Law No. 2013-48 of December 9, 2013 on Islamic Investment Funds

Page 3396 Official Journal of the Tunisian Republic — December 10, 2013 No. 98
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Law No. 2013-48 of December 9, 2013, on Islamic Investment Funds (1).
In the name of the people,
The Constituent National Assembly having adopted, The President of the Republic hereby promulgates the law as follows:

Article 1 - Islamic investment funds may be established either as collective investment schemes in securities, investment companies, expert funds, or non-resident enterprises exercising the activity of holding equity stakes in existing or newly created companies as provided for in Article 147 of the Code on Financial Services to Non-Residents, provided that they operate in accordance with Shariah standards. They are hereinafter referred to as "Funds".

Article 2 - The provisions of the Collective Investment Schemes Code promulgated by Law No. 2001-83 of July 24, 2001, the Law No. 2005-58 of July 18, 2005 on seed funds, the Law No. 88-92 of August 2, 1988 on investment companies, and the Code on Financial Services to Non-Residents promulgated by Law No. 2009-64 of August 12, 2009 shall apply to Islamic investment funds insofar as they are not derogated from by the provisions of this law.

Article 3 - Each fund must have a Shariah supervisory committee responsible for issuing fatwas and controlling the fund's transactions to ensure compliance with Shariah standards. The decisions of said committee are enforceable.
The committee shall consist of at least three members, chosen among experts specialized in Islamic transaction doctrine who are Tunisian nationals, except for committee members operating within the framework of the Code on Financial Services to Non-Residents.
Committee members are appointed for a three-year term, renewable twice.

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(1) Preliminary works:
Discussion and adoption by the Constituent National Assembly in its session of November 22, 2013.
The internal regulations or articles of association of the fund set forth the integrity and expertise conditions that committee members must meet.

Article 4 - The Shariah supervisory committee shall present an annual report on its activities to the general assembly of the company or manager.
All provisions relating to financial statements regarding the procedures and deadlines for making them available to shareholders or unit holders, dissemination, and filing with the Financial Market Council shall apply to the committee's annual report, in accordance with the prevailing legislation for each fund type. The board of directors or supervisory council must provide the committee with all documents and explanations it deems necessary for the exercise of its duties.

Article 5 - The Shariah supervisory committee must be independent, and the appointment of its members, their dismissal, and the determination of their fees shall be carried out by the general assembly of the company or manager and approved by the Financial Market Council when the Fund is a public offering entity or subject to the control of the Financial Market Council.
The general assembly may not dismiss a committee member before the expiration of their term unless it is established that they committed a serious fault in exercising their duties, in which case they shall be replaced by a new member.

Article 6 - Members of the Shariah supervisory committee are bound by professional secrecy regarding all documents and information obtained during the exercise of their functions.
The provisions of the Penal Code relating to the disclosure of professional secrecy shall apply to them.

Article 7 - Members of the Shariah supervisory committee must take all measures to avoid conflicts of interest during their term.

No. 98 Official Journal of the Tunisian Republic — December 10, 2013 Page 3397 A conflict of interest is considered to be any direct or indirect personal interest or direct or indirect personal relationship likely to affect the concerned member's commitment to comply with their conditions and obligations, and affecting the proper exercise of the committee's duties, whether they are a member of the board of directors or supervisory council or management board or an employee of the company or manager, or a subscriber or shareholder in the fund, or provide services related to the Fund's interests other than those provided within the committee. The member concerned by a conflict of interest situation must declare it to the board of directors or supervisory council and refrain from participating in committee meetings, deliberations, or decisions related to the conflict of interest until the board of directors or supervisory council rules on it within ten (10) days following the declaration date. When a conflict of interest is established as temporary, a notice shall be issued to the concerned member inviting them to refrain from participating in committee meetings, deliberations, or decisions related to the conflict until the impediment is resolved. When a conflict of interest is established as permanent, a notice shall be issued to the concerned member inviting them to submit their resignation to the president of the general assembly within forty-eight (48) hours following said notice, and they shall be replaced by a new member. In the event of becoming aware of a conflict of interest situation, the board of directors or supervisory council shall proceed to investigate the matter and hear the concerned party. And in case a deliberate concealment of the conflict of interest is established, the general assembly shall be seized and shall proceed to dismiss them and replace them with a new member.

Article 8 - Each fund must have an internal Shariah audit unit responsible for examining and controlling the fund's compliance with Shariah standards in accordance with fatwas and decisions of the Shariah supervisory committee, and for submitting periodic reports to the committee and the board of directors or supervisory council.
The internal Shariah audit unit shall consist of one or more members specialized in Islamic transaction doctrine. The composition of said unit is approved by the Shariah supervisory committee.
The Shariah supervisory committee must periodically ensure the effectiveness of the internal Shariah audit system.

Article 9 - The fund's articles of association or internal regulations, and in the case of a public offering entity, the prospectus must state the following information:

• the fund was established and operates in accordance with Shariah standards,
• the Shariah supervisory committee and its composition,
• the internal Shariah audit unit and its composition,
• the method for managing income non-compliant with Shariah standards, where applicable,
• the determination of the party responsible for paying Zakat, whether subscribers or shareholders or the fund. In the latter case, the Zakat due on each share or unit must be disclosed.

Article 10 - Investment companies operating under Law No. 88-92 of August 2, 1988 on investment companies may transform into Islamic investment funds provided they comply with the provisions of this law.

Article 11 - Islamic investment funds in operation on the date of publication of this law in the Official Journal of the Tunisian Republic must comply with its provisions within a period of one year from the date of publication. The deadline may be extended by decree.
This law shall be published in the Official Journal of the Tunisian Republic and executed as a law of the State.

Tunis, December 9, 2013.
The President of the Republic
Mohamed Moncef El Marzougui