Resolution No. 5 of 2009 by the Board of
Directors of Qatar Financial Markets
Authority on Issuing the Securities Services
Regulation 5 / 2009
Number of Articles: 76
Table of Content
Issuance Articles 1-3 (1-3)
Chapter One (1-2)
Definitions (1-2)
Chapter Two (3-21)
Licensing Conditions and Procedures 3-21 (3-21)
Chapter Three (22-41)
Rights and Obligations of the Company 22-41 (22-41)
Chapter Four (42-44)
Branches and Agents of the Company 42-44 (42-44)
Chapter Five (45-52)
- Reports and Records 45-52 (45-52)
Chapter six (53-64)
Exchange of Information 53-64 (53-64)
Section 1 - (53-55)
Information Provided by the Company to a Client 53 (53-55)
Section 2 - (56-64)
Information Provided by a Client to the Company (56-64)
Chapter Seven (65-73)
- Modification, Suspension and Cancellation of the (65-73)
Issuance Articles (65-73)
The Board of Directors,
Having reviewed Law No. 33 of 2005 on the Qatar Financial Markets
Authority and Qatar Securities Company, as amended by Decree-Law No.
14 of 2007;
Law No. 14 of 1995 on the Doha Securities Market, as amended by
Decree-Law No. 26 of 2002;
Resolution No. 2 of 2008 by the Board of Directors on the Qatar Financial
Markets Authority issuing the Securities Services Regulation;
The Regulation of the Qatar Financial Markets Authority; and
The proposal of the Chief Executive Officer of the Qatar Financial
Markets Authority;
Hereby resolves the following:
Issuance Articles 1-3
Article 1 - Introduction
The provisions of the Securities Services Regulation for the Qatar Financial Markets Authority
enclosed with this Resolution shall be applicable.
Article 2 - Introduction
The Chief Executive Officer shall issue the decisions necessary to implement the provisions
of this Regulation.
Article 3 - Introduction
All competent authorities, each within their respective jurisdiction, shall enforce this
Resolution from the date of its publication in the Official Gazette.
Chapter One
Definitions
Article 1
In addition to the definitions stated in the Authority Law and its Regulation , the
following words and words shall, in the application of the provisions of this Regulation and
the appendices enclosed herewith, have the meanings assigned thereto, unless the context
requires otherwise:
“Law” means Law No. 33 of 2005 on the Qatar Financial Markets Authority as amended by
Decree-Law No. 14 of 2007.
“Authority” means the Qatar Financial Markets Authority (hereinafter “the Authority”).
“Market” means any organised market subject to the control of the Authority.
“Company” means the Securities Services Company (hereinafter “the Company”) licensed to
conduct any of the activities prescribed in Article 4 of this Regulation.
“Representative” means a natural person employed by the Company and who acts in its name
and at its responsibility.
“Agent” means a juristic person that conducts work for its account in return for remuneration
according to a contract with the Company.
“Custodian” means a person engaged in safekeeping funds in cash and securities for securities
dealers.
“Financial Broker” means a person engaged in implementing orders for the selling and buying
of securities for the account of others.
“Investment Trustee” means a person engaged in monitoring the management of a client’s
investments in order to ensure compliance with the client’s investment principles and
objectives as stated in the investment agreement concluded between the client and the
Investment Manager.
“Dealer” means a person engaged in trading securities directly for his own account on the
market.
“Investment Manager” means a person engaged in managing investments by making decisions
related to the buying and selling of financial assets on behalf of another person.
“Financial Advisor” means a person engaged in providing advice and consultancy on
investment in securities to other persons for a consideration.
“Issuance Manager” means a person who, inter alia, obtains the relevant approvals; offers and
distributes securities to those applying for subscription; and prepares the final results of the
subscription.
“Issuance Underwriter” means a person engaged in guaranteeing the sale of securities issued
in the primary market by buying and reselling such securities, undertaking to buy what the
issuer cannot sell, and endeavouring to sell such unsold securities.
“Compliance Officer” means the person responsible for ensuring the Company’s compliance
with the laws, regulations and controls applicable to it, as well as with the contracts and
agreements concluded with its dealers.
“Supreme Management” means the chairperson and members of the Board of Directors of the
Company, a directors’ panel or similar body, as the case may be, and the senior executive
management.
“Senior Executive Management” means the chief executive officer and the other executive
officials directly responsible to him.
“Appeals Committee” means the committee provided for by the law establishing the Authority.
Article 2
The Authority shall issue appendices related to the regulation of the work of securities services
companies to complement, interpret, or give details of the provisions of this Regulation. The
appendices shall have the force as this Regulation and shall be an integral part thereof.
Chapter Two
Licensing Conditions and Procedures 3-21
Article 3
No person shall conduct the activities of securities services stated in Article
Regulation in or from the State of Qatar without a licence issued by the Authority.
4
of this
.
Article 4
With respect to the issuance of securities to the public or their trading among investors, any of
the following activities, if carried out by way of a business, shall be considered as a securities
services activity subject to the control of the Authority:
1. Executing orders for the buying or selling of securities for the account of others.
2. Trading securities for one’s own account.
3. Arranging for the trading of securities.
4. Provide custodian services for cash or securities.
5. Arranging for the provision of custodian services.
6. Providing advice on securities.
7. Managing investments in securities.
8. Engaging in investment trusteeship.
9. Underwriting the issuance of securities.
10. Managing the issuance of securities.
11. Any other activity deemed by the Authority as being subject to its control.
Article 5
A licence to conduct securities services activities shall be granted only upon the satisfaction of
the following conditions:
1. The applicant shall be a Qatari company whose objective is limited to carrying out one
or more of the activities stipulated in Article 4 of this Regulation.
2. No member of the applicant’s Supreme Management shall have been convicted, during
the five years immediately preceding the date of submitting the application for a
licence, of an act involving immorality or fraud, or a misdemeanour, or any crime
prescribed in the Commercial Companies Law or Doha Securities Market Law;
or has been declared bankrupt, unless he has been rehabilitated.
3. The applicant’s Executive Management and at least one-third of the members of its
Supreme Management shall be highly experienced and efficient in securities business.
4. The applicant shall not be subject to legal proceedings that might affect its financial
position or capability of fulfilling the regulatory requirements of the Authority.
5. The applicant’s paid-up capital shall not be less than the minimum specified by the
Authority.
6. The applicant shall provide the financial guarantees determined by the Authority.
7. The applicant shall:
a. Appoint an executive manager to manage the Company on a full-time basis.
b. Appoint a Compliance Officer.
c. Appoint an adequate number of approved persons pursuant to Appendix
this Regulation.
d. Make available the necessary financial and technical resources.
e. Provide internal controls that suit its activities.
Two
of
8. The applicant shall pay the application fees due to the Authority.
9. The applicant shall obtain the approval of Qatar Central Bank for bodies subject to its
control.
Article 6
As an exception to the provisions of Article 4 of this Regulation, the Authority may allow a
company licensed in another state to conduct any of the securities services activities if the state
granting the licence to the company allows reciprocal treatment and the company satisfies the
conditions for conducting such activities.
Article 7
An applicant for a licence shall submit his application to the Authority on the prescribed form.
Fees for processing the application shall be paid upon submission of the application and shall
not be refunded if a licence is not granted.
Article 8
A company under establishment wishing to obtain a licence from the Authority to conduct any
of the activities subject to its control shall submit a request for an initial approval to the
Authority on the prescribed form and shall enclose the required documents and information
for granting a licence, provided that the company satisfies all the remaining conditions and
requirements upon completion of its establishment procedures.
Article 9
The following documents and information must be attached to the application for a licence:
1. Data relating to the members of the Supreme and Executive Management of the
Company, showing their respective positions and samples of their signatures.
2. A copy of the decision of the Company’s Supreme Management regarding:
a. Authorisation of the individual who signs the application for a licence.
b. The contract concluded with an Executive Manager to manage the business of the
Company.
3. Authenticated copies of the Company’s valid commercial register, articles of
association and memorandum of association.
4. The Company’s future business plan, which shall include the method of conducting its
activities, the categories of prospective clients, and the services expected to be
provided.
5. The Company’s audited financial statements for the last three financial years, if
applicable.
6. Information about shareholders who individually own five (5) percent or more of the
Company’s capital.
7. The technical and technological resources that will be used by the Company to conduct
its activities in the market.
8. The location of the Company’s headquarters and branches.
9. A copy of the Company’s adopted or proposed internal regulations for directing its
operations, including at least the following information:
a. Procedures for opening clients’ accounts and receiving their orders from the date on
which the client commenced dealing with the Company until the end of the operation
and his notification thereof.
b. The Company’s administrative structure indicating the competencies of its departments
and divisions, the duties and responsibilities of its managers and representatives in
dealing with others, in addition to a detailed description of the competencies and
responsibilities of its employees.
c. The administrative and organisational relationship between the Company’s
headquarters and its branches, and the business that the branch is allowed to conduct.
d. The procedures for registration of communication exchanged between the Company
and its clients.
e. The procedures for processing the complaints of the Company’s clients.
f. The Company’s internal controls.
g. The procedures for dealing with any violation of the mutual obligations between the
Company and third parties.
10. Samples of forms for opening client accounts.
11. Procedures for controlling inside and confidential information and preventing its
leakage to persons who are not authorised to have access to such information. In the
cases where the applicant is a member of a group of companies or conducts more than
one activity, the procedures and controls that will be followed to prevent the leakage
of inside and confidential information to the remaining members of the group shall also
be provided.
12. Controls proposed to avoid conflicts of interest.
13. A list of the approved functions, and the particular nature of the operation of each such
function and its place in the organisational chart, and the names of the individuals
assigned to such functions.
14. An undertaking, written in language specified by the Authority, pledging compliance
with the laws, provisions, decisions, and amendments thereof, issued by the Authority
or by a Market on which the applicant trades, or by a depositary with whom he deals,
or by a concerned government authority, or by any other body whose laws and
decisions the Authority determines shall be followed. Such undertaking shall be signed
by the person authorised to sign for the Company.
Based on the foregoing, the Authority shall decide whether to grant or refuse a licence.
Article 10
A Company shall not combine any activity mentioned in Article 4 of this Regulation with any
other activity, except for conducting the following activities by banks authorised by Qatar
Central Bank to operate in the State:
1.
2.
3.
4.
5.
6.
Providing safekeeping services for funds.
Arranging for the provision of safekeeping services for funds.
Engaging in investment trusteeship.
Underwriting the issuance of securities.
Managing the issuance of securities.
Providing advice on securities.
Article 11
1. The Authority shall issue its decision on the application for a licence no later than
ninety days from the date of its submission. The expiry of this period without the
Authority issuing a decision shall be deemed a rejection of the application, unless the
Authority notifies the applicant of an extension of time for processing the application.
2. The Authority shall issue its decision to grant a licence with or without conditions, or
it shall refuse the licence.
Article 12
1. The Authority shall notify the applicant of its decision within ten working days from
the date on which it made its decision. Such notification shall be by registered letter or
any other method agreed upon between the parties for confirming receipt thereof.
2. The applicant may appeal to the Appeals Committee against the Authority’s refusal to
grant a licence within fifteen working days from the date of receiving the refusal
notification by registered letter.
Article 13
Where the application for a licence is refused, the applicant shall not apply again until the lapse
of one calendar year from the date of the Authority’s refusal.
Article 14
A Company shall not surrender the licence granted to it to another person through selling,
granting, leasing, lending, mortgaging or any other means.
Article 15
A Company shall, before commencing a licensed activity, deposit with the Authority a valid,
unconditional and irrevocable bank guarantee, payable upon request, in order to cover losses
that might be incurred by investors or the Market as a result of negligence or fraud by the
Company or any of its Representatives or Agents.
Article 16
A Company shall complete the guarantee within a maximum period of five working days from
the date of its falling below the prescribed amount for whatever reason.
Article 17
The Authority may oblige a Company to provide an insurance policy or a bank guarantee as a
security against risks of trading, mismanagement or failure to settle its obligations.
Article 18
A Company shall commence a licensed activity within six months from the date of notification
of the decision granting a licence; otherwise the decision shall be considered void. Such period
may be extended for another period of no more than six months from the date of its expiry
based on good cause acceptable to the Authority.
Article 19
A Company may conduct more than one licensed activity unless such combination of activities
results in a conflict of interest, in which case the Company shall carry out each activity
separately under separate management and in a manner that completely prevents consultation,
coordination and exchange of information about trading in securities among the management
and teams involved in the different activities.
Article 20
The Authority may publish its decisions related to the granting of licences on its website and
in two widely distributed local daily newspapers, one published in the Arabic language and the
other in the English language.
Article 21
Where the Authority has granted a licence to the Company or an approval to an individual for
conducting any activity mentioned in this Regulation, it shall not mean that the Authority
approves of the conduct of that person nor that it certifies or acknowledges the soundness of
his financial position and the appropriateness of his conduct, even though he might have been
complying with the provisions of this Regulation and had been submitting reports and keeping
records pursuant to its provisions.
Chapter Three
Rights and Obligations of the Company 22-41
Article 22
The Company shall comply with the rules of conduct stated below:
1. Honesty and Fairness
The Company shall observe honesty and fairness in dealing with its clients and shall work
loyally in their best interests and protect the integrity of dealing in the Market.
2. Caution
The Company shall conduct its business with efficiency, prudence and caution and in particular
it shall immediately execute orders received from its clients according to the type and
conditions of authorisation given by the client to the Company. Where a market order was not
executed during the day in which it was given, the Company shall seek new instructions from
the client.
3. Capacities
The Company shall have the necessary and sufficient resources for carrying out its activities
proficiently and shall use such resources effectively and efficiently.
4. Information about the Client
The Company shall obtain from its clients information about their financial situation,
experience in the field of investment, and their investment objectives related to the services
that they require from the Company.
5. Providing Information to Clients
The Company shall make adequate disclosure of all relevant information in its dealings with
its clients, and the price at which a transaction was executed shall be equal to or better than the
price that the client could have obtained or paid had he executed the transaction himself.
6. Conflict of Interest
The Company shall seek to manage any conflict of interest in a manner that ensures that its
clients receive fair treatment and are not exposed to any adverse procedures, behaviour or
treatment due to such conflict of interest. It shall disclose to its clients the conflict of interest,
whether in general or in relation to a specific transaction, in order to ensure that the client does
not object to it.
7. Response
The Company shall comply with all control requirements applicable to its activities in order to
achieve the best interests of its clients and to foster integrity of dealing in the Market.
8. Fair Treatment of Clients
The Company shall not give preferential treatment to any client at the expense of another client,
and it shall particularly send client orders to the concerned Market in their original form
without any change, and it shall give priority to client orders over the orders it issues for its
own account, or for the account of the shareholders in the Company or the members of its
Board of Directors, or its managers, or its Representatives or Agents.
9. Risk Management
The Company shall adopt effective controls to manage risks and ensure that its Supreme
Management bears responsibility for the organisation of its affairs according to such controls.
A Company shall observe the rules on internal controls prescribed in Appendix 1 of this
Regulation.
10. Protection of Funds of Clients
The Company shall make appropriate arrangements for the protection of its clients’ funds when
such assets fall under its responsibility pursuant to the scope thereof.
11. Relationship with the Control Authority
The Company shall deal with a control authority where subject to it in a transparent and
collaborative manner, and it shall immediately notify the Authority of any matter concerning
the Company that requires such notification.
12. Confidentiality
The Company shall not disclose any information about the client or his funds to any other
person except to:
a.
b.
c.
d.
A person authorised in writing by the client.
Legal heirs of the client.
Judicial authorities in the State of Qatar.
Governmental authorities such as the tax authorities.
e. The Authority or any other authority approved by it.
Where any of the aforementioned disclosures occur, the Company shall notify the Authority.
13. Provision of Advice
The Company shall not provide advice to a client with respect to securities unless the person
in the Company who gives the advice:
a. Is authorised to give such advice.
b. Is in possession of correct, recent and sufficient information enabling him to give
advice.
c. Informs the client of any interests that he or any of his employees or associates have in
such securities if such interests may affect the independence and objectivity of his
advice.
14. Solicitation
The Company shall adopt Regulations, controls, policies and procedures to ensure that:
a. It does not offer, give, invite or accept any solicitation that may conflict with any of its
obligations towards its clients.
b. It does not attempt to attract business through unethical means or means that do not
conform to the rules of proper business conduct.
15. Client’s Understanding of Risks
The Company shall take the necessary steps to ascertain that a client understands the nature of
the risks associated with the relevant activity, and the Company may fulfil this obligation by
incorporating an appropriate warning in the contractual terms governing the provision of its
services or in another document sent by the Company to the client.
16. Excessive Fees and Disclosure of Fees
The Company shall ensure that fees charged to clients in return for the provision of controlled
services are not excessive and that they are commensurate with the regulations. The Company
shall disclose in writing to its clients the basis or amount of the fees that it charges for
conducting activities for their account.
17. Gains Made from Violations or Mistakes in Operations
The Company shall have no right to any benefits obtained in violation of a law, regulations,
instructions or decisions issued pursuant to, or because of, the rectification of a mistake or a
violation. Such benefits shall be paid to the Authority.
18. Information Exploitation and Anticipation of Clients’ Orders
The Company and its employees shall not use its clients’ information related to activities on
financial markets for achieving any personal benefit, whether directly or indirectly. In
particular, they shall not anticipate a client’s order by concluding one or more transactions for
the account of the Company before executing the order received from the client in order to
gain a benefit from the impact that the client’s order might have on prices.
19. Prohibition Against Lending Clients’ Money
The Company shall not lend funds of its clients to others.
Article 23
An individual who is approved by the Authority shall comply with the following principles:
1.
Integrity
Acting at all times in conformity with standards of integrity in performing his functions.
2. Proficiency, Care and Diligence
Observing high standards of proficiency, care and diligence in performing his functions.
3. Code of Conduct
Complying with the rules of professional conduct in performing his functions.
4. Dealing Transparently with the Regulatory Authority
Observing cooperation and transparency when dealing with the regulatory authority and
immediately notifying the Authority of anything concerning the Company about which the
Authority expects to be notified.
5. Management and Control
Where a member of the Board of Directors or Senior Executive Management of the Company,
giving priority to his managerial responsibilities and ensuring that the Company’s work for
which he is responsible is effectively supervised and complies with the requirements of the
financial Regulation.
Article 24
The Authority shall determine the fees and commissions charged by the Company for the
services it provides.
Article 25
Companies may establish associations based on licensed activities. Such associations shall
have legal personalities after being licensed and registered by the Authority, and in such
capacity they can carry out their activities, achieve their objectives, protect the interests of their
members, and raise the level of awareness about the rules of professional conduct.
Article 26
The relationship between the Company and other similar companies shall be governed by the
rules of professional conduct and fair and legitimate competition.
Article 27
The Company shall act on behalf of its clients according to their instructions. It shall observe
the conditions and time constraints contained in such instructions in order to act in the best
interests of its clients. As an exception by the Authority, activities such as Investment
Management shall be governed by special rules.
Article 28
The Company shall be liable for its own actions, the actions of its Representatives and Agents,
and for any harm to its clients resulting from any technical failure on its part or from its noncompliance with the terms of authorisation given by the client.
Article 29
The Company shall not be liable in its relationship with its clients where it establishes that it
behaved according to the authorisation or instructions given by its clients and in their best
interests, and by observing due diligence.
Article 30
1. The Market may, upon a request of a Company and after notifying the Authority, freeze
a client’s securities where the Company provides acceptable justifications.
2. The Company shall bear all the obligations arising from the execution of such request.
Article 31
The Company shall maintain an appropriate level of financial solvency to cover the risks that
it might encounter pursuant to controls determined by the Authority.
Article 32
The Company shall participate in the risk insurance fund, which shall be established or
approved by the Authority and according to controls determined by it.
Article 33
The Company shall not own shares, whether directly or indirectly, in an unlisted company.
However, where such unlisted company lists itself on a Market, the provisions related to
control, which are stipulated in Chapter Five of the Authority’s Regulations, shall be observed.
Article 34
Securities shall not be sold unless the client’s ownership thereof has been verified, and a
Company shall not pay the sale proceeds to the client until after having executed the sale.
Article 35
The Company shall periodically provide the Authority with a list of the names of its employees,
their spouses, children and relatives up to the second degree, as well as the names of its Agents
and their employees entrusted with performing functions related to licensed activities. The
Company shall inform the Authority of any changes in such information.
Article 36
Where a Company is licensed as a broker, its employees, their spouses and minor children
shall not deal in securities other than through the Company for which the employee works.
The Company shall notify the Authority of any such transactions on the day on which they
took place
Article 37
The Company shall keep client funds in special accounts separate from its own funds, and it
shall not dispose of such funds except for authorized purposes.
Article 38
The Company shall ensure that its junior or insufficiently experienced employees are
supervised effectively while performing their duties and it shall train such employees and those
of its Agents in order to ensure the efficient performance of their duties.
Article 39
A trainee is a natural person employed by the Company for a certain period and under the
supervision of an employee of the Company in order to acquire the knowledge and skills
required for the performance of a specific job. In such case, the Company shall observe the
following:
1. The supervisor shall be fully responsible for all the work performed by the trainee.
2. The Company shall ascertain that the trainee enjoys the basic qualifications that enable
him to benefit from the training and that he demonstrates integrity, honesty, and good
behaviour.
3. Before the commencement of training, the Company shall provide the Authority with
the following information:
a.
b.
c.
d.
e.
The trainee’s name.
Academic qualifications.
Subject-matter of the training.
Duration of the training.
The department concerned with the training and the name of the person who will
directly supervise the performance of the trainee.
f. An undertaking by the trainee not to benefit from the information that he might have
access to during the training period for buying or selling securities or achieving any
other commercial purpose, or to disclose such information to another person
Article 40
The Company shall notify the Authority in writing, within a period not exceeding ten working
days, of its introduction of any changes that might affect the submitted information and
documents on which a license was granted to it, and it shall obtain the approval of the Authority
for such changes before their coming into force, including in particular:
1. Changes in the legal form of the Company or its articles of association.
2. An increase or decrease in its capital.
3. Failure on the part of the Company to satisfy a condition that is necessary for the
continuation of its activities.
4. Establishment of a subsidiary company.
5. A change in the address of the headquarters or a branch.
6. Opening or closing a branch.
7. Changing its name or the name under which it conducts its business.
Article 41
The Company shall notify the Authority in writing, within three working days, of the
occurrence of any event that might affect it, particularly:
1. Termination of a contract with an approved person or one of its Agents, and the reasons
for such termination.
2. Any material event that might affect the performance of a member of its Supreme
Management or Executive Management, or of an approved person or Agent.
3. Financial insolvency.
4. Suspension or investigation of any of its employees.
5. Any material event that affects the legal form or any activity of the Company.
6. Inability to fulfil any obligation that is due to the Authority and the reasons for such
inability.
7. Complaints made against the Company and the measures it has taken to address them.
Chapter Four
Branches and Agents of the Company 42-44
Article 42
The Company may, upon the approval of the Authority, establish one or more branches within
or outside the State, under the following conditions:
1. A branch shall be adequately and properly equipped to conduct its activities.
2. Its activities shall be limited to the licensed activities of the Company.
3. A branch manager shall be a qualified employee who has appropriate experience of not
less than three years.
4. A branch shall pay all fees due to the Authority.
Article 43
The Company shall notify the Authority of the closure of a licensed branch or the termination
of its activities.
Article 44
1. The Company may, after obtaining the approval of the Authority, appoint one or more
Agents within or outside the State to perform the following activities, subject to the
provisions of Article 20 of Appendix 1 of this Regulation:
a. Opening accounts for clients on behalf of the Company according to the procedures set
by it for ensuring compliance by the Agent with the requirements for opening client
accounts.
b. Verifying and validating authorisations by clients.
c. Receiving selling and buying orders and sending them to the Company, and settling
the executed transactions.
d. Any other activities approved by the Authority
2. The Agent shall receive from the Company a remuneration to be agreed upon between
the two parties and the Company shall be liable for the actions of its Agent. The Agent
shall not act as an Agent for another Company licensed by the Authority to conduct the
same activity.
3. The Agent shall satisfy the following conditions:
a. He shall have legal capacity.
b. He shall be registered with the relevant official bodies in or outside the State.
c. The nature of his previous work shall have been in the financial or a related sector
which the Authority considers relevant to securities markets activities.
d. A copy of the contract between the Company and its Agent shall be deposited with the
Authority and the Market.
e. He shall provide a local bank guarantee pursuant to the requirements of the Authority.
f. He shall provide a certification of financial solvency.
g. He shall appoint an employee who has appropriate experience of not less than three
years or has received training approved by the Authority.
h. He shall comply with legislation applicable to the Company and with instructions of
the Authority and the Market.
4. The Company shall pay to the Authority an annual fee for each Agent as determined
by the Authority; and shall apply annually for the renewal of the Agent’s licence at
least one month before its expiry.
Chapter Five
- Reports and Records 45-52
Article 45
The Company shall submit the following reports to the Authority:
1. Annual financial statements audited by an external auditor, to be submitted within
forty-five days from the end of the Company’s financial year.
2. Biannual financial statements audited by an external auditor, to be submitted within
thirty days from the end of the first half of the Company’s financial year.
3. Quarterly financial statements reviewed by the Company’s internal auditor, to be
submitted within fifteen days from the end of every quarter.
4. An annual report indicating the names of the Company’s partners and their respective
shares. In the case of a joint stock company, information shall be provided about all
persons who individually own five (5) percent or more of the Company’s capital. The
report shall be submitted within fifteen days from the end of the concerned year.
5. An annual report validated by the Compliance Officer of the Company, to be submitted
within fifteen days from the end of the concerned year. The report shall clarify the
following:
a. Extent of effectiveness of internal controls.
b. Complaints received by the Company during the year and the actions taken to address
them.
c. Information about the employees, their spouses, and their relatives up to the second
degree.
d. Information about the employees of the Agents of the Company who are entrusted with
performing duties related to the licensed activities.
Article 46
The Company shall maintain records that show its activities. Such records shall be in the
Arabic language and in the English language where possible. The records shall comprise in
particular:
1. Accounting records containing all financial and accounting operations and prepared
according to the International Accounting Standards (IAS).
2. Executed transactions and the fees and commissions arising from such transactions.
3. Particulars of selling and buying orders of clients.
4. Particulars of selling and buying orders for the Company’s own account.
5. A register of complaints received by the Company, the related documents and
correspondence, and the actions taken to address them.
6. A register of clients.
Article 47
The Company shall keep the specified records for a period conforming to the provisions of the
laws applicable in the State.
Article 48
The Company is prohibited from doing any of the following:
1. Recording false or misleading information.
2. Destroying or removing any recorded or stored information.
3. Obtaining the assistance of another person to do any of the foregoing.
Article 49
The Company shall submit documents, data and statistics required by the Authority within the
period specified by it. The Authority may commission, at the Company’s expense, any suitable
person to verify the validity of the submitted documents and data.
Article 50
The register of clients shall include the following:
1.
2.
3.
4.
Information about the client and its custodian (where applicable).
A statement of opening the client account and signed by the client.
A copy of the investment management agreement (where applicable).
Any other documents required in the interests of the client.
Article 51
The register of complaints shall include the following data:
1. Subject of the complaint.
2. Information about the complainant.
3. Information about the person against whom the complaint is made, unless the
complaint is made against the Company.
4. Securities or services complained about.
5. Date of the complaint.
6. Date and content of the decision made regarding the complaint.
7. Correspondence related to the complaint.
Article 52
In the case where records are kept in electronic form, the following shall be observed:
1. Possibility of making information available to the Authority and the Market at a
reasonable time and in a reasonable form.
2. Establishing, within a timeframe suitable for the nature of the licensed activity,
integrated Regulations that allow for the secure preservation of information and for
procedures for applying and operating backup copies and recovery in the event of a
Regulations failure.
Chapter six
Exchange of Information 53-64
Section 1 Information Provided by the Company to a Client 53
Article 53
Unless the clients agree otherwise, the Company shall notify its clients immediately, but no
later than the day following the date of executing a transaction, of the details of the transactions
executed for their account.
Article 54
The Company shall send a monthly statement of account to the client free of charge in the case
of executing a transaction for the account. The statement shall indicate the type, quantity, price
and value of each traded security and the remaining balance, and details of the commission
and fees.
Article 55
The Company shall send a biannual statement of account to a client free of charge in the case
where there are funds or securities in the account. The statement shall indicate the type,
quantity, price and value of each traded security and the remaining balance, and details of the
commission and fees.
Section 2 Information Provided by a Client to the Company
Article 56
A client shall provide the following information to the Company in order to open an account
with it:
1. Name, address, and phone number.
2. Age and sex.
3. Nationality.
4. Profession.
5. Information about place of employment.
6. Type of account to be opened.
7. Investment objectives, risk tolerance and type of securities intended for trading.
8. Whether the aim is to obtain distributions of profits, or capital gains, or both.
9. The client’s level of knowledge in trading securities.
10. Other expected annual revenues and net assets.
11. The number of the client’s main bank account and the name and address of the bank at
which the account is opened.
12. How the client knew about the activity of the Company.
Article 57
A client shall provide at least the following documents in order to open an account with the
Company:
1. With respect to a juristic person:
a. A copy of constitutive documents, such as the commercial register, issued by the
official bodies in the country where the juristic person was established.
b. A copy of the statute and contract of establishment.
c. A statement indicating the names of the persons authorised to sign on behalf of the
juristic person, and a copy of Supreme Management’s decision to open an account and
appoint the persons authorised to manage the account.
d. A copy of the documents indicating the identity of the persons authorised to sign on
behalf of the juristic person. Such documents must be authenticated by the official
bodies in the country where the juristic person has been constituted.
e. Sample signatures of the authorised signatories and their personal identity cards.
2. With respect to a natural person:
a. Valid copy of the identity card or passport.
b. Sample of the signature of the client.
Article 58
With respect to accounts of minors:
1. An account in the name of the minor shall be opened by his parent or guardian.
2. The parent or guardian shall present all of the minor’s information and documents,
including the birth certificate and passport, and in the case of a guardian an attestation
of the guardianship right.
3. Where the minor reaches the age of majority, any account management relationship
between the minor and his parent or guardian shall be terminated.
Article 59
The Company shall not open accounts for clients before ensuring that all documents and
information referred to in this Regulation satisfy its requirements.
Article 60
Where authorisation over an account is given to a natural person, the client shall present such
authorisation authenticated by the relevant official bodies and accompanied by all data and
documents of the Agent.
Article 61
Where a client does not reside in the State, all official documents shall be authenticated by the
relevant official bodies in the country that issued them.
Article 62
A client and the manager authorised to open accounts with the Company shall sign the account
opening agreement.
Article 63
The Company shall keep a special record for every client and it shall include all the information
and documents related to the client and his account. The Company shall also set appropriate
procedures for constantly updating the client’s data in order to ensure the validity of the
documents in its keep.
Article 64
After closing an account of a client, the Company shall keep the information related to the
client according to the applicable laws in the State.
Chapter Seven
- Modification, Suspension and Cancellation of the
Issuance Articles
Article 65
The Company may decide voluntarily to stop conducting a licensed activity by submitting a
written notice to the Authority, the Markets and its clients. Such termination of activities shall
take effect after three months from the date of receipt of the notice by the Authority, unless the
Authority agrees to a different date. The Company shall indicate the manner and date of the
winding down, transfer of its businesses, and the details related to such activities.
Article 66
The Company shall not conduct any dealing related to the licensed activity if the settlement
date of such transaction is later than the day before its cessation of operations becomes
effective.
Article 67
1.
In the cases mentioned in paragraph 2 of this Article, the Authority may decide the
following:
a.
To suspend the operations of the Company or the approved person for the period that it
deems appropriate.
b. To impose conditions, restrictions or obligations on the Company or the approved person.
c.
To terminate the activity of the Company or withdraw the approval of the approved
person.
d. To oblige the Company to do or to refrain from doing a certain action, or suspend, modify
or cancel the licence granted for conducting one or more activities.
2. The cases mentioned in paragraph 1 of this Article regarding a Company or an approved
person include:
a.
Failure or likely failure to comply with any of the standards or conditions stated in this
Regulation.
b.
Suspension or cancellation of any licence, including the licence obtained from the
Authority, or other approval obtained under any of the applicable laws which authorise them
to conduct any of the activities.
c.
Failure of the Company to conduct the licensed activity or its failure to commence
conducting it within six months.
d. Failure of an approved person to perform the function for which he was granted approval.
e.
Cases where the Authority deems it essential to take the abovementioned steps in order
to protect the interests of clients or the safety of the operations of a Market.
f.
Cases of violations of the law or other relevant legislations.
g.
Cases of a Company’s failure to meet its obligations.
h. Cases of a Company becoming bankrupt.
i.
Occurrence or likely occurrence of an event that might have an adverse effect on the
strength of the Company’s financial position.
j.
Failure to comply with the instructions of the Authority or a Market in relation to
submission of information or documents required by law or regulations.
k. Cases where a Company or an approved person is subject to a criminal investigation that
might result in failure to comply with the standards and conditions prescribed by law or
regulations.
l.
Violation of any rules, obligations or orders issued by the Authority pursuant to this
Regulation.
m. Receiving a request from an external control body which is accepted by the Authority.
Article 68
The Authority shall, before taking a decision to suspend, modify or cancel a licence, notify a
Company in writing of the proposed decision and shall give it an opportunity to submit a
memorandum on the Authority’s opinion and proposals within five days from the date of
receiving the notice. The Authority may, within ten working days of the date of giving the
notice, and after considering the memorandum, decide to cancel or modify its decision.
Article 69
The provisions of the previous Article shall not apply in the following cases:
a.
Where the Authority decides that the delay in issuing the decision may be prejudicial to
the interests of the clients of the Company or the safety of a Market.
b. Where the Company suffers from an incident that may affect its financial position.
In these two cases, the Authority shall give the Company an opportunity to submit a
memorandum on its opinion and proposals within ten days from the date of the notice given
by the Authority.
Article 70
Where the Authority, after having considered the memoranda submitted to it, decides to
suspend, modify or cancel the licence, it shall notify the Company in writing of its decision
within ten working days from the date of issuing the decision, and such decision shall come
into force from the date of receipt of the notification by the Company.
Article 71
The notification shall include details of the decision and the procedures and conditions for its
execution, and it shall indicate the right of the Company to appeal to the Appeals Committee
within fifteen days from the date of receiving the notification.
Article 72
1.
Where a Company decides voluntarily to cease conducting an activity or to suspend,
modify or cancel the licence for conducting any activity, it shall:
a.
Perform, finalise and settle the transactions in which it had participated during the period
prior to its cessation, or prior to the suspension, modification or cancellation of the licence
related to such activity.
b. Coordinate and cooperate with the Market in all related matters.
c.
Return all software and equipment provided to it by the Market.
2. The cessation, suspension, modification or cancellation of a licence related to conducting
an activity shall not affect the rights or obligations of the Company that have been established
before such event.
Article 73
The provisions stated in the appendices to this Regulation MUST be considered as
complementary to the provisions of these Articles, and the competent authorities, each in
their respective jurisdiction, shall comply therewith.
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