PRESIDENTIAL DECREE OF THE REPUBLIC OF UZBEKISTAN

of October 2, 1998 No. UP-2084

About measures for enhancement of activities of joint stock banks

For the purpose of increase in role of shareholders in management of activities of commercial banks, transfer of employees of bank to contractual system of hiring, increases in responsibility of the leading and executive bodies of bank for provision and ensuring recoverability of the credits, and also stimulation of process of creation of private banks:

1. Approve:

Regulations on joint stock bank according to appendix No. 1;

Standard regulations on Council of joint stock bank according to appendix No. 2.

2. To Central Bank of the Republic of Uzbekistan together with commercial banks. To provide with the Ministry of Finance until the end of the current year forming of Councils of joint stock banks according to the approved Standard provision.

At the same time to pay attention to expansion of financial independence of banks and additional attraction of share capital, increase in role and responsibility of shareholders in management of activities of banks, transfer of employees of banks to contractual system of hiring.

For realization of the above to recommend to the Central bank of the Republic of Uzbekistan to form the special commission.

3. Determine that in cases when in the authorized capital of bank the block of shares belonging to the state exceeds 25 percent, Council of the bank the attorney from the Central bank of the Republic of Uzbekistan to whom management is assigned is included> the specified block of shares.

4. Determine that Council of joint stock bank:

together with Board and heads of bank branches bears responsibility for the organization of effective management of bank, provisions; and timely recoverability of the credits according to requirements of the specified Standard provision and other acts of the legislation;

appoints the chairman and board members of bank;

signs the labor contract with the chairman of the board of bank.

5. Recommend to joint stock banks:

in two-month time in the procedure established by the legislation to bring the charters and internal regulating documents in compliance with the regulations approved by this Decree;

until the end of 1998 to organize holding general shareholder meetings on which to review and approve structures of Councils of banks. Provide appointment in accordance with the established procedure with Council of the bank of the chairman and board members of bank;

enter into practice regular hearing before Council of quarterly reports of the chairman of the board and head of service of internal audit of bank.

6. Recommend to the Central bank of the Republic of Uzbekistan:

strengthen supervision of activities of commercial banks, toughen requirements for implementation of operator functions by them, in case of need to apply for violation by banks of the legislation on activities of joint stock banks and infringement of shareholder rights severe measures up to withdrawal of the banking license;

together with Council of Ministers of the Republic of Karakalpakstan and khokimiyats of areas to develop and approve measures for stimulation of creation of joint-stock commercial banks with participation of private equity, including measures for increase in appeal of investment of free money of the population and business owners in the authorized capital of again created and operating commercial banks, to rendering the practical help to them when forming material and technical resources, and also completing, training and advanced training of personnel in a month.

7. To Central Bank together with the Ministry of Finance and the State Property Committee of the Republic of Uzbekistan:

in two-month time to develop and approve the restructuring program of debt to commercial banks, having provided the mechanism of complete repayment at the scheduled time of the credits delayed according to decisions of the Government.

8. Recommend Banking associations of Uzbekistan:

together with commercial banks and the State Property Committee of the Republic of Uzbekistan in two-month time to develop and perform package of measures for providing clients of banks and potential investors with wide information for optimum placement of free money by them in the shares emitted by banks;

till December 1, 1998 together with the State Property Committee of the Republic of Uzbekistan to take measures for regular lighting in mass media of financial condition of banks with results of estimates of the independent rating companies;

until the end of 1998 together with the Central bank. The state inspectorate for insurance supervision under the Ministry of Finance of the Republic of Uzbekistan to take effective measures on further development of system of insurance of bank deposits upon non-commercial risks.

9. To Central Bank of the Republic of Uzbekistan, the Ministry of Justice, other interested ministries and departments to bring the regulating documents into accord with provisions of this Decree.

10. To impose control over the implementation of this Decree on the Deputy prime minister of the Republic of Uzbekistan Hamidov B. S. and the Chairman of the Central bank of the Republic of Uzbekistan Mullazhanov F. M.

Appendix No. 1

to the Presidential decree of the Republic of Uzbekistan of October 2, 1998 No. UP-2084

Regulations on joint stock bank

1. General provisions

1. This Provision is developed according to the Laws of the Republic of Uzbekistan "About the Central bank of the Republic of Uzbekistan", "About banks and banking activity", "About joint-stock companies and protection of shareholder rights", other acts of the legislation and determines procedure for creation of joint stock banks and activities of their governing bodies, protection of the rights and interests of shareholders of bank.

2. In this Provision the joint stock bank (further - Bank) is understood as the commercial bank of the Republic of Uzbekistan created according to the current legislation in the form of open or private company.

2. Creation of bank

3. Legal entities and physical persons, including nonresidents of the Republic of Uzbekistan, except for public authorities, public organizations and public funds if other is not stipulated by the legislation can be founders of bank.

4. The minimum size of the authorized capital of bank is determined by the Central bank of the Republic of Uzbekistan. At the same time share of participation of each shareholder shall not exceed the size established by the legislation.

5. The bank, together with its branches, is single legal entity. Bank branches, without being independent legal entities, perform banking activity on behalf of the bank which created it.

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