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                Investors Protection Fund Instructions for the year 2007 Issued according to the securities Law No (76) for the Year 2002

                Article 1:
                These instructions shall be named “Investors Protection Fund Instructions” for the year 2007, and it shall come into effect as of the date of its publication in the official Gazette.
                 
                Article 2:
                A. The following words and phrases, wherever mentioned in these Instructions, shall have the meaning ascribed to them hereunder unless the context indicates otherwise:

                Commission: Jordan Securities Commission
                Board: The Board of Commissioners of the Commission
                Chairman: The Chairman of the Board of Commissioners.
                Market: Amman Stock Exchange or any market licensed by the Commission to trade in securities in accordance with the rules of the Securities Law. 
                Center: The Securities Depository Center
                Financial Broker: The licensed legal person engaged in buying and selling securities for the account of others. 
                The Fund: The Investor Protection Fund
                Board of Directors: The Board of Directors of the Fund
                B. Words and phrases not defined in these instructions shall have the meaning ascribed to them in the Securities Law and regulations and instructions issued pursuant thereto, unless the context indicates otherwise.

                Article 3:
                These instructions shall apply to all financial service companies licensed by the Commission to act as financial brokers in the Amman Stock Exchange or any securities market licensed by the Commission in the Hashemite Kingdom of Jordan.

                Article 4:
                A. The Commission shall establish, pursuant to  these instructions, a fund named the “Investors Protection Fund” having a legal personality with financial and administrative autonomy entitled to own movable and immovable assets and to perform all legal acts necessary to fulfill its objectives, including concluding contracts, and accepting grants and donations in accordance with the rules of these instructions.  It shall have the right to litigate and be represented in judicial proceedings by any lawyer that it appoints for this purpose.
                B. The Fund shall be linked to the Commission and subject to its supervision.  The Fund's offices shall be located at the Commission or at any other location determined by the Board within the City of Amman.

                Article 5:
                The Fund aims to protect investors with licensed financial service companies in accordance with the rules of these instructions by compensating them for damages they may incur as a result of the bankruptcy or compulsory liquidation of these companies.

                Article 6:
                A. The Fund shall be administered and supervised by a board of directors headed by the Chairman, and with the membership of :
                1. The Deputy Chairman / Deputy Chairman of the Board of Directors.
                2. The CEO of the Commission.
                3. The CEO of the Stock Exchange or whoever replaces him.
                4. The CEO of the Center or whoever replaces him.

                 

                Article 7:
                A. The Board of Directors shall meet on invitation from its chairman or deputy chairman in case of the chairman’s absence at least once every three months, or whenever the need arises.  The Board may also meet upon a request submitted by at least two of its members.  The meeting shall have quorum if attended by at least three members including the Chairman or his deputy, The Board Of Directors’ decisions shall be taken by unanimous or majority vote of its members.  In case of a tie vote the side with which the Chairman voted shall prevail
                B. The Board of Directors may call any expert or specialist from outside its members to participate in its meetings and to give an opinion.  Such expert shall not be entitled to vote. 
                C. The Chairman is the legal representative and head financial officer of the Fund. He shall have the power to order its disbursements, execute its policies, and manage its affairs. To implement such functions the Chairman shall have all the powers assigned to him by virtue of Article 13 of the Securities Law No 76 for the Year 2002 and any law that replaces it.  The Chairman may delegate in writing some of his powers to a member of the Board of Directors or to the General Manager.

                Article 8:
                The Board of Directors shall carry out the following duties and powers:
                A. Drawing the overall policy of the Fund
                B. Approving the general plan for investing the funds of the Fund in accordance with these instructions.
                C. Approving the regulations required for the activities of the Fund, including the appointment of the manager and staff.
                D. Approving the estimated annual budget of the Fund.
                E. Approving the Fund's balance sheet and closing financial statements.
                F. Reviewing and overseeing the liquidation procedures of the financial broker through the Commission.
                G. Appointing an auditor to audit the accounts of the Fund and determining the auditor’s fees.
                H. Reviewing requests for compensation submitted in accordance with these instructions and making the necessary decisions regarding them.
                I. Appointing a legal counselor and a lawyer to represent the Fund before the courts.
                J. Any other matter proposed by the Chairman related to the duties of the Fund.

                Article 9:
                A. The General-Manager and staff of the Fund are appointed by a decision of the Board of Directors, which shall define their duties, financial remunerations, and job privileges.  Their employment is terminated by the same process.
                B. The Board of Directors may agree to fill the positions defined in Section A of this Article from the staff of the Commission or the Stock Exchange or the Center, through secondment, on the conditions agreed upon with the representatives of these parties.

                Article 10:
                The Manager of the Fund shall carry out the following duties:
                A. Implementing the overall policy of the Fund, as set by the Board of Directors.
                B. Preparing the annual report of the Fund and its closing financial statements for submission to the Board of Directors within a period not exceeding three months from the end of the fiscal year.
                C. Preparing the estimated annual budget for the Fund.
                D. Any other duties assigned to him by the Chairman.

                Article 11:
                Resources of the Fund shall consist of:
                A. Accumulated funds with the Commission for establishing the Fund.
                B. Contributions from financial brokers as set out under Article 12 of these instructions.
                C. Returns on the investments of the Fund.
                D. Fines imposed by the Board on financial brokers related to their violations of these instructions.
                E. Any other resources approved by the Board.

                Article 12:
                A. Every financial broker shall pay (0.0001) one in ten thousand of the volume of its daily trading, buying and selling, to be deducted by the Center for the account of the Fund.

                Article 13:
                A. The Fund shall submit monthly statements of its assets and liabilities, and an annual statement to the Commission within a period not exceeding the middle of January, reflecting all sums collected by the Fund that are subject to these instructions as at 31 December of the previous fiscal year.
                B. For the first fiscal year, the Fund shall submit, within two weeks of the coming into force of these instructions , the statement referred to in Section A above reflecting the total sums in its possession as at the date of its establishment,
                C. The Fund shall prepare its annual financial report and submit it to the Commission within two months from the end of the fiscal year.
                D. The Fund may request the Commission to verify the correctness of the statements submitted to it by financial brokers, or to conduct an inquiry or impose a fine or take any of the legal measures stipulated in the Securities Law in the event that a financial broker is in violation of these instructions.

                Article 14:
                A. Financial brokers shall submit to the Fund monthly statements on the special form, within the first three working days of each month, showing the total credit liabilities that are subject to these instructions.  The Board may, at the request of the Fund, impose a late payment fine not exceeding 100 JD/day for every day's delay on the broker who violates the rules of this Article.
                B. The Fund has the right of access to or to request copies of the disclosures submitted by financial brokers to the Commission related to the conduct of their business.

                Article 15:
                A. In the event that the financial broker is declared bankrupt or placed under compulsory liquidation the Fund shall guarantee the debt of such broker to his clients that result from the broker having bought and sold traded securities for the accounts of his clients. The amount of the guarantee shall not exceed the amount of JD 5,000 per client and a ceiling of JD 2 million for the total creditors of a single broker whose debts are subject to the rules of these instructions.
                B. If the amount of  total claims acceptable according to these instructions exceed the sum of JD 2 million, this sum shall be distributed among creditors on a pro rata basis within the amount of compensation  assigned to a single creditor under Section A of this Article.
                C. Notwithstanding the provisions of Sections A and B of this Article, if the assets of the Fund are less than JD 2 million, the limit of the guarantee provided by the Fund shall not exceed 75% of its net assets as at the time the broker is declared bankrupt or placed under compulsory liquidation.  This amount shall be divided among the creditors as indicated under Section B of this Article.
                D. The guarantee provided by the Fund is limited to the debts of the financial broker to its clients that resulted from buying and selling securities traded in the Stock Exchange.  The Fund does not guarantee any debts between the financial broker and his clients that result from any other relationship.
                E. The guarantee provided by the Fund is limited to the amount of the original debt.  The calculation of the compensation does not include any interest, profit, or claims for damages.
                F. The Fund shall not provide any guarantee if the client of the financial broker is:
                1. A partner in the company as provided for in the provisions of these instructions, if such company is a limited liability company or a limited partnership in shaes or a private shareholding company.
                2. A member of the board of directors of a company as provided for in the provisions of these instructions or a member of its management or its general manager.
                3. A director or employee of a company as provided for in the provisions of these instructions.
                4. Any person who has control over the company.

                Article 16:
                A. if a judgment is rendered whereby a licensed financial broker is declared bankrupt or liquidated, the Fund shall within a month of such a judgment becoming final, place an announcement in at least two daily local newspapers requesting all those whose debts fall under the guarantee as stipulated in these instructions to submit their claims to the Fund or to any other entity that the Fund determines within one month of such an announcement.  Such claims must be supported by evidentiary document and its acceptance shall be conditional upon having submitted a claim to the liquidator or bankruptcy trustee.     
                B. The Fund shall review all claims submitted to it within the period specified in Section A of this Article, A creditor who does not submit his claim within the period specified above or who does not submit his claim to the bankruptcy trustee or to the liquidator will lose his right to do so. The Fund shall not be responsible for paying compensation to any claims submitted after the lapse of the specified period of time.

                 


                Article 17:
                A. The Fund shall review claims for compensation as submitted and take the appropriate decisions regarding them within two weeks after the conclusion of the deadline set for receiving claims.
                B. With due regard to the provisions of Article 15 of these instructions, the Fund shall settle claims submitted to it within the period specified in Section A of this Article within 15 days of the Board of Directors’ decision to approve the claim.
                C. Notwithstanding Sections A and B of this Article, the Fund may decide not to pay any creditor whose claim was rejected by the bankruptcy trustee or the liquidator pending a judicial ruling.

                Article 18:
                A. The creditor’s recourse to the Fund does not constitute a waiver on his part to make a claim against the debtor company before the relevant courts. The compensation received by the creditor from the Fund is considered as settlement of the Fund’s obligations from the value of the claim against the financial broker.
                B. The Fund shall legally substitute the creditor who has been compensated in accordance with the provisions of these instructions; within the limit of the sum paid to him by the Fund In the event that the proceeds of bankruptcy or liquidation exceed the broker's debts as provided for under these instructions.


                Article 19:
                A. Contributions and sums paid by financial brokers to the Fund shall not be considered, according to these instructions, as debt on the Fund or as recoverable insurance.
                B. In case legislation or instructions are issued annulling or dissolving the Fund, said legislation shall specify the party to which assets of the Fund shall be transferred.

                Article 20:
                The Fund may conclude contracts of insurance against the risk of recourse specified in the provisions of these instructions, with one or more insurance company/ ies in accordance with the decision of the Board of Directors.

                Article 21:
                A. The Fund may invest its funds in bonds issued or guaranteed by the Government of Jordan, The Fund may also deposit such funds at any of the licensed banks for interest, in accordance with the decision of the Board of Directors.
                B. The Fund shall deposit any uninvested funds in special accounts at  a licensed bank.

                Article 22:
                A. The Fund shall keep regular records and accounts in accordance with International Accounting Standards.
                B. The closing accounts of the Fund shall be published, after being approved by the Board of Directors, in at least two local daily newspapers.

                Article 23:
                The fiscal year of the Fund starts on the first day of January of each year and ends on the 31st day of December of the same year.   The first fiscal year starts on the date when these instructions come into force and ends at the end of the same year.

                Article 24:
                For the purpose of these instructions, the Fund may request the Commission to form a joint auditing team to review or examine the activity of a licensed financial broker and its records and statements.  This joint auditing team shall submit a joint report on its findings and recommendations to the Commission and the Fund.

                Article 25:
                If the Fund learns that a licensed financial broker or any executive therein practices illegal activities or activities that violate the standards of financial transactions or that may make the company susceptible to bankruptcy or liquidation, it shall notify the Commission and provide it with any proposals or recommendations necessary to take measures against these practices.

                Article 26:
                The Fund shall publish, within 30 days of the coming into force of these instructions, in two local daily newspapers, an announcement stating the names of financial brokers that are subject to the provisions of these instructions, the nature of claims covered and the maximum amount of the guarantee.  The Fund shall also publish this announcement in the same manner during the month of February of each year.

                Article 27:
                With due regard to the provisions of Article 15 of these instructions, if a decision is issued for the bankruptcy or liquidation of a financial broker the amount of the claim per creditor shall be calculated to set the amount of the guarantee by using the following standards and procedures:
                A. If the creditor / client has more than one account with the company in any of its branches, these accounts shall be considered as one account for the purposes of these instructions
                B. If the client is a debtor of the financial company, a set-off is made between his rights and liabilities, regardless of whether  his liabilities and facilities are due for payment or not.  Any credit balance resulting from the set-off process shall be considered as an account subject to compensation in accordance with these instructions.
                C. Article 28:
                Information given to the Fund and its staff is considered confidential under legal responsibility.

                Article 29:
                The Board may, based on the board of directors’ recommendation, issue decisions and instructions to define the executive standards and procedures related to these instructions.





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