Instructions on Banks' Ownership of Shares and Equity Stakes in Companies' Capital

No. (5/2021)

Date: 10/1/5669 AH | 23/8/1442 AH | 6/4/2021 AD

Greetings,

Based on the provisions of Article (99/b) of the Banks Law No. (28) of 2000 and its amendments, and to control the risks of investing available funds in banks and their subsidiaries within the Kingdom, as well as their external investments, with the aim of preserving the financial solvency of banks;

And based on the provisions of Articles (37/b, 38, 39) of the Banks Law regarding banks' ownership of shares and equity stakes in companies' capital;

I hereby approve the following:

A bank shall not own any non-financial subsidiary, whether directly or indirectly.
A bank shall not, whether through its presence inside or outside the Kingdom, establish or own subsidiaries (or subsidiaries of subsidiaries) without prior written approval from the Central Bank.
Subsidiaries of a bank (or subsidiaries of a bank's subsidiary) shall not contribute to the bank's capital.
When making any increase in the capital of external branches, subsidiaries, (subsidiaries of subsidiaries), or affiliated companies, the bank is obliged to obtain prior written approval from the Central Bank for such action.
A bank's ownership - whether alone or in agreement with others, directly or indirectly - in any of the companies that do not accept deposits shall not exceed (10%) of the subscribed capital of the company in which it subscribes. The Central Bank may approve that this percentage reach (20%) as a higher limit for capital subscribed in activities that the Central Bank deems support banking and financial activities, such as fintech, investment funds, and real estate ownership and marketing companies.
A bank shall not, directly or indirectly, own shares in any other bank or any company that accepts deposits without prior written approval from the Central Bank. In all cases, this ownership percentage must not exceed (10%) of its subscribed capital or the subscribed capital of the bank (or company) in which it owns shares, whichever is lower. This prohibition does not apply to shares that banks already owned in excess of this percentage as of 2/8/2000.
A bank may, with prior written approval from the Central Bank, establish or own one or more insurance subsidiaries in accordance with the provisions of the Insurance Business Regulation Law and related laws, provided the bank complies with the following upon ownership:
a. Submit an application to the Central Bank for approval of the ownership transaction, supported by an economic feasibility study justifying the ownership of the insurance company. b. The ownership in the company shall not result in a decrease in the capital adequacy ratio below the minimum prescribed by the Central Bank.
c. Meet the Central Bank's requirements regarding reserve and provision adequacy.
d. Make the ownership decision by the General Assembly in an extraordinary meeting.
In the event the Central Bank approves the ownership transaction according to Item (7) above, the bank is obliged to comply with the following:
a. The value of direct and indirect credit facilities provided to the company shall not exceed the percentage specified by Central Bank instructions. b. The company shall not contribute to the bank's capital, nor shall its director be a member of the bank's board of directors.
c. Provide the Central Bank with any amendments to the company's articles of association, internal regulations, and the business activities it will conduct, which must be consistent with applicable laws and instructions.
d. Periodically provide the Central Bank with a report from the external auditor on the operations of its insurance subsidiaries.

9. a. The total sum of shares and equity stakes owned by the bank in the capital of all companies shall not exceed (50%) of its subscribed capital. b. The Governor of the Central Bank may allow a bank exceeding the percentage mentioned in Item (9/a) above to increase its contribution to the capital of companies to a percentage not exceeding (50%) of the bank's regulatory capital in all cases.
c. The above percentage includes:

Shares and equity stakes owned by the bank itself.
Shares and equity stakes owned by subsidiaries, equal to the bank's contribution percentage in the capital of those companies.
Shares and equity stakes owned by companies that are subsidiaries of the bank's subsidiary in the capital of those companies.
d. For the exclusive purpose of calculating the percentage mentioned in (a, b) above, the value of shares and equity stakes shall be calculated at cost upon purchase.

The following shall not be included in the calculation of the percentages mentioned in paragraphs (9, 7, 6, 5) above:
- Shares and equity stakes acquired to settle a debt for a period of two years from the date of ownership.
- Shares and equity stakes registered in the name of the bank if the ownership belongs to one or more of the bank's clients; these shares and equity stakes are not considered assets of the bank.
- Shares and equity stakes in any subsidiary if it is a bank or a financial company.
A bank that owns shares or equity stakes acquired to settle a debt must dispose of these shares and equity stakes within two years from the date of acquiring ownership. In exceptional cases, the Central Bank may extend this period for two consecutive years as a maximum.
Every bank that owns a percentage of not less than (5%) of shares and equity stakes in the capital of any company must notify the Central Bank of this ownership of these shares and equity stakes within fifteen days from the date of acquisition.
The Central Bank may impose any other additional conditions it deems appropriate for the ownership of shares and equity stakes in companies' capital.
Every bank must provide the Central Bank with statements (according to the attached forms) in paper format starting from the first quarter of 2021, and subsequently upload them to the office supervision system quarterly, no later than the 15th of the month following the quarter to which these data belong, as follows:
- Jordan branches and subsidiaries.
- Unified Bank (Jordan branches, external branches, local subsidiaries, and external subsidiaries*).
  *External subsidiary statements are uploaded to the office supervision system semi-annually.
In the event of a conflict between these instructions and any other instructions issued by entities under whose supervision both the bank and its subsidiaries and subsidiaries of subsidiaries fall, the bank must inform us of this conflict and its mechanism for resolving it.
The following are repealed:
- Circular No. (10/2/1909) dated 14/2/2010.
- Instructions on Banks' Ownership of Shares and Equity Stakes in Companies' Capital No. (12/2002) dated 27/3/2002.
- Instructions on Banks' Ownership of Insurance Companies No. (5/2000) dated 5/12/2000.

These instructions shall come into force from the date thereof.

Please accept the highest regards,

The Governor
Dr. Ziad Frieze

Attached Statements:

Statement of Share Investments for Bank / For the Bank .................... dated ....................

First: Financial Assets at Fair Value through Profit or Loss (P/L) (In Jordanian Dinars)

No.	Company Name	Subscribed Capital of the Company	Number of Shares of the Company	Number of Shares Owned by the Bank Directly in the Capital of the Invested Company	Number of Shares Owned Indirectly by the Bank*	Number of Shares Owned by the Bank Directly and Indirectly (3)+(4)	Percentage of Contribution to Company Capital % = (5/2)	Percentage of Contribution to Bank Capital % = (5/ Bank Capital)	Currency	Fair Value Recorded in Bank Books at the Beginning of the Current Period (Start of Year)	Cost of Share Purchase	Fair Value Recorded in Bank Books at the End of the Current Period	Difference
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)

a- Jordan Branches and their Subsidiaries
b- External Branches
Total (a+b)
c- External Subsidiaries
Grand Total (a+b+c)
Distributed according to sectors approved in the financial market.
According to the bank's contribution percentage in its subsidiaries (inside and outside the Kingdom) x Number of Shares Owned by the Bank's Subsidiary in the capital of the Invested Company, and so on for Subsidiaries of Subsidiaries.