Rules of Procedure

The Rules of Procedure for Investigations, Sanctions and Appeals

I. GENERAL PROVISIONS

Art. 1 Purpose

These Rules of Procedure (“Rules”) establish the procedures for investigating and sanctioning breaches of the Listing Rules, Market Rules, and related regulations, ensuring fair, impartial, and efficient resolution of issues to maintain market integrity.

Art. 2 Scope of Applicability

These Rules apply to all natural and legal persons subject to the Listing Rules, Market Rules, and any related regulations including Issuers, Sponsor Advisors, Members and other market participants.

See also:

- Listing Rules

- Market Rules

Art. 3 Statute of Limitations

  1. No sanction proceedings may be initiated if the alleged breach occurred more than three (3) years before the initiation of proceedings.

  2. Proceedings must conclude within two (2) years from the initiation unless exceptional circumstances justify an extension.

Art. 4 Executive Bodies

  1. The MERJ Regulation department is divided into operational divisions for market surveillance (Markets Surveillance Division) and listing compliance (Listing Division) to oversee breaches of the Market Rules, Listing Rules, and related implementing provisions.

  2. Sanctions in accordance with these Rules of Procedure are imposed by MERJ Regulation or the Sanctions Committee which includes the following:

    1. The Listing Committee for matters relating to the Listing Rules; or

    2. The Disciplinary Committee for matters relating to the Market Rules.

  3. Appeals are heard and determined by the Appeals Committee.

  4. The executive bodies will act independently within their defined mandates and competence.

II. PRINCIPLES OF PROCEDURE

Art. 5 Independence and Fairness

  1. All investigations and decisions shall be impartial and based solely on the evidence presented.

  2. Parties have the right to be heard and to present evidence or arguments relevant to their case.

Art. 6 Conflict of Interest and Recusal

  1. Any individual involved in an investigation or decision who has a conflict of interest must disclose it immediately and recuse themselves.

  2. Automatic recusal applies in the following cases:

    1. Personal or financial interest in the matter;

    2. Previous involvement in another capacity (e.g., as a witness or advisor); or

    3. Close personal relationships with parties involved.

  3. Recusal decisions are made by:

    1. The Chair of the Sanctions Committee for matters before the Sanctions Committee; or

    2. The Chairman of the Appeals Committee for matters before the Appeals Committee.

  4. If a recusal is contested, the matter shall be decided by:

    1. The Chairperson of the Sanctions Committee in case of conflict among members of the Sanctions Committee.

    2. The Vice-Chairperson in case of conflict involving the Chairperson of the Sanctions Committee.

III. LANGUAGE AND COMMUNICATION

Art. 7 Language of Proceedings

  1. All proceedings shall be conducted in English.

  2. Parties may use interpreters approved by the Exchange, at their own cost.

Art. 8 Written Submissions

  1. All procedural communications and submissions must be in writing.

  2. Electronic submissions are permitted and considered valid upon receipt by the Exchange.

IV. CONDUCT OF PROCEEDINGS

Art. 9 Procedural Format

  1. Investigations and sanctions proceedings will typically be conducted in writing, unless otherwise deemed necessary by the Chairman of the respective committee.

  2. Hearings, when required, may be conducted in person or via secure electronic means at the discretion of the Chairman of the respective committee.

Art. 10 Deadlines and Submissions

  1. Standardized Deadlines

    1. Appeals: Within ten (10) business days from notification of the decision from the Sanctions Committee.

    2. Scheduling Hearings: Within twenty (20) business days from the notice of appeal.

  2. Decision Issuance: 30 business days from the hearing’s conclusion.

  3. Time Calculation

    1. Deadlines are based on business days unless otherwise stated.

    2. Submissions are deemed timely if received by 23:59 Seychelles time on the deadline date.

  4. Extensions Deadlines specified under these Rules are non-extendable, and failure to meet such deadlines results in forfeiture of corresponding rights or remedies, unless explicitly allowed under exceptional circumstances. Extensions for other deadlines may only be granted if:

    1. A written request is submitted at least two (2) business days before the deadline.

    2. The request demonstrates good cause and sufficient justification.

V. INVESTIGATION PROCEDURES

Art. 11 General Provisions

  1. Investigations aim to establish facts efficiently and impartially.

  2. All evidence and arguments must be considered equally.

  3. MERJ Regulation is responsible for conducting investigations.

Art. 12 Preliminary Inquiry

Preliminary inquiries may be initiated upon receiving a credible report or suspicion of a breach. The purpose of such inquiries is to ascertain whether sufficient grounds exist to warrant a formal investigation. Participants involved in the preliminary inquiry will be informed in writing, stating its scope and potential implications.

Art. 13 Transition to Formal Investigation

If a formal investigation is deemed necessary, participants shall receive written notification, including:

  1. A summary of the suspected breach and corresponding rules.

  2. The evidence supporting the initiation of the formal investigation.

  3. An indication of potential outcomes, such as penalties or further referral to the Sanctions Committee.

Art. 14 Evidence

  1. Evidence includes all information relevant to determining the facts of the case.

  2. Expert opinions may be requested, with costs borne by the requesting party unless otherwise determined.

  3. Evidence not shared with the parties concerned cannot be used in proceedings.

Art. 15 Initiation and Notification

  1. Preliminary investigations commence upon suspicion or report of a breach.

  2. Full investigations are initiated if sufficient grounds are found, and all Parties Concerned are notified in writing.

Art. 16 Conclusion of Investigations

  1. Upon completion, the MERJ Regulation may:

    1. Close the case if no breach is found;

    2. Impose penalties within its mandate, which must be approved by the appointed head of MERJ Regulation;

    3. Refer the case to the Sanctions Committee for further action.

  2. Parties will be informed of the decision in writing

VI. MERJ REGULATION SANCTIONS PROCEEDINGS

Art. 17 Sanctions Authority

MERJ Regulation is authorised to apply sanctions with the exception of any of the following:

  1. Suspension of a Sponsor Advisor or Member;

  2. Levying of fines;

  3. Withdrawal of registration of a Sponsor Advisor or Member; or

  4. Delisting of an issuer.

Art. 18 Decision-Making Process

  1. The respective division within MERJ Regulation may recommend sanctions following an investigation where deemed justified in the interests of maintaining market integrity.

  2. A summary of the specific breach(es) of the respective rules, findings from the investigation and proposed sanctions must be presented to the Chair of the respective Sanctions Committee.

  3. The Chair shall determine if the proposed sanctions are to be applied.

VII. SANCTIONS COMMITTEE PROCEEDINGS

Art. 19 Decision-Making Process

  1. The Sanctions Committee consists of three members, including the Chairman.

  2. Parties may be summoned for hearings if deemed necessary.

  3. The Sanctions Committee shall decide based on documentation and evidence submitted by the investigative body and the parties involved. Admission of new evidence during proceedings is only permissible if:

    1. It was unavailable during the investigation phase, and

    2. It is material to the resolution of the case.

Art. 20 Content of Decisions

Decisions of the Sanctions Committee shall include:

  1. A detailed summary of the facts and evidence considered.

  2. The legal and regulatory basis for the decision.

  3. The criteria for determining sanctions, which may include:

    1. The gravity of the breach.

    2. The degree of intent or negligence involved.

    3. The actual or potential harm caused to the market or participants.

    4. Any mitigating or aggravating factors.

VIII. APPEALS

Art. 21 Suspensive Effect

The filing of an appeal generally suspends the enforcement of the Sanctions Committee's decision unless the Appeals Committee determines that immediate enforcement is necessary to protect market integrity or investors.

Art. 22 Appeal Decisions

Appeal decisions must include:

1. A summary of the appellant’s arguments and any additional evidence submitted;

2. An assessment of the Sanctions Committee's findings;

3. A determination to uphold, amend, or overturn the original decision; and

4. Clear reasons for the outcome, including reference to applicable rules and evidence.

IX. APPEALS COMMITTEE

Art. 23 Composition

  1. The Appeals Committee shall consist of three (3) members appointed by the Chairperson of the Sanctions Committee, with the following conditions:

    1. Members must not have participated in the disciplinary hearing subject to the appeal.

    2. At least one member must possess legal qualifications.

    3. Members should have relevant expertise in regulatory, financial, or market practices.

    4. The Chairperson of the Sanctions Committee must ensure that all members are free from conflicts of interest before appointment.

    5. Members shall declare any conflicts of interest and recuse themselves if necessary.

  2. A Chairperson for the Appeals Committee shall be appointed from among its members.

Art. 24 Procedures

  1. Notice of Appeal

    1. A person aggrieved by the outcome or sanctions of a disciplinary hearing may file a notice of appeal within ten (10) business days of receiving the decision of the Sanctions Committee.

    2. The notice must be submitted in writing to the Chairperson of the Sanctions Committee and must include the grounds for appeal, specifying whether the appeal challenges the decision, the sanction, or both.

    3. Upon receipt of the appeal, the Chairperson of the Sanctions Committee shall notify the opposing party, who may submit a response within five (5) business days.

  2. Scheduling of Appeal Hearing

    1. The Appeals Committee shall convene the appeal hearing within twenty (20) business days of receiving the notice of appeal.

    2. Parties will be notified of the hearing’s date, time, and format (physical or virtual) at least five (5) business days before the hearing.

  3. Scope of Appeal

    1. The appeal is limited to the evidence presented during the disciplinary hearing.

    2. No new evidence will be permitted unless the Appeals Committee determines that extraordinary circumstances apply, such as:

      1. Evidence that could not reasonably have been discovered or presented during the disciplinary hearing; or

      2. Evidence that materially impacts the case’s outcome.

  4. Representation and Submissions

    1. Parties may be represented by legal counsel or other authorized representatives.

    2. Submissions must be made in writing and must be confined to the grounds and evidence raised in the disciplinary hearing, unless new evidence is admitted under exceptional circumstances.

  5. Conduct of Hearing

    1. The Appeals Committee may question parties and seek clarification on evidence or submissions.

    2. The hearing may be adjourned at the discretion of the Appeals Committee, provided the reasons for adjournment is communicated to all parties.

Art. 25 Decision

  1. The Appeals Committee shall:

    1. Deliver its decision in writing within thirty (30) days of the conclusion of the appeal hearing;

    2. Include in its decision –

      1. A summary of the evidence and arguments;

      2. The findings and reasoning for upholding, overturning, or varying the disciplinary outcome;

      3. The revised sanction, if applicable; and

      4. An indication that the decision is final and binding.

    3. Provide copies of the decision to all parties and the Securities Authority.

  2. When amending sanctions, the Appeals Committee shall consider:

    1. The gravity of the breach;

    2. The intent or negligence involved;

    3. The actual or potential harm to market integrity or participants;

    4. Any mitigating or aggravating factors presented by the parties.

  3. The Exchange may disclose sanctions through its website or other official publications. The Disclosure must:

    1. Identify the parties involved;

    2. Provide a summary of the breach and corresponding sanctions;

    3. Be made within five (5) business days of the final decision unless an appeal is pending.

  4. Confidentiality considerations may justify withholding certain details, particularly where disclosure could unfairly harm unrelated third parties or impede ongoing investigations.

X. COSTS

Art. 26 Allocation of Costs

  1. Procedural Costs:

    1. The party against which sanctions are imposed shall bear the procedural costs unless otherwise decided by the Sanctions Committee or Appeals Committee.

    2. If sanctions are not imposed, no procedural costs shall be applied.

  2. Repeated Proceedings:

Where repeated proceedings are necessitated due to procedural errors, the responsible party shall bear all associated costs.

Art. 27 Legal Representation

Parties shall bear their own costs for legal representation and expert assistance unless the Sanctions Committee determines otherwise due to exceptional circumstances.

XI. PUBLICATION AND CONFIDENTIALITY

Art. 28 Register of Sanctions

  1. The Exchange maintains a confidential register of all sanctions.

  2. Entries are deleted after three years if no further breaches occur.

Art. 29 Public Disclosure of Sanctions

  1. Preliminary investigations remain confidential unless otherwise required by law.

    1. The Exchange reserves the right to publish details of any sanctions imposed, including –

    2. The names of the parties;

    3. The nature of the breach;

    4. The sanctions imposed.

  2. Disclosure may occur through the Exchange’s website, any newspaper in Seychelles or the jurisdiction where the respective parties are domiciled or resident at the Exchange’s discretion.

  3. Disclosures will be made to any relevant regulatory body or securities exchange having oversight over the respective parties.

  4. Any publication will balance the need for transparency with considerations of fairness and confidentiality, particularly where it may impact ongoing proceedings or unrelated third parties.

XII. FINAL PROVISIONS

Art. 30 Entry into Force

These Rules shall enter into force on 1 November 2025 replacing any prior rules governing investigations, sanctions, and appeals. For pending matters:

  1. Proceedings initiated before the entry into force shall continue under the rules applicable at the time of initiation.

  2. Any new decisions, including appeals, shall be governed by these Rules.

Art. 31 Transitional Provisions

  1. Sanctions issued under previous rules shall remain enforceable unless successfully appealed.

  2. Applications for appeals filed under previous rules but not yet adjudicated shall proceed under these Rules.

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