Law on Securities Commission

8/7/2019 Law on Securities Commission

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Unofficial translation: Official Gazette of the Federation of Bosnia and Herzegovina No. 39/9, 36/99, and 33/04

LAW ON THE SECURITIES COMMISSION

I GENERAL PROVISIONS

Article 1

Pursuant to this Law, founded will be the Securities Commission in the Federation ofBosnia and Herzegovina (hereinafter: Commission) also regulating its title, seat, status,composition, organization, authorities and responsibilities and the financing of the Commission.

II TITLE, SEAT AND STATUS OF THE COMMISSION

Article 2

The Commission is an independent specialized institution of the Federation of Bosnia andHerzegovina (hereinafter: Federation).

The Commission has the character of a legal entity.

Article 3

The title of the Commission is: The Securities Commission of the Federation of Bosniaand Herzegovina.

The seat of the Commission is in Sarajevo.The Commission may have offices outside the seat of the Commission, that are founded

through a resolution of the Commission.

Article 4

The Commission has its seal that, in two concentric circles, contains the Coat of Arms ofthe Federation and text written in Latin letters,:

Bosnia and Herzegovina - Federation of Bosnia and HerzegovinaSecurities Commission of the Federation of Bosnia and Herzegovina.The Coat of Arms of the Federation of Bosnia and Herzegovina is placed in the center of

the seal.The Law on the Seal of the Federation of Bosnia and Herzegovina (The Official Gazette

of the Federation of B&H, No. 2/94 and 21/96) shall be applied to the form, making, use and

safekeeping of the seal of the Commission.

III COMPOSITION OF THE COMMISSION

Article 5

The Commission is made up of a President, a Deputy President and three members, whoare appointed and removed by the President of the Federation with the agreement of the DeputyPresident of the Federation which is confirmed by the Parliament of the Federation.

The term of office of the Commission lasts for a period of five years.The same person may be appointed more than once to the Commission.

When appointing the Commission, at least two members from the previous term of officeof the Commission must be appointed for every following term of office.

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The President, Deputy President and members of the Commission must be the Economicsor Law University graduates and must have multiple years of appropriate professionalexperience.

Article 6

One member of the Commission in the first two terms of office shall be appointed fromforeign experts.

Article 7

The President, Deputy president and members of the Commission may not :1) be in matrimony with each other or in kinship neither in an ascendant line, nor in a

collateral line, or in-laws up to the third degree;2) be a person convicted for a criminal act which is incompatible with service in the

Commission;3) be a member of a legislative, executive or court authority, nor a member of the

Supervisory Board or Management Board of an enterprise, bank, management

company, investment fund, pension fund, insurance company or professionalintermediary in the trade of securities;

4) carry out any other paid job, except for activities in the fields of science, research andlecturing;

5) possess directly or indirectly more than 5% of the securities of an enterprise, bank,management company, investment fund, pension fund, insurance company or

professional intermediary in the trade of securities;6) perform duties in a political party;7) take part in political activities; and8) conduct activities incompatible with the principles of protection of investors or

Commission independence.

Article 8

The President, Deputy President and members of the Commission shall be appointed withtheir written consent.

Candidate for President, Deputy President and member of the Commission who conductsactivities from Article 7 item 3 of this Law relieves himself/herself of such duty and suspendshis/her membership throughout the duration of his/her term of office to the Commission througha written consent from paragraph 1 of this Article.

The President, Deputy President and member of the Commission may not represent anyperson in a procedure before the Commission for a period of two years upon the end of his/her

term of office.

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Article 9

The President, Deputy President and member of the Commission may be removed beforethe expiration of his/her term of office, upon his/her own request.

The President, Deputy President and member of the Commission may be removed beforethe expiration of his/her term of office in the event that he/she does not act in accordance withthe law, or with acts of the Commission, or if he/she misuses his/her function or if othercircumstances arise that are incompatible with the performing of duties in the Commission.

Article 10

With a removal in accordance with Article 9 of this Law, another person shall beappointed for President, Deputy President or member of the Commission.

In a case from paragraph 1 of this Article, another person shall be appointed for theperiod until the expiration of the term of office of his/her predecessor.

IV AUTHORITIES OF THE COMMISSION

Article 11

The Commission ensures the application of the law and supervises its implementationalong with other regulations that are related to the issuance and trade of securities and isauthorized and responsible especially for:

1) the regulation of conditions and the method of issuing and trading securities;2) the approval of issues of shares and other securities of enterprises and banks;3) the approval of the issues of securities of fund management companies, investment

funds, mutual funds and other legal entities dealing with the issuance of securities;4) the regulation of conditions and the method of issuing cantonal and municipal bonds;5) the regulation of rules and the supervision of the trade of securities, based on the

exchange of securities and the quotation system, through electronic media;6) investor interest protection;7) the regulation and supervision over the application of disclosure standards for

investors and the public on the business operations of the participants in trading withsecurities;

8) the regulation and supervision of the application of corporate governance standards;and

9) the regulation of conditions, licensing and supervising of professional intermediaries

and other participants as well as other activities related with the work in the trade ofsecurities.

Article 12

In the performing of its authorities the Commission:1) supervises the application of the law and other regulations on the issuance and trading

of securities and is entitled to request information and documents from all legal andnatural persons that based on its judgment are necessary for the carrying out ofsupervision;

2) coordinates the activities of the administrative bodies, Federal institutions and

agencies of the Federation on issues of regulation and supervision of activities insecurities trading;

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3) prescribes the conditions and rules of securities trading;4) issues permits for securities issuance;5) prescribes and supervises the procedures and determines the results of a public

offering of securities and conducts the registration of issuers of securities;6) prescribes the standards and obligatory elements of the securities prospectus;

7) prescribes the standards for the approval of the sale of securities through publicofferings and for their quotation;

8) prescribes the conditions and approves the trade of securities of foreign issuers;9) passes regulations regulating the trading of securities on basis of confidential

information;10) suspends the issuance and trade of certain securities and other activities in the trade of

securities in cases of manipulation or speculation or when it assesses that the interestsof the investors and the public are jeopardized by such activities, or that they were notin accordance with the law and other regulations;

11) suspends the trade of all securities and the activities of all institutions and participantsin the trade of securities in cases determined by the law and regulations of the

Commission;12) prescribes the conditions and rules for the professional conducting of intermediary

activities in the trade of securities, including security and guarantee standards;13) issues, suspends and revokes licenses for conducting of intermediary activities in

securities trading;14) prescribes the conditions and standards for managing the Registrar of securities and

conducting settlement and depository activities in relation to securities;15) supervises the work of the Registrar of securities and Depository;16)prescribes the conditions and rules for participation of management companies,

investment funds, pension funds and insurance companies in the trade of securities;

17) prescribes the conditions and the procedures and approves the splitting-up and

mergingof shares and the acquisition and take-over of joint stock companies;18) prescribes the conditions and the procedure and approves the acquisition of shares

between joint stock companies;19) prescribes the standards for capital and limitation of risk in securities transactions for

professional intermediaries in the trade of securities;20) prescribes the standards for protection of shareholders and corporate governance;21)prescribes the conditions and procedures for entry in the register and keeps the

Register of Issuers of Securities;22)prescribes the content, conditions and standards for the disclosure of financial

statements and other information, including forward looking disclosure on businessoperations and the method for informing shareholders on the business operations of

joint stock companies;23) prescribes the form and time-frames for the keeping of public registers of informationon issuers and securities owners, professional intermediaries and activities in the tradeof securities and ensures the establishment of those registers;

24) initiates the process for passing of and amendments to regulations that relate tosecurities, corporate governance and protection of shareholders, professionalintermediaries in the trade of securities, self-regulating organizations and anti-trustregulations, for which the Commission is not authorized to pass;

25)determines the conditions, standards and method of information delivery to theCommission from issuers and professional intermediaries in the trade of securities andthe disclosure of statements that relate to their activities, including presentations and

promotion;

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26) supervises the business books, financial statements and announcements of issuers andprofessional intermediaries in the trade of securities;

27) organizes the training of professional participants, specialists and other participants inthe trade of securities;

28) keeps the register of issued, suspended and revoked licenses of professional

intermediaries and specialists in the trade of securities;29)prescribes fees for the approval of an issuance, the quotation of securities on the

Stock Exchange and other regulated public markets and the issuance of licenses forprofessional intermediaries and specialists in the trade of securities;

30) supervises implementation of other regulations that directly or indirectly affects theissuance and trade of securities and reports to the competent administrative bodies,administrative organizations and agencies of the Federation on its findings;

31)considers the method of the implementation of laws and other regulations on theissuing and trading of securities, files charges with the competent bodies concerningeconomic violations and criminal acts, enforces actions regarding economic violations

breaching Federation regulations in accordance with the Law on Violations; and

32) undertakes other measures and activities for which it is authorized and responsible inaccordance with this Law and other laws and regulations.

Article 13

For the purpose of conducting authorities and responsibilities as determined through theprovisions of Articles 11 and 12 of this Law, the Commission shall pass the Rules of Work of theCommission (hereinafter: Rules).

Article 14

The Ministry of Finance and the Banking Agency of the Federation are required tocooperate with the Commission in the exercise of its authorities in the regulation and supervisionof activities of banks and other financial organizations.

Natural persons and legal entities are required to provide information and documentsrequested by the Commission in the exercise of its authorities and responsibilities in the methodand in the period determined by the Commission.

Article 14a

The Commission is authorized to supervise securities issuers, legal and other persons certified toperform securities operations, as well as persons who perform operations related to securities,

securities issuance and trading, pursuant hereto and other legislation, and any legal and otherpersons subject to rules of corporate governance (hereinafter: subjects of supervision).

While inspecting a subject of supervision certified by the Commission according to law, theCommission may also inspect persons related to the purpose of supervision, if necessary toobtain full insight into the business operations of the subject of supervision certified by theCommission.In accordance with law, the Commission shall specify, in special bylaws, the methods ofinspection and supervision.

Article 14b

The inspection performed by the Commission shall include the following:

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Inspection, control and analysis of information, reports, and papers delivered by thesubject of supervision pursuant to law and other regulation,

Control of business operations and core business activities within the premises of thesubject of supervision (hereinafter: control of business operations),

Other activities as authorized by law and other regulation.

In the event that the supervision is carried out at the initiative of legal or natural persons, theCommission shall, following the completion of the inspection, inform the persons in writtenof the measures taken, in order to protect their rights and interests.

Article 14c

The control of business operations of the subject of supervision, for which the Commission isauthorized, shall be executed by official persons of the Commission, pursuant to a writtenauthorization by the president of the Commission issued for each and every case of supervision.In exception to this rule, the president of the Commission may authorize persons other than

officials of the Commission to participate in the supervision if necessary due to the complexity ofsupervision. The president of the Commission may authorize a company, institution or otherentities to perform specific expert tasks in the supervision of the business operations of thesubject of supervision (provision of expertise, interrogation, etc.), in case that specific expertknowledge or application of scientific methods is required.

Prior to the commencement of investigation, the official of the Commission shall present thewritten authorization from Paragraph 1 hereof to the responsible person of the subject ofsupervision.

Article 14d

The control of business operations shall be performed in the event that all facts material to thecase in question cannot be determined from the information and documents available to theCommission, and in cases stated in the Commission bylaws and controls performed at theinitiative of legal or natural persons with the aim of protecting their rights and interests.While performing control of business operations, the official of the Commission may: scrutinize

business records and papers, other documents and computer records that may contain data onsecurities transactions and other activities pertinent hereto and to other legislation enforced bythe Commission, request access to computer databases, request that copies of computer records

be provided, request that financial and other statements be made and delivered, and request oral

and written statements by legal persons and employees of legal persons subject to supervision.

Article 14e

In the event that the Commission determines, while performing inspection of securities issuance,any irregularities, or breaches of the law on Commission bylaws relating to securities issuance,which may be corrected, the Commission shall order the issuer to remove the irregularities inquestion, set the deadline for the removal, and suspend the securities issuance for the periodallocated to the removal of irregularities. During the period of suspension the issuance deadlineshall also be suspended, together with the subscription and payment of securities.

In case that the issuer should fail to remove the irregularities within the set period, or in case thatthe irregularities are of such nature that they cannot be removed, the Commission shall pass a

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decision annulling the issuance with the same consequences as in the event of an unsuccessfulissuance, pursuant to law regulating the securities issuance and trading.

The decision terminating and annulling the issuance shall be delivered to the issuer registry courtand to the Registry of Securities.

Article 14f

The Commission supervises securities trading operations performed by professionalintermediaries.The Commission may take the following measures against a professional intermediary: order thatdetected irregularities be removed within the set deadline, suspend, partially or in full, orterminate the license to perform professional mediation activities in securities trading.

Article 14g

In the event that the Commission determines, while performing inspection of the businessoperations of the stock exchange, that the stock exchange has acted contrary to provisions of thelaw and Commission bylaws, or in case that the orderly functioning of the capital market shouldrequire so, the Commission may take the following measures: suspend temporarily trading ofsome or all securities, order that changes or amendments be made to the Statute, Rules, or other

bylaws of the stock exchange.In case that the stock exchange should fail to comply with the Commission order from Paragraph1 hereof, the Commission may request that the authorized court initiate the procedure for

dissolution of the stock exchange and removal from the court registry.

V BY-LAWS, DECISION-MAKING AND MANAGEMENT

Article 15

The Commission has its By-laws.The By-laws regulate the management and organization of the Commission.The Commission appoints the Secretary to the Commission.

Article 16

Acts passed by the Commission are final.A party may initiate an administrative dispute against acts of the Commission before the

relevant court. .

Article 16a.The Commission shall make decisions during its sessions.Sessions of the Commission are held at least once in 30 days.The President is obliged to convene a session of the Commission on the

request of the Deputy President or on the request of two members of the Commission.

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The Commission decides by majority vote of total number of its members, among whichthe President or the Deputy President of the Commission must be present.

Acts of the Commission are published in the Official Gazette of the Federation BiH.

Article 16b.

Operations of the Commission are lead by the President or in the case of theunavailability of the President, by the Deputy President of the Commission.

The President of the Commission:1) signs the Commissions documents;2) renders individual acts that relate to participants in the trade of securities;3) represents and acts as an agent of the Commission in its relations with the the other

institutions and participants in the trade of securities;4) convenes sessions of the Commission and chairs the sessions;5) has responsibility for implementation of the Commission resolutions; and6) decides on the establishment and termination of employment, on salaries and on

responsibilities of the Commission personnel.

The President of the Commission may authorize members of the Commission toundertake certain tasks and sign specific acts, as regulated by a separate decision.

Article 17

The President, Deputy President and members of the Commission, as well as employeesof the Commission are required to ensure protection of confidential information in accordancewith the law, other regulations and acts of the Commission.

VI INCOMPATIBILITY OF POSTS

Article 18

Persons employed in the Commission may not:1) at the same time carry out any other paid job that relate to authorities of the

Commission, except for activities in the fields of science, research and lecturing;2) be members of a Supervisory or Management Board of enterprise, bank, fund

management company, investment fund, pension fund, insurance company orprofessional intermediary in the trade of securities;

3) possess, directly or indirectly more than 5% of the securities of an enterprise, bank,

fund management company, investment fund, pension fund, insurance company orprofessional intermediary in the trade of securities;4) perform activities that are incompatible with the principle of protection of investors or

the independence of the Commission.

VII FINANCING

Article 19

The Commission is financed out of the fees and duties collected from the activities of theCommission in accordance with the financial plan of the Commission.

Income surplus realized from the activities of the Commission, in relation to the financialplan of the Commission, belongs to the Federal budget.

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Activities of the Commission may be financed also from donations of foreigngovernmental and foreign non-governmental organizations.

VIII PENALTY PROVISIONS

Article 20

An individual who does not act in accordance with the Article 14 paragraph 2 of this Lawwill be penalized for a violation with a fine in the amount of 200 - 1,000 KM.

Article 21

A legal entity which does not act in accordance with the Article 14 paragraph 2 of thisLaw will be penalized for an economic violation with a fine in the amount of 5,000 - 70,000KM.

A responsible physical person in a legal entity will be penalized for an economic violation

from paragraph 1 of this Article with a fine in the amount of 1,000 - 5,000 KM.

IX TRANSITIONAL AND FINAL PROVISIONS

Article 22

The President of the Federation, with the agreement of the Federation Vice President, isobliged to appoint the President, the Deputy President and members of the Commission withinthe period of 30 days from the day when this Law comes into force. The Commission is requiredto submit its By-laws for confirmation to the Federal Parliament within a period of four monthsfrom the appointment of the Commission.

The Commission shall submit an annual financial plan for confirmation to the FederalParliament.Along with an annual financial plan, the Commission shall submit an annual report on its

work for the previous year to the Federal Parliament.

Article 23

The Commission shall perform the registration of issuers and shares issued in theprivatization process in accordance with the Law on the Privatization of Enterprises (OfficialGazette of the Federation of Bosnia and Herzegovina, no. 27/97), on the basis of final

authorization reports from the competent agencies for privatization.The previous approval of the Commission is not necessary for the issuance of shares fromparagraph 1 of this Article.

Article 24

On the effective date of this Law, the application of laws and other regulations regulatingthese matters in the territory of the Federation, prior to the effectiveness of this Law, shall cease.

Article 25

This Law comes into effect on the eighth day after its publication in The OfficialGazette of the Federation of Bosnia and Herzegovina.

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Law on Securities Commission