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3.      PARTICIPANTS IN THE OPERATIONS OF THE DEPOSITORY

3.1. The participants in the operations of the Depository (hereinafter: the participants) may be brokerage houses, banks, insurance companies and fund management companies. The participants in the operations on behalf and for the account of their clients or on their behalf and for their account may use all the services provided by the Depository.

3.2. The rights and obligations of the Depository and the participants in its operations shall be determined by these rules, guidelines of the Depository and with an agreement signed between the Depository and the participants.

3.3. A participant in the operations of the Depository may be the legal entity referred to in item 3.1. of these Rules that meets the following requirements:

-         to be registered in the trade register and to hold the relevant licenses and approvals;

-         to be a member of the Macedonian Long-Term Securities Stock Exchange;

-         to meet the personnel, organizational, technical and financial requirements stipulated with the Guidelines of the Depository;

-         to have at least two trained employees capable of using the services of the Depositary;

-         to hold a separate settlement account with NBRM;

-         absence of conditions or facts that may lead to grounded suspicion that it cannot fulfill the obligations arising from its participation in the operations of the Depository.

3.4. The participation in the operations of the Depository shall be acquired by submitting an admission request to the Depository.

The following documents shall be attached to the request referred to in paragraph 1 of this item:

-         audited annual statement for the previous fiscal year;

-         excerpt from the trade register;

-         evidence for meeting the requirements for admission to the operations of the Depository in accordance with item 3.3. of these Rules, especially disposal of appropriate computer equipment and trained staff for using the services of the Depository;

-         receipt for payment of an appropriate fee for participation in the operations in accordance with the applicable Tariff Book of the Depository.

3.5. Should the one that submits the request fail to attach the evidence necessary for participation in the operations of the Depository or the request be incomplete, the Depository may set an additional deadline for completion of the evidence which may not exceed 15 days.

Should the one that submits the request fail to make corrections within the anticipated deadline, the request will be rejected as inadmissible.

3.6. The decision for becoming a participant in the operations of the Depository shall be taken by the Board of Directors of the Depository within 10 days from the day the request is received.

The Depository shall inform the one that submits the request about its decision in writing within 5 days from the day it is taken.

Should within the determined deadline of 10 days, the Depository fail to take a decision with respect to the submitted request, it shall be considered that it has been solved positively.

3.7. The Depository may reject the request should it determine that:

-          the one that submits the request fails to meet the requirements for admission referred to in item 3.3. of these Rules;

-          the evidence attached contains incorrect information.

In case the request is rejected, the Depository will reimburse the paid funds (increased by the interest on sight deposits of legal entities for the period from the payment day until the day of the reimbursement) within 5 days from the day the negative decisions is taken.

The one that submits the request is entitled to lodge a complaint to the Securities and Exchange Commission within 8 days from the day of the receipt of the decision for rejecting the request.

3.8. Upon the acquiring of the function participant in the operations of the Depository, the Depository and the participant shall conclude a Contract in which the rights and obligations of the participant and the Depository shall be determined.

3.9. The Depository shall keep a special register of the participants in the operations.

The register of the participants in the operations of the Depository shall contain data on the title of the participant, address, registry number, address, date of acquiring the function of participant, personnel and technical equipment, responsible person of the participant, records of the pronounced penalty measures and other necessary data.

3.10.  By signing the agreement, the participant shall accept these Rules, guidelines and the Tariff Book of the Depository fully and irrevocably and shall be committed to their consistent application.

If the participant does not agree with the proposed amendments and modifications to these Rules, guidelines and other legal acts of the Depository, it can cancel its further participation in the operations of the Depository, before they enter into force.

3.11. By signing of the agreement, the participant in the operations is committed in its legal relations with the Depository, with the other participants in the operations of the Depository and in the other legal relations with its clients to adhere to and apply fully the provisions from these Rules, guidelines of the Depository, Tariff Book and the other legal acts of the Depository.

3.12. The participant in the operations of the Depository is obliged to inform immediately the Depository about all the changes that may affect its participation in the operations of the Depository.

3.13. The participant is obliged to settle the financial and other obligations towards the Depository and other participants in the operations of the Depository orderly and timely, in a manner and within deadlines determined with these Rules, guidelines and other acts, as well as the contracts concluded with the Depository.

The Depository is obliged to settle the financial and other obligations towards the participants in its operation, orderly and timely, in a manner and within deadlines determined with these Rules, guidelines and contracts concluded with the participants.

3.14. The participants in the operations of the Depository shall be fully responsible before the clients they represent and are obliged to indemnify them in cases of illegal procedures, negligence or failure to fulfill the obligations of the participant towards the client, including also the cases when the participant used the account of its client with the Depository incorrectly or not being authorized to do it.

3.15. The participant in the operations of the Depository who has an access to the computer system of the Depository is obliged to act in accordance with the guidelines of the Depository which determines the technical standards of the computer and communicational equipment for access to the computer system of the Depository, including also the usage of the program support provided by the Depository.

The participant in the operations of the Depository is obliged to adhere to all the safety measures for access to the computer system and for protection of the data from unauthorized usage by third persons, as well as other measures determined in the guidelines of the Depository.

The participant in the operations of the Depository shall be responsible for the actions of its employees performed contrary to these Rules and the guidelines of the Depository.

3.16. The Depository shall submit to all the participants in its operations notifications in a manner and within the deadlines prescribed by these Rules.

The participant is obliged to verify the accuracy and completeness of all notifications received by the Depository and to inform immediately the Depository if it has not received the notifications within the determined deadline or if it contests the accuracy of the data or the completeness of the notification.

If the participants does not contest the accuracy and completeness of the notification within 24 hours of its receipt, it shall be considered that the participant has confirmed the accuracy and completeness of the notification and that it renounced its entitlement to contest  the errors or deficiencies in the notification.

3.17. The participation in the operations of the Depository shall be terminated:

-         at request of the participant in the operations;

-         on the basis of decision by the Depository for exclusion

-         due to changes  at the participant in the operations which are of such disposition that it does mot meet any more the requirements for participation in the operations;

-         in accordance with the provisions of the Agreement for participation in the operations of the Depository.

The obligations that exist at the moment of termination of the participation in the operations, shall be fulfilled by  the participant and the Depository in accordance with these Rules and the guidelines of the Depository.

3.18. The Board of Directors of the Depository may take a decision for termination of the participation in the operations in the following cases:

-         if the participant fails to meet the requirements for participation in the operations of the Depository;

-         in case of opening a bankruptcy or liquidation procedure of the participant in the operations;

-         if the participant in the operations violates seriously these rules and the guidelines of the Depository;

-         if it fails to meet its financial obligations towards the Depository;

-         if it faces financial difficulties that may put in question the regular performance of the obligations towards the Depository, the other participants in the operations of the Depository and its clients;

-         if it fails to eliminate its omissions in meeting the requirements arising form the transactions with securities;

-         and in other cases which make it ineligible for participation in the operations of the Depository.

3.19. In case of occurrence of any of the circumstances listed in the previous item of these Rules, the Board of Directors of the Depository may take a decision for cancellation of  all services to the participant or for its deprivation of certain rights for a certain period of time (suspension).

The deprivation of certain rights shall be applied until the termination of the circumstances that led to the pronouncement of such measure, but it cannot last longer than three months.

3.20. The Depository and the participant are obliged  to meet all rights and obligations of the participant that occurred prior to the deprivation of certain rights of the participant in the operations in accordance with these Rules and the guidelines of the Depository.

3.21. The Board of Directors of the Depository may also impose payment of a fine in the amount determined with the Tariff Book of the Depository with the decision for exclusion or suspension of the participant in the operations.

The Board of Directors of the Depository may impose payment of a fine in accordance with the Tariff Book or the guidelines also in case when the omissions of the participant in the operations of the Depository are not a reason for its exclusion or suspension.

3.22. Prior to taking the decision for exclusion or suspension, the Board of Directors of the Depository shall enable the participant in its operations to explain the facts and circumstances that are reason for such measure against it.

3.23. The participant is entitled to lodge a complaint against the decision of the Board of Directors of the Depository to the Securities and Exchange Commission within 15 days from the day of its receipt.

3.24. The participant that is excluded or suspended is obliged to meet all previously undertaken obligations towards its clients, other participant in the operations of the Depository and towards the Depository.

In case when the suspended or the excluded participant in the operations cannot or does not want to fulfill all the remaining settlement obligations, they will be fulfilled by activating the guarantee fund in a manner and procedure determined by these Rules.

3.25. The Board of Directors of the Depository shall immediately upon taking the decision for suspension or exclusion of some of the participants in its operations notify all the participants, the Commission, Stock Exchange and the National Bank of RM.

3.26. The employees of the participants in the operations of the Depository that encounter in their operations data connected with its operations, are obliged to keep the secrecy thereof.

The obligation referred to in item 1 of this Article shall be applied even after the termination of their labour relation at the participant in the operations of the Depository, but not longer than 5 years.

3.27. The Depository shall submit a document (invoice) to the entities for which the Depository performs the services referred to in item 2.2. paragraph 2, in which the fee for the services rendered by it and which the entities are obliged to pay, is calculated.

The fee for the services rendered by the Depository shall be determined according to a special Tariff Book.

The Tariff Book, in addition to the fees for the services rendered by the Depository, shall also determine the fines for violation of these Rules and the guidelines of the Depository.

3.28. The Commission shall provide a consent for the Tariff Book of the Depository

3.29. The Tariff Book of the Depository shall be published in “Official Gazette of the Republic of Macedonia”.

3.30. The participants in the operations and the Depository shall endeavor to solve their disputes by agreement.

In case of failure, competent for solving the disputes shall be the court with local jurisdiction for the particular subject.

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