L. Paul Bremer, Coalition Provisional Authority

“ In order to promote equal access of domestic and foreign creditors to a universal pool of
assets of a bankrupt bank with cross border activities:
a. if a bankrupt domestic bank has branch offices or representative offices in a foreign
country, the CBI shall cooperate as much as possible with the authorities of that
country;
b. if a creditor of a bankrupt domestic bank has received partial payment on its claims
in a foreign country, the balance of its claims may be presented for payment together
with costs incurred in the proceeding in Iraq ”

“ Article 16 Other capital requirements
1. Each bank shall at all times maintain capital, including its unimpaired capital and reserves,
in Iraq of not less than the equivalent of 12 percent of the total value of its assets determined
on a risk-adjusted basis, or such higher percentage as specified by regulation of the CBI,
whereby not less than one-half of such capital shall consist of core capital. ”

“ Each bank shall furnish the CBI at the relevant intervals specified by regulation with:
a. statements showing its assets and liabilities;
b. statements on the foreign currency exposures, capital adequacy ratio, reserve
position, liquid assets, large exposures and credits to related persons;
c. information or statistics concerning its various accounts and activities, including
information on deposits, banking facilities, credit plans, or credit and contingent
liabilities granted to the bank’s customers ”

“ Whenever an administrator of a bank discovers that the capital of the bank is less than the
capital required by law or by regulation of the CBI, the administrator must promptly notify
the CBI thereof.
8. The CBI may provide guidance, including by means of establishing rules for good
business conduct, or specify by regulation rules to ensure the banks’ good relations with their
depositors and customers.
Article 27 Banking activities
1. ”

“ Secured claims of the bank against other persons that are not yet
mature where the maturity cannot be accelerated under the terms of any applicable agreement
may be sold by the receiver without the consent of such other persons.
3. Assets shall be deemed to have been sold in a commercially reasonable manner when they
are disposed of as follows:
a. securities, foreign currencies and other assets that can be readily sold at market sold
in the markets where they are traded ”

“ Actions taken by or on behalf of a bank after the decision appointing a conservator for that
bank takes effect shall be null and void, unless they are taken by or by the authority of the
CBI or the conservator, or unless they are money or securities transfer orders covered by
Article 83.
5. A conservator shall be accountable only to the CBI for the performance of duties and for
the exercise of the powers as conservator. The conservator shall only be subject to the duties,
rules and instructions given to the conservator by the CBI.
6. ”

“ Banks shall: maintain adequate capital and liquidity; make adequate provision for
depreciation of assets, for discharge of liabilities, and for losses; maintain adequate
accounting and other records of business; observe sufficient and effective risk controls; and
ensure that their assets are diversified as to risk of loss.
3. The CBI shall, by regulation, prescribe detailed standards of conduct for banks which the
CBI shall apply in its prudential supervision in accordance with international standards and
best practices. ”

“ The CBI shall examine all banks on a regular basis, and at least once
every year, except that representative offices shall be examined at least once every two years.
4. Any person authorized to carry out an examination under this article shall be subject to
confidentiality requirements and may require any administrator, officer, employee or agent of
a bank, or its subsidiaries or affiliates, to provide access to all necessary books, accounts,
documents, and records. ”

“ A bank may engage in the following activities subject to the terms and conditions of its
banking license or permit:
a. receiving money deposits (in the form of demand deposits, time deposits or other
types of deposit) or other repayable funds, bearing interest or not;
�
-25 -ANNEX A
b. extending credits (whether secured or not by collateral or liens) , including without
limitation: consumer and mortgage credit; factoring, with or without recourse;
financing of commercial transactions, including forfaiting (purchasing negotiable
instruments at discount without recourse) ”

“ It shall be prohibited for any bank without first obtaining the CBI’s prior written approval
to acquire stock or shares in a company established outside Iraq, except when such stock or
shares are transferred to it in the course of its banking operations.
Article 34 Bank holidays
All banks must open their doors for business with the public on all days and during all office
hours approved by the CBI, excluding Fridays and bank holidays. The CBI shall, by
regulation, announce the holidays to be observed by banks. ”

“ Banks shall not establish group structures that hinder the exercise of effective supervision.
The CBI may issue regulations specifying rules regarding affiliates of a bank, in particular,
concerning the requirements for transactions between banks and any affiliates that are not
subject to consolidation in the preparation of financial statements.
6. The CBI shall issue regulations specifying how the operational requirements specified for
banks by the provisions of this section, and in regulations issued by the CBI thereunder, shall
apply to domestic branch offices of foreign banks. ”

“ Any bank becoming aware of a proposed acquisition of a qualifying holding in the bank or
of a proposed increase in an existing qualifying holding in the bank pursuant to paragraph (4)
shall give at least 30 days prior notice to the CBI, or once it becomes aware of such proposal,
whichever is earlier.
6. Any bank becoming aware of circumstances that indicate that any of its owners and, in
particular, owners of a qualifying holding, are no longer fit and proper persons, shall notify
the CBI.
Article 23 Merger
1. ”

“ No bank may extend credit to a related person:
a. if the credit and its financial terms and conditions have not been approved by the
board of directors or, in the case of a branch of a foreign bank, the designated branch
manager ”

“ The receiver appointed by a decision of the Tribunal opening bankruptcy proceedings
against a bank, or under paragraph (5) of this article with respect to any replacement receiver,
shall be selected by the Tribunal from a list of candidates submitted to the Tribunal by the
CBI. Only fit and proper persons are eligible to serve as receiver or replacement receiver for
a bank. The bankruptcy decision shall specify the remuneration and the other terms and
conditions of employment of the receiver. ”

“ Article 5 License application
1. Licenses shall be applied for in writing to the CBI. Applications shall be in such form and
detail, and shall be accompanied by such documents, as shall be prescribed by regulation of
the CBI.
2. For a company established in the form of a juridical person pursuant to the laws of Iraq the
application shall include the following documents and information:
a. an authenticated copy of the instrument under which the applicant is formed,
together with the memorandum of association or bylaws, if any, and the address of its
head office ”

“ For the purposes of applying this article or any regulations issued pursuant thereto, a
person shall be deemed to include any other person with whom such person is connected,
directly or indirectly, in such a way that the financial soundness of any of them may affect
the financial soundness of the other or others, or the same factors may affect the financial
soundness of some or all of them, or if as a result of the structure of their relationship the
other person is in fact ultimately responsible for the credit outstanding.
Article 31 Bank credit to related persons
1. ”

“ Activities performed pursuant to micro and small business credit access or similar grant
programs by entities other than banks shall be permitted as authorized by entities exercising
governmental authority. Such activities shall be exempt from the application of this law.
Such entities exercising governmental authority shall provide notice and periodic reports to
the CBI concerning their exempted credit access and grant programs.
Section 2 – Licensing
Article 4 Licenses and permits
1. ”

“ Article 108 Entry into force
This law shall enter into force on the same date that the Order authorizing this law enters into
force. Thereafter, this law shall be published in the Official Publication. ”

“ The CBI shall by regulation prescribe prudential requirements as well as the common
procedures and methods of calculation to be followed by banks in their application. The CBI
may specify requirements, prescribed in response to exceptional circumstances, concerning
the rate of interest, maturity and other conditions applicable to any type or form of financing
extended or received (including deposits) or applicable to contingent liabilities.
Article 30 Large exposures
�
-27 -ANNEX A
1. No bank shall grant credit to a person if as a result thereof:
a. ”

“ Article 27. Notwithstanding the foregoing, and with the prior written approval of the CBI, a
bank may temporarily carry on or participate in the carrying on of such activities to the extent
necessary to obtain satisfaction of claims, provided that the CBI may require the bank to
cease such activities by a date specified in the license or permit.
Article 29 Prudential requirements
1. ”