Statute of Stock Exchange Intermediaries

1
DECRET N°99-2478 du 1er NOVEMBRE 1999
PORTANT STATUT DES INTERMEDIAIRES EN BOURSE¹
The President of the Republic,
On the proposal of the Minister of Finance,
Having regard to Law No. 94-117 of November 14, 1994 on the reorganization of the financial market and in particular its Article 58, Having regard to the opinion of the Administrative Court, Decrees:

CHAPITRE I
ON THE APPROVAL OF STOCK EXCHANGE INTERMEDIARIES
Section 1 - Conditions for Approval
Article 1
Natural persons wishing to exercise the activity of stock exchange intermediary must:

1. hold Tunisian nationality,
2. reside in Tunisia,
3. enjoy their civil and political rights,
4. be physically and mentally capable of performing their activities,
5. hold a master's degree or an equivalent diploma,
6. have at least five years of professional experience in the field of stock exchange intermediation,
7. successfully pass a professional aptitude test organized by an organization chosen by the Financial Market Council and under its supervision,
8. undertake to engage, independently of the activities specified in Article 56 of Law No. 94-117 of November 14, 1994, in the activity of trading and recording securities and financial products on the stock exchange,
9. demonstrate the existence of human and material resources necessary for the exercise of the stock exchange intermediary activity, as determined by a general decision of the Financial Market Council.

Article 2
The activities of counterparty, market making, and guarantee of good performance of issuances may only be exercised by specialized joint-stock companies acting as stock exchange intermediaries.

Article 3
Joint-stock companies wishing to exercise the activity of stock exchange intermediary must:

1. hold Tunisian nationality,
2. have as their mandatory object, independently of the activities provided for in Article 56 of Law No. 94-117 of November 14, 1994, the trading and recording on the stock exchange of securities and financial products,
3. demonstrate the existence of human and material resources necessary for the exercise of the stock exchange intermediary activity, as determined by a general decision of the Financial Market Council,
4. have a minimum paid-up capital of:
   • 1,000,000 D, if the company applies for approval to exercise the activities of trading and recording securities and financial products on the stock exchange, financial advice, financial canvassing, portfolio management of securities, and share underwriting,
   • 3,000,000 D, if the company applies for approval, in addition to the aforementioned activities, to exercise the activities of counterparty, market making, guarantee of good performance of issuances, or any one of these activities.
     Furthermore, the chairman and managing director, the general manager, or the president of the board of a joint-stock stock exchange intermediary company must enjoy their civil and political rights, hold a master's degree in an economic or financial field or an equivalent diploma, and demonstrate at least five years of professional experience in the field of financial intermediation (Decree No. 2007-1678 of July 5, 2007, Art. 1).

Article 4
No stock exchange intermediary may participate directly or indirectly in the capital of a joint-stock company acting as a stock exchange intermediary for more than 30% of the capital.
Indirect participation, as understood under this article, refers to the share held by a subsidiary, spouse, and minor children.

Article 5 (new) (Decree No. 2007-1678 of July 5, 2007, Art. 1).
The chairman and managing director, the general manager, the deputy general manager, the president or a member of the board of a stock exchange intermediary may not simultaneously hold any position in another joint-stock company acting as a stock exchange intermediary, in a listed company, or in a credit institution governed by Law No. 2001-65 of July 10, 2001, on credit institutions as amended and supplemented by Law No. 2006-19 of May 2, 2006. No person may be employed simultaneously by a stock exchange intermediary and another stock exchange intermediary, a listed company, or a credit institution.

Article 6
No person may be a stock exchange intermediary (natural person) or an executive, in any capacity, of a joint-stock company acting as a stock exchange intermediary:

• if they have been convicted of forgery, theft, breach of trust, fraud, extortion of funds or securities, embezzlement by a public depositary, issuance of a check without sufficient funds, handling of goods obtained through these offenses, and violation of foreign exchange regulations, or violation of legislative and regulatory texts relating to the repression of money laundering (Decree No. 2007-1678 of July 5, 2007, Art. 2),
• if they have been convicted of an intentional offense and have not been rehabilitated;
• if they fall under a final judgment of bankruptcy.
• if they have been administrator or manager of companies declared bankrupt and this bankruptcy has been extended to them personally, or if they have been convicted under Articles 288 and 289 of the Penal Code relating to bankruptcy.

Section 2 - Approval Procedure
Article 7
The approval of stock exchange intermediaries comprises a principle approval and a final approval issued by the Financial Market Council. However, the effective commencement of trading and recording operations for securities and financial products on the stock exchange remains subject to access authorizations granted, respectively, by the Tunis Securities Exchange and the Interprofessional Deposit, Clearing and Settlement Company.

Article 8
The applicant for principle approval sends, by registered mail with acknowledgment of receipt, to the Financial Market Council, or deposits it at its registry against a receipt, an approval file.
The documents of this file are determined by a general decision of the Financial Market Council.

Article 9
Upon receipt of the principle approval file, the services of the Financial Market Council process it within a period not exceeding three months. During this same period, the opinion of the Association of Stock Exchange Intermediaries is sought and is deemed favorable if no response is received within more than one month. The Financial Market Council may require the applicant to provide any supplementary information or document for processing the file. In this case, the three-month period is suspended until receipt by the Financial Market Council of the requested information or document.

Article 10
If the Financial Market Council rules favorably, it notifies the applicant of a principle approval decision.
In case of refusal, the Financial Market Council notifies the applicant of a reasoned decision.
If the Financial Market Council considers limiting the principle approval to certain activities requested by the applicant, particularly due to its financial and technical resources and guarantees provided, the notified decision is reasoned.

Article 11
Along with the principle approval, the Financial Market Council notifies the applicant of the list of file documents to be submitted in order to obtain final approval.
The documents of this file are determined by a general decision of the Financial Market Council.

Article 12
The applicant, under penalty of invalidity of the principle approval and within a period of 6 months from its notification, must send by registered mail with acknowledgment of receipt to the Financial Market Council, or deposit at its registry against a receipt, the required file for obtaining final approval. However, this period may be extended by 3 months by the Financial Market Council, upon request by the holder of the principle approval, before the expiration of the 6-month period.

Article 13
Upon receipt of the required file for obtaining final approval, the services of the Financial Market Council process it within a period not exceeding 2 months.
The Financial Market Council may require the applicant to provide any supplementary information or document for processing the file. In this case, this period is suspended until receipt by the Financial Market Council of the requested information or document. During this same period, the services of the Financial Market Council ensure the functionality of the premises and the required human and technical resources.

Article 14
If the Financial Market Council rules favorably, it notifies the applicant of a final approval.
In case of refusal of final approval, the Financial Market Council notifies the applicant of a reasoned decision.
If the Financial Market Council considers limiting the final approval to certain activities provided for in the principle approval, the decision notified to the applicant is reasoned.

Article 15
The approval of a stock exchange intermediary is personal, non-transferable, and inalienable.

Article 16
A stock exchange intermediary with final approval may not, under penalty of withdrawal of approval, commence the effective exercise of the activities for which it was approved after having provided the Financial Market Council with proof of its participation in the capital of the Tunis Securities Exchange and the Interprofessional Deposit, Clearing and Settlement Company, its membership in the market guarantee fund, the client guarantee fund, and the Association of Stock Exchange Intermediaries. Furthermore, it must deposit with the Financial Market Council, for their approval, the models of documents intended for third parties that it plans to use in the exercise of its activities.

Article 17
The final approval of a stock exchange intermediary is published as an announcement in the official bulletin of the Financial Market Council and in the bulletin of the Tunis Securities Exchange, at the expense of the interested party.

Section 3 - Modification of Approval
Article 18
Any project to extend or restrict the activities subject to the granted approval gives rise to a modification request that must be addressed to the Financial Market Council or deposited at its registry under the conditions provided in Article 8 above.

Article 19
The documents of the file submitted or deposited in support of the modification request are determined by a general decision of the Financial Market Council.

Article 20
The processing of the modification request and its outcome are carried out under the conditions provided in Articles 9, 10, 11, 12, 13, and 14 above.

Section 4 - Cessation of Activity, Suspension, and Withdrawal of Approval
Article 21 (new) (Decree No. 2007-1678 of July 5, 2007, Art. 1):
A stock exchange intermediary wishing to cease its activities must inform the Financial Market Council by any means leaving a written trace, at least two months before the date of cessation of activity.
This information mentions in particular the reasons and the date of the cessation of activity, and the measures envisaged for clearing the situation vis-à-vis clients and the market.
It must be accompanied by proof demonstrating that the interested party is in compliance with the market guarantee fund, the Association of Stock Exchange Intermediaries, the Tunis Securities Exchange, the Deposit, Clearing and Settlement Company, and other stock exchange intermediaries. A stock exchange intermediary may only close its effective liquidation if it provides the Financial Market Council with proof of the closure of all operations likely to preserve the interests of clients and the market. In this case, and until the closure of liquidation, the stock exchange intermediary remains subject to the supervision of the Financial Market Council. The Financial Market Council takes necessary measures for the safeguarding of client and market interests in accordance with the provisions of Article 24 of this decree.

Article 22
The Financial Market Council may, by reasoned decision and after the opinion of the Association of Stock Exchange Intermediaries, suspend the approval of a stock exchange intermediary in accordance with Article 57 of Law No. 94-117 of November 14, 1994, when the interested party no longer meets one of the conditions to which approval is subject. In this case, the interested party is previously heard by the board of the Financial Market Council.

Article 23
Independently of the cases of withdrawal of approval provided for in Article 42 of Law No. 94-117 of November 14, 1994, the Financial Market Council may, after the opinion of the Association of Stock Exchange Intermediaries, withdraw the approval of a stock exchange intermediary in accordance with Article 57 of said law:

1. When the interested party has not used its final approval within a period of 12 months from obtaining it, or when it has ceased exercising its activity for at least 6 months without prior agreement from the Financial Market Council,
2. When the causes of a suspension measure have not been lifted 6 months after its pronouncement,
3. When the interested party continues to be in a state of non-compliance regarding one of the prudential rules beyond a period of 4 months,
4. When the stock exchange intermediary no longer meets the conditions referred to in nos. 1, 2, 3, 4, and 9 of Article 1 above for natural persons, and those referred to in Article 3 for joint-stock companies.

Article 24
In case of total or partial prohibition of activity, suspension, or withdrawal of approval, following a disciplinary decision or application of Articles 22 and 23 above, and in case of bankruptcy, incapacity, death, or dissolution of a stock exchange intermediary, the board of the Financial Market Council designates, for the safeguarding of client and market interests and after the opinion of the Association of Stock Exchange Intermediaries, a stock exchange intermediary responsible for ensuring the dispatch of routine business. The designated stock exchange intermediary reports on its mission to the Financial Market Council in the manner determined by the latter.

Article 25
In case of absorption merger between two or more stock exchange intermediaries, the approval of the absorbed intermediary(ies) is automatically extinguished upon completion of the legal formalities of the absorption operation. In case of transformation of a financial intermediation establishment operated by a natural person, approved as a stock exchange intermediary, into a joint-stock company, the approval granted to the natural person is automatically extinguished upon obtaining final approval by the company.

Section 5 - Professional Cards
Article 26
The list of activities whose exercise, for persons placed under the authority of a stock exchange intermediary or acting on its behalf, requires holding a professional card, as well as the conditions for issuance and withdrawal of this card, are fixed by general decision of the Financial Market Council.

Article 27
The professional card is issued to a stock exchange intermediary on behalf of the persons referred to in Article 26 above by the Association of Stock Exchange Intermediaries, upon presentation of candidacies by said stock exchange intermediary and under its responsibility.

Article 28
The cessation of activity of holders of professional cards, as well as their suspension by the stock exchange intermediary for a duration exceeding one month, are brought to the knowledge of the Financial Market Council.

CHAPITRE II
ON CERTAIN ACTIVITIES OF STOCK EXCHANGE INTERMEDIARIES
Section 1 - Financial Canvassing
Article 29
A stock exchange intermediary that performs a financial canvassing operation as defined in Article 1 of Law No. 94-117 of November 14, 1994 on the reorganization of the financial market, must deliver or send to the solicited person, prior to any commitment by the latter, an information note on each of the proposed securities. The information note, prepared under the responsibility of the person engaging in financial canvassing, must be communicated beforehand to the Financial Market Council.

The non-objection of the Financial Market Council to the dissemination of an information note does not constitute, on its part, a certification of the sincerity of its content.

Article 30
A person employed by a stock exchange intermediary for financial canvassing operations at the residences of persons, on their workplaces, or in public places must hold a canvasser card that they are required to produce during these operations.

Article 31
A stock exchange intermediary issues, under its responsibility, a financial canvassing card to the persons it employs for this activity in accordance with a model filed with the Financial Market Council.
This card is valid until December 31 of the year of its issuance, which must be indicated in a highly visible manner.

Article 32
Prior to the issuance of the financial canvassing card to a person it intends to employ for this activity, a stock exchange intermediary must deposit with the Financial Market Council a written declaration containing the identity and address of the concerned person.

Article 33
When a stock exchange intermediary decides to withdraw the financial canvassing card either upon request of the Financial Market Council or on its own initiative, it notifies the holder by registered mail with acknowledgment of receipt of the withdrawal decision and publishes this decision in the official bulletins of the Financial Market Council and the Tunis Securities Exchange, within a maximum period of three working days from the date of the withdrawal decision (Decree No. 2007-1678 of July 5, 2007, Art. 2). The cardholder must return the card within a period of 3 clear days from the notification of the decision.

Article 34
The withdrawal of the financial canvassing card or the refusal of its renewal by a stock exchange intermediary must be notified, without delay, to the Financial Market Council.

Article 35
Any subscription, acquisition, or sale commitment taken by a person following a financial canvassing operation must, under penalty of nullity, be evidenced in writing, mentioning notably the date of its signature.

Article 36 (Decree No. 2007-1678 of July 5, 2007, Art. 3).
It is prohibited for a person employed in a financial canvassing operation to receive from the solicited person cash, commercial paper, or bearer or order checks.

Section 1 bis – Financial Advice - The Listing Sponsor
(Decree No. 2007-1678 of July 5, 2007, Art. 2)
Article 36 bis (new) (Decree No. 2007-1678 of July 5, 2007, Art. 2)
A listing sponsor is a financial advisory company whose object is to:

• advise the company wishing to go public and assist it in preparing its file,
• accompany and assist the company whose securities are admitted to the stock exchange by ensuring, on a permanent basis, compliance with its financial disclosure obligations.
  The exercise of the listing sponsor activity is subject to the approval of the Financial Market Council, which fixes by general decision the conditions for exercising this activity.

Section 2 - Portfolio Management of Securities on Behalf of Others
Article 37
A stock exchange intermediary allocates to the portfolio management activity for which it was approved an organically autonomous service.
Persons assigned to this service cannot be employed in trading functions.

Article 38
A stock exchange intermediary managing securities portfolios of persons under its authority, and when it is a joint-stock company, the securities portfolios of its executives, its subsidiary, or that of a shareholder holding more than 30% of its capital, may entrust this management only to a distinct service from the one provided in the previous article.

Article 39
Any natural or legal person may entrust a stock exchange intermediary, which accepts it, with the mandate to manage on its behalf and in its name a portfolio composed of securities and financial products, within the framework of a written management agreement. This agreement must be drawn up in at least two copies, signed for approval by the client and for acceptance by the stock exchange intermediary; one copy is obligatorily delivered to the client holding the managed account, and the other is retained by the stock exchange intermediary. The management agreement is drawn up in the name of the stock exchange intermediary and signed by an authorized person. It must notably specify:

• The directions assigned to portfolio management,
• The nature and limits of operations whose initiative is left to the stock exchange intermediary,
• The remuneration methods for the stock exchange intermediary and the periodicity of payment of fees related to portfolio management, as well as ancillary transaction fees.
  It also specifies the periodicity and methods of information communicated to the client. This information includes at least the quarterly sending of an evaluation of the portfolio and the result achieved over the elapsed period.

Article 40
The conclusion of a securities portfolio management agreement leads to the opening with the stock exchange intermediary of a securities and cash account in favor of its client.
The stock exchange intermediary is required to provide immediately, upon the client's request, any information on the position of the managed account.

Article 41
A stock exchange intermediary must not use the powers it has received or the mandates it holds for purposes other than those for which they were entrusted to it.

Article 42
The securities portfolio management agreement, whether for a fixed or indefinite term, may be terminated at any time by either party, by registered mail with acknowledgment of receipt.
Termination by the stock exchange intermediary takes effect only upon expiration of a 5-business-day notice period from receipt of the registered letter by the client.
Termination by the client takes effect upon receipt of the registered letter by the stock exchange intermediary.
Upon the effective date of termination, the stock exchange intermediary ceases to be authorized to take initiative for new operations. It prepares a management report showing the result of its management, draws up a statement and evaluation of its portfolio, and generally provides all useful clarifications to its client. Without prejudice to the provisions relating to mandates, the securities portfolio management agreement terminates