Draft Project (2) of the Instructions of Shares Buyback by Public Shareholding Companies “Treasury Stocks"

In order to achieve the goals of Jordan Securities Commission (JSC) to develop its legislations by virtue of up-to-date international practices & to cope with all developments taking place in Arab & international securities markets, the Commission reconsidered the (Instructions of Shares Buyback by Public Shareholding Companies “Treasury Stocks” for the year 2006); by preparing a New Draft Project of these Instructions after reviewing several regulatory legislations of regional & international countries, to buy treasury stocks that are convenient for the Jordanian market.

The New Draft Project emphasizes on the following:

1. The company must have the Commission prior to approval to purchase Treasury Stocks.
2. Subsidiary & Affiliate Companies are prohibited from purchasing shares of a Parent Company.
3. Availability of sufficient periods of time after announcing the purchase & buy of Treasury Stocks, to ensure proper disclosure prior to executing these transactions.
4. Conduct the purchase or buy transaction via one broker.

The Commission proposes this “Draft Project” to all concerned parties in Jordan capital market including brokers, investors, auditors & others, to state their opinions on the suggested “Instructions” within one week from the date of being disseminated. The Commission wishes to be acquainted with their opinions & suggestions to benefit from these prior to being finalized.

The attached “Instructions” are merely a “Draft Project” that may be altered & amended as deemed proper for public interest, nor is any part of it is final yet.

Kindly send your views & opinions to the following addresses:
Email: info@jsc.gov.jo.
Fax: 5682615.


Draft Project (2) of the Instructions of Shares Buyback by Public Shareholding Companies “Treasury Stocks” on February 12.2013


Article (1):
These Instructions shall be cited as the (Instructions of Shares Buyback by Public Shareholding Companies “Treasury Stocks” for the Year 2013) & shall come into effect as of .../…/2013.

Article (2):
A. The following words & expressions shall have the meanings ascribed thereto hereunder unless the context indicates otherwise:

? The Law: The Securities Law.
? The Commission: Jordan Securities Commission (JSC).
? The Board: The Board of Commissioners of the Commission.
? The Market: Amman Stock Exchange (ASE) or any Trading Market in Securities licensed by the Commission in accordance with the provisions of this Law.
? The Company: a listed & traded Public Shareholding Company at the Market.
? Treasury Stocks: shares issued by a company & repurchased by it via the Market.
? Daily Trading Average: is the daily average of the number of traded shares of a company during the month preceding the announcement date of purchasing Treasury Stocks, of which shall be fixed all through the purchase period of time. It equals:

=     Total Number of Traded Shares during the Month
            Number of Trading Days during the Month

? Announcement: making an announcement in at least two daily local & widely disseminated newspapers.
? Insiders:

1) People occupying the following positions in an Issuing Company shall be considered Insiders by provision not exclusively:

A. Chairman of the Board of Directors.
B. Members of the Board of Directors.
C. Secretary of the Board of Directors.
D. General Manager/Chief Executive Officer & his deputies.
E. Financial Manager.
F. Internal Auditor.
G. The Natural Person authorized to run the Account of Treasury Stocks.
H. Relatives of all the above stated.
I. Companies owned &/or controlled by members of the Board of Directors financially &/or administratively & their representatives.

2) If anyone occupying any of these positions is a Legal Person, the Natural Person representing him shall be considered as an Insider.

B. Words & expressions unstated above shall have the meanings ascribed thereto in the Law & the Regulations issued pursuant thereto.

Article (3):
The company that wishes for shares buyback shall disclose to the Commission, the decision of the Board of Directors recommendation for the General Assembly, prior to the beginning of the Trading Session of the next working day of its issuance, according to the specified Form & the recommendation must be announced.

Article (4):
The following terms shall apply to shares buyback transaction:

A. The number of purchased shares shall not exceed (10%) of the number of subscribed in shares of the company.
B. The company allocated amount to shares buyback shall not exceed its net of realized returned earnings & voluntary reserves after subtracting the issuance discount & the negative value of differences from assessing financial assets in fair value by other comprehensive income items.
C. The financing to purchase Treasury Stocks shall not be through borrowing.

Article (5):
A. The Company that wishes for purchasing Treasury Stocks shall submit to the Commission a written application to have its approval according to the available Form attached to it the following:

1. The decision of its Extraordinary General Assembly including the consent of purchasing & selling Treasury Stocks. The decision shall include the following:

? The maximum limit of the percent of shares the company intends to purchase.
? The purpose of purchase.
? The allocated amounts to be purchased.

2. The consents of official parties the company is subject to their supervision.
3. The Annual Financial Statements (Audited).
4. The last quarter of the Financial Statements, preceding the date of submitting the Purchase Application (Revised). 
5. The announcement wording or context.
 
B. The Commission shall issue its approval or rejection of the decision within (14) working days of the date of submitting the application fulfilling the terms & requirements.
C. Taking into account the enforced Instructions of Issuing Companies Disclosure, Accounting & Auditing Standards for the year 2004, the company shall within a period of time not exceeding (4) working days of the date of approving its application, announce the following:

? The decision of the General Assembly.
? The official consents.
? The purchase transaction starting date.
? The Brokerage Company of which the transaction shall be executed.

D. The company shall be prohibited from starting the execution of the purchase transaction prior to (7) working days of the announcement date.

Article (6):
The purchase transaction shall be conducted through the market & shall take the following into consideration:

A. The daily demand for a single Trading Session shall not exceed (25%) of the share Daily Trading Average (DTA).
B. The company shall be permitted to exceed the percent indicated in Item (A) above, in case the share (DTA) is low. This percent shall not exceed by any means (50%) of the share (DTA), in condition the Commission prior to approval is taken & this is announced to the public.
C. The company shall execute the purchase transaction within a period of time not exceeding one year of the date of the first purchase transaction.
D. It is forbidden to purchase Treasury Stocks through block trades.
E. The company shall be prohibited from executing transactions of shares buyback for a higher price of the last executed one during the Trading Session.
F. The purchase transaction shall be conducted via one broker.

Article (7):
Treasury Stocks shall not be entitled to any dividends distributed to shareholders, nor to participating in & voting in the General Assemblies & representing in the Board of Directors.

Article (8):
The retain period of time of Treasury Stocks must not be less than (6) months & not more than (18) months from the date of the last purchase transaction.

Article (9):
The company shall not be permitted to issue any new securities during it’s retain period of time of Treasury Stocks.

Article (10):
The company that intends to sell its Treasury Stocks shall conduct the following:

A. Inform the Commission in advance of the selling transaction, its start date & the Brokerage Company executing it.
B. Announce the intent of the company to sell these shares, its start date & the Brokerage Company executing it.
C. The company shall be prohibited from starting to execute the selling transaction prior to (7) working days of the date of announcing it.

Article (11):
A. If the company is incapable of selling Treasury Stocks within the specified period of time in these Instructions, it must submit to the Commission a written application, prior to at least (10) working days of the end of this period, including the Board of Directors recommendation for the General Assembly of the mechanism for disbursing these shares.
B. Upon the company’s justified application, the Board shall have the right to extend the shares retain period of time to the one it deems proper according to public interest.

Article (12):
A. Insiders of a company & owned companies &/or controlled by them & their relatives shall be prohibited from dealing in Treasury Stocks.
B. Subsidiary & affiliate companies shall be prohibited from owning shares in a Parent Company.

Article (13):
Companies that wish for shares buyback through the Market in order to decrease capital shall be exempted from the terms cited in these Instructions. In turn, the Regulatory Provisions of Shares Buyback (Treasury Stocks) to Decrease Capital for the year 2012 issued by the Commission shall be applicable to these companies.

Article (14):
The company shall observe the interests of all shareholders upon taking decision to disburse Treasury Stocks.

Article (15):
The (ASE) shall take appropriate measures to disclose transactions executed, by virtue of the Provisions of these Instructions.

Article (16):
A. The company shall be prohibited from executing purchase & sell transactions on its shares during (15) days prior to & (3) days after ratifying the annual financial statements in the Ordinary General Assembly or during the disclosure of any Material Fact that may affect the price of a share.
B. The company shall be prohibited from executing purchase & sell transactions of its shares during (3) days prior to & (2) days after announcing the annual & semiannual financial statements.

Article (17):
Further to the cited requirements of disclosure in the Instructions of Issuing Companies Disclosure, Accounting & Auditing Standards for the year 2004, the company shall comply with the following:

A. To disclose on a weekly base the number of shares purchased, average price execution & percent of remaining shares to be purchased.
B. To disclose reasons to renounce executing &/or to discontinue the purchase of Treasury Stocks.

Article (18):
The company shall be prohibited from selling purchased shares during the purchase period.
Article (19):
By virtue of these Instructions, companies shall rectify their status by maximum on June 30.2014.

Article (20):
The Instructions of Shares Buyback by Public Shareholding Companies “Treasury Stocks” for the Year 2006 are hereby repealed.