CONTENTS

CODE OF MONEY AND CREDIT

TITLE I PAGE

Money

TITLE II

The Central Bank

- Section 1 Establishment - Name - Head Office - Capital
- Section 2 Organisation
- Section 3 The Consultative Committee
- Section 4 Supervision of the Bank
- Section 5 Money Issue
- Section 6 The Bank's Overall Mission
- Section 7 Clearing Houses
- Section 8 Central Bank Operations
- Section 9 Financial Provisions
- Section 10 Exemptions and Privileges

TITLE III

Banking Regulations
- Section 1 Definitions
- Section 2 Prohibitions
- Section 3 Conditions of Establishment
- Section 4 Obligations of Banks
- Section 5 General Management Regulations
- Section 6 Professions Linked up to the Banking
Profession : Finance Establishment
- Section 7 Supervisory Commissioners

TITLE IV

Sanctions
- Section 1 Punitive Sanctions
- Section 2 Penalties for Delay
- Section 3 Administrative Penalties

TITLE V

Transitory Provisions Relating to Title III

TITLE VI

Diverse and Final Provisions

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 CODE OF MONEY AND CREDIT

Law promulgated by

Decree No. 13513 of 1 August 1963

The President of the Lebanese Republic,

Whereas the Lebanese Constitution, notably its article 58,

Whereas the Government has communicated to the Chamber of Deputies, by Decree No. 12825
of 21 May 1963, an urgent draft law pertaining to Money and Credit,

Whereas more than forty days have elapsed since the communication of this draft law to the
Chamber of Deputies without the latter adjudicating thereon,

On the proposal of the Minister of Finance,

And after the approval of the Council of Ministers sitting on 24 July 1963,

Decrees what follows:

FIRST ARTICLE

Is enforced the urgent draft law tabled before the Chamber of Deputies by Decree N° 12825 of
21 May 1963, and worded as follows:

TITLE I

MONEY

Article 1
The currency of the Lebanese Republic is the Lebanese Pound, the official shortening of which is
L.L.

Article 2
The pure gold content of the Lebanese Pound is fixed by law.

Article 3
The Pound is divided into one hundred equal parts called Piastres. The official shortening of the
Lebanese Piastre is P.L.

Each piastre is divided into one hundred equal parts called cents.

Article 4 (as modified by the Law promulgated by Decree N° 6102 of

--------- (5 October 1973, and by Law N° 361 of 1 August 1994
Currency tokens are divided into:
2
A) banknotes of equal or superior value to the currency unit;

B) coins equivalent in value to: 1 pound; 100 pounds; 250 pounds; and 500 pounds.

Gold coins may equally be issued when the law has authorised the reconversion of banknotes
into gold. The characteristics of the gold coins, as well as the conditions of their issue, shall be
fixed by decree from the Council of Ministers.

Article 5 (as modified by Law N° 43/87 of 21 November 1987,

--------- (and by Law N° 178 of 22 December 1992
Banknotes may be issued in the following denominations: 1, 5, 10, 25, 50, 100, 250, 500, 1000,
5000, 10000, 20000, 50000, and 100000 pounds.

Article 6 (as modified by Law N° 361 of 1 August 1994)

Subdivisions of banknotes and coins may be of: 1 piastre; 2.5 piastres; 5 piastres; 10 piastres; 25
piastres; 50 piastres; 1 pound; 5 pounds; 10 pounds; 25 pounds; 50 pounds; 100 pounds; 250
pounds; and 500 pounds.

Article 7 (as modified by Law N° 361 of 1 August 1994)

Banknotes of a value of 500 pounds and over shall be unlimited legal tender throughout the
Lebanese territory.

Article 8 (as modified by Law N° 361 of 1 August 1994)

Subdivisional units shall be legal tender of:
A) Two pounds for coins of a face value equal or under 10 piastres.

B) Ten pounds for banknotes or coins of 25 piastres.

C) Twenty pounds for banknotes or coins of 50 piastres.

D) One thousand pounds for banknotes and coins equivalent in value to 1 pound; 5 pounds;
10 pounds; 25 pounds; and 50 pounds.

E) Five thousand pounds for banknotes and coins equivalent in value to 250 pounds.

Article 9
The money-issuing organisation and public cash offices shall receive subdivisonal notes and
coins, without limitation as to amounts.

Article 10
The issue of money is the exclusive privilege of the State.
However, the State may vest this privilege in the Central Bank it creates.

Article 11
Shall be prohibited the issue, circulation, or acceptance of
- All tokens made out as Lebanese money to be used in lieu of monetary tokens authorised
by the law;

3
- All interest-free loan bonds "to Bearer" even though they may be made out in currencies
other than the Lebanese currency.

TITLE II

THE CENTRAL BANK

SECTION 1: STABLISHMENT - NAME- HEAD OFFICE - CAPITAL

Article 12
A Central Bank is created under the name of Bank of Lebanon, hereinafter referred to as the
"Bank" or the "Central Bank".

Article 13
The Bank is a juridical person of public law vested with financial autonomy.

It is reputed to be trading in its relations with Third Parties. Its operations shall be carried out and
accounted in conformity with commercial and banking rules and practices.

It shall not by submitted to the administration and management regulations and supervisions
applicable to the organisations of the Public Sector, notably Decree-Laws Nos. 114,115, 117 and
118 of 12 June 1959. Nor shall it be subject to the requirements of the Code of Commerce
regarding registration on the Trade Register.

The Beirut Courts are solely competent to deal with disputes between the Bank, and Third
Parties.

Article 14
The Head Office of the Bank shall be Beirut.

The Bank shall have to operate agencies at Tripoli, Saida and Zahle. It shall be authorised to
open agencies in other districts in Lebanon and close down those agencies which it may consider
have outlived their purpose. It may have representatives and correspondents in Lebanon and
abroad.

Article 15
The capital of the Bank shall be constituted from a State appropriation authorised by law, or
through the incorporation of reserves as may be authorised by decree from the Council of
Ministers, upon the request of the Bank and on the proposal of the Minister of Finance.

Article 16
The Bank cannot be dissolved, except by virtue of the law which, if need be, shall also regulate
the mode of its liquidation.

SECTION 2: ORGANISATION

Article 17 (as modified by Law N° 4/85 of 1 April 1985)

The management of the Bank shall be the concern of a Governor assisted by a first
sub-Governor, a second sub-Governor, a third sub-Governor, and a fourth sub-Governor, as well
as by a Central Board hereinafter referred to as the "Board".
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 1.- The Governor and Sub-Governors

Article 18
The Governor shall be appointed, for six calendar years, by decree from the Council of
Ministers, acting on the proposal of the Minister of Finance.

The sub-governors shall be appointed for five calendar years by decree from the Council of
Ministers on the proposal of the Minister of Finance after consultation with the Governor. They
shall carry out the functions which are assigned to them by the Governor.

The Governor and sub-governors must be university graduates, and have the experience and
moral qualities required for the proper discharge of their duties.

The term of office of the Governor and sub-governor may be renewed once or several times.

The Governor and sub-governors shall take the oath before the President of the Republic,
pledging themselves to discharge their duties loyally and scrupulously within the framework of
the law and honour.

Article 19
Excluding the case of voluntary resignation, the Governor cannot be relieved of his functions,
except for physical incapacity duly reported, infringement to the duties of his functions as
outlined in Chapter I of Title III of the Penal Code, violation of the provisions of article 20, or
serious mismanagement.

Sub-governors may not be relieved of their functions except for the very motives designated in
the preceding sub-paragraph, on the proposal of the Governor or following his advice.

Article 20
The Governor and sub-governors must dedicate themselves entirely to the Bank. Their functions
are incompatible with any sort of legislative mandate, public function, activity in any enterprise,
or other professional work, irrespective of whether such activity or work be remunerated or not.

During their term of office, they are equally barred from keeping, taking or receiving any interest
whatever in a private enterprise.

Shall be considered as interest, within the meaning of the preceding paragraph, any participation
or association, in any form whatsoever or by whatever means this may be, even though by simple
loan. Shareholding in joint-stock companies shall not be considered an "interest".

No commitment bearing the signature of the Governor or sub-governors may be accepted in the
portfolio of the Bank.

Article 21
However the Governor and, with his agreement, the sub-governors may, exceptionally to the first
sub-paragraph of the preceding article:
- Be members to Commissions set up by the Government;

5
- Be appointed governors or directors to the International Monetary Fund or the World
Bank for Reconstruction and Development, or any other international agency to which
Lebanon may have subscribed;

- Represent Lebanon at international conferences.

Article 22
The remunerations of the Governor and sub-governors shall be fixed in the Special Status
referred to in article 33.

Article 23
The Governor and sub-governors ray not sit on the Board of a bank or finance institution
governed by the present law, or of an enterprise under the control of the said bank or
establishment, hold an office therein or participate in any manner whatsoever during two
calendar years following the termination of their functions at the Central Bank.

Article 24
In case of termination of service for physical disability duly reported, or as a result of resignation
accepted by the Government, or due to the non renewal of the term of office, such as in cases of
death, the Governor and sub-governors, or their heirs, shall receive an indemnity equal to two
years' remuneration.

Article 25
When the post of Governor has become vacant, the next incumbent shall be the first
sub-governor, pending the appointment of the new occupant.

Article 26
The Governor has the widest powers in the management and administration of the Bank. He is
entrusted with the enforcement of the present law and of the resolutions of the Board.

He is the legal representative of the Bank; on behalf of the Bank he signs all deeds, treaties and
covenants; he authorises all judicial actions; takes all executory or safety measures he may deem
proper, including mortgages.

He organises the services of the Bank and defines their duties. He appoints and dismisses the
Bank's agents, irrespective of grades. He may engage technicians to act as advisers, to undertake
study missions, or to upgrade the professional standard of the Bank's agents.

The various designations stated above are not exhaustive in character.

Article 27
In cases when the Governor is absent or unavailable, he shall be replaced by the first
sub-governor, according to conditions fixed by himself and, in the event the latter is equally
unavailable, by the second sub-governor.

The Governor may vest all his powers in the person replacing him.

2.- The Central Board

Article 28
6
The Board shall be composed of the following:
- The Governor, Chairman;

- The sub-governors;

- The Director-General of the Ministry of Finance;

- The Director-General of the Ministry of National Economy.

The last two members do not sit on the Board as Government proxies. Their action in the Bank
shall not exceed the power attaching to them as members of the Central Board.

They take before the President of the Republic the same oath as the Governor and sub-governors.

Article 29
The Board shall meet whenever convened by the Governor and at least once a month. The
Minister of Finance may also request the Governor to summon the Board.

Article 30
The Board cannot meet without the physical attendance of the Governor or of his deputy, nor can
it meet if the Director-General of Finance or the Director-General of National Economy is not
present.

Article 31
The attendance of at least four members of the Board is necessary to ensure quorum. Resolutions
are passed by majority vote of the attending members, and, in case of a tie, the Governor's vote is
overpowering.

Article 32
On the request of one of its members, the Board may, if it deems the request well-grounded,
postpone the execution of any resolutions by three clear days at most. A new debate on the
outstanding matter shall be held within the fixed time-limit, and the resolution adopted in the
course of the new meeting may then be enforced.

Article 33 ( as modified by Law No. 8/75 of 5 March 1975)

Within the framework of the powers vested in the Bank by the present law, the Board is notably
given the following functions which are not, however, listed exhaustively:
1.- The Board outlines the monetary policy as well as the credit policy of the Bank.

2.- It establishes the executive regulations of the present law.

3.- It assesses the discount rate and the rate of interest chargeable on the loans ; it also
discusses all measures affecting banks.

4.- It discusses the setting up and organisation of clearing houses.

5.- It discusses matters regarding issue.

6.- It deals with applications for loans submitted by the public sector.

7
7.- It lays down various regulations concerning the Bank's operations.

8.- It debates questions affecting the Bank's buildings and immovable assets, the lifting of
seizure of real estate, mortgage oppositions or registrations; the relinquishment of
privileges or of titles; projects of transactions or compromise bearing on the Bank's
interests.

9.- It lays down the Special Status of the Governor and sub-governors, referred to in article
22, and the general status of the Bank's personnel.
Both of which are to be approved by the Minister of Finance.
The Bank's agents shall be engaged under the regulations of private law; however, they
may not join political parties and, as long as they work in the Bank, discharge
parliamentary; municipal or "Moukhtar" duties. They may also not be members of the
Board of Directors of companies.
Shall be prohibited any -remuneration and allocation under any form of commissions or
percentage of income or profit of the Bank.

10.- The Board shall fig: the expenditures under the Bank's budget, modifying them in the
course of the year as may be required.

11.- It shall close the accounts of the financial year.

12.- It shall approve the annual draft report which the Government is to address to the
Ministry of Finance, in accordance with article 117.

Article 34
The service indemnity of the Director-General of Finance and of the Director-General of
National Economy shall by fixed by decree and paid by the Bank. It shall not be subject to article
27 of Decree-Law No. 112 of 12 June 1959.

SECTION 3 : THE CONSULTATIVE COMMITTEE

Article 35
A six-man Consultative Committee shall be set up by the Bank:

1.- Four shall be appointed by virtue of their experience in banking, trade, industry and
agriculture. A list comprising between five and ten qualified persons shall be presented,
to this effect, to the Minister of Finance by the representative bodies of each of the
banking, trading, industrial and agricultural sectors. The Minister shall select out of each
of the four lists one person whom he shall appoint as member of the Consultative
Committee.

These members are not considered and must not act as representatives or proxies, sitting
on the Committee, to take care of the interests of the sectors from which they have been
drawn.

2.- One shall be selected from the Planning Board.

3.- The sixth member shall be drawn from among university professors of economics, of
Lebanese nationality.
8
Article 36 (as modified by the Law promulgated by Decree N°- 6102 of
---------- (5 October 1973
The Committee members shall be appointed by decree on the proposal of the Ministry of
Finance, following the advice of the Board of the Central Bank. Their two-year term of office
may be subject to renewal. Their service indemnity shall be fixed in accordance with the

Ministry of Finance and shall be chargeable on the Bank.

The Committee shall lay down its own internal regulations.

Taking the oath before the President of the Republic, the members shall swear to discharge the
duties of their function loyally and accurately with due respect to the law and honour, and shall
be bound to banking secrecy as provided for in Article 151 derived from the Law of 3 September
1956 concerning banking secrecy.

Article 37
The Bank shall provide the Committee with the necessary premises and secretariat.

Article 38
The Governor may consult the Committee on problems of a general nature and on matters of
monetary and credit policies. He may also seek the Committee's advice on measures he has
under consideration and on which he deems it useful to hear from the Committee.

Article 39
The Committee is empowered to
a) Table before the Governor studies on the economic situation in general,
that of a region or of a specific sector, and advise him accordingly;

b) Offer suggestions intended to boost deposits, reduce banknote holdings,

spread the use of substitute money, and collect individual surplus
money in the general interest;

c) Propose whatever measures that can usefully provide a cover to bank

deposits and ensure the safety of investments.

Article 40
Proxies, Civil Servants, and persons referred to in article 127 are not eligible to the Committee.

SECTION 4: SUPERVISION OF THE BANK

Article 41
There shall be established at the Ministry of Finance a "Government Commissariat with the
Central Bank". This Service will be under the direction of a Civil Servant who will be graded
Director-General and bear the title of "Government Commissioner with the Central Bank".

Article 42
The Commissioner shall be charged to:
a) See to the enforcement of the present law;

9
b) Supervise the Bank's accounts. The Commissioner shall be assisted in the discharge of
this duty by a Civil Servant of his own Service belonging to at least Grade III of the
Schedule of the Ministry of Finance.

The Government Commissariat to the Central Bank shall include, on the other hand, a
study section concerned with matters of money and credit.

Article 43
The Commissioner shall be immediately kept informed of the Board's resolutions. Within two
days of notification, he may require the Governor to suspend any resolution that he deems
contrary to the law and regulations, referring the matter to the Minister of Finance. If the case is
not dealt with within five clear days of suspension, the resolution may be carried out.

Article 44
The Commissioner and his assistant, referred to in paragraph b) of article 42, shall have access to
all account books and documents of the Central Bank, except Third Parties’ accounts and files
under the cover of the banking secrecy as provided by the Law of 3 September 1956.

They shall check the tills and holdings of the Central Bank.

In no manner whatsoever will they be authorised to interfere with the management of the Central
Bank.

Article 45
The Commissioner shall periodically inform the Minister of Finance and the Board, of the
supervision he has carried out. At the close of every financial year he shall report to the Minister
of Finance on the discharge of his duties in the course of the preceding year. Copy of his report is
to be addressed to the Governor.

Article 46
The organisation, operation and cadres of the Government Commissariat to the Bank shall be
established by decree. Only the special indemnity allocated to the Government Commissioner
shall be chargeable on the Bank, but it shall not be subject to article 27 of Decree-Law No. 112
of 12 June 1959

SECTION 5: MONEY ISSUE

Article 47
The exclusive privilege of issuing money, referred to in article 10, is vested in the Bank of
Lebanon.

Article 48 (as modified by Decree-Law No. 31 of 2 May 1977)

Notes of a value equal or over one pound shall bear the facsimile signatures of the Governor and
first sub-governor of the Bank.

In case the first sub-governor should discharge the duties of the Governor, in the event of the
latter's absence, as provided under article 25 of the present code, the notes mentioned in the
preceding paragraph shall bear an exact copy of his signature together with an exact copy of the
second sub-governor's signature.

10
Article 49
The format, design, text, and other features of &nominations due for issue shall be laid down by
the Bank.

Article 50
The Bank shall bring to the public's notice the types of notes it intends to circulate as well as
their distinguishing features.

Article 51
The Bank may decide the withdrawal from circulation of one or several types of notes to be
exchanged for new types of notes.

Article 52
The notice bringing this decision to public attention must state the time limit during which the
notes subject to exchange may be presented to any of the Bank's counters.

At the expiry of the time-limit, the Bank shall pay over the notes under exchange only at its
central counter in Beirut.

Article 53
Three years after the expiry of the time-limit referred to in the first sub-paragraph of the
preceding article, the amount of the notes under exchange and not yet presented for exchange
shall be carried into a provision account .from which refund of the notes will be subsequently
made.

Article 54
The notes whose countervalue has been posted to the provision account referred to in the
preceding article shall be deducted from the amount of the issue.

Article 55
Seven years after the expiry of the time-limit set by article 53, the right to exchange shall be
invalidated and the balance of the provision account shall by transferred to the special account
referred to in article 115 .

Article 56
The Bank shall not be bound to refund notes destroyed or lost, nor to accept or repay counterfeit.

Article 57
It shall repay damaged notes, on condition that the portion presented is of an area exceeding one
half of the note and contains all the indications needed for identification.

Article 58
No opposition can be served to the Bank in case notes are lost or stolen.

Article 59
The Bank shall issue subdivision notes or coins made out of silver or other metal.

Article 60
Subdivision notes shall carry the facsimile signature of the Bank's Head Cashier.

11
Article 61
The format, design and text of denominations, the dimension, weight, metal content, the
allowance on the weight and metal content, of the coins; as well as other distinguishing features
of the denominations and coins, shall be laid down by the Bank.

Article 62
The Bank shall acquaint the public with the description of denominations and coins it intends to
put into circulation.

Article 63
Should one or several types of subdivision notes or coins be withdrawn, a time-limit of two years
shall be allowed to the holders of such notes and coins during which they can exchange them at
the cash counters of the Bank.

At the expiry of the time-limit, the right to exchange shall be invalidated and the notes or coins,
subject to withdrawal, shall have no currency.

Article 64
The countervalue of unexchanged subdivision notes or coins shall be posted to a special account
provided for by article 115.

Article 65
The provisions of articles 56 and 57 shall be applicable to subdivision notes.

Article 67
The provisions of article 58 shall apply on subdivision money.

Article 68
The Bank's balance sheets and statements shall indicate, under distinct postings, the amount of
the notes issued and that of the subdivisional money issued.

Article 69 (as modified by the Law promulgated by Decree No. 6102 of

---------- (5 October 1973
The Bank shall retain, among its assets, bullion and foreign exchange providing a safe cover for
Lebanese currency equivalent in value to at least thirty per cent (30%) of the money it issued and
of its deposits at call, provided that the ratio of the said bullion and foreign exchange to the value
of the money it issued is not under fifty per cent (50%).

The Bank's holdings of Lebanese money shall not be taken into account in the assessment of the
two ratios prescribed in the preceding sub-paragraph.

SECTION 6: THE BANK'S OVERALL MISSION

Article 70 (as modified by the Law promulgated by Decree No. 6102 of

---------- (5 October 1973
The overall duty of the Bank shall be the safeguard of currency as a fundamental guarantee for
permanent economic and social development, and more specifically:
- safeguarding a sound Lebanese currency

- safeguarding economic stability

12
- safeguarding the basic structure of the banking system

- developing the monetary and financial market,

To achieve these ends, the Banks shall exercise the powers vested in, it by virtue of the present
law.

1.- Cooperation between the Bank and the State

Article 71
The Central Bank shall co-operate with the Government, advising it on matters of economic and
financial policy, so as to promote the highest degree of co-ordination between its mission and the
Government's objectives.

Article 72
It may propose to the Government measures which it deems likely to have a favourable bearing
on the balance of payments, the movement of prices, public finances and, broadly speaking, on
economic development.

It shall draw the Government's attention to facts which, in its judgment, may harm national
economy and currency. It takes care of Government relations with international finance
institutions.

The Government shall seek the Bank's advice on matters related to money and shall invite the
Bank's Governor to join in deliberations on such questions.

Article 73
The State Services and Organisations of the Public Sector or of mixed economy shall provide the
Central Bank with statistics and data it may require for its economic surveys.

Article 74
The Government shall see to the safety and protection of the Bank's establishments. It shall put at
the disposal of these establishments an adequate Guard free of charge, providing also sufficient
escort for the safe conveyance of funds or securities.

2.- Stabilizing Exchange Rates

Article 75 (as modified by the Law promulgated by Decree N°- 6102 of

---------- (5 October 1973
The Bank shall use means as it may deem capable of ensuring exchange stability, and more
specifically operate on the open market, following agreement with the Minister of Finance, either
as buyer or seller of bullion or of foreign exchange with due regard to the provisions of article
69.

The Bank's dealings in foreign exchange shall be entered in a special account, called "Exchange
Stabilisation Fund".

3.- Action on banking liquidities and the volume of credit

13
Article 76 (as modified by Law N°- 2867 of 9 May 1967 and by the Law
--------- (promulgated by Decree N2 6102 of 5 October 1973
In order to maintain banking liquidity and the volume of credit in sympathy with its overall
mission as defined in article 70, the Bank is authorised to adopt such measures as it may deem
opportune and, notably, the following steps that it may take separately or simultaneously or even
concurrently with the measures referred to in Title III of the present law:
a) set and modify the rates and ceilings of discount and other forms of credit
which it is authorised to grant to banks and finance establishments.

b) resort to operations designated in article 75.

c) buy and sell securities on the open market, in conformity with articles 106, 107 and 108.

d) compel banks to deposit with it assets (minima reserves) amounting to a specific ratio of
their liabilities arising from deposits and loans they have been granted, as may be fixed
by the "Bank", excluding such liabilities of the same nature towards other banks which
are equally required to deposit these reserves.

The Central Bank may, if it deems it appropriate, consider banks' investments in

Government Bonds or in Bonds issued with Government guarantee as part of the reserves
up to a specific ratio to be assessed by the Bank.

The Central Bank ratio of minima reserves shall not be in excess of 25 per cent of the
liabilities at call nor over 15 per cent of the liabilities at fixed date.

The Central Bank shall enforce varying ratios on the different categories of banks
liabilities within the limits set in the preceding subsection.

In exceptional cases, it may also impose special limit ratios on what exceeds, in these
liabilities or some of their categories, a fixed limit, or on the excess occurring, in these
liabilities or some of their categories, after a fixed date.

e) compel banks to deposit with it assets (special minima reserves) amounting to a specific
ratio of assets as may be fixed by the Bank.

f) accept, in the light of the general monetary situation, deposits bearing interests as may be
fixed by the Bank.

Article 77
The monthly holdings of a bank with the Central Bank (actual reserves) must at least reach the
ratios, which have been set, of the monthly average of liabilities subject to reserve (compulsory
reserves).

Without prejudice to administrative penalties under Section 3 of Title IV of the present law, the
Central Bank may levy, on the amount on which actual reserve is below the compulsory, a
penalty interest which may tantamount to a rate 3 points higher than the rates of its advances on
securities prevailing at the time. The Central Bank cannot enforce such sanction if it becomes
evident that the shortage has been rendered unavoidable as a result of unforeseen circumstances
or if the bank concerned stands in a state of liquidation.

14
Article 78
A time-limit of at least 30 days must be given to banks for compliance with instructions
imposing a compulsory reserve or modifying its rate.

Article 79 (as modified by the Law promulgated by Decree N9 6102 of

---------- (5 October 1973
The Central Bank may also exercise an influence over the general credit situation by limiting the
volume of credit in specific categories or granted for specific purposes or to specific sectors, and
lay down conditions to govern such credit.

SECTION 7: CLEARING HOUSES

Article 80
The Bank shall set up Clearing Houses in cities where this .is deemed necessary.

SECTION 8: CENTRAL BANK OPERATIONS

1.- Bullion and exchange operations

Article 81 (as modified by the-Law promulgated-by Decree N° 6102

---------- (of 5 October 1973
The Bank is authorised to:
1. Buy and sell, import and export gold and other precious metals and transact all other
operations on these materials ;

2. Accept deposits of coined gold and gold ingots, and issue in favour of depositors, upon
their request, certificates of gold in the form of Bonds “to Bearer" or ''to Order";

3. Discount, rediscount, buy and sell trade Bills and instruments of payment and assets at
call drawn up in foreign currencies. Maturity of Bills shall not exceed six months ;

4. Buy and sell loan Bonds issued or guaranteed by foreign Governments or international
institutions, such Bonds to be drawn up in foreign currencies and readily marketable ;
5. Hold accounts with central banks or with correspondents abroad.;

6. Open accounts to central banks, foreign banks and international institutions and operate
as correspondent to these banks and institutions;

7. Lend to and borrow from central banks, foreign finance institutions and banks, and
international finance institutions on condition that these are short term operations and
within the framework of the Central Bank's functions.

Article 82
The Bank is not entitled to transact the operations authorised under the preceding article except
with and for the account of:
a) The public sector

b) Banks and finance institutions domiciled in Lebanon

c) Central banks, banks and finance institutions abroad

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d) International finance institutions

Article 83
Exceptionally to the preceding article, the Bank may
a) Issue gold certificates, referred to in paragraph 2 of article 81, in favour of all persons,
and buy and sell gold without other banks acting as middlemen ;

b) In exceptional circumstances, and with the agreement of the Minister of Finance, buy
from and sell currencies to the public in straight dealings.

2.- Operations with the public sector

Article 84
Within the context of the present law, the Public Sector is taken to mean the State, municipalities
and the juridical persons of public law referred to in article 2 of Decree-Law No. 117 of 12 June
1959.

Article 85
The Bank operates as banker to the Public Sector. In this capacity:
a) It is only depository of Public Sector funds;

b) It effects such payments as may be ordered by the Public Sector, up to the value of the
latter's holdings with it;

c) It effects transfers of funds on the request of the Public Sector up to the value of the
latter's holdings with it;

d) It ensures the safe keeping, and if need be the management, of securities which it is
entrusted with by the Public Sector and, broadly speaking, renders all banking services to
this Sector;

e) Finally, it may grant credits to the Public Sector, in such cases as are listed in articles 88,
91 and 92.

Article 86
Public Sector deposits in the Central Bank shall bear no interests. In agreement with the Minister
of Finance the Bank may, however, grant an interest to Public Sector deposits, other than the
deposits of the State.

Article 87
The Bank shall provide the services listed in sub-paragraphs b), c) and d) of article 85, free of
charge.

Article 88
The Bank is authorised to grant the Treasury, upon the request of the Minister of Finance, cash
facilities the amount of which shall not exceed ten per cent of the State ordinary average
budgetary revenue of the last three financial years ended. The duration of these facilities shall not
exceed four months.

16
Article 89
Permanent authorisation is given the Government to resort to the credit referred to in the
preceding article whenever the Ministry of Finance and the Central Bank are inadequate to meet
the State's immediate commitments.
Such authorisation, however, cannot be used more than once within the twelve-month period.

Article 90
Apart from the cash facilities under articles 88 and 89, the principle is that the Central Bank does
not grant credits to the Public Sector.

Article 91
However, in circumstances of unusual seriousness or in cases of absolute necessity, should the
Government consider resorting to a Central Bank loan, it shall inform the Governor of the Bank
accordingly.

The Bank shall study with the Government the possibility of substituting its assistance by other
means such as the floating of an internal loan, an external credit, an economy squeeze under
other headings of expenditures, new fiscal resources, etc...

It is only in cases when it has been established that no substitute solutions are available and if,
notwithstanding this, the Government presses its application, that the Central Bank can grant the
requested loan.

The Bank shall then propose to the Government, if necessary, measures likely to limit the
harmful economic consequence of its loan and, notably, its effects, in the prevailing
circumstances, on the internal and external purchasing power of the money.

Article 92
Public Sector organisations other than the State may not apply for Central Bank loans, except in
the circumstances or the cases referred to in paragraph 1 of article 91.

Applications from such organisations shall be filed straight with the Bank.

The Bank shall examine these applications from the standpoints enumerated in paragraphs 1 and
2 of article 91. It shall also examine the economic feasibility of the project for the .financing of
which the loan is requested, as well as the applicants refund power. Finally, it shall take into
consideration the position of the Treasury and its commitments, in view of the eventual State
guarantee.

The Bank cannot consider providing the loan requested unless its study establishes that no
circumstances nor any objection stands in the way of the operations.

In this case, the Bank submits a detailed report to the Minister of Finance and, if the Government
approves the project and declares itself ready to back the operation by State guarantee, the Bank
may grant the loan in question. The Bank shall also acquaint the Minister of Finance with the
reasons that shall have brought it not to attend to the loan application filed by an organisation of
the Public Sector other than the State.

Article 93

17
Credits granted in compliance with articles 88, 91 and 92 shall bear interest for the benefit of the
Bank. The rate of interest shall be assessed according to prevailing market conditions.

The rate of interest on the cash facilities under article 88 shall not be below the Bank discount
rate, reduced by one point.

The rate of interest on credits under articles 91 and 92 shall not be below the Bank's discount
rate, raised by one point.

Article 94
Credits under articles 91 and 92 shall not be granted for a period exceeding 10 years.

Article 95
The rate of interest, duration and other terms governing the credit shall be covered by a contract
between the Bank and the borrower.

The contract shall be submitted to parliament, alongside the complete file of studies and reports
from the Administration and the Bank.

Article 96
The Bank can lay it a condition that the credits under articles 88, 91 and 92 shall be effected
against the issue and delivery to the Bank by the borrower of negotiable Bills likely to be sold to
the public.

Article 97
The Bank is equally the financial agent of the public Sector in respect of the following:
a) It extends its services, free of charge, for subscription to internal or external loans floated
by the public Sector;

b) Ten clear days before maturity the Bank shall undertake, without charge or commission,
the payment of interests and redemption of these loans;

c) The Bank participates in negotiations aiming at the conclusion of payment or

compensation agreements;

d) It is exclusively in charge of the accounting related to these agreements and may

conclude all necessary arrangements on the subject.

The Bank's participation in the aforementioned agreements is provided on behalf of the State,
which shall benefit of all profits and bears all risks, expenses, commissions, interests and charges
whatsoever.

3.-Operations with banks

Article 98
The Bank shall open deposit accounts for funds from banks and finance establishments.

Article 99
The Central Bank shall not be held obliged, as a matter of principle, to grant credits to banks. It
does so if it deems that such action contributes to general interest.
18
Article 100 (as modified by Law No. 28/67 of 9 May 1967)
The Bank may discount trade Bills emanating from actual debts due to commercial, industrial or
agricultural operations. The Bills must have determined maturities not exceeding 180 days and
bear three signatures known for solvency.
The Bank may accept a substitute in lieu of the third signature:
- either a warrant for goods agreeable to the Bank;

- or a mortgage of securities of the sort against which it is authorised to grant loans in

conformity with article 102. In this event, the Bank may take proceedings against the two
signatories, without having to sell out the collateral beforehand.

Article 101
The Central Bank may acquire trade Bills, complying with the conditions indicated in the
preceding article; under the "pension" contract system, for a maximum 30-day period subject to
one renewal. If, at the maturity of the contract, the operation has not been unwound by the seller
bank, the Central Bank shall transform the "pension" into a discount.

Article 102 (as modified by the Law promulgated by Decree No. 14013
----------- (of 16 March 1970 and the Law promulgated by Decree
(No. 6102 of 5 October 1973
The Bank may grant advances on current account by opening credits valid for a period of twelve
months subject to a single renewal in case of necessity, on condition that such credits are secured
by Bills maturing within one year or by bullion or foreign exchange or movable assets.

The Bank may accept as security for loans referred to in the preceding sub-section Bills whose
maturity does not exceed three years, if these loans are for the financing of agriculture or
industry or public works contracts or the export of Lebanese products to foreign countries,
according to special terms it may lay down for this purpose.

In emergencies and in cases of dire necessity which may dictate compliance with the urgent
needs of economy to ensure stability of the credit system, the Bank's Board may decide to grant
exceptional loans guaranteed - as much as this is needed - by real securities other than the
securities referred to in the preceding two subsections, and provided either by the bank
benefiting from the loan, or by its Board Directors or by its clients; the nature of the required
guarantees and the terms of the exceptional loans as well as their maturities to be determined by
the Bank's Board.

Article 103
The rates of interest, the minima currency premiums, the charges and commissions applicable to
discount, "pension" and advances, the margins and terms applicable to collaterals and all other
conditions relating to discount, "pension" and advances, shall be laid down by the Bank in the
Regulations governing its operations.

Article 104
It is also for the Central Bank to set, for each bank, the ceiling of its assistance, under all forms,
notably with due regard to the importance of the bank concerned and the quality of its
management.

Article 105 (as modified by Decree-Law No. 41 of 5 August 1967 and

19
------------ (the Law promulgated by Decree No. 6102 of 5 October 1973

Should the public hold public Bonds issued by the State or guaranteed by the State, the Bank
may discount or buy such Bonds through the "pension" system, on condition that their maturity
is not in excess of 180 days.

The Bank may also discount or accept as collateral to advances, Government Bonds or Bonds
guaranteed by the Government, the maturity of which is not in excess of five years, if such bonds
are intended to implement constructive projects, provided that the interest rate is no less than the
original interest rate raised by two points.

Article 106 (as modified by the Law promulgated by Decree No. 6102
----------- (of 5 October 1973
In pursuance of subsection (c) of article 76, the Bank may buy and sell without endorsement
private Bonds, the maturity of which is not in excess of 180 days, and Government bonds and
Government-guaranteed bonds the maturity of which is not excess of one year dating from
purchase.

Article 107
In no case can operations on public Bonds as described in article 105 and 106 be dealt with on
behalf of the Treasury or other issuing entities of the Public Sector.

Article 108 (as modified by the Law promulgated by Decree

----------- (No. 6102 of 5 October 1973

The Central Bank is authorised to discount Government Bonds and Bonds guaranteed by the
Government, or to hold same through the "pension" system or to buy them within the framework
of the conditions set down in articles 105 and 106 ,in so far as this is consistent with the requi-
rements of monetary stability.

Article 109 (as modified by the Law promulgated by Decree

----------- (No. 6102 of 5 October 1973
The Central Bank does not transact operations authorised by articles 98 to 108 inclusive, except
with banks and international finance institutions.

Purchase and sale operations of Government Bonds or of Bonds guaranteed by the Government
shall be transacted by the Bank through the Beirut Stock Exchange whenever required, if this is
deemed appropriate.

4. Other Operations

Article 110 (as modified by Decree-Law No. 41 of 5 August 1967)

The Bank may also:
a) Acquire, build and equip, by using its own funds, the buildings necessary for its
operations ; sell or exchange such buildings;

b) Acquire, through compulsory or amicable sale, all movable or immovable goods, in

recovery of a debt; such goods are to be alienated as soon as possible, unless they are
used for the Bank's operations;

20
c) Manage the Funds created for the benefit of its personnel., such as provisions against
indemnities for dismissal, providence, etc.

d) Open deposit accounts for its agents; grant, out of its own funds, loans to its agents;

e) And, broadly speaking, undertake all operations that can contribute to promote the
execution or liquidation of operations authorised by the present law;

f) Take up participations in Lebanese public utility companies or mixed national companies

within the limit of its own funds.

Article 111 (as modified by Decree-Law N° 41 of 5 August 1967)

The Bank is to refrain from:
a) Trade operations alien to its functions such as are defined by the present law;

b) Participating, in whatever form that may be, in undertakings, irrespective of their nature
excluding those companies referred to in paragraph "f" of article 110;

c) Buying or keeping immovable goods other than those referred to in the preceding article;

d) Transacting the authorised operations according to other conditions, under other

guarantees, or with other persons than those designated in the present law.

SECTION 9: FINANCIAL PROVISIONS

Article 112
The Bank's financial year runs alongside the calendar year.

Exceptionally, the first year shall include the period running from the day when the Bank has
initiated operations to 31 December 1964.

Article 113
Excess receipts over overheads, charges, amortization and diverse provisions, constitute the net
profit.

Fifty per cent of this net profit shall be carried into an account "General Reserve Fund" of the
Central Bank and the other 50% shall be paid into the Treasury.

When the amount of the "General Reserve Fund" has reached fifty per cent of the Bank's capital,
the net product shall be distributed in the proportion of 20% to this "Fund" and 80% to the
Treasury.

If the outcome of a financial year has been adverse, the loss shall be covered by drawing on the
"General Reserve Fund" and, if unavailable or short, by a compensatory payment from the
Treasury.

When as a result of a drawing by virtue of the preceding sub-paragraph the balance of the
account "General Reserve Fund" falls to under fifty per cent of the capital, the distribution of
excesses shall be resumed on a 50-50 basis between this account and the Treasury, until this
account rises again to half the amount of the capital.
21
Article 114
The Bank's gold and currency holdings shall be accounted according to their countervalue at the
legal parity rate of the Lebanese Pound.

Article 115
A special account shall be opened in the name of the Treasury for the following entries
a) The differences between the countervalue, at the legal parity rate, of the Bank's gold and
currency holdings, and the actual purchasing or sale value of these holdings;

b) The profit or loss entailed by the Bank's gold and currency holdings from the alteration of
the legal parity rate of the Lebanese Pound
or of a foreign currency;

c) The sums referred to in articles 55 and 64.

Article 116 (as modified by the Law promulgated by Decree

(No. 6105 of 5 October 1973
The debit balance of the special account referred to in the preceding article shall not be subject to
payment nor interest-bearing, so long as it does not exceed the 25 % of the countervalue, at the
legal parity rate, of the Bank's gold and currency holdings.

Sums in excess of the 25% limit shall be covered by the State, either in cash, or by
interest-bearing Treasury Bonds, according to conditions to be laid down in agreement with the
Bank.

If the special account shows a creditor balance, it shall be used for the advance redemption of the
Treasury Bonds issued by virtue of Decree No. 581 of 8 December 1949, amended by Decree
No. 3453 of 21 November 1950, and for the redemption of Treasury Bonds which will have been
issued by virtue of the preceding sub-paragraph of the present article.

In case this special account shows a creditor balance following the amortizations referred to in
the preceding subsection, it shall be necessary to retain, compulsorily, the equivalent of twenty
per cent thereof in the bank as treasury deposit, the remaining eighty per cent to be switched to
Treasury account.

Article 117
Before June 30 of every year, the Governor shall table before the Minister of Finance the balance
sheet and the Profit and Loss Account of the previous fiscal year as well as a report on the Banks
operations in the course of the said year.
The balance sheet and report shill be gazetted in the month following their presentation to the
Minister of Finance.

A shortened statement of the situation shall be released every 15 days.

SECTION 10: EXEMPTIONS AND PRIVILEGES

Article 118

22
The Central Bank shall be exempted from all taxes, imposts and rates whatsoever, already
enforced or likely to be enforced for the benefit of the State, municipal corporations or other
organisations.

Article 119
In the course of judicial proceedings, the Bank shall be dispensed from providing caution-money
or advances in all cases where the law prescribes this obligation to be borne by the parties.

The Bank has a general mortgage right on the assets and other valuables it may hold, under
whatever title, in the name and for the account of its debtors.

Article 120
Without prejudice to other provisions, existing or future, more favourable to mortgages, the Bank
is entitled to sell the collateral covering its claims, according to the following procedure
1. Failing the recovery of a mature debt, the Bank may, notwithstanding all opposition,
fifteen days after Notary summons have been served to the debtor, cause the collateral to
be sold in recovery of the sums due as capital, interests, commissions and charges,
without prejudice to other legal action which may be taken against the debtor and/or his
guarantors and/or other persons jointly and severally liable with the debtor.

2. The sale shall be ordered by the President of the Court of primary jurisdiction simply
upon the Bank's request, no hearing of the debtor being needed.

3. The Bank relinquishes its claim, directly and without further formalities, on the product
of the sale.

In order to benefit from the procedure as authorised and described in the present article, the bank
must have secured the written agreement of the Borrower to all the terms of this article, before or
upon the conclusion of the loan.

TITLE III

BANKING REGULATIONS

SECTION 1 : DEFINITIONS

Article 121
An enterprise whose essential object is to employ, for its own account in credit operations, the
funds that it received from the public is qualified as bank.

Article 122
Shall be considered as funds received from the public by a bank the deposits and the product of
loans.

Article 123
Deposits shall be regulated by article 307 of the Code of Commerce.

Article 124
Shall not be considered as funds received from the public by a bank set up as a joint-stock
company
23
a) The capital subscribed by shareholders, the reserves, the issue premiums of shares, the
profit carried forward;

b) The funds that the bank secures, by way of credits, of any form they may be, from other
banks or finance establishments.

SECTION 2: PROHIBITIONS

Article 125
It is forbidden to any person, natural or juridical, not carrying on the banking profession, to
receive deposits as implied by article 123.

Article 126 (as modified by the Law promulgated by Decree

(No. 6102 of 5 October 1973
Only firms set up as Joint-Stock Companies or Anonymous Companies shall be authorised to
carry on the banking profession in Lebanon.
Shall be excluded from the provisions of the preceding subsection foreign banks operating in
Lebanon at the date of promulgation of this law on condition that theses foreign banks are;
considered as banks for the purpose of the law by which they are governed.

Article 127 (as modified by the Law promulgated by

------------- (Decree N2 6102 of 5 October 1973
No one can found or manage a bank, or be employed by a bank:
1. If he has been convicted less than 10 calendar years before:
a) for any crime of common law, theft, breach of trust, swindling or offence under the same
penalties as swindling, extorsion of funds or valuables, dishonest issue of cheques with
insufficient funds, impairing State credit within the meaning of articles 319 and 320 of
the Penal Code, receiving things obtained through such infringements;

b) for any infringement under penalty in any of the article 689 to 700 of the Penal Code;

c) for any attempt or complicity in infringements referred to in sub-paragraphs a) and b)

mentioned above.

The prohibition prescribed in paragraph 1 of the present article is applicable to persons convicted
abroad for infringements constituting, according to Lebanese law, one of the crimps or offences
referred to in sub-paragraphs a), b), and c), mentioned above after verification that the foreign
sentence is in order, in conformity with the last sub-paragraph of article 29 of the Penal Code.

2. If he had been declared insolvent and was not rehabilitated at least 10 calendar years
before. If the declaration of insolvency took place abroad it will carry effect in Lebanon
after verification that the foreign sentence is in order, in conformity with the last
sub-paragraph of article 29 of the Penal Code.

3. If he has been convicted for infringement to the Law of 3 September 1956 relating to
banking secrecy.

No person holding the post of Chairman of the Board, or General Manager or Assistant General
Manager, or Manager or Assistant Manager shall be authorised to undertake commercial
operations of their own or to be member of a Company involving unlimited liability.
24
The provisions of this article shall equally apply to the employees of the Central Bunk. They
shall not be authorised to be Board members of companies.

SECTION 3: CONDITIONS OF ESTABLISHMENT

Article 128 (as modified by Decree-Law No. 77 of 27 June 1977)

A. Establishment of any Lebanese bank and the opening of any branch of a foreign bank in
Lebanon shall be subject to an authority emanating from the Central Bank Board.

B. Any modification in the Articles of Association of Lebanese banks shall be subject to the
approval of the Bank of Lebanon.

Article 129 (as modified by Decree-Law N°- 41 of 5 August 1967)

On the establishment of a bank or on the subsequent increase of its capital, the amount of the
capital must be paid up in cash and deposited with the Central Bank, excluding those
contributions in kind authorised under the provisions of article 132.

Central Bank intervention, mentioned in the preceding paragraph, shall be made without charge
or commission.

Article 130 (as modified by Decree-Law No. 77 of 27 June 1977)

Any foreign bank that wishes to set up a branch in Lebanon, must obtain the authority mentioned
in article 128 before undertaking the formalities of declaration and publicity provided by Order
N° 96 of 30 January 1926 and article 29 of the Code of Commerce.

Article 131 (as modified by Decree-Law No. 77 of 27 June 1977)

The Central Bank Board shall grant the authority mentioned in article 128 in so far as it should
deem that it serves public interest.

The Board shall be vested with appreciation authority in what pertains to the granting or refusal
of the authority.

SECTION 4: OBLIGATIONS OF BANKS

1.- Minimum Capital

Article 132 (as modified by Decree-Law No. 41 of 5 August 1967,

----------- (by the Law promulgated by Decree No. 6102 of 5 October 1973,
(and by Decree-Law N9 77 of 27 June 1977
A. Every Lebanese bank established before 9 May 1977 shall be required to have a
minimum paid up capital of three million Lebanese Pounds, allocated for its working in
Lebanon.

The Bank of Lebanon may decide that minimal capital be increased up to five million
Lebanese Pounds and fix the time limit for the full payment of that increase.

B. Every Lebanese bank whose establishment is authorised after 9 May 1977, shall be
required to have a minimal paid up capital of fifteen million. Lebanese Pounds, of which
seven million five hundred thousand Lebanese Pounds shall be paid before the beginning
25
 of its activities by way of blocked deposit for its account lodged with the Lebanese
Treasury, such deposit to be refunded interest-free on the winding up of its activities.

This deposit shall be deemed one element of the body of fixed assets determined under
article 153.

All its shares shall be registered; at least fifty per cent of these shares shall belong to
natural Lebanese persons or to companies or establishments whose members are natural
Lebanese persons, and they may be made over solely to Lebanese persons.

The Bank formed through merger or incorporation with existing banks shall not be
deemed new bank. However, prior approval by the Bank of Lebanon is required to this
end.

C. Every Lebanese bank shall be required to set up a reserve fund by setting aside 10 % of
its net annual profit (for that purpose).

D. Barring cases of incorporation, merger or transformation of a branch of a foreign bank

into Lebanese joint-stock company, capital shall be paid up in full in cash to the Bank of
Lebanon. It shall be possible, however, following agreement with the Bank of Lebanon,
to settle one half of the capital in kind by contributing such real estate as may be
necessary for the working of the bank.

E. No Lebanese bank may reduce its declared capital or take back any portion thereof.

Article 133 (as modified by Decree-Law No. 41 of 5 August 1967, by the

----------- (Law promulgated by Decree No. 6102 of 5 October 1973 and
(by Decree-Law No. 77 of 27 June 1977
A. Every foreign bank duly authorised before 9 May 1977 to set up a branch in Lebanon
shall be required to prove that a capital of at least three million Lebanese Pounds has
been allocated to that branch.
The Bank of Lebanon may decide that the minimal capital be increased up to five million
Lebanese Pounds, and fix the time limit for the payment in full of that increase.
B. Every foreign bank duly authorised to conduct banking activities through the setting up
of a branch in Lebanon after 9 May 1977 shall be required to allocate a minimum capital
of fifteen million Lebanese Pounds, of which seven million five hundred thousand
Lebanese Pounds shall be paid up before the beginning of its activities by way of blocked
deposit for its account lodged with the Lebanese Treasury, such deposit to be refunded
interest-free upon the winding up of its activities.

A bank formed through incorporation or merger with existing banks or via transformation
of a Lebanese bank existing in the form of a joint-stock company into the branch of a
foreign bank shall not be deemed new bank; however, the prior approval of the Bank of
Lebanon to this effect is required.
C. Every foreign bank shall be r-squired to set up a reserve fund by setting aside 10% of the
net profit of its branch in Lebanon for that purpose.
D. Barring cases of merger, incorporation or transformation of a bank established in the
form of a Lebanese joint-stock company into the branch of a foreign bank, capital must
be paid in cash into the Bank of Lebanon.

26
E. No foreign bank may reduce its declared capital allocated to its branch in Lebanon for
any cause whatsoever.

Article 134 (as modified by Decree-Law No. 41 of 5 August 1967 and

---------- (by the Law promulgated by Decree No. 6102 of 5 October 1973

The Central Bank shall define the principles governing the assessment of the items of assets
representing the counterpart of the bank's capital.

It shall require every bank to justify that its assets actually exceed, by an amount at least equal to
its capital, the liabilities to which it is committed towards Third Parties.

The Bank which has sustained losses shall be required to rebuild its capital within a maximum
period of one year.

However, supplementary time-limits not exceeding one calendar year all told may be granted by
the Central Bank if the bank in question provides sufficient guarantees as to its capacity to
rebuild its capital within the fixed time-limit.

Evaluation of loss shall be the assessment of the Banks Control Commission.

Should the bank concerned or any interested third party challenge the assessment of the Control
Commission, the case shall be referred to the Central Board.

The Central Board's decision in this connection shall be final and open to no means of
administrative or judicial review.

2.- Listing the banks

Article 135
Banks must apply for registration with the Central Bank.

The application shall be received if the interested parties comply with the provisions of the
present law and with the requirements of the Code of Commerce.

Article 136
The Central Bank shall establish the list of banks (hereinafter referred to as the "list") whose
application has been accepted.

It shall publish the list in the Official Gazette, in the course of January of each year. All
alterations to the said list shall also be published in the Official Gazette.

Any person can consult the list, free of charge, at the Central Bank's Head Office or agencies.

Article 137
Unless duly entered on the bank list, no enterprise may carry on the banking profession, nor
incorporate the terms of "bank", "banker", or "banking" or any other equivalent term in any
language whatever, either in its style, or in the description of its object, or in its publicity; nor
can it use such terms in any manner whatsoever likely to mislead the public on its quality.

27
Article 138
The banks centered on the list referred to in article 136 are required to mention the registration
number assigned to them on the said list, in the same conditions, on the same documents and
under the same penalties as govern registration on the Trade Register.

Article 139
Registration on the list referred to in article 136 shall replace the authorisation of the Minister of
Finance, prescribed under article 1 of the Law of 3 September 1956 concerning banking secrecy.

3.- Delisting

Article 140 (as modified by Decree-Law No. 41 of 5 August 1967)

A bank is struck off the Bank's list:
a) If it is in liquidation.
b) If it declares itself in a state of suspension of payments.
c) If it appears to the Higher Bank Board that it is no longer in a position to pursue its
activities.
d) If it his not gone into operation for one calendar year dating
from its registration on the list.
e) If it has suspended it s activity for over one year.
f) If it has failed to constitute its capital afresh within the
time-limit set in article 134.
g) In those cases referred to in article 208
In the event of both (a) and (b), it is for the governor of the Bank to decide on delisting; in all
other cases, it is for the Higher Bank-Board to do so.

Article 141
Delisting entails the immediate prohibition prescribed in article 125 and the liquidation of the
delisted bank, in conformity with the laws and regulations in force.

The bank in due process of liquidation may continue to use its style as "bank" on condition that
its state of liquidation is clearly mentioned after its style.

Article 142
The Public Prosecutor shall ask the Court, on the Central Bank's request, to order all measures
designed to safeguard the interests of depositors of the delisted bank, notably, the affixing of
seals, inventory , the nomination of a sequestrator, etc...

4.- Accounts and Statistics - Supervision

Article 143
Banks are required to keep a separate accounting for the whole of their operations in Lebanon.

Article 144
For the execution of the present law, agencies or branches in Lebanon of the same bank, whether
Lebanese or foreign, constitute one entity.

Article 145
The financial year of banks must run alongside the civil year.

28
Article 146
Banks are required to establish annual accounts, closed on December 31, comprising a balance
sheet and a Profit and Loss Account, as well as other periodical statements, of accounts or
statistics, which shall be requested of them by the Central Bank in the conditions, forms and
time-limits decided by the latter.

They are also under obligation to provide the Bank, in respect of the documents referred to in the
preceding sub-paragraph,with all information, clarification and justification the latter may
require.

Article 147
Banks are also under obligation to furnish the Central Bank, for the operation of its Central
Service of Banking Risks, periodical statements listing the credits they grant, in accordance with
standard forms established by the Central Bank and within the time-limits the latter prescribes.

The operational costs of this Service must be met by the banks, according to the conditions and
terms which shall be set by the Central Bank.

Article 148
The supervision of banks shall be the concern of a department of the Central Bank, absolutely
distinct and independent of other departments and in direct link up with the Governor.

All agents of this department shall be sworn in. They shall be held, in favour of banks and their
clients; to the secrecy prescribed by article 2 of the Law of 3 September 1956, even in relation to
persons belonging to other departments of the Bank, excluding the Governor. This does not
preclude the application of penalties referred to in article 151.

Article 149
The Central Bank shall exercise its supervision in the following manner:
1. It verifies the positions and documents, the information, clarifications and justifications
that banks are required to submit or that the Central Bank is entitled to demand, in
conformity with the provisions of the present law.
2. It requires responsible bank directors, whenever it deems it necessary, to furnish all
additional information, clarifications or justifications, duly confirmed by them in writing
and under their personal responsibility.
3. The Central Bank Governor is entitled, if he deems it necessary, to decide a further
verification by his assessors, in order to satisfy himof the accuracy of all or part of what
has been mentioned in the two preceding paragraphs.

Should the Governor take such a decision; the responsible managers of the bank or banks
concerned shall be required to put at the disposal of the assessors, that the Governor will
have chosen from among the assessors belonging to the Service referred to in article 148,
the documents which will enable these assessors to discharge their duty and to submit a
detailed report.

Article 150
In no case can the assessors of the Central Bank require bank managers to reveal the names of
their clients, except for holders of debtor accounts. Nor can they apply to any other person except
to the responsible manager of the bank.

29
Banks are authorised to arrange their accounts in such a manner that the names of the clients do
not appear, except for holders of debtor accounts.

Central Bank assessors are strictly forbidden, in the exercice of their supervision, to enquire
about any question of fiscal nature, to interfere in it, or to report it to whomsoever.

Article 151
Every person belonging to or having belonged to the Central Bank, in any capacity whatsoever,
is bound by the banking secrecy Law of 3 September 1956. This obligation covers all
information and facts concerning not only the clients of the Central Bank and banks and finance
establishments but also these establishments themselves, and with which he has been acquainted
through his association with the Central Bank.

SECTION 5: GENERAL MANAGEMENT REGULATIONS

1.- General principles

Article 152 (as modified by Decree-Law No. 41 of 5 August 1967 and

----------- (by the Law promulgated by Decree No. 6102 of 5 October 1973

Banks are forbidden to:

1. Carry on a trade, an industry or any activity whatsoever which is alien to the banking
profession;

2. Enter into association, in whatever form, with industrial, commercial, agricultural

enterprises or others, in compliance with the provisions of article 153;

3. Grant credits, in any form whatsoever, to their supervisory commissioners, to the Central
Board and to the Central Bank's personnel of all grades, as well as to the family members
of such persons;

4. Grant, either directly or Indirectly, credits to members of its Board of Directors or to

persons in charge of its management, to its principal shareholders and to relatives of such
persons without compliance to the conditions laid down in the following

a) Credits shall be the object of a prior authority, in principle, from the shareholders
general meeting which would specify at least the maximum level of credits that
could be granted to each person, while it would be the duty of the Board of
Directors and of the Supervisory Commissioners to advise the shareholders
ordinary annual meeting of the grant conditions governing such credits and of the
way such conditions shall be met; if necessary the meeting's authority shall be
rejuvenated each year.

b) The granting of every credit must be the object of an express permission of the
Boards of Directors specifying the amount and the terms.

c) Credits shall be covered by real collateral security or by bank guarantee from a

finance establishment duly registered in Lebanon and acceptable to the
Supervisory Commission.

30
 d) Such credits shall not exceed, in the aggregate, 25 per cent of the bank's own
funds.

e) Any bank may grant these credits to members of its Board of Directors, to persons
in charge of its management and to its principal shareholders, irrespective of the
conditions stated in this article, within a margin of 6 per cent of its own funds and
the maximum level referred to in the preceding subsection (d).

f) It shall be the duty of the Banks Control Commission to appreciate to what extent
the provisions of this article shall apply to specific accounts and risks particularly
in so far as an indirect interest exists, each case to be examined individually.
Where diverging viewpoints arise between the Banks Control Commission and
the Board of the bank concerned, the matter shall be referred for adjudication to
the Central Board. The decision of the Central Board in this respect shall be
considered as final and no means of administrative or judicial review shall be
accepted.

Excluded from the provisions of this article are such loans as may be granted by a
bank to a subsidiary credit establishment it actually owns even though the persons
in charge of the management of that establishment are at the same time members
of its Board of Directors or of its staff, on condition that such establishment is
duly registered with the Bank of Lebanon.

For the purpose of the application of subsections 3 and 4 of this article, the family shall include
the spouse, the ascendants and descendants, the brothers and sisters if they are the borrower's
dependents.

Article 153 (as modified by the Law promulgated by Decree

----------- (No. 14013 of 16 March 1970 and by the Law promulgated
(by Decree No. 6102 of 5 October 1973
The total of all the elements of any bank's assets representing its initial formation outlays, its
equipment and furniture, its investments in real estate, and its share in partnership or
shareholdings of whatever description in any enterprise regardless of its object, together with the
aggregate credits granted by virtue of the preceding article shall not exceed the total of its own
funds at any time.
Fixed assets out of the total of all the elements of these assets shall be represent-d only by
property agreeable to the Bank of Lebanon in conformity with special rules to be framed by the
Board of the Central Bank.

Article 154 (as modified by the Law promulgated by

----------- (Decree N°- 6102 of 5 October 1973
By derogation to articles 152 (paragraph 2) and 153, a bank may acquire partnership,
participation share, or real estate, in excess of the authorised margin, if such acquisition is
effected in recovery of insecure or outstanding debts. These assets must, however, be liquidated
within a maximum time-limit of two years; if it has not been able to respect this delay for
circumstances beyond its control, the matter must be referred to the Central Bank.

The temporary ownership of real estate in conformity with the preceding article shall be
exempted from the permit referred to in the law governing ownership by aliens but shall remain

31
subject to permit granted by the Banks Control Commission ascertaining that purchase has been
actually made in settlement of an outstanding debt, or a debt of doubtful recovery.

Article 155
It lies within the Central Bank's competence to appreciate, in the light of the definitions of article
177, if the items of a bank's assets constitute acts of partnership, participation or freezing, in
violation of the provisions of the two articles 152 and 153.
If the bank concerned challenges the Central Bank's view on the matter, the dispute shall be
settled by simple arbitration, in conformity with the Code of Civil Procedure.

The arbitration compromise must be arrived at within the month following the date of the
challenge.

The arbitration sentence stands without appeal.

The arbitrators and the supplementary arbitration are bound by the secrecy law of 3 September
1956.

Article 156
In their use of funds received from the public, banks must observe norms designed to safeguard
the latter's rights.

They must notably adapt the period of such use to the nature of their resources.

Article 157
The investments of banks are classified into short, medium, and long-term operations.

Article 158
Short-term credits are essentially the temporary assistance extended by banks to their clients'
treasury, or credits whose recovery is normally assured by the end, within a maximum period of
one year, of operations for which they were granted.

Article 159
Medium or long-term credits are those which commit the banker, in his lender's capacity, to the
financing of operations or projects which, by their nature, do not enable the client to repay,
within a year, the sums which he borrowed for their execution.

Article 160
Banks must require every applicant for credit to produce a statement of his position or a balance
sheet.

Article 161
They must follow up the use of credits they grant to make certain, as far as this is possible, that
the funds they have furnished are not deviated from their declared destination.

Article 162
When the contract concluded between the bank and its client makes it an obligation upon the
latter to subscribe to time drafts representing the advance granted to him, such drafts shall be, by
derogation to article 9 of Legislative Decree No. 130/L of 20 December 1933, submitted only to
a fixed stamp duty of one Lebanese Pound in respect of drafts not exceeding 5,000 Lebanese

32
Pounds; 2 Lebanese Pounds for drafts varying in amount between 5,001 and 10,000 Lebanese
Pounds; and 5 Lebanese Pounds, for drafts beyond 10,000 Lebanese Pounds in value.

Article 163 (abrogated by the Law promulgated by

---------- (Decree No. 6102 of 5 October 1973

Article 164
It is forbidden to any bank to pledge the valuables they have received by mortgage, or to use
them as collaterals for loans, without having previously obtained by special deed, the consent of
the debtor who has given these valuables in mortgage. At no time must the bank pledge the
valuables received in mortgage, nor use them as collaterals for loans, for an amount exceeding
the amount of its own claim on the debtor who has placed these valuables under mortgage.

Article 165
A bank must not acquire its own shares, nor accept them as collateral for its credits.

2.- Special rules governing a number of operations

A. Savings Accounts

Article 166
Banks may receive savings deposits from natural persons or from non-profit associations.

Article 167
Funds deposited in order to constitute a capital shall be considered savings deposits.

Article 168
The opening of a savings account must lead to the delivery, by the bank, of a book in the name of
the account owner.
The book constitutes the depositor's title to his claim. It is not transferable either through tranfer
or endorsement.

Article 169
Payments and drawings can be effected only by presentation of the book to the cash office which
issued this document upon which these operations must be registered. Drawings by cheques or
transfers are not authorised.

Article 170
It is for the banks to lay down the conditions governing the opening of savings accounts.

Article 171
Savings accounts are exempted from the income tax established by Decree Law No. 144 of 12
June 1959.

Article 172
Registration on the "List" exempts banks from the formality referred to in article 186 of
Decree-Law No. 126 of 12 June 1959.

B. Travellers' Cheques

33
Article 173
The issue of Travellers' Cheques is subject to a previous authorisation from the Central Bank
which shall lay down the conditions that the bank must fulfill to receive such authorisation.

3.- Central Bank's Intervention

Article 174 (as modified by the Law promulgated by
----------- (Decree No 6102 of 5 October 1973
The Central Bank is empowered to make recommendations and to take steps designed to ensure
a sound banking management.
Such recommendations and steps may be of a general or individual character.
It shall be duty of the Central Bank to lay down, following the findings of the Banks Association
of Lebanon, such overall regulations as may be deemed necessary to ensure good relations
between banks and their depositors and clients.

The Bank may, equally, specify and amend, whenever it deems it necessary, standards of
management that banks shall be required to respect in order to remain within liquidity and
solvency.

The Bank may, notably, specify and amend, whenever it deems it necessary, standards of
management that banks shall be required to respect in order to remain within liquidity and
solvency.

Article 175 (as modified by the Law promulgated by

----------- (Decree No. 6102 of 5 October 1973
In order to safeguard sound banking activity, it shall be the duty of the Central Bank to
occasionally specify, either generally or pertinently to individual banks, the ratio that it is
essential to maintain between assets and liabilities or between some items of the assets and
liabilities.

Own funds shall be considered as liabilities within the concept of this article.

Article 176
The provisions which may be issued by virtue of the preceding article cannot be of immediate
enforcement nor retroactive. In the directives it shall circulate to banks on this occasion, the
Central Bank shall set the time at which the new ratios shall be applied and the conditions and
terms according to which such ratios are to be worked out.

Article 177
In the regulations and directives which it shall establish for the enforcement of the present Law,
the Central Bank shall accurately define the meaning of the terms "liquid assets", "liquidity",
"assets at call", "short term commitments", "own funds or capital items", "freezing", etc.

SECTION 6: PROFESSIONS LINKED UP TO THE BANKING PROFESSION:

FINANCE ESTABLISHMENTS

Article 178 (as modified by the Law promulgated by

----------- (Decree No. 6102 of 5 October 1973
Within the framework of the special provisions of this law, shall be considered as finance
establishments those organisations whose fundamental object is the transaction of credit

34
operations, regardless of their kinds, provided that the conditions laid down in articles 179, 180,
182 of this law are met.

Article 179 (as modified by the Law-promulgated

(by Decree N° 6102 of 5 October 1973
Lebanese finance establishments shall be set up in the form, of joint stock companies.

Foreign finance establishments shall be authorised to reside in Lebanon only if they are foreign
companies or branches of foreign companies set up in their country of origin as joint-stock
companies.

Finance Establishments shall be governed by the provisions of articles 125 and 127, as well as
the provisions of articles 128, 130, 131, 143, 144, 145, 146, 147 of the present law.

For the purpose of the present law and the enforcement of the provisions of article 125 on
finance establishments, the following elements shall not be considered as deposits
a) Capital, money set to reserves, dividends, share issue premiums.
b) Assets accruing to finance establishments from operations with banks or other finance
establishments or from the issue of debentures.

Article 180 (as modified by Decree-Law No. 41 of 5 August 1967

(and by the Law promulgated by
(Decree No. 6102 of 5 October 1973
Every Lebanese finance establishment shall be required to have a minimum paid-up capital of
two million Lebanese pounds.

Every foreign finance: establishment shall have to provide evidence that it has set aside for its
operations in Lebanon a capital of at least two million Lebanese pounds.

Article 181 (as modified by the Law promulgated by

----------- (Decree N2 6102 of 5 October 1973
Finance establishments shall be required to apply for registration with the Bank of Lebanon.
Applications in conformity with the conditions specified by law shall be accepted.

The Bank of Lebanon shall publish the list of registered finance establishments in conformity
with the provisions of article 136, concerning banks, of the Code of Money and Credit.

No establishment shall be entitled to assume the quality of finance establishment unless it is duly
registered and listed among finance establishments.

Natural and juridical persons who have previously been registered as finance establishments
shall be given, in implementation of the provisions of the Code of Money and Credit, a
time-limit of one year dating from the promulgation of this law to comply with the provisions of
articles 178 to 181 of this law; if they are not closed at the termination of this time-limit, they
shall, as of right, be submitted to the provisions of articles 183, 184 and 222 of the present law.

Article 182 (as modified by the Law promulgated by

----------- (Decree 1;i°- 6102 of 5 October 1973
Finance establishments shall be required to comply with all the regulations which the Bank of
Lebanon shall adopt concerning credit, particularly those regulations specified. in article 79 of
35
this law, and they shall abide by the directives they shall receive from the Central Bank in
respect of management.

Supervision of finance establishments shall lie within the competence of the Banks Control
Commission which, in relation with those establishments, shall be vested w with the same
powers as it exercises over banks.

Finance establishments and their supervisory commissioners shall be submitted to the provisions
governing supervisory commissioners for banks.

Finance establishments shall come under the administrative penalties which apply to banks by
virtue of article 208, and in case their registration has been struck off, they shall be allowed
either to maintain their activity within the framework of article 183 below, or to wind up their
business.

Article 183 (as modified by the Law promulgated

----------- (by Decree N° 6102 of 5 October 1973
Regulations governing finance establishments shall not apply to natural or juridical persons who
engage in one or several of the operations referred to in article 178 and who have failed to meet
the conditions of registration as finance establishments.

On such persons the regulations referred to under articles 125 and 127 shall apply.

Shall not be considered as deposits received by establishments designated in this article elements
referred to in article 124 and assets placed at the disposal of the establishments by : partners in
case the organisation has been set up in the form of partnership; managing and silent partners in
case the company has been set up as a limited partnership; managing partners in case the
company has been set up as a partnership limited by shares; as well as assets that accrue to
joint-stock companies through the issue of debentures in accordance with article 22 and
subsequent articles of the Code of Commerce.

Article 184 (as modified by the Law promulgated

---------- (by Decree No. 6102 of 5 October 1973
Establishments concerned by the preceding article shall be required within the six-month period
following the enforcement of this law - in case they were established subsequently -to file with
the Bank of Lebanon a declaration comprising their commercial name or style, their postal
address, the amount of their capital and the nature of their operations.

They shall equally be required to submit copy of the dossier of their registration in the
commercial register, as well as copy of the dossier of their registration with the Ministry of
National Economy in case they are branches of foreign establishments. They shall send to the
Central Bank, within the time-limit it shall set them, and in conformity with its model, forms and
conditions, all statements of account and statistics that may be demanded of them.

They shall also abide by the regulations adopted by the Bank of Lebanon regarding credit,
notably in respect of those operations designated in article 79, as well as by the directives the
Bank may send them concerning management.

SECTION 7: SUPERVISORY COMMISSIONERS

36
Article 185
No one can be designated to the functions of bank supervisory commissioner if he stands within
one of the cases listed in article 127.

Article 186 (as modified by the Law promulgated

----------- (by Decree No. 6102 of 5 October 1973
By derogation to the provisions of articles 172 and 173 of the Code of Commerce, supervisory
commissioners for banks and finance establishments shall be appointed as follows:

Supervisory commissioners shall be appointed by the shareholders general meeting for a period
of three years ending when the general meeting which shall examine the accounts of the third
year is held. The tenure of office of the commissioner who is appointed in replacement of
another before the three-year period has run its course shall be terminated at the end of the
remaining time of his predecessor.

In case the general meeting fails to appoint supervisory commissioners, every shareholder shall
be entitled to require the competent tribunal to appoint a provisional commissioner whose tenure
shall end on the appointment of a regular supervisory commissioner by the general meeting.

Supervisory commissioners are expected to meet all conditions and to be academically fully
qualified to be acceptable as experts by tribunals ; they should be sworn in.

One shareholder or a group of shareholders representing at least ten per cent of the capital of the
bank or of the finance establishment, shall be entitled to challenge the appointment of one or
more than one supervisory commissioner by the general meeting, and to request the competent
tribunal to nominate others. Should the tribunal comply with these shareholders' request, the
supervisory commissioners thus appointed may not be removed before the end of their tenure
except by decision of the competent tribunal.

Banks and finance establishment shall be exempted from the requirements of having a
supplementary supervisory commissioner nominated by the tribunal.

With due regard to the provisions of the banking secrecy law, one shareholder or a group of
shareholders representing at least 10 per cent of the capital of the bank or the finance
establishment shall be entitled to require the competent tribunal to appoint an expert to examine
specific matters. In case the tribunal deems the request grounded and acts accordingly, it shall fix
the expert's assignment, his powers and his remuneration. The expert shall lay his report before
the inviting shareholders) and the Board of Directors, such report to be also tabled before the
first general meeting to be held by the shareholders.

Article 187 (as modified by Decree-Law No. 41 of 5 August 1967)

In the course of the year, commissioners must report immediately to the responsible authorities
of the bank where they have assumed supervision, any irregularities and infringements they may
have noticed, and call on these authorities to rectify tie situation as soon as possible.

They are equally required to establish a detailed annual report on the supervision they have
carried out sand on the results thereof. This report shall be submitted to the responsible
authorities of the bank concerned, at least at the end of the month of March following the fiscal
year object of the supervision.

37
Additionally to the reports they draft in pursuance of the provisions of the Code of Commerce,
the supervisory commissioners are required to table before the ordinary General Meeting of the
Bank to which they have been seconded, a special itemized report on the advances granted by the
said bank, directly or indirectly, to the members of its Board of Directors or to its managing
Executives.

Article 188 (as modified by Decree-Law No. 41 of 5 August 1967)

The supervisory commissioners are required to send directly and simultaneously to the governor
of the Central Bank :end to the Chairman of the Banks Control Commission, copies of their
reports referred to in the preceding article.

They must, on the other hand, answer within the shortest delay possible, any enquiry for
information or clarification submitted by each of these two authorities.

Article 189 (as modified by the Law promulgated by Decree N° 6102

(Decree No. 6102 of 5 October 1973
Every foreign bank shall be required to appoint its supervisory commissioner in conformity with
what has been prescribed in the provisions of article 186.

These supervisory commissioners shall see to the proper operation of the foreign banks in
Lebanon within the framework of conditions set down in the present law.

Article 190
Supervisory commissioners are bound to the banking secrecy in the same manner as those
persons referred to in article 2 of the Law of 3 September 1956.

Article 191
The Government is authorised to regulate the profession of the bank supervisory commissioners
by decree adopted by the Council of Ministers on the Central Bank's proposal, and approved by
the Minister of Finance.

TITLE IV

SANCTIONS

SECTION 1 : PUNITIVE SANCTIONS

Article 192
Refusal to accept Lebanese money within the framework of conditions laid down in articles 7
and 8 is subject to penalties listed in article 319 of the Penal Code.

Article 193
Infringements to article 11 come under the penalties listed in article 440 of the Penal Code.

Article 194
Infringements to article 23 come under the penalties listed in article 356 of the Penal Code.

Banks, finance establishments and enterprises referred to in article 23 are considered

accomplices to persons who shall have accepted from them a mandate, an employment, or a
participation, in breach of the said article 23.
38
Article 195
Infringements to articles 125, 137 and 141, 1st paragraph, are under the penalties listed in article
655 of the Penal Code.

Article 196
Whoever contravenes the prohibitions prescribed in article 127 shall be imprisoned for one
month at least and three months at most and fined at least 300 Lebanese Pounds and 1,000
Lebanese Pounds at most, or subjected to one only of these penalties.

Article 197
Infringements to articles 152 and 153 shall be subject to a term of imprisonment of at least one
month and three months at most and to a fine of 1,000 Lebanese Pounds at least and 5,000
Lebanese Pounds at most, or to one only of these penalties.

Article 198
Shall be subject to penalties referred to in article 655 of the Penal Code whoever shall have
obtained from a bank a credit by giving out incorrect or incomplete information, in reply to the
request which has been made to him in compliance with article 160. The bank which shall not
have demanded the financial- position or balance sheet referred to in article 160. comes under a
fine of between 1,000 and 5,000 Lebanese Pounds.

Article 199
Infringements to articles 164 and 165 are subject to a term of imprisonment of a t least one
month and a t most three months and a fine of 1,000 Lebanese Pounds at least and 5,000
Lebanese Pounds at most, or to one of these two penalties.

Article 200 (as modified by Decree-Law No 41

(of 5 August 1967 and by the Law promulgated
(by Decree No. 6102 of 5 October 1973
Shall be subject to the penalties of article 655 of the Penal Code the issue of Travellers’ Cheques
without due authorisation from the Central Bank or in violation of the terms prescribed by the
latter by virtue of article 173.

Shall be subject to the same penalties any person who shall engage in credit operations,
regardless of their nature, when he has not been registered with the Bank of Lebanon in
conformity with the provisions of article 181 or when he has not applied for the permit required
in accordance with article 184 of the present law.

Article 201
Any person who, being empowered to sign for a bank or for a finance establishment, or being 3
member of the Board of Directors, or manager, or employed by a bank or a finance
establishment, shall have knowingly provided Central Bank with account statements, statistics,
information, or explanations, incomplete or contrary to reality, shall be subject to a term of
imprisonment of between 8 and 30 days and to a fine of between 100 and 1,000 Lebanese
Pounds, or to one only of these penalties.

Moreover, the bank, which shall not have declared to the Central Service of Risks a client or a
risk related to a client, may be subject to damages towards other creditor banks of the said client
who happened to stop his payments.
39
Article 202
Shall be considered accomplices and open to the same penalties as the main authors those
supervisory commissioners who, intentionally or through negligence, shall have failed to their
obligations as defined in the present law.

Infringements to the last sub-paragraph of article 186 shall come under the penalties provided by
article 356 of the Penal Code.

The Court may also bar from the exercise of the profession, either temporarily or definitively, the
supervisory commissioners convicted by virtue of the preceding two paragraphs.

Article 203
Any breach to the banking secrecy by persons referred to in article 148, 151, 155 and 190, shall
be subject to a term of imprisonment of between six months and two years, without prejudice to
the application of articles 127 and 185.

Article 204
When a breach has been held against a juridical person, the physical penalties that such a breach
is likely to ensue shall be uttered against the one or several managers or agents of the juridical
person concerned, responsible for the breach.

This or these responsible persons are held jointly and severally with the juridical person for the
payment of all fines, damages and charges.

Article 205
A bank or finance establishment cannot take advantage of the supervision exercised by the
Central Bank to shun the civil or penal responsibilities it would have incurred.
They cannot make use of this supervision as an element of publicity.

Article 206
Breaches to the present law shall be prosecuted before repressive Courts according to the
procedure of urgency. Action is filled by the Public Prosecutor upon the Central Bank's request.

The Court shall order the publication or exhibition of the sentence, or both measures, in part or in
full, at the expense of the convicted party.

SECTION 2: PENALTIES FOR DELAY

Article 207
Without prejudice to the penal or administrative penalties applicable, any bank which does not,
within the time-limits, meet the obligations prescribed under articles 146, 147, 175 and 176, or
which obstructs Central Bank's control, referred to in article 149, is subject to a penalty for delay
which may reach 100 Lebanese Pounds per day.

The same penalty is incurred by finance establishments which do not satisfy the obligations
referred to in article 182.

40
The penalty for delay is set by the Central Bank and is due for computation the next day
following the date of the formal notice it shall have addressed by registered mail to the bank or
finance establishment concerned.

SECTION 3: ADMINISTRATIVE PENALTIES

Article 208 (as modified by Law No. 28/67 of 9 May 1967)

Whether a bank has infringed its articles or the provisions of the present law or the measures
prescribed by the Central Bank by virtue of the powers it holds from this law, whether it has
furnished statements or information incomplete or non conforming to reality, the Central
Bank, without prejudice to penalties for delay and repressive penalties applicable, is entitled to
adopt towards the bank concerned the following administrative measures:
a) warning
b) reduction or suspension of credit facilities
c) prohibition on certain operations or other limitations in the exercise
of the profession
d) the nomination of a supervisor or a temporary manager
e) de-listing from the list of banks.

Article 209 (is modified by the Law promulgated by

(Decree No. 14013 of 16 March 1970
The sanctions provided by the preceding article are decided by the Higher Bank Board, created
by virtue of article 10 of Law No. 28/67 of 9 May 1967.

The decision of the Higher Bank Board are open to no channel of recourse whether ordinary or
extraordinary, administrative or judicial.

Article 210 (as modified by Decree-Law No. 12 of 14 July 1967)

The Commission's decisions referred to in the preceding article are to be published, whenever
such decisions refer to the appointment of a provisional manager or the delisting of a bank from
the list of banks.

TITLE V

TRANSITORY PROVISIONS RELATING TO TITLE III

Article 211
The enterprises referred to in articles 121 and 178 are required, in conformity with articles 135
and 180, to apply for their listing or registration with the Central Bank, within three months from
the date of publication in the press of the latter's notice inviting them to undertake these
formalities.

Article 212
The list referred to in article 136 shall be published for the first time within nine months which
shall follow the expiry of the three month time-.limit set in the preceding article.

Article 213
Enterprises which shall not be entered on the list referred to in the preceding article, must, in
conformity with article 137, cease exercising the banker's profession and making use of the terms
"bank", "banker", or "banking", as from the publication of the said list.
41
Article 214
Banks are required to conform to articles 132 and 133 within the two years following the date of
the Central Bank's notification that their application for listing has been accepted.

Article 215
From the date of their receiving notification of their listing, banks shall. have to stop transacting
those operations prohibited by virtue of article 152.

Article 216
A time-limit of five years is accorded to banks, to be computed from the day when notification
for registration on the list has been made to them:
a) to liquidate or regularise the operations referred to in article 152
in which they might be engaged at the time;
b) to take the necessary measures to conform to article 153.

Article 217
Within the time-limit set in the preceding article, banks shall operate in such a manner as to
comply with the requirements of paragraph II of article 156

Article 218
During the periods of re-adjustment, provided under articles 214, 216 and 217, the Central Bank
shall take all appropriate measures, relating to the particular circumstance of each bank, so as to
safeguard liquidity and solvency.

Article 219
The measures which the enterprises referred to in articles 121 and 178 shall be brought to tale,
such as the modification of Articles to achieve a separation or an incorporation, the forming of a
new company, movable and immovable contributions, sharing out, liquidation and, broadly
speaking, all operations and all deeds, executed in compliance with articles 214, 215, 216 and
217 and within the time-limits set in the said articles, are exempt from all such duties as stamps,
transfer, notary or registration.

Article 220
In banks set up as joint-stock companies, the decisions which would result from the execution of
articles 214, 215, 216 and 217 shall be validly taken by a general extraordinary meeting of
shareholders debating according to the conditions of quorum and majority outlined in articles
203 and 204 of the Code of Commerce.

Article 221
Registration on the original list, accepted by the Central Bank, is considered to have been given
on condition that the enterprises concerned shall conform to the provisions of Title III within the
prescribed time-limits.

Subsequent to these time-limits, any enterprise which shall not have put its situation in order and
shall not have complied with the said provisions shall be delisted and considered to have reached
its term and liquidated.

The foregoing provisions apply to finance establishments.

42
Article 222
No enterprise whose activity is submitted to Title III can take advantage of its vested interests
against the application of the provisions of the present law.

TITLE VI

DIVERSE AND FINAL PROVISIONS

Article 223
The Government is authorised to pay to the Bank the capital set in article 15, as soon as the
Central Board has gone into operation.
The latter shall organise and gradually put into running order the Bank's various services so that
this institution is in a state to carry on the whole set of functions devolving to it by the present
law, as from 1 April 1964.

Article 224
The Central Bank is empowered to:
1. Determine with the Bank of Syria and Lebanon the items of assets and liabilities that the
latter must transfer to it, consequent upon the termination of its privilege of issue, as well
as the conditions and terms of this operation.
2. Negotiate and sign with the Bank of Syria and Lebanon one or several protocols to
regulate outstanding matters between the State and this establishment, notably o
a) the question of counterfeit, in 1952, L.L. 100 notes of the Bank of Syria and
Lebanon, issued on 1 December 1945.
b) the basis of assessment of the rate of interest served by the Bank of Syria and
Lebanon to Public Administrations deposits, by virtue of article 11 of the
covenant of 29 May 1937;
c) the claim put by the Bank of Syria and Lebanon regarding the partial amendment,
effected by the Law of 24 May 1949, to the covenant of 29 May 1937.
The Central Bank is empowered to compromise and transact for the final liquidation of the
relations between the State and the Bank of Syria and Lebanon stemming from the covenant of
29 May 1937.

To carry executory power, the one or several protocols referred to in the present article shall
have to be approved by the Council of Ministers.

The Central Bank shall debit the Treasury sums which the State shall be held owing to the Bank
of Syria and Lebanon and shall credit it with the amounts which shall be owing by the latter to
the State, as a result of the settlement of the outstanding questions referred to above.

Article 225
Notes which shall have been issued up to 31 March 1964 inclusive, by the Bank of Syria and the
Lebanon, in its capacity as Issue Institute of the Lebanese Republic, shall continue, from 1 April
1964, to be unlimited legal tender.
Pending the issue of its own notes, the Central Bank is authorised, if need be, to draw upon the
stocks of the Bank of Syria and Lebanon the necessary denominations of notes and put them into
circulation.
Subsequently, the Bank shall gradually withdraw the notes of the Bank of Syria and. Lebanon,
according to the conditions and terms set in articles 51 to 55 inclusive.

43
In execution of articles 56, 57, 58 and 69, the notes of the Bank of Syria and Lebanon still in
circulation after 1 April 1964 shall be assimilated to Central Banks own notes.

Article 226
In execution of article 59, the Central Bank:
a) Shall post to its liabilities, through the debit of a provisional account it shall open in the
name of the Treasury, the nominal amount of subdivisional money in circulation up to
late 31 March 1964.
b) Shall take over, at cost price, the stock of the minted coins
belonging to the Treasury and shall register the amount proceeding from
the latter to the credit of the -provisional account referred to in
sub-paragraph a) above.
Shall be considered as part of the stock the subdvision money lying in the tills of the Banks of
Syria and Lebanon late on 31 March 1964.

The Bank may choose not to take over and cancel the money power of the subdivisional
denominations of coins in stock which it shall deem unsuitable for circulation.
If, as a result of the entries referred to in sub-paragraph a) and b) above, the provisional account
shows a debtor balance, the Bank shall deduct its claim on the State out of the latter's
participation referred to in article 113. If the balance of the provisional account is creditor, the
Bank shall pay this balance into the Treasury and shall post the stock of subdivisional coins to its
assets.

Article 227
In compliance with sub-paragraph d) of article 97, the fulfillment of payment agreements, the
execution of which stands entrusted to private banks, shall be assumed by the Central Bank.
The latter shall give the interested barks the necessary time-limits and lay down the terms and
conditions for the resumption of the clearing accounts they hold.

Article 228
Within the terms and conditions to be laid down in accord with the Minister of Finance, the
Central Bank shall take over the assets of Exchange Control which is cancelled.
The currencies acquired by the Bank, out of the application of the preceding sub-paragraph, shall
be taken into account, in exactly the same manner as its other gold and currency holdings, in the
assessment of the rates referred to in paragraph 1 of article 69.

Article 229
Until a new parity rate expressed in terms of gold has been worked out in agreement with the
International Monetary Fund and approved by a law in conformity with article 2, the following
transitory measures shall be taken by the Ministry of Finance and enforced, at dates which it
shall set .
1. A real exchange rate, as close as possible to free market rates, shall be adopted for the
Lebanese Pound, by reference to the USA dollar defined by 0.888671 gram of fine gold.
This rate shall be "the transitional legal parity" of the Lebanese Pound.

2. The gold element of the cover for notes issued by the present Issue Institute shall be
accounted an the basis of the "transitional legal parity".

3. The differences between, on the one hand, the countervalue to the transitional parity of
gold and currencies of the cover, and on the other hand, their actual price, shall still be
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 governed by the provisions of Decree No. 15105/K of 27 Mar 1949 up to the transfer of
these elements to the Central Bank.
Starting from this conveyance, the said elements, as well as the other gold and currency
holdings of the Central Bank, shall be governed by article 115.

4. The duties and, taxes to be levied on sums worked in foreign currencies, now assessed on
the basis of the parity set in article 1 of the Law of 24 May 1949, shall be calculated on
the basis of the "transitional legal parity".
The new exchange rate must not materialise into any increase of the duties and taxes
applied to sums worded in forcing currencies. The Minister of Finance shall set, by
orders, the adequate conditions and terms designed to ensure this principle.

5. The foreign currencies levied by the State shall be accounted according to the transitional
parity rate.

6. The State's external expenditures, laid down in Lebanese Pounds, shall be reviewed in
relation to the transitional legal parity and shall henceforth be transferred at the free
market rate.

Article 230
Within the two months following the publication of the present law, the Government shall
appoint the Central Board which shall have to go into operation immediately.
The other provisions of the present law shall be enforced, in order of their necessity, by decrees
issued on the proposal of the Minister of Finance. The whole law shall be enforced in its entirety
on 1 April 1964.

It is however possible to postpone the enforcement of all or of a number of provisions of articles

228 and 229, until 1 January 1965 through decrees issued on the proposal of the Minister of
Finance.
Likewise, the obligation to dedicate one's self fully to the Bank, as required by article 20, shall
be applicable to the Governor only as from 1 April 1964.
Shall be abrogated all the legal and regulatory provisions contrary to the new provisions of this
law as and when this is enforced, as well as other provisions dealt with by the present law.

SECOND ARTICLE

The present decree shall be published in the Official Gazette.

Zouk, 1 August 1963
Signed: Fouad Chehab

By the President of the Republic

The President of the Council of Ministers
Signed: Rachid Karameh

The Minister of Finance

Signed: Rachid Karameh

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