasury privilege are authorized to waive this privilege regarding their claims on publicly participated companies concerned by restructuring. However, the State may negotiate with creditors benefiting from this waiver the compensatory measures it deems necessary and useful for conducting restructuring operations of debtor companies, particularly debt rescheduling, partial waiver of these debts, as well as the use of recovered amounts for acquiring shares or assets within the restructuring framework. The principle of waiving the Treasury privilege and its implementation conditions are decided, for each case, by the Prime Minister after opinion of the Sanitation and Restructuring Commission for Publicly Participated Enterprises.

Article 33. The following operations, carried out by local public authorities, public institutions and companies with public participations, may be eligible for the same advantages provided by Articles 29, 30 and 32 of this law and according to the same procedure:

• transfer or exchange of shares or titles;
• merger, absorption or demerger of companies;
• transfer of asset elements capable of constituting an autonomous operating unit.

TITRE IV PARTICULAR PROVISIONS (new) Law No. 94-102 of August 1, 1994 Article 33.1. The provisions of this title apply to restructuring operations decided after opinion of the CAREPP in accordance with Article 23 of this law for companies with public participations as well as companies whose capital is entirely or particularly held by public companies.

Article 33.2. 6 An ordinary share held by the State in the capital of a public company may be transformed by decree into a specific share prior to an operation that will result in the loss of the public character of this company. The specific share may comprise, according to the decree provisions, all or part of the rights defined below: 1/ - Appointment of one or two State representatives to the board of directors and general assemblies without deliberative voting rights. 2/ - Prior approval by the Minister in charge of State participations for crossing one or more thresholds set by existing legislation, by a person acting alone or in concert. Shares acquired in violation of these provisions lose their voting rights, and their holder must transfer them within three months. The Minister informs the company's Managing Director, who reports to the next general assembly of shareholders. After the aforementioned three-month period, forced sale of said shares is carried out according to Tunis Stock Exchange procedures(1). 3/ - The power to oppose the following decisions:

• merger and demerger;
• voluntary liquidation;
• any decision likely to structurally change the nature of the company's activity, including transfer of one or more asset elements resulting in such a change. Under penalty of nullity, the minutes containing these decisions must bear the signature of a State representative as designated above.

Article 33.3. The specific share is inalienable. It takes effect automatically upon its establishment. A clause is inserted in the company's statutes mentioning the establishment of the specific share. The specific share may be transformed at any time into an ordinary share by decree.

Article 33.4. Block sales of shares may be carried out by competitive bidding according to specifications to a natural or legal person, or a group thereof. The aforementioned specifications may provide that the transfer, under any title, of shares forming part of these blocks must, for a specified duration in the specifications, be subject to prior approval by the Minister in charge of privatization. The latter gives his response within one month from receipt of the request. His silence beyond this period constitutes approval. When shares form part of a block whose transfer is subject to approval, they must remain registered and be stamped indicating their inalienability and its duration. Any transfer of shares in violation of this approval is unenforceable against third parties.

Article 33.5. Block sales of shares as defined in Article 33.4 are carried out at the Tunis Stock Exchange without negotiation, notwithstanding any contrary provision. In this case, all approval and preemption clauses inserted in the statutes of companies subject to Article 33.1 are deemed unwritten regarding public participants and concerned public companies.

Article 33.6. Notwithstanding Article 94 paragraph 2 of the Commercial Code, holders of shares acquired within a block sale by competitive bidding according to specifications may conclude among themselves pacts aimed at enabling active collaboration in fulfilling commitments provided by the specifications.

TITRE V OBLIGATIONS IMPOSED ON PUBLIC INSTITUTIONS NOT HAVING AN ADMINISTRATIVE CHARACTER (new) Law No. 96-74 of July 29, 1996 Article 33.7. The provisions of this title apply to public institutions, with the exception of:

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• administrative character public institutions;
• non-administrative character public institutions whose list is fixed by decree and referred to in Article 8 of this law;
• agricultural chambers created in accordance with Law No. 88-27 of April 25, 1988;
• chambers of commerce and industry created in accordance with Law No. 88-43 of May 19, 1988 as amended and completed by Law No. 92-112 of November 23, 1992;
• technical centers created in accordance with Law No. 94-123 of November 28, 1994;
• interprofessional groups created in accordance with Law No. 99-84 of July 26, 1993.

Article 33.8. Public institutions referred to in Article 33.7 of this law are managed by a General Manager appointed by decree. The General Manager represents the company towards third parties and in all civil and administrative acts. His powers are fixed by decree.

Article 33.9. A board of directors is established in each public institution referred to in Article 33.7 of this law, comprising...