Official Gazette of Montenegro 53/09 of 7 August 2009 [unofficial translation]
DECREE PROMULGATINGTHESECURITIES LAW
(OGRM 59/00, 10/01, 43/05, 28/06, OGM53/09 of 7 August 2009)
The Securities Law is hereby promulgated, which has been adopted by the Parliament of the Republic of Montenegro at the second sitting of the second ordinary session in 2000, on 22 December 2000.
Number:01-2913/2
Podgorica,26December 2000
PresidentoftheRepublicofMontenegro
MiloĐukanović,m.p.
SECURITIES LAW
I. GENERAL PROVISIONS
Scope and Purpose ofthe Law
Article 1
This Law regulates the types of securities, the issue of securities and trade in those securities, the rights and obligations of entities on the securities market, and the organisation, scope of work and responsibilitiesof the Securities and Exchange Commission of the Republic of Montenegro.
Definition of Securities
Article 2
Securities shall mean documents granting rights to its owners in relation to the issuers in accordance with Law and under the terms of issuance.
According to the granted rights, securities shall be divided into equity and debt securities.
Equity securitiesshall mean shares denominated as a share of capital of a joint-stock company and collective investment schemes units, issued in accordance with a speciallaw, as well as securities that grant the acquisition right for these securities (convertible bonds, options, futures, and similar).
Debt securities shall mean securities issued in series that grant to the holder the right to a payment of nominated value, with or without interest, as well as other rights in accordance with regulations and decision on the issue.
Debt securities, in the meaning of this Law, shall be:
1)bonds, by which issuer is obliged to pay the bondholder the nominal value of the bonds and the agreed-upon interest at maturity;
2)certificates of deposit by which issuer is obliged to pay to the holder of the certificate the value of the deposited funds and the related interest by a specified date;
3)Treasury bills issued by the Republic of Montenegro (hereinafter referred to asthe Republic);
4)other financial instruments prescribed by regulations of the Securities and Exchange Commission of the Republic of Montenegro (hereinafter referred to as the Commission) as securities, but not including:
-checks and bills of exchange;
-commercial papers (trade order, letter of credit, goods order, bill of lading, warehouse receipt);
-and other instrument prescribed by the Commission not to be securities for the purpose of this Law.
Debt securities shall be divided into short-term and long-term as follows: debt securities shall be considered as short-term when their maturity date is shorter than a year as of the day of their issuance, whereas debt securities shall be considered as long-term when their maturity date exceeds the period of a year as of the day of their issuance.
Dematerialization of Securities
Article 3
Securities are issued, transferred and kept in dematerialized form.
Essential Elements of Securities
Article 4
Essential elements of dematerialized securities are:
1)identification of securities’ type;
2)identification of a category and serial number;
3)name (title), head office and full address of the issuer and its identification in the Registry of issuers maintained by the Commission;
4)issuer’s liabilities as well as rights and responsibilities of security owner including the manner of their fulfilment;
5)place and date of issuance;
6)names of the persons authorized to represent the issuer;
Other elements shall be stipulated by the rules of the Commission.
Registration of Securities
Article 5
Securities issued in accordance with this Law must be registered at the Central Depository Agency that is established and operates in accordance with this Law.
The rights and obligations related to the securities shall start upon registration at the Central Depository Agency.
Issuers of Securities
Article 6
The issuer of securities may be the Republic of Montenegro, a municipality, business organization and any other legal person registered with the Central Registry of the Commercial Court.
II. SECURITIES AND EXCHANGE COMMISSION
Establishment and Status
Article 7
The Commission is an organization of the Republic of Montenegro, with the status of a legal person, established for the purpose of regulating and supervising the issue of and trade in securities.
The headquarters of the Commission shall be in Podgorica.
The Commission shall be independent and autonomous in the conduct of its activities as specified in the law and shall report to the Parliament of the Republic of Montenegro (hereinafter referred to as the Parliament).
responsibilities
Commission Responsibilities
Article 8
The Commission shall have the following responsibilities:
1)to make Rules with respect to implementation of this Law, when authorised therefore;
2)to ensure that this Law and any Rules made under this Law are complied with;
3) to approve public offers of securities and keep records of issues of securities which are not sold by public offer;
4) to supervise public offers of securities;
5)to license and approve relevant actsof securities markets, authorised market participants and Central Depository Agency;
6)to authorise and regulate collective investment schemes established in accordance with a separate Law and approve adequate acts;
7) to approve nomination ofexecutive directors of the personslicensed by the Commission;
8) keep records and registers in accordance with provisions of this Lawthat are freely available to the interested persons for inspection;
9) to set general requirements to be met by natural persons professionally engaged in trade in securities;
10) to promote and encourage high standards of investor protection and integrity among licensees;
11) to monitor and enforce Rules for the conduct of business by licensees including the suspension and revocation of licenses;
12) to undertake measure and support the operation of an orderly, fair and properly informed securities market;
13) to regulate the manner and scope of trading on a securities market;
13a) to determine highest value of commissions and other fees collected by the stock exchange for its services, when it determines that their amount discourages development of securities market;
13b) to regulate issuance and trade in short-term securities in moredetails.
14) deleted;
15) to take all steps to safeguard the interests of persons who invest in securities and to suppress illegal, dishonourable and improper practices in relation to dealings in securities;
16) to take actions and perform control and examination to prevent any frauds on the securities market;
17) to co-operate with other related authorities in Montenegro or elsewhere; and
18) to take other actions and perform other duties under the law.
Commission Rules and Other Acts
Article 9
Without limitation to specific provisions in this Law enabling the Commission to make Rules, the Commission may make Rules for or with respect to:
1)applications for licenses, the issue of licenses and incidental matters;
2)the display of licenses and the issue of duplicates;
3)the qualifications, experience and training required of natural person that are to be licensees, the examinations that applicants for licenses may be required to take, and the circumstances in which they may be excused from such requirements;
4)the making of annual or other periodicreports to the Commission by licensees;
5)the conditions subject to which securities may be listed and the circumstances in which dealings in listed securities shall be suspended;
6)the particulars to be recorded in relation to accounts to be kept for the purposes of this Law, and the particulars to be recorded in profit and loss accounts and balance sheets;
7)the information to be contained in auditors’ reports required to be filed under this Law;
8)deleted;
9)the form and content of advertisements relating to securities business, and possible restrictions upon the entities who may issue advertisements;
10)transactions with securities purchased in compliance with resale agreements and securities sold in compliance with repurchase agreements (REPOs);
11)executing custody operations.
The Commission shall be obliged to publish draft rules on its website, at the latest 14 days before their adoption, soliciting comments, proposals or suggestions from interested parties.
The Commission may determine a shorter deadline than the deadline referred to in paragraph 2 of this Article, if proposed rules prescribe activities requesting urgent action.
Rules issued by the Commission that have the character of general acts shall be published in the Official Gazette of Montenegro.
The Commission may issue instructions, bulletins, advice or other regulatory statements, as it may consider necessary or desirable for the administration of this Law.
Decision of Commission
Article 10
The provisions of the law regulating general administrative procedure shall apply to the procedures before the Commission, unless otherwise determined by this Law.
Decisions by the Commission related to matters set forth in Article 8, paragraph 1, points 3, 4, 5, 6, 7, 11 and 16, of this Law, shall be made in the form of resolutions.
The Commission shall make a decision on an application within 30 days from the date of receiving the properly made application, i.e., from the date when the submitted documents are considered complete by the Commission.
Decisions specified in paragraph 1 above are final.
A party may initiate an administrative dispute beforethe competent court against decisions of the Commission.
Decisions on approving or revoking public offers of securities and issuing, suspending or revoking licenses shall be published in the Official Gazette of Montenegro.
Membership and Nomination of the Commission Members
Article 11
The Commission shall consist of 5 members: the chairman, the deputy chairman, and three members.
The Commission shall be appointed by the Parliament from persons nominated by the Government of the Republic of Montenegro (hereinafter: the Government).
The persons with university education and professional experience of more than 5 years in the areas of law, monetary, economic or financial systems and with a recognized standing eligible for this position may be nominated as a member of the Commission.
The following persons shall not be eligible for appointment as members of the Commission:
1)the persons elected, nominated or employed in government bodies;
2)members of governing and managing boards, executive bodies and secretaries of the securities issuers,
3)shareholders and employees of Stock Exchanges, licensees, Central Depository Agency; and
4)persons in matrimony with each other or in kinship either in an ascendant line, or in a collateral line, or in-laws up to the third degree.
The chairman, the deputy chairman and at least one of the members of the Commission shall be full-time paid members exclusively engaged in the business of the Commission, and shall not carry out any other paid job, except for activities in the fields of science, research and lecturing.
The chairman of the Commission shall manage and act for and represent the Commission.
If the office of chairman of the Commission is vacant, or if the chairman of the Commission is unable to act as chairman due to illness or other incapacity, the deputy chairman shall act as chairman in his place.
The members of the Commission must behave so as not to detract from their own reputation or the prestige of the Commission and so as not to jeopardize their independence and impartiality in making decisions and the independence of the Commission.
The members of the Commission must not use their work in the Commission and the prestige of the Commission in pursuit of their own interests.
Term of Office
Article 12
A member of the Commission shall be appointed for the term of five years and may be re-appointed.
The office of a member shall be vacated:
1)if he is performing his duties as a member of the Commission in a negligent and inefficient manner;
2)if he becomes permanently incapable of performing his duties as a member;
3)if he is convicted with an unconditional custodial sentence or of an offence that makes him unworthy of the position of a member;
4)if he is absent from three consecutive meetings of the Commission without the Commission's permission.
A member may resign his office by letter sent to the Parliament.
Meetings of the Commission
Article 13
Meetings of the Commission shall be held as often as may be necessary for the performance of its functions and in any event not less than once every month and such meetings shall be held at such places, times and days as the Commission may determine.
The quorum for a meeting of the Commission is minimum 3 members.
The decisions shall be made by majority votes of all members of the Commission.
The Statute of the Commission
Article 14
The Commission shall have its Statute.
The Statute shall be published in the Official Gazette of the Republic of Montenegro.
The Commission shall have a stamp with a title: "Securities and Exchange Commission of the Republic of Montenegro, Podgorica" and the coat of arms of the Republic of Montenegro.
Conflict of Interest
Article 15
Members of the Commission and employees of the expert body of the Commission shall be obliged to comply with the highest professional standards and act in accordance with the Code of Ethics to be established by the Commission, in order to avoid a possible conflict of interest
If the chairman, deputy chairman or a member of the Commission have been connected in any way with the subject matter of deciding or havebeen directly or indirectly interested in such subject matter, they shall as soon as practicable after the commencement of the meeting, disclose the interest and shall not, unless the Commission otherwise directs, take part in any consideration or discussion of, or vote on, any question touching that matter.
Acting in accordance with paragraph 2 of this Article and acting contrary to the Commission Code of Ethics shall be separately recorded, and such record shall be available to the interested persons for inspection.
Professional Service of the Commission
Article 16
The Commission shall organize professional service of the Commission for the discharge of professional, administrative and material and financial duties.
The Commission shall appoint a Secretary who will manage the professional service the Commission.
General labour relations regulations shall apply on the employees of the Commission.
Acting of employees of the professional serviceof the Commission contrary to the Code of Ethics shall be separately recorded by the Commission, and those records shall be made available to the interested parties.
Immunity
Article 17
Ceased by the Decision of the Constitutional Court of the Republic of Montenegro (OG RMNE of 21 July 2005)
Confidentiality
Article 18
Members or former members, and employees or former employees of the Commission, shall be obliged to keep information obtained during their work in the Commission, or otherwise, that are considered, in accordance with regulations, as business secret.
Prohibition referred to in paragraph 1 of this Article shall cease to be valid once the denotation business secret is removed from the information, in accordance with criteria established by a legal document of the Commission.
Persons referred to in paragraph 1 of this Article must notgive advice related to investment in securities or give opinion on favourable and unfavourable purchase or sale of securities.
Prohibition referred to in paragraph 3 of this Article shall cease to be valid after termination of the performance of function or operations in the Commission.
Persons referred to in paragraph 1 of this Article shallbe obliged to keep privileged information until the information loses its privileged capacity.
Cooperation of the Commission with other Regulatory Authorities
Article 18a
At the request of competent state body or foreign body competent for supervision of trade in securities, the Commission shall be obliged to submit necessary data and information.
Exchange of data and information referred to in paragraph 1 of this Article shall not be considered as disclosure of business secret.
Funding
Article 19
The Commission shall be funded from:
1)the fees and charges paid along with applications submitted to the Commission;
2)the fees and charges paid with respect to registration and transfer of securities with the competent registration authority.
The amount of the fees and charges mentioned in paragraph 1 above shall be prescribed by the Commission.
The Commission may also be funded from other sources.
Financial Year
Article 20
The financial year of the Commission shall be the period of twelve months ending on 31 December in each year, and its first financial year shall begin on the date of enforcement of this Law and end on 31 December of that year.
The Commission may use any revenues exceeding the expenditures exclusively for meeting the legal obligations regarding the performance of the function of regulatory and supervisory body in the area of securities
Registers and Other Documents of Commission
Article 21
The Commission shall keep registers and other records.
The Commission shall keep the registers of issuers of securities; granted and withdrawn approvals of public offers of securities; refused applications for approval of public offer; granted, suspended and revoked licenses; refused applications for licenses; natural persons professionally engaged in transactions with securities; and other registers as needed.
Audit
Article 22
The accounts, records and financial statements of the Commission shall be audited by an internationally recognized independent auditor appointed by the Commission.
The auditors shall prepare in accordance with International Auditing Standards an audit report and send it to the Commission.
The auditors shall include in their report:
1)an evaluation, as well as their opinion, on whether the income and expenses account for the financial year gives a true and fair view of the Commission’s income and expenses;
2)An evaluation, as well as their opinion on whether the balance sheet for the financial year gives a true and fair view of the Commission’s financial affairs at the end of that financial year.
The auditors shall have a right of access to the registers, accounts, and other records of the Commission and are entitled to require from officers of the Commission such information and explanation as they consider necessary for the performance of their duties as auditors.
Annual Report
Article 23
The Commission shall, not later than six months after the end of each financial year, prepare a report on its activities and situation at the securities market and shall submit it to the Parliament and to the Government.
The Commission shall submit financial statements for the previous year with the auditor’s report, together with the report referred to in paragraph 1 of this Article.
III ISSUE OF EQUITY AND LONG-TERM DEBT SECURITIES
The Issuance Procedure
Article 24
The securities issuance procedure includes: