Decree No. 2006-1294 of May 8, 2006, implementing the provisions of Article 23 of Law No. 2005-96 of October 18, 2005 on strengthening the security of financial relations

1 Decree No. 2006-1294 of May 8, 2006, implementing the provisions of Article 23 of Law No. 2005-96 of October 18, 2005 on strengthening the security of financial relations.1

The President of the Republic, On the proposal of the Minister of Finance, Having regard to Law No. 94-117 of November 14, 1994, on the reorganization of 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, Having regard to the Collective Investment Schemes Code promulgated by Law No. 2001-83 of July 24, 2001, as supplemented by Law No. 2005-105 of December 19, 2005 on the creation of venture capital common funds, Having regard to Law No. 2005-96 of October 18, 2005, on strengthening the security of financial relations and notably its Article 23, Having regard to Decree No. 75-316 of May 30, 1975, defining the powers of the Ministry of Finance, Having regard to the opinion of the Administrative Court.

Decrees:

Article 1 – The minimum share capital of portfolio management companies for third parties is set at one hundred thousand dinars, fully paid up upon incorporation. Management companies must demonstrate at all times that their capital is at least equal to 0.5% of the total assets they manage. This requirement is no longer applicable when the capital reaches five hundred thousand dinars.

Art. 2. – The approval for the exercise of portfolio management activities for third parties, as provided in Article 23 of Law No. 2005-96 of October 18, 2005 (hereinafter "the Law"), is granted based on an application submitted by the founders of the management company to the Financial Market Council, accompanied by documents whose list is established by regulation of the Financial Market Council. The Financial Market Council processes the approval application within a maximum period of one month from the date of submission of the application accompanied by the necessary documents. (Decree No. 2009-1502 of May 18, 2009, Art. 1) The approval is granted based on an activity plan and the human and material resources of the management company to carry out one or more of the following activity areas:

• individual portfolio management,
• management of variable capital investment companies and common securities investment funds as provided in Article 1 of the Collective Investment Schemes Code promulgated by Law No. 2001-83 of July 24, 2001 (hereinafter "the Code"),
• management of venture capital common funds as provided in Article 22 bis of the Code promulgated by Law No. 2001-83 of July 24, 2001 (hereinafter "the Code") and seed funds as provided in Article 1 of Law No. 2005-58 of July 18, 2005 (hereinafter "the Law").

2 Art. 3 – The following are subject to the approval provided in Article 23 of Law No. 2005-96 of October 18, 2005 (hereinafter "the Law"):

• Any merger or demerger operation between management companies whose purpose is the management of securities portfolios for third parties,
• Any direct or indirect acquisition of a proportion of the capital of a portfolio management company for third parties by one or more persons resulting in control over the latter.

Art. 4. – Portfolio management companies for collective investment schemes in securities as provided in Article 31 of the Collective Investment Schemes Code may, after obtaining the approval provided in Article 23 of Law No. 2005-96 of October 18, 2005 (hereinafter "the Law"), convert into portfolio management companies for third parties.

Art. 5. – No person may establish or manage a management company or serve as a member of its board of directors, executive board, or supervisory board if they:

• have received a final conviction for forgery, theft, breach of trust, fraud or offenses punishable under the fraud laws, extortion of funds or third-party assets, misappropriation by a public depositary, issuance of checks without sufficient funds, handling of proceeds obtained through these offenses, or violation of foreign exchange regulations, or for violation of legislative and regulatory texts relating to the suppression of money laundering. (Decree No. 2009-1502 of May 18, 2009, Art. 1)
• are subject to a final judgment of bankruptcy,
• have served as director or manager of companies declared bankrupt or have been convicted under Articles 288 and 289 of the Penal Code relating to bankruptcy.

Art. 6. – The Financial Market Council establishes by regulation the rules to be followed for the safeguarding of investors' funds and the proper conduct of operations.

Art. 6 bis (Decree No. 2009-1502 of May 18, 2009, Art. 1) - The management company must hold neither the securities accounts nor the cash of its clients. Securities and cash must be deposited at the client's choice, with one or more banks as defined by Law No. 2001-65 of July 10, 2001 (hereinafter "the Law").

Art. 6 ter (Decree No. 2009-1502 of May 18, 2009, Art. 1) - The board of directors or supervisory board of the management company appoints a compliance and internal control officer according to conditions established by regulation of the Financial Market Council.

Art. 7. – The Minister of Finance is responsible for the implementation of the provisions of this decree, which shall be published in the Official Journal of the Tunisian Republic.

Tunis, May 8, 2006 Zine El Abidine Ben Ali