Facilities that may be granted by the Central Bank of Lebanon to banks and financial institutions

Intermediate Circular No. 773 To Banks and Financial Institutions

We enclose herewith a copy of Intermediate Decision No. 13842 dated 4/9/2026 concerning the implementing provisions for Article 8 bis of Basic Decision No. 6116 dated 7/3/1996 (Facilities that the Central Bank of Lebanon may grant to banks and financial institutions).

Beirut, 4 September 2026 Governor of the Central Bank of Lebanon Said Karim

Intermediate Decision No. 13842

Implementing Provisions for Article 8 bis of Basic Decision No. 6116 dated 7/3/1996 (Facilities that the Central Bank of Lebanon may grant to Banks and Financial Institutions)

The Governor of the Central Bank of Lebanon,

Based on the Code of Money and Credit, especially Articles 70, 79, and 174 thereof,

And based on Basic Decision No. 6116 dated 7/3/1996 and its amendments concerning the facilities that the Central Bank of Lebanon may grant to banks and financial institutions,

And given that the aforementioned Decision granted banks loans for direct or indirect participation in newly established "companies" without any trading or parallel market for their shares,

And given that the Central Bank of Lebanon no longer grants these facilities, which necessitates establishing frameworks and controls to ensure good management and follow-up of the resulting participations,

And given that the comprehensive legal, regulatory, and financial review conducted by the Central Bank of Lebanon for these participations revealed shortcomings in some banks' exercise of their supervisory and oversight duties,

And given that participations in such high-investment-risk companies require good follow-up, care, and management, such that banks must effectively exercise their powers and duties in supervising the good management of invested funds and protecting the interests of the relevant parties,

And given that the Central Bank of Lebanon, by taking necessary measures to preserve its funds and protect its rights as stipulated in the applicable laws and regulations,

And based on the decision of the Central Council of the Central Bank of Lebanon taken at its session held on 3/9/2026,

Decides the following:

Article One: The text of paragraph (e) of item (1) of section "First" of "Article 8 bis" of Basic Decision No. 6116 dated 7/3/1996 is hereby repealed and replaced with the following:

"-e: Management fees shall not exceed 2% as a maximum, of:

The value of shareholder loans approved by the Central Bank of Lebanon and the capital of Venture Capital companies for the investment period and for a maximum of the first five years of the company's duration.

The value of funds invested in "start-up companies" for the remaining years, after deducting written-off participations and provisions made on the remaining participations. The company entrusted with management and the auditor of the "companies" shall bear responsibility for not forming the necessary provisions, at that time, to affect the calculation of management fees."

Article Two: The text of item (2) of section "Fourth" of "Article 8 bis" of Basic Decision No. 6116 dated 7/3/1996 is hereby repealed.

Article Three: The numbering of section "Fifth" of "Article 8 bis" of Basic Decision No. 6116 dated 7/3/1996 is hereby amended to become section "Sixth", and item (5) with the following text is added thereto:

"-5: Any bank that violates the provisions of this Article shall be subject to the administrative penalties stipulated in Article 208 of the Code of Money and Credit, without prior warning upon verification of such violation. In addition to the foregoing, violating the provisions of this Basic Decision also constitutes a crime under Article 770 of the Penal Code, and the Central Bank of Lebanon has the right to prosecute any violating bank before the competent judicial authority."

Article Four: The following section "Fifth" is added to "Article 8 bis" of Basic Decision No. 6116 dated 7/3/1996:

"Fifth: Obligations of Banks:

I- Required Information:

Concerned banks must provide the Central Bank of Lebanon, within a period of 40 days from the date of issuance of this Decision, and subsequently within 15 days from the end of each quarter, with a report on each "company" in which they participate, directly or indirectly, including at least the following:

1- Information related to the "Company":

• Name of the "Company", its legal form, and a list of its shareholders and founders.
• Date of participation and the value of the concerned bank's participation.
• The company entrusted with management (Management Company), where applicable.
• Nature of the activity and its development, the company's sector of operation, competition and growth rate in this sector, investment strategy and expected return, investment value.
• Duration of participation and expected exit date.
• Distribution of profits of all types, beneficiaries thereof, and their value.
• Initial investment value, Cumulative Provisions taken, and Fair market value.
• List of members of the Board of Directors, General Managers, and Auditors.
• Legal status of the participation.

2- Information related to the Company entrusted with Management:

• Qualifications and experience of this company in this field.
• Curriculum vitae of the members of the Board of Directors, senior and executive management, and the investment committee.

3- Financial Performance of the "Company":

• Activity of the "Company" for the past period and how funds resulting from loans granted by the Central Bank of Lebanon were used.
• Sufficient investments made by banks directly or indirectly through these "companies" with the legal form adopted in each investment, nature of activity and its development, sector of operation, management team, labor markets, investment value (and its nature (direct investment, share purchase, capital increase, temporary financing (Bridge Financing), convertible loans to shares (Convertible Loans)), participation percentage.
• Business plan set to achieve profitability for the "companies" and the exit plan and/or closure of these companies.
• Current valuation of the "Company" compared to the previous valuation and explanation of the reason for the change.
• Financial statements.
• Performance indicators, especially achieved objectives (KPIs) and achieved profitability.
• Actual performance compared to the business plan and investment strategy.
• Significant developments that occurred to the "companies" or their assets.
• Extent of need for additional investment financing for the next 12 months and commitments under financing.
• Current and expected liquidity position for the next 12 months.
• Lawsuits, if any.
• Any significant increase in the level of risk compared to the expected return.
• The annual report of the auditor on the "Company"'s activities, specifically including how funds resulting from loans granted by the Central Bank of Lebanon were spent.

4- Management Fees and Expenses:

a- A detailed analysis of all fees and expenses in the currency paid by the "Company", directly or indirectly, showing the fees originally agreed upon, the fees and expenses actually paid to date, and the fees expected to be incurred during the remaining period of the participation, provided that each of the following is separately specified:

• Annual management fees and method of calculation and payment.
• Consultancy fees and method of calculation and payment.
• Performance fees and incentive profit share (Carried Interest).
• Formation fees and placement agent fees.
• Fees of the Chairman and members of the Board of Directors, in detail.
• Any amounts deducted from investment returns.
• Fees or charges paid to the auditor, Midclear S.A.L., lawyers, and others.

b- A comparative analysis showing the extent to which the paid fees are consistent with market reality and best practices, and with fees paid by similar "companies" in terms of size and strategy. In case of inconsistency of these fees, the bank must justify this discrepancy and propose corrective measures.

5- Exit Strategy from the "Company":

• Exit mechanism and date.
• Expected returns according to several scenarios.
• Conditions to be met before the possibility of exit.
• Risks or obstacles that may delay the exit.
• Expected amounts to be repaid to the Central Bank of Lebanon and their repayment date.

II- Decisions Subject to Prior Approval from the Central Bank of Lebanon:

Concerned banks must take the necessary measures to ensure that prior approval has been obtained from the Central Bank of Lebanon for any decisions that may affect the value of loans granted by the Central Bank of Lebanon. These decisions include, but are not limited to:

• Capital increase.
• Increase in leverage ratio.
• Substantial amendment of the investment strategy or its subject.
• Amendment of the duration of participation in the "Company".
• Disposal of company assets, their restructuring, or transfer abroad.
• Waiver of significant rights or claims.
• Change of the company entrusted with management.
• Amendment of management fees or incentive profit share.
• Transactions that may result in conflicts of interest or any dealings with related parties.
• Merger of the company with other companies or divestment of one of its subsidiaries.

III- Additional Measures:

Concerned banks must:

• Take appropriate internal measures to manage their participation in the "Company" under the supervision of senior management or a committee emanating from the Board of Directors.
• Demonstrate the extent to which their interests and the interests of the company entrusted with managing the "Company" are consistent with the interests of the Central Bank of Lebanon, especially working to improve the market value of the company with the aim of exiting the investment at the highest possible value.
• Identify any existing or potential conflict of interest.
• Provide the Central Bank of Lebanon with any documents or reports it may request.

Article Five: The Central Bank of Lebanon shall cease granting loans and the subject of "Article 8 bis" of Basic Decision No. 6116 dated 7/3/1996.

Article Six: This Decision shall be effective upon its publication in the Official Gazette.

Beirut, 4 September 2026 Governor of the Central Bank of Lebanon Said Karim