Bonds that may be Issued by Lebanese Banks and Financial Institutions

167

Circular No. 36 / Section/Article 1 / Date: 30/6/2025

Basic Circular No. 36 Addressed also to Financial Institutions and Statutory Auditors

We enclose herewith a copy of Basic Decision No. 6856 dated 19/12/1997 concerning bonds that may be issued by Lebanese banks and financial institutions.

Beirut, 19 December 1997 Governor of Banque du Liban Riad T. Salamah Old Number 1581

168

Basic Decision No. 6856 Bonds that may be Issued by Lebanese Banks and Financial Institutions

The Governor of Banque du Liban, Based on the Monetary and Banking Law, particularly Articles 174 and 175 thereof, Based on the Commercial Code, particularly Articles 122 and following, and Articles 453 and following thereof, And based on Law No. 521 dated 6/6/1996, particularly Article 6 thereof, And based on the Resolution of the Central Council of Banque du Liban adopted in its meeting held on 17/12/1997, Decides as follows:

Article 1: Every bank or financial institution registered with Banque du Liban must obtain the prior approval of the Central Council when wishing to issue bonds in any currency.

Article 2: Banks and financial institutions wishing to issue bonds must attach three copies of each of the following documents with their license application submitted to Banque du Liban: A - A detailed statement of the own funds of the concerned bank or financial institution. B - The resolution of the Ordinary General Assembly of shareholders approving the issuance of bonds. C - A statement of the total value of the bond issuance project, including the number and denomination of bonds to be issued, type of bond, currency type, interest rate, payment method, and maturity dates. D - An updated prospectus organized according to the detailed conditions in Article 3 below. E - A sample of the bond form intended for issuance. F - A statement regarding the status of issued but unpaid bonds. G - A certificate from the legal advisor of the concerned bank or financial institution confirming that the new issuance complies with applicable laws and regulations, the issuer's bylaws, and that there are no obstacles to the free trading of the issued bonds. H - A certificate from the statutory auditors of the concerned bank or financial institution confirming that they have reviewed the appointed company's accounts and records, verified its financial statements prepared in accordance with standards, and found that those statements fairly and accurately reflect the company's financial position, with no material changes occurring since the date of the audited statements. I - Any other documents or information that Banque du Liban may request.

169

Article 3: The updated prospectus required under paragraph (D) of Article 2 must include at least the following information: A) Information concerning the issuer: 1 - The legal name of the issuer. 2 - Its capital amount, number of shares, and their classes. 3 - The location of its main headquarters. 4 - Names of the Chairman and Board members. 5 - Name and address of the legal advisor who prepared the certificate regarding compliance with applicable laws and regulations. 6 - Name and address of the statutory auditor who prepared the certificate on the issuer's sound financial position. 7 - Financial results achieved for the last two years preceding the issuance date (or from the company's incorporation if established within those two years), both individual and consolidated, and whether they have been approved. If more than nine months have passed since the preparation of the last balance sheet, financial results for the last half-year.

170

B) Information concerning the bonds to be issued: 1 - Text and date of the Ordinary General Assembly resolution authorizing the general issuance of bonds, including stages if applicable. 2 - Issuance volume, and the volume of each stage if applicable. 3 - Number of bonds to be issued and their classes if applicable. 4 - Value of a single bond and its issue price. 5 - Type of bond: registered or bearer. 6 - Currency type in which bonds are to be issued. 7 - Nature of bonds regarding whether they are redeemable before maturity or not. 8 - Serial numbers of issued bonds and payment method. 9 - Interest rate, calculation method, and payment method. 10 - Payment schedules and location. 11 - Payment conditions and guarantees. 12 - Status of previously issued bonds, if any. 13 - Absence of any type of restriction on the trading of issued bonds. 14 - Name of the custodian entrusted with holding the bonds and conducting settlement and clearing operations regarding them. 15 - Use of issuance proceeds and proceeds of each stage if applicable. 16 - Issuance expenses and expenses of each stage if applicable. 17 - Name of the issuance agent entrusted with marketing operations.

Article 4: Conditions to be met by bonds intended for issuance: The Central Council of Banque du Liban may approve the general issuance by any bank or financial institution of bonds up to six times their basic own funds, provided they meet the following conditions: 1 - The minimum capital of the concerned bank must not be less than the value of funds required to be allocated to its main headquarters and branches according to regulatory texts issued by the Governor of Banque du Liban, and for financial institutions registered with Banque du Liban must not be less than five billion Lebanese Lira. 2 - The maturity of issued bonds must not be less than one year. 3 - Maturities of issued bonds must not be less than one year at minimum, and the value maturing within one year must not exceed twice the basic own funds of the concerned bank or financial institution. 4 - The issuer must not discount, purchase, or settle before maturity a bond it issued, unless at least one year has elapsed since its issuance date. 5 - They must be issued in accordance with applicable legal provisions (Articles 122 and following, and Articles 453 and following of the Commercial Code, and Article 6 of Law No. 521 dated 6/6/1996). 6 - They must be freely tradable. 7 - The value of a single bond must not be less than one hundred fifty thousand Lebanese Lira, or its equivalent in the foreign currency of issuance. 8 - The bond's maturity, interest rate, calculation method, payment manner, and commencement date must be specified in the bond text. 9 - The nominal value shown on the bond must equal the amount paid on the issuance date. 10 - Bonds must be issued on a single business day, with bond maturity occurring on a subsequent single business day.

171

Article 5: In all cases, the investments of any bank or financial institution in bonds issued by another bank or financial institution must not exceed 100% of the basic own funds of the issuing bank or financial institution.

Article 6: Banks and financial institutions, particularly commercial banks, medium- and long-term financing banks, and financial institutions marketing subscriptions in bonds issued by another bank or financial institution, whose current investments in these bonds exceed the limit specified in Article 5 above and cannot immediately settle their status, must consult Banque du Liban regarding this matter. 1 - Repealed Law No. 521 dated 6/6/1996 by Law No. 308 dated 3/4/2001, which replaced it. 2 - Reference to Article 9 of Law No. 308 dated 3/4/2001.

172 Article 6 bis: The principal and interest of all bonds issued by banks and financial institutions operating in Lebanon, and the movable values representing support loans deposited with a custodian (Custodian) in Lebanon, shall be settled into the accounts of account holders at banks operating in Lebanon. The same exceptional procedures applied by "Clearstream S.A.G." for transferring all aforementioned bonds and movable values abroad shall apply.

Article 7: Statutory auditors at banks and financial institutions must continuously verify the application of the concerned institutions to the provisions of this Decision and immediately notify Banque du Liban and the Banking Supervision Committee upon any breach.

Article 8: A bank or financial institution in breach of the provisions is subject to referral to the higher banking authority for administrative sanctions against it according to Articles 208 and 209 of the Monetary and Banking Law.

Article 9: The following regulatory texts issued by Banque du Liban are repealed:

• Decision No. 6218 dated 4/7/1996, subject of Circular No. 1447 dated 4/7/1996.
• Decision No. 6731 dated 18/9/1997, subject of Circular No. 1559 dated 18/9/1997.

Article 10: This Decision takes effect upon its issuance.

Article 11: This Decision shall be published in the Official Gazette. Beirut, 19 December 1997 Governor of Banque du Liban Riad T. Salamah

1 - This article was added pursuant to Article 1 of Interim Decision No. 13187 dated 30/1/2020 (Interim Circular No. 541), which is effective for six months from its date, and was extended several times, lastly until 30/6/2026, pursuant to Interim Decision No. 13793 dated 9/1/2026 (Interim Circular No. 752). 2 - Circular numbers are according to the old numbering system.