Instructions on Banks' Ownership of Shares and Equity Stakes in Companies' Capital No. (5/2021)

In the name of Allah, the Most Gracious, the Most Merciful

[Logo of the Central Bank of Jordan]

Number: 1/10/5779
Date: 27/8/1442 AH
Corresponding to: 6/6/2021 AD

Instructions on Banks' Ownership of Shares and Equity Stakes in Companies' Capital No. (5/2021)

Greetings,

Based on the provisions of Article (99/b) of the Banking Law No. (28) of 2000 and its amendments, and for the purpose of controlling the risks of deploying available funds for banks and their subsidiaries within the Kingdom, as well as the deployment of their external presence, with the aim of preserving the financial solvency of banks, and based on the provisions of Articles (37/b, 38, 39) of the Banking Law concerning banks' ownership of shares and equity stakes in companies' capital, I hereby decide the following:

1. A bank is not permitted to own any non-financial subsidiary, whether directly or indirectly.
2. A bank is not permitted, whether through its presence inside or outside the Kingdom, to establish or own subsidiaries (or subsidiaries of subsidiaries) without prior written approval from the Central Bank.
3. Subsidiaries of the bank or (subsidiaries of the bank's subsidiary) are not permitted to contribute to the bank's capital.
4. When making any increase in the capital of foreign branches, subsidiaries, or (subsidiaries of subsidiaries) or affiliated companies, the bank is obliged to obtain prior written approval from the Central Bank.
5. The bank's ownership - whether alone or in agreement with others and whether directly or indirectly - in any company whose purpose is not to 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 a maximum of (20%) of the subscribed capital in activities that the Central Bank deems to support banking and financial activities, such as fintech, investment funds, and real estate ownership and marketing companies.

Central Bank of Jordan

6. A bank is not permitted to own, directly or indirectly, 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.
7. 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 Activities Regulation Law and related laws, provided that the bank complies with the following upon ownership:
   a. Submit an application to the Central Bank for approval of the ownership process, supported by an economic feasibility study justifying the ownership of the insurance company. b. The ownership in the company must not lead to a decrease in the capital adequacy ratio below the minimum prescribed by the Central Bank.
   c. Meet the Central Bank's requirements regarding the adequacy of reserves and provisions.
   d. The ownership decision must be taken by the General Assembly in an extraordinary meeting.
8. In the event of the Central Bank's approval of the ownership process under 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 must not exceed the percentage specified by the Central Bank's instructions. b. The company is not permitted to contribute to the bank's capital, nor may its director be a member of the bank's board of directors.
   c. Provide the Central Bank with any amendments that may occur to the company's articles of association, internal regulations, and the activities it will conduct, which must be consistent with the 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 value of shares and equity stakes in the capital of all companies owned by the bank must not exceed (50%) of its subscribed capital.
   b) The Governor of the Central Bank may allow a bank that has exceeded the percentage mentioned in item (9/a) above to increase its contribution to the capital of companies, provided that in all cases it does not exceed (50%) of the bank's regulatory capital. c) The above percentage includes:
   1. Shares and equity stakes owned by the bank itself.
   2. Shares and equity stakes owned by subsidiaries, equal to the bank's contribution to the capital of those companies.
   3. Shares and equity stakes owned by subsidiaries of the bank's subsidiary in the capital of those companies.

Central Bank of Jordan

d) For the exclusive purpose of calculating the percentage mentioned in (a, b) above, the value of shares and equity stakes is calculated at cost upon purchase.
10) The following are not included in the calculation of the percentages mentioned in paragraphs (5, 6, 7, 9) above:
a. Shares and equity stakes acquired to settle a debt for a period of two years from the date of ownership. b. 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.
c. Shares and equity stakes in any subsidiary if it is a bank or a financial company.
11) A bank that owns shares or equity stakes to settle a debt must dispose of these shares and equity stakes within two years from the date of acquiring ownership. The Central Bank may, in exceptional cases, extend this period for two consecutive years as a maximum.
12) Every bank that owns a percentage of not less than (5%) of the shares and equity stakes in the capital of any company must notify the Central Bank of this ownership within fifteen days from the date of acquisition.
13) The Central Bank may impose any other additional conditions it deems appropriate for the ownership of shares and equity stakes in companies' capital.
14) 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 fifteenth day of the month following the quarter to which these data relate, as follows:
a. Jordan branches and subsidiaries. b. The bank consolidated (Jordan branches, foreign branches, local subsidiaries, and foreign subsidiaries*).
*Statements of foreign subsidiaries are uploaded to the office supervision system semi-annually.
15) In the event of a conflict/contradiction between these instructions and any other instructions issued by the authorities under whose supervision the bank and its subsidiaries and subsidiaries of subsidiaries fall, the bank must inform us of this conflict and its mechanism for handling this conflict.
16) The following are repealed:

• Circular No. (1909/2/10) dated 14/2/2010.
• Instructions on Banks' Ownership of Shares and Equity Stakes in Companies' Capital No. (2002/12) dated 27/3/2003.
• Instructions on Banks' Ownership of Insurance Companies No. (2000/5) dated 5/12/2000.

17. These instructions shall come into force from their date.

Please accept our highest regards,

Governor
Dr. Ziad Friez

- Attached Statements:

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Statement of Share Investments for Bank/Bank ............................ dated ............................ (in Jordanian Dinar) First: Financial assets at fair value through profit or loss (P/L)

Number	Company Name*	Subscribed Capital of the Company	Number of Shares of the Company	Number of Shares Owned by the Bank in the Capital of the Invested Company Directly	Number of Shares Owned by the Bank Indirectly	Number of Shares Owned by the Bank Directly and Indirectly (3)+(4)	Ownership Percentage to Company Capital % =(5/2)	Ownership Percentage to Bank Capital % =(5/Bank Capital)	Currency	Cost of Share Purchase	Fair Value Recorded in Bank's Books at the Beginning of the Current Period (Year)	Fair Value Recorded in Bank's 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. Foreign Branches
c. Foreign Subsidiaries
Total (a+b+c)

• Distributed according to the approved sectors 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. Signatures of Authorized Persons:
  Official Stamp:
  Date:

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Statement of Share Investments for Bank/Bank ............................ dated ............................ (in Jordanian Dinar) Second: Financial assets at fair value through other comprehensive income (OCI)

Number	Company Name*	Subscribed Capital of the Company	Number of Shares of the Company	Number of Shares Owned by the Bank in the Capital of the Invested Company Directly	Number of Shares Owned by the Bank Indirectly	Number of Shares Owned by the Bank Directly and Indirectly (3)+(4)	Ownership Percentage to Company Capital % =(5/2)	Ownership Percentage to Bank Capital % =(5/Bank Capital)	Currency	Cost of Share Purchase	Fair Value Recorded in Bank's Books at the Beginning of the Current Period (Year)	Fair Value Recorded in Bank's 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. Foreign Branches
c. Foreign Subsidiaries
Total (a+b+c)

• Distributed according to the approved sectors 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. Signatures of Authorized Persons:
  Official Stamp:
  Date:

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Statement of Investment in Investment Funds for Bank/Bank ............................ dated ............................ (in Jordanian Dinar) Third: Financial assets at fair value through profit or loss (P/L)

Number	Company Name*	Subscribed Capital of the Company	Number of Shares of the Company	Number of Shares Owned by the Bank in the Capital of the Invested Company Directly	Number of Shares Owned by the Bank Indirectly	Number of Shares Owned by the Bank Directly and Indirectly (3)+(4)	Ownership Percentage to Company Capital % =(5/2)	Ownership Percentage to Bank Capital % =(5/Bank Capital)	Currency	Cost of Share Purchase	Fair Value Recorded in Bank's Books at the Beginning of the Current Period (Year)	Fair Value Recorded in Bank's 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. Foreign Branches
c. Foreign Subsidiaries
Total (a+b+c)

• Distributed according to the approved sectors 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. Signatures of Authorized Persons:
  Official Stamp:
  Date:

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Statement of Investment in Investment Funds for Bank/Bank ............................ dated ............................ (in Jordanian Dinar) Fourth: Financial assets at fair value through other comprehensive income (OCI)

Number	Company Name*	Subscribed Capital of the Company	Number of Shares of the Company	Number of Shares Owned by the Bank in the Capital of the Invested Company Directly	Number of Shares Owned by the Bank Indirectly	Number of Shares Owned by the Bank Directly and Indirectly (3)+(4)	Ownership Percentage to Company Capital % =(5/2)	Ownership Percentage to Bank Capital % =(5/Bank Capital)	Currency	Cost of Share Purchase	Fair Value Recorded in Bank's Books at the Beginning of the Current Period (Year)	Fair Value Recorded in Bank's 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. Foreign Branches
c. Foreign Subsidiaries
Total (a+b+c)

• Distributed according to the approved sectors 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. Signatures of Authorized Persons:
  Official Stamp:
  Date:

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Statement of Bank Investments/Bank ............................ dated ............................ (in Jordanian Dinar) Fifth: Bank's investment in the capital of subsidiaries / investment in subsidiaries of subsidiaries:

Number	Company Name	Subscribed Capital of the Company	Number of Shares Owned by the Bank	Ownership Percentage to Company Capital (%)	Currency	Cost	Facilities Granted to the Company	Administrative Relationship with the Company	Central Bank Approval Number and Date*	Notes
							Direct	Indirect
	Total Subsidiaries
	Total Subsidiaries
	Total

• Mention the number of the Central Bank's approval letter for the investment / date of Central Bank approval.
  Indicate investments in a subsidiary of a subsidiary.
  Signatures of Authorized Persons:
  Official Stamp:
  Date:

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Statement of Bank Investments/Bank ............................ dated ............................ (in Jordanian Dinar) Sixth: Bank's investment in the capital of affiliated companies:

Number	Company Name	Subscribed Capital of the Company	Number of Shares Owned by the Bank	Ownership Percentage to Company Capital (%)	Currency	Cost	Facilities Granted to the Company	Administrative Relationship with the Company	Notes
							Direct	Indirect
	Total

Signatures of Authorized Persons:
Official Stamp:
Date: