General Decision of the Financial Markets Council No. 17 of June 21, 2012 regarding the Compliance and Internal Control Officer Function within Securities Portfolio Managers for Third Parties

General Decision of the Financial Markets Council No. 17 of June 21, 2012 regarding the Compliance and Internal Control Officer Function within Securities Portfolio Managers for Third Parties The Council Board of the Financial Markets Council, Having regard to Law No. 94-117 of November 14, 1994, reorganizing the financial market as amended and supplemented by subsequent texts, particularly Articles 28, 31, and 48 thereof, Having regard to the Collective Investment Scheme Code promulgated by Law No. 2001-83 of July 24, 2001, as amended and supplemented by subsequent texts, Having regard to Law No. 2005-96 of October 18, 2005, on strengthening the security of financial relations, particularly Article 20 thereof, Having regard to the Minister of Finance's Order of April 29, 2010, approving the Financial Markets Council Regulation on collective investment schemes in securities and portfolio management for third parties, as amended by the Minister of Finance's Order of February 15, 2013, particularly Article 85 thereof; Decides:

Article 1:
For the application of this General Decision, "manager" means:

• any management company provided for in Article 31 of the Collective Investment Scheme Code promulgated by Law No. 2001-83 of July 24, 2001;
• any management company provided for in Article 20 of Law No. 2005-96 of October 18, 2005 on strengthening the security of financial relations;
• stock exchange intermediaries and credit institutions authorized to manage securities portfolios for third parties in accordance with Article 22 of the aforementioned Law No. 2005-96.

"Executive" means any person holding the functions of Chief Executive Officer, General Manager, Director, member of the Supervisory Board or Management Board, as well as permanent representatives of legal entities serving as directors. I- Procedures for exercising the Compliance and Internal Control Officer function:
Article 2:
The Compliance and Internal Control Officer function must be performed exclusively by dedicated persons who possess the necessary authority, resources, expertise, and access to all relevant information.
Article 3:
The Compliance and Internal Control Officer must be attached to a hierarchical level that guarantees independence. Their remuneration method must not impair their objectivity or the independence of their judgments.
Article 4:
The manager may outsource the Compliance and Internal Control Officer function. In this case, approval from the Financial Markets Council must be sought.
The application file submitted to the Financial Markets Council must include the draft outsourcing contract to be concluded with the relevant service provider, specifying in particular the activity program, proposed stakeholders, envisaged periodicity, and annual duration of outsourced control missions.
Article 5:
The Compliance and Internal Control Officer function may be delegated to an entity within the manager's group. In this case, the manager must precisely define in writing the delegated entity's responsibilities. The application file submitted to the Financial Markets Council must describe how the Compliance and Internal Control function is organized. It outlines in particular the hierarchical and, where applicable, functional reporting lines of the Compliance and Internal Control Officer, as well as the human and technical resources available to him/her and the degree of independence enjoyed vis-à-vis operational functions. Where the delegated entity has multiple Compliance and Internal Control Officers, the activity program describes the aforementioned elements for each of these officers.

II- Conditions for the appointment of the Compliance and Internal Control Officer:
Article 6:
The natural person candidates for the Compliance and Internal Control Officer function must:

• hold Tunisian nationality;

• reside in Tunisia;

• enjoy civil and political rights;

• be physically and mentally fit to perform their activities;

• hold a master's degree, bachelor's degree, or equivalent diploma in the economic, financial, or accounting field;

• have at least five years of professional experience in the financial market when the manager manages securities portfolios invested in the financial market, and at least five years in the financial field when the manager manages venture capital or private equity vehicles, or have successfully passed a professional aptitude test organized by an entity recognized by the Financial Markets Council.
  Article 7:
  Prior to appointing a Compliance and Internal Control Officer, the manager must ensure the candidate's integrity, professional competence, and knowledge of the legal and regulatory framework governing management activities. The manager must also submit to the Financial Markets Council an approval request for the candidate, accompanied by the following documents:

• a sworn certified curriculum vitae;

• a copy of their national identity card;

• a certified true copy of their diplomas;

• a residence certificate;

• an extract from the criminal record;

• a medical certificate attesting that the person is physically and mentally fit to practice;

• documents proving at least five years of professional experience in the financial market or the financial field, as applicable.
  III- Resources and powers of the Compliance and Internal Control Officer:
  Article 8:
  The manager must provide the Compliance and Internal Control Officer with all necessary means to carry out their mission, including:

• adequate human and material resources;

• free access to all documents and information system modules that the officer deems useful for performing their mission;

• access to client complaints;

• the right to attend various meetings regarding fund placements;

• access to information concerning any event affecting securities portfolio management or collective investment schemes in securities.
  IV- Missions of the Compliance and Internal Control Officer:
  Article 9:
  The Compliance and Internal Control Officer must compile a compendium of all applicable current regulations governing the manager's activities and ensure their dissemination among executives and staff. They must ensure that legal and regulatory provisions are well understood by these individuals. To this end, they organize information meetings with new recruits to inform them of the legal and regulatory provisions related to their function. They are also responsible, upon any modification of a legislative or regulatory provision, for ensuring proper communication within the manager.

Article 10:
The Compliance and Internal Control Officer must perform advisory and assistance missions for persons responsible for management activities to ensure compliance with their professional obligations. They must ensure that procedures comply with industry best practices and current legal and regulatory provisions. The Compliance and Internal Control Officer must also ensure that the manager's procedures and resources are updated to incorporate legal and regulatory changes. They disseminate a procedure manual to executives and staff and ensure that the manager complies with the obligations arising from said manual. They carry out necessary controls to verify compliance with procedures by executives and staff.
Article 11:
The Compliance and Internal Control Officer must ensure that executives and staff always act in the exclusive interest of clients, unitholders, and shareholders.
Article 12:
The Compliance and Internal Control Officer must ensure that various irregularities identified by the depositary institution, the statutory auditor, or the Financial Markets Council are corrected without delay.
Article 13:
The Compliance and Internal Control Officer must prepare at least once a year a risk map of the risks incurred by portfolio management activities. This analysis integrates an estimate, for each risk, of its potential impact and probable occurrence. Based on the annual risk map, the Compliance and Internal Control Officer must establish an annual work program defining the controls to be performed and their frequency. A table specifying scheduled controls, documents used, and control periodicity is presented in the semi-annual report submitted to the Financial Markets Council, prepared according to the model provided in the annex of this General Decision. Controls performed must include:

• net asset value calculation;
• prudential ratios;
• investment policy and strategy;
• valuation of securities in the portfolio;
• order pre-allocation and allocation;
• bank account reconciliation;
• securities account reconciliation;
• shareholder and unitholder reconciliation;
• legal information obligations.

Article 14:
When the manager has not entrusted the ethics officer function to a collaborator without other duties, this function is performed by the Compliance and Internal Control Officer. The Compliance and Internal Control Officer must implement control procedures to ensure that each portfolio belonging to an individual or a collective investment scheme in securities is managed exclusively in the investor's, unitholder's, and shareholder's interest, and that operations initiated for managed accounts and collective investment schemes are exclusively motivated by their economic interest. They also control that managed portfolios are treated according to the investment policy.
Article 15:
The Compliance and Internal Control Officer must ensure that a permanent system for protecting IT access exists, that information backup procedures are periodically tested, and that the manager has off-site backup as well as a business continuity plan.
Article 16:
The Compliance and Internal Control Officer must ensure that the manager has implemented effective and transparent procedures for the reasonable and prompt handling of client complaints, and must monitor the recording of each complaint and the measures taken for its resolution.

V- Relationship between the Compliance and Internal Control Officer and the Financial Markets Council
Article 17:
The Compliance and Internal Control Officer must maintain an up-to-date file where written reports of control operations, including measures taken regarding identified irregularities and supporting documents, are archived chronologically. The Compliance and Internal Control Officer must also prepare a semi-annual control report covering the resources provided to carry out their mission and the results of their activities during the considered period. This report must be prepared according to the model provided in the annex of this General Decision and submitted to the Board of Directors or Management Board, as well as to the Financial Markets Council, no later than one month after the end of each semester. The Compliance and Internal Control Officer must bring to the attention of the Financial Markets Council and the manager's general management any irregularity identified in the exercise of their mission, as well as remedial measures undertaken or envisaged. The Compliance and Internal Control Officer keeps the Financial Markets Council informed of any change affecting the manager's operations. They must also ensure compliance with the conditions and deadlines for transmitting any document required by the Financial Markets Council. VI- Change of Compliance and Internal Control Officer
Article 18:
The manager must notify the Financial Markets Council of the resignation or termination of the Compliance and Internal Control Officer, along with the reasons, within seven days following the event. In case of a vacancy in the Compliance and Internal Control Officer position, the manager must regularize its situation within a period not exceeding one month. The conditions set forth in Articles 6 and 7 of this General Decision apply thereto.

Article 19:
The provisions of this General Decision take effect as of March 28, 2013.
Visa For the Council Board of the Financial Markets Council The Minister of Finance The President Elyès FAKHFAKH Salah ESSAYEL

Model of semi-annual report on controls performed by the Compliance and Internal Control Officer Company:
Compliance and Internal Control Officer:
Telephone number:
Email address:
CONTROLS YES NO OBSERVATIONS
I. CONTROL OF MANDATED MANAGEMENT

1. BACK AND MIDDLE OFFICE CONTROL
   1.1 Compliance with market conditions
   1.2 Control of orders and their allocation
   1.3 Purchases and sales on the stock exchange/monetary market/auctions
   1.4 Control of levied commissions
   1.5 Control upon termination of a mandate
   1.6 Control of client files
   1.7 Control of external service providers
   1.8 Monitoring the regularization of anomalies
2. MANAGEMENT CONTROL
   2.1 Control of management orientation
   2.2 Control of contractual management ratios
   2.3 Monitoring risks regarding limits set by mandates (loss limit)
   2.4 Verification of the evolution of risk exposure levels
   2.5 Verification of portfolio performance coherence relative to its reference index, if applicable
   2.6 Verification of portfolio performance coherence relative to other portfolios managed under the same management orientation
   2.7 Verification of overall/average portfolio performance relative to market performance

II. CONTROL OF SICAV AND FCP MANAGEMENT

1. BACK AND MIDDLE OFFICE CONTROL
   1.1 Maintenance of regulatory registers and documents related to corporate life
   1.2 Compliance with market conditions
   1.3 Net asset value calculation
   1.4 Bank account reconciliation (cash)
   1.5 Securities account reconciliation
   1.6 Reconciliation of unitholders and shareholders
   1.7 Asset inventories
   1.8 Subscriptions and redemptions
   1.9 Purchases and sales on the stock exchange/monetary market/auctions
   1.10 Control of levied commissions
   1.11 Control of orders
   1.12 Compliance with CMF regulations concerning the prospectus, control of document updates, fund management rules, or SICAV statutes
   1.13 Control of external service providers
   1.14 Monitoring the regularization of anomalies
2. MANAGEMENT CONTROL
   2.1 Prudential ratios
   2.2 Classification
   2.3 Investment policy and strategy
   2.4 Valuation of equity and debt securities
   2.5 Verification of portfolio performance coherence relative to its reference index and potentially relative to other external OPCVM of the same category
   2.6 Verification of performance coherence relative to management orientation and risk level in accordance with the OPCVM prospectus

III. CONTROL OF FCPR AND SEED FUNDS MANAGEMENT

1. BACK AND MIDDLE OFFICE CONTROL
   1.1 Maintenance of regulatory registers and documents related to corporate life
   1.2 Compliance with operational conditions
   1.3 Net asset value calculation
   1.4 Bank account reconciliation (cash)
   1.5 Securities account reconciliation
   1.6 Reconciliation of unitholders
   1.7 Asset inventories
   1.8 Subscriptions and redemptions
   1.9 Subscriptions, purchases, and sales of securities
   1.10 Control of levied commissions
   1.11 Control of shareholdings and orders
   1.12 Compliance with CMF regulations concerning the prospectus, control of document updates, and fund management rules
   1.13 Control of external service providers
   1.14 Monitoring the regularization of anomalies
2. MANAGEMENT CONTROL
   2.1 Prudential ratios
   2.2 Classification
   2.3 Investment policy and strategy
   2.4 Valuation of equity and debt securities
   2.5 Repurchase operations
   2.6 Verification of performance coherence relative to management orientation and risk level in accordance with the fund prospectus

IV. CLIENT RELATIONSHIP

1. Formalization of client relations
2. Transmission of statements to clients
3. Control of mandate execution
4. Client complaints register

V. CODE OF CONDUCT AND ETHICAL RULES

1. Equality of shareholders and unitholders
2. Strict respect for the interest of shareholders and unitholders
3. Prevention of conflicts of interest
4. Selection of intermediaries
5. Application of the code of ethics
6. Awareness sessions

VI. PROCEDURE CONTROL

1. Compliance with legal and regulatory obligations
2. Compliance with procedure manual obligations
3. Approval of OPCVM
4. Compliance with information obligations
   4.1 Information obligations related to SICAV and FCP
   4.2 Information obligations related to FCPR and seed funds
   4.3 Information obligations related to individual management
   4.4 Information obligations of the manager

VII. IT SECURITY
VIII. WORK PROGRAM