RESOLUTION OF BOARD OF CENTRAL BANK OF THE REPUBLIC OF UZBEKISTAN

of November 6, 2004 No. 24/8

About approval of the Regulations on conducting by commercial banks financial accounting of investments into affiliated economic societies

According to the laws of the Republic of Uzbekistan "About the Central bank of the Republic of Uzbekistan", "About banks and banking activity" and "About financial accounting", the Board of the Central bank of the Republic of Uzbekistan decides:

1. Approve "Regulations on conducting by commercial banks financial accounting of investments into affiliated economic societies" according to appendix.

2. This provision becomes effective after ten days from the moment of its state registration in the Ministry of Justice of the Republic of Uzbekistan.

3. To impose control of execution of this resolution on the First Deputy Chairman of the Central bank M. R. Zhumagaldiyev.

Approved by the resolution of Board of the Central bank of the Republic of Uzbekistan of November 6, 2004 No. 585

Regulations on conducting by commercial banks financial accounting of investments into affiliated economic societies

I. General provisions

1. This Provision is developed according to the Civil code of the Republic of Uzbekistan, the laws of the Republic of Uzbekistan "About the Central bank of the Republic of Uzbekistan", "About banks and banking activity", "About financial accounting", and also taking into account requirements of International accounting standards (further on tekstumsfo).

2. The purpose of this provision consists in determination of accounting policy by commercial banks (further in the text - banks) concerning investments into affiliated economic societies. This Provision for the purpose of financial accounting establishes concept of affiliated economic society and requires use of accounting method on actual cost when accounting investments into affiliated economic societies.

3. For the purpose of this provision the following concepts are used:

control is powers on management of financial and economic policy of business entity for the purpose of receipt of benefit from its activities;

affiliated economic society is the economic partnership or society which is under control of head bank;

the head bank is the bank owning one or more affiliated economic societies;

the group is head bank with all its affiliated economic societies;

the accounting method on actual cost is accounting method according to which investments are recognized on actual cost of acquisition.

The investor reflects investment income only in that degree in what he receives payments from accumulated net profit of investee, the arising ambassador of date of acquisition;

impairment (reduction in cost) is situation when the recoverable amount of investment into affiliated economic society becomes below its book value;

the recoverable amount is the greatest of two following sizes: fair value of asset less costs to sell or its cost of use;

the cost of use is the discounted cost of expected future cash flows which are expected to be received from continuous use of asset and its disposal on the termination of term of its useful service;

4. If at the time of acquisition the bank decides that the cost of investment will be compensated generally by sale, but not by means of preserving it in ownership as asset, then the bank shall classify it as asset, held for sale. In this case the asset is estimated on the smallest of two sizes: its book value or fair value less costs to sell.

5. Existence of control is supposed when the head bank owns, directly or indirectly through affiliated economic societies, more than half of voting shares of other business entity, except as specified, when owing to emergence of these or those circumstances such ownership does not provide control. Control can exist also in case of ownership of head bank less than half of voting shares of other business entity. At the same time the bank shall have:

1) opportunity to manage more than half of voting shares, under the agreement with other investors;

2) powers to determine financial and operational policy of this business entity according to constituent documents or to the agreement;

3) opportunity to appoint or displace most of board members and to control business entity through this governing body;

4) opportunity to have majority of votes at meetings of the board of directors and to control business entity through this governing body.

6. In case the bank has opportunity to control affiliated economic society, it shall apply requirements of this Provision even if the bank does not apply control actively.

7. In case of assessment of powers of bank by determination of financial and economic policy of other business entity, in addition to ordinary shares it is necessary to consider availability and influence of the "potential voting power" belonging to bank and also to other investors which allows its owner to acquire additional voting power or to reduce voting power of other party in case of decision making. "The potential voting power" is determined by availability of equity warrants (the demand certificate on the share), equity options, debt or equity instruments converted into ordinary shares or other similar tools. At the same time only those tools which can be performed or converted at the moment are taken into consideration. The tools representing potential voting power are not considered convertible at the moment if they are subject to execution or converting only in case of approach of certain date in the future or only when there is some future event.

8. In case of determination of whether "the potential voting power" promotes control, the bank checks all facts and circumstances (including conditions of execution of the tools representing "potential voting power", and other contractual arrangements regardless of whether they are considered separately or together) which influence "potential voting power", except for intentions of management of bank and financial opportunity to perform or convert.

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