PRESIDENTIAL DECREE OF THE AZERBAIJAN REPUBLIC

of May 14, 1997 No. 579

About approval of the Regulations on specialized check investment funds

For the purpose of ensuring creation of necessary conditions for market grouping of securities, I decide savings of investments made by the population in the securities issued during privatization of the state companies, and effective placement of the state privatization shares (checks) in the Azerbaijan Republic:

1. Approve Regulations on specialized check investment funds it (is applied).

2. Ceased to be valid

3. Ceased to be valid

4. This Decree becomes effective from the date of its signing.

Approved by the Presidential decree of the Azerbaijan Republic of May 14, 1997 No. 579

Regulations on specialized check investment funds

1. General provisions

1. This Provision determines rules of creation and activities of specialized check investment funds in the Azerbaijan Republic (further - "check investment funds"). Check investment funds are created for the collection of checks performed for the purpose of ensuring participation of physical persons and legal entities in the course of privatization of the state companies by means of the state privatization shares (checks) (further - "privatization checks").

2. The check investment fund is public joint stock company which accepts privatization checks and makes with them transactions, raises funds by issue of own shares, puts investments into securities of other issuers, is engaged in purchase and sale of securities.

3. The organization and activities of check investment funds in the territory of the Azerbaijan Republic are performed according to regulatory legal acts of the Azerbaijan Republic taking into account the features established by this Provision.

4. Before statement of this provision the legal entities performing investing activities in the Azerbaijan Republic can act as check investment funds only after coordination of the constituent documents with requirements of this provision.

5. Foreign investors can participate in activities of check investment funds according to the procedure, determined by regulatory legal acts of the Azerbaijan Republic, and only by means of the state privatization options.

6. Licensing of activities of check investment funds in the territory of the Azerbaijan Republic is performed by the President of the Azerbaijan Republic.

The legal entity, according to the procedure, established by this Provision, not obtained license for activities as check investment fund, cannot act as check investment fund.

7. In this Provision the following concepts are used:

* Investment fund of the closed type - the investment fund which does not have the right to take the shares at shareholders;

* Representative group check investment the fondachekovy investment fund managing check investment fund and also all representative persons of this check investment fund and its manager;

* Representative person physical or legal litsauchreditel (founders), the head, officials and shareholders of the legal entity who own 25 percent and more stocks, or the company which more than 25 percent of shares granting voting power belong to this person;

* Representative faces of the manager of check investment fund - all investment funds which signed the contract for management with the manager of check investment fund;

* The investment declaration of check investment fondasvedeniye, the reflecting restrictions delivered on activities of check investment fund, main objectives and the directions of investing activities, and also the limiting part of the authorized capital invested in this or that security;

* Depositary of check investment fund - the legal entity rendering depositary services to check investment fund based on the agreement and not being representative person of this check investment fund;

* The manager of check investment fund - legal entity or physical person which in accordance with the established procedure obtained license for activities on management of check investment fund and with which the contract for management is signed;

* The independent auditor of check investment fund - the auditor who is not representative person of check investment fund.

2. Organization and state registration of check investment fund

1. Organization and and state registration of check investment fund are performed in stipulated by the legislation procedure, taking into account the features determined by this Provision.

2. According to the legislation of the Azerbaijan Republic on privatization of state-owned property the legal entities and physical persons having the right of the buyer in the privatizations (recognized by subjects of privatization) can act as the founder of check investment fund.

3. According to the legislation of the Azerbaijan Republic the decision on organization of check investment fund is made by meeting of founders.

4. According to the legislation of the Azerbaijan Republic the meeting of founders of check investment fund approves the charter of check investment fund prepared taking into account the "Approximate Charter of specialized check investment fund" approved by the State committee on securities of the Azerbaijan Republic, chooses relevant organs of management of check investment fund, approves draft agreements and the depositary contract for management of check investment fund which is subject to the conclusion with the manager of fund and the independent auditor and provides to the corresponding official of check investment fund power on the conclusion of these agreements.

In case of the conclusion of the contract for management of check investment fund with the manager of fund are considered approved by Cabinet of Ministers of the Azerbaijan Republic "Recommendation about the contract for management of check investment fund".

In the agreement signed with depositary of check investment fund are considered approved by Cabinet of Ministers of the Azerbaijan Republic "Recommendation about basic provisions of the depositary agreement".

5. According to the legislation of the Azerbaijan Republic the check investment fund is investment fund of the closed type and has no right to take the shares at shareholders. Shares of check investment fund can be traded on the securities market.

6. According to the legislation of the Azerbaijan Republic restrictions for purchase and sale of shares of check investment funds are not put.

7. The charter of check investment fund, along with provisions which by the legislation of the Azerbaijan Republic are subject to specifying in charter of joint-stock company can reflect also following:

* organization of check investment fund in the form of public joint stock company;

* organization of check investment fund in the form of the closed check investment fund;

* equal rights of voices of shares of check investment fund, availability at it the regular share of the same nominal;

* investment declaration;

* inadmissibility of creation of any private funds;

* data on rules, terms of issue of dividends and the address to which they are issued.

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