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RESOLUTION OF THE CABINET OF MINISTERS OF THE AZERBAIJAN REPUBLIC

of June 4, 2019 No. 257

About approval of number of regulatory legal acts in connection with increase in efficiency of activities of legal entities whose controlling stake of shares (shares) belongs to the state

(as amended of the Resolution of the Cabinet of Ministers of the Azerbaijan Republic of 25.08.2021 No. 241)

For the purpose of ensuring execution of subitems 1.1. 1, 1.1.2 and 1.1.3 Orders of the President of the Azerbaijan Republic "About additional measures in connection with increase in efficiency of activities of legal entities whose controlling stake of shares (shares) belongs to the state" of September 5, 2016 the No. 2300 Cabinet of Ministers of the Azerbaijan Republic DECIDES:

1. Approve "Evaluation procedure of efficiency of activities of legal entities whose controlling stake of shares (shares) belongs to the state" (Appendix No. 1).

2. Approve "Rules and standards of corporate management in joint-stock companies which controlling stake of shares (shares) belongs to the state" (Appendix No. 2).

3. Approve "Payment procedure of bonuses to members of governing bodies of legal entities on the basis of the payment system which is based on results of activities of legal entities which controlling stake of shares (shares) belongs to the state" (Appendix No. 3).

4. Changes can be made to this Resolution according to the Item 2.6-1 "Regulations on Procedure for Preparation and Acceptance of Regulatory Legal Acts of Executive Bodies", No. 772 approved by the Presidential decree of the Azerbaijan Republic of August 24, 2002.

Prime Minister of the Azerbaijan Republic

Nowruz Mamedov

Appendix No. 1

Approved by the Resolution of the Cabinet of Ministers of the Azerbaijan Republic of June 4, 2019 No. 257

Evaluation procedure of efficiency of activities of legal entities whose controlling stake of shares (shares) belongs to the state

1. General provisions

1.1. This Procedure is developed for the purpose of ensuring execution of subitem 1.1.1 of the Order of the President of the Azerbaijan Republic "About additional measures in connection with increase in efficiency of activities of legal entities whose controlling stake of shares (shares) belongs to the state" of September 5, 2016 No. 2300.

1.2. This Procedure regulates assessment procedure on the basis of criteria for evaluation of efficiency of activities of legal entities which controlling stake of shares (shares) belongs to the state.

1.3. The legal entities (further - legal entities) belonging to the state whose controlling stake of shares (shares) belongs to the state are implied as joint-stock companies, limited liability companies which 51 or more percent of shares (shares) directly or indirectly belongs to the state.

1.4. The efficiency evaluation is made periodically by efficiency measure calculation.

1.5. This Procedure is applied in banks and other credit institutions which controlling stock the state, and also at insurers and overcautious persons, persons licensed in the security market in investment funds (at managing directors) and the legal entities organizing licensed payment systems taking into account regulatory legal acts and acts of normative nature adopted for the respective area owns.

1.6. The powers assigned to the Supervisory Board (Board of directors) by this Procedure are performed by executive body in case of its absence.

2. Performance indicators

2.1. The performance indicator (further - PE) consists of the indicators used for determination of efficiency of activities of the legal entity and calculated according to this Procedure.

2.2. The list and procedure of payments of PE are specified in Appendix No. 1 to this Procedure. Use of the main performance indicators for calculation is obligatory, and use of additional performance indicators - voluntary.

2.3. Calculation of PE is perfromed by legal entities for year.

2.4. The specific weight of PE reflecting value of each of them separately for the legal entity is determined by the Supervisory Board (Board of directors) of the legal entity. The specific weight of PE established on each legal entity remains to constants within at least 3 years.

2.5. Set of the specific weights of all PE applied on each legal entity makes 100%. The specific weight of the main performance indicators shall be at least 60%.

2.6. If calculation of PE which is not provided in Appendix No. 1 to this Procedure is considered necessary, the legal entity prepares the relevant PE which is represented the Supervisory Board (Board of directors) with indication of sound arguments to the body specified in Item 4.1 of this Procedure on coordination. The prepared PE after coordination with relevant organ affirms the Supervisory Board (Board of directors) and is applied as the main PE.

3. Calculation of PE

3.1. For calculation of PE the following sources are used:

3.1.1. documents of financial accounting of the legal entity;

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