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of January 31, 2024 No. 06/6
About approval of "Procedure for making of transactions with the faces tied with banks"
Based on Articles 34.2. 7, 34.2.8, 34.2.14, 40.1.1-1 of the Law of the Azerbaijan Republic "About banks" and article 22.1.17 of the Law of the Azerbaijan Republic "About the Central bank of the Azerbaijan Republic" DECIDES: Board of the Central bank of the Azerbaijan Republic
1. Approve "The procedure for making of transactions with the faces tied with banks" (is applied).
3. Charge to Legal department to provide in 3-day time submission of this Resolution to the Ministry of Justice of the Azerbaijan Republic for entering into the State register of legal acts of the Azerbaijan Republic.
Chairman of the Central bank
Talekh Kazimov
Approved by the Resolution of Board of the Central bank of the Azerbaijan Republic of January 31, 2024, No. 06/6
1.1. This Procedure is developed according to Articles 34.2. 7, 34.2.8, 34.2.14 and 40.1.1-1 of the Law of the Azerbaijan Republic "About banks" also determines the minimum requirements to the transactions made with the faces tied with banks, and also with local branches of foreign banks (further - banks).
1.2. In view of the minimum requirements established by this Procedure, banks shall have adequate policy and procedures for transactions with the faces tied with banks for implementation of safe and healthy banking activity.
1.3. When making transactions with the faces tied with banks it is also necessary to observe requirements of the Civil Code of the Azerbaijan Republic and the Law of the Azerbaijan Republic "About banks".
1.4. According to article 53-3.2.2 of the Law of the Azerbaijan Republic "About the Central bank of the Azerbaijan Republic" the Central bank can use the right of motivated discretion in connection with determination of the connected persons.
2.1. The concepts used in this Procedure have the following values:
2.1.1. the faces tied with bank (further - the connected person) - persons specified in Article 49-1.1 of the Civil Code of the Azerbaijan Republic and also any person directly or indirectly owning the share allowing to have significant effect on decision making of bank based on the agreement, irrespective of share in the authorized capital of bank, members of the committee on audit of bank, the staff of division of internal audit, other bank employees participating in decision making, the chief accountant of bank (person which is carrying out these obligations), and also persons specified in Article 49-1.1.3 of the Civil Code of the Azerbaijan Republic, persons having the family relations, faces having with specified persons the family relations provided Articles 49-1.1.3 of the Civil code of the Azerbaijan Republic, persons having the right to act on behalf of the face tied with bank, legal entities, in whom faces specified in Articles 49-1.1.6 and 49-1.1.7 of the Civil code of the Azerbaijan Republic, including heads of the structural unit of bank participate from shares in the amount of at least 20 (twenty) percent, persons with whom transactions are made, significantly different from market conditions and not having the obvious economic reasons. The head and the chief accountant (person which is carrying out these obligations) of local branch of foreign bank, and also the other persons connected with foreign bank according to the legislation of the country which resident is the foreign bank are considered as the connected persons of local branch of foreign bank;
2.1.2. the considerable credit of the connected person - the credit requirement provided to one connected person whose total amount constitutes 1 (one) percent and more from the capital of the I level of bank after deduction;
2.1.3. partially considerable credit of the connected person - the credit requirement provided to one connected person taking into account requirements of subitem 3.5.4 of this Procedure which total amount constitutes up to 1 (one) percent from the capital of the I level of bank after deduction;
2.1.4. non-standard asset - the asset classified as non-standard asset based on acts of normative nature of the Central bank of the Azerbaijan Republic (further - the Central bank).
2.2. If the amount of the indirect participation arising by means of immediate possession (in the relations after the third party on the account) one person shares or shares of other person constitutes less than 10 (ten) percent, such participation for the purposes of this Procedure, is not considered in case of determination of faces tied with bank (for example if the person "A" owns on behalf of "B" of 45%, the person "B" on behalf of "In" - 60%, the person "G" on behalf of "D" - 30% of share (45%*60%*30%=8.1%), the person "A" is not considered indirectly participating on behalf of "D").
2.2-1. For the purposes of this Procedure the structural division of bank is implied as the branch, department and representative office of bank determined by the Law of the Azerbaijan Republic "About banks", and by other bank employees participating in decision making - the workers belonging to the special category, specified in subitems 2.1.15.1 and 2.1.15.2 of "Standards of corporate management in the banks" approved by the Resolution of Board of the Central bank of August 28, 2023 No. 41/1.
2.3. When calculating the cumulative amount of credit requirements according to this Procedure the residual amount of credit requirements is considered. The concepts "credit requirement", "banker acceptance" and "considerable influence" used in this Procedure express the values established by "Procedure about prudential standard rates and requirements for credit risks, including the large credit risks" approved by the Resolution of Board of the Central bank of July 22, 2022 No. 29/1-2.
2.4. The circle of the groups of providing used in this Procedure is determined "By procedure for classification of assets and creations of special reserves for compensation of possible losses", the approved Resolution of Board of the Central bank of July 22, 2022 No. 29/1-1.
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