Articles of Association of Tehran Stock Exchange Company (Public Joint Stock Entity) (TSE) Table of contents

Transcription

1 Articles of Association of Tehran Stock Exchange Company (Public Joint Stock Entity) (TSE) Table of contents Title Page No: Chapter One Definitions Chapter Two Objective Duration Nationality and Headquarters Chapter Three Scope of Activity Chapter Four Capital, Composition of Shareholders and Shares Transfer Chapter Five TSE Bodies Chapter Six General Meetings Chapter Seven Board of Directors Chapter Eight Managing Director Chapter Nine Inspector/ Auditor Chapter Ten Financial Rules and Regulations Chapter Eleven Other Provisions

2 Chapter one definitions Article 1 The definitions provided for all the terms and phrases in article 1 of the Securities Market Act of I.R.I. ratified in November 2005 by the Parliament (Islamic Consultative Assembly) shall also apply for the purposes used herein. Other terms shall be defined as follows: 1 Law/Act means the Securities Market Act of I.R.I. enacted in November 2005 by the Parliament (Islamic Consultative Assembly) and its subsequent amendments 2 Commercial Code/ Law means the law passed in 1932 along with its amendments in Rules and regulations means all the ratifications of the Council of Ministers, the Council, Securities and Exchange Organization (SEO) as well as the approvals or decisions of other competent authorities within their jurisdictional powers under any designation or title (such as by laws, regulations, directives and circulars) with respect to the securities/ stock market and its participants which have been notified for implementation. 4 Member means a person that has been admitted by the company under the prevailing rules of law and has the professional, financial and general qualifications and is eligible for the functions stipulated in the laws and regulations. 5 Investor means a person that owns the securities listed on the exchange and or has acted for the same purpose. 6 Listed security means a security which has been listed on the company under the prevailing rules of law and the company has provided the facilities for its purchase and sales. 7 Related party means a person as defined in the national accounting standards. 8 Associated party means any legal or natural person that has undertaken reciprocal obligations under a contract or through any other legal relationship before the company. 2

3 Chapter Two objective Duration Nationality and Headquarters Article 2 The legal person established under this constitution and pursuant to paragraph 3 of article 1 of the Act is named the Tehran Stock Exchange Company (public stock entity) and is hereinafter referred to as the company. Article 3 The company s objectives are described hereunder: 1) to establish, manage and organize the Stock Exchange for the purpose of trading listed securities by the Iranian citizens and non Iranians as prescribed by the legislation; 2) to list the securities including the securities owned by foreign issuers in accordance with the rules and regulations; 3) to set forth the membership requirements for various groups of members, admit the membership applicants, establish and enforce professional disciplinary rules for members, assign the functions and responsibilities of members, oversee their activities and regulate the interrelationships pursuant to the rules and regulations; 4) to provide the opportunities for the members fair access to the market to carry out transactions on the listed securities; 5) to cooperate and make coordination with other financial institutions which have been partially entrusted with the task of securities trading or publishing and processing the information related to the Stock Exchange including the Central Securities Depository and Settlement Companies; 6) to conduct research and training programs as well as promoting the corporate culture related to securities so as to facilitate, improve and develop trading and investing in securities; 7) to cooperate with other exchanges inside and outside the country with the intention of exchanging information, data and experiences, equalizing rules and standards and simultaneous listing of securities in accordance with the laws and regulations; 8) to oversee good performance of securities transactions listed on the Stock Exchange; 3

4 9) to prepare, gather, process and publish the information relating to the securities orders and transactions; 10) to supervise the activities of listed securities issuers pursuant to the rules and regulations; 11) to perform other duties which have been entrusted to the company in accordance with the rules of law. Article 4 The company holds the Iranian nationality and its duration of activity shall be indefinite as of its foundation date. Article 5 The company s headquarters is in Tehran and its relocation shall have to receive the approval of the company board of directors. The board of directors shall have the authority to establish or dissolve its branch or agency at any time or in any location deemed proper as per the rues in force. Chapter Three Scope of Activity Article 6 All bodies or organs of the company including the general meetings, directors/executives, inspector/auditor as well as the company members and related parties shall have to abide by all the laws and regulations. The SEO shall regulate and supervise the decisions, actions and activities taken and carried out by the company s bodies, members and related parties within a legislative framework and as per the company s constitution. The provision of this article shall apply to the generality or all articles of the constitution and other powers delegated to the company s bodies and members. Article 7 For the operation of article 6, the following items shall apply: 1) the functions, powers and responsibilities of the company and of any of the bodies or directors; 4

5 2) the company s requirement to submit information to the bodies of securities market, persons or other competent authorities or make the information public as the case may be; 3) the procedures for admission, suspension and revocation of the membership or rejection of admitting the membership applicants, professional and ethical qualifications of members directors, applicable disciplinary rules, their functions as well as the method of terminating their activities in the company; 4) the company income sources, payers, payment term, manner of paying such incomes and sanctions for non payment as well as the method of entering accounts and their record keeping; 5) executive procedures, administration, organizational structure, professional and ethical competency of the company board members and other directors and employees, their functions and responsibilities, requirements for passing special training courses by the staff and the minimum number of personnel recruited by the company; 6) improvement of applicable softwares or the requirement to use particular softwares; 7) method of the company s marketing and its members; 8) the procedures to investigate the complaints relating to securities transactions and members activities by the company; 9) method of establishing an internal controls system, risk management, and controlling the conflict of interests with investors; 10) securities listing, type of securities eligible for listing, functions and responsibilities of the company with respect to monitoring the compliance with listing requirements by issuers and suspending or cancelling the securities listing; 11) method of supervising good performance of securities trading so as to prevent commission of crimes and offences as well as the requirement to report the matter to the SEO; 12) the responsibilities of the company, directors, employees and the company s associated parties with respect to presenting or disclosing the information on violation of rules and regulations. 5

6 Chapter Four Capital, Composition of Shareholders and Shares Transfer Article 8 The company s capital is the amount of Rls. 150 billion which has been divided into 150 million ordinary registered shares valued at 1,000 rials per share, all paid up in cash. Article 9 The company shareholders can be grouped as follows: Group one: group one consists of the persons that have obtained brokerage trading license in accordance with the provisions of the Stock Exchange Establishment Act passed in May 1966 or that have obtained the brokerage or broker/dealership license pursuant to the Securities Market Act ratified in November 2005 and further have been admitted as the company members; Group two: group two consists of the financial institutions that will obtain the trading license from the SEO with the exception of the brokerage houses; Group three: group three consists of the persons that do not fall within the first and second categories. Note Until when the trading license for financial institutions is issued under the prevailing rules, the list of the existing institutions classified as group two shall be indicated by the SEO. Article 10 The maximum shareholding percentage owned by any of the groups referred to in article 9 shall, at the time of its formation and subsequent changes, be determined by the SEO. Article 11 Any person may, at any time, directly or indirectly (through its related parties) hold two and a half (2.5) percent of the company s shares in the maximum. 6

7 Article 12 Transfer of shares and rights issue shall be authorized only within each of the shareholding groups as defined in article 9. In addition to adherence to the Commercial Code, transfer of shares and rights issue shall be effected with the observance of other rules in force. Article 13 The company s board of directors shall, upon the SEO s approval, have to take action in respect of the proposal for capital increase and complete all the legal formalities. The company shareholders shall have the rights issue to buy shares when the capital is increased unless when they have been deprived of the rights issue on the strength of the general meeting s approval and rules of law. Under such circumstances, the persons that are offered new issues for sale shall have to be designated and receive the SEO s permission in this respect. However, when raising the company's capital, the minimum amount approved by the SEO shall be included. Article 14 None of the shareholders shall be allowed to make qualified or collateralize all or parts of their shares or rights and interests accrued by proxy, conditional deal, transaction with the right of withdrawal and the like (except for the directors collateralized shares). This matter must be reflected in the share certificate. Article 15 The full particulars, ten digit national code, and ten digit zip code and address of the shareholder shall, during the subscription and transfer of shares, have to be entered in the company shares register in the manner expressed by the shareholder. Service or delivery at the shareholder s address as recorded under this article shall remain to be valid so long as he has not announced other address to the company. Article 16 Listing of the company on the Stock Exchange and on the OTC markets shall be subject to the SEO's approval. Article 17 The share certificate and its contents shall have to be issued pursuant to the Commercial Code and the provision of article 15 and shall be signed by the managing director and one of the board members as designated by the board of directors. 7

8 Note until when the share certificate is issued, a scrip (temporary certificate) shall be issued containing the items required to be written on the shares certificate in accordance with the Commercial Code. Chapter Five Bodies of the Company Article 18 The company bodies shall include: 1) general meetings 2) board of directors 3) managing director 4) inspector/auditor Chapter Six General Meetings Article 19 The functions and powers of the company s ordinary and extraordinary general meetings shall be the same functions and powers provided in the Commercial Code for the ordinary and extraordinary general meetings of the public joint stock companies unless otherwise provided in the law, regulations or articles of the existing constitution. Article 20 All the ordinary and extraordinary general meetings shall be officially held in the presence of the SEO s representative. The SEO s representative shall attend the general meetings as supervisor and if he identifies that the decisions taken at such meetings are contrary to the law, regulations or public interests, especially, those of the investors, he shall have to report the matter to the chairperson of the general meeting. The chairperson of the general meeting shall have to announce the remarks made by the SEO s representative to the shareholders present at the meeting. Note The resolutions made by the general meeting shall be valid so far as the SEO s approval indicates that they are not in conflict with the prevailing laws and regulations. In the event that the general meeting s decisions do not receive the SEO s approval, the board of directors shall 8

9 not be authorized to implement such decisions and shall, if need be, have to invite the general meeting, to make a final decision in this regard. Article 21 The shareholders or their proxy and legal deputy shall be allowed to attend all the general meetings irrespective of the number of their shares. The shareholders shall have only one vote for each share unless for the election of board members that the provisions of article 88 of the Commercial Code shall apply. Note 1 If a shareholder transfers his shares to another party, the next shareholder shall be entitled to attend the ordinary and extraordinary general meetings when the transfer procedures of his shares have been accomplished and entered in the company shares register prior to convention of such meetings in compliance with all prevailing rules and provisions of the present constitution. The admission paper for attending the general meetings shall be given to the persons whose names have been recorded in the company shares register. Note 2 Not any natural or legal member shall be permitted to undertake the proxy of other shareholders at general meetings in a manner that, along with his/its own shares, covers two and a half (2.5%) percent of the company s aggregate shares. Article 22 The company s ordinary general meeting shall be held at least once a year so as to examine the annual financial statements for approval and to hear the annual reports given by the board of directors and by the inspector/auditor as well. Note 1 The board members shall have to fulfill the formalities related to invitation and the meeting under this article in a manner that the meeting can be held for each fiscal year within the first four months of the following fiscal year. Note 2 Where the ordinary general meeting is not formally held for the first time to deal with the matters stated in this article, the board of directors shall have to immediately complete the required formalities during the next phases ranging from the convention of ordinary general meeting to the decision making process for the operation of this article. 9

10 Note 3 If the company financial statements are not approved at the given meeting, the ordinary general meeting shall, at the same meeting or other meeting which shall be held within 24 days, have to indicate the amendments required in the financial statements and shall grant the board of directors a period of grace not exceeding three months to apply such amendments. Note 4 The approval of the company s annual financial statements shall be valid after the inspector s/auditor s report has been read/ heard. Note 5 It shall be mandatory that the inspector/auditor or his agent attend the general meeting so as to read the inspector s/auditor s report. Article 23 in addition to the persons that, being bound by the Commercial Code, shall have to send invitation for general meetings, the SEO shall, when it deems proper for the interests of the public and, in particular, the investors, have the authority to request the company board of directors to send invitations for ordinary or extraordinary general meetings so as to take decisions on certain matters. Under the circumstances, the company board of directors shall have to send invitations to hold the general meeting within the time limit set by the SEO in view of the formalities so required. Article 24 The presiding board of each general meeting shall be chosen in compliance with article 101 of the Commercial Code and shall be responsible for running the meeting. The general meeting shall be chaired by the board chairperson and, in his absence, by the board vice chairperson and, in the absence of these two persons, by one of the board members as designated by the board members present or by the general meeting. Article 25 In addition to applying the Commercial Code, in inviting, convening, running and decision making at the general meetings, other provisions shall also apply. Note The quorum to officially hold the general meetings and the votes required for decisionmaking at such meetings shall be attained in accordance with the provisions of the Commercial Code and other rules. 10

11 Chapter Seven Board of Directors Article 26 The company shall be managed by a non executive board of directors composed of seven persons who are elected by the general meeting for a term of two years on the strength of the provisions of the existing constitution, Commercial Code and prevailing rules. Article 27 The ordinary general meeting shall have to choose substitute members as many as the number of natural persons comprising the board of directors so as to replace the main member in the event of death, resignation or dismissal of any of the main members in the manner arranged by the ordinary general meeting. The office term of the substitute member shall equal the term remained for the board member who has been replaced by the substitute. Note If there is not any substitute member to replace the board members for any reason, the board of directors shall, within two months at the latest, have to complete the formalities relating to the convention of the ordinary general meeting so as to elect the substitute members for the board members. Article 28 The reelection of the board members and substitute members for subsequent terms shall meet no impediment. Article 29 Prior to the election of the natural members of the board of directors, whether the main members or the substitute members, the nominees for such positions shall register with the SEO subject to the procedure set forth by this Organization and further shall provide the required information on their general and professional qualifications which shall receive the SEO's approval. The representatives of the legal persons of the board of directors shall, within ten days at the latest after the election, be presented to the SEO and shall submit the required information so as to examine their general and professional qualifications for the SEO's approval. 11

12 Note 1 If the SEO discovers that any of the board members has become disqualified during the course of their office term or if it is known that they lacked qualifications from the beginning, it (the SEO) shall have the authority to remove them from their position. Note 2 At least 50 days before holding the general meeting to elect the new members of the board of directors, the present board of directors shall have to publish a notice in the company's mass circulated newspaper. If such notice is not published in a timely manner, the SEO shall directly have the authority to run the notice. The SEO shall, under the specific circumstances including when electing the first members of the board of directors, be allowed to reduce the period of time stated in this notice. Article 30 Any of the directors shall at least have 500 shares out of the company shares during the whole time of his office term and shall deposit them in the company's fund as security to guarantee the loss and damage that the company may sustain owing to the directors' negligence and default severally or jointly. The said shares shall be registered and nontransferable and in so far as a director has not received a certificate of release for his officeterm, such shares shall remain in the company's fund as collaterals. These collateralized shares shall not preclude using the voting rights thereto at general meetings and paying the profits accrued to the shareholders. Article 31 The SEO shall be entitled to have an observer without having the voting right in the board of directors. The SEO's observer shall be allowed to attend the board meetings and the party who invites the board of directors to hold meetings shall have to inform him (the observer) of the board meetings as well as of the date, hours and location of such meetings in due course of time. The observer's salary and benefits shall be fixed and paid by the SEO. The observer and his spouse and first class relatives (next of kin) of the first category shall not be entitled to receive any funds under any title from the company, nor shall they be allowed to directly and indirectly become stakeholders in the company transactions. The company shall not be allowed to furnish any guarantee for them versus the third parties. 12

13 Article 32 The board of directors shall not be permitted to take any decision being incompatible with the law, rules and provisions of the constitution. In case the observer identifies that the decisions taken by the board of directors are in conflict with the law, rules and provisions of the constitution or contrary to the interests and benefits of all the investors, he shall have to report the matter to the SEO for decision making while giving a notice to the board of directors. Article 33 The board of directors shall have to appoint one member as chairperson of the board and one member as vice chairperson of the board from among its members. The officeterm in such positions shall not exceed the term of their membership in the board of directors. Article 34 The board of directors has a secretariat which is operating under the supervision of the chairperson of the board. The secretariat of the board of directors shall have to draw up minutes for each meeting containing the date, hour, location, names of attendees, topics discussed, proceedings summary, approvals, names and opinions of those against each approval which shall be signed by the majority of members present at the meeting. The minutes of the board meeting shall be drawn up at least in two copies and shall be numbered in the order of date whereby a copy shall be filed in the secretariat of the board of directors and the other copy shall be delivered to the SEO by the observer. Note The secretariat of the board of directors shall be the competent authority for communicating the approvals of the board members. Article 35 The board meeting shall be presided by the chairperson and in his absence by the vice chairperson and in the absence of both, by one of the board members who will be chosen by the board of directors by a majority vote of those present at the same meeting. Article 36 The board meetings are held at the company headquarters. The board of directors shall have to hold a meeting at least once per month. The chairperson of the board shall have to transmit invitation letters by the secretariat to the members and to the SEO s observer in a manner determined by each containing the agenda, location, date and hour of holding the 13

14 meeting. Additionally, any of the board members shall be allowed to deliver his application for a meeting to the secretariat by stating the reasons and, if necessary, his intended date and hour so that the secretariat will, in coordination with the chairperson of the board, invite the members of the board of directors to consider this matter. Note The mere statement made by any of the board members or by the observer indicating that they have not received the letter of invitation shall not invalidate the decisions taken by the board of directors. However, the board of directors shall have to consider the challenging member s request and take a proper decision. Article 37 The board meetings shall deem to have been officially held when it is attended by at least four members of the board. The approvals at the board meetings, however, shall be valid when they have obtained the consent of at least four members present at the meeting. Article 38 The board of directors shall, within the context of the law, rules and provisions of the constitution, have ultimate powers to take any action in the name of the company and to perform any operations or transactions which are in connection with the company s objective and purpose and decision making on them do not expressly fall within the general meeting s jurisdiction. The functions and powers of the board of directors are, inter alia, listed as below: 1) to make the utmost effort to realize the company s purpose and objective in the most efficient and effective manner; 2) to execute the approvals of the general meetings upon fulfillment of legal formalities and subject to provisions set forth in the present constitution; 3) to enforce the approved rules after they have been communicated; 4) to draft and approve the company s long term, medium term and short term programs and budget; 5) to prepare the annual report regarding the company performance and status for presentation to the general meeting; 6) to cooperate with the SEO and the inspector/auditor in line with the performance of its/his duties; 14

15 7) to establish procedures to resolve the conflict of interests between shareholders, directors and members with investors; 8) to establish an internal control system to ensure that all the company operations are carried out in line with the company objectives and within the framework of law, rules and provisions of the constitution; 9) to supervise the activity and performance of the company managing director, directors and staff members; 10) to acquire assets and make the required investments in line with achieving the company objectives; 11) to create branches at any location inside and outside the country in the performance of the company objective; 12) to adopt the in company by laws apart from the provisions which fall within the powers of the ordinary general meeting; 13) to approve the company s administrative and executive structure and modify such structure; 14) to open accounts with banks and institutions in the name of the company and use such account; 15) to subscribe, endorse, accept, pay and protest against commercial papers in the name of the company; 16) to conclude any type of contract and perform any kind of transaction in the name of the company and change, modify, revoke or rescind them within the scope of the company objective; 17) to make a request and take measures to have any type of trademark and patent registered in the name of the company; 18) to lend, guarantee or mortgage instruments, documents, funds or assets of the company by taking into account the company s benefits and interests when it deems necessary to achieve the company purpose; 15

16 19) to receive loans and credits in foreign currency and rials (local currency) in the name of the company under any terms when it deems necessary to achieve the company purpose; 20) to prepare the periodic (quarterly) and annual financial statements of the company; 21) to fulfill the obligations undertaken by the company befor other parties and seek compensation for the company rights from others; 22) to invite the ordinary and extraordinary general meetings and set agenda for them; 23) to propose any type of reserve out of the profit and recommend distribution of dividends between the company shareholders to the general meeting; 24) to propose amendment or modification of the constitution to the general meeting upon the SEO s approval; 25) to propose changes in the rules governing the company to the SEO; 26) to make investigation into the violations committed by the members in pursuance of article 35 of law, 27) any further powers and functions which, on the strength of law and regulations, fall or will fall within the scope of the powers and functions of the company or the board of directors. Note The board of directors shall be allowed to delegate parts of its powers and functions to the managing director. Delegation of powers and functions shall take place in an express and definite manner. Article 39 The board of directors shall, at the end of the fiscal year, have to prepare a report on the performance of the company and its affiliates for that year along with the future plans and shall deliver it to the inspector/auditor for his/its opinion within the period specified in the constitution. The SEO shall have the authority to specify the minimum particulars required to be included in this report. A summary of this report shall be read by the chairperson or by one of the board members at the general meeting held to consider the performance and financial statements of the company. 16

17 Article 40 Any of the board members and the managing director shall, at the SEO s discretion, have to furnish security with the SEO to guarantee the good performance of his/their functions and responsibilities. Such security shall not be transferable to another party and if there exists no reason to maintain the security as per the rules, it shall have to be released within six months after fulfillment of the settlement for their management office term. Article 41 The members of the board of directors shall have to refuse the acceptance of a position or responsibility which is inconsistent with their responsibility in the board of directors and shall report any position or responsibility to the SEO one week after assumption of the same. Note The SEO s decision on the existence of the conflict between the position and responsibility of the board members in the company shall be binding. Article 42 The company board members, directors and personnel and their spouses and firstclass (next of kin) relatives of the first category shall have to abide by the restrictions imposed by the SEO on the conduct of securities transactions and takeover of any position and responsibility outside the company. Article 43 If any member of the board of directors decides to resign from his post, he shall have to notify the matter to the SEO and to the chairperson of the board at least 30 days in advance and obtain the board s approval. In case the member s resignation is accepted, the date of resignation shall accordingly have to be fixed by the board of directors. Article 44 Non attendance of any member of the board of directors in the meeting over four consecutive sessions or eight intermittent sessions during the course of a year without any justifiable grounds shall automatically lead to that member s removal from membership in the board of directors. Determination of the justifiable grounds shall be left to the discretion exercised by the board of directors. 17

18 Chapter Eight Managing Director Article 45 The board of directors shall have to appoint a natural person outside the board of directors as the company managing director to serve for a term of two years. Accordingly, the board of directors shall fix the remuneration or bonus for the managing director. Note The managing director s general and professional qualifications shall have to receive the SEO s approval before he is appointed to this position. However, in the event that the SEO discovers that the managing director has forfeited the said qualifications during his term or if it is proved that he was not suitably qualified for the given responsibility from the beginning, the board of directors shall, at the SEO s request, have to remove him from this post and choose a replacement for him with the SEO s approval. Article 46 If owing to the resignation, dismissal, death or for any other reason, the position of the managing director in the company remains vacant, the board of directors shall, not later than one month, have to appoint another person to this position pursuant to the provisions of the constitution. If the formalities related to the appointment of the managing director are prolonged over a week, the board of directors shall, until when a managing director is appointed as per this article, have to choose a person to take over his functions and responsibilities. Article 47 The managing director shall be the chief executive officer in the company and shall be acting as the company s spokesman in addition to the company s representation with the SEO, the Council and other authorities and entities. The powers and functions of the managing director are, inter alia, listed as below: 1) to execute the rules, instructions and approvals of the general meetings and the board of directors; 2) to institute civil and criminal proceedings or file lawsuits and defend any of such proceedings on behalf of the company and in the name of the company at the public or special courts to safeguard each and every items of the real and presumptive or any 18

19 other rights and interests of the company; to defend the company and in the name of the company versus any action and claim, whether civil and criminal brought against the company at any public or special courts to safeguard the said rights and interests; to contact and appear in person at the police departments and the investigating judge by virtue of the vested powers and attend all hearing sessions from the beginning to the final stages of legal proceedings, make comments, lodge an appeal, submit the second appeal, raise an objection and request for rehearing, compromise and settlement; to withdraw documents, submissions, statement of claim; to repudiate and dismiss the documents and evidence; to bring up a forgery and ask to determine the forger; to have authority to sign the contracts containing the arbitration or sign a separate arbitration agreement to send the pending case for arbitral proceeding and choose the arbitrator with or without the right for settlement; to request the execution of the arbitrator s final award; to use all the authority and request for eviction, termination of forcible possession and abatement of nuisance; to ask and demand for compensation of loss and damage and request for issuance of an executive writ and follow up action; to introduce the debtor and the debtor s property, request for arrest of the suspect and accused, and accept the debtor s property at tender sessions for recovery of the company s claims; to appoint the expert; to hire and dismiss the attorney or an agent with the frequent rights of substitution; to confess the nature of claim, initiate the impleader and counterclaim and defend such cases; to request for the warrant of property attachment and seizure as well as compensation of loss and damages arising from offences and receipt of judgment debt and matters and cases of similar nature; to request for issuance of enforcement notice and follow up executive actions and receipt of judgment debt, whether decided at law courts, offices or deeds registration departments; 3) to employ the staff, fix their salaries and benefits, dismiss them from or appoint them to posts, and in general, use all the vested powers to manage human resource within the framework of the approved by laws, 4) to accept advances, deposits and guarantee funds, to receive collaterals and issue of certification and furnish any type of commitment on behalf of the company. 19

20 Note The managing director shall have the authority to delegate some of his functions and powers by retaining the responsibility to the directors other than the board members and to the company staff members. Chapter Nine Inspector/ Auditor Article 48 The ordinary general meeting shall have to choose the company inspector/auditor each year from among the auditing firms which are members of the SEO s trusted auditing firms. The general meeting shall also have to choose a substitute inspector/auditor from among the said auditing firms or from among the partners of such firms so that in case of compulsion, dissolution, resignation, disqualification or non assumption of the position by the principal inspector/auditor, the substitute can take over his/its functions and responsibilities. Note 1 The appointment of the inspector/auditor in a consecutive manner shall be allowed only for two times. Note 2 The principal inspector/auditor and the substitute inspector/auditor shall have to assume responsibility under the provisions of the Commercial Code. Note 3 The ordinary general meeting shall have the authority to remove the principal or substitute inspector/auditor by designating a replacement at any time it deems advisable. Article 49 In addition to the duties set forth in the Commercial Code for the inspector of public joint stock companies, the inspector/auditor shall have to perform the following functions: 1) to abide by the national accounting and auditing standards when expressing an opinion on the financial statements; 2) to express an opinion in his/its report to the general meeting on the compliance or noncompliance with laws and regulations by the company directors and personnel 3) to transmit a copy of its/his opinion directly to the SEO ten days prior to convention of the ordinary general meeting; 20

21 4) to appraise the efficiency/performance of the company internal controls system and reflect its flaws and shortcomings along with other difficulties and defects he/it discovers in a report and send it directly and simultaneously to the board of directors and to the SEO; 5) to submit a written report simultaneously to the SEO and to the board of directors as soon as he/it becomes aware of the breach of law, regulations and approved procedures, 6) to send a copy of his/its important correspondence with the company management simultaneously to the SEO. Article 50 The inspector s/auditor s fee shall be fixed by the ordinary general meeting. The inspector/auditor, directors and their personnel as well the spouses and relatives of the first degree (next of kin) from the first category shall not be entitled to receive any funds, assets and other privileges from the company other than those approved by the general meeting or enter into the company s transactions directly or indirectly as stakeholders. Article 51 Upon expiration of the inspectors/auditor s term of office until when the general meeting chooses a new inspector/auditor, the former inspector/auditor shall as ever continue to perform the assigned functions without regard to the restrictions specified in note 1 of article 48. Article 52 The inspector/auditor shall have to abide by the rules/procedures set forth by the SEO pertaining to his/its relationships with the company. Chapter Ten Financial Provisions Article 53 The company fiscal year shall fun for one whole solar year which, excluding the first year of operation, shall start on March 20 of each year and shall end on March 20 of the next 21

22 year. The first year of the company's operations shall start from the date of its foundation until March 20 of the same year. Article 54 The board of directors shall have to deliver the company annual financial statements and its report on the company operations and general condition to the inspector/auditor for his/its verification at least 30 days prior to the general meeting which is held to consider such particulars. Note The board of directors shall accordingly have to prepare the periodic semiannual financial statements for each fiscal year and shall, not later than 45 days after the lapse of the first six months of the same year, present them to the inspector/auditor for his/its examination and comment. The inspector/auditor shall have to submit his/its opinion to the company and transmit a copy of it to the SEO within one month at the latest after the receipt of the financial statements. Article 55 All the company's income sources out of the transactions fees, admission and listing fees of companies, membership fees and use of facilities granted to members and other incomes along with the schedule for receipt, payers, guarantees for receipt and related particulars shall have to obtain the SEO's approval. Note The board of directors shall have the authority to fix the company rates of services and fees, taking into account the limits specified by the SEO for such purposes. Article 56 In addition to the statutory reserve under the provision of article 140 of the Commercial Code, the company's contingency reserve shall be determined by the SEO. Until when the contingency reserve reaches the amount fixed by the SEO, the general meeting shall, each year before the distribution of dividends, have to reserve one fifth of the company's net profit as contingency reserve. Division of the contingency reserve among the shareholders shall be forbidden without the SEO's permission. Note The general meeting shall have the authority to decide on the status of the contingency reserve above the amount fixed by the SEO and on the status of other reserves and provisions. 22

23 Article 57 In order to compensate for the damage and loss caused to others on the ground of non compliance with the rules of law by the company directors and personnel, it shall have to deposit the security designated by the SEO. The type and amount of such security may be modified/ changed by the SEO. Article 58 The company shall not be authorized to pledge any commitment for over 80% of its capital without obtaining the SEO's approval. Article 59 The company shall not be allowed to invest in the shares of the listed companies, members and the companies which trade in securities or to grant them loans or to buy the securities issued by them. Article 60 The company shall be authorized to take all actions and make the investments required to carry out its activity and shall acquire the assets needed for such purposes. Engagement in the activity being irrelevant to the company objective and purpose and investment in such activity and acquisition of non essential assets for the purpose of its activity shall be subject to obtaining the SEO's permission. Article 61 The authorized signatories and their terms of reference shall be assigned by the board of directors. The decision taken by the board of directors in this respect shall, within a month, be presented to the Companies Registration Department so as to be published in the state Gazette upon entry. Article 62 The company s distributable profit during each fiscal year includes the company's net profit for the same year less the statutory reserve, contingency reserve, other reserves and the loss related to the previous fiscal year plus the undivided profit of the previous fiscal years; Division of the distributable profit for each fiscal year among the shareholders shall be required that: firstly, the existence of the distributable profit has been confirmed by the inspector/auditor, and, secondly, the financial statements of that year have obtained the approval of the ordinary general meeting. 23

24 Chapter Eleven Other Provisions Article 64 The board of directors shall have to form the company internal control unit within a month after their appointment in the maximum. Note The company internal control unit shall operate under the supervision of the board of directors and shall have to submit monthly reports to the board of directors and to the SEO on a regular basis. Article 65 Any change or modification in the provisions of the existing constitution shall be subject to the fulfillment of legal formalities in the company and, ultimately, subject to the company's proposal and the SEO's approval. Article 66 The voluntary dissolution of the company shall require the extraordinary general meeting's approval as well as the authorization given by the SEO and the Council. Accordingly, in the case that the company's trading license is revoked by the Council, the company shall be dissolved or, if the SEO approves, it may continue its operations by changing its name and other area of activity/purpose. The company liquidation after its dissolution shall be effected subject to the provisions of the Commercial Code and in compliance with the applicable rules. Article 67 In the event that the Council approves the interruption or suspension of all or a part of the company's activity for a specified or an unlimited period of time, the company shall have to discontinue or suspend its activity as per the rules in force. Article 68 The Market Securities Act of I.R.I ratified in November 2005, and all the rules and regulations including the existing by laws, instructions, procedural matters and circulars and the provisions which will be approved in the future as well as their subsequent changes or modifications shall constitute an integral part of this constitution. Article 69 The SEO shall be the authority to make an interpretation of the provisions of this constitution and none of the provisions herein shall be construed in a manner to breach or restrict the rules of law. 24

25 Article 70 The provisions which have not been set forth in the existing constitution shall be governed by the Commercial Code and other statutory rules. Article 71 The present constitution comprising 71 articles and 24 notes received the approval of the company general meeting on October 22, 2006 and the approval of the SEO on October 22,