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Saudi Stock Exchange Securities Depository Centre Rules

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Contents Section One ......................................................................................................................................... 3

1 General Provisions .................................................................................................................. 3 Section Two ......................................................................................................................................... 4

2 Securities Depository Centre ................................................................................................... 4 Section Three ...................................................................................................................................... 6

3 Connection to the Depository and Settlement System ............................................................ 6 3-1 Members ................................................................................................................................. 6 3-2 Settlement Agents ................................................................................................................... 8

Section Four ...................................................................................................................................... 11 4 Securities Ownership Registration and Depository ................................................................ 11

Section Five ....................................................................................................................................... 14 5 Investment Portfolios ............................................................................................................. 14 5-1 Opening of Investment Portfolios .......................................................................................... 14 5-2 Identifying the Investor in Depository and Settlement System ............................................... 17 5-3 Documents required for identifying Investor in the Depository and Settlement System ......... 18

Section Six ......................................................................................................................................... 21 6 Deposit of Securities Owned by Certificates .......................................................................... 21

Section Seven .................................................................................................................................... 23 7 Clearing and Settlement ........................................................................................................ 23

Section Eight ...................................................................................................................................... 25 8 Transfer of Securities Ownership .......................................................................................... 25

Section Nine ...................................................................................................................................... 27 9 Securities Ownership Restrictions ......................................................................................... 27

Section Ten ........................................................................................................................................ 29 10 Centre’s Responsibility .......................................................................................................... 29 10-1 Centre’s responsibility: .......................................................................................................... 29 10-2 Centre’s Responsibility on Disclosure of Information: ............................................................ 30

Section Eleven ................................................................................................................................... 31 11 Final Provisions ..................................................................................................................... 31


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Section OneGeneral Provisions

1 General Provisions

1-1 Terms and phrases referred to in these rules shall have the corresponding meanings as

in the (Glossary of Defined Terms Used in the Exchange Rules).

1-2 Any reference to the Capital market Law and its Implementing Regulations provided

herein shall mean the (Capital Market Law) and the (Regulations, Rules

and Instructions issued by the Capital Market Authority).

1-3 Any reference herein to the Exchange Rules shall mean all the Rules of the Exchange.

1-4 Any reference to the relevant rules and regulations shall mean all applicable laws and

regulations that are in effect and relevant to any of the activities of the Capital Market

or to the participants in the capital market, including the Anti-Money Laundering

Regulations, the Information Technology Crime Combating Regulations, and the

Electronic Trading Regulations.


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Section Two CentreSecurities Depository

2 Securities Depository Centre

The Centre shall provide its services in accordance with the following:

2-1 The Centre shall provide the following services:

2-1-1 opening of Investment Portfolios in the Depository and Settlement System.

2-1-2 registration of securities ownership.

2-1-3 depository of securities.

2-1-4 transfer of ownership of securities; and the clearing and settlement thereof.

2-1-5 registration of any ownership restriction of deposited securities.

2-1-6 connection of Members to the Depository and Settlement System.

2-1-7 connection of Settlement Agents to the Depository and Settlement System.

2-1-8 management of Issuers’ Securities Ownership Register.

2-1-9 organization of Issuers’ general assemblies including Remote Voting services for

such general assemblies.

2-1-10 issuance of reports, notices, and information through any of the various mediums

available at the Centre.

2-1-11 provision of any other service relevant to the activities of the Centre, as the

Centre may wish to provide in accordance with the Capital Market Law and its

Implementing Regulations.

2-2 Subject to the Capital Market Law and its Implementing Regulations, the services

referred to in clause (2-1) above shall be offered in the manner and pursuant to the

requirements as the Centre may be deem to be appropriate.

2-3 Beneficiaries of the Services of the Centre shall sign any required agreement relevant

to any of the services referred to in clause (2-1).


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2-4 Beneficiary of the services of the Centre or Member – as stipulated in these rules –

shall pay any of the applicable fees.

2-5 Securities shall be deposited in the Depository and Settlement System, and its

ownership shall be electronically registered, settled, restricted and

transferred between Investment Portfolios and in the Issuers’ Securities Ownership

Register through the Depository and Settlement System.

2-6 Restrictions and records kept in writing or archived electronically in the Depository and

Settlement System at the Centre shall be considered as a conclusive proof and

evidence of securities ownership and any restriction thereof.

2-7 Records and documents provided to the Centre in hardcopy or electronically shall be

safe-kept in a designated system at the Centre, and the Centre may keep such records

and documents in any other mean, as the Centre may deem appropriate.


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Section ThreeConnection to the Depository and Settlement

System

3 Connection to the Depository and Settlement System

The Centre shall connect Members and Settlement Agents to the Depository and Settlement System, in accordance with the following provisions:

3-1 Members

3-1-1 with the exception of unlisted securities, the Centre provides the Members with a

connection to the Depository and Settlement System through which Investment

Portfolios can be opened for themselves and for their clients, and to manage these

portfolios, execute orders of depository, transfer, settlement, pledge of securities in

the Depository and Settlement System.

3-1-2 unless otherwise provided to the contrary in these rules, all securities transactions

shall be executed through the Members.

3-1-3 Member shall - prior to entering any buy or sell order of a security in the Trading

System, whether on its behalf or on behalf of its clients - ensure that the securities

to be sold are available in type and quantity, and that it is not restricted by any of

the ownership restrictions that may prohibit such action, and that there is a

sufficient cash fund.

3-1-4 subject to the Capital Market Law and its Implementing Regulations, the Centre

may, for the purpose of rectifying a discovered error, cancel or modify any of the

instructions entered into the Depository and Settlement System.

3-1-5 the Member shall - throughout its connection with the Depository and Settlement

System - have a valid agreement with a Settlement Agent, to be connected to the

Depository and Settlement System in accordance with the Exchange Rules, to

undertake the cash settlement of securities transactions executed for the Member

and its clients.

3-1-6 the Member shall notify the Exchange - in writing - within at least (10) working days

before the deadline set for the disconnection of the existing Settlement Agent and

connection of its new Settlement Agent.

3-1-7 the Member shall - before the termination of its contractual relationship with its

Settlement Agent connected to the Depository and Settlement System - enter into


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an agreement with another Settlement Agent to be connected to the Depository and

Settlement System and to replace the existing Settlement Agent.

3-1-8 the Member shall be fully liable for all transactions and instructions executed

through such Member, whether related to its own Investment Portfolio or any

Investment Portfolios of its clients, and whether the transactions or instructions

were electronically entered into the Depository and Settlement System or manually

provided to the Centre.

3-1-9 with the exception of the transfer of the securities available in the Member’s

Investment Portfolio or in the Investment Portfolios of its clients to other Investment

Portfolios managed by another Member, connection of Member to the Depository

and Settlement System shall be suspended or terminated immediately upon

suspension or termination of the Member’s membership.

3-1-10 the Member shall designate only those of its qualified staff to have access to the

Depository and Settlement System.

3-1-11 the Member shall obtain from the Centre a username for any of its staff designated

to have an access to the Depository and Settlement System.

3-1-12 usernames shall be assigned by the Centre to the Member’s designated staff only

after receiving any qualifying training, as the Centre may deem necessary.

3-1-13 username shall be composed of two component codes consisting of the Member’s

code and Member’s designated staff’s code.

3-1-14 the Member shall be liable for all actions that may take place in the Depository and

Settlement System through the username given to its staff regardless of whether

those actions are authorized or not.

3-1-15 the Member shall immediately - upon the termination of the service of its

designated staff who holds a username or upon the changing of the nature of

his/her work - notify the Centre in writing in order for the Centre to cancel the

username assigned to such staff.

3-1-16 Member’s requests - that cannot be electronically executed - shall be submitted

pursuant to the form approved by the Centre along with all required documents.

3-1-17 the Member shall submit to the Centre a detailed list of all requests that cannot be

electronically executed along with all their relevant documents; The Centre shall,

upon its receipt of the submitted documents, return a signed copy of such list to the

Member.


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3-1-18 the Member shall be liable for the accuracy and completeness of all the documents

provided by such Member to the Centre.

3-1-19 the Centre may reject any of the submitted requests which cannot be electronically

executed if its relevant documents are not fully submitted.

3-1-20 the Member shall ensure that the accessibility to the Depository and Settlement

System is correct and done in accordance with the relevant rules and regulations.

3-1-21 the Member shall provide and implement proper monitoring, security and control

systems and procedures sufficient to prevent any unauthorized usage of the


3-1-22 the Member shall immediately notify the Centre upon the occurrence (or

anticipation thereof) of any failure or technical problem to any of its systems

connected to the Depository and Settlement System and to immediately take all

necessary actions to rectify it.

3-1-23 the Member shall pay, in due time, to the Centre any applicable fees, including

those due on its clients.

3-2 Settlement Agents

3-2-1 Settlement Agent contracting with Member shall provide the Exchange with a

settlement undertaking and guarantee letter pursuant to the form prepared by the

Centre.

3-2-2 the Centre shall provide the Settlement Agent with a connection to the Depository

and Settlement Centre to enable the Settlement Agent to provide cash settlement

to all transactions executed by the Member, whom such Settlement Agent is

contracting with, in the Depository and Settlement System.

3-2-3 the Settlement Agent shall open a client account in the name of the Member to

safe-keep the cash funds of the Member and its clients in order to settle the cash

value of the transactions executed by such Member.

3-2-4 the Centre grants the Settlement Agent - on the sole responsibility of the

Settlement Agent - The Function of Credit Settlement Ceiling Control for the

Member, whom the Settlement Agent is contracting with.

3-2-5 the Centre sends - electronically through the Depository and Settlement System -

to the Settlement Agent a file containing the net cash accounts of the Member,

whom the Settlement Agent is contracting with, and its clients, after market close

for securities of category (shares or exchange traded funds units), or after two


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days from the market close of that day for the securities of category (debt

instruments).

3-2-6 the Centre sends - electronically through the Depository and Settlement System -

to the Monetary Agency a list containing a net cash settlement amounts for each

Settlement Agent, after the market close for the securities of category (shares or

exchange traded funds units), or after two days from the market close of that day

for the securities of category (debt instruments).

3-2-7 the Settlement Agent shall designate any of its qualified staff to have an access to

the Depository and Settlement System at the Centre.

3-2-8 the Settlement Agent shall obtain from the Centre a username for any of its

designated staff to have an access to the Depository and Settlement System.

3-2-9 username shall be assigned by the Centre to the Settlement Agent’s designated

staff only after receiving any qualifying training, as the Centre may deem

necessary.

3-2-10 username shall be composed of two component codes consisting of the code of

the Settlement Agent and the code of the Settlement Agent’s designated staff.

3-2-11 the Settlement Agent shall be liable for all actions that may take place in the

Depository and Settlement System through the username given to its staff

regardless of whether those actions are authorized or not.

3-2-12 the Settlement Agent shall immediately - upon the termination of the service of its

designated staff who holds a username - notify the Centre in writing in order for

the Centre to cancel the username assigned to him.

3-2-13 the Settlement Agent and its contracted with Member shall solely be jointly and

severally liable for the cash settlement of all transactions executed for the account

of such Member.

3-2-14 Settlement Agent shall immediately notify the Centre upon the occurrence (or

anticipation thereof) of any failure or technical problem to any of its systems

connected to the Depository and Settlement System and to immediately take all

necessary actions to rectify it.

3-2-15 in order to terminate the connection of a Settlement Agent, who is connected with

a Member, to the Depository and Settlement System, an alternative Settlement

Agent contracted with the Member shall be made available to replace the existing

Settlement Agent.


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3-2-16 each of the existing Settlement Agent and the Member, shall provide the Centre

with a written undertaking letter signed by both of them stating the existing

Settlement Agent’s commitment and guarantee to settle the cash value of all

transactions executed by the Member, whom the Settlement Agent is contracting

with, and its clients up until the time of disconnecting the existing Settlement Agent

from the Depository and Settlement System.

3-2-17 each of the existing Settlement Agent and the Member, shall provide the Centre

with a written undertaking letter signed by both of them stating their commitment to

provide the Centre - within 10 days from the date of disconnecting the existing

Settlement Agent’s connection from the Depository and Settlement System - a

written clearance and release singed by both of them stating the settlement of all

outstanding claims vis-à-vis each other.

3-2-18 the Centre shall coordinate with the existing Settlement Agent to have its

connection linked with its contracted with Member disconnected from the

Depository and Settlement System, and to cancel all usernames assigned to its

staff, within the time agreed upon between the Centre, existing Settlement Agent

and the Member.


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Section FourSecurities Ownership Registration and Depository

4 Securities Ownership Registration and Depository

Securities ownership registration and Depository shall be carried out pursuant to the following

provisions:

4-1 Listed Securities or any further issue thereof shall be registered and deposited in the


4-2 Securities Ownership Registers shall be deposited, updated and all actions thereof shall

be electronically registered in the Depository and Settlement System.

4-3 To deposit and register the ownership of Listed Securities, any further issue thereof or any

of the Issuer’s other actions, the Issuer shall - as applicable - comply with the following:

4-3-1 obtain an approval from the Authority to list the issued securities or any further

issue thereof in the Exchange.

4-3-2 submit a registration and deposit application to the Exchange within a period not

exceeding (5) working days of the date of obtaining the Authority’s approval

accepting the listing of securities or any further issue thereof.

4-3-3 sign the data uploading of Securities Ownership Register agreement with the

Exchange.

4-3-4 sign the management of Securities Ownership Register agreement with the

Exchange.

4-3-5 provide a complete information on the issued securities or any further issue

thereof and on the register of its owners in a manner and form, as the Centre may

deem appropriate.

4-3-6 provide a copy of the relevant resolution of the Issuer extraordinary general

assembly approving the further issue or any other action which the Issuer may

issue in accordance with the Capital Market Law and its Implementation Rules,

Exchange Rules or any of the other relevant rules and regulations.

4-3-7 pay any applicable fee.


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4-4 The Centre shall determine the date on which the depository and registration of issued

securities or any further issue thereof will be completed.

4-5 With the exception of depositing securities owned by certificates, securities shall be

deposited in the owner’s most recently opened Investment Portfolios in the Depository and

Settlement System.

4-6 The Issuer shall be solely liable for the validity, accuracy and completeness of the data

and ownership register of its securities submitted for depository and registration in the


4-7 Subject to the restrictions provided under the Capital Market Law and its Implementing

Regulations, the Centre shall provide the Issuer with the information relevant to its

Securities Ownership Register in accordance with the provisions of the management of

Securities Ownership Register agreement.

4-8 The Centre shall - after all regulatory relevant conditions and requirements are fulfilled -

update the Securities Ownership Register in the following events:

4-8-1 transfer of ownership.

4-8-2 modification to the Issuer’s capital.

4-8-3 mergers and acquisitions.

4-8-4 modification to the nominal value of the security.

4-8-5 update of the personal data of securities owners.

4-8-6 any other case as may be decided by the Centre.

4-9 The Issuer shall be liable for any of the actions or procedures conducted through it on any

of the Centre’s electronic systems which the Centre may make available to the Issuer

within its offered services from time to time.

4-10 After fulfilling all the relevant conditions and requirements stipulated in the Capital Market

Law and its Implementing Regulations and the Exchange Rules, the Centre shall cancel

the depository and registration of a security in the Depository and Settlement System in

the following events:

4-10-1 de-listing of the security in the Exchange.

4-10-2 merger and acquisition.


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4-10-3 expiration of the duration of the term of security in the cases of limited term securities.

4-10-4 any other case as may be provided under the Capital Market Law and its Implementing Regulations.

4-11 Cancelation of depository and registration of security in the Depository and Settlement

System shall not affect the Centre’s commitment to safe-keep the historical data of the

cancelled security up until the date of cancelation.

4-12 The Issuer may - upon the cancelation of the depository and registration of its security in

Depository and Settlement System at the Centre - enter into an agreement with the Centre

to manage its Securities Ownership Register in accordance with the provisions of the

agreement the Centre sets in this regard.

4-13 The Centre may – as it may deem appropriate - safe-keep the records of any unlisted

securities and all actions thereof in any other electronic system.

4-14 Unlisted securities shall be exempted from the provisions provided in clauses (4-1) to (4-5)

and clauses (4-10) to (4-12).


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Section FiveInvestment Portfolios

5 Investment Portfolios

The following provisions and procedures shall be applied to Investment Portfolios:

5-1 Opening of Investment Portfolios

5-1-1 Investment Portfolios shall be opened, through the Members, in the Depository and

Settlement System.

5-1-2 Investment Portfolios shall be only opened for Investors who may own and trade

securities in accordance with the Capital Market Law and its Implementing

Regulations.

5-1-3 deposit, transfer, settlement and clearance of securities, and the imposition of any

ownership restriction thereof shall all be made through the Investment Portfolios

and in between them.

5-1-4 Investment Portfolio opened in the Depository and Settlement System shall be

connected by the Member with the Cash Account opened with such Member.

5-1-5 the Centre may - as it may deem appropriate - directly open, at the Centre ,a

Market Portfolio in the Depository and Settlement System.

5-1-6 the Centre may – as it may deem appropriate - connect the Market Portfolio to a

Cash Account with a Member.

5-1-7 Investment Portfolios opening procedures set forth in these rules shall be subject to

the restrictions provided in the Capital Market Law and its Implementing

Regulations.

5-1-8 subject to the conditions and restrictions provided in these rules, Investment

Portfolios may be opened for any of the following Investors:

5-1-8-1 natural persons.


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5-1-8-2 joint stock & limited liability companies.

5-1-8-3 Authorized Persons.

5-1-8-4 charitable and social institutions and associations.

5-1-8-5 endowments.

5-1-8-6 licensed mutual funds.

5-1-8-7 public institutions.

5-1-8-8 government funds.

5-1-8-9 any other person authorized by the Capital Market Law and its

Implementing Regulations to own and trade securities.

5-1-9 an Investment Portfolio shall not be opened unless the Investor is free from any

legal restriction that may restrict the opening of an Investment Portfolio thereof.

5-1-10 an Investment Portfolio shall not be opened unless the Investor is identified -

pursuant to these rules - in the Depository and Settlement System.

5-1-11 in order to open an Investment Portfolio for a natural person, such natural person

shall have completed eighteen years of age.

5-1-12 a guardian may open an Investment Portfolio for a natural person who has not yet

completed fifteen years of age.

5-1-13 subject to the consent of the guardian, a natural person who has completed

fifteen years of age and holds an identification card may open an Investment

Portfolio.

5-1-14 a guardian may open an Investment Portfolio for an incapacitated person.

5-1-15 the guardian shall be liable for any of the actions conducted on the Investment

Portfolios of the Investors referred to in sub-clauses (5-1-12) , (5-1-13) and (5-1-

14) above.

5-1-16 the Member shall be solely liable for the verification of the availability of the

requirements for the opening of Investment Portfolios and for the existence of the

capacity of the Investors.


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5-1-17 Investment Portfolios shall be managed, and all relevant transactions in those

Investment Portfolios shall be executed by and through the Member whom those

Investment Portfolios have been opened through.

5-1-18 the Member may open more than one Investment Portfolio for any of its clients.

5-1-19 the Investor may open more than one Investment Portfolio through more than one

Member.

5-1-20 Investment Portfolio may not be registered in the name of more than one

Investor.

5-1-21 the Investor may transfer his/her owned securities in between his/her Investment

Portfolios with a Member.

5-1-22 subject to the consent of the Member from whom the securities are required to be

transferred, the Investor may require his/her securities to be transferred from an

Investment Portfolio held with a Member to another Investment Portfolio held with

another Member.

5-1-23 the Member shall not reject any transfer request from its client of any security,

safe-kept by such Member, to another Investment Portfolio held by another

Member, unless such security required to be transferred is restricted by any of

the ownership restrictions.

5-1-24 the Member shall be solely liable for the validity and completion of all transactions

executed through its client’s Investment Portfolio.

5-1-25 the Member shall be liable to pay any applicable fees due on its clients to the

Centre for the opening and maintenance of their Investment Portfolios.

5-1-26 Investment Portfolios may be suspended through the following:

5-1-26-1 the Centre, based on the instructions of the Authority.

5-1-26-2 the Member, immediately upon the Member becomes aware of the

death of the owner of an Investment Portfolio.

5-1-26-3 the Member, in the event that the Investor’s data is not updated when

legally required.


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5-1-27 except for reasons of execution of restriction, liquidation through sale or

distribution and transfer in accordance with the provisions of inheritance and wills,

and operations resulting from Corporate Actions or implementation of provisions

and conditions of a pledge of securities and the deposit of securities owned by

certificates, suspension of an Investment Portfolio shall result in the halting of all

other actions until the suspension of such Investment Portfolio is lifted.

5-1-28 subject to sub-clause (5-1-29) below, an Investment Portfolio shall be closed in

the following events:

5-1-28-1 upon the instructions of the Authority.

5-1-28-2 upon the request of the Investor through the Member.

5-1-28-3 upon the death of the owner of an Investment Portfolio through the

Member.

5-1-29 the Investment Portfolio shall not be closed except after the disposal of all

securities in such Investment Portfolio, and the Member verifies that no future

rights are or will be due from Corporate Actions for those disposed securities.

5-1-30 except for reasons of execution of restrictions, or liquidation through sale or

distribution and transfer in accordance with the provisions of inheritance and wills,

and operations resulting from Corporate Actions or implementation of provisions

and conditions of a pledge of securities, no action shall be executed in the

Investment Portfolio after the death of an Investor.

5-1-31 for liquidation purposes, transfer of securities between the Investment Portfolios

of a deceased Investor shall be permitted.

5-1-32 except for securities restricted by any ownership restrictions provided in these

rules, liquidation shall be performed on all securities available in the Investment

Portfolios of the deceased Investor.

5-2 Identifying the Investor in Depository and Settlement System

5-2-1 an Investor shall be identified in the Depository and Settlement System by

assigning a unique number to such Investor.

5-2-2 in cases where the Investor is required to be identified directly at the Centre in the

Depository and Settlement System, the Member shall provide the “Investor

identification” form in accordance with the form prepared by the Centre.


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5-2-3 the unique number assigned to the Investor shall be, as possible, identical to the

number of the Investor’s identification card, residency permission (Iqama) or

commercial registration, as may be applicable depending on the nature of the

Investor.

5-2-4 a unique number shall not be assigned to more than one Investor.

5-2-5 to identify an Investor, the Investor shall, at the Member, fill an addition or

modification of data forms, as approved by the Centre.

5-2-6 the Investor shall update his/her data immediately upon the occurrence of any

change to any of his/her data through filling the form of “Investor data modification”

, as approved by the Centre.

5-2-7 the Member shall verify the completeness and validity of data relevant to the

identification of Investor in the Depository and Settlement System and its relevant

required documents.

5-2-8 the Member shall be solely liable for the identification of all of its clients in the

Depository and Settlement System at the Centre, and for the validity of their

entered data.

5-2-9 the Member shall, immediately upon becoming aware of any required update or

correction to the data of its client identified in the Depository and Settlement

System, notify the Centre of any such update or correction.

5-2-10 the Member shall, upon the request of the Centre, provide any of the documents

relevant to the identification of any of its clients in Depository and Settlement

System.

5-2-11 natural persons Investors, Saudis and non-Saudis residents shall be identified in

the Depository and Settlement System through the Member.

5-2-12 Investors other than those referred to in sub-clause (5-2-11) above shall be

identified by the Centre in the Depository and Settlement System at the Centre.

5-3 Documents required for identifying Investor in the Depository and Settlement System

To identify any of the Investors in the Depository and Settlement System, as applicable,

the following documents shall be submitted:

5-3-1 copy of the identification card or family card for Saudis or GCC nationals.


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5-3-2 copy of valid residency license card (Iqama) and the passport of non-GCC

nationals.

5-3-3 copy of the commercial registration certificate for companies.

5-3-4 copy of the company’s by-laws or articles of association, its annexes and any

amendment thereof. .

5-3-5 copy of the board of directors’ resolution approving the opening of an Investment

Portfolio for the company and granting the power to those who will sign on behalf

of the company.

5-3-6 copies of the identification cards of the members of the board of directors of the

listed joint stock company.

5-3-7 copies of the commercial registration certificate, license and letter of engagement

in business for the Authorized Persons.

5-3-8 copies of the license and by-laws of charitable and social associations and

institutions.

5-3-9 copy of the resolution of the relevant public entity approving the investment.

5-3-10 copy of the resolution of the charitable or social association or institution

appointing the person who manages the Investment Portfolio and the Cash

Account.

5-3-11 copy of the identification card of the person appointed to manage the Investment

Portfolio and Cash Account.

5-3-12 copies of the title deeds of the endowment and appointment of trustee.

5-3-13 copy of the identification card of the trustee of the endowment.

5-3-14 copy of the license issued to establish the mutual fund.

5-3-15 a letter from the manager of the mutual fund stating the name of the person

authorized to manage the Investment Portfolio of the fund.

5-3-16 copy of the identification card of the person appointed to manage the Investment

Portfolio of the fund.

5-3-17 copy of the statute or by-laws of the public institution or government fund.


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5-3-18 copy of the resolution issued by the public institution or government fund stating

the name of the person authorized to manage its Investment Portfolio.

5-3-19 copy of the identification card of the Saudis and GCC nationals or copy of

residence permit (Iqama) and the passport of the non-GCC nationals authorized to

manage the Investment Portfolio and Cash Account of the public institution or

government fund.

5-3-20 copy of the Authority’s letter of approval issued for the public institution or

government fund or charitable and social institutions and associations.


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Section SixDeposit of Securities Owned by Certificates

6 Deposit of Securities Owned by Certificates

Securities owned by certificates shall be deposited in accordance with the following

provisions:

6-1 No transfer of ownership or effect of any ownership restriction on securities owned by

certificate shall be executed unless such securities are deposited in the Depository and

Settlement System at the Centre.

6-2 Deposit of securities owned by certificate shall be, as applicable, as follows:

6-2-1 in the Investment Portfolio of the owner of the certificate.

6-2-2 in a Market Portfolio in the name of the owner of the certificate.

6-3 Deposit of any security owned by a certificate in its owner’s Investment Portfolio in the

Depository and Settlement System at the Centre, shall result in cancelling that certificate.

6-4 The deposit referred to in clause (6-2) shall not entail any breach to any of the rights or

obligations related to the deposited security.

6-5 Deposit of security owned by a certificate into the Investment Portfolio of the owner in the

Depository and Settlement System at the Centre, shall be pursuant to the following:

6-5-1 upon the request of the security’s owner.

6-5-2 upon the request of the Member in the name of its client.

6-5-3 upon the request of the Issuer.

6-5-4 upon an initiative from the Centre after the Issuer’s approval.

6-5-5 upon a judicial decision, or instructions from the Authority.

6-6 For depositing any security owned by a certificate into the Investment Portfolio of the

owner in the Depository and Settlement System at the Centre, the following shall be

available:

6-6-1 a complete “deposit of certificate” form, as approved by the Centre, and the Centre may waive this condition.


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6-6-2 the owner’s identification data in the certificate shall be complete and matching with the owner’s identification data in the Securities Ownership Register of the Issuer.

6-6-3 submit the original certificate, and the Centre, as it may deem to be convincing, may waive this condition.

6-7 In case the Investor has more than one Investment Portfolio, depositing of securities

owned by certificates shall be deemed correct and valid if such securities are deposited in

any of the Investor’s Investment Portfolios.

6-8 The Centre may - in the event of receiving a request for depositing a security owned by a

certificate where the identification data of the person whom the security is requested to

be deposited in his/her name does not match with the identification data of the owner in

the Securities Ownership Register of the Issuer - request any of the following:

6-8-1 written approval, from the Issuer to deposit the security in the name of the person requested to be deposited in his/her name.

6-8-2 final resolution from the Committee resolving that the person whom the security is requested to be deposit in his/her name is the true owner of such security.

6-9 The Centre may perform any inquiries and verification procedures - as the Centre may

deem appropriate - in relation to any security owned by a certificate where the

identification data of the person whom the security is requested to be deposited in his/her

name does not fully match with the identification data of the security’s owner registered in

the Issuer’s Securities Ownership Register.

6-10 In the event, the Centre has any doubt, or becomes aware of a dispute over the

ownership of a security owned by a certificate where identification data of the person,

whom the security is requested to be deposited in his/her name, does not match with the

identification data of the security’s owner as registered in the Issuer’s Securities

Ownership Register, the Centre may halt depositing such security until a final resolution

resolving the identity of the owner is issued by the Committee.

6-11 Unlisted securities shall be exempted from the provisions provided herein in this section.


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Section SevenClearing and Settlement

7 Clearing and Settlement

Executed securities shall be cleared and settled in accordance with the following provisions and

procedures:

7-1 In these rules, settlement and clearing of securities shall mean the transfer of executed

securities from the sellers’ Investment Portfolios to the buyers’ Investment Portfolios.

7-2 In these rules, settlement and clearing of cash shall mean the transfer of the cash value

of the executed securities from the buyers’ Cash Accounts and add it to the Sellers’ Cash

Accounts held with the Members.

7-3 Settlement and clearing of listed securities in the Depository and Settlement System shall

be electronically processed.

7-4 Settlement and clearing of privately placed securities deposited in the Depository and

Settlement System shall be processed electronically or non-electronically, as may be

available at the Centre.

7-5 Rights and obligations between the seller and buyer of Listed Securities shall be

established immediately upon the execution of the transaction in the Trading System, and

for the privately placed securities, immediately upon the execution of the trading

agreement at the Centre, pursuant to clause (7-13) in this section.

7-6 The time for the settlement and clearing for Listed Securities of the category (shares or

exchange traded funds units) is instant (T +0).

7-7 The time for the settlement and clearing for Listed Securities of the category (debt

instrument) is after two business days of the date of execution of the transaction (T +2).

7-8 Cash settlement for the Listed Securities shall be electronically effected via and in

between the Investors’ Cash Accounts linked to their Investment Portfolios in the

Depository and Settlement System, by both the Member and Settlement Agent.


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7-9 The cash value of the traded privately placed securities shall be paid and settled before

those securities are settled and cleared at the Centre, such cash settlement shall be

settled directly between the seller and buyer through the Member and out of the Centre.

7-10 The time for settlement and clearing of cash for Listed Securities of the category (shares

or exchange traded funds units) shall be within no later than the start of the next business

day.

7-11 The time for settlement and clearing of cash for Listed Securities of the category (debt

instrument) shall be after two business days of the date of execution of the securities

(T+2).

7-12 Subject to the prior approval of the Authority, the Centre may - from time to time - change

the time duration of the settlement, as the Centre may deem appropriate.

7-13 For the settlement and clearing of privately placed securities - with the exception of those

transaction executed through the Depository and Settlement System - the buyer and the

seller shall provide the Centre with a trading of privately placed securities agreement

signed by both of them, in accordance with the “sale of securities agreement” form, as

approved by the Centre.

7-14 The Member shall be solely liable for all transactions and actions executed in the Trading

System or Depository and Settlement System and for those transactions and actions

manually executed on the securities owned by such Member or its clients.


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Section EightTransfer of Securities Ownership

8 Transfer of Securities Ownership

Securities ownership shall be transferred at the Centre in accordance with the following provisions

and procedures:

8-1 The Centre, through itself, shall perform the following:

8-1-1 transfer of ownership of securities relevant to inheritance and wills.

8-1-2 transfer of ownership of securities between the parents and their children and spouses.

8-1-3 transfer of ownership of securities relevant to donations for the charitable associations and institutions.

8-1-4 transfer of ownership of securities relevant to endowment.

8-1-5 transfer of ownership of securities from the Investment Portfolio of a limited liability company to any of its partners or vice versa.

8-1-6 transfer of ownership of securities from the Investment Portfolio of the Issuer to

the Investment Portfolio of any of its employees.

8-1-7 transfer of ownership of securities in compliance with the Authority’s instructions.

8-1-8 any other case of transfer of ownership of securities, as the Centre may deem to

be exempted, after obtaining the Authority’s approval.

8-2 Transfer requests shall be submitted through Members.

8-3 The Member shall, through it, transfer the ownership of securities from the Investment

Portfolios of the Authorized Persons designated for Murabaha transactions to the

Investment Portfolio of their clients and vice versa.

8-4 Subject to clause (8-5) below, no transfer of ownership shall be permitted for securities

restricted by any of the ownership restrictions.

8-5 Transfer of ownership of securities restricted by legal restriction shall be permitted only

after obtaining the Authority’s approval.


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8-6 For transfer of ownership of securities at the Centre, the following documents - as

applicable - shall be submitted:

8-6-1 a form of “transfer of securities ownership” completed by the Member, in

the relevant standard form approved by the Centre.

8-6-2 copies of the identification cards of the transferor and transferee.

8-6-3 certified copy of the deed of specification of heirs.

8-6-4 copy of the deed of distribution or agreement on distribution by all heirs

for all securities in the deceased Investment Portfolio(s).

8-6-5 legally and dully certified relinquishment in case of any of the heirs

relinquishes all or part of his/her securities inheritance.

8-6-6 letter from the Issuer providing complete ownership transfer information,

in case of ownership transfer to employees.

8-6-7 certified copy of each the endowment and appointment of trustee deeds.

8-6-8 copy of the by-laws of the social or charitable institutions.

8-6-9 copy of a valid power of attorney which grants the agent to perform the

relevant required action.

8-6-10 copies of the identification card of any of the appointed agents.

8-6-11 copy of any other relevant deed or document.

8-7 The Member shall verify the validity of the copies of documents submitted through such

Member.

8-8 The Centre shall not be liable for any transfer of ownership performed pursuant to the

provisions provided in this section.

8-9 The Member shall pay any applicable transfer fees.

8-10 Transfer of ownership of unlisted securities shall be subject to the terms and conditions

stipulated in the agreement with the Centre.


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Section NineSecurities Ownership Restrictions

9 Securities Ownership Restrictions

Pledge of securities, their registration thereof and their restrictions shall be effected pursuant to

the following provisions:

9-1 Listed Securities shall be pledged with the Member who shall act as a “pledge agent”.

9-2 Pledge and un-pledge of Listed Securities and the enforcement through the sale of the

pledged securities shall be conducted by the pledge agent pursuant to the terms and

conditions of the “pledge of securities agreement” which shall be duly signed by the

pledger and the pledgee and the pledge agent.

9-3 Subject to the provisions provided herein in this section, the pledge of securities

agreement, as a minimum, shall include the following information:

9-3-1 information and data of the parties to the pledge of securities agreement.

9-3-2 statement of all securities subject to the pledge.

9-3-3 statement of provisions relevant to the rights and procedures related to the

pledged securities including cash and securities’ dividends, reduction of Issuer’s

capital, merger or acquisition.

9-3-4 statement of provisions relevant to the rights and obligations of the pledge agent.

9-3-5 terms and conditions relevant to the enforcement over the pledged securities.

9-3-6 terms and conditions relevant to the un-pledge of the pledged securities.

9-3-7 disclaimer statement that the Exchange and the Centre shall not be liable for any

action relevant to the pledge of securities agreement or the registration of the

pledged securities in the Depository and Settlement System.

9-4 Listed Securities shall not be deemed pledged unless such pledge is registered by the

pledge agent in the Depository and Settlement System at the Centre.

9-5 Subject to sub-clause (9-3-4), the pledge agent shall immediately register the pledge of

any security later issued as a dividends for a pledged securities provided that the


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registration date of the pledged securities in the Depository and Settlement System shall

be prior to the entitlement due date of the newly issued securities.

9-6 The pledger shall have the right to exercise any right issue relevant to the pledged

securities.

9-7 To register the pledge of any security allocated to the pledger as a result of exercising

any of his/her right issue provided in clause (9-6), allocated securities shall be pledged

and registered again in accordance with the provisions of this section.

9-8 The Member shall pay to the Centre any applicable fees for the registration of pledged

securities.

9-9 Unlisted securities shall be pledged at the Centre, and the Centre shall act as a ”pledge

agent”.

9-10 Pledge of unlisted securities at the Centre shall be subject to the terms and conditions

agreed by the Centre.

9-11 Restriction and un-restriction of securities shall be at the Centre and effected pursuant to

the following:

9-11-1 Upon the instructions of the Authority.

9-11-2 Upon the request of the Issuer in accordance with its by-laws and relevant rules

and regulations.

9-12 Depository and Settlement System may impose any restriction or ownership limits

provided in the Capital Market Law and its Implementing Regulations or any of the

relevant rules and regulations or in the by-laws of any of the Issuers.


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Section Ten’s ResponsibilityCentre

10 Centre’s Responsibility

The Centre shall be responsible to provide services and disclose information relevant to any of its

services pursuant to the following provisions:

10-1 Centre’s responsibility:

10-1-1 the Centre shall make all reasonable efforts to provide its services and make

them available in accordance with these rules.

10-1-2 without any breach to the Capital Market Law and its Implementing Regulations,

the Centre shall not be held liable for any loss or damage that may be incurred by

the Member or any of its clients or the Settlement Agent which may result directly

or indirectly from the orders or instructions that may be entered into the

Depository and Settlement System or manually executed at the Centre.


the Centre, the Exchange, the board of directors, managers or employers of the

Exchange, shall not be held liable for any Member or its clients or the Settlement

Agent, including, without any limitation, the following:

10-1-3-1 procedures enforced in connection with emergency events.

10-1-3-2 use or inability to use the Depository and Settlement System

by the Member or the Settlement Agent.

10-1-3-3 errors and defaults or defects in any of the systems, devices

or programs used at the Centre or at the Exchange.

10-1-3-4 errors or shortage in data processing.

10-1-3-5 any error, default, slowness, delay, omission or inaccuracy in

the Depository and Settlement System.

10-1-4 in case of disruption to any of the services of the Centre occurs, for any of the

reasons referred to in sub-clause (10-1-3), the Centre shall make all reasonable

efforts to minimize the duration of that disruption.


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10-2 Centre’s Responsibility on Disclosure of Information:

10-2-1 all private information kept in the Centre in a hardcopy or electronic format shall

be treated as confidential, and shall not be disclosed except in accordance with

the Capital Market Law and its Implementing Regulations and relevant rules and

regulations.


the Centre may disclose any of the information in the following events:

10-2-2-1 upon the instructions of the Authority.

10-2-2-2 upon the request of the Issuer in relation to information

relevant to the Securities Ownership Register of such Issuer.

10-2-2-3 upon the request of the Member in relation to information

relevant to its Investment Portfolio or any of the Investment

Portfolios of its clients.

10-2-2-4 upon the request of the owner of an Investment Portfolio

through the Member.

10-2-2-5 upon the request of the heirs for the purpose of identification

of inheritance.


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Section ElevenFinal Provisions

11 Final Provisions

11-1 The Centre, in the event of discovering any error in the registration of an ownership of a

security, may rectify such error without any prior approval required to be obtained.

11-2 Any beneficiary, to any of the provided services by the Centre, may submit a complaint to

the Compliance Division at the Exchange about any of the decisions made by the Centre

or relevant to any of its provided services.

11-3 Subject to the Capital Market Law and its Implementing Regulations and the agreements

signed with the beneficiaries of Centre’s services, the Centre may suspend all or some of

the services provided to any of the beneficiaries if such beneficiary failed to settle the due

fees on time.

11-4 The Committee shall resolve the disputes that fall within the provisions of these rules.

11-5 These rules shall come into force on the next day following its publication.