COSOB Regulation No. 24-02 of October 23, 2024, on Venture Capital Collective Investment Undertakings

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Having reviewed Regulation COSOB No. 23-04 of 10 Rabie Ethani 1445 corresponding to 25 October 2023 on the General Regulations of the Securities Exchange;

After adoption by the Stock Exchange Operations Organization and Surveillance Commission, dated 20 Rabie Ethani 1446 corresponding to 23 October 2024,

Enacts the regulation whose content follows:

Article 1st. – In application of the provisions of Article 163 (point 2) of Law No. 21-16 of 25 Joumada El Oula 1443 corresponding to 30 December 2021 cited above, the purpose of this regulation is to define the rules governing venture capital collective investment undertakings, hereinafter referred to as "OPCR".

Chapter 1st
General Provisions

Art. 2. – Venture capital collective investment undertakings constituted as venture capital investment companies, hereinafter referred to as "SICAR", are governed by the provisions of Regulation COSOB No. 97-04 of 24 Rajab 1418 corresponding to 25 November 1997 cited above, relating to variable capital investment companies (SICAV), when no mention is made in this regulation.

Art. 3. – Venture capital collective investment undertakings constituted as venture capital mutual funds, hereinafter referred to as "FCPR", are governed by the provisions of Regulation COSOB No. 97-04 of 24 Rajab 1418 corresponding to 25 November 1997 cited above, relating to mutual funds (FCP), when no mention is made in this regulation.

Art. 4. – For the purposes of this regulation, the following terms are understood:

1. Venture Capital Collective Investment Undertaking (OPCR): An investment vehicle whose main objective is to take participations, on behalf of its shareholders or unit holders, in unlisted companies with a view to their subsequent transfer or sale.

2. Venture Capital Investment Company (SICAR): A joint-stock company whose main purpose is to form and manage, on behalf of its shareholders, a portfolio of assets consisting of shares, partnership interests, investment certificates, convertible or non-convertible bonds, and participatory securities issued by unlisted companies, as well as securities issued by other OPCR.

Incidentally, the SICAR may grant advances in current accounts to the companies constituting its portfolio, hold shares of listed companies, shares or units of collective investment undertakings in securities (OPCVM), and hold cash.

ANNEX
Regulation of the Stock Exchange Operations Organization and Surveillance Commission (COSOB) No. 24-02 of 20 Rabie Ethani 1446 corresponding to 23 October 2024 on venture capital collective investment undertakings.
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The President of the Stock Exchange Operations Organization and Surveillance Commission (COSOB),

Having reviewed Ordinance No. 75-59 of 26 September 1975, modified and supplemented, establishing the Commercial Code;

Having reviewed Legislative Decree No. 93-10 of 23 May 1993, modified and supplemented, on the securities exchange;

Having reviewed Ordinance No. 96-08 of 19 Chaâbane 1416 corresponding to 10 January 1996 on collective investment undertakings in securities (O.P.C.V.M) (S.I.C.A.V) and (F.C.P);

Having reviewed Law No. 06-11 of 28 Joumada El Oula 1427 corresponding to 24 June 2006, modified and supplemented, on venture capital companies;

Having reviewed Law No. 21-16 of 25 Joumada El Oula 1443 corresponding to 30 December 2021 establishing the Finance Law for 2022, particularly its Article 163;

Having reviewed Law No. 22-18 of 25 Dhou El Hidja 1443 corresponding to 24 July 2022 on investment;

Having reviewed Presidential Decree of 5 Chaâbane 1444 corresponding to 26 February 2023 appointing the President of the Stock Exchange Operations Organization and Surveillance Commission;

Having reviewed Executive Decree No. 16-205 of 20 Chaoual 1437 corresponding to 25 July 2016 on the procedures for the formation, management, and exercise of the activity of investment fund management companies;

Having reviewed the Order of 23 Ramadhan 1418 corresponding to 21 January 1998, modified and supplemented, on the regulation and operation of the Treasury securities market;

Having reviewed the Order of 29 Ramadhan 1443 corresponding to 30 April 2022, modified, appointing the members of the Stock Exchange Operations Organization and Surveillance Commission;

Having reviewed Regulation COSOB No. 97-04 of 24 Rajab 1418 corresponding to 25 November 1997 on collective investment undertakings in securities (OPCVM);

Having reviewed Regulation COSOB No. 03-02 of 15 Moharram 1424 corresponding to 18 March 2003 on the keeping of securities custody accounts;

Having reviewed Regulation COSOB No. 16-03 of 28 Dhou El Kaâda 1437 corresponding to 1 September 2016 on the guarantees that investment fund management companies must present regarding organization, technical and financial resources, and professional competence;

Having reviewed Regulation COSOB No. 16-04 of 23 Moharram 1438 corresponding to 25 October 2016 on the fundamental ethical rules to be respected by investment fund management companies;

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3. Venture Capital Mutual Fund (FCPR): A co-ownership without legal personality, whose portfolio consists of shares, partnership interests, investment certificates, convertible or non-convertible bonds, and participatory securities issued by unlisted companies, as well as securities issued by other OPCR.

Incidentally, the FCPR may grant advances in current accounts to the companies constituting its portfolio, hold shares of listed companies, shares or units of OPCVM, and hold cash.

The FCPR is formed and managed by a management company which appoints a depositary.

4. Pre-liquidation period: The period during which the OPCR or its management company proceeds to the sale of its assets. During this period, the OPCR can no longer make new investments, except for reinvestment in companies in which it already holds participations.

The pre-liquidation period begins at least six (6) years from the date of formation of the OPCR.

5. Management Company: A legal entity whose purpose is the management of the FCPR.

6. Depositary: A bank, a financial institution, or a stock exchange intermediary authorized by the Stock Exchange Operations Organization and Surveillance Commission, hereinafter referred to as "the Commission", to exercise the activity of keeping securities custody accounts and designated for the conservation of the assets of an OPCR.

7. External Evaluator: Any expert responsible for the valuation of the financial and real estate assets of a collective investment undertaking, registered on a list established by the Commission. The following may be registered as external evaluators:
   — Certified accountants registered on the roll of the National Order of Certified Accountants; — Legal entities providing legal and financial advisory services to companies regarding capital structure, mergers, and acquisitions; — Real estate appraisers (natural or legal persons) registered on one of the lists of court-approved experts for the valuation of real estate assets; — Credit rating agencies for the evaluation of credit risk.

The conditions for registration of the external evaluator are fixed by an instruction of the Commission.

8. Management Fees: The set of operating expenses borne by an OPCR. Management fees cover all financial, administrative, and operational management costs of the OPCR, including the remuneration of the personnel of the SICAR, the management company, the depositary, the external evaluator, the statutory auditor, as well as all fees billed directly to the OPCR, including the fee paid to the Commission. These fees are borne by the OPCR.

Chapter 2
Approval, Constitution, and Management of the Venture Capital Collective Investment Undertaking, Valuation, and Conservation of its Assets

Section 1
Approval of the Venture Capital Collective Investment Undertaking

Art. 5. – The approval of the OPCR is subject to the filing of an application by the founders of the SICAR or by the management company of the FCPR with the Commission, accompanied by the draft articles of association of the SICAR or the management regulations of the FCPR, and a file whose content is fixed by an instruction of the Commission.

Art. 6. – The granting or refusal of approval of the OPCR is notified by the Commission to the applicant by any means allowing confirmation of the date of receipt, within a period not exceeding two (2) months, from the date of filing the complete approval file.

Section 2
Constitution of the
Venture Capital Investment Company

Art. 7. – The articles of association of the SICAR must include, in addition to the information mentioned in Article 11 of Regulation COSOB No. 97-04 of 24 Rajab 1418 corresponding to 25 November 1997 cited above, with the exception of point 27, the following mentions:
— External Evaluator:

• Name and surname, trade name or corporate name;
• Address, registered office;
• Procedures for appointment and dismissal;
• Rights and obligations of the external evaluator;
• Remuneration method;
• Term of office.
  — Depositary of the SICAR:
• Registered office;
• Procedures for appointment and dismissal;
• Rights and obligations of the depositary;
• Remuneration method.
  — Expected lifespan of the SICAR.

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Section 4
Dissolution of the Venture Capital Collective Investment Undertaking

Art. 14. – The OPCR is dissolved by operation of law and its approval is withdrawn in the event of extinction of its corporate purpose or its liquidation.

The OPCR must be liquidated ten (10) years after its formation, unless a derogation is granted by the Commission in duly justified cases.

However, the lifespan of the OPCR and the compartment of the OPCR mentioned in Articles 48 and 71 below is fixed in the articles of association of the SICAR or in the management regulations of the FCPR. It may be extended by the extraordinary general meeting of the SICAR or the management company of the FCPR.

Art. 15. – When the net asset value of the OPCR falls below fifty million dinars (50,000,000 DA), the Commission may require its dissolution if it is not regularized within a period not exceeding twenty-four (24) months from the detection of this decline.

Art. 16. – In the event of cessation of functions of the depositary or the management company of the OPCR, for any reason whatsoever, the Commission may require its dissolution if it is not replaced within a period not exceeding six (6) months from this cessation.

Art. 17. – In the event of cessation of functions of the depositary or the management company of the OPCR, their liability remains fully engaged until the designation of a new management company or new depositary. Consequently, they must take all necessary measures to preserve the interests of the shareholders or unit holders.

Section 5
Transformation of the Venture Capital Collective Investment Undertaking

Art. 18. – Any SICAR, even in liquidation, may be absorbed by any other SICAR or participate in the formation of a new SICAR by merger. It may also contribute its assets to an existing SICAR or participate with it in the formation of a new SICAR by merger-spin-off. Any SICAR may also absorb an FCPR. Finally, it may contribute its assets to a new SICAR by spin-off.

Art. 19. – Any FCPR, even in liquidation, may be absorbed by any SICAR or any FCPR. Any FCPR may merge with another FCPR to create a new FCPR. Any FCPR may be subject to a spin-off.

The project for absorption, merger, merger-spin-off, or spin-off is subject to prior approval, issued by the Commission under the same conditions as the approval of a new OPCR. The said project must be published in a newspaper authorized to receive legal announcements.

Art. 20. – Unit holders in the funds concerned by one of the operations provided for in Article 18 above retain their right to exit their fund without fees, before the date set for the implementation of said operation.

Art. 8. – The SICAR must complete the formalities provided for in Articles 12 to 15 of Regulation COSOB No. 97-04 of 24 Rajab 1418 corresponding to 25 November 1997 cited above, within three (3) months following the issuance of the approval, under penalty of nullity.

Art. 9. – The initial capital of a SICAR must be, at a minimum, equal to fifty million dinars (50,000,000 DA).

Section 3
Constitution of the Venture Capital Mutual Fund

Art. 10. – The draft regulations of the FCPR must include, in addition to the information provided for in Article 18 of Regulation COSOB No. 97-04 of 24 Rajab 1418 corresponding to 25 November 1997 cited above, with the exception of point 11, the following mentions:
— Management Company of the FCPR:

• Trade name, corporate name;
• Registered office;
• Remuneration method.
  — Depositary of the FCPR:
• Trade name, corporate name;
• Registered office;
• Procedures for appointment and dismissal;
• Rights and obligations of the depositary;
• Remuneration method.
  — External Evaluator:
• Name and surname, trade name or corporate name;
• Address, registered office;
• Procedures for appointment and dismissal;
• Rights and obligations of the external evaluator;
• Remuneration method;
• Term of office.
  — Expected lifespan of the FCPR.

Art. 11. – The constitution of the FCPR results from the signing of the management regulations by the management company and two (2) unit holders, at least, and the release of the units after receipt by the management company of the approval of the FCPR, issued by the Commission.

Art. 12. – The management company must complete the formalities provided for in Articles 20 to 22 of Regulation COSOB No. 97-04 of 24 Rajab 1418 corresponding to 25 November 1997 cited above, within three (3) months following the issuance of the approval, under penalty of nullity.

Art. 13. – The initial assets of the FCPR must be, at a minimum, equal to fifty million dinars (50,000,000 DA).

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The SICAR must implement a code of ethics including, in particular, good management practices and the prevention of conflict of interest situations. The provisions of Regulation COSOB No. 16-04 of 23 Moharram 1438 corresponding to 25 October 2016 cited above, with the exception of its Article 8, are applicable to the SICAR.

Art. 27. – The SICAR may delegate, under a mandate, the management of funds to a management company of OPCR.

When the SICAR delegates the management of funds, it remains individually and jointly liable, to the same extent as the management company, unless proven otherwise, for damages caused by their faults to third parties or to the shareholders of the SICAR, either as a result of violations of legislative or regulatory provisions, or due to the violation of provisions fixed by the articles of association of the SICAR.

Section 7
Depositary of the Venture Capital Collective Investment Undertaking

Art. 28. – The OPCR or its management company designates the depositary, under an agreement defining the rights and obligations of each party as well as the amount and method of remuneration of the depositary.

Art. 29. – The depositary has the following obligations:

1. To ensure the conservation of the assets of the OPCR, whether they are securities registered in accounts or delivered physically, to verify the ownership of other assets, and to keep the corresponding register.

2. To ensure that:
   — Payments made by unit holders or shareholders, or on their behalf, during the subscription of units or shares of the OPCR, have been received and that all liquidity has been accounted for; — The monitoring of the OPCR's liquidity flows is carried out regularly.

3. To execute the decisions of the management company concerning the purchases and sales of securities as well as those relating to the rights attached to the securities constituting the assets of the OPCR, and to keep a chronological record of the operations carried out on its behalf.

4. To verify that:
   — The sale, issuance, repurchase, redemption, and cancellation of units or shares carried out by the OPCR or on its behalf, are in compliance with legislative and regulatory provisions, the management regulations, and the articles of association of the OPCR;

Section 6
Management of the Venture Capital Collective Investment Undertaking

Art. 21. – For the purposes of this regulation, the following may exercise the activity of OPCR management company:
— Stock exchange intermediaries approved to exercise the portfolio management activity for OPCVM; — Venture capital companies provided for by Law No. 06-11 of 28 Joumada El Oula 1427 corresponding to 24 June 2006, modified and supplemented, cited above; — Investment fund management companies provided for by Executive Decree No. 16-205 of 20 Chaoual 1437 corresponding to 25 July 2016 cited above.

SICARs constituted to manage internally the funds of their shareholders, in accordance with the provisions of this regulation, are also deemed to exercise the activity of management company.

Art. 22. – The venture capital company and the investment fund management company exercise the activity of OPCR management company under the conditions fixed by this regulation.

Art. 23. – The venture capital company and the investment fund management company, when exercising the activity of OPCR management company, may, under the conditions fixed by their boards of directors or executive committees and by this regulation, hold participations in the OPCR created or managed.

Art. 24. – The SICAR must present sufficient guarantees, particularly in terms of organization, technical and financial resources, as well as professional competence. The provisions provided by Regulation COSOB No. 16-03 of 28 Dhou El Kaâda 1437 corresponding to 1 September 2016 cited above, with the exception of its Article 7, are applicable to the SICAR.

Art. 25. – The directors of the SICAR must not have been subject to the convictions provided for in Article 11 of Law No. 06-11 of 28 Joumada El Oula 1427 corresponding to 24 June 2006, modified and supplemented, cited above.

Art. 26. – The SICAR must act in the interest of the shareholders. It must take all reasonable measures to identify situations of conflicts of interest that may arise during:
— The management of shareholders' funds;
— The taking of participations;
— The calculation of the net asset value;
— Merger, absorption, and spin-off operations.

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— The calculation of the value of the units or shares of the OPCR is carried out in accordance with legislative or regulatory provisions, the management regulations, and the articles of association of the OPCR; — The decisions of the OPCR or its management company are executed in accordance with legislative and regulatory provisions, the management regulations, and the articles of association of the OPCR.

Art. 30. – In application of point 1 of Article 29 above, the OPCR or its management company must provide the depositary, upon request, before the asset inventory date, any document proving the acquisition of registered or physically delivered securities or the transfer of ownership on behalf of the OPCR.

The depositary is required to establish and certify, at the end of each semester, the inventory of all assets held by the OPCR. This document is made available to the statutory auditor and the shareholders or unit holders.

Art. 31. – In application of point 2 of Article 29 above, the depositary must:
— Control compliance with the deadline for receipt of subscription and repurchase orders mentioned in the information prospectus of the OPCR provided for in Articles 45 and 46 below; — Ensure the identification of unit holders or shareholders of the OPCR and record the number of units or shares held by each holder or shareholder in a register that it maintains and updates; — Perform a reconciliation between the asset portfolio statement transmitted by the OPCR or its management company and the securities registered in the OPCR's account in the depositary's books; — Perform a reconciliation between the number of units or shares subscribed, transmitted by the OPCR or its management company, and that recorded in the depositary's books; — Ensure the organization of the payment of distributable sums, as well as the processing of operations on the units or shares of the OPCR.

Art. 32. – In application of point 3 of Article 29 above, the depositary must inform, in writing or by any means allowing confirmation of the date of receipt, the OPCR or its management company, as soon as it becomes aware of the existence of events likely to affect the securities constituting its assets.

Art. 33. – In application of point 4 of Article 29 above, the depositary must ensure, before the execution of the decisions of the OPCR or its management company, that:
— The eligibility criteria for assets, the rules for the composition of its assets, the rules for risk dispersion and capping are in conformity with its investment policy, legislative and regulatory provisions, the management regulations, and the articles of association of the OPCR; — For the purposes of calculating the net asset value, the valuation of the OPCR's assets is carried out in accordance with legislative and regulatory provisions, the management regulations, and the articles of association of the OPCR; — The management fee rate applied and the subscription and repurchase commissions levied by the OPCR or its management company are in conformity with those indicated in the OPCR's information document and the cap fixed in Article 91 of this regulation.

Art. 34. – The depositary must inform, without delay, in writing against acknowledgment of receipt, the OPCR or its management company of the irregularities observed and the conservatory measures that the depositary is able to take. The depositary sends, without delay, a copy of said letter to the Commission.

Art. 35. – The depositary is liable, individually and jointly, to the same extent as the OPCR or its management company, unless proven otherwise, towards