Regulation of the Financial Markets Council on the Maintenance and Administration of Securities Accounts

Regulation of the Financial Markets Council on the Maintenance and Administration of Securities Accounts¹

The Board of Directors of the Financial Markets Council, Having regard to Law No. 94-117 of November 14, 1994 reorganizing the financial market as amended by subsequent texts and notably Law No. 2005-96 of October 18, 2005 on strengthening the security of financial relations and notably its Articles 29 and 31; Having regard to Law No. 2000-35 of March 21, 2000 on the dematerialization of securities; Having regard to Decree No. 2001-2728 of November 20, 2001 on the conditions for listing securities and approved intermediaries for maintaining securities accounts as amended by Decree No. 2005-3144 of December 6, 2005; Decides:

General Provisions Article 1: This regulation applies to the maintenance and administration of securities accounts for securities issued on Tunisian territory and subject to Tunisian legislation. Article 2: This regulation applies:

• to legal entities issuing securities;
• to approved intermediaries mandated by an issuer conducting a public offering;
• to approved administrator intermediaries chosen by the owners of securities;
• to persons managing portfolios of securities individually or collectively, namely credit institutions, stockbrokers, and management companies;
• to the Depository, Clearing and Settlement Company;
• to investors in securities.

Article 3: In this regulation, the following terms shall mean:

• Issuer: any legal entity issuing securities.
• Category of securities: ▪ shares; ▪ preferred dividend shares without voting rights; ▪ investment certificates; ▪ bonds; ▪ convertible bonds; ▪ participatory securities; ▪ Treasury bills; ▪ units of collective investment schemes ▪ rights attached to securities.
• Approved administrator intermediary: a stockbroker or credit institution entrusted by the owner of the securities or its legal representative to manage their account with the issuer or the approved mandated intermediary.

1As endorsed by the Minister of Finance order dated August 28, 2006 and amended by the CMF regulation on the central securities depository endorsed by the Minister of Finance order dated January 12, 2016.

• Approved mandated intermediary: a stockbroker, credit institution, or the Depository, Clearing and Settlement Company mandated by the issuer to open and maintain securities accounts. Article 4: The maintenance and administration of securities accounts issued by companies conducting public offerings are exercised by authorized stockbrokers and credit institutions, as permitted to exercise the activities set forth in Article 2 of Law No. 2001-65 of July 10, 2001 on credit institutions as amended and supplemented by Law No. 2006-19 of May 2, 2006, and the Depository, Clearing and Settlement Company is authorized to exercise account maintenance activities. The exercise of these activities by stockbrokers and credit institutions is subject to the signing of the specifications annexed to this regulation and the deposit of a signed copy with the Financial Markets Council.

Article 5: The maintenance and administration of securities accounts are governed notably by the following provisions:

• Articles 314 to 386 of the Commercial Companies Code.
• Articles 689 to 697 of the Commercial Code;
• Articles 309 to 324 and 1104 to 1171 of the Code of Obligations and Contracts;
• Articles 404, 405, and 409 of the Civil and Commercial Procedure Code;
• Article 210 et seq. of the Real Rights Code;
• Law No. 2000-35 of March 21, 2000 on the dematerialization of securities;
• Decree No. 2001-2728 of November 20, 2001 on the conditions for listing securities and approved intermediaries for maintaining securities accounts as amended by Decree No. 2005-3144 of December 6, 2005;
• Decree No. 99-2478 of November 1, 1999 establishing the status of stockbrokers and the general decisions of the Financial Markets Council taken under said decree;
• This regulation and its annexed specifications;

TITLE I THE MAINTENANCE AND PRESERVATION OF SECURITIES

Article 6: Securities issued on Tunisian territory and subject to Tunisian legislation, regardless of their nature, are registered in accounts by category in accordance with the provisions of Article 1 of Decree No. 2001-2728 of November 20, 2001 on the conditions for listing securities and approved intermediaries for maintaining securities accounts mentioned above. The maintenance of securities accounts issued through a public offering may be exercised by the issuer or by an approved mandated intermediary. The maintenance of securities accounts, if not exercised by the issuer itself, must be entrusted to a single approved mandated intermediary for each issuance of securities with identical rights. The approved mandated intermediary must maintain a separate register for each category of securities. For companies not conducting public offerings, the maintenance of securities accounts may only be exercised by the issuer itself. The latter is required to sign the specifications annexed to this regulation.

Article 7: When an issuer entrusts an approved mandated intermediary with the maintenance of securities accounts, it must publish, prior to executing the mandate, in the official bulletin of the Financial Markets Council, an announcement notably containing:

• the company name;

• the legal form of the issuer;

• the share capital amount;

• the commercial register number;

• the registered office address;

• the category of securities entrusted to the approved mandated intermediary;

• the name and address of the approved mandated intermediary; Any modification affecting the identity, address, or category of securities entrusted to the approved mandated intermediary must be made public under the same conditions and procedures. The aforementioned information must be reproduced on all information documents during each financial operation related to the relevant category of securities.

CHAPTER I The agreement between the issuer and the approved mandated intermediary

Article 8: The maintenance of securities accounts by an approved mandated intermediary must, as a mandatory requirement, be established through a written agreement between the issuer and said intermediary, signed by the legal representatives of both parties, with a copy deposited with the Financial Markets Council. Article 9: The issuer must provide the approved mandated intermediary with all elements relating to the identity of each account holder and their respective securities, including:

• name, first name, and domicile for individuals; company name or trade name, legal form, and registered office address for legal entities;
• national identity card number or other ID document if the holder is a foreigner for individuals;
• commercial register number for legal entities or the equivalent in the country of origin for foreign legal entities;
• nationality of the account holder;
• number and category of securities held;
• rights attached to the securities and, where applicable, to whom these rights belong;
• restrictions encumbering these securities (pledge, seizure, non-transferability, etc.).

Article 10: The agreement must define the scope of missions entrusted to the approved mandated intermediary, as well as cases where the latter substitutes for the issuer in fulfilling obligations towards shareholders (financial information, convening general meetings, legal publicity, etc.) regarding Administration, the Financial Markets Council, and the Depository, Clearing and Settlement Company.

Articles 11: The agreement must obligatorily include the commitment of the approved mandated intermediary to provide:

• to the issuer's statutory auditor: all documents and information held within the framework of account maintenance and necessary for fulfilling the audit mission set forth in Article 19 of Decree No. 2001-2728 of November 20, 2001 mentioned above;
• to the Financial Markets Council and the Depository, Clearing and Settlement Company, for values taken charge by the latter: all required information and documents held within the framework of account maintenance; Article 12: In case of termination of the mandate by either party, denunciation is effected by telegram, telex, fax, or any other means leaving a written record. The termination initiated by the issuer takes effect five (5) trading days from the date of receipt of the denunciation notification by the approved mandated intermediary. The latter then ceases to be authorized to maintain the securities accounts of said issuer.

The termination initiated by the approved mandated intermediary takes effect at least fifteen (15) trading days after receipt of the termination notification by the issuer. The approved mandated intermediary then ceases to be authorized to maintain the securities accounts of said issuer. No later than the effective date of termination, the approved mandated intermediary prepares an inventory of the accounts under its maintenance and establishes a final statement, which is transmitted to the issuer accompanied by an operations chronology. The issuer must, in accordance with Article 7 of this regulation, publish an announcement regarding the termination of the mandate granted to the approved mandated intermediary and the designation of a new approved mandated intermediary, where applicable.

CHAPTER II The obligations of the approved mandated intermediary Article 13: The approved mandated intermediary must, upon request by the issuer, send to it all elements relating to the identification of its securities owners as set forth in Article 9 of this regulation, according to the periodicity and deadlines fixed in the account maintenance agreement. Article 14: The approved mandated intermediary notably ensures the following obligations:

• ensuring the registration of entrusted securities and accounting for their movements in compliance with applicable regulations and instructions issued by the Depository, Clearing and Settlement Company for values taken charge by it. It exercises due care to facilitate the exercise of rights and obligations attached to these securities;
• not using, transferring ownership of, or proceeding with any registration for the entrusted, registered securities until receiving necessary legal proof. Any movement affecting an account must be justifiable.

Article 15: (Amended by Article 47 of the CMF regulation on the central securities depository endorsed by the Minister of Finance order dated January 12, 2016.) The approved mandated intermediary must open an account for each owner of securities. Each account must include, in addition to the elements set forth in Article 9, the following information:

• the acquisition date of the securities and the origin of ownership (purchase, subscription, free allocation, inheritance, or other);
• the identity of the approved administrator intermediary(ies), if applicable; The approved mandated intermediary must:
• communicate information regarding the segregation of assets to the Depository, Clearing and Settlement Company in accordance with its instructions.

Article 16: The approved mandated intermediary must maintain a general operations journal per security, based on double-entry bookkeeping, updated daily with all entries affecting registered accounts. The journal must accurately indicate at any time all operations relating to the accounts. The journal is referenced by the designation of the account(s) moved. This journal must notably include:

• the operation date and accounting date;
• the direction of the operation (debit or credit);
• the type of operation (trading, registration, etc.);
• the number of securities involved in the operation;
• references to counterpart accounts moved;
• restrictions and rights attached to the securities involved in the operation;
• the identity of the approved administrator intermediary(ies), if applicable.

Entries posted to the journal must, without delay, feed the accounts of securities owners and allow updating the general register referred to in Article 18 of this regulation. It must be possible at any time, based on legal proofs constituting the basic data, to reconstruct any account balance posted in the general register or to trace these data from said register.

Article 17: The approved mandated intermediary must update the securities accounts under its charge whenever it becomes aware of any change in ownership, in accordance with the rules governing the security subject to transfer of ownership, or regarding attached rights and restrictions.

Article 18: The approved mandated intermediary must maintain a general register for each category of securities, including, in addition to the identity elements set forth in Articles 9 and 15, an account number per holder and the identity of the approved administrator intermediary(ies).

Article 19: The documents provided for in Articles 16 to 18 may be maintained on an unalterable electronic medium, provided that periodic closing procedures are established to freeze the chronology and guarantee the intangibility of records by transcribing data onto paper, and that these supports and documents are retained for the legal period prescribed for property prescription.

Article 20: The approved mandated intermediary must, upon request by each account holder or their approved administrator intermediary, issue a certificate stating the number of securities they hold. This certificate must be dated and numbered, and include all identity elements set forth in Articles 9 and 15 of this regulation.

Article 21: The issuer exercising account maintenance itself is subject to all obligations imposed on the approved mandated intermediary by this regulation.

TITLE II THE ADMINISTRATION OF SECURITIES ACCOUNTS Article 22: The owner of securities may entrust one or more approved intermediaries with managing their account opened with the issuer or the approved mandated intermediary. The statements referred to in Articles 9 and 15 of this regulation are reproduced anew in an administration account maintained by the approved administrator intermediary.

Article 23: No obligation is imposed on the account holder to have their securities accounts administered by an approved administrator intermediary. In this case, the holder maintains a direct relationship with the issuer or the approved mandated intermediary, and the exercise of their rights is carried out directly by them with the issuer or the intermediary, as applicable.

Article 24: In accordance with Article 9 of Decree No. 2001-2728 of November 20, 2001 mentioned above, securities may only be exchanged after being placed in an administration account opened with an approved administrator intermediary. All orders concerning them must pass through this intermediary and solely by it. The approved administrator intermediary must notify the issuer or the approved mandated intermediary of any change in ownership of the securities under its administration within five (5) trading days from the date of said change, specifying whether management occurs during a specific operation or is entrusted permanently.

Article 25: Each approved administrator intermediary must open an account to any person requesting it and who commits to complying with current practices in their institution.

CHAPTER I The agreement between the account holder and the approved administrator intermediary Article 26: Opening an account as provided by General Decision No. 5 of the Financial Markets Council dated April 24, 2000, even if provisional for a specific operation, with an approved administrator intermediary must, as a mandatory requirement, be established through a written agreement between said intermediary and the account holder. This agreement identifies the respective rights and obligations of the parties and specifies notably:

• name, first name, and date of birth for individuals; company name for legal entities; and where applicable, the name and first name of the usufructuary;
• profession of the account holder as well as address and professional and personal telephone numbers for individuals;
• telephone number and registered office address for legal entities;
• national identity card number of the account holder or other ID document if the holder is a foreigner for individuals; commercial register number for legal entities; or equivalent in the country of origin for foreign legal entities;
• nationality of the account holder;
• account number, opening date, and unique identifier;
• type of account (managed under mandate or free);
• client's investment objectives and degree of knowledge in investment matters;
• method of establishing initial contact with the account holder (advertising, solicitation, recommendation, telephone call, or others);
• specimen signature of the legal representative or other authorized person if the account is opened in the name of a legal entity, along with a copy of the powers granted to them;
• specimen signature of the account holder and mandated persons, where applicable;
• services subject to the agreement as well as categories of securities on which the services focus;
• pricing of services to be provided by the approved administrator intermediary;
• validity period of the agreement, termination procedures, and account transfer methods;
• various reciprocal commitments of the parties.

Article 27: The agreement must specify whether management occurs during a specific and particular operation after which the account holder personally retains the exercise of their rights, or whether it is entrusted permanently to the approved administrator intermediary, thereby transferring to them the exercise of the account holder's rights such as receiving coupons, interest, or dividends and exercising attached rights.

Article 28: When an account is opened for a third party or when the account holder grants a mandate to a third party to operate their account, the approved administrator intermediary must obtain a copy of the mandate specifying the object and scope of granted powers (purchase, sale, or management) bearing duly legalized signatures of the parties, along with a copy of the national identity card of the agent and the principal.

Article 29: If the account holder is a minor or an incapacitated person, the approved administrator intermediary must obtain, as applicable, a birth certificate accompanied by proof of kinship if it is a minor, or a copy of the guardianship judge's authorization in case of an incapacitated person.

Article 30: In the event of opening an account for a legal entity, the approved administrator intermediary must require a copy of the powers granted to the legal representative of the legal entity. Article 31: An account holder opened with an approved administrator intermediary may transfer it to another approved administrator intermediary. To this end, they must submit a transfer request. A settlement of the portfolio composition must necessarily be carried out between the parties; a minutes is drawn up in accordance with the stockbroker status provisions. The approved administrator intermediary must transfer the deposited securities directly to the new intermediary and make available all information and details concerning the account, including restrictions encumbering the securities. The two concerned approved administrator intermediaries must inform the issuer or the approved mandated intermediary of this transfer within five (5) trading days from the transfer date. If the account holder decides, in accordance with Article 23 of this regulation, to exercise themselves the administration charge of their securities, the approved administrator intermediary must inform the issuer or the approved mandated intermediary. If the concerned securities are taken charge by the Depository, Clearing and Settlement Company, the latter must, in all cases, be informed in accordance with its instructions. Article 32: The securities account administration agreement, whether for a fixed or indefinite term, may be terminated by either party. The termination of the agreement by the approved administrator intermediary must be served to the account holder opened with them by registered letter with acknowledgment of receipt. It takes effect only upon expiration of a five (5) trading day period from the receipt of the registered letter by the account holder. The termination by the account holder may be done either by registered letter with acknowledgment of receipt, taking effect upon receipt by the approved administrator intermediary, or by signing a termination request by the account holder in person at the approved administrator intermediary's premises, taking effect immediately. A contradictory settlement must be carried out between the parties, in accordance with Article 5