LAWON THE MARKET OF SECURITIES AND OTHER FINANCIAL INSTRUMENTS("Official Herald of the Republic of Serbia", No. 47/2006) |
Article 1
The present Law shall govern the following:
1) conditions and procedure of issuing securities;
2) trade of securities in the organized market of securities (hereinafter referred to as: organized market);
3) organization, structure and work mode of the organized market in the Republic of Serbia (hereinafter referred to as: the Republic);
4) concept and activity of the market organizer;
5) establishment and activity of participants in the organized market;
6) organization and jurisdiction of the Securities Commission (hereinafter referred to as: the Commission);
7) organization and jurisdiction of the Central Registry, Depository and Clearing of Securities (hereinafter referred to as: the Central Registry).
All the provisions of the present Law related to securities shall also apply to other financial instruments, unless otherwise specified by the provisions of the present Law.
Article 2
In terms of the present Law, particular terms shall have the following meanings:
1) securities shall be transferable electronic documents traded in the financial market which generate rights and liabilities for their lawful possessors in compliance with the provisions of the present Law and in compliance with the issuer's decision on issuing securities;
2) other financial instruments shall be all other financial instruments which represent contractual relationship between two or more parties, which express agreed right or liability, and/or right to collect payment, and which are connected to the financial market due to their nature;
3) debt securities shall be bonds and other securities entitling possessor to collect principal sum, interest and other rights;
4) standardized financial derivatives shall be financial instruments which represent standardized contractual relationship between two or more parties, where realization of a standardized agreed liability depends on meeting previously agreed conditions; the subject matter of the contract may be shares, interest rates, foreign currencies, specific types of goods, stock exchange indexes and other;
5) foreign securities shall be securities whose issuance is approved by a competent body for securities located abroad; securities and other financial instruments issued by domestic legal entities abroad shall also be considered as foreign securities;
6) lawful possessor of securities shall be the owner of the securities account held with the Central Registry;
7) privileged information shall be any information about exact and particular facts related to one or more issuers, buyer and/or seller of securities or about facts related to one or more securities, which are not available to public and which may have direct or indirect influence on the issuer, trade of securities and/or on their price in the organized market;
8) issuer shall be a person (entity) who announces public offer at the moment of issuing securities or other financial instruments, and person (entity) that has issued securities or other financial instruments, and/or legal entity underwriter of issuance that buys out securities from the issuer on the grounds of a contract on providing services of organizing issuance of securities with the obligation to buy them out from the issuer in order to resell them;
9) investor shall be a person (entity) who purchases securities and other financial instruments, except for the underwriter of issuance who purchases securities from the issuer in order to resell them;
10) professional investor shall be a legal entity which, due to its business activities, has the ability to estimate the significance of future investment into securities or other financial instruments;
11) market organizer shall be a legal entity to whom the Commission has issued a work licence to conduct activities related to organizing trade of securities and standardized financial derivatives, and other activities in compliance with the present Law;
12) broker-dealer company shall be a legal entity to whom the Commission has issued a licence to conduct broker-dealer company activities in compliance with the present Law;
13) authorized bank shall be the bank to whom the Commission has issued a licence to conduct broker-dealer company activities in compliance with the present Law;
14) custody bank shall be the bank to whom the Commission has issued a licence to conduct activities of maintaining the securities account on behalf of clients and to act upon clients' orders, and to conduct other activities in compliance with the present Law, as well as the National Bank of Serbia which may also conduct activities as a custody bank without the Commission's licence - in the matters of securities issued by the Republic of Serbia and by units of territorial autonomy and local government;
15) the Central Registry shall be a joint-stock company that keeps the central records of lawful possessors of securities and other financial instruments and of the rights arising from these securities and/or instruments, as well as of the third party rights to these securities and other financial instruments and of these entities, and that also conducts the clearing and balancing of securities and balancing of monetary payables and receivables arising on the ground of business transactions involving securities, including the conduct of other activities in compliance with the present Law;
16) clearing shall be the determination of respective payables and receivables based on securities and monetary funds between the participants in the organized market related to transactions involving securities;
17) balancing of accounts shall be the carrying out of obligations between participants in the organized market by transferring securities and monetary funds based on transactions involving securities.
Article 3
The Commission shall supervise the implementation of the present Law and it shall conduct other activities in compliance with the present Law, with the law that governs the investment funds, with the law that governs the take-over of joint-stock companies and with other law that governs the transactions of securities traded in the organized market.
Article 4
The present Law shall apply to the following financial instruments:
1) securities;
2) standardized financial derivatives (hereinafter referred to as: the financial derivatives);
3) other financial instruments that are being traded in accordance with the market organizer's business rules, approved by the Commission.
Article 5
The present Law shall not apply to the following subjects:
1) insurance companies' insurance policies;
2) securities issued in relation to transactions of goods and services, such as bill of exchange, check, written order (assignation), bill of lading, waybill, warehouse warrant, as well as other securities whose issuance and circulation are governed by a separate law;
3) other documents related to debt, monetary deposit or savings that do not have properties of securities in compliance with the present Law;
4) derived and other financial instruments that are not standardized and that are not specified as financial instruments by the present Law;
5) stakes of general partnership, limited partnership and limited liability company, open-ended investment fund investment units and voluntary pension fund investment units;
6) debt securities issued by the Republic of Serbia and the National Bank of Serbia, unless otherwise specified by the present Law or by some other law.
Primary and Secondary Offer of Securities
Article 6
Primary offer of securities shall be the first offer for sale of securities conducted by the issuer of these securities.
Every other offer, and/or trade of securities shall be the secondary offer of securities.
Primary and Secondary Public Offer
Article 7
Primary public offer of securities shall be the issuance of securities based on a public offer conducted by the issuer.
Secondary public offer of securities shall be every other public offer, and/or trade of securities in the organized market conducted by its possessor.
Any offer not conducted in compliance with the provisions of paragraphs 1 and 2 of the present Article shall be considered as an offer without public invitation.
Article 8
Public offer of securities shall be a public invitation addressed to unspecified number of unknown persons (entities) for the purpose of subscribing to and paying for securities during the primary public offer or to purchase securities during the secondary public offer.
Public offer of securities shall be conducted only in compliance with the provisions of the present Law.
Article 9
In terms of the present Law, public company shall be a legal entity acting as the issuer of securities that has successfully conducted at least one primary public offer of these securities and that has obtained the Commission's licence to issue, and/or to include these securities in the organized market.
Public company shall be obliged to produce financial reports, reports on its legal status and its business activities, and on all facts that may significantly influence the securities price, and it shall do that in compliance with the provisions of the present Law.
By exception to paragraph 2 of the present Article, reporting obligation shall not apply to the Republic and to the National Bank of Serbia when they are the issuers of securities.
The Commission shall keep the Registry of Public Companies mentioned in paragraph 1 of the present Article.
Article 10
The organized market shall be the market of securities and other financial instruments which is available to public and where trade of securities and other financial instruments is conducted in compliance with previously prescribed rules, providing all this is organized by the market organizer and providing the Commission exercises supervision over it.
The organized market shall consist of the stock exchange market and of over-the-counter securities trading market.
The stock exchange market shall be the market where trade of securities and other financial instruments that are accepted in the stock exchange market listing is conducted and where this trade is conducted in compliance with the rules prescribed by the stock exchange market.
The over-the-counter securities trading market shall be the market where trade of securities and other financial instruments is conducted in compliance with the rules prescribed by the organizer of the over-the-counter securities trading market.
The securities may be traded in the organized market only of the issuer, in compliance with the provisions of the present Law, has obtained from the Commission an approval for issuing securities, and/or for including securities into organized market.
By exception from the provisions of paragraph 5 of the present Article, securities issued by the Republic and the National Bank of Serbia may be traded in the organized market without obtaining the Commission's approval.
Article 11
In terms of the provisions of the present Law, the professional investors shall be the following entities:
- banks with their head offices in the Republic;
- international financial institutions, such as: the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation and the European Bank for Reconstruction and Development;
- insurance companies with their head offices in the Republic;
- investment fund and voluntary pension fund management companies with their head offices in the Republic;
- broker-dealer companies with their head offices in the Republic;
- banks, insurance companies, broker-dealer companies, investment fund and voluntary pension fund management companies and investment and pension funds with their head offices in member states of the Organization for Economic Cooperation and Development (hereinafter referred to as: OECD), member states of the European Union (hereinafter referred to as: EU) and other legal entities with their head offices in the Republic or in OECD and EU member states, that invest their monetary funds into securities for the purpose of gaining profit based on the price difference or for the purpose of protecting financial assets from market risks, and/or for the purpose of accomplishing rights arising from securities.
Following a proposal coming from the entity specified in paragraph 1 sub-paragraph 6 of the present Article, the Commission shall approve of the professional investor status in a manner prescribed by the Commission's and the Government's enactments.
The Commission shall prescribe the form and the content of the request to have the professional investors status defined.
The Government shall prescribe closer criteria for defining the professional investors' status based on candidate's volume of trading securities for a certain period of time and number of transactions conducted in such a way.
The Commission shall keep the Professional Investors Registry.
Article 12
Qualified participation, in terms of the provisions of the present Law, shall exist when legal entity or individual has direct or indirect portion, when it possesses voting right shares or other rights on which basis it participates in the management or participates in the capital of other legal entity with the portion of no less than 5%.
Article 13
Related persons (entities), in terms of the provisions of the present Law, shall be legal entities which are mutually related by management, capital or in some other way, for the purpose of accomplishing joint business goals, in such a way that business activities or business results of one entity may significantly influence business activities and/or business results of other entity.
Related persons (entities), in terms of the provisions of the present Law, shall also be the following mutually related persons (entities):
- family members;
- one entity, and/or entities considered as related entities, who jointly, directly or indirectly, participate in other entity, in terms of the present Article;
- same entity, and/or entities considered as related entities in terms of the present Article, who participate in both entities;
- entities related in compliance with the law that governs legal status of business companies;
- management board or supervisory board members, and family members of these persons.
In terms of the provisions of present Law, family members shall be considered the following:
- spouses, and/or persons living together in a relationship which has the same legal capacity as marriage;
- blood relatives in direct line without limitations;
- side relatives up to the third relationship degree, including in-law relationship;
- adopter and adoptees, including adoptees' descendants;
- foster parent and wards, including wards' descendants.
II GENERAL CHARACTERISTICS OF SECURITIES
Form and Elements of Securities
Article 14
In terms of the provisions of the present Law, securities shall be issued, transferred and recorded in the form of electronic record in the information system of the Central Registry.
Article 15
Securities shall particularly include the following:
1) indication of the type of securities;
2) indication of the class, and/or series of securities if the issuer has issued several classes, and/or series of securities of the same type;
3) name, head office and identification number of the issuer of securities;
4) name, head office and identification number of legal entity, and/or name, family name, address and citizen's uniform registry number of individual on whose name securities are registered;
5) nominal value of the entire issue of securities;
6) nominal value of securities, and/or bookkeeping value if securities are issued without their nominal value;
7) description of rights and liabilities arising from securities and modes of their realization;
8) date of issuance, and/or date of registering a security in the Central Registry.
The Central Registry shall define separate elements of particular types of securities and uniformed identification of securities.
Article 16
The following entities in the Republic may issue securities and other financial instruments in compliance with the provisions of the present Law:
1) legal entities with head office in the territory of the Republic (hereinafter referred to as: domestic legal entities);
2) the Republic, autonomous provinces, local government units, legal entities acting as budget beneficiaries and mandatory social security organizations, in compliance with the provisions of law;
3) the National Bank of Serbia;
4) legal entities with head office located in the territory of OECD and EU member states and in the territory of neighbouring countries with whose institutions in charge of controlling the market of securities the Commission has signed contract with on cooperation between bodies competent for controlling the market (hereinafter referred to as: securities of foreign legal entities), in compliance with the provisions of the present Law.
Article 17
The securities issued by domestic legal entities that are being traded in the Republic shall be denominated in dinars.
The debt securities issued by entities specified in the Article 16 items 1), 2) and 3) of the present Law and debt securities issued by foreign legal entities may be denominated in foreign currency.
In order to issue securities denominated in foreign currency, the issuer specified in the Article 16 item 1) of the present Law shall previously obtain approval of the National Bank of Serbia, in compliance with the National Bank of Serbia regulations.
The provisions of the law that governs public debt shall apply to the issuer specified in the Article 16 item 2) of the present Law when issuing securities denominated in foreign currency.
The provisions of the law that governs organization and jurisdiction of the National Bank of Serbia shall apply to the issuer specified in the Article 16 item 3) of the present Law when issuing securities denominated in foreign currency.
The National Bank of Serbia shall prescribe closer conditions for granting approval specified in paragraph 3 of the present Article.
In the process of granting approval specified in paragraph 3 of the present Article, the National Bank of Serbia shall apply the law that governs general administrative proceedings.
The decision on granting approval specified in paragraph 3 of the present Article shall be final and one may initiate administrative dispute against it.
The National Bank of Serbia shall define in a separate regulation the mode of determining foreign currency quotas as a limit for granting approvals for issuing securities denominated in foreign currency specified in paragraph 3 of the present Article, and conditions and mode of granting such approvals.
The issuer shall cover obligations from securities in a denominated currency.
III RIGHTS AND RESTRICTIONS OF RIGHTS ARISING FROM SECURITIES
Article 18
The rights arising from securities and rights to securities may be acquired and disposed of by domestic and foreign individuals and legal entities, unless otherwise specified by separate law.
Article 19
Lawful possessors of securities (hereinafter referred to as: lawful possessor) shall acquire the pertaining rights by entering securities into their account kept with the Central Registry.
By exception from the provisions of paragraph 1 of the present Article, when custody bank maintains securities accounts with the Central Registry on its own behalf and for the account of lawful possessors who are clients of that bank, and/or on behalf of the clients of that bank who are not lawful possessors and for the account of lawful possessors - lawful possessor of such securities shall be a person (entity) for whose account the custody bank maintains securities accounts.
The transfer of rights arising from securities shall be conducted by transferring securities into the account of a new lawful possessor in the Central Registry.
The third party rights arising from securities shall be acquired and transferred by entering such rights and their beneficiaries into the securities account of lawful possessors kept with the Central Registry.
Transfer and Restrictions to Transferring Rights Arising from Securities
Article 20
Rights arising from securities shall be unlimitedly transferable in legal circulation, unless otherwise specified by the provisions of the present Law or some other law.
By exception from the provisions of paragraph 1 of the present Article, disposal of rights arising from securities may be limited in the following cases:
1) if lawful possessor announces in a written statement that he/she/it waives the right to dispose of particular or all rights arising from securities, but not for the benefit of other person (entity), in compliance with the provisions of the law that governs business companies;
2) if competent court decides to prohibit the disposal of particular or all rights arising from securities.
The restrictions to disposal of rights arising from securities shall be entered in the lawful possessor's securities account kept with the Central Registry.
A lawful possessor may withdraw the statement specified in paragraph 2 item 1) of the present Article at any time.
The entered restrictions to disposal of rights arising from securities on the ground of the statement specified in paragraph 2 item 1) of the present Article shall be erased in the following cases:
1) if through the Central Registry member a written statement of a lawful possessor on withdrawing statement specified in paragraph 2 item 1) of the present Article is delivered to the Central Registry, or
2) on the day defined in the statement specified in paragraph 2 item 1) of the present Article, when waiving the right to dispose of rights arising from securities is limited by time.
The entered restrictions to disposal of rights arising from securities on the ground of the court decision shall be erased when the court decision on revoking such limitation is delivered to the Central Registry by the court or through the Central Registry member.
IV TYPES OF SECURITIES AND OTHER FINANCIAL INSTRUMENTS
Article 21
The following securities may be the subject matter of public offer in the organized market:
1) shares - securities registered as a portion of the joint stock company's capital;
2) debt securities;
3) warrants - securities which give their possessor the right to purchase, and/or sell securities and other financial instruments on a specific day, and/or within a specified period of time, in accordance with previously determined or determinable price;
4) depository receipts - securities issued by banks that possess foreign shares or bonds deposited with the bank located abroad, and which represent domestic equivalent to foreign shares or bonds, i.e. they contain equal rights and liabilities as foreign securities they relate to.
Other securities and/or financial instruments determined in compliance with the provisions of the present Law and the Commission's enactment may also be the subject matter of public offer in the organized market.
Article 22
Obligations arising from debt securities shall not become mature before the expiration of a period of 30 days starting from the day of their issuance.
By exception from the provisions of paragraph 1 of the present Article, obligations arising from debt securities issued by the Republic and the National Bank of Serbia may become mature before the expiration of a time limit specified in paragraph 1 of the present Article.
The debt securities may be the short-term and the long-term ones.
Obligations arising from the short-term debt securities shall become mature within a period of 365 days starting from the day of their issuance.
The debt securities and other financial instruments that may be exchanged for shares shall not be a base for acquiring shares before the expiration of a six-month period starting from the day of their issuance.
Standardized Financial Derivatives
Article 23
Standardized financial derivatives may be the subject matter of public offer if they are defined as such by the market organizer's Business Rules, and if the Commission approves Business Rules.
Types of Standardized Financial Derivatives
Article 24
The standardized financial derivatives shall be the futures contracts and the options contracts.
The futures contracts shall be the following:
1) futures contract with delivery of the subject matter of contract - transferable standardized contract in which purchaser is obliged to pay previously determined price on the maturity date specified in the contract and seller is obliged to deliver the subject matter of contract on that day, providing the maturity period is not shorter than three days starting from the day the contract is signed;
2) futures contract without delivery of the subject matter of contract - transferable standardized contract in which parties are obliged to pay on the maturity date specified in the contract the difference between agreed price of the subject matter of contract and price of the subject matter of contract valid on the maturity date, providing the maturity period is not shorter that three days starting from the day the contract is signed.
The options contract is transferable standardized contract which gives purchaser the right to purchase or sell the subject matter of contract at a price determined by contract, and seller is obliged to sell or purchase the subject matter of contract on that date, providing there is an obligation to pay agreed premium on the maturity day, i.e. days, specified in the contract, with maturity period not shorter than three days staring from the day the contract is signed.
The subject matter of public offer in the organized market may also be other financial instruments with the subject matter of contract being standardized in terms of its type, quality and other characteristics and when financial instrument value depends on its market price, if determined as such by the market organizer's decision.
The Commission shall approve with the decision specified in paragraph 4 of the present Article.
The standardized financial instruments may be the subject of trade only in the organized market - under conditions and in a manner defined by the provisions of the present Law and by the market organizer's enactments.
V ISSUANCE OF SECURITIES THROUGH PUBLIC OFFER
Conditions for Issuing Securities through Public Offer
Article 25
The securities shall be issued through public offer, coupled by making public the prospectus for issuing securities and announcing a public invitation to subscribe to and pay for securities, unless otherwise specified by the provisions of the present Law.
The entity that intends to issue securities shall prepare the prospectus for issuing securities and submit the following documents to the Commission:
1) equest for the approval of the prospectus for issuing securities;
2) the issuer's decision on issuing securities and their inclusion in precisely specified over-the-counter securities trading market;
3) a copy of the prospectus for issuing securities;
4) a copy of the summary prospectus for issuing securities (hereinafter referred to as: summary prospectus);
5) public invitation to subscribe to and pay for securities;
6) the issuer's establishment act;
7) decision on registering in the Business Companies Registry;
8) financial statements conducted in compliance with the provisions of the law that governs accounting and auditing;
9) report on audit of financial statements conducted in compliance with the provisions of the law that governs accounting and auditing;
10) bank statement on the issuer's account balance for a period of last 60 days prior to submitting a request;
11) competent body's approval, if the provisions of the present Law or some other law prescribe that issuance of securities is allowed only with previously obtained approval from that body.
When issuance of securities is taking place in the process of establishing an open-ended joint-stock company, the founders of such a company shall prepare the corresponding prospectus for issuing securities and deliver to the Commission the documents specified in paragraph 2 items 1) to 6) of the present Article.
When issuance of securities is conducted by an underwriter on the grounds of a contract on buying out the issue signed with the issuer, the issuer shall be responsible for preparing the prospectus for issuing securities.
The public offer of securities may be conducted only with the previously obtained decision of the Commission on approving the prospectus for issuing securities.
It shall be considered as null and void any acquisition of securities issued on the grounds of offer made through the advertisement, publicity, letter, phone call or through any other act which makes the purchase of particular company's securities available to a large number of unspecified persons (entities), if such an operation has not been done in compliance with the provisions of the present Law.
The Commission shall keep the registry of decisions on approving th prospectus for issuing securities.
Prospectus for Issuing Securities
Article 26
The prospectus shall be a public written document that contains data enabling the investor to have clear and complete picture of real (objective) legal and financial status of the issuer of securities, of its business capabilities and of rights and liabilities arising from securities the prospectus relates to, and other data significant for reaching the investment decision.
The prospectus for issuing securities shall contain the following elements:
1) introductory part of the prospectus which shall contain data on the issuer, data on securities to be issued and data on allocation of funds acquired by issuing such securities;
2) basic prospectus which shall contain detailed data on the issuer, business activities of the issuer and data on securities that have been issued but not withdrawn, i.e. on securities whose maturity period has not expired.
The summary prospectus shall be the summary of the prospectus which shall be publicized and which shall contain data from the introductory part of the prospectus.
When it estimates it is necessary for the purpose of protecting the investors, the Commission may require the applicant to appropriately emphasize particular data in the prospectus for issuing securities.
The Commission shall prescribe the form and the content of the request for approval of the prospectus for issuing securities, of the decision on issuing securities, of the prospectus for issuing securities and of the summary prospectus.
Responsibility for the Accuracy and Completeness of Data
Article 27
The data mentioned in the prospectus for issuing securities, in the summary prospectus and in any other form of a public announcement related to issuing and trading securities shall be accurate and shall completely present financial status and business results of the issuer.
Any other form of a public announcement related to issuing and trading securities shall contain data that must be in accordance with data from the prospectus.
The prospectus for issuing securities, the summary prospectus and any other form of a public announcement related to issuing and trading securities shall contain data which, because of business activities conducted by the issuer and type of securities to be issued, shall enable the investors to conduct an objective evaluation of the issuer's financial status, of its entire assets and liabilities status, of its gains and losses in conducting business activities, of its legal status, of its potential business results and of other important facts and circumstances related to the issuer, and of rights and liabilities arising from these securities.
In the prospectus for issuing securities, in the summary prospectus and in any other form of a public announcement related to issuing and trading securities one shall not state data that may make the investors create a wrong picture about the issuer, about securities to be issued in accordance with such a prospectus and about the issuer's securities that have already been issued.
The issuer shall be responsible for accuracy and completeness of data announced in the prospectus for issuing securities, in the summary prospectus and in any other form of a public announcement related to issuing and trading securities.
The issuer shall be responsible for the damage caused by announcing inaccurate and/or incomplete data in the prospectus for issuing securities, in the summary prospectus and in any other form of a public announcement related to issuing and trading securities.
The issuer, the auditor and all other persons who have participated in preparing the prospectus for issuing securities and the summary prospectus shall be jointly and severally responsible for the damage specified in paragraph 6 of the present Article, if they knew, i.e. if they had to know due to nature of business they are involved in, that data were inaccurate and/or incomplete.
The Commission shall not be held responsible for accuracy and completeness of data stated in the prospectus for issuing securities and in the summary prospectus.
Decision on Approving Prospectus for Issuing Securities
Article 28
The Commission shall render a decision on approving the prospectus for issuing securities when it finds that it contains all the data in accordance with the provisions of the present Law and that appropriate documentation has been enclosed.
The Commission shall render a decision on refusing the request for approval of the prospectus for issuing securities in the following cases:
1) if the prospectus' content is opposed to, and/or if the prospectus' form is opposed to the provisions of the present Law and to enactments adopted on the ground of the present Law;
2) if the prospectus does not contain all necessary data or if appropriate documentation is not enclosed;
3) if data from the prospectus are not in accordance with the issuer's decision on issuing securities, and/or if they do not match data from the enclosed documentation;
4) if bankruptcy or liquidation procedure has been initiated against the issuer of securities;
5) if the issuer has violated a reporting obligation prescribed by the provisions of the present Law.
Time Limit for Rendering Decision on Approving Prospectus for Issuing Securities
Article 29
The Commission shall render a decision on approving the prospectus for issuing securities within a period of 20 days starting from the day the request for approving the prospectus is properly delivered.
Preliminary Prospectus for Issuing Securities
Article 30
The issuer may also submit to the Commission a request for the approval of the preliminary prospectus for issuing securities (hereinafter referred to as: preliminary prospectus).
The preliminary prospectus shall contain all the data to be announced in the prospectus, except for the data related to the price of securities, the amount of interest rate and the underwriters of the issue.
The Commission shall prescribe the conditions for announcing the preliminary prospectus.
The provisions of the present Law related to the prospectus for issuing securities shall accordingly apply to the content of the request for approval of the preliminary prospectus, to responsibility for the data accuracy, to the decision on approving such a prospectus and to the time limit for rendering such a decision.
Announcement of Preliminary Prospectus
Article 31
It shall be allowed to announce the preliminary prospectus as of the day the decision on approving the preliminary prospectus is rendered until the day the decision on approving the prospectus on issuing securities is rendered, but it shall not be allowed to conduct subscriptions or to make payments for the securities that such a prospectus relates to.
The preliminary prospectus may be publicly announced for a period not longer than six months starting from the day the decision on its approval is rendered.
Following the request coming from any interested person (entity), the issuer and the broker-dealer company the issuer authorizes so, shall provide such a person (entity) with a copy of the preliminary prospectus and they shall keep records on such persons (entities).
Shelf Prospectus for Issuing Securities
Article 32
The joint-stock company that intends to issue the approved but non-issued securities through public offer, and/or entity which intends to issue other securities through public offer, with postponing the beginning of subscription to and payment for the securities, shall previously obtain from the Commission an approval for making the shelf prospectus for issuing securities (hereinafter referred to as: shelf prospectus).
The shelf prospectus shall contain all the data the prospectus for issuing securities contains, except for data on the price of securities, and/or the amount of interest rate.
It shall not be allowed to make subscriptions to or payments for securities the shelf prospectus relates to as of the day the decision on approving the shelf prospectus is rendered until the day the decision on approving the prospectus for issuing securities is rendered.
Based on the decision on approving the shelf prospectus, the issuer may submit several requests for approval of the prospectus for issuing securities for the purpose of successive issuance of securities within different periods, in a mode and under conditions determined in the shelf prospectus.
The value of the entire issue of securities that are issued in compliance with the provisions of paragraph 4 of the present Article shall not exceed the amount determined in the shelf prospectus.
The date of maturity of securities that are issued in compliance with the provisions of paragraph 4 of the present Article shall be in accordance with maturity time limits determined in the shelf prospectus.
The postponement of the beginning of subscription to and payment for securities shall not exceed the period of five years for the approved but non-issued securities, and/or 12 months for other securities, starting from the day the decision on approving the shelf prospectus is rendered.
The Commission shall prescribe conditions for the announcement of the shelf prospectus.
The provisions of the present Law related to the prospectus for issuing securities shall accordingly apply to the content of the request for approval of the shelf prospectus, to responsibility for the accuracy of the data, to the decision on approving such a prospectus and to time limits for its adoption.
Article 33
Should from the day of submitting the request for the approval of the prospectus for issuing securities, preliminary or shelf prospectus, and until the expiration of the time limit for making a subscription to or payment for securities such circumstances occur which may influence the value estimation of securities to be issued, than the issuer shall deliver to the Commission the request for the approval to amend the prospectus within a period of one day starting from the day such circumstances have occurred.
The amendments to prospectus shall be the integral part of the prospectus, and such amendments may not change data in the prospectus that are not influenced by new circumstances, but new data may be added if important for the public offer of securities.
The provisions of the present Law related to prospectus for issuing securities shall accordingly apply to the content of the request for the approval of the amendments to prospectus, to responsibility for data accuracy, to decision on approving such a prospectus and to time limits for its adoption.
Special Rule for Preliminary and Shelf Prospectus
Article 34
After approving preliminary, and/or shelf prospectus, the issuer shall deliver to the Commission the amendments to prospectus that contain data which were not announced in preliminary, and/or shelf prospectus - together with the request for the approval of the prospectus for issuing securities.
A copy of amendments specified in paragraph 1 of the present Article shall also be delivered to all persons (entities) founded in the issuer's records, and/or in the records of a broker-dealer company specified in the Article 31 paragraph 3 of the present Law.
Summary Prospectus for Short-Term Securities
Article 35
The summary prospectus shall be produced for the issuance of short-term securities.
The Commission shall render a decision on approving the summary prospectus for issuing short-term securities within a period of seven days starting from the day the proper request of the issuer is submitted.
The Commission shall prescribe in its act the form and content of the summary prospectus for short-term securities and other necessary documentation that is submitted together with the request for the approval of such a prospectus.
VI OFFER OF SECURITIES OF FOREIGN LEGAL ENTITY AND OFFER OF FOREIGN SECURITIES
Offer and Circulation of Securities
Article 36
The offer and circulation of securities of a foreign legal entity in the territory of the Republic shall be conducted in compliance with the provisions of the present Law related to public offer of securities, unless otherwise specified by the provisions of the present Law.
Only the broker-dealer company, and/or authorized bank shall organize offer and circulation of securities specified in paragraph 1 of the present Article, providing it holds the following documents:
1) the Commission's permission to conduct the activity of organizing the issuance of securities;
2) signed contract on organizing offer and circulation of securities with a foreign legal entity that is the issuer of securities;
3) previously obtained consent from the National Bank of Serbia to conduct the circulation of foreign legal entity's securities in the territory of the Republic.
The National Bank of Serbia shall closely define conditions on giving its consent specified in paragraph 2 item 3) of the present Article.
The National Bank of Serbia shall apply the law that governs general administrative proceedings during the procedure of giving its consent specified in paragraph 2 item 3) of the present Article.
The decision on giving consent specified in paragraph 2 item 3) of the present Article shall be final and one may initiate administrative dispute against it.
The National Bank of Serbia regulation specified in paragraph 3 of the present Article shall define the mode to determine currency quotas up to which consents for offer and circulation of securities of a foreign legal entity in the territory of the Republic shall be given, and conditions and mode of giving such consents.
Approval of Prospectus for Offer and Circulation of Securities of Foreign Legal Entity
Article 37
The offer and circulation of securities of a foreign legal entity through public offer may be conducted only if such a legal entity was granted an approval by a competent body charged with supervision of the market of securities in the territory of OECD and EU member states, and/or in the territory of neighbouring countries, where securities had been issued, with whom the Commission has signed the contract on defining cooperation between competent bodies charged with supervision of the market of securities.
The offer and circulation of securities of a foreign legal entity through public offer may not be conducted without previously obtained Commission's decision on approving the prospectus for issuing securities of a foreign legal entity.
The provisions of the present Law related to the prospectus for issuing securities shall accordingly apply to the prospectus on basis of which offer and circulation of securities of a foreign legal entity is made.
The following documents shall be submitted together with the request for the approval of the prospectus for offer and circulation of securities of a foreign legal entity:
1) contract on organizing offer and circulation of securities signed between a foreign legal entity that is the issuer of securities and a broker-dealer company, and/or authorized bank;
2) consent from the National Bank of Serbia on offer and circulation of securities of a foreign legal entity;
3) originals and certified translations of other documentation submitted together with the request for the approval of prospectus for offer and circulation of securities.
The National Bank of Serbia shall prescribe closer conditions and modes of giving consent specified in paragraph 4 item 2) of the present Article.
Registration of Prospectus for Foreign Securities
Article 38
The public offer of foreign securities may be conducted only with the prior registration of the prospectus for issuing such securities that has been approved by a foreign body specified in the Article 37 paragraph 1 of the present Law.
The Commission shall render its decision on the registration of prospectus specified in paragraph 1 of the present Article and it shall keep the registry of such decisions.
The applicant shall submit the following documentation together with the request to register the prospectus specified in paragraph 1 of the present Article:
1) documentation specified in the Article 37 paragraph 4 of the present Law;
2) original and certified translation of entire prospectus approved by a body specified in the Article 37 paragraph 1 of the present Law;
3) originals and certified translations of periodical reports the foreign issuer is obliged to deliver to the body specified in the Article 37 paragraph 1 of the present Law, which reports shall not be older than six months starting from the day the request is submitted;
4) other data and documents defined by the Commission's general enactments.
Article 39
The public offer of foreign securities may be conducted in the form of depository receipts if the prospectus for issuing securities - on which basis such receipts have been issued - was approved by a foreign body specified in the Article 37 paragraph 1 of the present Law.
The issuer of depository receipts may only be the bank, under the following conditions:
1) if such a bank has previously obtained a consent from the National Bank of Serbia on issuing depository receipts;
2) if such a bank has signed a contract with the issuer of foreign securities.
The National Bank of Serbia shall prescribe closer conditions and mode of giving consent specified in paragraph 2 item 1) of the present Article.
Article 40
The Commission shall prescribe mode, conditions and procedure for the issuance and trade of depository receipts.
VII PROCEDURE OF ISSUANCE OF SECURITIES THROUGH PUBLIC OFFER
Procedure of Issuance of Securities and Addressing Public Invitation
Article 41
The procedure of issuance of securities shall begin by addressing a public invitation for the subscription and payment of securities and by announcing the summary prospectus for issuing securities in at least one daily newspaper that is distributed in the entire territory of the Republic.
The public invitation specified in paragraph 1 of the present Article shall contain the following data:
1) data on the starting date of the subscription and payment and on a time limit for the subscription and payment of securities;
2) data on the location where subscription and payment shall take place, i.e. where inspection may be conducted or where a copy of the prospectus for issuing securities may be received;
3) the most important data related to the issuer and to securities to be issued.
The Commission shall closely prescribe the content of the public invitation for the subscription and payment of securities, the mode of its announcement and the content of the subscription form.
The issuer shall announce the public invitation for the subscription and payment of securities within a period of 30 days starting from the day the decision on approving the prospectus for issuing securities is received.
If the issuer fails to announce the public invitation for the subscription and payment within a deadline given in paragraph 4 of the present Article, than the decision on granting the approval specified in the provisions of the Article 28 of the present Law shall be declared void.
Announcement of Prospectus for Issuing Securities
Article 42
The summary prospectus for issuing securities shall be announced simultaneously with the public invitation for the subscription and payment of securities, and that shall be done in the same daily newspaper in the form of a single advertisement and in a mode prescribed by the provisions of the Article 41 paragraph 1 of the present Law.
The prospectus for issuing securities and the summary prospectus shall be placed at disposal of all interested persons (entities) - in the locations defined for the subscription and payment of these securities.
The issuer, the broker-dealer company and the bank authorized by the issuer, shall be obliged to provide any interested person (entity), upon his/her/its request, with a copy of the prospectus for issuing securities or the summary prospectus.
Location of Subscription and Payment of Securities and Time Limit for Subscription and Payment
Article 43
The subscription of securities shall take place in the broker-dealer company or in the bank - the Central Registry members, on the grounds of a written contract signed between that broker-dealer company, i.e. that bank and the issuer.
The payment of securities shall take place in the bank - the Central Registry member, on the grounds of a written contract signed between that bank and the issuer.
When issuance of securities is being conducted by a bank, the payment of these securities shall take place in other bank - the Central Registry member, on the grounds of a written contract signed between that other bank and the issuer.
The payment of securities shall be made in money.
By exception from the provisions of paragraph 4 of the present Article, when issuance of securities is being conducted without the approved prospectus for issuing securities in compliance with the provisions of the Article 54 of the present Law, the payment of shares and securities exchangeable for shares may be made in money, in securities, in objects and in other rights.
Time Limit for Subscription and Payment of Securities
Article 44
The time limit for the subscription and payment of securities shall not be longer than three months starting from the day identified in the public invitation as a starting day of the subscription and payment of securities.
Following a request coming from the issuer, the Commission shall extend the time limit for the subscription and payment of securities for up to 45 days.
The subscription and payment based on public invitation shall be made within given time limits and under conditions defined in the public invitation for the subscription and payment of securities and in the prospectus for issuing securities.
The subscription and payment shall be made in a mode that provides equal treatment of all persons (entities) which are subscribing to and/or making payment of securities within given time limits and under defined conditions, and in a mode that prevents causing damage to the issuer.
Article 45
A person (entity) who has subscribed to securities based on a public invitation before being allowed to inspect the prospectus for issuing securities, with the exception of a professional investor, may abandon the subscription - in the form of a written statement delivered within a period of two days starting from the day the inspection of the prospectus is made.
Suspension and Cancellation of Procedure of Issuance of Securities
Article 46
The Commission shall supervise the procedure of issuance of securities by public invitation.
Should the Commission in the course of conducting supervision over procedure of issuance of securities by public invitation discover irregularities that may be removed, it shall order the issuer to remove those discovered irregularities within a certain time limit and it shall suspend subscriptions and payments of securities for such a period, with the time limit for subscription and payment also being suspended. The Commission shall inform persons (entities) who have subscribed to and who have made payments of securities of that issuer about this order.
The issuer shall deliver to the Commission a report with evidence on the removal of irregularities within a specified time limit.
Should the Commission on basis of such a report determine that irregularities have been removed, it shall render a decision on terminating the suspension of subscriptions and payments of securities and it shall inform all persons (entities) who have subscribed to and who have made payments of securities of that issuer about it.
Should the issuer not have removed irregularities within a time limit defined in the Commission's order specified in paragraph 2 of the present Article or should the Commission in the course of conducting supervision discover irregularities performed during the procedure of a public invitation that the issuer may not be able to remove, it shall render a decision on cancelling the procedure of a public invitation and it shall inform all persons (entities) who have subscribed to and who have made payments of securities about it, as well as public, in a mode prescribed by the provisions of the Article 41 paragraph 1 of the present Law.
Should the procedure of issuance of securities have been cancelled, the issuer shall return paid amounts with interest to persons (entities) who subscribed to and made payments of securities within a period of three days starting from the day the Commission's decision is received, as well as compensate the caused damage.
Decision on Approving Issuance of Securities
Article 47
The issuer shall deliver to the Commission an evidence on number of subscribed and paid securities and it shall submit a request to obtain approval for issuing securities, within a period of seven days starting from the expiration day of the time limit for the subscription and payment of securities.
The Commission shall render a decision on approving issuance of securities within a period of three days starting from the day the request specified in paragraph 1 of the present Article is submitted - if subscription and payment of securities have been made in accordance with the public invitation for subscription and payment and with the prospectus for issuing securities.
Announcement of Report on Public Offer Results
Article 48
The issuer shall announce a report on the public offer results in one daily newspaper that is distributed in the territory of the entire Republic within a period of three days starting from the day the decision on approving issuance of securities, and/or the decision on refusing issuance of securities, is received, and such a report shall contain data on subscribed and paid securities and an indication whether public offer was successful or not.
The Commission shall closely prescribe the content and mode of announcing a report on public offer results specified in paragraph 1 of the present Article.
Subscription of Securities into Central Registry and Inclusion of Securities into Organized Market
Article 49
The Commission shall immediately deliver the decision on approving issuance of securities to the issuer and market organizer, in compliance with the issuer's decision specified in the provisions of the Article 25 paragraph 2 item 2) of the present Law, and to the Central Registry.
The issuer shall submit a request to the Central Registry, through the Central Registry member, to open an issuance account and to subscribe securities with the Registry within a period of seven days starting from the day the decision on approving issuance of securities is received.
The applicant shall submit the following documents together with the request specified in paragraph 2 of the present Article:
1) the decision on approving issuance of securities;
2) other documentation specified by the Central Registry enactment.
The securities shall be issued by their transfer from issuance accounts to accounts which are opened and maintained with the Central Registry, in compliance with the provisions of the present Law.
The Central Registry shall immediately inform the issuer about the subscription of securities specified in paragraph 1 of the present Article with the Central Registry, through the Central Registry member and the market organizer, in compliance with the issuer's decision specified in the provisions of the Article 25 paragraph 2 item 2) of the present Law.
The issuer shall submit a request to the market organizer to be accepted on the over-the-counter securities trading market within a period of three days starting from the day the Central Registry information on subscription of securities is received, in compliance with the issuer's decision specified in the provisions of the Article 25 paragraph 2 item 2) of the present Law, or the issuer shall submit a request to be accepted in the stock exchange market within the same time limit.
Should the securities meet conditions for their trade in the organized market, the market organizer specified in paragraph 1 of the present Article shall be obliged to accept them in the over-the-counter securities trading market within a period of five days starting from the day the request for the reception in the over-the-counter securities trading market is submitted.
Should the securities meet conditions for their trade in the stock exchange market, the stock exchange shall be obliged to accept them in the stock exchange market within a period of five days starting from the day the request for the reception in the stock exchange market is submitted.
If the issuer has submitted a request for the reception of securities in the stock exchange market and such securities fail to meet conditions for their reception in the stock exchange market listing, the market organizer shall act in accordance with the issuer's decision specified in the Article 25 paragraph 2 item 2) of the present Law.
The market organizer specified in paragraph 1 of the present Article shall be obliged to inform the Commission about the reception of securities in the organized market.
Conditions for Inclusion of Securities in Organized Market
Article 50
The securities shall be included in the organized market if they are issued through a public offer, i.e. if the issuer has received the Commission's decision on inclusion of such securities in the organized market
The stock exchange may prescribe in its enactments additional conditions for the reception of securities in the stock exchange market listing, providing the Commission gives its consent.
VIII TRADE OF SECURITIES IN ORGANIZED MARKET
Article 51
The secondary offer of securities, i.e. trade of securities shall be conducted in the organized market, unless otherwise specified by the provisions of the present Law.
Only broker-dealer companies and authorized banks that are members of the stock exchange may trade securities in the organized market, whereas other persons (entities) may trade only through the mediation of the organized market members.
The proprietor's securities traded in one organized market in the Republic shall not be traded in another organized market in the Republic.
The acquisition and alienation of own securities shall be conducted in compliance with the provisions of the law that governs business companies.
Article 52
The trade in the organized market shall mean public offer of securities and matching supply and demand of securities and other financial instruments.
The trade of securities shall be conducted only in the organized market in the Republic that includes the stock exchange and the over-the-counter securities trading market, unless otherwise specified by the provisions of the present Law.
The trade of securities specified in paragraph 2 of the present Article shall be conducted only in compliance with the provisions of the present Law, unless otherwise specified by the present Law.
The market organizer shall provide organization and conditions for the organized market operations, supervision over the organized market members' business activities and reception of securities and other financial instruments in the organized market.
IX EXCEPTIONS TO OBLIGATION TO APPROVE PROSPECTUS AND TO TRADE THROUGH PUBLIC OFFER
Exceptions as to Type of Securities and to Issuer
Article 53
The approval of the prospectus for issuing securities shall not be mandatory when company issues shares in the process of privatization of state-owned, i.e. socially owned capital, in compliance with the provisions of the law that governs privatization.
The provisions of the present Law related to procedure of issuance of securities shall accordingly apply to opening accounts, subscription with the Central Registry and inclusion of shares specified in paragraph 1 of the present Article in the organized market.
The approval of the prospectus for issuing securities shall not be mandatory when issuing and offering short-term securities to individuals and legal entities, whose number may not exceed 100.
The issuance and offer of securities specified in paragraph 3 of the present Article shall be conducted without addressing a public offer and without any other type of public announcement.
The issuer shall render a decision on issuing short-term securities and such a decision shall minimally contain the following elements:
1) basic data on the issuer;
2) indication of the issue of securities;
3) total nominal value of securities;
4) nominal value and number of securities;
5) selling price of securities;
6) data on interest and mode of interest calculation;
7) maturity date;
8) location and time of subscription and payment and a time limit for subscription and payment of securities.
The issuer shall issue and offer securities specified in paragraph 3 of the present Article through a broker-dealer company and/or authorized bank who must be the Central Registry members, providing it previously signs contract with them.
The subscription and payment of securities specified in paragraph 3 of the present Article shall be conducted in compliance with appropriate application of the provisions of the Articles 43 and 44 of the present Law.
Immediately after a time limit for subscription and payment of securities has expired, the issuer decides should the issuance of short-term securities be cancelled or considered successful.
Should the issuance be successful, the broker-dealer company and/or authorized bank who are the Central Registry members shall be obliged to immediately deliver to the Central Registry the decision specified in paragraph 5 of the present Article and the following data through electronic means:
- number of sold securities, with individual prices of these securities;
- data on buyers of securities.
The Central Registry shall be obliged to assign the CFI code and the ISIN number and to conduct clearing and balancing of accounts of securities specified in paragraph 9 of the present Article, in compliance with business operations rules.
The securities issued in compliance with paragraph 3 of the present Article may be traded outside the organized market, unless the issuer is granted with the Commission's approval to include such securities in the organized market.
The broker-dealer company and/or authorized bank who are the Central Registry members shall be obliged to inform the Central Registry about the executed sale immediately after the execution of a secondary sale of short-term securities specified in paragraph 10 of the present Article.
The Central Registry shall be obliged to announce publicly on its internet page the following data on the issuers of short-term securities issued in compliance with the provisions of the present Article:
1) basic data on the issuer;
2) total indebtedness of the issuer based on issued debt securities;
3) nominal value and number of securities;
4) selling price of securities;
5) data on interests and mode of interest calculation;
6) maturity date.
The Central Registry shall closely prescribe the content of data specified in paragraph 13 of the present Article.
Exceptions as to Type of Investor
Article 54
One may issue and offer securities to the following previously identified buyers without having the prospectus for issuing securities approved:
1) to the Republic of Serbia;
2) to the National Bank of Serbia;
3) to professional investors;
4) to all existing shareholders, in compliance with the provisions of the law that governs business companies;
5) to the issuer's employees, when shares are issued only for the purpose of assigning them to those persons, in compliance with the provisions of the law that governs business companies.
The issuance and offer of securities specified in paragraph 1 of the present Article shall be conducted without a public offer and any other type of public announcement.
Article 55
The issuer of securities specified in the Article 54 of the present Law shall be obliged to submit the request for the approval of issuing securities to the identified buyer without a public offer before it begins subscription and payment of securities, and such an issuer shall deliver the following documents to the Commission:
1) information on issuance of securities to the identified buyer without a public offer;
2) decision on issuance of securities to the identified buyer without a public offer;
3) other necessary documentation.
The Commission shall prescribe the content of information on issuance of securities to the identified buyer without a public offer, of decision on issuance of securities to the identified buyer without a public offer and of other necessary documentation.
The Commission shall render a decision on approving issuance of securities to the identified buyer without a public offer when it finds that information on issuance of securities to the identified buyer without a public offer contains all data defined in compliance with the provisions of the present Law, that prescribed documentation has been enclosed and that data in such information are in accordance with the issuer's decision on issuance of securities to the identified buyer without a public offer and with the delivered documentation.
The issuer of securities specified in the Article 54 of the present Law shall, together with offer addressed to persons (entities) specified in the Article 54 of the present Law, also deliver information on issuance of securities to the identified buyer without a public offer, whose issuance has been approved by the Commission's decision.
The Commission shall keep the registry of decisions on approving issuance of securities to the identified buyer without a public offer.
Before subscription and payment of securities, the issuer of securities specified in the Article 54 of the present Law shall be obliged to sign the contract with person (entity) specified in paragraph 1 of that Article and such a contract should govern mutual relations between the issuer and that person (entity) in regard with issuance of such securities.
By exception from the provisions of paragraph 6 of the present Article, the issuer shall not be obliged to sign the contract specified in that paragraph when shares are issued to shareholders or the issuer's employees for the purpose of assigning them to these persons.
The issuer of securities specified in the Article 54 of the present Law shall be obliged to submit to the Commission the request to obtain a decision on approving issuance of securities within a period of seven days starting from the day the time limit for subscription and payment of such securities has expired, and deliver the following documents:
1) contract specified in paragraph 6 of the present Article;
2) evidence on number of subscribed and paid securities.
The Commission shall render a decision on approving issuance of securities specified in the Article 54 of the present Law if subscription and payment of securities have been conducted in compliance with the decision on issuance of securities without a public offer and with the contract specified in paragraph 6 of the present Article.
Article 56
The provisions of the present Law related to the prospectus for issuing securities shall accordingly apply to corresponding provisions in regard with responsibility for the accuracy of data stated in information on issuance of securities and with time limit for the adoption of decision on approving issuance of securities specified in the Article 54 of the present Law.
The provisions of the present Law related to issuance of securities through a public offer shall accordingly apply to corresponding provisions in regard with location for subscription and payment and with time limit for subscription and payment, with termination and suspension of issuance, with decision on approving of issuance and with opening account and subscribing to securities specified in the Article 54 of the present Law.
Circulation Limitations and Inclusion into Organized Market
Article 57
The securities issued in compliance with the Article 54 of the present Law shall not be the subject of secondary public offer in the organized market for at least twelve months starting from the issuance day.
A lawful possessor of securities issued without a public offer and acquired from the issuer may alienate them through public offer after the expiration of a twelve-month period starting from the issuance day, providing the issuer obtains the Commission's approval for the inclusion of such securities in the organized market.
By exception from the provisions of paragraph 1 of the present Article, securities issued in compliance with the Article 54 of the present Law may be traded in the organized market before the expiration of a time limit specified in that paragraph, providing the issuer obtains approval for the inclusion of such securities in the organized market.
The professional investor who has acquired securities in compliance with the Article 54 of the present Law may alienate them without a public offer to the Republic of Serbia, to the National Bank of Serbia or to professional investors.
The issuer shall submit to the Commission a request for obtaining the approval specified in paragraph 2 of the present Article and together with such a request the issuer shall deliver the prospectus for issuing securities - basic prospectus and other documentation specified in the Article 25 paragraph 2 of the present Law, without the invitation for subscription and payment of securities.
The Commission shall render a decision on approval specified in paragraph 2 of the present Article when it determines that prescribed documentation has been enclosed.
The provisions of the Article 44 of the present Law shall accordingly apply to a time limit to render a decision on approving the inclusion of securities in the organized market.
The procedure for the inclusion of securities issued in compliance with the Article 54 of the present Law in the organized market shall be conducted in accordance with the provisions of the Article 49 of the present Law.
All the contracts as opposed to the provisions of the present Article shall be considered as null and void.
Article 58
When underwriter buys out securities from the issuer on the ground of a contract on organizing the issuance of securities with the obligation to buy them out for further sale through public offer, the underwriter may do that only if there is previously adopted decision on approving the prospectus for issuing securities.
The underwriter specified in paragraph 1 of the present Article may issue securities through public offer on the ground of a contract specified in that paragraph only during the period of subscription and payment of these securities, and after the expiration of such a period, the underwriter may trade securities that are bought out but not sold only in the organized market.
When underwriter buys out securities from the issuer on the ground of a contract on organizing the issuance of securities with the obligation to buy them out for further sale without a public offer, such a buy out may be conducted only in compliance with the provisions of the Article 51 of the present Law.
The underwriter specified in paragraph 3 of the present Article may issue securities without a public offer on the ground of a contract specified in that paragraph only during the period of subscription and payment of these securities, and after the expiration of such a period, the underwriter may trade securities that are bought out but not sold only in compliance with the provisions of the Article 51 of the present Law.
Exceptions as to Reason for Issuance of Securities
Article 59
The approval of the prospectus for issuing securities shall not be mandatory when the following issuances are at stake:
1) issuance of shares for the purpose of converting reserves and unallocated profit into basic capital, in compliance with the law that governs business companies;
2) issuance of warrants for the purchase of shares or bonds;
3) issuance of ordinary shares when exchanging exchangeable bonds, warrants or preferential shares of the same issuer;
4) issuance of shares for the purpose of converting the joint-stock company debt into basic capital, in compliance with a separate law;
5) issuance of shares for the purpose of exchanging existing shares due to change of their nominal value;
6) issuance of securities for the purpose of exchanging existing securities during the company's statutory changes, conducted in compliance with the law that governs business companies.
Article 60
The issuer of securities specified in the Article 59 of the present Law shall deliver to the Commission the following documents:
1) information on the issuance of securities without a public offer;
2) decision on the issuance of securities without a public offer;
3) other required documentation.
The issuer of securities specified in the Article 59 of the present Law shall be obliged to submit to the Commission a request to obtain the approval for issuing securities within a period of seven days starting from the day the decision on the issuance of such securities is rendered.
The Commission shall render a decision on the approval for issuing securities specified in the Article 59 of the present Law when it finds that decision on the issuance of securities without a public offer contains all data determined in compliance with the provisions of the present Law, that appropriate documentation has been enclosed and that data from that decision is in accordance with the delivered documentation.
The Commission shall prescribe the content of a decision on the issuance of securities specified in the Article 59 of the present Law and what other documentation is required.
The Commission shall keep the registry of decisions on the approval for issuing securities specified in the Article 59 of the present Law.
Article 61
The provisions of the present Law related to the issuance procedure and to the inclusion of securities in the organized market shall accordingly apply to opening of accounts, to subscription in the Central Registry and to inclusion of securities specified in the Article 59 of the present Law in the organized market.
Exceptions to Obligation to Trade in Organized Market
Article 62
The debt securities may be traded outside the organized market if offer for the purchase, i.e. sale is conducted without a public announcement, and in the following cases:
1) if the Republic conducts the purchase, i.e. sale of securities;
2) if the National Bank of Serbia conducts the purchase, i.e. sale of securities;
3) if contractual parties are professional investors.
The shares and other securities may be traded outside the organized market in the take-over bid procedure, in compliance with the provisions of the law that governs take-over of joint stock companies.
The shares and other securities may be traded outside the organized market in the mandatory sale and purchase procedure, in compliance with the provisions of the law that governs business companies and law that governs take-over of joint stock companies.
The transfer of securities, and/or rights arising from securities shall be conducted outside the organized market for the following purposes:
1) for the purpose of fulfilling obligations in the business company reorganization procedure or for the purpose of accomplishing special rights of incompatible shareholders and members, in compliance with the provisions of the law that governs business companies;
2) for the purpose of executing the final court decision that completes inheritance, bankruptcy or liquidation proceedings and/or for the purpose of enforcing the final decision that completes other court proceedings;
3) for the purpose of exchanging them for shares and other securities exchangeable for such shares when in the take-over bid procedure payments for such shares and securities are conducted in other issuers' securities, in compliance with the provisions of the law that governs take-over.
The seller, and/or the Central Registry shall be obliged to inform the market organizer where trade of such securities is conducted about this trade of debt securities outside the organized market immediately after finishing the balancing of accounts.
The Commission shall define the mode of delivering information specified in paragraph 5 of the present Article and its content.
Unless otherwise specified by the Government's act, the provisions of the present Law shall not apply in the following cases:
1) to the transfer of ownership of shares free of charge issued by banks, from the State Union Serbia and Montenegro to the Republic, on the ground of the Law on Regulating Relations between the Federal Republic of Yugoslavia and Legal Entities and Banks from the Territory of the Federal Republic of Yugoslavia that are Original Debtors or Guarantors to the Paris and London Clubs Creditors ("Official Gazette of the FRY", Nos. 36/2002 and 7/2003);
2) to the trade of shares issued by banks where lawful possessor of such shares is the Republic, on the ground of the Law on Regulating Relations between the Federal Republic of Yugoslavia and Legal Entities and Banks that are Original Debtors or Guarantors to the Paris and London Clubs Creditors ("Official Gazette of the FRY", Nos. 36/2002 and 7/2003), and the Law on Regulating the Public Debt of the Federal Republic of Yugoslavia on the Ground of the Foreign Currency Savings of Citizens ("Official Gazette of the FRY", No. 36/2002);
3) to the trade of shares issued by banks, where lawful possessor of such shares is the Republic;
4) to the trade of shares issued by banks where, in compliance with law, lawful possessor of such shares is the Agency for Deposit Insurance;
5) to the trade of shares issued by banks, where lawful possessors of such shares have authorised by a special written contract the Agency for Deposit Insurance to sell such shares to a third party on their behalf and for their account;
6) to the trade of shares issued by insurance companies, where lawful possessors of such shares have authorised by a special written contract the Agency for Deposit Insurance to sell such shares to a third party on their behalf and for their account, in compliance with the law that governs insurance;
7) to the trade of shares issued by banks, where such trade is conducted within the procedure of converting the property of bankrupt and/or wound-up banks into money, in which the function of official receiver is performed by the Agency for the Security of Deposits;
8) to the trade of shares of the Central Registry, stock exchange markets and other entities in the financial sector, where lawful possessor of such shares is the Republic, in terms of the law that governs business activities and organization of banks;
9) to the trade of shares of the Central Registry, stock exchange markets and other entities in the financial sector, where lawful possessors of such shares have authorised by a special written contract the Agency for Deposit Insurance to sell such shares to a third party on their behalf and for their account, in terms of the law that governs business activities and organization of banks.
The Government shall prescribe closer details of the procedure and the mode of trading securities specified in paragraph 1 of the present Article.
The following proprietor's securities of a specific issuer may be traded outside the organized market, by applying a public tender:
1) shares that are transferred to the Share Fund in compliance with law, and shares of individual shareholders offered for sale simultaneously with the Share Fund shares in compliance with the Law on Share Fund ("Official Herald of the Republic of Serbia", No.38/01 and 45/05);
2) shares whose lawful possessor is the Republic Fund for Pension and Invalid Insurance of Employees;
3) shares whose lawful possessor is the Republic Development Fund;
4) shares whose lawful possessor is the Republic.
The Government shall closely prescribe the procedure and the mode of trading securities specified in paragraph 9 of the present Article.
X REPORTING DUTY OF PUBLIC COMPANIES
Article 63
A public company shall be obliged to inform the public about its business activities in a mode defined by the provisions of the present Law and by the Commission's enactments.
A reporting duty shall cease when, following a request of public company, the Commission renders a decision on erasing such a company from the Registry of Public Companies, and/or when decision on withdrawal of securities from the organized market comes into effect.
A reporting duty for the issuer of debt securities shall cease when all obligations arising from such securities expire.
Article 64
Should such circumstances occur that may significantly influence public company's business activities and price of its securities, and they do not include commonly known circumstances, the public company shall be obliged to immediately make a public announcement on such circumstances (report on important events) in one daily newspaper with distribution in the territory of the entire Republic.
A public company shall be obliged to deliver simultaneously a copy of the report specified in paragraph 1 of the present Article to the Commission and to the market organizer where securities of that public company are being traded.
The Commission shall prescribe the mode of making the report specified in paragraph 1 of the present Article.
A public company shall not be obliged to make the report specified in paragraph 1 of the present Article if there are justified reasons indicating that such a public announcement would significantly jeopardize the public company's business activities.
Should the case specified in paragraph 4 of the present Article take place, the public company shall be obliged to submit a request to the Commission to render a decision on terminating the obligation of reporting on important events.
Financial Statements and Audit Reports
Article 65
A public company shall be obliged to deliver the following documents to the Commission, to the market organizer and to the broker-dealer company it has signed the contract with:
1) adopted annual financial statement produced in compliance with the provisions of the law that governs accounting and auditing - no later than by March 31st of the current year for the previous business year;
2) adopted report on a conducted audit of the annual financial statement which is produced in compliance with the provisions of the law that governs accounting and auditing - within a period of eight days starting from the day the audit is conducted, and no later than by July 15th of the current year for the previous business year;
3) adopted semi-annual financial statement - no later than by August 31st of the current year for public companies whose securities are being traded in the stock exchange market.
Should the issuer's competent body refuse to adopt statements and reports specified in paragraph 1 of the present Article, the issuer shall be obliged to inform about it the Commission and the organized market where public company's securities are being traded no later than by the next working day starting from the day the statement, i.e. report was refused and to submit the certified copy of minutes of the session where that statement, i.e. report was considered, and to publicly announce the decision on refusal in one daily newspaper with distribution in the entire territory of the Republic.
An obligation specified in paragraph 1 of the present Article shall also relate to all participants in the financial market the Commission has granted the licence to conduct activities, and/or work licence, regardless of the legal form, and it shall also relate to closed joint stock companies and companies with limited liability that have issued debt securities by a public offer, until their maturity date.
Announcing Financial Statements Summaries
Article 66
A public company shall announce the summary of the annual financial statement in one daily newspaper with distribution in the entire territory of the Republic within a period of three days starting from the day the time limit for delivering a report on a conducted audit of the annual financial statement has expired, and such a summary shall contain the following elements:
1) summary of annual financial statements and audit report specified in the Article 65 of the present Law;
2) data on changes of legal and financial standing of a public company;
3) information on a location where inspection of the entire financial statement and auditor's report may be conducted;
4) statement on significant changes of data from the prospectus;
5) other prescribed data.
The Commission shall prescribe the content and mode of announcing financial statements summaries.
Announcing Annual Financial Statement
Article 67
The joint stock company whose shares are being traded in the organized market shall be obliged to announce the annual business report in a mode as defined in the Article 64 paragraph 1 of the present Law within a period of 30 days starting from the day the time limit for delivering a report on a conducted audit of the annual financial statement has expired.
The management of the joint stock company whose shares are being traded in the organized market shall be obliged to produce a report on a six-month business plan of that company and to announce it in a mode as defined in the Article 64 paragraph 1 of the present Law.
A report specified in paragraph 2 of the present Article for the first half of the current year shall be announced from March 15th to May 15th of the same year, and for the second half of the current year from September 15th to November 15th of the same year.
A report specified in paragraph 2 of the present Article shall contain an explanation of important material events and transactions conducted during the given period and their influence on the issuer's financial standing, as well as a general review of that company's financial standing.
The Commission shall prescribe the content and form of announcing business report.
Information on Possessing Voting Shares and Responsibility for Data Accuracy
Article 68
A person (entity) who acquires or disposes of voting shares of the same joint stock company together with related entities so that their portion in managing such a company reaches, exceeds or drops below 5%, 10%, 25%, 33%, 50%, 66%, 75% or 95% of the total number of votes in the assembly of such a company, shall be obliged to inform about it the issuer, the Commission and organization in charge of preventing monopoly within a period of three days starting from the day the change has occurred.
The Commission shall prescribe the content and form of announcing information specified in paragraph 1 of the present Article.
Should the person (entity) specified in paragraph 1 of the present Article act as opposed to the obligation defined in that paragraph, it shall lose the voting right acquired on the basis of its portion in the basic capital of the joint stock company.
The Commission shall inform the Central Registry about the voting right loss specified in paragraph 3 of the present Law.
Responsibility for Data Accuracy and Completeness
Article 69
The provisions of the present Law related to responsibility for the accuracy and completeness of data from the prospectus for issuing securities shall accordingly apply to responsibility for the accuracy and completeness of data from reports on important events, annual and semi-annual financial statements, reports on a conducted audit of financial statements, summary of these reports, information on possessing voting shares and organized market participants' reports.
Supervision over Public Companies' Reporting
Article 70
The Commission shall supervise the public companies' reporting.
Should the Commission in the course of its supervision specified in paragraph 1 of the present Law find that public company has in its reporting acted as opposed to the provisions of the present Law, it shall order such a company to remove the defined irregularities within a given time limit and to submit evidence about it.
Should the public company act as opposed to the order specified in paragraph 2 of the present law, the Commission shall render a decision in which it shall state that public company has violated the reporting obligation, it shall deliver that decision to the organizer of the market where those securities are being traded and it shall publicly announce it in a mode as defined in the Article 64 paragraph 1 of the present Law.
The Commission may undertake other measures in compliance with the provisions of the present Law.
Prohibition to Use Privileged Information
Article 71
No person (entity) shall acquire, purchase, sell or dispose of securities in some other way by using privileged information.
A prohibition to use privileged information shall refer to all persons (entities) who knew or had to know that they possess privileged information, and particularly to persons (entities) who have learned about privileged information while performing their business activities, their professions or while exercising their functions, such as follows:
1) the issuer's employees;
2) the issuer's management board and supervisory board members;
3) auditor, portfolio manager, investment advisor, broker, financial analyst, accountant, bookkeeper, attorney at law, actuary, appraiser, court expert or judge.
A prohibition to use privileged information shall also apply to the following persons (entities):
1) all persons (entities) with a portion of at least 10% in the issuer's capital;
2) the issuer's dependant company;
3) all persons (entities) who have learned privileged information and who knew, and/or had to know that they have learned it from persons (entities) specified in the present Article.
Prohibition to Announce Privileged Information
Article 72
A person (entity) specified in the Article 71 of the present Law shall be obliged to keep data on privileged information as a business secret and shall not announce it to other persons (entities), or on the basis of such information to recommend to other persons (entities) to acquire, purchase and sell securities or to dispose of these securities in some other way.
Public companies shall be obliged to make a list of persons (entities) specified in the Article 71 of the present Law and to deliver it at the request of the Commission or other competent body.
A list of persons (entities) specified in paragraph 2 of the present Article shall minimally contain information related to identity of persons (entities) in hold of privileged information, reasons for inputting their names into a list and date of making a list.
Public companies shall be obliged to update regularly data from the above-mentioned list in case of changing data from the list and to keep these lists for a period of at least five years starting from the day the lists have been made.
Public companies shall be obliged to inform in writing persons (entities) from the list with the obligation to keep privileged information and with prescribed sanctions in case of disrespecting obligations defined in paragraph 1 of the present Article.
Article 73
A person (entity) specified in the Article 71 of the present Law shall be obliged to inform the issuer, the Commission and the market organizer where securities are being traded about every purchase or sale of securities the privileged information relates to.
The Commission shall prescribe the content and mode of notifying specified in paragraph 1 of the present Article.
Article 74
For the purpose of preventing the abuse of privileged information, the Commission may require from all persons (entities) with possible access to privileged information to give appropriate information and data.
Should the Commission find that privileged information have been abused, on the ground of facts and circumstances founded while supervising, it shall initiate the proceedings before the appropriate government agency.
Article 75
Together with an invitation for scheduling the Assembly of shareholders, the joint stock company shall be obliged to deliver to the shareholders with voting right information on their right to appoint a proxy for that session of the Assembly and form of a proxy statement, unless the joint stock company has less than 15 shareholders or if the establishment act or the joint stock company Statute excludes the making of such a statement.
The joint stock company shall determine proxies of shareholders with voting right, following a proposal coming from the management board of that company or its shareholders.
The Commission shall define the shape and content of a proxy statement specified in the present Article and it shall render a decision on the approval of such a statement.
Article 76
The market organizer shall conduct activities aimed at organizing the stock exchange market and over-the-counter securities trading market, in compliance with the provisions of the present Law.
The market organizer may be the stock exchange and the organizer of the over-the-counter securities trading market.
The market organizer shall be a legal entity established as a share company, in compliance with the provisions of the law that governs business companies.
Activities aimed at organizing trade of securities and other financial instruments in the stock exchange market and/or in the over-the-counter securities trading market shall not be conducted if the Commission fails to previously grant a licence for the work of the stock exchange, and/or licence for the work of the organizer of the over-the-counter securities trading market.
The Commission shall keep the registry of licences granted for the work of the market organizers.
It shall be allowed to merge the market organizer only with other market organizer, providing the Commission previously approves with such a merge.
The Commission shall closely prescribe the procedure for merging of market organizers and documentation to be submitted.
Article 77
The stock exchange shall be a legal entity organized as a share company that conducts activities aimed at organizing trade of securities and other financial instruments in the stock exchange market, and/or in the stock exchange market and over-the-counter securities trading market, in compliance with the provisions of the present Law.
The founder, i.e. the shareholder of the stock exchange may be the Republic of Serbia, as well as domestic and foreign legal entity and individual.
When a person (entity) intends to acquire the qualified participation, i.e. intends to acquire voting shares, so that their portion in the stock exchange capital reaches, exceeds or drops below 5%, 10%, 15%, 20%, 33% or 50% of the total number of votes in the stock exchange assembly, such a person (entity) shall be obliged to previously inform the Commission about it and the Commission shall than conduct an evaluation specified in paragraph 6 of the present Article and give its previous approval.
The Commission shall prescribe the content and mode of announcing information specified in paragraph 3 of the present Article.
The provisions of paragraph 3 of the present Article shall apply to the Republic and to the National Bank of Serbia.
The Commission shall decide on suitability and reliability of new persons (entities) that should acquire the qualified participation and it shall render a decision on that matter, within a period of 3 months starting from the day the information specified in paragraph 3 of the present Article is received.
The Commission shall render a positive decision if it finds that on the ground of obtained information it may conclude that persons (entities) with the qualified participation have good business reputation and that their financial position is such that it may be assumed it shall not have a negative impact on the stock exchange business activities.
The Commission shall prescribe closer conditions for the purpose of defining criteria for suitability and reliability of persons (entities) acquiring the qualified participation.
The stock exchange, i.e. the Central Registry shall immediately inform the Commission if the total number of votes in the stock exchange assembly exceeds and/or drops below 5%, 10%, 15%, 20%, 33% or 50%.
Should the bank or insurance company acquire qualified participation in terms of the present Law, it shall be necessary to obtain previous approval of the National Bank of Serbia.
The stock exchange shall be obliged to deliver at least once a year to the Commission the data on persons (entities) with the qualified participation, as well as data on the percentage of their portion in the stock exchange capital.
A person (entity) who acquires the qualified participation, i.e. who exceeds thresholds specified in paragraph 3 of the present Article contrary to the provisions of the present Article, i.e. without the Commission's approval, shall lose the voting right gained on the ground of such acquired shares.
The provisions of the law that governs business companies shall apply to the stock exchange, unless otherwise specified by the present Law.
Article 78
Organizing the trade of securities shall include the following activities:
1) organizing the public offer of securities and matching supply and demand of securities;
2) announcing information on supply, demand and market price of securities and other data relevant for trade of securities;
3) determining and announcing exchange rates of securities;
4) conducting other activities in compliance with the provisions of the present Law.
Provisions of paragraph 1 of the present Article shall also apply to business transactions involving other financial instruments.
Prohibited Business Activities
Article 79
The stock exchange may not trade securities, give advices related to purchase and sale of securities and other financial instruments or advices related to choice of a broker-dealer company or authorized bank, conduct activities the present Law defines as activities of a broker-dealer company or some other business activities, except for those business activities specified in the Article 78 of the present Law.
Article 80
The monetary part of the stock exchange basic capital may not be under EUR 1.000.000 in dinar equivalent at the National Bank of Serbia's official medium exchange rate valid on the payment day.
Article 81
The Commission shall grant the stock exchange work licence on the ground of a submitted request.
The following documents shall be submitted together with the request specified in paragraph 1 of the present Article:
1) the stock exchange establishment act;
2) evidence on a basic capital origin;
3) evidence on a basic capital payment at bank's temporary account;
4) evidence on a staff and organizational capacities and technical equipment;
5) stock exchange Statute;
6) the stock exchange business activities rules;
7) regulations on the stock exchange listing and quotation;
8) the list of the stock exchange founders, i.e. shareholders, with the registration copy of the Business Companies Registry, and/or certified translation of the registration copy from the foreign registry of legal entities;
9) data on persons (entities) specified in item 8) of the present paragraph who participate in the stock exchange basic capital, expressed in percentages;
10) the stock exchange tariff booklet;
11) data on stock exchange management members.
The Commission shall closely prescribe the content of the request for granting the stock exchange work licence.
Decision on Granting Stock Exchange Work Licence
Article 82
The Commission shall render a decision on granting the stock exchange work licence when it determines the following elements:
1) validity of a request specified in the Article 81 of the present Law;
2) that all conditions in terms of law have been met;
3) that proper documentation has been enclosed;
4) that persons (entities) with the qualified participation are suitable and reliable.
The Commission shall refuse to grant the stock exchange work licence if it finds that one or more of the following reasons exist:
1) that in terms of the present Law conditions for the work of the stock exchange market have not been met;
2) that stock exchange management members do not meet conditions in terms of the present Law;
3) that origin of the basic capital is not clear and certain on the ground of submitted evidence, and/or that submitted data is not possible to check;
4) that structure of related persons (entities) is such that it disables efficient supervision over the stock exchange business activities;
5) that persons (entities) with the qualified participation do not meet criteria of suitability and reliability.
The Commission shall render a decision on granting the stock exchange work licence within a period of 60 days starting from the day the proper request is submitted.
The stock exchange work licence is being granted for an indefinite period.
Registration in Business Companies' Registry
Article 83
The stock exchange shall gain the status of a legal entity once it registers in the business companies' registry.
The stock exchange shall be obliged to file a registration application in the business companies registry, in compliance with the provisions of the law that governs the registration of business companies, within a period of 30 days starting from the day the Commission's decision on granting the work licence and decision on previous approval for the election, i.e. appointment of the stock exchange management members is received.
The stock exchange shall deliver a registration copy of the business companies' registry to the Commission within a period of seven days starting from the day the decision on registration is received.
The stock exchange shall not begin with activities the work licence relates to before such activities are registered in the business companies' registry.
Article 84
A legal entity that has not been granted the stock exchange work licence in compliance with the provisions of the present Law, or an entrepreneur, shall not be registered in the business companies' registry and shall not use the title stock exchange in legal circulation, or derived words, unless otherwise specified by other law.
Article 85
The Commission shall render a decision on previous approval for the election, i.e. appointment of the general manager, and/or president and members of the stock exchange management board (hereinafter referred to as: management member).
Conditions for Election, i.e. Appointment of Management Members
Article 86
As a management member may be elected a person to whom the approval specified in the Article 85 of the present Law has been granted, providing he/she meets the following additional conditions:
1) he/she has not been convicted by a finally binding court decision for crimes against labour, economy, property, judiciary, money laundry, public order and legal transactions and line of duty, threatened with a minimum sanction of one-year imprisonment, or for a crime determined by the present Law;
2) he/she has not harshly violated the provisions of the present Law related to conducting safe and fair business activities, to the prohibition on usage and disclosure of privileged information, and/or to the prohibition of manipulations, to rules on business ethics, good faith and rules on managing the risk, or has in some other way harshly jeopardized interests of participants in the organized market.
The stock exchange management member shall not be a person who is the management member of the following subjects:
1) the other market organizer or its employee;
2) a broker-dealer company or authorized bank;
3) a bank with whom the stock exchange has signed the contract;
4) related persons (entities) in terms of persons (entities) specified in items 1) and 2) of the present paragraph.
The stock exchange management member shall have appropriate business reputation and at least three years of work experience gained while conducting business activities involving securities in the country or abroad with the following subjects:
1) a broker-dealer company;
2) the stock exchange of securities, i.e. financial derivatives;
3) a bank;
4) a management company of the investment or voluntary pension funds;
5) an insurance company;
6) the National Bank of Serbia, state agency, organization or legal entity that conducts activities involving securities on behalf of the state as entrusted affairs;
7) the Commission;
8) the Central Registry;
9) an expert from the field of securities, business law, accounting and audit;
10) the business company or other legal entity, in terms of conducting financial affairs.
Content of Request and Documentation
Article 87
The Commission shall prescribe the content of a request for obtaining previous approval specified in the Article 85 of the present Law.
The following documentation shall be enclosed together with the request specified in paragraph 1 of the present Article:
1) an evidence that person the request is submitted for meets conditions specified in the Article 86 of the present Law;
2) a plan for organizing and running the stock exchange business activities, prepared by a person the request is submitted for.
Article 88
The Commission shall render a decision on granting the previous approval for the election, i.e. appointment of the stock exchange management member once it finds the conditions defined by law and the stock exchange enactments have been met and that appropriate documentation has been enclosed.
When request for granting the previous approval specified in paragraph 1 of the present Article has been submitted together with the request for granting the stock exchange work licence, the Commission shall initiate and run a single procedure.
The Commission shall refuse the request for granting the previous approval specified in paragraph 1 of the present Article when it finds that conditions specified in the provisions of the Article 86 of the present Law have not been met.
Article 89
The Commission shall withdraw the previous approval for election, i.e. appointment of the stock exchange management member when it determines the following:
1) that decision on granting the approval is based on untrue data;
2) that person the approval is granted for has been convicted by finally binding court sentence for crimes specified in the Article 86 paragraph 1 item 1) of the present Law;
3) that person the approval is granted for has committed a violation specified in the Article 86 paragraph 1 item 2) of the present Law.
Staff and Organizational Capacity and Technical Equipment of Stock Exchange
Article 90
The Commission shall grant the stock exchange work licence if the stock exchange meets the following conditions:
1) if it has at least three permanent employees, providing they hold the licence to conduct broker activities, and if such a licence had not been revoked before, and if they meet conditions specified in the provisions of the Article 86 paragraph 1 of the present Law;
2) if it meets other conditions related to staff and organizational capacities and technical equipment, in compliance with the provisions of the present Law and the Commission's enactments.
Article 91
The stock exchange employees shall not be the management members, or employees of broker-dealer companies, banks or security issuers whose securities are being traded in that stock exchange.
A prohibition specified in paragraph 1 of the present Article shall be in force after the termination of their labour - maximum for the period of six months starting from the day the labour has been terminated, providing the employment contract prescribes so.
Stock Exchange General Enactments
Article 92
The stock exchange general enactments shall be the Statute, the Business Rules, the Tariff Booklet, the Listing and Quotation Booklet and other general enactments.
The stock exchange Business Rules shall particularly regulate the following:
1) types of business activities, conditions and mode of their conduct;
2) conditions and mode of the stock exchange members conducting business activities;
3) types and conditions for trading securities and other financial instruments;
4) general conditions and mode of including securities and other financial instruments in the stock exchange listing and reasons and procedure for excluding securities from the listing;
5) conditions and mode of issuing, withdrawing and erasing financial derivatives;
6) mode of determining and announcing interest rates, and/or prices of securities and other financial instruments that are being traded in the stock exchange;
7) mode of conducting calculation transactions for the purpose of carrying out business deals concluded in the stock exchange;
8) mutual rights and duties between the stock exchange and the stock exchange members;
9) prohibited activities, and/or manipulations in the market;
10) supervision and supervision measures;
11) other issues significant for the stock exchange work;
The Listing and Quotation Booklet shall regulate special conditions and procedure of inclusion of securities and other financial instruments in the listing, erasure from the listing, i.e. exclusion, closer rules on a procedure and participants in trading securities in the stock exchange, as well as other issues significant for the listing and quotation.
Securities Listing and Quotation Commission
Article 93
The stock exchange shall have the Commission for Listing and Quotation of Securities.
The stock exchange management board shall appoint members of the Commission specified in paragraph 1 of the present Article.
Article 94
The stock exchange shall be obliged to obtain the Commission's previous approval in order to change the following:
1) the establishment act;
2) the Statute;
3) the Business Rules;
4) the Listing and Quotation Booklet;
5) the Tariff Booklet.
Change of Name, Head Office and Address
Article 95
The stock exchange shall be obliged to inform the Commission on a change of name, head office or address before it actually files an application to register such a change.
In case of changing the stock exchange name, the stock exchange shall submit to the Commission a request for granting the approval to change enactments.
The stock exchange shall enclose evidence that it meets technical equipment conditions together with information on a change specified in paragraph 1 of the present Article.
Article 96
The stock exchange members shall conduct the trade of securities in the stock exchange.
By exception from the provisions of paragraph 1 of the present Article, the Republic and the National Bank of Serbia may trade securities in the stock exchange.
The stock exchange members shall be broker-dealer companies and authorized banks.
The stock exchange Statute shall prescribe conditions for acquiring the status of the stock exchange member, general issues regarding supervision the stock exchange exercises over the stock exchange member's activities, as well as conditions for the stock exchange member exclusion and termination of membership.
The inclusion in the stock exchange membership is conducted on the ground of a filed application and documentation prescribed by the stock exchange enactments.
The stock exchange shall include in the membership the broker-dealer company, and/or authorized bank, if they meet conditions for acquiring the status of the stock exchange member prescribed by the stock exchange Statute.
The stock exchange shall render a decision upon an application specified in paragraph 5 of the present Article within a period of 15 days starting from the day the application is received and it shall deliver it to the broker-dealer company, and/or authorized bank and to the Commission.
When dealing with administrative matters, the stock exchange shall accordingly apply the provisions of the law that governs general administrative procedure.
The stock exchange decisions shall be final and one may initiate administrative disputes against them.
Article 97
The stock exchange shall not violate the principle of equality of the stock exchange members.
The stock exchange member shall particularly obey the following rules:
1) to comply with all of the stock exchange enactments;
2) to conduct business activities in the stock exchange in good faith;
3) not to abuse information that are not accessible to all the stock exchange participants;
4) to inform the stock exchange in writing about any change of his powers, rights, obligations and responsibilities in legal transactions, and especially about changes related to conditions on the ground of which the status of the stock exchange member was acquired;
5) to pay the membership fee, the commission for transactions involving trade of securities in the stock exchange and other fees determined by the Tariff Booklet.
Article 98
The stock exchange shall supervise the stock exchange members in terms of business activities they conduct in the stock exchange.
In the course of implementing supervision specified in paragraph 1 of the present Article, the stock exchange shall be entitled to have the direct inspection of the stock exchange member's book of orders and other documents related to business activities conducted in the stock exchange.
The stock exchange shall inform the Commission about the measures undertaken against the stock exchange members.
The stock exchange shall be obliged to undertake the same measures against all the stock exchange members under the same circumstances.
Stock Exchange Information System
Article 99
The stock exchange shall organize the information system in order to provide the following:
1) that all the participants involved in trade of securities and other financial instruments may simultaneously, equally and under the same conditions give and accept orders for purchase and sale of securities and other financial instruments in the stock exchange;
2) that all the participants involved in trade of securities and other financial instruments in the stock exchange have simultaneous and equal access to information on securities and other financial instruments that are being traded.
Article 100
The stock exchange shall set up an arbitration tribunal in order to settle disputes among the stock exchange participants related to business activities concluded in the stock exchange.
The stock exchange arbitration tribunal shall have its list of arbitrators, prescribed by the stock exchange assembly.
The stock exchange members shall not be the members of the stock exchange arbitration tribunal.
The stock exchange arbitration tribunal shall adopt the book of rules in order to define the mode of conducting its affairs.
The arbitration tribunal decision shall be final.
The Commission shall prescribe conditions and mode of setting up the arbitration tribunal in cases of possible disputes between the stock exchange and the stock exchange participants.
Article 101
Only the securities and other financial instruments that are included in the stock exchange listing may be traded in the stock exchange market.
The stock exchange shall prescribe in its Listing and Quotation Booklet conditions for listing and quotation of securities and other financial instruments in the stock exchange, and the Commission shall grant its approval on such a Booklet.
The stock exchange shall include securities and other financial instruments in the stock exchange market upon the issuer's request, in compliance with the provisions of the Article 49 of the present Law and if conditions for the inclusion of securities and other financial instruments in the stock exchange listing prescribed by the Listing and Quotation Booklet have been met.
The stock exchange shall publicly announce on its internet page and in at least one daily newspaper distributed in the territory of the entire Republic the list of the issuers and the type of securities and other financial instruments specified in its decision on the inclusion in the stock exchange listing, within a period of two days starting from the day the decision is rendered.
Article 102
By exception to the provisions of the Article 101 of the present Law, the debt securities issued by the Republic and the National Bank of Serbia may be traded in the stock exchange market without meeting special conditions the stock exchange defines for other issuers of securities.
Article 103
Foreign securities, and/or securities issued by foreign legal entities may be included in the listing and quoted in the stock exchange under conditions defined by the present Law and by the stock exchange enactments.
Commencement of Trade in Stock Exchange
Article 104
The trade of securities and other financial instruments in the stock exchange may commence when the decision on inclusion in the listing of securities is announced.
Article 105
The stock exchange shall define the exchange rate of securities and other financial instruments that are being traded at the stock exchange.
The exchange rate shall be the stock exchange's statement consisting of data on securities and other financial instruments traded on that particular day, quantities, prices and price changes.
The exchange rate specified in paragraph 1 of the present Article shall be delivered to the Commission on daily basis.
The stock exchange shall be obliged to publish on daily basis the exchange rate of securities and other financial instruments traded in the stock exchange in at least two daily newspapers that are distributed in the territory of the entire Republic and in the stock exchange premises.
Temporary Suspension of Trade and Exclusion of Securities
Article 106
The stock exchange may temporarily suspend trade of particular securities and other financial instruments traded in the stock exchange if trade with such financial instruments causes or may cause market disturbance, and/or if it is necessary in order to protect the investors' interests.
The temporary suspension specified in paragraph 1 of the present Article shall last until conditions to continue with trade are met, but mostly for a period of six months starting from the day the stock exchange has rendered its decision on a temporary suspension of trade.
The stock exchange shall temporarily suspend the trade of particular securities and other financial instruments traded in the stock exchange upon the Commission's request if the Commission estimates so in order to protect the interests of investors, and/or organized market.
The stock exchange shall prescribe the mode for exercising temporary suspension of securities trade in the stock exchange.
Article 107
The stock exchange shall exclude securities of a particular issuer from the listing in the following cases:
1) if there has been no trade of securities for a period longer than six months;
2) if the issuer no longer meets conditions for the listing in the stock exchange;
3) if securities maturity date has expired;
4) if bankruptcy or liquidation procedure has been initiated against the legal entity who had issued securities;
5) if the issuer files an application to be included in some other stock exchange or in over-the-counter securities trading market;
6) if the issuer demands so in a procedure of changing its legal form and turning from an open-ended into a closed-ended joint-stock company, in compliance with the provisions of the law that governs business companies;
7) if the Commission estimates so in order to protect the interests of investors, and/or organized market.
Article 108
The stock exchange shall render a decision on temporary suspension and exclusion of securities and other financial instruments.
The stock exchange shall be obliged to deliver immediately the decision specified in paragraph 1 of the present Article to the issuer and to the Commission, and to announce it in a mode specified in the Article 105 paragraph 4 of the present Law.
Supervision over Stock Exchange Business Activities
Article 109
The Commission shall supervise the legality of the stock exchange business activities at least twice a year.
The supervision specified in paragraph 1 of the present Article shall include direct supervision in the stock exchange business premises.
The Commission's authorized person may perform the following activities in the supervision procedure:
1) it may inspect acts, business books, account statements, correspondences and other stock exchange documents;
2) it may request information on particular issues significant for the stock exchange business activities.
The minutes shall be taken on the supervision of legality of the stock exchange business activities.
Article 110
Should during the supervision illegalities and/or irregularities in the stock exchange business activities be found, the Commission shall order the stock exchange to remove such illegalities and/or irregularities within a specified time limit and it may undertake one or more of the following measures:
1) it may pronounce a public reprimand;
2) it may order the stock exchange to temporarily suspend trade of particular securities, and/or to exclude particular securities from the listing;
3) it may order the stock exchange to temporarily suspend its work for a period of up to three months;
4) it may order temporary prohibition on disposal of funds from the stock exchange account and other stock exchange assets for a period of up to three months;
5) it may order temporary prohibition on payment of fees to the stock exchange management members and employees;
6) it may revoke the stock exchange work licence;
7) it may undertake other measures, in compliance with the provisions of the present Law and its enactments.
The Commission shall announce its decision on undertaken measures specified in paragraph 1 of the present Article in one daily newspaper that is distributed in the territory of the entire Republic and on its internet page, unless such an announcement would seriously jeopardize the financial market or cause disproportionate damage to the stock exchange.
The Commission shall prescribe closer conditions and mode of exercising supervision, procedure of issuing orders and undertaking measures, time limits for implementing orders and duration of measures.
The Commission shall be obliged to undertake the same measures under the same circumstances.
Stock Exchange Termination of Work
Article 111
The Commission shall revoke the stock exchange work licence in the following cases:
1) if the stock exchange fails to conduct business activities for a period longer than six months;
2) if the stock exchange work licence was granted on the ground of untrue data;
3) if the stock exchange fails to conduct business activities involving securities and other financial instruments in compliance with the provisions of the present Law;
4) if the stock exchange no longer meets conditions prescribed for obtaining work licence;
5) if the stock exchange violates the obligation of prohibition of manipulations;
6) if the stock exchange fails to act in accordance with the Commission's order to remove found illegalities, and/or irregularities, within a time limit defined by the Commission's act;
7) if the stock exchange informs the Commission about the termination of business activities and files an application to be erased from the market organizer's work licence registry;
When the Commission revokes work licence to the stock exchange, it shall initiate the proceedings for its liquidation, and/or bankruptcy, in compliance with the provisions of the law.
A decision on initiating the liquidation, and/or bankruptcy proceedings against the stock exchange shall be delivered to the Commission.
2. Over-the-Counter Securities Trading Market Organizer
Article 112
The over-the-counter securities trading market organizer shall be a legal entity established as a joint-stock company that organizes trade of securities and other financial instruments in the over-the-counter securities trading market, in compliance with the provisions of the present Law.
The founder, and/or shareholder of the over-the-counter securities trading market organizer may be the Republic, and domestic and foreign legal entity and individual.
The provisions of the law that governs business companies shall apply to the over-the-counter securities trading market organizer, unless otherwise specified by the provisions of the present Law.
Article 113
The monetary part of the over-the-counter securities trading market basic capital may not be under EUR 750.000 in dinar equivalent at the National Bank of Serbia's official medium exchange rate valid on the payment day.
Over-the-counter securities trading market
Article 114
The securities and other financial instruments shall be included in the over-the-counter securities trading market in compliance with the provisions of the Article 49 of the present Law, and/or upon the issuer's request to transfer from one organized market to the other one.
The over-the-counter securities trading market organizer shall closely prescribe the mode of the inclusion of securities and other financial instruments that meet conditions defined in the Article 50 paragraph 1 of the present Law.
Article 115
The provisions of the present Law related to legal status, acquisition of a qualified participation, activity, granting of a work licence, registration at the court registry, usage of name, management, employees, general enactments, change of head office and address, members, information system, arbitration tribunal, trade of debt securities of the Republic and National Bank of Serbia, foreign securities, foreign legal entity's securities, commencement of trade, exchange rate, suspension of trade of securities and other financial instruments, supervision and termination of work of stock exchange, as well as provisions of the Article 105 paragraphs 4 and Article 107 paragraph 1 items 3) to 7) of the present Law, shall accordingly apply to the over-the-counter securities trading market organizer.
Article 116
The stock exchange, and/or the over-the-counter securities trading market organizer shall be obliged to deliver the following documents to the Commission:
1) data on trade of securities and other financial instruments - on daily basis, at the end of the working day;
2) data on admittance to membership, rejection of membership and termination of membership - within a period of three days starting from the day the membership is admitted, rejected or terminated;
3) data on inclusion in the stock exchange listing, rejection of inclusion in the stock exchange listing and exclusion of securities and other financial instruments from the stock exchange listing - within a period of three days starting from the day of inclusion, rejection or exclusion from the stock exchange listing;
4) annual financial statements, together with the report on a conducted audit of financial statements, and business report - until July 15th of the current year for the previous year;
5) monthly business reports - until the 15th day of the month for the previous month;
6) data on every change related to meeting conditions prescribed for conducting activities the obtained licence refers to - within a period of eight days starting from the day the change occurred;
7) monthly supervision reports - until the 15th day of the month for the previous month;
8) other data and information - upon the Commission's request.
The Commission shall prescribe the content of data specified in paragraph 1 of the present Article.
Article 117
It shall be prohibited to create an untrue picture about the organized market, particularly the following:
1) to influence the market price of securities and other financial instruments by purchasing, selling and lending that does not have the change of lawful possessors as a result;
2) to order an authorized participant in the organized market to purchase, and/or to sell, with simultaneously ordering the same or other authorized participant in that market to sell, and/or purchase the same securities and other financial instruments in the same amount and at the same price, when it is known that other person has ordered or shall order the same or other authorized participant in that market to purchase, and/or sell the same financial instruments at the same price, on the ground of a previous agreement concluded with the authorized participant in the organized market - if such an activity is undertaken in order to influence the price change in the organized market resulting with the order issuer or other persons (entities) gaining material benefit from it.
It shall be prohibited to undertake activities in the organized market solely for the purpose of:
1) increasing the price of particular securities and other financial instruments and motivating other investors to purchase those instruments;
2) decreasing the price of particular securities and other financial instruments and motivating investors to sell those instruments;
3) creating an illusion as to the volume of circulation of securities and other financial instruments.
The persons (entities) participating in a manipulation specified in paragraphs 1 and 2 of the present Article shall be jointly responsible for the damage caused.
All the participants in the organized market, such as: the market organizer, broker-dealer companies, banks performing custody services, authorized banks and the Central Registry shall immediately inform the Commission about possible, i.e. perceived manipulations in the market.
Article 118
The stock exchange employees and management members, and/or the over-the-counter securities trading market organizer shall be obliged to obey the following rules:
1) they shall keep as a business secret data on circulation of securities and other financial instruments that have not been publicly announced, and other data they learnt while conducting their activities or in some other way, and they shall not disclose them to third persons, use them or allow third persons to use them;
2) they shall not give advices related to trade of securities and other financial instruments and on investing into them, or give their opinions on advantages or disadvantages related to trade of securities and other financial instruments;
3) they shall not give advices related to choice of broker-dealer companies and authorized banks.
By exception from the provisions of paragraph 1 of the present Article, data specified in that paragraph shall be announced and placed at third persons' disposal only when the Commission's authorized person undertakes supervision activities or on the ground of the court order, and/or other competent state agency order.
Prohibition on Spreading Untrue Information
Article 119
It shall be prohibited to spread information creating an illusion about facts and circumstances that influence or may influence the price of securities and other financial instruments, participants, situation or trends in the organized market, with the intention to motivate one or more persons (entities) to conclude or not to conclude contracts on trade of securities and other financial instruments, or to accomplish, and/or restrain from accomplishing the rights related to securities and other financial instruments.
The persons (entities) spreading untrue information mentioned in paragraph 1 of the present Article shall be jointly responsible for the damage caused.
Trade of Standardized Financial Derivatives
Article 120
The trade of standardized financial derivatives shall be conducted in the organized market, and non-standardized financial derivatives outside the organized market.
The market organizer shall prescribe conditions for the inclusion of standardized financial derivatives in the organized market, conditions for conducting trade of such derivatives, modes of settling obligations arising from transactions involving trade of standardized financial derivatives, and/or clearing and balancing, upon the previously obtained approval from the Commission.
The Commission shall prohibit the inclusion of a standardized financial derivative in the trade, i.e. it shall prohibit the further trade of a standardized financial derivative in case such a trade has started in the organized market, if such a measure is necessary in order to protect the investors' interests.
Article 121
The standardized financial derivatives may be traded outside the organized market when offer to purchase, and/or sale is made without the public announcement, if due to the standardized financial derivative's type such a standardized financial derivative may be traded outside the organized market, and in the following cases:
1) if purchase, and/or sale of the standardized financial derivatives is conducted by the Republic;
2) if purchase, and/or sale of the standardized financial derivatives is conducted by the National Bank of Serbia;
3) if parties are professional investors.
Article 122
The provisions of the present Law related to trade of securities and other financial instruments and to settlement of obligations arising from the trade of securities shall accordingly apply to trade of standardized financial derivatives, to prohibition to abuse confidential information and to settlement of obligations arising from the trade of such instruments.
XIII AUTHORIZED PARTICIPANTS IN THE ORGANIZED MARKET
Article 123
A broker-dealer company shall be a legal entity organized as a joint-stock company that conducts activities in the organized market in compliance with the provisions of the present Law.
The provisions of the law that governs business companies shall apply to the broker-dealer company, unless otherwise specified by the provisions of the present Law.
A broker-dealer company may not conduct its activities without obtaining the licence to conduct such activities in the organized market from the Commission.
A legal entity or individual may establish the broker-dealer company.
The provisions of the Article 77 of the present Law related to acquisition of a qualified participation in the stock exchange capital shall accordingly apply to the acquisition of a qualified participation in the broker-dealer company capital.
The Commission shall keep the registry on issued licences for conducting the broker-dealer company activities.
Broker-Dealer Company Activities
Article 124
A broker-dealer company may conduct the following activities:
1) it may mediate in purchase and sale of securities and other financial instruments and it may purchase and sell such instruments on its own behalf and for the account of the order issuer, and/or on behalf and for the account of the order issuer (broker transactions);
2) it may purchase and sell securities and other financial instruments on its own behalf and for its own account, for the purpose of making the price difference (dealer activities);
3) it may conduct a mandatory purchase and sale of securities and other financial instruments on its own behalf and for its own account at the price announced by the broker-dealer company in advance (market-maker transactions);
4) it may manage securities and other financial instruments on behalf and for the account of the order issuer (portfolio manager transactions);
5) it may organize issuance of securities and other financial instruments without an obligation to purchase unsold securities, and/or organize the inclusion of securities in the organized market (issuance agent transactions);
6) it may organize issuance of securities and other financial instruments with an obligation to purchase them from the issuer for the purpose of a further sale, or with an obligation to purchase unsold securities from the issuer (issuance underwriter transactions);
7) it may provide consulting services related to transactions of securities and other financial instruments (investment consultant activities).
Within a frame of activities specified in paragraph 1 of the present Article, a broker-dealer company may also conduct activities specified in the Article 181 paragraph 1 of the present Law, except for the activities specified in item 2) of that paragraph.
A broker-dealer company may not conduct investment consultant activities as its only activity.
The provisions on broker-dealer companies' activities shall also apply to activities involving other financial instruments.
A broker-dealer company may also conduct activities related to trade of other financial instruments, if specified so by a separate law.
Exceptions to Obligation to Obtain Licence for Conducting Activities
Article 125
The licence for conducting investment consultant activities shall not be mandatory in the following cases:
1) if such activities are conducted as providing consulting services as a part of the basic activity of attorney at law, tax consultant, accountant or auditor - if a person providing such consulting services does not charge any additional fee, except for fees received for conducting basic activity;
2) if such activities are conducted as a part of the basic activity of legal entities established in compliance with the provisions of a separate law - if providing such consulting services related to transactions of securities is defined as a basic activity by such law.
Article 126
The monetary part of the basic capital of a broker-dealer company shall not be lower than the following:
1) EUR 50.000 in dinar equivalent at the National Bank of Serbia's official medium exchange rate valid on the payment day for conducting activities specified in the Article 124 paragraph 1 items 1) and 7) of the present Law;
2) EUR 100.000 in dinar equivalent at the National Bank of Serbia's official medium exchange rate valid on the payment day for conducting activities specified in the Article 124 paragraph 1 items 2) and 5) of the present Law;
3) EUR 200.000 in dinar equivalent at the National Bank of Serbia's official medium exchange rate valid on the payment day for conducting activities specified in the Article 124 paragraph 1 items 3) and 4) of the present Law;
4) EUR 300.000 in dinar equivalent at the National Bank of Serbia's official medium exchange rate valid on the payment day for conducting activities specified in the Article 124 paragraph 1 item 6) of the present Law;
The basic capital specified in paragraph 1 of the present Article shall be fully paid before the broker-dealer company is registered in the registry of business companies, i.e. before the broker-dealer company activities are registered in the registry of business activities.
A broker-dealer company meeting a condition related to basic capital in terms of the provisions of paragraph 1 of the present Article for conducting activities where higher amount is required shall be considered as a company that meets a condition related to the monetary part of the basic capital for conducting activities where lower amount is required.
A broker-dealer company shall be obliged to maintain permanently the minimum basic capital for conducting activities specified in paragraph 1 of the present Article.
Staff and Organizational Capacities and Technical Equipment
Article 127
A broker-dealer company may conduct activities specified in the Article 124 paragraph 1 of the present Law if it meets conditions related to staff and organizational capacities and technical equipment that comply with the provisions of the present Law and the Commission's act.
A broker-dealer company's staff capacity in terms of paragraph 1 of the present Article shall mean that company has at least one permanent employee with the broker licence.
A broker-dealer company may conduct activities specified in the Article 124 paragraph 1 item 4) if it meets conditions prescribed in paragraph 1 of the present Article and if it has at least one permanent employee with the portfolio manager licence.
A broker-dealer company may conduct activities specified in the Article 124 paragraph 1 item 7) if it meets conditions prescribed in paragraph 1 of the present Article and if it has at least one permanent employee with the investment consultant licence.
The Commission shall prescribe closer conditions for conducting the broker-dealer company activities related to organizational capacity and technical equipment.
A broker-dealer company may hire mediators for conducting its activities.
A broker-dealer company shall be liable for activities and damage caused by mediators while providing their services, together with mediators.
The Commission shall closely define in its enactment types of activities the mediators may conduct, and/or conditions the legal entities and individuals must meet in order to conduct mediators' activities, and it shall keep the registry of mediators.
Licence for Conducting Activities of Broker, Investment Consultant and Portfolio Manager
Article 128
Only individuals with licence for conducting activities may conduct activities of a broker, investment consultant and portfolio manager.
The Commission shall define the program, organize tuition and examinations for acquiring the title of a broker, investment consultant and portfolio manager, issue a certificate on acquiring the mentioned titles, issue the licence for conducting activities and keep the registry of such persons.
The Commission shall issue the licence for conducting broker activities if applicant meets the following conditions:
1) if he/she has successfully passed the examination for acquiring the broker title;
2) if he/she meets conditions specified in the Article 86 paragraph 1 of the present Law;
3) if his/her licence for conducting broker activities has not been revoked previously.
The Commission shall issue the licence for conducting investment consultant and portfolio manager activities if applicant meets the following conditions:
1) if he/she has successfully passed the examination for acquiring the investment consultant and/or portfolio manager title;
2) if he/she meets conditions specified in the Article 86 paragraph 1 of the present Law;
3) if his/her licence for conducting investment consultant and/or portfolio manager activities has not been revoked previously;
4) if he/she has a faculty diploma;
5) if he/she has at least three years of work experience with securities transactions.
The Commission shall issue the licence for conducting activities to a person who has acquired his/her broker, investment consultant and/or portfolio manager title abroad, providing he/she previously validates appropriate certificate and meets other conditions specified in paragraphs 3 and 4 of the present Law.
The Commission shall validate a certificate specified in paragraph 5 of the present Article under procedure defined in its acts and agreements signed between the Commission and competent foreign supervisory bodies.
The Commission may temporarily prohibit a person with the licence for conducting broker, investment consultant and/or portfolio manager activities to conduct such activities due to violation of the provisions of the present Law related to safe and fair business activities - for a period of up to three months.
The Commission shall revoke the licence for conducting broker, investment consultant and/or portfolio manager activities if the person to whom the licence was granted:
1) is finally sentenced for a crime specified in the Article 86 paragraph 1 item 1) of the present Law;
2) has harshly violated the provisions of the Article 86 paragraph 1 item 2) of the present Law;
3) has conducted activities the licence has not been granted for.
Licence for Conducting Broker-Dealer Company Activities
Article 129
The Commission shall closely prescribe the content of the request and additional documents needed for issuing the licence for conducting activities.
The following documents shall be delivered together with the request specified in paragraph 1 of the present Article:
1) a broker-dealer company's Statute;
2) a broker-dealer company's Business Rules;
3) data on founders, number, type and nominal amount of shares, and data about all persons (entities) the founder is related to in terms of the provisions of the present Law;
4) names and data on qualifications, experience and business reputation of nominated broker-dealer company management members;
5) evidence on staff and organizational capacities and technical equipment of the broker-dealer company;
6) the tariff booklet for conducting broker-dealer company activities.
Should the request specified in paragraph 1 of the present Article be submitted for the purpose of establishing the broker-dealer company, the following documents shall be submitted together with the documents specified in paragraph 2 of the present Article:
1) a contract on establishing the broker-dealer company;
2) a copy from the registry of business companies for legal entities - the broker-dealer company shareholders, and certified translation of a copy from the registry of business companies for foreign legal entities;
3) evidence that competent regulatory body of the origin country has approved the foreign legal entity to participate in the establishment of a broker-dealer company in the Republic or evidence that such an approval is not needed according to regulations of that country, providing such a broker-dealer company shall be a dependant company of a foreign legal entity;
4) data on the broker-dealer company management members;
5) evidence that broker-dealer company shall have at least one permanent employee with the licence for conducting activities specified in the Article 124 paragraph 1 items 2), 3) and 4) of the present Law.
Decision on Granting Licence for Conducting Activities
Article 130
The Commission shall render a decision on granting the licence for conducting the broker-dealer company activities when it determines the following:
- that request specified in the Article 129 of the present Law is proper;
- that all conditions determined by the present Law have been met;
- that appropriate documentation has been enclosed;
- that persons (entities) with the qualified participation are suitable and reliable.
The Commission shall reject the request to grant the licence for conducting the broker-dealer company activities when it determines the following:
1) that broker-dealer company does not meet conditions for conducting the broker-dealer company activities prescribed by the present Law;
2) that founders do not meet conditions prescribed by the present Law;
3) that broker-dealer company management members do not meet conditions specified in the Article 86 of the present Law;
4) that origin of the basic capital is not clear and certain on the ground of enclosed evidence, i.e. that it is impossible to check the delivered data;
5) that structure of related persons (entities) is such that it prevents efficient supervision over the stock exchange business activities;
6) that persons (entities) with the qualified participation do not meet suitability and reliability criteria.
Time Limit for Rendering Decision
Article 131
The Commission shall render a decision on granting the licence for conducting the broker-dealer company activities within a period of 30 days starting from the day the request is received.
Approval in Case of Statutory Changes
Article 132
In case of statutory changes, a broker-dealer company shall be obliged to obtain an approval from the Commission for joining, merging and separation, before filing an application to register those changes in the business companies' registry.
Article 133
A broker-dealer company may also conduct activities within the broker-dealer company units that do not have the legal entity status but have certain powers in legal transactions, separate accounting of business results and a separate sub-account - if such units meet conditions for conducting the broker-dealer company activities.
The provisions of the present Law related to granting the licence for conducting the broker-dealer company activities shall accordingly apply to granting licence for conducting those activities in the broker-dealer company units.
Broker-Dealer Company General Enactments
Article 134
Broker-dealer general enactments shall be the establishment act, statute, business rules and other general enactments.
A broker-dealer business rules shall particularly govern the following:
1) types of business activities the broker-dealer company shall conduct and conditions and modes of their conduction;
2) types of clients' orders, mode, conditions and sequence of their execution;
3) mutual rights and duties between the broker-dealer company and its clients;
4) other issues significant for the work of the broker-dealer company.
The Commission shall closely prescribe the content and mode of announcing the broker-dealer company business rules.
A broker-dealer company shall be obliged to charge for its services up to the maximum amount of the tariff that must be previously delivered to the Commission, and which is defined in the broker-dealer tariff booklet.
Consent to Change General Enactments
Article 135
A broker-dealer company shall be obliged to obtain the Commission's previous consent in regard with the establishment act, and with changes on statute and business rules.
Broker-Dealer Company Management
Article 136
The Commission shall render a decision on giving previous consent to election, and/or appointment of director, i.e. president and management board members (hereinafter referred to as: management member).
Conditions for Election, and/or Appointment of Management Members
Article 137
As a broker-dealer company management member may be elected a person who:
1) has not been finally sentenced for crimes against labour, economy, property, judiciary, money laundry, public order and legal transactions and line of duty, threatened with a minimum sanction of one-year imprisonment, or for a crime determined by the present Law;
2) has not harshly violated the provisions of the present Law related to conducting safe and fair business activities of the broker-dealer company, to prohibition of usage and disclosure of privileged information, and/or to prohibition of manipulations, resulting in jeopardizing the solvency, i.e. liquidity of the broker-dealer company and in broker-dealer company's clients suffering damage.
The management member of the broker-dealer company shall not be the person who is the management member of the following entities:
1) other broker-dealer company or authorized bank;
2) management company of investment fund or voluntary pension fund;
3) bank the broker-dealer company has signed the contract on maintaining the securities account with;
4) entities related to entities specified in items 1) and 2) of the present paragraph.
The director, i.e. the broker-dealer company management board president in those companies where in compliance with the law that governs business companies there are no directors, must have appropriate business reputation and at least three years of work experience gained while conducting activities involving securities in the country or abroad in the following entities:
1) in the broker-dealer company;
2) in the stock exchange of securities, and/or financial derivatives;
3) in the bank;
4) in the management company of the investment fund or voluntary pension fund;
5) in the insurance company;
6) in the National Bank of Serbia, state administration agency, organization or legal entity that conducts activities involving securities on behalf of the state as entrusted affairs;
7) in the Commission;
8) in the Central Registry;
9) as an expert in the field of securities, business law, accounting and auditing;
10) in the business company or other legal entity, in terms of conducting financial affairs.
Request Content and Documentation
Article 138
The Commission shall prescribe the content of the request for giving previous consent to election, and/or appointment of the broker-dealer company management member.
The following documents shall be enclosed together with the request specified in paragraph 1 of the present Article:
1) evidence that person for whom the consent to election, and/or appointment of the broker-dealer company management member is requested meets conditions specified in the Article 137 of the present Law;
2) organization plan and plan for conducting the broker-dealer company business activities prepared by a person for whom the consent to election, and/or appointment of the broker-dealer company management member is requested.
Article 139
The Commission shall render a decision on giving previous consent to election, and/or appointment of the broker-dealer company management member when it finds that conditions defined by law and the broker-dealer company acts have been met and that appropriate documentation has been enclosed.
Should the request for giving consent specified in paragraph 1 of the present Article be submitted together with the request for issuing the licence for conducting activities of such a company in order to establish the broker-dealer company, the Commission shall initiate and run a single procedure.
The Commission shall reject the request for giving consent specified in paragraph 1 of the present Article when it finds that conditions specified in the Article 137 of the present Law have not been met.
Article 140
The Commission shall withdraw the previous consent to election, and/or appointment of the broker-dealer company management member when it finds the following:
1) that decision on giving consent is rendered on the ground of untrue data;
2) that person to whom the consent is given, and who is the broker-dealer company member at the same time, has acquired shares of other broker-dealer company as opposed to the provisions of the Article 123 paragraph 5 of the present Law;
3) that person to whom the consent is given has been finally sentenced for a crime specified in the Article 137 paragraph 1 item 1) of the present Law;
4) that person to whom the consent is given has violated the provisions of the Article 137 paragraph 1 item 2) of the present Law.
Registration in Registry of Business Companies
Article 141
A broker-dealer company shall be obliged to file an application to register in the registry of business companies within a period of 30 days starting from the day the decision on granting the licence for conducting the broker-dealer company activities and decision on giving previous consent to election, and/or appointment of the broker-dealer company management member is received.
Should the broker-dealer company not file an application to register in the registry of business companies within a time limit specified in paragraph 1 of the present Article, the Commission shall render a decision on cancelling the licence for conducting activities and it shall erase such a broker-dealer company from the registry.
A broker-dealer company shall be obliged to deliver a copy of the registration to the Commission within a period of seven days starting from the day the decision on registration in the registry of business companies is received.
A broker-dealer company shall not commence its activities for which the work licence has been granted before registering those activities in the registry of business activities.
Change of Form, Name, Head Office and Address
Article 142
A broker-dealer company shall be obliged to inform the Commission about changing the form, name, head office and address before it files an application to register those changes in the registry of business companies.
In case of changing its legal form or its name, a broker-dealer company shall submit a request to the Commission to give consent to those changes.
A broker-dealer company shall enclose evidence on meeting technical equipment conditions when informing on changing its head office or address.
Article 143
A legal entity that has not been granted the licence to conduct broker-dealer company activities in compliance with the provisions of the present Law, or entrepreneur, shall not be registered in the registry of business companies and shall not use in legal transactions the name broker-dealer company, broker, investment consultant or portfolio manager, or derived words, unless otherwise specified by provisions of a separate law.
Risk Protection of Conducting Broker-Dealer Company Activities
Article 144
A broker-dealer company capital shall always be equal to the capital needed to cover possible losses due to a risk the broker-dealer company is exposed to in conducting its business activities, because of the type of activity and value of business it exercises.
Capital Adequacy and Calculation of Capital Adequacy
Article 145
The Commission shall prescribe the mode of calculating the broker-dealer company capital needed to conduct activities specified in the Article 126 paragraph 1 of the present Law.
The Commission shall also prescribe the methodology for the risk measurement and for calculating the needed capital.
Article 146
A broker-dealer risk exposure towards one person (entity), and/or towards several related persons (entities) shall be the sum of all claims and contingent claims towards that person (entity), and/or persons (entities), value of investment into securities of that person (entity) and value of the broker-dealer company portion of capital of that person (entity).
Article 147
The risk exposure of the broker-dealer company towards one person (entity) and/or several related persons (entities) shall not exceed 25% of the broker-dealer company capital.
By exception from the provisions of paragraph 1 of the present Article, the risk exposure of the broker-dealer company towards a person (entity) that is in relation to such broker-dealer company as direct or indirect parent company, and/or towards which the broker-dealer company relates as a direct or indirect parent company, and/or towards a person (entity) having the same parent company as such broker-dealer company, shall not exceed 20% of the broker-dealer company capital.
Should the broker-dealer company exceed the highest allowed exposure specified in paragraph 1, i.e. in paragraph 2 of the present Article due to merging of two legal entities, and/or due to other reasons outside its influence, it shall be obliged to immediately inform the Commission about it.
Together with the information specified in paragraph 3 of the present Article, the broker-dealer company shall enclose a description of measures to be undertaken for the purpose of harmonizing with paragraph 1, i.e. paragraph of the present Article and time limits for undertaking them.
Article 148
The high-risk exposure of the broker-dealer company shall be the exposure of a broker-dealer company towards one person (entity), and/or several related persons (entities) that exceeds 10% of the broker-dealer company capital.
The amount of all high-risk exposures of the broker-dealer company shall not exceed 800% of the broker-dealer company capital.
Article 149
The Commission shall closely prescribe the mode of evaluation and inclusion of particular items when calculating the risk exposure of the broker-dealer company and closer criteria for persons (entities) specified in the provisions of the Article 147 of the present Law.
Reserves for Common Risks and Special Reserves
Article 150
A broker-dealer company may create reserves for common risks in order to cover possible losses due to risks involving from its entire business activities.
Should the broker-dealer company create reserves for risks specified in paragraph 1 of the present Article, it shall in its profit and loss account present separately revenues and expenditures related to increase and/or decrease of such reserves.
Article 151
A broker-dealer company shall be obliged to create special reserves based on special risks arising from particular business activities, and/or types of business activities it conducts.
The special reserves specified in paragraph 1 of the present Article shall be considered reserves the broker-dealer company creates because of a special risk arising in collecting claims on the ground of clients' claims guarantee in case of a bankruptcy of other broker-dealer company.
The Commission shall prescribe the minimum volume and mode of calculating the special reserves specified in paragraphs 1 and 2 of the present Article.
Article 152
In order to protect itself from the liquidity risk, the broker-dealer company shall be obliged to determine and exercise a proper liquidity management policy, including the following:
1) planning of expected monetary inflows and outflows;
2) regular liquidity monitoring;
3) undertaking appropriate measures for preventing, and/or removing non-liquidity causes.
Article 153
A broker-dealer company shall be obliged to calculate the funds liquidity ratio on daily basis.
The Commission shall prescribe the mode of calculating the funds liquidity ratio and the lowest volume of liquidity the broker-dealer company must provide.
Article 154
A broker-dealer company shall be obliged to inform immediately the Commission about its inability to settle mature monetary obligations.
Article 155
A broker-dealer company shall be obliged to monthly calculate and prescribe the following elements, on the basis of the balance valid on the last day of the month:
1) the capital amount;
2) the capital amount needed to conduct particular business activities;
3) the capital adequacy;
4) the risk exposure.
Article 156
A broker-dealer company shall be obliged to deliver to the Commission monthly reports filled with data on capital, risk exposure and liquidity.
Article 157
The Commission shall prescribe the content of information, i.e. reports specified in the Articles 154 and 156 of the present Law, and time limits and mode of reporting.
Measures for Ensuring Capital Adequacy and Liquidity
Article 158
A broker-dealer company shall not decide on the payment of profit either in the form of a dividend, or in the form of a payment based on the portion of the profit of the company management, and/or employees, in the following cases:
1) if its capital is lower than the minimum capital specified in the provisions of the Articles 144 and 145 of the present Law;
2) if due to the payment of profit its capital could become so low that it could not reach the minimum capital specified in the provisions of the Articles 144 and 145 of the present Law;
3) if it does not ensure the lowest volume of liquidity in compliance with the provisions of the Articles 152 and 153 of the present Law;
4) if due to the payment of profit it could not ensure the lowest volume of liquidity in compliance with the provisions of the Articles 152 and 153 of the present Law.
A broker-dealer company assembly decision that is opposed to paragraph 1 of the present Article shall have no legal effect.
Article 159
When the broker-dealer company capital, due to increased capital requirements and other causes, does not reach the minimum capital specified in the Articles 144 and 145 of the present Law, the broker-dealer company management must immediately undertake measures from its competence to ensure the minimum capital, and/or propose a set of measures that are within a competence of the broker-dealer company other bodies.
A broker-dealer company management shall be obliged to inform the Commission in its monthly report specified in the Article 156 of the present Law about measures, and/or set of proposed measures specified in paragraph 1 of the present Article.
Article 160
Should the Commission in the course of exercising supervision finds that broker-dealer company has failed to reach the minimum capital specified in the Articles 144 and 145 of the present Law, and/or that it is not able to settle mature monetary obligations, the Commission may temporarily prohibit such a company to conduct all or some of activities involving securities, up to a period of three months.
Principles of Safe and Fair Business Activities of Broker-Dealer Company
Article 161
A broker-dealer company shall be obliged to respect the principle of equality of clients when conducting its business activities.
When conducting its business activities, the broker-dealer company shall be obliged to follow only its clients' interests, taking special care about the most convenient price and the best way to execute orders.
A broker-dealer company shall be obliged to enable access to its business rules and tariff booklet in the premises where it deals with clients.
A broker-dealer company employees and management members shall be obliged to keep as a business secret data on balance and transactions in the securities accounts of company's clients, and other data they learnt while conducting activities of such a company, and they shall not disclose them to third persons, use them or allow third persons to use them.
By exception from the provisions specified in paragraph 4 of the present Article, data specified in that paragraph may be disclosed and placed at third party's disposal in the following cases:
1) on the ground of client's written approval;
2) when the Commission's authorized person exercises supervision over business activities;
3) on the ground of a court order, and/or order of some other competent state agency.
A broker-dealer company may not conduct business activities involving securities that could jeopardize the organized market stability, and particularly the following:
1) provide investors with false information about securities price;
2) spread false information in order to change securities price;
3) dispose of client's securities without a written approval;
4) execute clients' orders in a way that is opposed to the provisions of the present Law and other acts that govern the mode of executing orders coming from the broker-dealer company clients;
5) purchase, sell or lend for its own account the same securities that are the subject of client's order before acting upon client's order;
6) purchase, sell or lend securities on the ground of the contract on managing securities solely for the purpose of collecting commission;
7) motivate clients to frequently conduct transactions solely for the purpose of collecting commission.
Article 162
A broker-dealer company shall not give priority to its own interests over client's interests.
A broker-dealer company shall be obliged to inform the client about possible conflict of client's interests with the company's interests, and/or broker-dealer company other client's interests.
A broker-dealer company shall be obliged to organize its business activities in such a way that possible conflicts of interests between the client, broker-dealer company and employees of such a company are reduced to a least possible level.
Article 163
A broker-dealer company shall be obliged to sign a written contract with its client, and such a contract shall regulate their mutual rights and obligations in conducting the broker-dealer company activities.
The contract specified in paragraph 1 of the present Article shall consist of a provision that constitutive part of the contract shall be the client's statement that prior to signing the contract the client had an access to business rules and its content, and/or that client had access to the broker-dealer company tariff booklet, and the client's statement on its knowledge and experience in conducting business activities involving securities and other financial instruments in the financial market.
On the ground of the client's statement on its knowledge and experience, the broker-dealer company shall produce a warning statement about possible risks that may arise from trading particular securities.
A broker-dealer company shall be obliged to inform its clients about changing its business rules prior to those rules coming into effect.
The Commission shall prescribe the standardized form of a statement specified in paragraphs 2 and 3 of the present Article.
Clients Orders for Purchase and Sale of Securities
Article 164
A broker-dealer company shall be obliged to do the following:
1) to execute clients' orders exactly as written and immediately when conditions for their execution have been arranged;
2) to keep a separate book of orders which shall record clients' orders for purchase or sale of securities and revocation of such orders;
3) to receive clients' orders in the business premises of its head office, in a place where its organizational unit conducts activities and in the business premises of other legal entity on the ground of a signed contract, providing it is not the issuer of securities on whose behalf such business activities are being conducted;
4) to execute clients' orders for purchase and/or sale of securities in the sequence prescribed by the broker-dealer company business rules;
5) to issue the receipt of order to the client, the following working day starting from the day the order is received;
6) to issue a certified copy from the book of orders on all business activities related to the client's executed orders, upon client's request.
By exception from the provisions of paragraph 1 item 3) of the present Article and on the ground of a signed contract, the broker-dealer company may authorize other legal entity to receive that broker-dealer company clients' orders in the business premises of that legal entity's head office, on behalf and for the account of the broker-dealer company, providing it is not the issuer of securities on whose behalf such orders are being given.
The book of orders shall be kept in a way that prevents any subsequent alterations of entered data.
The Commission shall prescribe data on the content, mode of keeping book of orders and mode of receiving orders.
Refusal of Purchase and Sale Orders
Article 165
A broker-dealer company shall be obliged to refuse:
1) an order for purchase when it finds that client's monetary account does not have sufficient funds to settle obligations that would arise upon the execution of an order for purchase securities;
2) an order for sale when it finds that client's securities account does not have sufficient securities that are the subject of order;
3) an order for purchase, and/or order for sale of securities when it finds that execution of such an order would result in violating the provisions of the present Law related to the prohibition of manipulation and prohibition of spreading false information, and/or in committing other offence punishable by law as a crime, commercial violation or misdemeanour;
4) an order for purchase, and/or order for sale of securities when time limit for the submission of that order has expired.
Article 166
A broker-dealer company shall be obliged to inform its client on each business transaction conducted upon his request, on the working day following the day of the purchase, and/or sale of securities, at the latest.
The client may not waive the right to obtain information specified in paragraph 1 of the present Article.
Monetary Accounts of Broker-Dealer Company and Clients
Article 167
A broker-dealer company shall be obliged to open separate monetary accounts for its clients and its own with an authorized bank, and/or bank - the Central Registry member or with the Central Registry.
A broker-dealer company may use funds from the clients' monetary accounts only for the payments of obligations arising from the clients' orders.
The funds at the clients' monetary accounts shall not be the property of a broker-dealer company and shall not be a part of its assets, those funds cannot be included into the liquidation or bankruptcy estate, or used for the payments of the broker-dealer company's obligations towards third persons.
A broker-dealer company shall be obliged to take care that clients' monetary accounts have sufficient funds on the balancing day.
Maintaining Securities Account
Article 168
By signing a contract on opening and maintaining the securities account, the broker-dealer company shall be obliged to open the securities account with the Central Registry on behalf of the client (hereinafter referred to as: owner's account) and it shall, on behalf and for the account of the client, maintain the balance of securities on such account and execute orders for transfer of rights arising from securities and orders for registration of third party's rights on such securities, and the client shall be obliged to pay the commission for it.
A broker-dealer company may use the securities from the owner's account only upon the client's order.
A broker-dealer company shall be obliged to maintain the accounts of their own securities (the Central Registry member account) separately from their clients' securities accounts.
The securities on owner's account of the broker-dealer company's client shall not be the property of the broker-dealer company and shall not be a part of its assets, those securities cannot be included into the liquidation or bankruptcy estate, or used for settling the broker-dealer's obligations towards third parties.
A broker-dealer company shall be obliged to take care that owner's account of its client has sufficient securities on the balancing day.
Article 169
By signing the contract on management of securities, the broker-dealer company, on its behalf and for the account of the client, shall be obliged to invest the client's monetary funds into securities, and/or to receive the client's securities for the purpose of managing them, and the client shall be obliged to pay the commission for it.
A broker-dealer company that signs the contract on management of securities with the client shall be obliged to open and maintain the separate account for the client with the Central Registry (hereinafter referred to as: management account).
The contract on management of securities shall particularly regulate the following:
1) amount of monetary funds, and/or types and quantity of securities the client places at the broker-dealer company's disposal for the purpose of purchasing, and/or selling those securities;
2) policy of investment into securities;
3) conditions under which the client entrusts securities to the broker-dealer company for further management;
4) amount of commission and basis for calculation and collection of commission;
5) other mutual rights and obligations.
The term policy of investment specified in paragraph 3 item 2) of the present Article shall mean the special type of securities to be purchased from the client's funds, characteristics of the issuer of securities, the highest allowed amount to be invested into securities of one issuer and persons (entities) related to it, and other circumstances significant for determining the amount of investment risk.
A broker-dealer company shall be allowed to invest the client's monetary funds into securities only in compliance with the contract signed with the client.
Article 170
The Commission may prescribe conditions for lending and sale of lent securities.
Reporting by Broker-Dealer Company
Article 171
A broker-dealer company shall be obliged to deliver to the Commission the following documents:
1) annual financial statement and report on audit of financial statements produced in compliance with the law that governs accounting and auditing - until July 15th of the current year for the previous year;
2) monthly business reports - until the 15th day of the month for the previous month;
3) data on each change of prescribed conditions for conducting activities the work licence has been granted for - within a period of eight days starting from the day the change has occurred;
4) other data and information the Commission requires.
The Commission shall prescribe the content of data specified in paragraph 1 of the present Article.
Supervision over Business Activities of Broker-Dealer Company
Article 172
The Commission shall exercise supervision over legality of business activities of the broker-dealer company at least twice a year.
The supervision over legality specified in paragraph 1 of the present Article shall include the direct supervision in the business premises.
The Commission's authorized person shall conduct the following activities in the supervision process:
1) it shall inspect acts, business books, account statements and other documents of the broker-dealer company;
2) it shall request information on particular issues that are significant for the broker-dealer company's business activities.
The minutes shall be taken on the supervision over legality of the broker-dealer company's business activities.
Article 173
Should the Commission find illegalities, and/or irregularities in the process of supervision over the broker-dealer company's business activities, it shall render a decision ordering such a company to remove determined irregularities within an appropriate period and it may undertake one or more of the following measures:
1) it may pronounce the public reprimand;
2) it may issue an order for temporary prohibition on conduct of particular or all activities specified in the licence for conducting activities, for a period of up to three months;
3) it may issue an order for temporary prohibition on disposal of funds from the monetary accounts and securities accounts and from other assets, for a period of up to three months;
4) it may issue an order for temporary prohibition on payment of part of the profit that belongs to shareholders, and/or commission to the management members and employees;
5) it may revoke the licence for conducting activities;
6) it may undertake other measures, in compliance with the provisions of the present Law and the act to be rendered by it.
The Commission shall announce the decision on undertaking measures specified in paragraph 1 of the present Article in one daily newspaper that is distributed in the territory of the entire Republic and on its internet page, unless such an announcement would seriously jeopardize the financial market or cause a disproportional damage to the broker-dealer company the measure has been pronounced against.
The Commission shall prescribe in its act closer conditions and mode of exercising the supervision, procedure for issuing orders and undertaking measures, and time limits for the execution of orders and their duration.
The Commission shall be obliged to undertake the same measures against all broker-dealer companies under the same circumstances.
Revocation of Licence for Conducting Activities of Broker-Dealer Company
Article 174
The Commission shall revoke the broker-dealer company's licence for conducting activities in the following cases:
1) if it does not conduct the activity the licence has been granted for a period longer than three months;
2) if the licence for conducting activities was granted on the ground of untrue data;
3) if it does not conduct business activities involving securities in compliance with the provisions of the present Law;
4) if no longer meets conditions prescribed for obtaining the licence for conducting activities;
5) if it violates the prohibition of manipulation;
6) if it fails to meet conditions for conducting business activities in terms of the provisions of the present Law related to risk elimination;
7) if it fails to comply with a decision on temporary prohibition on conduct of activities;
8) if within a time limit prescribed by the Commission fails to act in compliance with an order to remove determined illegalities, and/or irregularities.
Should the broker-dealer company inform the Commission about termination of its business activities and file an application to be erased from the registry of licences issued for conducting such activities, the Commission shall revoke the licence for conducting activities to such a company.
Special Bankruptcy Procedure Rules
Article 175
Should the broker-dealer company's work licence be revoked, the Commission shall ex officio initiate the liquidation, and/or bankruptcy procedure in compliance with the provisions of the law, unless otherwise specified by the provisions of the present Law.
On the day when the decision on revoking the broker-dealer company's licence is rendered, the Commission shall order the bank where that company's accounts are held to block these accounts.
During the bankruptcy procedure against the broker-dealer company, the bankruptcy receiver may not abandon the contracts on purchase and sale of securities signed by that company.
Claims of the clients of the broker-dealer company shall be set aside from the bankruptcy estate of that company on the ground of investments into securities, as well as claims of the Republic and the National Bank of Serbia on that ground.
The decision on opening the liquidation, and/or bankruptcy proceedings against the broker-dealer company shall be delivered to the Commission.
Authorization to Conduct Activities of Broker-Dealer Company
Article 176
A bank may conduct activities of a broker-dealer company if it obtains such a licence from the Commission (hereinafter referred to as: authorized bank).
Conditions for Conducting Broker-Dealer Company Activities
Article 177
An authorized bank may conduct the broker-dealer company activities under the following conditions:
1) if it has a separate organizational unit for such purpose;
2) if it keeps separate records and data on business activities of such organizational unit in business books;
3) if it meets conditions related to staff and organizational capacities and technical equipment for conducting such activities.
An authorized bank shall adopt business rules of the organizational unit specified in paragraph 1 of the present Article on transactions involving securities, subject to Commission's approval.
Article 178
Should the Commission find certain illegalities, and/or irregularities in authorized bank's business activities while implementing the supervision procedure, it shall deliver its decision on undertaken measures to the National Bank of Serbia.
Article 179
The provisions of the present Law related to broker-dealer company activities, conditions and licence for conducting such activities, providing of data, rules of safe and fair business activities, reporting, supervision over business activities, supervision measures and termination of conducting activities, prescribed for the broker-dealer company shall accordingly apply to the authorized bank.
Authorization to Conduct Activities of Custody Bank
Article 180
A bank (hereinafter referred to as: custody bank) may conduct custody bank activities if it obtains such a licence from the Commission.
The Commission shall keep the registry of issued licences for conducting custody bank activities.
The National Bank of Serbia may conduct custody bank activities without the Commission's licence - for the securities issued by the Republic and units of territorial autonomy and local self-government.
Article 181
Within a scope of its competence, the custody bank shall conduct the following activities:
1) it shall open and maintain the securities accounts with the Central Registry on behalf and for the account of lawful possessors - its clients (owner's securities account);
2) it shall open and maintain the securities accounts with the Central Registry on behalf of the custody bank and for the account of lawful possessors - its clients, and/or on behalf of its clients who are not lawful possessors of such securities and for the account of lawful possessors (summary custody account);
3) it shall execute orders for transfer of rights arising from securities and orders for registration of third party rights on securities, and take care of transfer of rights arising from such securities;
4) it shall collect claims from the issuers on the grounds of matured securities, interests and dividends for the account of lawful possessors of such securities and take care of exercising other rights belonging to lawful possessors of securities who are its clients;
5) it shall provide services involving lending of securities;
6) it shall inform the shareholders on annual joint-stock companies' assemblies and represent them at such assemblies;
7) it shall take care of the client's tax affairs arising from securities, providing the client is a lawful possessor of such securities and providing it empowers the custody bank to do that;
8) it shall conduct other activities in compliance with the law that governs investment funds and voluntary pension funds and other law, and custody bank's business rules.
A custody bank may also conduct activities related to other financial instruments.
When conducting activities specified in paragraph items 1) and 2) of the present Article, the custody bank shall be obliged to take care that there are enough monetary funds, and/or securities on the client's monetary account, and/or owner's account on the balancing day.
When conducting activities specified in paragraph item 2) of the present Article, the custody bank shall be obliged to keep separate records on the securities and persons (entities) on whose behalf it conducts such activities, to keep data from such records as a business secret and to protect them from unauthorized use, amendments or losses.
The custody bank shall conduct its activity if it is the Central Registry member and if it has separate organizational unit with staff and technical capacities to conduct custody bank activities.
The custody bank may not conduct the broker-dealer company activities specified in the provisions of the Article 124 paragraph 1 of the present Law.
The securities kept on the owner's account and on summary custody account of clients shall not be the custody bank's property and shall not be a part of its assets, they cannot be included into liquidation or bankruptcy estate or used for settling the custody bank's obligations towards third persons.
The custody bank may dispose of securities kept on the custody account only on the ground of the client's order.
Following a request coming from the client, the custody bank shall be obliged to issue information on the balance of funds on its custody account, within a period of three days starting from the day the request has been submitted at the latest.
The provisions of the Article 170 of the present Law shall accordingly apply to securities lent by a custody bank.
Licence for Conducting Custody Bank Activities
Article 182
The Commission shall prescribe the content of the request for granting the licence for conducting the custody bank activities.
The following documents shall be enclosed together with the request specified in paragraph 1 of the present Article:
1) bank's statute;
2) evidence that bank is the Central Registry member;
3) custody bank business rules;
4) evidence that bank has separate organizational unit for conducting the custody bank activities;
5) evidence that bank meets conditions related to staff and organizational capacities for conducting the custody bank activities;
6) evidence that bank meets the condition related to technical equipment for conducting the custody bank activities, i.e. that it has appropriate information system for conducting such activities.
The Commission shall give its consent to appointment of a person who shall manage the custody bank activities.
The Commission shall prescribe conditions for staff and organizational capacities and technical equipment for conducting the custody bank activities.
A legal entity that has not been granted a licence for conducting the custody bank activities in compliance with the provisions of the present Law, or entrepreneur, shall not be registered in the registry of business companies, they cannot use the custody bank name in legal transactions, and/or derived words, unless otherwise specified by the provisions of other law.
Custody bank Business Rules and Contract Signing
Article 183
The custody bank shall enact business rules involving securities related to conducting custody activities, subject to Commission's approval.
The rules specified in paragraph 1 of the present Article shall particularly regulate the following:
1) types of custody activities conducted by the custody bank;
2) types of clients' orders and modes of their execution;
3) mode of handling client's securities and monetary funds;
4) rights and obligations between the custody bank and its clients.
The Commission shall closely prescribe the content and mode of announcing rules specified in paragraph 1 of the present Article.
A custody bank shall be obliged to sign a written contract with its client and such a contract shall regulate their mutual rights and obligations in conducting custody activities of a custody bank, in compliance with the provisions of the present Law and with rules specified in paragraph 1 of the present Article.
The employees and management members of a bank conducting custody bank activities shall be obliged to keep as a business secret the data on balance and circulation of the securities accounts, and other data they learnt while conducting the custody bank activities and they shall not disclose them to third persons, use them or allow third persons to use them.
By exception from the provisions of paragraph 5 of the present Article, data specified in that paragraph may be disclosed and placed at third party's disposal in the following cases:
1) on the ground of the client's written approval;
2) when the Commission's authorized person conducts supervision over legality of activities;
3) on the ground of the court order, and/or other competent state agency order.
Article 184
The provisions of the present Law related to granting approval for conducting activities, decision on registration into the registry of business companies and time limit for rendering such a decision, reporting, supervision and supervision measures and termination of conducting activities, prescribed for the broker-dealer company, shall accordingly apply to the custody bank.
XIV CENTRAL REGISTRY OF SECURITIES
Article 185
The Central Registry shall be a legal entity that organizes and conducts its business activities as a closed joint-stock company, in compliance with the provisions of the present Law and law that governs business companies.
The Central Registry shall issue shares to its founder, and/or to the limited number of other persons (entities).
The Central Registry shares shall be the ordinary ones with the voting right.
Article 186
The Central Registry shall conduct its business activities under the following name: the Central Registry, Depository and Clearing of Securities joint-stock company.
The shortened business name of the Central Registry shall be: the Central Registry of Securities a.d.
The head office of the Central Registry shall be in Belgrade.
The Central Registry shall have its organizational units dislocated from its head office, without having the status of a legal entity.
Article 187
The main activity of the Central Registry shall be the clearing and balancing of payables and receivables in securities and money arising from concluded business transactions involving securities.
Besides activities mentioned in paragraph 1 of the present Article, the Central Registry shall conduct the following activities:
1) it shall keep the registry of securities;
2) it shall keep records on securities in the issuer's accounts;
3) it shall keep records on securities accounts and other accounts of the Central Registry members and their clients, in terms of the present Law;
4) it shall register third party rights on securities;
5) it shall safe keep materialized securities;
6) it shall maintain money accounts of the Central Registry members;
7) it shall book entries of materialized securities in a dematerialized form;
8) it shall conduct the clearing and balancing of payables and receivables in securities and money arising from concluded business transactions involving securities and determine the balance of payables and receivables of the Central Registry members and their clients after settling their mutual payables and receivables, within a time limit defined by the Central Registry business rules;
9) it shall conduct the clearing and balancing of foreign securities traded in the Republic;
10) it shall transfer securities to accounts of the Central Registry members and of lawful possessors of such securities;
11) it shall determine and allocate a uniformed identification number of securities and other financial instruments;
12) it shall keep the code book of securities and other financial instruments;
13) it shall manage business activities related to corporative affairs;
14) it shall calculate tax on transfer of absolute rights arising from securities in compliance with the provisions of the law that governs property tax;
15) it shall cooperate with international organizations dealing with registration, clearing and balancing of securities and money arising from concluded business transactions involving securities;
16) other business activities related to securities.
The Central Registry shall apply the provisions of the law that governs administrative proceedings when acting in administrative matters.
The Central Registry decisions shall be final and one may initiate administrative dispute against it.
Article 188
The monetary portion of the Central Registry basic capital shall not be less than EUR 50.000 in dinar equivalent at the official medium exchange rate of the National Bank of Serbia valid on the payment day.
The Central Registry work funds shall be provided from fees for conducting activities specified in the Article 187 of the present Law, in compliance with the provisions of the Central Registry tariff booklet, and from other sources, in compliance with the provisions of the law.
The state portion of the Central Registry capital shall not be less than 51%.
Registration in Registry of Business Companies
Article 189
The Central Registry shall acquire the status of a legal entity when it registers in the registry of business companies.
The Central Registry shall be obliged to deliver to the Commission a registration copy from the registry of business companies within a period of seven days starting from the day the decision on registration in the registry of business companies has been received.
Article 190
The commitments arising from business transactions concluded in the organized market and outside the organized market shall be met through the Central Registry, in compliance with the Central Registry business rules.
Meeting the commitment of transfer of rights arising from securities on the ground of issuance of such securities and of the contract on their sale shall be conducted only for the purchased securities that have been paid for.
The Central Registry members shall meet their monetary commitments arising from business transactions concluded with such securities through monetary accounts held with the Central Registry.
Transfer of Rights Arising from Securities and Registration of Third Party Rights
Article 191
The transfer of rights arising from securities on the ground of issuance, sale contract and loan agreement shall be executed on the basis of a transfer order issued by the Central Registry member, in compliance with the provisions of the Central Registry enactments.
The transfer of rights arising from securities on the ground of legal succession shall be executed on the basis of a final court decision.
The transfer of rights arising from securities on the ground of a gift agreement shall be executed on the basis of a written gift agreement certified by a competent body.
Article 192
The Central Registry shall register the third party rights on securities on the ground of a registration order issued by the lawful possessor, and/or person authorized by the lawful possessor or a legal proxy.
Article 193
The Central Registry bodies shall be the Assembly and the Management Board.
Central Registry Assembly Powers
Article 194
The Government shall exercise the Central Registry Assembly powers through its authorized representatives.
Should the number of shareholders increase, the Central Registry Assembly shall consist of shareholders with the managing right.
The shareholders shall exercise their managing right directly or through their representatives.
The Government shall exercise the right specified in paragraph 3 of the present Article on behalf of the Republic.
The Central Registry Statute shall determine the minimum number of shares as a condition for the membership of the Central Registry Assembly.
Article 195
The Central Registry Assembly shall conduct the following activities:
1) it shall enact the Central Registry Statute;
2) it shall adopt business policy enactments;
3) it shall adopt enactments that shall closely regulate conditions and mode for conducting the Central Registry activities;
4) it shall consider the Management Board annual reports;
5) it shall adopt the Central Registry annual financial statement and decide on usage and allocation of a gained profit, and/or on covering losses;
6) it shall decide on increasing the Central Registry basic capital and amount of investments into the Central Registry fixed assets;
7) it shall decide on the amount and structure of safety reserves;
8) it shall appoint and dismiss the Management Board members;
9) it shall decide on the statutory changes and changes of the Central Registry legal forms;
10) it shall appoint and dismiss the auditor;
11) it shall adopt the Central Registry development plan;
12) it shall adopt the book of rules on its work;
13) it shall render other decisions in compliance with the provisions of the law and the Central Registry Statute.
Article 196
The Management Board shall have the President, the Deputy President and three members.
The Central Registry Assembly shall appoint and dismiss the Management Board members.
The Management Board members' term of office shall be four years and same persons may be reappointed.
Article 197
The Management Board members shall appoint among them the President and the Deputy President of the Central Registry Management Board.
Article 198
The Central Registry Management Board shall conduct the following activities:
1) it shall schedule the Central Registry Assembly sessions;
2) it shall prepare proposals for the Central Registry Assembly and execute its decisions;
3) it shall consider and propose for adoption the Central Registry business report during the year;
4) it shall submit the business report to the Central Registry Assembly;
5) it shall issue shares and determine their value, and the Central Registry assets value, in compliance with the provisions of the law;
6) it shall determine the amount and the day of the dividend, the payment day and procedure for the dividend payments;
7) it shall decide on giving and revoking the proxy;
8) it shall adopt the general enactment on organization and systematization;
9) it shall adopt the book of rules on its work;
10) it shall conduct other activities determined by the law that governs the legal status of business companies and by the Central Registry Statute.
Article 199
The Management Board shall decide on matters from its scope of work by majority of votes.
Should the number of votes be equal, the Management Board President shall have the decisive vote.
Article 200
The Central Registry general enactments shall be the Statute, business rules, tariff booklet, instructions and other general enactments that generally regulate issues significant for the Central Registry work.
The Commission shall give its consent on the Statute, business rules and tariff booklet of the Central Registry.
Enactments specified in paragraph 2 of the present Article shall be published in the "Official Herald of the Republic of Serbia" within a period of eight days starting from the day the consent specified in that paragraph has been given.
Article 201
The Central Registry Statute shall particularly regulate the following:
1) conditions for admittance to the Central Registry membership;
2) rights and duties of the Central Registry members;
3) termination of the Central Registry membership;
4) name and head office of the Central Registry;
5) activity, and/or business activities;
6) the Central Registry bodies, scope of work, responsibility and mode of bodies' decision-making process;
7) representation of the Central Registry and responsibility for commitments;
8) division of profit and cover of losses;
9) mode of establishing and using the Central Registry funds and reserve funds;
10) the Central Registry internal organization;
11) general enactments and mode of their adoption;
12) mode and procedure for amending the Statute;
13) other issues significant for the Central Registry work and business activities, in compliance with the law.
Article 202
The Central Registry business rules shall particularly regulate the following:
- mode of conducting the Central Registry business activities;
- mode of opening and maintaining the securities accounts;
- mode of opening and maintaining the monetary accounts;
- mode of safekeeping of securities;
- mode of clearing and balancing payables and receivables on the ground of concluded business transactions involving securities;
- mode of transferring rights arising from securities and transfer of such securities, and content of order for transfer of rights arising from securities (hereinafter referred to as: transfer order) and order for registration of third party rights on securities (hereinafter referred to as: registration order);
- mode of establishing and using a guarantee fund and other mode of eliminating risk in case of the Central Registry member failing to meet commitments;
- other issues significant for the Central Registry work.
The Central Registry Management Board shall prescribe closer conditions for the implementation of business rules.
Article 203
The Central Registry tariff booklet shall define the membership fee and fees the Central Registry shall charge for providing its services.
Central Registry Members and their Rights and Duties
Article 204
The Central Registry members shall be the Republic, the National Bank of Serbia, broker-dealer companies, authorized banks, custody banks, market organizers, fund management companies and foreign legal entities dealing with clearing and balancing of securities.
A candidate shall be admitted to the Central Registry membership on the basis of a filed application and documentation prescribed by the Central Registry general enactments.
The Central Registry shall be obliged to render a decision on the Central Registry membership within a period of 30 days starting from the day the application specified in paragraph 2 of the present Article has been filed.
A decision specified in paragraph 3 of the present Article shall be final and one may initiate administrative dispute against it.
Article 205
The Central Registry shall define in its enactments the rights and duties of the Central Registry towards the Central Registry member and such enactments shall be published in the "Official Herald of the Republic of Serbia".
Article 206
Should there be caused damage by giving illegal and inaccurate orders for the registration of rights that are subject of registration with the Central Registry, the Central Registry members shall be responsible towards holders of such rights.
Article 207
The Central Registry shall control its member in a part of its business activities that are falling under the Central Registry competence.
When exercising the control specified in paragraph 1 of the present Article, the Central Registry shall have the right to inspect directly documentation related to business activities specified in that paragraph.
The Central Registry shall inform the Commission about results of the control specified in paragraphs 1 and 2 of the present Article.
Article 208
The Central Registry member shall have its Central Registry membership terminated in the following cases:
1) if its work licence, and/or licence for conducting activities has been revoked;
2) if no longer meets conditions on the ground of which it was admitted to the Central Registry membership;
3) if it does not meet commitments towards the Central Registry;
4) if it does not respect the Central Registry general enactments;
5) in other cases defined by the Central Registry Statute.
Article 209
The following accounts shall be opened and maintained with the Central Registry:
1) the Central Registry members' securities accounts;
2) deposited securities accounts;
3) issuing accounts.
The following accounts shall be maintained within the accounts specified in paragraph 1 item 1) of the present Article:
- securities owner's accounts;
- managing accounts;
- summary custody account and other securities accounts in compliance with the Central Registry business rules.
The following monetary accounts shall be opened and maintained with the Central Registry:
- the Central Registry members' monetary accounts;
- the Central Registry members' guarantee funds accounts.
The National Bank of Serbia shall open and maintain the Central Registry monetary accounts.
Within the Republic's monetary account held with the Central Registry a sub-account of the Share Fund shall be opened for the purpose of raising funds the Share Fund sells.
Article 210
The Central Registry loss that cannot be covered by the Central Registry funds shall be covered by decreasing the Central Registry basic capital, in compliance with the provisions of the law.
Central Registry Duty and Responsibility
Article 211
The Central Registry shall be obliged to protect the information system and available data from unauthorized use, changes and losses.
The Central Registry shall be obliged to keep permanently the documentation and data recorded in electronic media, unless otherwise specified by other law.
The Central Registry shall be obliged to ensure the safety of continuous functioning of information system by creating a secondary database and secondary computer system that would secure continuous workflow in case of flood, fire and similar events, and which must be distanced from the premises where the Central Registry primary information system is located.
The data in the Central Registry shall be secret and shall be announced only under conditions and in a mode prescribed by the provisions of the present Law, upon the court order or other competent body order.
The Central Registry shall be obliged to let its member inspect a part of the Central Registry database related to that particular member and its clients, and/or to provide its member with the copy of those data, in compliance with the Central Registry business rules.
The data from the central records of the shareholders of issuers shall be public and announced on the Central Registry internet page in a mode prescribed by the Central Registry enactments.
Article 212
The Central Registry shall be responsible to the issuer, owner of securities, and/or lawful holder of rights that are the subject of registration with the Central Registry for any damage caused by default, and/or improper execution of transfer order, and/or by violating other commitments defined by the present Law, and for damage caused by inaccuracy or loss of data in the process of replacing materialized securities for dematerialized securities.
Article 213
The Central Registry shall be obliged to obtain an approval from the Commission for amendments of the Central Registry Statute, business rules and tariff booklet, and for the appointment of the management member.
Article 214
The Commission shall supervise the legality of the Central Registry business activities, and it shall make minutes about it.
In the course of the proceedings as specified in paragraph 1 of the present Article, the Commission may inspect the Central Registry acts, business books and other documents.
Article 215
Should the Commission find illegalities or irregularities while conducting supervision specified in the Article 214 of the present Law, the Commission shall issue orders for their removal and undertake one or more measures, in compliance with the provisions of the present Law and its enactments.
The Commission shall render a decision on undertaken measures specified in paragraph 1 of the present Article.
The Commission shall prescribe the mode of carrying out the supervision, procedure of issuing orders and undertaking measures specified in the present Article, and time limits for executing orders and duration of measures.
Article 216
The Central Registry shall file to the Commission a report on registration, clearing and balancing of securities and other facts important for the organized market.
The Commission shall prescribe the content and mode of filing a report specified in paragraph 1 of the present Article.
The Central Registry shall publicly announce the annual financial statement on its business activities, in compliance with the Commission's act and deliver it to the Commission.
Article 217
The provisions of the present Law related to the stock exchange employees, to employees, i.e. management members keeping a business secret and to prohibited activities in the stock exchange shall accordingly apply to the Central Registry.
National Bank of Serbia Powers
Article 218
The National Bank of Serbia shall adopt regulations that govern the mode of executing payment operations through the Central Registry monetary accounts.
The National Bank of Serbia shall supervise the legality of business activities of the Central Registry and its members in a part related to executing payment operations through the Central Registry monetary accounts.
Article 219
The Commission shall be an independent and autonomous organization of the Republic of Serbia.
The Commission shall be responsible to the People's Assembly of the Republic of Serbia for conducting activities from its scope of work.
The Commission shall have the status of a legal entity.
The head office of the Commission shall be in Belgrade.
Article 220
The Commission shall conduct the following activities falling under its competences:
1) it shall adopt enactments in order to implement the provisions of the present Law;
2) it shall approve issuance of securities with and without public offer;
3) it shall approve the status of professional investors to legal entities, in compliance with the provisions of the present Law and its own acts;
4) it shall grant work licences and approvals in compliance with the provisions of the present Law and law that governs establishment and business activities of investment funds;
5) it shall grant licences for conducting activities to broker-dealer companies in compliance with the provisions of the present Law;
6) it shall supervise business activities of broker-dealer companies, stock exchanges, organizers of over-the-counter securities trading markets, management companies, investment funds, the Central Registry, authorized banks, custody banks, issuers of securities, investors, professional investors and other persons (entities) - in a part of their activities conducted in the organized market, in compliance with the provisions of the present Law, of the law that governs takeover of joint-stock companies, of the law that governs investment funds and of the regulations enacted on the basis of such laws, and in compliance with the provisions of other law that govern this subject;
7) it shall request information from all authorized participants and market organizers and their auditors;
8) it shall organize, undertake and supervise the implementation of measures that are ensuring efficient functioning of the organized market and protection of investors;
9) it shall closely define the content of mandatory information delivered to it and publicly announced;
10) it shall determine criteria that must be met by information systems of authorized participants dealing with securities, of the Central Registry, of stock exchanges and of over-the-counter securities trading market organizers, and for the purpose of conducting the trade of securities;
11) it shall keep registries in compliance with the provisions of the present Law, the law that governs takeover of joint-stock companies and the law that governs investment funds;
12) it shall define the mode of safekeeping documents for authorized participants dealing with securities, the Central Registry, stock exchanges and over-the-counter securities trading market organizers;
13) it shall press charges to the competent state agency against authorized participants dealing with securities, the Central Registry, stock exchange and over-the-counter securities trading market organizer if elements of a criminal offence, commercial violation or misdemeanour have been discovered in the process of supervising them;
14) it shall follow the situation and trends in the organized market and undertake measures for the removal of irregularities in that market;
15) it shall cooperate with international organizations, foreign regulatory bodies and other domestic and/or foreign agencies and organizations for the purpose of providing legal aid, exchange of information and in other cases when there is such a need, in compliance with the provisions of the law;
16) it shall provide information on the organized market;
17) it shall conduct other activities defined by the provisions of the present Law and other law.
The Commission may initiate and run court proceedings in order to protect the interests of investors and other persons (entities) for which it determines that their particular right or their interest arising from that right has been violated, and such a violation is related to business activities involving securities and other financial instruments.
The Commission shall conduct activities specified in paragraph 1 items 1) to 14) as entrusted affairs.
General Powers of Commission in Carrying Out Supervision
Article 221
The Commission shall carry out the supervision by inspecting reports and documentation and other data the subjects of supervision specified in the Article 220 paragraph 1 item 6) of the present Law are obliged to have or obliged to deliver to the Commission in compliance with the provisions of the present Law and regulations enacted on the basis of the present Law, by conducting analyses of such data, and by taking statements from persons in charge and other employees of the subject of supervision, as well as from other persons who have knowledge interesting for the supervision.
The Commission's authorized persons - inspectors shall conduct the supervision specified in paragraph 1 of the present Article by conducting a direct supervision in the premises of the subject of supervision or in the premises of a legal entity that is directly or indirectly, in a business terms, management terms or in the capital terms related to the subject of supervision, by inspecting acts, business books, account statements, correspondences and other documents.
The subjects of supervision shall be obliged to allow the Commission's authorized persons to have access to business premises, to allow them to inspect and have delivered all requested documents and materials, to give statements and to provide other conditions for conducting the supervision.
The Commission shall prescribe in its act closer conditions and mode of implementing the Commission's powers in the supervision process.
Article 222
A supervision measures shall be used to order the removal of determined illegalities and irregularities, and to undertake activities for their removal.
Should illegalities and irregularities be found, the Commission shall render a decision ordering undertaking of particular acts and measures which shall contribute to the establishment of legality and harmonization of business activities with law and other regulations, and/or it shall pronounce appropriate measure prescribed by the present Law.
In a decision specified in paragraph 2 of the present Article, the Commission shall define the time limit for the execution of such a decision and obligation to have the evidence on a corrected illegality and irregularity delivered to it.
The Commission may pronounce a new measure if it finds that illegalities and irregularities have not been removed.
In a decision specified in paragraph 4 of the present Article, the Commission shall also pronounce a fine by accordingly applying the provisions of the present Law related to the execution of measures towards licensed subjects.
Should the Commission find there is a frequent violation of the provisions of the present Law, of the law that governs takeover of joint-stock companies, of the law that governs investment funds and regulations adopted on the basis of such laws, as well as of other laws regulating this subject, it may pronounce a public reprimand.
The Commission shall prescribe closer conditions and mode of exercising supervision, procedure of issuing orders and undertaking measures, time limits for executing orders and duration of measures and criteria for pronouncing fines.
Article 223
The Commission shall enact the Statute by which it shall, in compliance with the provisions of the present Law, define its competencies, and organization and mode of conducting activities from such competencies, rights, duties and responsibilities of members, president and secretary of the Commission, rights and duties of other employees, mode of providing operative assets, mode of enacting general and individual acts and other issues significant for the Commission's work.
The People's Assembly of the Republic of Serbia shall approve with the Commission's Statute.
Article 224
The Commission shall adopt rulebooks, instructions, directives and orders for the purpose of implementing and executing business activities defined by the present Law and other laws.
Article 225
The Commission shall accordingly apply the provisions of the law that governs general administrative proceedings when dealing with administrative matters, unless otherwise specified by the provisions of the present Law.
The Commission's decisions shall be final and one may initiate administrative dispute against them.
Article 226
The Commission may give its opinions, and other means of public announcements, when this is necessary for the purpose of implementing and executing particular provisions of the present Law.
Article 227
The Commission shall publish the Statute and other general acts in the "Official Herald of the Republic of Serbia" and in the Commission's Bulletin, and the Commission's decisions on approving, and/or registering the prospectus, declaring public offer void, granting and revoking licence for conducting the broker-dealer company activities, and/or work licence of the stock exchange and over-the-counter securities trading market organizer shall be published in the "Official Herald of the Republic of Serbia", the Commission's Bulletin and in one daily newspaper that is distributed in the entire territory of the Republic.
Article 228
The Commission shall have five members, including the President of the Commission.
The People's Assembly shall appoint and dismiss the President and members of the Commission upon a proposal of the People's Assembly of the Republic of Serbia competent working body in charge of finance. The President of the Commission shall present and represent the Commission and it shall manage its work.
Article 229
The President and members of the Commission shall be appointed for a five-year term.
The President and members of the Commission may be reappointed.
Article 230
For the position of the President and member of the Commission may be appointed the citizen of the Republic who possesses general work ability, faculty diploma and at least five years of work experience gained in conducting activities involving securities in the country or abroad.
Article 231
A person with the following background may not be appointed for the position of the President and member of the Commission:
1) a person who has been sentenced for a crime against labour, economy, property, judiciary, money laundry, public order and legal transactions and line of duty;
2) a person related to or married to other member of the Commission;
3) a person who is public servant;
4) a person who is member of a political party.
The President and members of the Commission shall be the permanent employees of the Commission.
The President and members of the Commission shall have no property portion in legal entities for which the Commission grants licences for conducting the broker-dealer company activities, and/or work licence.
The President and members of the Commission shall not conduct other activities that could influence their autonomy, impartiality and public image, and image of the Commission.
Article 232
The President and member of the Commission shall have their function terminated before the expiration of their term of office if they request so or when their employment ends due to meeting retirement conditions.
Article 233
The President and member of the Commission shall be dismissed from their positions in the following cases:
1) if they are sentenced for a crime to unconditional imprisonment for a minimum of six months or for a crime against labour, economy, property, judiciary, money laundry, public order and legal transactions and line of duty;
2) if a competent health institution's findings confirm they have permanently lost the working capacity of conducting their function;
3) if it is determined that they have conducted their function unprofessionally and unconscientiously;
4) if existence of one or more circumstances specified in the Article 231 of the present Law is determined.
Article 234
The People's Assembly of the Republic of Serbia competent working body in charge of finance shall determine if conditions for the termination of function, and/or dismissal of the President and member of the Commission have been met by initiating appropriate proceedings in the People's Assembly within a period of 60 days starting from the day such conditions have been determined.
The People's Assembly shall render a decision on the termination of function, and/or dismissal of the member of the Commission, and in such a decision it shall determine the day of the termination of function, and/or dismissal.
Article 235
The general regulations related to labour relations shall apply to rights and duties of the Commission's employees.
Article 236
The Commission shall decide at sessions headed by the President of the Commission or a member authorized by the President.
The quorum shall comprise of three members of the Commission.
The Commission shall decide by majority of votes of all members, including the President.
Should there be equal number of votes, the decisive vote shall be the President's one.
The President and members of the Commission shall be exempted from voting when deciding upon requests of legal entities in which they have capital participation.
Article 237
The President and members of the Commission shall be obliged to act professionally, conscientiously and impartially when conducting their activities.
The President and members of the Commission shall not jeopardize their autonomy, and/or the Commission's autonomy when making their decisions.
It shall be prohibited to any person (entity), body or organization to undertake any activity that may influence the autonomy of the Commission's work and decision-making process, or of any of its members.
It shall be prohibited to any person (entity), body or organization to undertake activities that legally fall under the Commission's competence, unless otherwise specified by the provisions of the present Law.
Article 238
The President and members of the Commission, as well as employees in the Commission, shall not be engaged in trade activities involving securities or counselling on such securities.
The persons specified in paragraph 1 of the present Article may not use their work in the Commission for the realization of their own interests.
Article 239
The President and members of the Commission, as well as employees in the Commission, shall be obliged to keep safe data on the issuers of securities, on persons (entities) supervised by the Commission, and on other data related to facts and circumstances they have come across while performing their functions, and/or activities, except for data that are available to public, and they shall not disclose such data to third persons, use them or allow third persons to use them.
The data specified in paragraph 1 of the present Article shall be considered as an official secret, except for data that are available to public.
By exception from the provisions of paragraph 1 of the present Article, data mentioned in that paragraph may be announced and disclosed only on the ground of the court order, and/or order of a competent administration body.
By exception from the provisions of paragraph 1 of the present Article, the Commission may announce and disclose data from that paragraph to competent bodies specified in the Article 37 paragraph 1 of the present Law - for the purpose of exchanging information and data, and for implementing the supervision function.
Article 240
The President and members of the Commission, as well as employees in the Commission, shall be obliged to give to the Commission data on securities they have at their disposal, and data on any change of balance in regard with such securities.
An obligation specified in paragraph 1 of the present Article shall also apply to immediate family members of persons specified in that paragraph.
The data on securities specified in paragraph 1 of the present Article shall be available to public.
The persons specified in paragraph 1 of the present Article shall not be members of the stock exchange bodies, over-the-counter securities trading market organizer, broker-dealer company, authorized bank, custody bank, the Central Registry, fund management company, investment funds, issuers of securities that are being traded in the organized market, nor can they represent interests of such participants before the Commission and/or before state or other bodies.
Article 241
The registers kept by the Commission shall be public.
The prospectus, summary prospectus, annual financial statement with the auditor's opinion, summary of annual report and report on important business events and legal facts about the issuer, shall also be an integral part of the registers specified in paragraph 1 of the present Article for all the issuers of securities.
The Commission shall closely prescribe the content, methods and mode of exercising the right to inspect the registries specified in the present Article.
Article 242
The authorized persons (entities) dealing with securities shall be obliged to deliver to the Commission the data they announce in compliance with the provisions of the present Law, before their actual announcement.
The Commission may request to have delivered other data interesting for investors and authorized participants that are dealing with such securities.
The data specified in paragraphs 1 and 2 of the present Article shall be delivered to the Commission in a written form.
The Commission shall prescribe which data is to be delivered in electronic, magnetic or other similar media.
Article 243
The Commission shall be obliged to establish information system with the Central Registry, stock exchanges, over-the-counter securities trading market organizers, broker-dealer companies, authorized banks, management fund companies and investment funds, and to provide the data protection.
The Commission shall prescribe criteria for safety of communications and protection of available data, simultaneously meeting the following conditions:
1) technical compatibility with equipment and information program of the Commission;
2) use of a telecommunication system for receiving information.
All information received through information and telecommunication system shall be considered as original documents, in compliance with characteristics and under the conditions prescribed by the Commission.
Tariff Booklet and Fund Sources
Article 244
The Commission shall adopt the Tariff Booklet that determines the amount of fees for business activities from its scope.
The Tariff Booklet specified in paragraph 1 of the present Article shall be published in the "Official Herald of the Republic of Serbia".
Article 245
The funds for the Commission's work shall be provided from fees collected for conducting activities falling within its scope of business activities, in compliance with the Tariff Booklet, as well as from other sources, in compliance with the provisions of the law.
The Commission's reserve funds shall be allocated from the realized revenues, in conformity with the financial plan.
The Commission shall finance the excess of expenditures over revenues from its own reserves, and if such funds are not sufficient - from the Budget of the Republic.
The Commission shall pay the surplus of revenues over expenditures into the Budget of the Republic.
Article 246
The Commission shall submit the annual financial statement for the previous year, with business report and authorized auditor's report enclosed, to the People's Assembly for approval before April 30th of the current year.
The audit of the Commission's annual financial statement shall be conducted in a mode defined by the law that governs the audit of accounting reports.
The Commission shall appoint the auditor who shall conduct the auditing specified in paragraph 2 of the present Article.
The Commission shall adopt the financial plan for the following year by November 30th of the current year and deliver it to the People's Assembly for approval.
The Commission shall, at least once a year, submit a report on its work to the People's Assembly, as well as a report on trends in the organized market in the Republic.
Article 247
The Commission shall be obliged to inform quarterly the Government about its work and trends in the organized market, enclosing appropriate documents related to the following:
1) granted and revoked work licences and licences for conducting the broker-dealer company activities, in compliance with the provisions of the present Law and laws that govern investment funds and takeover of joint-stock companies;
2) report on accomplishing the Commission's supervisory function, with the measures undertaken during the supervision;
3) realization of the Commission's financial plan for the current year;
4) standpoints and opinions of the Commission;
5) other documents related to implementation of the Commission's competences.
Article 248
A person who in the prospectus for issuing securities, summary prospectus, in any other form of public announcement related to issuance and trade of securities, preliminary prospectus, shelf prospectus, amendments to prospectus, prospectus for short-term securities, prospectus approved by a body specified in the Article 37 of the present Law that is in charge of securities abroad, report on important events, annual and semi-annual financial statement, summary of the annual financial statement and annual business report, announces untrue information about legal and financial status of an issuer or about his business capabilities and other untrue facts relevant for reaching the investment decision, and/or a person who does not announce complete data on such facts - shall be fined or sentenced by imprisonment of up to three years.
A person who fails to announce the amendments to prospectus or report on important events within a period of three days starting from the day the circumstances that may significantly influence the securities price have occurred - shall be fined or sentenced to imprisonment of up to three years.
Should there be a disturbance of the organized market due to offences specified in paragraphs 1 and 2 of the present Article, the perpetrator shall be sentenced to imprisonment for a period from one to five years.
Article 249
The issuer of securities shall be punished for a commercial violation by a fine ranging from 100.000 to 3.000.000 dinars:
1) if it allows subscription and payment of securities on the ground of the preliminary prospectus (Article 31 paragraph 1 of the present Law);
2) if it distributes the preliminary prospectus for a period longer than six months starting from the day the decision on its approval has been reached (Article 31 paragraph 2 of the present Law);
3) if it fails to deliver a copy of the preliminary prospectus to interested persons (entities), and/or if it fails to keep records on such persons (entities) and if it fails to deliver the amendments to prospectus to persons (entities) to whom the preliminary prospectus has been delivered (Article 31 paragraph 3 and the Article 34 paragraph 2 of the present Law);
4) if it subscribes to and makes payment for securities the shelf prospectus relates to within a time limit specified in the Article 32 paragraph 3 of the present Law;
5) if it fails to submit the request for amending the preliminary or shelf prospectus providing such circumstances have occurred which may significantly influence the evaluation of securities (Article 33 paragraph 1 of the present Law);
6) if it fails to announce the prospectus summary in compliance with the provisions of the Article 42 paragraph 1 of the present Law;
7) if it fails to place the prospectus for issuing securities and the summary prospectus at disposal of all interested persons (entities) at locations determined for the subscription and payment of such securities (Article 42 paragraph 2 of the present Law);
8) if it fails to deliver to every interested person (entity), upon his request, a copy of the prospectus for issuing securities or summary prospectus (Article 42 paragraph 3);
9) if it fails to make a subscription and payment of securities in compliance with the Article 43 of the present Law;
10) if it fails to make a subscription and payment of securities within a time limit and in a mode specified in the Article 44 of the present Law;
11) if it fails to return paid amounts to persons (entities) who have made a payment within a time limit specified in the Article 46 paragraph 6 of the present Law;
12) if it fails to deliver to the Commission evidence on the number of subscribed and paid securities and if it fails to submit a request to obtain approval for issuing securities within a time limit specified in the Article 47 paragraph 1 of the present Law;
13) if it fails to announce a report on the public offer results within a time limit and in a mode specified in the Article 48 of the present Law;
14) if it issues and offers, and/or trades short-term securities as opposed to the provisions of the Article 53 of the present Law;
15) if it issues and offers securities without the approved prospectus by public announcement to already identified purchasers (Article 54 of the present Law;
16) if before commencing subscription and payment of securities fails to submit to the Commission the request for approval of issuing securities without a public offer (Article 55 paragraph 1 of the present Law);
17) if it fails to deliver to the identified purchaser information on the issuance of securities without a public offer, whose issuance has been approved by the Commission's decision (Article 55 paragraph 4 of the present Law);
18) if it fails to inform the public and the Commission about its business activities in a mode specified in the provisions of the Articles 63, 64, 65, 66, 67 and 68 of the present Law;
19) if it acts as opposed to the provisions of the present Law related to prohibition of manipulation (Article 117 of the present Law);
20) if it acts as opposed to the provisions of the present Law related to prohibition on spreading untrue information (Article 119 of the present Law);
21) if it fails to enable the Commission's authorized person to conduct supervision over the issuer's business activities (Article 220 paragraph 1 item 6) of the present Law);
22) if it fails to announce the decision on the dematerialization of securities within a time limit and in a mode specified in the Article 261 paragraph 3 of the present Law;
23) if it acts as opposed to the provisions of the Article 261 paragraph 4 of the present Law;
The issuer of securities shall be fined in the range from 10% to 100% of the value of the entire issue of securities in the following cases:
1) if it fails to submit the request to open an issuance account and to subscribe securities with the Central Registry within a time limit and in a mode specified in the Article 49 paragraphs 2 and 3 of the present Law;
2) if it fails to submit the request to be accepted in the over-the-counter securities trading market to the market organizer within a time limit specified in the Article 49 paragraph 6 of the present Law;
The person in charge employed with the issuer of securities shall also be punished for committing a commercial violation specified in paragraph 1 of the present Article by a fine ranging from 50.000 to 200.000 dinars.
A protective measure of prohibiting the person in charge to perform specific activities for a period from one to five years and a protective measure of publicly announcing the court decision may be imposed together with the commercial violation fine specified in paragraphs 1 and 2 of the present Article.
Article 250
A broker-dealer company and/or authorised bank shall be punished for a commercial violation by a fine ranging from 100.000 to 3.000.000 dinars in the following cases:
1) if it fails to inform the Central Registry in a mode specified in the provisions of the Article 53 paragraphs 9 and 12 of the present Law;
2) if it trades debt securities outside the organized market as opposed to the provisions of the Article 62 of the present Law;
3) if it fails to inform immediately the market organizer where debt securities should be traded about a trade of debt securities outside the organized market (Article 62 paragraph 5 of the present Law);
4) if it fails to inform the Commission in compliance with the provisions of the Article 77 paragraph 8 of the present Law;
5) if it fails to deliver data to the Commission in compliance with the provisions of the Article 77 paragraph 10 of the present Law;
6) if it acts as opposed to the provisions of the present Law related to prohibition of manipulation (Article 117 of the present Law);
7) if it acts as opposed to the provisions of the present Law related to prohibition on spreading untrue information (Article 119 of the present Law);
8) if it conducts activities of a broker-dealer company without a licence (Article 123 paragraph 3 of the present Law);
9) if it conducts other business activity, besides activities conducted in compliance with the provisions of the Article 124 of the present Law;
10) if it conduct activities of an investment adviser as the only activity (Article 124 paragraph 3 of the present Law);
11) if it hires a mediator as opposed to the provisions of the Article 127 of the present Law;
12) if in case of statutory changes, and before obtaining the Commission's approval for joining, merging and separation, files an application to register those changes in the business companies' registry (Article 132 of the present Law);
13) if it conducts activities in the broker-dealer company unit without obtaining an approval to do so (Article 133 of the present Law);
14) if it fails to deliver the maximum amount of the tariff, and/or amendments of such a tariff to the Commission and if it fails to charge for its services in compliance with such a tariff (Article 134 paragraph 4 of the present Law);
15) if it fails to obtain the Commission's previous approval on amendments to the Statute and Business Rules (Article 135 of the present Law);
16) if broker-dealer company management member performs its activities without the Commission's approval (Article 136 of the present Law);
17) if it fails to act in a mode and within a time limit specified in the Article 141 of the present Law and if it starts conducting activities for which the licence was granted before actually registering those activities in the business companies registry (Article 141 of the present Law);
18) if it fails to inform the Commission about changing its legal form, name, headquarter or address, or if it fails to submit an evidence that it meets technical capabilities conditions (Article 142 of the present Law);
19) if its risk exposure towards one person (entity), and/or towards several persons (entities) exceeds the amount of 25% of its capital (Article 147 paragraph 1 of the present Law);
20) if it fails to inform immediately the Commission that it has exceeded the highest allowed risk exposure due to reasons specified in the Article 147 paragraph 3 of the present Law;
21) if total amount of all high risk exposures exceeds 800% of its capital (Article 148 paragraph 2 of the present Law);
22) if it fails to present reserves for common risks separately in the profit and loss account, and/or if it fails to present separately revenues and expenditures related to increase and/or decrease of such reserves (Article 150 of the present Law);
23) if it fails to establish special reserves in regard with special risks arising from individual business activities, and/or types of business activities it conducts (Article 151 of the present Law);
24) if it fails to determine and if it fails to exercise the proper liquidity management policy (Article 152 of the present Law);
25) if it fails to inform the Commission immediately about inability to settle mature monetary obligations (Article 154 of the present Law);
26) if it fails to calculate and prescribe data specified in the Article 155 of the present Law on monthly basis and if it fails to deliver monthly reports to the Commission in compliance with the provisions of the Article 156 of the present Law (Article 155 and 156 of the present Law);
27) if company management fails to act in a mode and within a time limit specified in the Article 159 of the present Law;
28) if it fails to respect the principle of equality of clients when conducting its business activities (Article 161 paragraph 1 of the present Law);
29) if it fails to enable access for clients to inspect its business rules and tariff booklet (Article 161 paragraph 3 of the present Law);
30) if it conducts business activities involving securities that are jeopardizing the organized market stability (Article 161 paragraph 6 of the present Law);
31) if it gives priority to its own interests over clients' interests, or if it fails to inform its client about possible conflicts of its own interests with the broker-dealer company or other clients interests (Article 161 paragraph 1 and 2 of the present Law);
32) if it fails to sign a written agreement with the client in a mode specified in the Article 163 of the present Law;
33) if it acts as opposed to the provisions of the Article 164 of the present Law;
34) if it fails to refuse an order in compliance with the Article 165 of the present Law;
35) if it fails to inform its client on each business transaction concluded upon his request, on the working day following the day of the purchase, and/or sale of securities, at the latest (Article 166 paragraph 1 of the present Law);
36) if it acts as opposed to the provisions of the Article 167 of the present Law;
37) if it fails to sign the contract on maintaining securities account with the client and if it fails to maintain the client's securities account in a mode specified in the Article 168 of the present Law;
38) if it fails to sign the contract on managing securities with the client in compliance with the Article 169 of the present Law;
39) if it fails to deliver to the Commission acts and data in compliance with the Article 171 of the present Law;
40) if it fails to enable the Commission's authorized person to supervise legality of its work in a mode specified in the Article 172 of the present Law;
The person in charge employed with the broker-dealer company or authorized bank shall also be punished for committing a commercial violation specified in paragraph 1 of the present Article by a fine ranging from 50.000 to 200.000 dinars.
A protective measure of prohibiting the person in charge to perform specific activities for a period from one to five years and a protective measure of publicly announcing the court decision may be imposed together with the commercial violation fine specified in paragraph 1 of the present Article.
Article 251
A bank conducting custody activities shall be punished for a commercial violation by a fine ranging from 100.000 to 3.000.000 dinars in the following cases:
1) if it acts as opposed to the provisions of the present Law related to prohibition of manipulation (Article 117 of the present Law);
2) if it acts as opposed to the provisions of the present Law related to prohibition on spreading untrue information (Article 119 of the present Law);
3) if it acts as opposed to the provisions of the Article 181 paragraph 3 of the present Law;
4) if it fails to keep separate records on securities and persons (entities) on whose behalf it opens and maintains securities accounts (Article 181 paragraph 4 of the present Law);
5) if broker-dealer company activities are being conducted in the organizational unit that is conducting activities of the custody bank (Article 181 paragraph 6 of the present Law);
6) if it uses securities kept on custody account without the client's order or in disaccord with the client's order (Article 181 paragraph 8 of the present Law);
7) if it fails to issue a balance statement of the funds on the clients custody account upon clients request, within a period of three days starting from the day the request was submitted (Article 181 paragraph 9 of the present Law);
8) if it renders a decision on appointment of a person who shall manage custody bank activities without previously obtaining the Commission's approval (Article 182 paragraph 2 of the present Law);
9) if it fails to obtain the Commission's approval on business rules involving securities (Article 183 paragraph 1 of the present Law);
10) if it fails to sign the contract with the client in a written form (Article 183 paragraph 4 of the present Law);
11) if it starts conducting custody bank activities for which the licence has been issued before registering those activities in the business companies registry (Article 184 of the present Law);
12) if it fails to deliver reports on custody bank business activities to the Commission (Article 184 of the present Law);
13) if it fails to enable the Commission's authorized person to supervise over business activities (Article 184 of the present Law);
The person in charge employed with the bank conducting custody activities shall also be punished for committing a commercial violation specified in paragraph 1 of the present Article by a fine ranging from 50.000 to 200.000 dinars.
A protective measure of prohibiting the person in charge to perform specific activities for a period from one to five years and a protective measure of publicly announcing the court decision may be imposed together with the commercial violation fine specified in paragraph 1 of the present Article.
Article 252
The market organizer shall be punished for a commercial violation by a fine ranging from 100.000 to 3.000.000 dinars in the following cases:
1) if it fails to accept securities that meet conditions to be traded at the organized market in the over-the-counter securities trading market within a time limit specified in the Article 49 paragraph 7 of the present Law);
2) if upon the issuer's request it fails to include securities that do not meet conditions to be accepted to the stock exchange market listing to the over-the-counter securities trading market, in compliance with the Article 49 paragraph 9 of the present Law;
3) if it fails to inform the Commission about accepting securities to the organized market (Article 49 paragraph 10);
4) if it fails to inform the Commission in compliance with the Article 77 paragraph 8 of the present Law;
5) if it fails to deliver data to the Commission in compliance with the Article 77 paragraph 10 of the present Law;
6) if it acts as opposed to the provisions of the Article 79 of the present Law;
7) if it fails to file an application to be registered with the business companies registry within a period of 30 days starting from the day the Commission's decision on granting the work licence and decision on previous approval for the election, i.e. appointment of the stock exchange management members is received (Article 83 paragraph 2 of the present Law);
8) if it commences conducting activities for which the work licence is issued before actually registering those activities with the business companies registry (Article 83 paragraph 4 of the present Law);
9) if it elects, i.e. appoints a person as a stock exchange management member without obtaining previous Commission's approval (Article 85 of the present Law);
10) if it appoints as a stock exchange management member a person who is employed with the market organizer, broker-dealer company, bank or issuer of securities whose securities are being traded in that organized market (Article 91 of the present Law);
11) if it fails to obtain the Commission's previous approval to change the establishment act, Statute, Business Rules, Listing and Quotation Booklet and Tariff Booklet of the market organizer (Article 94 of the present Law);
12) if it fails to inform the Commission about change of name, headquarter or address of the market organizer (Article 95 of the present Law);
13) if it fails to act in a mode and within a time limit specified in the Article 96 paragraph 7 of the present Law;
14) if it violates the principle of equality as opposed to the provisions of the Article 97 of the present Law;
15) if it fails to inform the Commission about undertaken measures in compliance with the Article 98 paragraph 3 of the present Law;
16) if it acts as opposed to the provisions of the present Law related to undertaking the same supervisory measures against all stock exchange members (Article 98 paragraph 4 of the present Law);
17) if it fails to organize the information system in compliance with the provisions of the Article 99 of the present Law;
18) if it appoints the stock exchange management member as a stock exchange arbitration tribunal member (Article 100 paragraph 3 of the present Law);
19) if it fails to accept to the stock exchange market securities that do meet conditions to be accepted to the listing (Article 101 paragraph 3 of the present Law);
20) if it fails to act in a mode and within a time limit specified in the Article 101 paragraph 4 of the present Law;
21) if it fails to determine the exchange rate of securities that are being traded in the stock exchange, and/or over-the-counter securities trading market and if it fails to deliver it to the Commission on daily basis (Article 105 of the present Law);
22) if it fails to announce the exchange rate in a mode specified in the Article 105 paragraph 4 of the present Law;
23) if it fails to exclude securities of a particular issuer from the stock exchange, and/or over-the-counter securities trading market under conditions specified in the Article 107 of the present Law;
24) if it fails to act in a mode and within a time limit specified in the Article 108 paragraph 2 of the present Law;
25) if it fails to enable the Commission to conduct supervision over the market organizer business activities (Article 109 of the present Law);
26) if it fails to deliver data and reports to the Commission as specified in the Article 116 of the present Law;
27) if it acts as opposed to the provisions of the present Law related to prohibition of manipulation (Article 117 of the present Law);
28) if it acts as opposed to the provisions of the present Law related to prohibition of spreading untrue information (Article 119 of the present Law);
29) if it acts as opposed to the provisions of the present Law related to inclusion in, and/or exclusion from the over-the-counter securities trading market (Article 262 paragraphs 4 and 6 of the present Law).
The person in charge employed with the market organizer shall also be punished for committing a commercial violation specified in paragraph 1 of the present Article by a fine ranging from 50.000 to 200.000 dinars.
A protective measure of prohibiting the person in charge to perform specific activities for a period from one to five years and a protective measure of publicly announcing the court decision may be imposed together with the commercial violation fine specified in paragraph 1 of the present Article.
Article 253
The Central Registry shall be punished for a commercial violation by a fine ranging from 100.000 to 3.000.000 dinars in the following cases:
1) if it fails to inform the issuer and market organizer about the subscription of securities within a time limit specified in the Article 49 paragraph 5 of the present Law;
2) if it fails to conduct clearing and balancing of short-term securities and if it fails to publicly announce prescribed data (Article 53 paragraphs 10 and 13 of the present Law);
3) if it fails to deliver data to the Commission as specified in the Article 77 paragraph 8 of the present Law;
4) if it acts as opposed to the provisions of the present Law related to prohibition of manipulation (Article 117 of the present Law);
5) if it acts as opposed to the provisions of the present Law related to prohibition of spreading untrue information (Article 119 of the present Law);
6) if it conducts other activities besides activities specified in the Article 187 of the present Law;
7) if it fails to deliver to the Commission a copy of registration with the business companies registry within a time limit specified in the Article 189 paragraph 2 of the present Law;
8) if it fails to act in a mode and within a time limit specified in the Article 204 paragraph 3 of the present Law;
9) if it fails to inform the Commission about control results (Article 207 paragraph 3 of the present Law);
10) if it fails to protect the information system and data placed at its disposal as specified in the Article 211 of the present Law;
11) if it fails to enable access to data base, and/or if it issues the copy with data in a mode specified in the Article 211 paragraph 5 of the present Law;
12) if it adopts general acts specified in the Article 200 without the Commission's approval or if it changes acts specified in the Article 200 without the Commission's approval or if it fails to obtain the Commission's previous approval specified in the Article 213 of the present Law (Articles 200 and 213 of the present Law);
13) if it fails to enable the Commission to conduct supervision over the Central Registry business activities (Article 214 of the present Law);
14) if it fails to deliver business reports to the Commission and if it fails to announce the annual business report in compliance with the Commission's act (Article 216 of the present Law);
15) if it fails to inform the issuer and market organizer as specified in the provisions of the Article 261 paragraph 11 of the present Law.
The person in charge employed with the Central Registry shall also be punished for committing a commercial violation specified in paragraph 1 of the present Article by a fine ranging from 50.000 to 200.000 dinars.
Article 254
The legal entity shall be punished for a commercial violation by a fine ranging from 100.000 to 3.000.000 dinars in the following cases:
1) if it trades debt securities outside the organized market with persons (entities) that are not specified in the Article 62 paragraph 1 of the present Law;
2) if it fails to inform immediately the market organizer about the signed contract on sale of securities outside the organized market (Article 62 paragraph 5 of the present Law);
3) if it fails to inform the issuer, the Commission and agency in charge of preventing monopoly about disposal and acquisition of shares in a mode and within a time limit specified in the Article 68 paragraph 1 of the present Law;
4) if upon the Commission's request it fails to deliver a list of persons (entities) to the Commission as specified in the Article 72 paragraph 2 of the present Law;
5) if it fails to regularly update data from the list of persons (entities) and of it fails to safe keep it as specified in the provisions of the Article 72 paragraph 4 of the present Law;
6) if it fails to inform the persons (entities) from the list with the obligation to protect privileged information as specified in the provisions of the Article 72 paragraph 5 of the present Law;
7) if it conducts activities of organizing trade of securities and financial derivatives without the stock exchange's work licence, and/or without the over-the-counter securities trading market organizer's work licence (Article 76 paragraph 4 of the present Law);
8) if it uses the name stock exchange or over-the-counter securities trading market organizer in legal transactions as opposed to the provisions of the Article 84 of the present Law;
9) if it acts as opposed to the provisions of the present Law related to prohibition of manipulation (Article 117 of the present Law);
10) if it acts as opposed to the provisions of the present Law related to prohibition of spreading untrue information (Article 119 of the present Law);
11) if it conducts broker-dealer company activities without a licence for conducting such activities (Article 123 paragraph 3 of the present Law);
12) if it uses names broker-dealer company, broker, investment advisor or portfolio manager or derived words in legal transactions as opposed to the provisions of the Article 124 of the present Law;
13) if it conducts custody bank activities without a licence for conducting such activities (Article 180 paragraph 1 of the present Law);
14) if it uses the name custody bank in legal transactions as opposed to the provisions of the Article 182 paragraph 5 of the present Law;
15) if it conducts activities specified in the Article 187 of the present Law as opposed to the provisions of the present Law;
16) if it fails to enable the Commission to conduct supervision over its business activities (Article 220 paragraph 1 item 6) of the present Law.
The person in charge employed with the legal entity shall also be punished for committing a commercial violation specified in paragraph 1 of the present Article by a fine ranging from 50.000 to 200.000 dinars.
A protective measure of prohibiting the person in charge to perform specific activities for a period from one to five years and a protective measure of publicly announcing the court decision may be imposed together with the commercial violation fine specified in paragraph 1 of the present Article.
Article 255
An individual shall be punished for a misdemeanour by a fine ranging from 10.000 to 50.000 dinars for conducting activities specified in the Article 254 of the present Law.
An entrepreneur shall be punished for a misdemeanour by a fine ranging from 100.000 to 500.000 dinars for conducting activities specified in the Article 254 of the present Law.
Article 256
The following persons (entities) shall be punished by a fine ranging from 10% to 100% of the total nominal, i.e. total book value of securities in the following cases:
1) issuer who fails to dematerialize securities within a time limit specified in the Article 261 paragraph 1 of the present Law;
2) legal entities specified in the Article 261 paragraph 7 of the present Law who fail to deliver to the Central Registry data from books or registries of shares and other securities that they keep for other persons (entities) and who fail to file an application to subscribe such securities with that registry within a time limit specified in the Article 261 paragraph 7 of the present Law;
3) joint-stock company that fails to deliver to the Central Registry data from the book of shareholders and that fails to file an application to subscribe such shares with that registry within a time limit specified in the Article 261 paragraph 8 of the present Law;
4) issuer of debt securities who fails deliver to the Central Registry data on lawful possessors and securities owned by them and who fails to file an application to subscribe such securities with that registry within a time limit specified in the Article 261 paragraph 9 of the present Law;
5) issuer who fails to file an application to the market organizer to include securities in the organized market within a time limit specified in the Article 261 paragraph 13 of the present Law;
6) issuer of shares issued before the application of the present Law who fails to act in a mode and within a time limit specified in the Article 262 paragraph 2 of the present Law;
7) joint-stock companies that fail to harmonize their business activities within a time limit specified in the Article 262 paragraph 3 of the present Law.
The person in charge employed with the legal entity shall also be punished for committing a commercial violation specified in paragraph 1 of the present Article by a fine ranging from 50.000 to 200.000 dinars.
A protective measure of prohibiting the person in charge to perform specific activities for a period from one to five years and a protective measure of publicly announcing the court decision may be imposed together with the commercial violation fine specified in paragraph 1 of the present Article.
XVII TRANSITIONAL AND CONCLUDING PROVISIONS
Article 257
The Securities Commission that conducts business activities in compliance with the provisions of the Law on the Market of Securities and other Financial Instruments ("Official Gazette of the Federal Republic of Yugoslavia, No. 65/02 and "Official Herald of the Republic of Serbia", Nos. 57/03, 55/04, 45/05, 85/05 and 101/05) shall continue to conduct business activities in compliance with the provisions of the present Law.
The Commission shall be obliged to organize itself and to harmonize its general enactments with the provisions of the present Law within a period of five months starting from the day of its coming into force, and enactments adopted on the ground of the Law on the Market of Securities and other Financial Instruments ("Official Gazette of the Federal Republic of Yugoslavia, No. 65/02 and "Official Herald of the Republic of Serbia", Nos. 57/03, 55/04, 45/05, 85/05 and 101/05) shall be appropriately applied until such enactments are adopted.
Licences, decisions, measures and other acts adopted by the Commission in compliance with the provisions of the Law on the Market of Securities and other Financial Instruments ("Official Gazette of the Federal Republic of Yugoslavia, No. 65/02 and "Official Herald of the Republic of Serbia", Nos. 57/03, 55/04, 45/05, 85/05 and 101/05) shall remain in force on the day when the present Law comes into force.
Proceedings initiated before the Commission prior to day when the present Law starts its application shall terminate in compliance with the provisions of the Law on the Market of Securities and other Financial Instruments ("Official Gazette of the Federal Republic of Yugoslavia, No. 65/02 and "Official Herald of the Republic of Serbia", Nos. 57/03, 55/04, 45/05, 85/05 and 101/05).
The Commission members appointed in compliance with the regulations valid until the coming into effect of the present Law shall continue doing their tasks until new members are elected, which election shall take place by September 30, 2006 at the latest.
Should the People's Assembly not appoint new Commission members within a period specified in paragraph 5 of the present Article, the existing Commission members shall continue doing their tasks until new members are elected, with powers defined by the present Law.
On the occasion of the first election of the President of the Commission and members of the Commission in terms of paragraphs 5 and 6 of the present Article, the President shall be elected for a five year term, one member for a four year term, one member for a three year term, one member for a two year term and one member for a one year term.
If the function of the President, and/or member of the Commission terminates before the mandate expires, than the new President, and/or member of the Commission shall be appointed until the expiration of a mandate of the President, and/or member whose function has terminated.
Article 258
A broker-dealer company established prior to the present Law coming into effect shall continue working in compliance with the provisions of the present Law and shall organize themselves and harmonize their legal status, general enactments and business activities with the provisions of the present Law within a period of six months starting from the day of the present Law coming into force.
Individuals and legal entities who have acquired shares, and/or portions of a broker-dealer company prior to the present Law coming into force shall have no obligation to harmonize with the provisions of the present Law related to the acquisition of the qualified participation.
Should persons (entities) specified in paragraph 1 of the present Article subsequently acquire more shares of the broker-dealer company, they shall be obliged to act in compliance with the provisions of the present Law related to the acquisition of the qualified participation.
Article 259
The Central Registry established on the ground of the Law on the Market of Securities and other Financial Instruments ("Official Gazette of the Federal Republic of Yugoslavia, No. 65/02 and "Official Herald of the Republic of Serbia", Nos. 57/03, 55/04, 45/05, 85/05 and 101/05) shall continue its work in compliance with the provisions of such Law and it shall organize itself and harmonize its general enactments and its business activities with the provisions of the present Law within a period of six months starting from the day of its coming into force.
Decisions, measures and other acts adopted by the Central Registry in compliance with the provisions of the Law on the Market of Securities and other Financial Instruments ("Official Gazette of the Federal Republic of Yugoslavia, No. 65/02 and "Official Herald of the Republic of Serbia", Nos. 57/03, 55/04, 45/05, 85/05 and 101/05) shall remain in force on the day when the present Law comes into force.
Article 260
The stock exchange that conducted its business activities in compliance with the Law on the Market of Securities and other Financial Instruments ("Official Gazette of the Federal Republic of Yugoslavia, No. 65/02 and "Official Herald of the Republic of Serbia", Nos. 57/03, 55/04, 45/05, 85/05 and 101/05) shall continue its work in compliance with the provisions of the present Law and it shall organize itself and harmonize its general enactments and its business activities with the provisions of the present Law within a period of six months starting from the day of its coming into force.
The stock exchange shall be obliged to harmonize the amount of its basic capital with the provisions of the Article 80 of the present Law within a period of two years starting from the day when the present Law comes into force.
The stock exchange that conducted its business activities in compliance with the Law on the Market of Securities and other Financial Instruments ("Official Gazette of the Federal Republic of Yugoslavia, No. 65/02 and "Official Herald of the Republic of Serbia", Nos. 57/03, 55/04, 45/05, 85/05 and 101/05) shall organize an over-the-counter securities trading market within a period of six months starting from the day when the present Law comes into force, in compliance with the provisions that govern over-the-counter securities trading market.
When conducting harmonization specified in paragraph 3 of the present Article, the stock exchange shall have no obligation to pay additional basic capital for the over-the-counter securities trading market organizer as specified in the Article 113 of the present Law.
The Commission shall issue the work licence for the over-the-counter securities trading market organizer to the stock exchange on the ground of documents the stock exchange is obliged to deliver as specified in paragraph 3 of the present Article.
The Commission shall issue the work licence for the over-the-counter securities trading market organizer to the stock exchange within a period of 15 days starting from the day the application specified in paragraph 6 of the present Article was filed.
The Commission shall revoke the work licence to the stock exchange that does not act as specified in the provisions of paragraphs 1 and 2 of the present Article and it shall initiate a liquidation proceeding against it.
Decisions, measures and other acts adopted by the stock exchange in compliance with the provisions of the Law on the Market of Securities and other Financial Instruments ("Official Gazette of the Federal Republic of Yugoslavia, No. 65/02 and "Official Herald of the Republic of Serbia", Nos. 57/03, 55/04, 45/05, 85/05 and 101/05) shall remain in force on the day when the present Law comes into force.
Shareholders who have acquired shares of the stock exchange prior to the present Law coming into force shall have no obligation to harmonize with the provisions of the present Law related to the acquisition of the qualified participation.
Persons (entities) specified in paragraph 9 of the present Article shall be obliged to act in compliance with the provisions of the present Law related to the acquisition of the qualified participation.
Article 261
The issuer shall be obliged to dematerialize the materialized securities issued prior to the present Law coming into force within a period of six months starting from the day of the present Law coming into force and it shall cancel and declare void all issued materialized securities, i.e. certificates that are being dematerialized.
The decision on a dematerialization of securities shall be rendered by the body of a legal entity - the issuer, and this decision shall be forwarded to the Central Registry through the Central Registry member.
The issuer shall publish the decision specified in paragraph 2 of the present Article in at least two daily newspapers distributed in the entire territory of the Republic of Serbia, within a period of 15 days starting from the day of its adoption, at the latest.
The issuer shall be obliged to invite all the owners of materialized securities to hand them in to the Central Registry by the decision specified in paragraph 2 of the present Article - for the purpose of exchanging them for dematerialized securities, and it shall specify the time limit for such exchange, which shall neither be shorter than 30 days nor exceeding 90 days starting from the day the decision has been made public.
On the day the decision specified in paragraph 2 of the present Article was published, securities that decision applies to shall no longer be valid as securities and shall become identification documents serving to exercise the right to exchange.
The Central Registry shall prescribe in detail the procedure of exchanging materialized securities for dematerialized ones in its business rules.
Legal entities that keep books or registries of shares and other securities on behalf of other persons (entities) shall be obliged to deliver to the Central Registry data from such books, and/or registries related to lawful possessors and issued securities owned by them that have not been withdrawn, and/or securities whose maturity date has not expired and to file an application to subscribe such securities with that registry, all this within a period of six months starting from the day of the present Law coming into force.
Joint-stock companies shall be obliged to deliver to the Central Registry data from the book of shareholders and to file an application to subscribe to issued, but not withdrawn securities to that registry, within a period of six months starting from the day of the present Law coming into force.
The issuers of debt securities shall be obliged to deliver to the Central Registry data related to lawful possessors and issued securities owned by them that have not been withdrawn, and/or securities whose maturity date has not expired and to file an application to subscribe such securities with that registry, all this within a period of six months starting from the day of the present Law coming into force.
The issuer shall file an application specified in paragraphs 8 and 9 of the present Article through a broker-dealer company or authorized bank.
The Central Registry shall be obliged to inform the issuer and market organizer about subscribing with the registry, on the ground of an application specified in paragraphs 7-9 of the present Article and in a mode prescribed in the Article 49 of the present Law.
The Central Registry shall closely prescribe conditions, mode and form of filing an application and data specified in the present Article.
The issuer of securities specified in paragraphs 7-9 of the present Article shall be obliged to file an application to the market organizer to include such securities in the organized market, within a period of three days starting from the day the Central Registry decision on subscription of securities has been received.
Article 262
The issuers that have issued securities prior to the day of coming into effect of the present Law shall meet their liabilities arising from such securities in compliance with the decision on their issuance.
The shares that have been issued prior to the day of coming into effect of the Law on the Market of Securities and other Financial Instruments ("Official Gazette of the Federal Republic of Yugoslavia, No. 65/02 and "Official Herald of the Republic of Serbia", Nos. 57/03, 55/04, 45/05, 85/05 and 101/05) and shares of open joint-stock companies that have been issued through public offer in compliance with the Law on Companies ("Official Herald of the Republic of Serbia", No. 125/04) and Law on the Market of Securities and other Financial Instruments ("Official Gazette of the Federal Republic of Yugoslavia, No. 65/02 and "Official Herald of the Republic of Serbia", Nos. 57/03, 55/04, 45/05, 85/05 and 101/05) shall be considered as shares issued through public offer and issuers of such shares shall be obliged to include them in the organized market within a period of three months starting from the day the present Law begins with its application.
A joint-stock company that has issued the shares specified in paragraph 2 of the present Article shall be obliged to harmonize its business activities with the present Law, within a period of three months starting from the day the present Law begins with its application.
The proprietors' securities for which the issuer has not filed an application to be included in the organized market shall be traded in one over-the-counter securities trading market, and such securities shall be included in the over-the-counter securities trading market upon the lawful possessor's request.
A lawful possessor specified in paragraph 4 of the present Article shall deliver an extract from the Central Registry containing data on the ownership on such securities, together with the request for the inclusion in the over-the-counter securities trading market.
Should the issuer of proprietor's securities specified in paragraph 4 of the present Article include such securities in the organized market, than the over-the-counter securities trading market organizer specified in paragraph 4 of the present Article shall be obliged to exclude them from the over-the-counter securities trading market.
Article 263
As of the day the present Law comes into effect, the Law on the Market of Securities and other Financial Instruments ("Official Gazette of the Federal Republic of Yugoslavia, No. 65/02 and "Official Herald of the Republic of Serbia", Nos. 57/03, 55/04, 45/05, 85/05 and 101/05) shall no longer be effective.
Article 264
The present Law shall come into effect on the eighth day from the day of its publishing in the "Official Herald of the Republic of Serbia", and shall be applied after the expiry of six months following the day of its coming into effect.