Regulatory Bylaw No. (15) Conditions and Requirements for Listing Companies in the Securities Market / Second Market

Regulatory Bylaws of the Capital Markets Authority for the Year 2022 Regulatory Bylaw No. (15) Conditions and Requirements for Listing Companies in the Securities Market / The Second Market

Article (1)
Definitions:
A. The Authority: The Capital Markets Authority.
B. The Market: The Iraq Securities Market.
C. The Main Market: The market through which trading in securities issued in accordance with the provisions of laws, regulations, and Regulatory Bylaw No. (6) (Conditions and Requirements for Listing Companies in the Iraq Securities Market) takes place.
D. The Second Market: That part of the Market through which trading in securities governed by its own listing conditions and regulatory bylaws for trading takes place.

Article (2)
Listing Conditions in the Second Market:
A. The company shall submit a listing application to the Iraq Securities Market, signed by the Chairman of the Board of Directors and the Authorized Manager, and attach a certified certificate and memorandum of association from the Companies Registration Department, confirming its knowledge and acceptance of the listing conditions approved by the Market and the Authority. B. It must be a joint-stock company that has been conducting its activity for a period of not less than one year, and must have issued at least one annual financial statement audited by an independent auditor.
C. The company's financial data must include the following:
First: The annual financial statements for the year preceding the date of submission of the listing application, accompanied by a report from the Board of Directors, an independent auditor, and a person legally authorized in Iraq, and must include:

• The General Balance Sheet.
• The Profit and Loss Account.
• The Cash Flow Statement.
• Necessary explanations regarding this data.
  Second: The quarterly financial data covering the time period from the end of the previous financial year to the submission of the listing application until the end of the last quarter preceding the date of that application, compared with the corresponding period in the previous year, and must include:
• The General Balance Sheet.
• The Profit and Loss Account.
• The Cash Flow Statement.
  Third: Equity rights must not be less than 50% of the capital.
  Fourth: Approval of the company's Board of Directors for the listing application in the Second Market, supported by a resolution of the General Assembly on the listing request. In the event that the General Assembly's approval is not obtained, the company shall be listed on the condition that the matter be presented to the first meeting of the General Assembly after the listing date and that the General Assembly's approval be submitted to the Authority and the Market; otherwise, the company shall be delisted. Fifth: The company shall submit a confirmation of legal restrictions on the transfer of ownership of the securities, signed by the Chairman of the Board of Directors and the Authorized Manager of the company. Sixth: The company must deposit its shares in the Depository Center and undertake to agree to the deposit conditions. Seventh: Payment of the prescribed membership and annual subscription fees.

Article (3)
Regulatory Bylaws for Trading in the Second Market:
A. Client mandates issued for trading in securities listed in the Second Market and used by brokerage firms must be in the format prepared by the Market.
B. The closing price or opening price of any security shall not be calculated.
C. The average share price for each company shall be calculated individually in each trading session.
D. The price shall be free for three effective trading sessions after listing. The upper and lower limits for the increase and decrease of the share price during the session shall be within 20% of the average share price of the previous session, and a reference price shall be set at a change of 50% when the company's shares are returned to trading in the Main Market after an increase, following the General Assembly meeting, with the reference price reduced by the amount of the dividend distribution. E. The Market is responsible for publishing reports and transferring data as follows:
First: Publishing trading data in the daily bulletin, including the number of trades, the number of shares traded and their value, as well as the highest and lowest trading price for each security and the average price. Second: Publishing trading data in the monthly bulletin, including the same data included currently for securities listed in the Main Market, except for information regarding the opening and closing prices. Third: Sending trading data to the Authority. Fourth: Sending trading data related to executed orders automatically to the Depository Center, and completing the deposit and storage process on the settlement day. Fifth: Printing daily execution reports as is done in the Main Market.
V. The same trading regulatory bylaws in effect in the Main Market shall be followed, except where a provision in these bylaws states otherwise.
Z. Orders shall be entered and executed through the trading stations of each authorized person in the trading hall through a trading system specific to the Second Market.
H. The Market and the Depository Center are committed to the procedures of the financial clearing and share settlement process in accordance with the mechanisms of the systems used and their procedures.

Article (4)
Descent from the Main Market to the Second Market:
A. The company shall descend from the Main Market to the Second Market in one of the following cases:
First: The company's failure to implement one of the conditions for continuing listing in the Main Market (Regulatory Bylaw No. 6) and by a decision of the Governors' Council approved by the Authority's Council. Second: A decrease in the number of contracts executed on the company's shares to less than (25) contracts annually, or a decrease in the annual trading volume to less than 1% of the company's capital, and a decrease in the number of trading days to less than (25) days during the year. B. The company shall descend from the Main Market to the Second Market by a decision of the Governors' Council after raising a recommendation from the Market's Authorized Manager and with the Authority's approval.

Article (5) *
Ascent from the Second Market to the Main Market: The company shall ascend to the Main Market upon request from the company's Board of Directors in the event that the listing conditions contained in the bylaws issued by the Authority applicable to companies listed in the Main Market (Regulatory Bylaw No. 6) are met, while observing the conditions and trading procedures in the Main Market. When trading indicators are achieved that are commensurate with the trading indicators of Main Market companies:
A. The number of contracts executed on the company's shares shall not be less than 25 contracts annually.
B. The annual trading volume shall not be less than 1% of the company's capital or the number of trading days shall not be less than 25 days during the year.

Article (6)
Disclosure Requirements Submitted by Companies Listed in the Second Market:
A. Submission of annual financial statements audited by a legally authorized auditor to the Authority and the Market and publishing them within a period of 150 days from the end of the year. B. Submission and publication of quarterly financial data every three months to the Authority and the Market.
C. Disclosure of material events that affect the performance, activity, ownership, and continuity of the company, which have a direct or indirect effect on the value and movement of the security in the market.

Article (7)
Delisting from the Second Market: The company shall be delisted by a decision of the Council in the following cases:
A. Non-compliance with listing continuation conditions.
B. Non-trading of its shares for a period of one year without a justified reason.
C. Upon the issuance of a decision to liquidate or merge it.

Article (8)
General Provisions:
A. The company shall complete all listing requirements in the Second Market within a period not exceeding 60 days from the date of notifying the company of the approval of the listing; otherwise, the approval is considered void. B. The Market shall issue the trading mechanism for the Second Market.
C. The Market shall periodically issue a list of companies listed in the Main Market and companies listed in the Second Market.
D. The Authority and the Market shall monitor the compliance of companies listed in the Second Market with the application of the prevailing Financial Markets Law and the rules and regulatory bylaws issued thereunder.

• Article (5) was amended by the Authority's Council meeting held on 3/1/2022, and the Authority's Council decision No. (7/13) was issued on 13/1/2022.