Chapter (42)

The Capital Market Authority shall supervise the company and inspect its activities in accordance with the provisions of the Capital Market Law applicable to securities companies.

Chapter (43)

The company shall observe the following systems and procedures for safeguarding securities in its custody:

1. Maintain appropriate and sufficient systems and procedures for safeguarding the securities in its custody;
2. Appoint internal and external auditors to evaluate the financial auditing of the company;
3. Prepare periodic reports for its Participants of the central depository and issuers of securities on the performance of the company; and

Implement arrangements to ensure the proper performance of electronic data processing systems of the company and to retrieve the information in the event of any failure of such systems.

Chapter (44)

The company shall establish the technical systems of the securities depository, clearance and settlement of securities transactions. Such systems shall become effective upon the approval of the Stock Exchange in respect to the system of settlement and clearance. Such technical systems shall become effective upon the approval of Board of Directors of the Capital Market Authority.

Chapter (45)

The legal auditing of the company shall be carried out by two (2) auditors selected from a list prepared by the Capital Market Authority for such purpose.

The company shall provide the Authority with all such reports and financial statements required from any issuing company which offers its shares to the public in accordance with the Capital Market Law, in addition to any other reports specified by the Executive Regulations.

Chapter (46)

The Chairman of the Capital Market Authority shall be notified of any resolution appointing the members of the board of directors of the company within thirty days from its adoption. Such resolution shall be effective upon such notification.

Chapter (47)

In order to maintain the stability of the capital market and the proper conduct of the company’s business, the board of directors of the Capital Market Authority may issue a motivated resolution discharging any member of the board of directors of the company.

It may also appoint a member as an observer at any meeting of the board of directors of the company, for a period specified by the board of directors of the Capital Market Authority. This member may participate in the discussions of the board and have his point of view recorded in the resolutions adopted by the board, but shall not have the right to vote at such meetings.

Chapter (48)

The company shall be liable to Participants or issuers of securities, as the case may be, for:

1. Failure to deliver securities or transfer funds of the Participant or any of its customers, or to register or transfer the ownership of securities;
2. Disappearance or loss of securities or funds;
3. Any damage sustained by a Participant, its customer, an issuer of securities or any other person to whom the company is liable under its articles of incorporation or its rules and procedures or its agreements with Participants or issuers of securities.

Any damage arising from the liability of the company shall be borne by Participants in accordance with the loss sharing rules, unless the damage is covered by insurance.

Chapter (49)

• The company shall have appropriate systems and procedures in place to protect the confidential nature of the information of those parties dealing with the company. Any director, officer, employee or agent of the company shall be prohibited from disclosing such information.
• The company shall also have the appropriate means for detecting any violation of such confidentiality obligation.
• A Participant and an issuer of securities shall have the right to look at, and the company shall make available to the authorized representative of such Participant or issuer, at the business premises of the company, all the books and records of the company relating to the transactions of such Participant or issuer and obtain a copy of same.

Chapter (50)

The board of directors of the Capital Market Authority shall establish rules pertaining to measures to be taken against the company in the event of violation of this Law and any decree issued thereunder. Any such decree shall become effective upon being acknowledged by the competent Minister.

Chapter (51)

The provisions of the Capital Market Law shall apply to those persons having judicial power of inspection and the authority to identify violations of such laws and their decrees.