Legislative Decree No. 93-10 of May 23, 1993, Relating to the Securities Exchange Market, as Amended and Completed

CCCC Commission d’Organisation et de Surveillance des Opérations de Bourse COSOB Legislative Decree No. 93-10 of May 23, 1993, Relating to the Securities Exchange Market amended and completed by Ordinance No. 96-10 of January 10, 1996, Law No. 03-04 of February 17, 2003, and Article 95 of Law No. 17-11 of December 27, 2017, establishing the Finance Law for 2018 COSOB/ Documentation Dept. / 2018

COSOB / Documentation Dept. L.D. No. 93-10 amended & completed

Legislative Decree No. 93-10 of May 23, 1993, Relating to the Securities Exchange Market, amended and completed by Ordinance No. 96-10 of January 10, 1996, Law No. 03-04 of February 17, 2003 (and rectification of Law No. 03-04), and Article 95 of Law No. 17-11 of December 27, 2017, establishing the Finance Law for 2018

The President of the High Committee of State, Having regard to the Constitution, and in particular Articles 115 and 117; Having regard to the proclamation of January 14, 1992, establishing the High Committee of State; Having regard to Deliberation No. 92-02/HCE of April 14, 1992, relating to decrees of a legislative nature; Having regard to Deliberation No. 92-04/HCE of July 2, 1992, relating to the election of the President of the High Committee of State; Having regard to Ordinance No. 66-154 of June 8, 1966, as amended and completed, establishing the Civil Procedure Code; Having regard to Ordinance No. 66-156 of June 8, 1966, as amended and completed, establishing the Penal Code; Having regard to Ordinance No. 75-58 of September 26, 1975, as amended and completed, establishing the Civil Code; Having regard to Ordinance No. 75-59 of September 26, 1975, as amended and completed, establishing the Commercial Code; Having regard to Law No. 88-01 of January 12, 1988, establishing the orientation law on public economic enterprises; Having regard to Law No. 88-03 of January 12, 1988, relating to participation funds; Having regard to Law No. 90-10 of April 14, 1990, relating to currency and credit; Having heard the National Consultative Council, Promulgates the legislative decree whose text follows:

Article 1. — A securities exchange market is hereby established. The securities exchange market is the framework for the organization and conduct of operations on securities issued by the State, other public law entities, as well as joint-stock companies.

Art. 2. — The securities exchange market is held in Algiers.

Art. 3 (Law No. 03-04 of February 17, 2003). — The securities exchange market comprises the following bodies: — a commission for the organization and supervision of stock exchange operations, which constitutes the securities market authority, hereinafter referred to as "the Commission"; — a securities exchange management company; — the central securities depository.

1 This article, amended and completed by Law No. 03-04 of February 17, 2003, was initially worded as follows: Art. 3. — The securities exchange market comprises the following bodies:

• a commission for the organization and supervision of stock exchange operations, which constitutes the securities market authority, hereinafter referred to as "the Commission";
• a securities exchange management company.

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Art. 4. — Negotiations and transactions within the exchange are carried out by stock exchange intermediaries.

TITLE I STOCK EXCHANGE INTERMEDIARIES

Art. 5 (Law No. 03-04 of February 17, 2003) — Any negotiation involving securities admitted to the exchange may only take place within the exchange and through stock exchange intermediaries. — However, negotiations on bond securities, listed on the exchange, issued by the State, other public law entities, and joint-stock companies, may take place off-exchange, according to the negotiated procedure between market participants. — A regulation of the Commission determines the conditions for carrying out these negotiations as well as the status of these participants.2

Art. 6 (Law No. 03-04 of February 17, 2003) — The activity of stock exchange intermediary is exercised, after approval by the Commission for the Organization and Supervision of Stock Exchange Operations (COSOB), by commercial companies constituted primarily for this purpose, banks, and financial institutions. — These intermediaries may also exercise the activity of intermediation in markets for transactions on securities and other financial products not admitted to the exchange, under the conditions set by the legislative and regulatory provisions governing these markets.3

2 This article, amended and completed by Law No. 03-04 of February 17, 2003, was initially worded as follows: Art. 5 (Ordinance No. 96-10 of January 10, 1996). — Any negotiation involving securities admitted to the exchange may only take place within the exchange and through stock exchange intermediaries.

• However, negotiations on bond securities, listed on the exchange, issued by the State, other public law entities, and joint-stock companies, may take place off-exchange, according to the negotiated procedure between market participants.
• A regulation of the Commission determines the conditions for carrying out these negotiations as well as the status of these participants. The provisions of the first paragraph of this article are applicable for a period of eighteen months renewable by the Commission for the Organization and Supervision of Stock Exchange Operations.(1) (1) This article, completed by Ordinance No. 96-10 of January 10, 1996, was initially worded as follows: Article 5: Any negotiation involving securities admitted to the exchange may only take place within the exchange and through stock exchange intermediaries.

3 This article, amended and completed by Law No. 03-04 of February 17, 2003, was initially worded as follows: Art. 6 (Ordinance No. 96-10 of January 10, 1996). — The activity of stock exchange intermediary may be exercised, after approval by the Commission, by natural persons or by joint-stock companies constituted primarily for this purpose. These intermediaries may also exercise the activity of intermediation in markets for transactions on securities and other financial products not admitted to the exchange, under the conditions set by the legislative and regulatory provisions governing these markets.(1) (1) This article, amended and completed by Ordinance No. 96-10 of January 10, 1996, was initially worded as follows: Art. 6. — The activity of stock exchange intermediary may be exercised, after approval by the Commission, by natural persons or by joint-stock companies constituted exclusively for this purpose.

COSOB / Documentation Dept. L.D. No. 93-10 amended & completed

Art. 7 (Law No. 03-04 of February 17, 2003) — Stock exchange intermediaries may, within the limits of the legislative and regulatory provisions governing them, essentially exercise the following activities:

• negotiation for third-party accounts;
• investment advice on securities;
• individual portfolio management pursuant to a written contract;
• portfolio management of collective investment schemes in securities;
• placement of securities and financial products;
• performance guarantees and firm commitment to issue securities;
• negotiation for own account;
• custody and administration of securities;
• corporate advice on capital structure, mergers, and acquisitions. However, the Commission for the Organization and Supervision of Stock Exchange Operations (COSOB) may limit the approval granted to a stock exchange intermediary to a subset of the activities listed above. In case of dispute, the aggrieved applicant may file an appeal according to the procedures provided for in Article 9 below. A COSOB regulation will specify the conditions and procedures for approval.4

Art. 8. — Stock exchange intermediaries must provide sufficient guarantees, particularly regarding the composition and amount of their capital, their organization, their technical and financial resources, the guarantees and bonds to be provided, the honorability and experience of their executives and agents, as well as the security of their clients' operations. A regulation of the Commission will specify all these conditions.

4 This article, amended and completed by Law No. 03-04 of February 17, 2003, was initially worded as follows: Art. 7 (Ordinance No. 96-10 of January 10, 1996). — Furthermore, funds entrusted to stock exchange intermediaries by their clients for investment in securities must be transferred by bank transfer. Furthermore, stock exchange intermediaries must ensure that funds entrusted by their clients for the realization of stock exchange operations originate from regularly declared income. A regulation of the Commission will specify the conditions for the application of the above paragraph.(1) (1) This article, amended and completed by Ordinance No. 96-10 of January 10, 1996, was initially worded as follows: Art. 7. — Stock exchange intermediaries are authorized, under the conditions set by the Commission, to:

• manage portfolios of securities for their clients by receiving funds accompanied by a management mandate;
• act as counterparty in securities transactions. This option may not be exercised with regard to their clients. Furthermore, stock exchange intermediaries must ensure that funds entrusted by their clients for the realization of stock exchange operations originate from regularly declared income. A regulation of the Commission will specify the conditions for the application of the above paragraph.

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Art. 9 (Law No. 03-04 of February 17, 2003) Stock exchange intermediaries are approved by the Commission for the Organization and Supervision of Stock Exchange Operations (COSOB) under the conditions set by the regulation mentioned in Article 31 of Legislative Decree No. 93-10 of May 23, 1993, as amended and completed, supra. In the event of refusal or limitation of approval, the Commission's decision must be reasoned. The applicant may file an appeal for annulment before the Council of State within one (1) month from the notification of the Commission's decision. The Council of State has a period of three (3) months to rule on the appeal for annulment from the date of its registration.5

Art. 10. — The manager, or the board of directors, of each stock exchange intermediary may authorize qualified agents among its staff to carry out securities negotiations on the exchange. The qualification rules are defined by a regulation of the Commission.

Art. 11. — The agents referred to in Article 10 above are registered with the Commission, which issues them a professional card. A regulation of the Commission will specify the conditions for the application of this Article.

Art. 12. — Stock exchange intermediaries, their administrators, managers, directors, registered agents, and generally all their personnel, as well as their statutory auditors, are bound by professional secrecy. Failure to observe professional secrecy is punished in accordance with the Penal Code.

Art. 13. — Stock exchange intermediaries are required to conclude mandate contracts with their clients. The contracts must obligatorily provide for periodic reports, at least every six months, of the operations carried out by the intermediary for its client. The mandatory clauses that each standard contract must contain are determined by a regulation of the Commission.

Art. 14. — Stock exchange intermediaries are liable to their principals for the delivery and payment of securities negotiated on the market.

5 This article, amended and completed by Law No. 03-04 of February 17, 2003, was initially worded as follows: Art. 9. — Stock exchange intermediaries are approved by the Commission under the conditions set by the regulation mentioned in Article 31 below. In the event of refusal of approval, the Commission's decision must be reasoned. The applicant retains all rights of appeal provided by the legislation in force.

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TITLE II OF THE SECURITIES EXCHANGE MANAGEMENT COMPANY AND THE CENTRAL SECURITIES DEPOSITORY6 (Law No. 03-04 of February 17, 2003)

Chapter 1 The Securities Exchange Management Company7 (Law No. 03-04 of February 17, 2003)

Art. 15. — The conduct, within the meaning of Article 18 below, of transactions on securities admitted to the exchange is ensured by a securities exchange management company which takes the form of a joint-stock company.

Art. 16. — The capital of the company is represented by shares reserved for stock exchange intermediaries.

Art. 17. — The approval of the stock exchange intermediary only becomes effective when it has acquired or subscribed to a share of the capital of the securities exchange management company. A regulation of the Commission will specify the conditions for the application of this Article.

Art. 18. — The object of the company includes in particular: — the practical organization of the listing of securities, — the material organization of transactions and exchange sessions, — the recording of negotiations by stock exchange intermediaries, — the organization of settlement operations for securities transactions, — the management of a trading and quotation system, — the publication of information relating to exchange transactions, — the publication of an official quotation bulletin under the control of the Commission. The missions of the company are exercised under the control of the Commission.

Art. 19. — The company receives commissions on operations carried out on the exchange. The calculation rules will be fixed by regulation of the Commission for the Organization and Supervision of Stock Exchange Operations.

Art. 19 bis (Law No. 03-04 of February 17, 2003) The statutes and their amendments, as well as the appointment of the General Manager and the senior executives of the Securities Exchange Management Company, must be approved by the Minister in charge of Finance after opinion of the Commission for the Organization and Supervision of Stock Exchange Operations. Based on a reasoned report from the Commission for the Organization and Supervision of Stock Exchange Operations, the Minister in charge of Finance may, on a provisional basis, dismiss the General Manager and/or the senior executives of the company and provide for their replacement pending the designation by the Board of Directors of a new General Manager and/or new executives.

6 The title of Title II, amended and completed by Law No. 03-04 of February 17, 2003, was initially worded as follows: Title II: Of the securities exchange management company.

7 Title II, amended and completed by Law No. 03-04 of February 17, 2003; is completed by (01) chapter.

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The statutes and organs of the existing company must be brought into conformity with the provisions of this law within six (6) months of its publication.8

Chapter 2 The Central Securities Depository9 (Law No. 03-04 of February 17, 2003)

Art. 19 ter (Law No. 03-04 of February 17, 2003) When an issuer of securities, whether State, local authorities, public body, or joint-stock company, uses the option to issue securities registered in account, bearer securities may only be registered with an intermediary authorized by the Commission for the Organization and Supervision of Stock Exchange Operations in the capacity of securities account-keeper. The conditions for authorization to keep securities accounts and control of the activity are specified by a regulation of the Commission for the Organization and Supervision of Stock Exchange Operations.10

Art. 19 quater (Law No. 03-04 of February 17, 2003) The functions of the Central Securities Depository are exercised by a body established in the form of a joint-stock company. The statutes and their amendments, the appointment of the General Manager, and the senior executives of the Central Securities Depository must be approved by the Minister in charge of Finance after opinion of the Commission for the Organization and Supervision of Stock Exchange Operations. Based on a reasoned report from the Commission for the Organization and Supervision of Stock Exchange Operations and on a provisional basis, the Minister in charge of Finance may dismiss the General Manager of the Central Securities Depository and/or the senior executives and provide for their replacement pending the nomination by the Board of Directors of a new General Manager and/or new executives. The missions of the Central Securities Depository likely to allow the settlement of operations contracted on the organized or over-the-counter market consist of:

• the custody of securities which allows for the opening of accounts in the name of approved participants,
• the tracking of the movement of securities from one account to another,
• the administration of securities to allow approved participants to exercise their related rights,
• the legal codification of securities,
• the publication of information relating to the market.11

8 This Article is completed by Law No. 03-04 of February 17, 2003.

9 This Chapter is completed by Law No. 03-04 of February 17, 2003.

10 Article 19 ter is completed by Law No. 03-04 of February 17, 2003.

11 Article 19 quater is completed by Law No. 03-04 of February 17, 2003

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Art. 19 quinquiès (Law No. 03-04 of February 17, 2003) The capital of the Central Securities Depository, valued at sixty-five (65) million dinars, is constituted by the participations of its founders, which are:

• the External Bank of Algeria,
• the Popular Credit of Algeria,
• the National Bank of Algeria,
• the Agricultural and Rural Development Bank,
• the National Savings and Foreseen Fund/Bank,
• the SAIDAL group,
• the El-Aurassi hotel management company,
• the ERIAD - Sétif company. The capital of the Central Securities Depository company is open only to:
• the securities exchange management company,
• securities issuing companies,
• stock exchange intermediaries. The Public Treasury and the Bank of Algeria are deemed holders of participations in the company by virtue of the law and may, upon their request, exercise this right. Any new application for participation in the capital of the Central Securities Depository is subject to the approval of the Commission for the Organization and Supervision of Stock Exchange Operations on the proposal of the Board of Directors of the Central Securities Depository. The implementation modalities of this Article, and in particular the conditions relating to participation in the company's capital, are specified by a regulation of the Commission for the Organization and Supervision of Stock Exchange Operations.12

Art. 19 Sixtiès (Law No. 03-04 of February 17, 2003) The activities of the Central Securities Depository referred to in Article 19 quater above are exercised under the control of the Commission for the Organization and Supervision of Stock Exchange Operations.13

12 Article 19 quinquiès is completed by Law No. 03-04 of February 17, 2003.

13 Article 19 Sixtiès is completed by Law No. 03-04 of February 17, 2003

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TITLE III THE COMMISSION FOR THE ORGANIZATION AND SUPERVISION OF STOCK EXCHANGE OPERATIONS

Chapter 1 Composition and Operation

Art. 20 (Law No. 03-04 of February 17, 2003) An independent regulatory authority for the organization and supervision of stock exchange operations is established, enjoying legal personality and financial autonomy. It is composed of a President and six (6) members. 14

Art. 21. — The President is appointed for a term of four (04) years. The conditions of appointment, cessation of functions, and the status of the President of the Commission are determined by regulatory means.

Art. 22 (Law No. 03-04 of February 17, 2003) The members of the Commission are appointed based on their financial and stock exchange expertise for a duration of four (4) years under the conditions fixed by regulatory means according to the following distribution: — a magistrate proposed by the Minister of Justice; — a member proposed by the Minister in charge of Finance; — a university professor proposed by the Minister in charge of Higher Education; — a member proposed by the Governor of the Bank of Algeria; — a member chosen among the executives of legal entities issuing securities; — a member proposed by the National Order of Chartered Accountants, Statutory Auditors, and Certified Accountants.15

Art. 23. — Except for the President, the composition of the Commission is renewed by half every two years.

14 This article, amended and completed by Law No. 03-04 of February 17, 2003, was initially worded as follows: Art. 20. — A commission for the organization and supervision of stock exchange operations is established. It is composed of a President and six members.

15 This article, amended and completed by Law No. 03-04 of February 17, 2003, was initially worded as follows: Art. 22. — The members of the Commission are appointed for a term of four (04) years under the conditions fixed by regulatory means according to the following distribution:

• a magistrate proposed by the Minister of Justice,
• a member proposed by the Governor of the Bank of Algeria,
• two members chosen among the executives of legal entities issuing securities,
• two members chosen due to their experience acquired in financial, banking, or stock exchange matters. Their functions are terminated under the conditions fixed by regulatory means.

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Art. 24. — The function of President of the Commission is exercised on a full-time basis by its holder. It is incompatible with any elected mandate, government function, the exercise of a public function, or any other activity, with the exception of teaching and artistic and intellectual creation activities.

Art. 25. — The President, as well as all permanent personnel of the Commission, may not carry out transactions on shares admitted to the exchange.

Art. 26. — The Commission adopts its internal regulations at its first meeting.

Art. 27. — Fees are collected on acts and services rendered by the Commission. The rules for the basis, calculation, and collection of these fees are fixed by regulatory means.

Art. 28. — An operating subsidy is allocated to the Commission from the State budget.

Art. 29. — The Commission has, for its operation, a secretariat equipped with administrative and technical services.