COSOB Regulation No. 04-03 of September 9, 2004 Relating to the Guarantee Fund

Decree of 13 Dhou El Hidja 1425 corresponding to January 23, 2005, approving the regulation of the Commission for the Organization and Supervision of Stock Exchange Operations No. 04-03 of 24 Rajab 1425 corresponding to September 9, 2004, relating to the guarantee fund.

The Minister of Finance.

Having seen Ordinance No. 75-59 of September 26, 1975, as amended and supplemented, establishing the Commercial Code;

Having seen Legislative Decree No. 93-10 of May 23, 1993, as amended and supplemented, relating to the securities exchange;

Having seen Presidential Decree No. 04-138 of 6 Rabie El Aouel 1425 corresponding to April 26, 2004, appointing the members of the Government;

Having seen Executive Decree No. 95-54 of 15 Ramadhan 1415 corresponding to February 15, 1995, fixing the attributions of the Minister of Finance;

Having seen Executive Decree No. 96-102 of 22 Chaoual 1416 corresponding to March 11, 1996, implementing Article 32 of Legislative Decree No. 93-10 of May 23, 1993, as amended and supplemented, relating to the securities exchange;

Decrees:

Article 1. — The regulation of the Commission for the Organization and Supervision of Stock Exchange Operations No. 04-03 of 24 Rajab 1425 corresponding to September 9, 2004, relating to the guarantee fund, is hereby approved, the text of which is annexed to this decree.

Art. 2. — This decree shall be published in the Official Journal of the People's Democratic Republic of Algeria.

Done in Algiers, on 13 Dhou El Hidja 1425 corresponding to January 23, 2005.

Abdellatif BENACHENHOU.

ANNEX

Regulation No. 04-03 of 24 Rajab 1425 corresponding to September 9, 2004, relating to the guarantee fund.

The President of the Commission for the Organization and Supervision of Stock Exchange Operations (COSOB),

Having seen Legislative Decree No. 93-10 of May 23, 1993, as amended and supplemented, relating to the securities exchange, notably its Article 64;

Having seen Ordinance No. 03-11 of 27 Joumada Ethania 1424 corresponding to August 26, 2003, relating to currency and credit;

Having seen the Presidential Decree of 7 Ramadhan 1424 corresponding to November 2, 2003, appointing the President of the Commission for the Organization and Supervision of Stock Exchange Operations;

Having seen Regulation No. 96-03 of 17 Safar 1417 corresponding to July 3, 1996, relating to the conditions for approval, obligations, and control of stock exchange operation intermediaries;

After adoption by the Commission for the Organization and Supervision of Stock Exchange Operations on the date of 24 Rajab 1425 corresponding to September 9, 2004;

Enacts the regulation whose text follows:

Article 1. — The purpose of this regulation is to specify the conditions for the management and intervention of the guarantee fund, as well as the rules for the assessment and calculation of contributions, in accordance with Article 64 of Legislative Decree No. 93-10 of May 23, 1993, as amended and supplemented, cited above.

Art. 2. — Constituted in the form of a bank account managed by the Commission for the Organization and Supervision of Stock Exchange Operations hereinafter referred to as "the Commission," the guarantee fund is intended to cover the commitments of stock exchange operation intermediaries, hereinafter referred to as IOBs, towards their clients.

The resources of the fund originate from:
— the contributions of stock exchange operation intermediaries as provided for by this regulation; — the possible contribution of the securities exchange management company; — the fines provided for in Article 60 of Legislative Decree No. 93-10 of May 23, 1993, as amended and supplemented, cited above; — the investment income from its resources.

Art. 3. — The commitments covered by the fund relate to the restitution to investors of securities and cash held on their behalf by authorized IOBs acting as account holders when they are linked to the activities provided for in Article 7 of Legislative Decree No. 93-10 of May 23, 1993, as amended and supplemented, cited above, and when they do not fall within the scope of application of the bank deposit guarantee fund established by Article 118 of Ordinance No. 03-11 of August 26, 2003, cited above.

Art. 4. — For the purposes of this regulation, "securities" shall mean any credit balance of securities accounts opened with IOBs acting as account holders.

Art. 5. — The IOB acting as an account holder is required to pay, semi-annually, to the guarantee fund, a contribution calculated on the basis of the cash and securities positions of clients.

For cash, the contribution is equal to 0.2% of the semi-annual average of the end-of-day positions of cash held by each IOB acting as an account holder for the account of its clients.

Bank IOBs are not subject to the payment of the contribution on the cash position.

For securities, the contribution is equal to 0.04% of the semi-annual average of the end-of-quarter positions of securities held by each IOB acting as an account holder for the account of its clients.

When the availability of the guarantee fund is insufficient to cover the compensation of clients based on the global amount indicated in Article 6 below, said amount is reduced proportionally.

Art. 6. — The right to compensation of clients of a defaulting IOB acting as an account holder cannot exceed an amount of one million (1,000,000) dinars per client, of which six hundred thousand (600,000) dinars for securities and four hundred thousand (400,000) dinars for cash, provided that the total of reimbursements for a single IOB acting as an account holder does not exceed a global amount of one hundred fifty million (150,000,000) dinars.

COSOB Regulation Regulation No. 04-03

Art. 7. — The following are excluded from the benefit of the guarantee:

• Partners personally liable and limited partners holding at least 5% of the capital of the IOB, administrators, members of the board of directors and the supervisory board, executives, and auditors of the IOB.
• Securities resulting from operations for which a final criminal conviction has been pronounced against the investor for a money laundering offense.

Art. 8. — Except in the event of the opening of a judicial reorganization or bankruptcy procedure, the intervention of the guarantee fund takes place after the Commission has established the unavailability of securities and cash held with an IOB acting as an account holder.

Compensation is made to the benefit of the holder of the account opened with an IOB acting as an account holder or, where applicable, their heirs, in accordance with the legal provisions in force in this matter.

The IOB acting as an account holder is required to inform, without delay, by registered letter with acknowledgment of receipt, each account holder of the unavailability of their assets in securities and cash.

It must also indicate to its clients the steps to be taken and the supporting documents to be provided for their compensation by the guarantee fund.

Art. 9. — The intervention of the guarantee fund is brought to the attention of the public in a press release published by the Commission - manager of the fund - in the official bulletin of the quote and in at least two national daily newspapers.

Claims for compensation are received within a period of three months from the date of publication of the press release.

Art. 10. — The intervention of the fund entails the subrogation of the Commission in its capacity as manager of the fund in the rights of the holders of claims benefiting from the guarantee against the defaulting IOB, to the extent of the rights effectively covered by the guarantee.

Art. 11. — The available resources of the guarantee fund must be invested in negotiable securities issued or guaranteed by the State.

Art. 12. — This regulation shall be published in the Official Journal of the People's Democratic Republic of Algeria.

Done in Algiers on 24 Rajab 1425 corresponding to September 9, 2004.

Ali SADMI.

COSOB Regulation Regulation No. 04-03