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Enclosure 17(E17) – Registration and Settlement for Issues of Registered Compensatory Notes under the Ownership and Use of Agricultural Land Act and for Compensatory Instruments /CI/ under the Transactions with Compensatory Instruments Act /TCIA/  
     
 

1. This procedure regulates the terms for registration and settlement of Registered Compensatory Notes /RCN/ - issued under the Ownership and Use of Agricultural Land Act - in the registries of Central Depository AD, and for CI issued under the terms of TCIA.

2. Registering a RCN issue:

2.1. When registering RCNs at the CD, a main issue is registered with code “PKB” and sub-issues with the respective “PKBXXXXX” codes for each RCN issuer. “XXXXX” is the unified location identifier of the land commission/municipal office on agriculture and forestry , which is the RCN issuer, in accordance with the National Statistical Institute’s Unified Classifier of Territorial Units.

2.2. The RCN should be recorded as sub-issues until the moment when the municipal and regional land tenders are closed within the respective areas of the land commissions/municipal offices on agriculture and forestry, which are the RCN issuers. After the tenders are closed, the respective sub-issues of the issuers from these areas shall be merged into the main issue. A letter of advice from the Ministry of Agriculture and Forestry to the CD shall be accepted as a document notifying about the closure of these tenders.

3. Clearing and Settlement Procedures under transactions with RCN:

3.1. Transactions with RCN are concluded and RCN transfers via registration agent are registered on the floor of BSE.

3.2. For transactions under item 3.1. with RCN sub-issues - “PKBXXXXX”, - the settlement shall be done under the terms of settlement for securities from public issues.

3.3. For transactions under item 3.1. with the main issue – “PKB”, the settlement shall be done under the terms of settlement for securities from public issues, with the following additions:

3.3.1. Under these issues, the Investment Intermediaries who are transaction partners can nominate several clients of theirs who can participate in the transaction both with RCN from the main issue and with different sub-issues.

3.3.2. The RCN total for all clients under the main issue as well as by sub-issues should equal the total of RCNs for which the transactions has been concluded.

3.3.3. The individual sub-issues may either be explicitly specified by the intermediaries for their clients, or not be specified. With unspecified sub-issues, acceptable are the cases when the intermediary has submitted a transaction participant message /МТ540 - МТ543/ about the main RCN issue only. With specified issues, messages should be submitted not only about the main RCN issue (or instead it), but also about each individual sub-issue.

3.3.3.1. In cases when the issues are specified for a client who is a RCN seller, they shall be searched for, blocked and transferred from the respective client’s accounts in the same way as they are specified. If, under a certain issue or sub-issue, there is not sufficient quantity of RCN available for trade, an error message shall be generated: “Insufficient quantity of papers”

3.3.3.2. In cases when the particular sub-issues are not specified for a given client who is a RCN seller, then the RCN shall be searched for, blocked and transferred from the respective client’s accounts in the following sequence:

· First, a check of stock available shall be made for the main RCN issue’s account; · If RCN quantity on the main issue’s account is not sufficient, the available stock shall be checked for the existing sub-issues’ accounts, while following the alphabetical order of the sub-issues’ codes.

· The search shall continue on all sub-issues, until the quantity requested by the client is satisfied

· In case it is ascertained, after the check performed as above, that the seller does not have sufficient quantity of RCNs, an error message shall be generated: “Insufficient quantity of papers”.

3.3.3.3. In case the particular sub-issues are specified for a given client who is a RCN buyer, then the respective RCN quantities shall be specified by the seller as well, by issue and sub-issues.

3.3.3.4. In case the particular sub-issues are not specified for a given client who is a RCN buyer, then the papers received by the seller shall be entered into the main RCN issue’s account for the respective buyer, whereas the respective quantities shall be deducted from the amounts available on the sellers’ sub-issues accounts.

3.4. The particular issue and sub-issues shall be specified via individual messages /МТ540 - МТ543/ about each issue/sub-issue under the given transaction. In case there is no specification of the issues for the seller, it is mandatory to have opened a client’s account from the main issue.

4. The registration of CI transactions and CI settlements shall take place under the terms of the Ordinance on the Central Depository’s Activity related to the Registration of the Issuance of, Transactions with and Executing Settlements with Compensatory Instruments, as well as in accordance with Procedures N0N05, 6 and 7 of CD AD.

4.1. For settlements with CI under the terms of Art. 13 and Art. 13a of TCIA, the documents under Art. 13, Para.2 regarding the deletion of CI from the payer’s account shall be prepared in accordance with:

· Sample 01/E17 – Order for Settlement with Compensatory Instruments for Legal Entities; · Sample 02/E17 – Order for Settlement with Compensatory Instruments for Physical Entities;

· Sample 03/E17 – Notification of Settlement with Compensatory Instruments by the competent governmental body receiving the CI settlement.

4.2. When CI are returned under the terms of Art. 13b of the TCIA, CD shall open an account of the issuer following an order by the Central Register of Compensatory Instruments, on which the transfers are entered. After each transfer, CD shall delete the CI the particular CI and notify the CRCI thereof. Transfers shall be initiated based on Sample 01/E17 or Sample 02/E17, while explicitly mentioning the ground on which the order for transfer is given, and the order shall be accompanied by a copy of the court decision.

4.3. After the CI settlement is registered, CD shall send a confirmation of the settlement made to the competent governmental body receiving the CI settlement – Sample 04/E17.

4.4. CD AD shall register the CI settlement within up to three business days upon receipt of the complete set of documents required for the registration: from the part of the payer: an Order for Settlement with CI; an original deed of ownership on the CI; an acknowledgement of the fee paid under the CD tariff; from the part of the beneficiary: a Notification of the CI settlement from the competent governmental body.

5. Payments with CI in cases of centralized public tenders /CPT/ and non-attendant public tenders /NPT/ for the sale of residual stakes of state and municipal property.

5.1. CPTs and NPTs shall be held on the BSE floor under the terms defined by the competent governmental bodies. BSE shall notify CD about the tender conditions at least 1 business day before the day on which the tender is to take place. The notification shall include:

· A list of the companies that are subject of the given tender;

· A breakdown of the shares/stakes by lots (a lot is the obligatory minimum quantity of shares/stakes that can be purchased with a single order);

· Way of payment: what portion of the shares/stakes can be paid for in cash, what portion can be paid for with compensatory instruments, and the type of these compensatory instruments.

5.2. About the transactions concluded, BSE shall sent the information to CD under the standard procedure, along with the data about the other transactions of that day. 5.3. The Investment Intermediaries shall send the information about the deals under item 5 under the procedure for sending information about the stock exchange transactions.

5.4. Closure of transactions

5.4.1. In cases of transactions with cash settlement, the Investment Intermediary shall remit the amount due under the transaction to the Privatization Agency’s account with the Bulgarian National Bank. A copy of the payment order shall be submitted to the Settlement Department at CD. On the grounds of the payment order submitted, CD shall close the transaction by transferring the securities to the buyer’s account. Following the closure of the transaction, CD shall send to the Privatization Agency the data about the transactions, the contents and format of these data being agreed upon by the parties beforehand.

5.4.2. In case the issue of the company that is subject of the transaction under item 5.4.1. is not registered with the Central Depository or these are stakes of limited liability companies, the transfer of ownership shall be performed by the Privatization Agency. CD shall sent to PA the data about the transactions, the contents and format of these data being agreed upon by the parties beforehand.

5.4.3. In cases of payment with CI, the Investment Intermediary shall sent to CD a message МТ541, in which data are additionally included about the CI with which the payment is made, namely the CI issue and quantity. In case payment is made with different CI under the same transaction, the II shall send an individual message about each type of compensatory instrument. On the grounds of the messages received, CD shall close the transaction by transferring the CI to a Privatization Agency’s account and rendering them to zero, while transferring the securities to the buyer’s account. Following the closure of the settlement, CD shall send to the Privatization Agency the data about the transactions, the contents and format of these data being agreed upon by the parties beforehand.

5.4.4. In case the issue of the company that is subject of the transaction under item 5.4.3. is not registered with the Central Depository or these are stakes of limited liability companies, the transfer of ownership shall be performed by the Privatization Agency. Following the closure of the settlement, CD shall send to the Privatization Agency the data about the transactions, the contents and format of these data being agreed upon by the parties beforehand.

5.5. No partial payment shall be allowed under a given transaction, respectively, no partial transfer shall be allowed of the securities that are subject of the transaction.