Law No. 2016-48 of July 11, 2016

No. 58 Official Journal of the Tunisian Republic — July 15, 2016 Page 2195 Law No. 2016-48 of July 11, 2016, on Banks and Financial Institutions (1) In the name of the people, The Assembly of People's Representatives having adopted, The President of the Republic promulgates the law as follows:

Title I
General Provisions
Article 1 - The purpose of this law is to organize the conditions for exercising banking operations and the supervision modalities for banks and financial institutions, with a view to preserving their soundness and protecting depositors and users of banking services, thereby contributing to the proper functioning of the banking sector and achieving financial stability.
Art. 2 - The provisions of this law apply to banks and financial institutions operating in Tunisia, including non-resident banks and financial institutions as defined by exchange control legislation. The provisions of the Financial Services Code for Non-Residents promulgated by Law No. 2009-64 of August 12, 2009, apply to non-resident banks and financial institutions unless otherwise provided by this law. Banks and financial institutions are subject to the provisions of the Commercial Companies Code unless otherwise provided by this law. Art. 3 - The provisions of this law do not apply to entities exercising banking operations under their governing laws. They also do not apply to international financial institutions, their representations, or financial cooperation agencies created under agreements with the Tunisian Republic government. ____________ (1) Preliminary works: Discussion and adoption by the Assembly of People's Representatives in its session on June 9, 2016.

Title II
On Banking Operations, Banks and Financial Institutions
Chapter I
On Banking Operations
Art. 4 - The following are considered banking operations under this law:

• the receipt of public deposits regardless of duration and form,
• the granting of credits in all forms,
• leasing operations,
• credit management services ("factoring"),
• Islamic banking operations,
• making payment instruments available to the public and providing payment services.
  Not considered banking operations are financing granted by non-approved companies to their clients for goods or services supply, and financing granted by a company to another belonging to the same group under the Commercial Companies Code or to its agents.
  Without prejudice to specific financial legislation and within the exceptions provided, banking operations may include:
• financial management consulting and assistance,
• services facilitating company creation/development/restructuring,
• asset and wealth management.

Art. 5 - Public deposits under this law are funds collected from a third party by any payment method as a deposit or otherwise, with the right to use them for professional activities, subject to restitution to holders under agreed conditions.
Funds giving rise to the issuance of cash certificates or equivalent titles are also considered deposits.
However, the following fund categories are not public deposits:

• funds deposited to form or increase a company's capital,
• funds from bond, sukuk, or equivalent debt instrument issuances,
• funds from money market repurchase agreements,
• funds from other financing forms between banking institutions,
• funds lodged in accounts by company executives, board/supervisory/directorate members, or controlling shareholders,
• funds deposited by employees not exceeding 10% of the company's capital.

Art. 6 - A credit under this law is any act by which a natural or legal person, acting for consideration:

• makes funds available to another person, or
• commits to making funds available or takes an obligation by signature in the form of a guarantee.

Art. 7 - Leasing under this law is the leasing operation defined by Article 1 of Law No. 94-89 of July 26, 1994, on leasing. The provisions of the leasing law apply to this category unless otherwise provided by this law.

Art. 8 - "Factoring" credit management service under this law is any commitment by which a bank or financial institution provides services to manage commercial receivables for the benefit of a portfolio holder, provided that such bank or institution necessarily grants advances or guarantees recovery.

Art. 9 - Payment instruments under this law are any form of instruments enabling fund transfers between accounts, regardless of technical method, including electronic money. Electronic money is any monetary value representing a claim against the issuer, stored on an electronic medium, issued in exchange for funds of at least equivalent value, and accepted as a payment method by third parties other than the issuer. Not considered payment instruments are orders/cards issued for:

• acquiring goods/services from the issuer,
• consuming a service/acquiring goods exclusively for their intended purpose.

Art. 10 - Payment services under this law include:

• cash deposits and withdrawals,
• direct debits,
• cash payments by check, bill of exchange, or postal money orders/other paper equivalents,
• fund transfers,
• remote communication-based payments including electronic payments.

Art. 11 - Islamic banking operations under this law are banking operations not involving the receipt/payment of interest, according to various terms in deposit collection, placement, financing, and investment, in compliance with Islamic banking standards. The Central Bank of Tunisia ensures conformity with international standards. These operations notably include:

• Mourabaha,
• Ijara with purchase option,
• Moudaraba,
• Moucharaka,
• Istisna’a,
• Salam,
• investment deposits.
  The Governor of the Central Bank of Tunisia fixes these operations and their exercise modalities/conditions by circular within a maximum of two months from the law's entry into force.

Art. 12 - "Mourabaha" under this law is any sale operation with capital and profit margin declaration. The bank/financial institution acquires, upon the client's request, specific movable/immovable goods from a third party and resells them to the client at a price equivalent to acquisition cost plus a predetermined profit margin, payable within agreed periods.

Art. 13 - "Ijara with purchase option" financing under this law is any leasing operation where a bank/financial institution acquires and owns equipment/materials/real estate, leases them to clients for professional use for a fixed duration against agreed-period rents, granting the client an option to acquire the leased asset during or at the end of the lease term. The leasing law (No. 94-89) applies unless otherwise provided.

Art. 14 - "Istisna’a" under this law is any sale operation where a bank/financial institution finances, upon the client's ("Mostasni'i") request, the manufacturing of a specific movable/immovable good with detailed nature, quantity, and characteristics. To fulfill obligations, the bank/financial institution commissions a contractor ("Sani'i") to manufacture the good according to the description. The bank/financial institution takes possession, pays the "Sani'i", and delivers the good to the "Mostasni'i" for a predetermined price payable within agreed periods, provided no contract depends on the other.

Art. 15 - "Salam" under this law is any forward sale of tangible movable goods against immediate cash payment, where a bank/financial institution acquires clearly described and determined goods by measure, weight, or count. The bank/financial institution must sell the received "Salam" goods within a fixed period.

Art. 16 - Investment deposits under this law are amounts lodged by holders in a bank account by any payment method, pursuant to a "Moudaraba" or "Wakala" contract, for use in asset investments over a fixed period with or without restrictions. The bank guarantees no investment loss unless negligence/contractual breach is duly established.

Chapter II
On Banks and Financial Institutions
Art. 17 - A bank is any legal entity habitually collecting public deposits (Art. 5) and making payment instruments available to the public, to exercise other banking operations (Art. 4). Each approved bank automatically qualifies as an authorized foreign exchange intermediary under prevailing exchange legislation.

Art. 18 - A financial institution is any legal entity habitually exercising banking operations (Chapter I), excluding public deposit collection and payment instrument provision.

Art. 19 - An investment bank is any financial institution specializing in:

• granting financing to companies to strengthen equity,
• granting bridge credits to companies with repayment not exceeding one year, related to financial engineering,
• taking participations in restructuring operations involving a commitment to transfer back within five years.
  Investment bank resources consist exclusively of equity and borrowed funds. Approved investment banks may use "bank" in their corporate name and documents/advertisements, provided they always add "investment bank".

Art. 20 - Payment services (Art. 10) are exercised by a resident financial institution specializing in them as a payment institution. A payment institution cannot exercise payments executed via check, bill of exchange, postal money orders paid in cash, or equivalent titles. A payment institution may commercialize prepaid electronic money issued by banks or the Tunisian Post and exercise manual foreign exchange activities under prevailing legislation. Payment institutions are exempt from Title IV provisions on bank/financial institution governance. The Central Bank of Tunisia defines their specific governance rules by circular and fixes application conditions for this article.

Art. 21 - Every payment institution must open, on its books, a payment account in the name of each service user, used exclusively for authorized payment services (Art. 20). The institution must deposit funds in these accounts with a bank; the account must be global and independent of the payment institution's own accounts. The Central Bank of Tunisia fixes maintenance/operation modalities. Funds must be individually registered in the payment institution's accounting books. The institution must conclude an insurance policy or obtain a bank guarantee covering accounts, within an amount adequate to its equity, per Central Bank conditions. The insurance company or guaranteeing bank must not belong to the same group as the payment institution. The account balance cannot be used to pay debts owed by the payment institution to the holding bank. This balance is used exclusively for operations benefiting payment service users. The account balance cannot be seized by the payment institution's creditors. In case of liquidation of the payment institution or its holding bank, the account balance is reserved for settling payment account holders.

Art. 22 - Banks/financial institutions proposing to exercise Islamic banking operations (Art. 4) must submit a request to the Central Bank of Tunisia, including a business plan and description of financial/accounting/administrative separation mechanisms, and obtain authorization. The Central Bank fixes application conditions. Banks already approved before this law's entry into force are exempt from this article.

Art. 23 - Banks/financial institutions are prohibited from habitually engaging in operations outside the banking domain (Art. 4). This prohibition does not apply to acquiring/possessing movable/immovable goods necessary for Islamic banking operations, provided they are sold to clients within a reasonable period per financing contracts. Banks/financial institutions may exceptionally exercise non-banking operations, provided they are of limited importance relative to habitual operations and do not prevent/restrict/distort competition to the detriment of habitual operators.

Title III
On the Approval for Exercising Banking Operations
Chapter I
On Approval
Art. 24 - Anyone wishing to habitually exercise banking operations (Art. 4) as a bank or financial institution must, prior to operating in Tunisia, obtain prior approval under conditions set by this law. Also subject to prior approval: any change in activity category/nature; any merger or demerger; any asset/liability transfer causing substantial change in financial structure, activity category/nature; any capital reduction.

Art. 25 - Approval for banking/financial institution activity is granted by the approval commission created by this law, based on a Central Bank of Tunisia report, per conditions set by this law.

Art. 26 - A commission named "Approval Commission" is created to grant and withdraw approvals (Arts. 24 & 34). Composed of: the Governor of the Central Bank of Tunisia (or representative) as President; four independent members recognized for integrity and competence in finance/banking/economics. Independent members are appointed by the Central Bank's Board of Directors (subject to parity principle) for 3 years, renewable once. The commission establishes its internal rules based on the Central Bank's proposal, defining functioning modalities. Published in the Official Journal and Central Bank website. Meets at the Central Bank headquarters; secretariat provided by the department handling approval files.

Chapter II
On Approval Conditions and Procedures
Art. 27 - Approval is granted considering:

1. The applicant's activity program showing business plan and economic model according to operations/services,
2. Quality of direct/indirect shareholders (reference shareholder, main shareholders per Art. 102), regarding reputation, financial capacity, willingness to support the institution, and guarantor quality,
3. Adequacy of financial, human, and logistical means, including capital/equity allocated to the activity program,
4. Reputation, integrity, competence, and experience of executives/board/supervisory council members, meeting Title IV Chapter III conditions,
5. Governance device, organizational/administrative structure, and risk management/internal control/compliance policies aligned with activities,
6. Ability to implement the activity program compatibly with proper banking system functioning, offering sufficient client security and sound/prudent management per legal/regulatory prescriptions,
7. Absence of obstacles to the Central Bank's supervision mission due to direct/indirect capital/control links with other natural/legal persons, or relevant legislative/regulatory provisions,
8. Agreement of competent authorities in the home country for banks/financial institutions with foreign registered offices holding significant shareholder status under Art.