OPERATIONS RULES KDD CENTRAL SECURITIES CLEARING CORPORATION, LJUBLJANA

Transcription

1 Unofficial English translation. The official text of the Operations Rules is in the Slovenian language. OPERATIONS RULES KDD CENTRAL SECURITIES CLEARING CORPORATION, LJUBLJANA Accepted by the Management Board and the Board of Directors at the meeting of 27 September 2004, as amended on 7 December 2004, Approved by Securities Market Agency, under ruling No. 24/14/AG-04-(841), as of 15 December 2004; Changes and amendments of rules accepted by the Management Board and the Board of Directors on 12 September 2007 and approved by the Securities Market Agency, under ruling No. 24/16/AG-07-(491), as of 5 December 2007, published in in the Official Gazette of the Republic of Slovenia No. 115/2007 on 14 December 2007; Changes and amendments of rules accepted by the Management Board and the Board of Directors on 21 October 2009, with changes and amendments of these changes accepted by the Management Board and the Board of Directors on 28 January 2010 and approved by the Securities Market Agency, under ruling No / , as of 20 April 2010, published in in the Official Gazette of the Republic of Slovenia No. 37/2010 on 7 May 2010.

2 TABLE OF CONTENTS 1. GENERAL PROVISIONS... 8 Definitions of abbreviations and terms... 8 Terms used within the meaning defined by ZBan-1 and ZTFI... 8 Members of KDD... 9 Users of services provided by KDD... 9 Regulations and general conditions... 9 Tariff Technical regulations KDD MEMBERS COMMON PROVISIONS Definitions in Chapter Acquiring member status General terms of membership Termination of membership Reasons for exclusion of a member Resolution on application for membership and exclusion REGISTRY MEMBERS Contract of accession to system of dematerialised securities accounts maintenance Temporary disconnection from information system of dematerialised securities accounts maintenance Registry member obligations on cancellation or exclusion Cancellation of a registry membership Exclusion from registry membership Termination of registry membership Supervision of registry members SETTLEMENT MEMBERS Accession to the system of dematerialised securities accounts maintenance as a requirement Contract of accession to settlement system Temporary disconnection from the settlement information system Cancellation of settlement membership Additional reasons for exclusion of settlement member Termination of settlement membership Supervision of settlement members MAINTENANCE OF CENTRAL REGISTRY GENERAL PROVISIONS Maintenance of central registry Holders of dematerialised securities and entitled persons Types of dematerialised securities accounts Holder's account and sub-accounts Types of holder s accounts System of dematerialised securities accounts maintenance Types of auxiliary accounts Joint account and joint custody account / 70

3 Accounts for issue or deletion of dematerialised securities Control account Floating account Information system for issue and deletion of dematerialised securities ISSUE, CANCELLATION OR REPLACEMENT OF DEMATERIALISED SECURITIES General provisions Use of provisions of Section Definitions in Section Issue, replacement and cancellation of dematerialised securities Uniform identification and designation of dematerialised securities Record date for legal independence of entitlements from dematerialised security Record date for money entitlements on dematerialised securities Maturity of money entitlements on dematerialised securities Interest on debt securities KDD services on issue, cancellation and replacement of dematerialised securities KDD registry maintenance services KDD resolutions on issue, cancellation or replacement of dematerialised securities KDD services for issue of dematerialised securities General provisions Types of issues of dematerialised securities KDD services on issue of dematerialised securities Service contract for issue of dematerialised securities Entry in central registry of issued dematerialised securities Procedure for one-phase issue of dematerialised securities Entry of issued dematerialised securities in control account Transfer by debit of control account and credit to holders accounts Procedure on issue through floating account Order to issue through floating account Entry of dematerialised securities credited to floating accounts Transfer by debit from floating account and to credit of holders accounts KDD services for cancellation of dematerialised securities Types of cancellations KDD cancellation services Service contract for cancellation of securities Procedure of one-phase cancellation Cancellation through floating account KDD services to replace dematerialised securities Manner of issue or cancellation of dematerialised securities on replacement KDD replacement services Service contract for replacement of dematerialised securities Application of rules to issue or cancellation of dematerialised securities Maintenance services of dematerialised securities registry Content of basic services relating to maintenance of the dematerialised securities registry Contract of maintenance of dematerialised securities registry Additional services relating to maintenance of the dematerialised securities registry / 70

4 3.3. TRANSFER OF AND THIRD PARTY RIGHTS IN DEMATERIALISED SECURITIES Definitions in Section Registry member authorised to enter orders Manner of entering order KDD authorised to enter orders and make other entries Effect of order entry Requirements for order execution Effect of order execution ENTRY AND MAINTENANCE OF PERSONAL DATA ON HOLDERS AND ENTITLED PERSONS Definitions in Section Personal data on holders and entitled persons entered in the central registry First entry of data on holder or entitled person Uniform identification Assignment of KID Maintenance of personal data on holders and entitled persons Special rules for entry of holder of a fiduciary account SETTLEMENT OF STOCK EXCHANGE TRANSACTIONS GENERAL PROVISIONS Application of provisions of Chapter Definitions in Chapter Settlement of stock exchange transactions and settlement system KDD settlement services Entry of data on stock exchange transactions into the settlement information system Buy-in and sell-out KDD fiduciary securities account Fiduciary bank account Settlement members liability for fulfilment of its obligations arising from stock exchange transactions Settlement members liability for others and the guarantee fund SETTLEMENT OF MONETARY OBLIGATIONS General Net settlement of payment obligations Calculation of net positions Multilateral restatement for the purpose of net settlement Manner of fulfilment of obligations incurred by multilateral restatement Payment of net payment obligations Payment of liquidity reserve Payment of net payment claims Net debtor settlement member default on net payment obligation Provision of funds in case of default on net payment obligations The right to perform a sell-out and the pledge Enforcing liability of net debtor settlement member SECURITIES SETTLEMENT General Gross settlement of securities / 70

5 Seller settlement member obligation to ensure that requirements for settlement of obligation to transfer securities are met Buyer settlement member obligation to ensure that requirements for settlement of obligation to transfer securities are met Entry of end sellers' and end buyers' accounts codes Allocation of a stock exchange transaction Invalid allocation The moment of entry of orders to transfer securities for the settlement of stock exchange transactions Conditions for execution of an order to transfer securities for the settlement of a stock exchange transactions to the credit of the end buyer's account Execution of an order to transfer securities for the settlement of a stock exchange transactions, if conditions for transfer to the credit of the end buyer's account are not met Time of executing orders to transfer securities for the settlement of a stock exchange transactions Legal consequences of late securities settlement Legal consequences of default by the seller settlement member Buy-in Rescission right of buyer settlement member Enforcing seller settlement member s liability Legal consequences in case of insufficient amount Legal consequences of buyer settlement member s delay as a creditor Sell-out based on creditor s delay LIABILITY OF SETTLEMENT MEMBERS TO FULFIL OBLIGATIONS ARISING FROM STOCK EXCHANGE TRANSACTIONS Joint and several liability of settlement members to fulfil obligations arising from stock exchange transactions Internal relationship between settlement members Payments into the guarantee fund Pledge Enforcing liability of a settlement member Management of the guarantee fund and disposals to the debit of the guarantee fund TRANSFER OF CLAIMS AND ASSUMPTION OF OBLIGATIONS BETWEEN STOCK EXCHANGE MEMBER AND SETTLEMENT MEMBER Types of transfer of claims and assumption of obligations Transfer agreement Internal legal relationship between a stock exchange member and a settlement member Use of registry codes in case of an agreement on individual transfers Termination of the transfer agreement ZPRE-1 TAKE-OVER BID PROCEDURES GENERAL PROVISIONS Application of provisions of Chapter Definitions of terms in Chapter RELATIONSHIP BETWEEN PARTIES TO A TAKE-OVER BID PROCEDURE Relationship between KDD and the acquirer Description of KDD services on take-over bid Service contract for a take-over bid / 70

6 Reporting obligation Relationship between other parties Relationship of acquirer and authorised member Relationships among KDD, acquirer and authorised member Relationship among KDD, acquirer and acceptor DEPOSIT OF FUNDS AND PREVIOUSLY ISSUED SUBSTITUTIVE SECURITIES Calculation of monetary amount Deposit of monetary amount or bank guarantee Calculation of number of previously issued substitutive securities Deposit of previously issued substitutive securities Receipt on deposit ACCEPTANCE PROCEDURE FOR BID Preliminary procedure Notification of license for take-over bid Requirements for opening take-over accounts Procedure for acceptor s statement of acceptance of take-over bid Acceptor s statement of acceptance of take-over bid Order to accept Entry of order to accept Data entry on acceptor s order to accept Confirming acceptor s order to accept Execution of order to accept Termination of effect of acceptor s order to accept PROCEDURES ON EXPIRY OF ACCEPTANCE PERIOD Outcome of take-over bid Report and notification on outcome of take-over bid Notification on agency ruling on outcome of take-over bid Fulfillment of obligations from successful take-over bid General provision Acceptors transfer of securities to acquirer account Fulfillment of acquirer payment obligations Quantity of substitutive securities for acquirer obligation to acceptors Acquirer delivery of previously issued substitutive securities Acquirer presentation of new substitutive securities Reimbursement of deposited funds, bank guarantee and securities on unsuccessful take-over bid General provision Reimbursement to acquirer of deposited funds or bank guarantee Reimbursement to acquirer of deposited substitutive securities Acceptors' reimbursement of securities of target company MODIFIED AND COMPETITIVE TAKE-OVER BID Application of provisions for take-over bid COLLECTIVE DEPOSIT OF PHYSICAL SECURITIES IN CUSTODY KDD'S OTHER SERVICES Other services performed by KDD / 70

7 8. PROCEDURE OF AMENDING RULES, REGULATIONS, GENERAL CONDITIONS AND TARIFF Amendments of rules Adoption of regulations and of amendments thereto Adoption of general conditions and of amendments thereto Adoption of tariff and of amendments thereto Consolidated text Publication TRANSITORY AND FINAL PROVISIONS Registry and settlement members Application of rules Enforceability of rules TRANSITORY PROVISION TO THE RESOLUTION ON AMENDMENT OF RULES DATED 12 SEPTEMBER TRANSITORY PROVISION TO THE RESOLUTION ON AMENDMENT OF RULES DATED 21 OKTOBER / 70

8 1. GENERAL PROVISIONS Definitions of abbreviations and terms Article 1 (1) Abbreviations used in these rules have the meaning stated below: 1. OZ: the Obligations Code [Official Gazette of Republic of Slovenia, no. 83/01 and 40/07]; 2. ZBan-1: the Banking Act [Official Gazette of Republic of Slovenia, no. 131/06]; 3. ZGD-1: the Companies Act [Official Gazette of Republic of Slovenia, no. 42/06, 60/06 correction and 33/07 ZSReg-B]; 4. ZISDU-1: the Act on Investment Funds and Management Companies [Official Gazette of Republic of Slovenia, no. 26/05 official consolidated text]; 5. ZNVP: the Dematerialised Securities Act [Official Gazette of Republic of Slovenia, no. 2/07 official consolidated text and 67/07 - ZTFI]; 6. ZPre-1: the Take-over Act [Official Gazette of Republic of Slovenia, no. 79/06 and 67/07 - ZTFI]; 7. ZTFI: Market in Financial Instruments Act [Official Gazette of Republic of Slovenia, no. 67/07]; (2) These rules refer to provisions of the acts that are currently valid. (3) Terms used in these rules have the following meaning: 1. KDD: KDD - Central clearing and depository corporation Inc., Ljubljana; 2. central registry: the central registry of dematerialised securities according to Paragraph 1 Article 3 ZNVP, maintained by KDD on the basis of authorisation from Paragraph 2 Article 3 ZNVP; 3. agency: the Securities Market Agency; 4. organised securities market: the organised securities market defined in Paragraph 1 Article 14 of ZTFI, where trading in securities is conducted; 5. stock exchange: the Ljubljana Stock Exchange Inc., Ljubljana; 6. stock exchange market: the securities market managed by the stock exchange. Terms used within the meaning defined by ZBan-1 and ZTFI Article 2 (1) The terms used in these rules have the same meaining as the terms used in the following provisions of ZBan-1, if respective cases do not explicitly state otherwise: 1. Bank Deposit in Paragraph 2 of Article 8, 2. Bank in Paragraphs 1 and 4 of Article 13, 3. Member State in Paragraph 1 of Article 18, 4. Third Country in Paragraph 2 of Article 18, 5. Person of Member States or Third Countries in Paragraph 3 of Article 18. (2) The terms used in these rules have the same meaining as the terms used in the following provisions of ZTFI, if respective cases do not explicitly state otherwise: 1. Investment Services and Transactions in Article 8, 2. Customer Order in Paragraph 1 of Article 9, 3. Execution of a Customer Order in Paragraph 4 of Article 9, 4. Ancillary Investment Services in Article 10, 8 / 70

9 5. Investment Company in Paragraph 1 of Article 11, 4. Stockbroking Company in Paragraph 2 of Article 11. (3) In these rules, EU regulations set forth in the following provisions of ZTFI are subject to the following abbreviations: 1. Directive 2006/48/EC in Item 12 Paragraph 1 of Article 2, 2. Directive 2006/49/EC in Item 13 Paragraph 1 of Article 2. Members of KDD Article 3 (1) Members of KDD are registry members and settlement members. (2) Registry member is a person admitted to membership of the system of dematerialised securities accounts maintenance pursuant to these rules. (3) Settlement member is a person admitted to membership of the system of dematerialised securities accounts maintenance and the settlement system pursuant to these rules. (4) Member with unlimited access is registry or settlement member who is enabled by KDD to manage its own house account and its clients' accounts, which may be owned by any natural person or legal entity. (5) Member with limited access is registry or settlement member who is enabled by KDD to manage its own house account or accounts of some other holders. (6) A KDD member may manage dematerialised securities accounts in order to perform auxiliary investment services, to manage the settlement system pursuant to Article 459 of ZTFI or for any other legally permissible reason. (7) KDD's mutual rights and obligations in relation to its members and mutual rights and obligations of settlement members in relation to stock exchange transactions settlement shall be subject to legislation of the Republic of Slovenia. (1) Users of services provided by KDD are: 1. members of KDD; 2. issuers of dematerialised securities; and Users of services provided by KDD Article 4 3. other persons for whom KDD performs respective services with respect to securities. (2) An issuer of dematerialised securities is a legal person whose dematerialised securities it issued are entered in the central registry maintained by KDD. Regulations and general conditions Article 5 (1) Regulations of KDD are implementing procedures for individual actions that have to be performed according to these rules. (2) General conditions are beforehand set rules for undefined number of legal relations of the same type that can arise between KDD and users of its services and are not included in regulations. 9 / 70

10 (3) With its regulations or general conditions KDD determines conditions of performing individual actions in compliance with general regulations. Tariff Article 6 KDD is entitled to a compensation for its services in the amount determined by the tariff set forth under Article 430 of ZTFI. Technical regulations Article 7 KDD may adopt technical regulations setting forth: 1. technical requirements to be fulfilled by users of its services with respect to their communication equipment, software and other equipment in order to ensure a correct performance of services performed for them by KDD, 2. the form and manner of electronic transmission of data to the users by KDD in the performance of its services, or transmitted to KDD by users in the use of its services. 10 / 70

11 2. KDD MEMBERS 2.1. COMMON PROVISIONS Definitions in Chapter 2. Article 8 The following terms used in Chapter 2 of these rules have the meaning stated below: 1. system of dematerialised securities accounts maintenance: the meaning of Paragraph 1 Article 34 of these rules, 2. information system of dematerialised securities accounts maintenance: the meaning of Paragraph 2 Article 34 of these rules, 3. settlement system: the meaning of Paragraph 2 Article 89 of these rules, 4. settlement information system: the meaning of Paragraph 3 Article 89 of these rules. Acquiring member status Article 9 (1) KDD shall admit as a member a person applying for KDD membership, provided that the said person meets the organisational, technical, staffing and other membership requirements set forth in these rules and the regulations. (2) Person from Paragraph 1 hereof shall acquire member status once concluding the contract of accession to the system of dematerialised securities accounts maintenance or settlement system following issue of a decision on admittance to membership (Article 13 hereof). (3) Membership application shall be submitted in writing. Application shall include documents defined in the regulations, including other documents proving eligibility for membership. (4) KDD shall notify of the admission of every new member: 1. the stock exchange; 2. the agency; 3. if the registry member is a bank: the Bank of Slovenia; and 4. other members. General terms of membership Article 10»(1) The following can become members with unlimited access: 1. a brokerage company, an investment firm, a bank or a special financial institution authorised in the Republic of Slovenia in accordance with the Paragraphs (1) or (2) of Article 32 of ZTFI to provide, directly or through a branch, investment services of executing the orders for the account of the clients from Point 2 and investment transactions for its own account from Point 3 of Paragraph (1) of Article 8 of ZTFI and in relation with this the ancillary investment services from Point 1 of Paragraph (1) of Article 10 of ZTFI; 2. an investment firm, a bank or a special financial institution of a Member State authorised in the Member State of its registered office to provide investment services of executing the orders for the account of the clients from Point 2 and investment transactions for its own account from Point 3 of Paragraph (1) of Article 8 of ZTFI and in relation with this the ancillary investment services from Point 1 of Paragraph (1) of Article 10 of ZTFI. (2) The following can become members with limited access: 11 / 70

12 1. the Bank of Slovenia, the central bank of another Member State and the European Central Bank in terms of managing the accounts of banks and special financial institutions in relation to central bank operations; 2. a person that manages assets with limited legal capacity in terms of managing the accounts of such assets; 3. a management company that, in line with the ZISDU-1 provides the asset management services for well-informed investors in terms of managing the accounts of persons for which the said services are provided; 4. a person that obtained, under the ZISDU-1, the authorisation to provide custody services in terms of managing the accounts of investment funds, mutual pension funds or covers of assurance of pension companies it manages; 5. an operator of a settlement system referred to in Article 459 of ZTFI in terms of managing accounts required for maintaining a link between the settlement system referred to in Article 459 of ZTFI and the settlement system pursuant to these rules; 6. any person in terms of keeping its own house account and the accounts of its branches or other organizational units. Termination of membership Article 11 (1) Membership in KDD is terminated by cancellation or exclusion. (2) KDD shall notify of the cancellation or exclusion of a member: 1. the stock exchange; 2. the agency; 3. if the registry member is a bank: the Bank of Slovenia, and 4. the other KDD members. Reasons for exclusion of a member Article 12 (1) KDD shall exclude a member whose license for performing investment services and transactions is cancelled or for any reason looses its status of a person from Paragraphs 1 or 2 of Article 10 hereof which entitle the respective person to membership of KDD. (2) KDD may exclude a member where the member: 1. does not pay KDD the compensation for use of its services within eight days of receiving the reminder for payment from KDD; 2. is late in paying compensation for its use of KDD services, more than twice within six months, 3. no longer fulfils all technical, human resources, or other requirements under these rules or regulations, or with respect to its use of information system of dematerialised securities accounts maintenance, or for its use of the settlement information system, and does not remedy this violation within eight days after receiving from KDD a notice specifying the violation; 4. does not fulfill such requirements mentioned in the preceding Point 3 of this Paragraph more than twice within six months; or 5. for any other reason for exclusion set forth in these rules with respect to a particular type of membership. 12 / 70

13 Resolution on application for membership and exclusion Article 13 (1) The Management Board of KDD renders its decision on an application of membership or exclusion by way of a resolution. (2) A resolution of the Management Board of KDD disapproving an application for membership or excluding a member shall state the grounds for such decision. (3) An applicant for membership or an excluded member may appeal the resolution within eight days from receiving a notification of the decision. (4) The Board of Directors of KDD decides on appeal from a decision of the Management Board affecting an applicant or an excluded member REGISTRY MEMBERS Article 14 (deleted) Contract of accession to system of dematerialised securities accounts maintenance Article 15 Under the contract of accession to the system of dematerialised securities accounts maintenance, KDD agrees to allow the registry member to use the information system of dematerialised securities accounts maintenance, in accordance with the requirements and in the manner set forth in these rules and regulations and, to the extent required, to: open and close accounts and sub accounts maintained by the registry member pursuant to these rules or regulations; enter orders, as the registry member may be authorised pursuant to these rules or regulations; access data regarding accounts and sub accounts from Item 1 of this Article; and perform other acts with respect to maintenance of accounts or sub accounts from Item 1 of this Article, as may be permitted by the information system of dematerialised securities accounts maintenance, provided the registry member pays KDD, for the use if its services, the compensation determined by the tariff of KDD. Temporary disconnection from information system of dematerialised securities accounts maintenance Article 16 (1) When the agency, the Bank of Slovenia or the competent supervisory body of a member state or foreign country of the member imposes on a registry member measure of temporary ban of providing investment services or any other temporary measure which prohibits the said member to use in part or in full the information system of dematerialised securities accounts maintenance, KDD shall disconnect the registry member from the information system of dematerialised securities accounts maintenance for the duration of the imposed measure in the due scope and within the scope of technical capacity. (2) If a registry member is late in paying the compensation for KDD's services or violates obligations regarding technical, staffing or other conditions, which these rules require to be satisfied in order for the member to use the information system of dematerialised securities accounts maintenance, KDD can disconnect the member from the information system of dematerialised securities accounts maintenance in part or in full until the member complies with such obligations. 13 / 70

14 (3) During such temporary disconnection, the registry member shall continue to fulfill its obligations in the system. (4) KDD shall notify of the temporary disconnection of a registry member from such system and of the reasons therefore: 1. the stock exchange, 2. agency, 3. the Bank of Slovenia when the registry member is a bank or a special financial institution of a member state; and 4. the other registry members. Registry member obligations on cancellation or exclusion Article 17 A registry member whose membership is cancelled or who is excluded from the system of dematerialised securities accounts maintenance shall: 1. ensure the holders, whose client accounts or portfolio accounts it maintains transfer the dematerialised securities entered in these accounts to the credit of the accounts maintained by other registry members or by KDD; 2. transfer the dematerialised securities from its house accounts to the credit of the accounts maintained by other registry members; and 3. meet the requirements for closing of all accounts of dematerialised securities it maintains. Cancellation of a registry membership Article 18 (1) A registry member may cancel its membership in the system of dematerialised securities accounts maintenance by submitting a cancellation statement to KDD. (2) The cancellation statement shall be in writing. (3) The cancellation statement becomes effective on the first day of month following the month in which the registry member complies with Article 17 of these rules. Exclusion from registry membership Article 19 (1) Where a registry member is excluded, KDD shall allow it to use information system of dematerialised securities accounts maintenance only to the extent required to enable it to comply with Article 17 of these rules. (2) The exclusion of a registry member comes into effect on the first day of the month following the month in which the registry member complies with Article 17 of these rules. Termination of registry membership Article 20 The rights and obligations of a registry member in the system of dematerialised securities accounts maintenance cease when its cancellation or exclusion statement comes into effect, respectively according to Paragraph 3 Article 18 or Paragraph 2 Article 19 of these rules. 14 / 70

15 Supervision of registry members Article 21 KDD supervises registry members, in order to determine their performance of services of dematerialised securities accounts maintenance according to these rules and regulations, by verifying the requirements for execution of an order are entered in the central registry by a member in accordance with Article 23 of ZNVP and these rules SETTLEMENT MEMBERS Accession to the system of dematerialised securities accounts maintenance as a requirement Article 22 (1) A person cannot accede to the settlement system unless it accedes to the system of dematerialised securities accounts maintenance. (2) All provisions set forth herein which refer to registry members shall apply also for settlement members. Contract of accession to settlement system Article 23 (1) Under the contract of accession to the settlement system, KDD undertakes to provide to the settlement member the settlement services of Article 90 of these rules, and the settlement member agrees to pay KDD for its use of these services the compensation determined by the tariff of KDD. (2) Upon the execution of the contract of accession to the settlement system, the rights and obligations of a settlement member specified in these rules are effective with KDD and other settlement members. (3) Settlement member may begin to exercise its rights, acquired by concluding the contract of accession to the settlement system, after making the basic payment into the guarantee fund pursuant to Paragraph 2, Article 132 hereof. Temporary disconnection from the settlement information system Article 24 (1) KDD shall disconnect a settlement member from the settlement information system in due scope: 1. if the agency, the Bank of Slovenia or the competent supervisory body of a member state or foreign country of the member imposes on the settlement member measure of temporary ban which prohibits the said member to use in part or in full the settlement information system; 2. if the settlement member has been temporarily disconnected from the information system of dematerialised securities accounts maintenance pursuant to Paragraph 2, Article 16 hereof; 3. if the settlement member does not comply with solvency requirements set forth in the regulations, until the said member complies with such requirements. (2) KDD may disconnect a settlement member from the settlement information system in part or in full: 1. if the settlement member upon maturity defaults its obligation or creditor obligation in the settlement system as set forth under Chapter 4 hereof; 2. if the settlement member is late in paying the compensation for KDD s services or violates obligations regarding technical, staffing and other conditions, which are required pursuant to these rules 15 / 70

16 or regulations in order to use the settlement information system, until the said member complies with such obligations; 3. if the member fails to submit evidence of solvency when called upon to do so pursuant to Paragraph 2, Article 28 hereof, until the member submit such evidence. (3) The settlement member's obligations arising from the settlement system shall not terminate during the period of temporary disconnection from the settlement information system. (4) KDD shall inform the following of any temporary disconnection from the settlement information system and of the reasons for such disconnection: 1. the stock exchange; 2. the agency; 3. if the settlement member is a bank or special financial institution of a member state: the Bank of Slovenia; and 4. other settlement members. Cancellation of settlement membership Article 25 (1) A settlement member may cancel its membership in the settlement system on two months notice. (2) A settlement member cancels such membership with a cancellation statement submitted to KDD. (3) The cancellation statement shall be in writing. (4) The two month period runs from the first day of the month following the month in which KDD received this statement. (5) The cancellation becomes effective on the first day of the third month following the month of the statement. Additional reasons for exclusion of settlement member Article 26 (1) KDD shall exclude a settlement member from the settlement system if a member has been excluded from the system of dematerialised securities accounts maintenance. (2) KDD may exclude a settlement member from the settlement system: 1. if the member violates twice, within last three years: its obligation in the settlement system and if such violation resulted in debiting the guarantee fund in order to fulfil the said obligation; or its obligation to make a payment to the guarantee fund; 2. if a member violates: its obligation in the settlement system whose value exceeds the share of the guarantee fund as set forth in the regulations, and if such violation resulted in debiting the guarantee fund in order to fulfil the said obligation; or - its obligation to make a payment to the guarantee fund, whose value exceeds the share of the guarantee fund as set forth in the regulations; 3. if the settlement member does not comply with solvency requirements and does not comply with such requirements within the following six months. 16 / 70

17 Termination of settlement membership Article 27 A settlement member s rights and obligations in the settlement system cease where 1. the member cansels its membership, upon the effective date of its cancellation according to Paragraph 5 Article 25 of these rules. 2. the member is excluded, on the first day of the month following the resolution of exclusion by the Management Board of KDD. Supervision of settlement members Article 28 (1) KDD supervises the solvency of settlement members in order to manage risks of eventual defaults in obligations arising from stock exchange transactions, by verifying whether settlement members timely fulfil their payment obligations to KDD or to other settlement members in the settlement system, as determined in Chapter 4 of these rules. (2) KDD may request a settlement member to submit adequate evidence of its solvency. 17 / 70

18 3. MAINTENANCE OF CENTRAL REGISTRY 3.1. GENERAL PROVISIONS Maintenance of central registry Article 29 Maintenance of the central registry means the making of entries in the central registry with respect to: 1. the issue, cancellation or replacement of dematerialised securities; 2. the transfer of dematerialised securities between the accounts of holders; 3. the modification or deletion of third party rights in dematerialised securities or of legal deeds related to dematerialised securities. Holders of dematerialised securities and entitled persons Article 30 (1) Holder of a dematerialised security is a person in whose account of dematerialised securities at the central registry, a dematerialised security is recorded (hereinafter referred to as: holder). (2) Entitled person is a person to whose benefit a right, as a third party, in a dematerialised security is recorded in the central registry. Types of dematerialised securities accounts Article 31 (1) Holders` accounts are maintained in the central registry. (2) Auxiliary accounts are maintained with respect to maintenance of the central registry. Holder's account and sub-accounts Article 32 (1) Holder's account is an account of dematerialised securities which comprises dematerialised securities: 1. owned by the same person and 2. in relation to which the same registry member or KDD is authorised to enter the holder s orders involving the said securities. (2) Third party rights and legal facts which are subject of entry into the central registry with respect to particular dematerialised securities are to be entered in the sub-account maintained within the holder s account wherein the said dematerialised securities are credited. (3) Maintenance of holder's account means capacity of a registry member or KDD to enter and/or execute holder s orders involving securities credited to the said account, if the relevant conditions for entry and/or execution of the order are met. (4) Maintenance of sub-account means capacity of a registry member or KDD to enter and/or execute orders involving third party right or legal fact already entered in the central registry, if the relevant conditions for entry and/or execution of the order are met. 18 / 70

19 Types of holder s accounts Article 33 (1) The following types of holders` accounts are maintained in the central registry: 1. registry account; 2. client account; 3. house account; 4. portfolio account; and 5. custody account. (2) A registry account is a holder s account maintained by KDD. (3) A client account is a holder s account maintained by a registry member for the holder under a contract for dematerialised securities account maintenance executed with the holder, or under another contract. (4) A house account is an account of dematerialised securities held by a registry member who maintains this account. (5) A portfolio account is a client account maintained by a registry member who performs securities management services for the holder. (6) A custody account is a client account held by an investment fund, a mutual investment fund, or a fund of assets for covering technical provisions of a pension company, and maintained by a registry member who performs custody services for this fund pursuant to ZISDU-1. (7) A fiduciary account is a client account pursuant to Paragraphs 4 and 6 of Article 255 of ZTFI. (8) The provisions of these rules, regarding a client account, apply to a portfolio account, a custody account, and a fiduciary account. (9) The following holder s accounts are also maintained in the central registry with respect to a takeover bid pursuant to ZPre-1: 1. take-over account (Point 17 Article 146 of these rules); and 2. deposit account (Point 18 Article 146 of these rules). System of dematerialised securities accounts maintenance Article 34 (1) System of dematerialised securities accounts maintenance is the legal relationship between registry members and KDD setting forth their mutual rights and obligations with respect to dematerialised securities accounts maintenance. (2) Information system of dematerialised securities accounts maintenance is a computer system maintained by KDD and the various procedures performed by KDD to: 1. open and close holders accounts and sub accounts in the central registry; 2. enter orders of account holders of their disposal of securities, and orders of entitled person s disposal or exercise of a third party right, through remote access via a communications network; 3. execute such orders mentioned in Point 2 of this Paragraph, and other orders to transfer dematerialised securities, or orders to enter, modify or delete third party rights in dematerialised securities recorded in the central registry; 4. enter data on existing entries regarding the transfer of dematerialised securities between holders` accounts and for the creation or deletion of third party rights or legal deeds recorded in the central registry, and make these entries in the central registry; 19 / 70

20 5. access data of holders accounts, and transfer such data via a communications network; and 6. do such other acts as required to maintain holders accounts and sub accounts, and to maintain the share register or register of recorded dematerialised securities. Types of auxiliary accounts Article 35 The following auxiliary accounts are maintained for the maintenance of the central registry: 1. the joint account; 2. the joint custody account; and 3. accounts with respect to issue or deletion of dematerialised securities. Joint account and joint custody account Article 36 (1) A joint account records the number of securities that were the object of a particular stock exchange transaction for a joint account kept in the settlement information system. (2) A joint custody account is a joint account maintained with respect to stock exchange transactions for the joint account of investment funds, mutual pension funds or fund of assets for covering technical provisions«of a pension company, maintained by the same manager, and provided with custody services according to ZISDU-1 by the same registry member. (3) The provisions of these rules regarding the joint account apply to the joint custody account. Accounts for issue or deletion of dematerialised securities Article 37 (1) An account of issue or deletion of dematerialised securities is an auxiliary account maintained in the information system for the purpose of recording the issue or deletion of dematerialised securities resulting from their issue, cancellation or replacement pursuant to a corporate action of the issuer, or other legal deed. (2) The following types of accounts of issue or deletion of dematerialised securities are maintained in the information system for the purpose of recording the issue or deletion of dematerialised securities: 1. the control account; and 2. the floating account. Control account Article 38 (1) A control account, maintained by KDD, records the number of dematerialised securities being issued, cancelled or replaced pursuant to a particular corporate action of the issuer, or other legal deed. (2) The following two types of control accounts are maintained in the information system for the issue or deletion of dematerialised securities: 1. the issue control account; and 2. the deletion control account. 20 / 70

21 Floating account Article 39 (1) A floating account records the number of dematerialised securities being issued, cancelled or replaced pursuant to a particular corporate action of the issuer, and maintained by the registry member. (2) The following types of floating accounts are maintained in the information system for the issue or deletion of dematerialised securities: 1. the issue floating account; 2. the deletion floating account; and 3. the issue and deletion floating account. Information system for issue and deletion of dematerialised securities Article 40 Information system for issue and deletion of dematerialised securities is a computer system maintained by KDD and the procedures performed by KDD to: 1. open and close control accounts and floating accounts; 2. with respect to an issue of dematerialised securities: to enter and execute issuers orders to transfer dematerialised securities by debiting the control account or floating account and crediting holders accounts; 3. with respect to cancellation of dematerialised securities: to enter and execute issuers orders, holders' orders or other orders to transfer dematerialised securities by debiting the holders accounts and crediting the control account or floating account; 4. with respect to the replacement of securities: to calculate the number of new dematerialised securities, issued for replacement, that belong to respective holders of dematerialised securities and which are cancelled due to their replacement resulting from a conversion at a rate determined for this corporate action; to calculate additional payments that belong to the respective holders of dematerialised securities which are cancelled due to their replacement; and 5. do other acts required to perform the issue, replacement or cancellation of dematerialised securities ISSUE, CANCELLATION OR REPLACEMENT OF DEMATERIALISED SECURITIES General provisions Use of provisions of Section 3.2. Article 41 The provisions of Section 3.2.of these rules apply to: 1. the mutual rights and obligations between KDD and the issuer, with respect to the following KDD services: issue, cancellation or replacement of dematerialised securities; and maintenance of the registry of issuer s dematerialised securities; 2. mutual holders rights and issuers obligations arising from dematerialised securities. 21 / 70

22 Definitions in Section 3.2. Article 42 The following terms used in Section 3.2. of these rules have the following meaning: 1. serial securities: securities of the same issuer carrying the same holders` rights and the same issuers` obligations; 2. shares: shares issued in dematerialised form; 3. debt securities: bonds and other dematerialised securities entitling their holder to demand from the issuer the payment of the principal amount of the bond and accrued interest; 4. calculation period: the period for which interest is calculated, and to which the holder is entitled, and for which the issuer is obligated, arising from a dematerialised security (hereinafter referred to as the calculation period of a dematerialised security) or from a specific installment (hereinafter referred to as the calculation period of an installment), 5. installment means an amount of money comprising: part of the principal amount of a debt security, if the principal is paid by installments, or an amount of interest for part of the calculation period of the dematerialised security; 6. installment debt security: a debt security whereby principal, interest, or both are paid by installments; 7. redemption plan: a component of an installment debt security that comprises the following data: the maturity of the respective installments; where the principal is paid by installments, the part of the principal amount that is paid by installments; and if the interest is paid by installments, the calculation period of an installment; 8. corporate debt securities: convertible and dividend bonds according to Paragraph 1 Article 371 ZGD-1 and share call options according to Article 338 ZGD-1, when issued as securities; 9. investment coupons of a mutual fund: investment coupons of a mutual fund according to ZISDU-1, issued as a dematerialised security; 10. certificate of deposit: serial debt securities, issued as dematerialised securities evidencing a monetary bank deposit by an issuer who is a bank under ZBan; 11. confirmation of deposit: a security pursuant to Article 457 of ZTFI. Issue, replacement and cancellation of dematerialised securities Article 43 (1) Dematerialised securities are issued when KDD records them in the central registry, and transfers them by debiting the control or floating account for the issue and by crediting the holders accounts. (2) The rights of each holder of dematerialised securities, and the issuer s obligations to each such holder become effective upon their transfer by debiting them from the control or floating account for issue and crediting them to such holders accounts. (3) Dematerialised securities are cancelled when KDD transfers dematerialised securities being cancelled by debiting them from the holders accounts and crediting them to the control account or floating account for deletion. (4) The rights of every holder of dematerialised securities, and the issuer s obligations to every such holder, cease upon their transfer, by debiting them from every such holder s account and by crediting them to the control or floating account for deletion. 22 / 70

23 (5) The replacement of dematerialised securities is their cancellation and the issue of new dematerialised securities to holders of the cancelled dematerialised securities. Uniform identification and designation of dematerialised securities Article 44 (1) The uniform identification of a dematerialised security is a uniform identification code assigned by KDD at the time of entry of the first issue of dematerialised securities in the central registry, in accordance with an applicable international standard and in the manner set forth in the regulations. (2) The designation of dematerialised securities is a uniform identification code assigned by KDD at the time of entry of their first issue in the central registry, and used with their entry to the credit of their holders accounts. Record date for legal independence of entitlements from dematerialised security Article 45 (1) The record date of legal independence of entitlements is the day from which the entitlement arising from dematerialised security acquires legal independence in such manner that it is no longer transffered to the new holder by the transfer of that dematerialisied security (Paragraph 1, Article 15.b of ZNVP). (2) Holders of dematerialised securities or other claimants from dematerialised securities on the record date of legal independence of entitlement are determined according to the central registry status at the moment of closure of the information system of dematerialised securities accounts maintenance on that date, so that the entitlement referred to in first paragraph is no longer transferred to a new holder by the transfer of dematerialised security if a transfer was executed in the central registry afterwards. (3) When the legal basis for the entitlement referred to in paragraph 1 hereof is a decision of the general meeting or other body of the issuer, setting of the record date of legal independence of entitlements on the day preceding the date of the general meeting at which such decision is adopted or preceding the date on which decision is issued by another issuer's body, shall have no legal effect. Record date for money entitlements on dematerialised securities Article 46 Where an issuer s resolution of a general meeting, on distribution of the remaining profit, on a redemption plan, or other action giving right to payment of an entitlement under Paragraph 1 Article 45 of these rules, does not set the record date, then the record date for such entitlement shall be a record date set at two business days preceding the maturity date of such entitlement. Maturity of money entitlements on dematerialised securities Article 47 (1) Where an issuer s resolution of a general meeting, on distribution of the remaining profit, does not set the maturity date of the shareholders entitlement to a dividend, then payment is due on the fifteenth day following the day of such general meeting. (2) Where an issuer does not determine the maturity date of an installment on an installment debt security or other payment based on a debty security or other payment, then such installment is due the second business day following the last day of the calculation period for such installment or such payment. 23 / 70