LAW OF THE AZERBAIJAN REPUBLIC

of May 16, 2000 No. 878-IQ

About privatization of state-owned property

This Law establishes the organizational, economic and legal basis of privatization of the property which is in state-owned property in the Azerbaijan Republic.

Chapter I. General provisions

Article 1. Basic concepts

1.0. In this Law the following basic concepts are used:

1.0.1. privatization of state-owned property - transfer of state-owned property to property of buyers according to the rules established by this Law;

1.0.2. the moment of the announcement of state-owned property open for privatization - time of acceptance by relevant organs of the executive authority of the decision on privatization of state-owned property;

1.0.3. subject to privatization - property in the territory of the Azerbaijan Republic and beyond its limits, being in state-owned property of the Azerbaijan Republic, share of the state in authorized capital of joint businesses, the stocks owned by the state, the parcels of land which are under the privatized companies, except for state-owned property which privatization is forbidden;

1.0.4. the starting price of the company (object) - the price of the property submitted for the first auction, calculated using stipulated by the legislation procedure;

1.0.5. the state privatization share - the set of the bearer securities issued in cash form, including four privatization checks, gratuitously issued to each citizen of the Azerbaijan Republic registered for January 1, 1997 and which are expressed on average in 1/8000000 parts of the state-owned property privatized by checks;

1.0.6. the state privatization option - the personalized security issued in non-cash form and granting to the foreign investor right to use the state privatization checks in case of privatization of state-owned property;

1.0.7. the privatization transaction - the purchase and sale agreement signed according to this Law between the seller and the buyer of state-owned property;

1.0.8. the local investor - citizens of the Azerbaijan Republic, the founder (founders) or legal entities in whose authorized fund the share belonging to citizens of the Azerbaijan Republic exceeds 50%;

1.0.9. the foreign investor - foreigners, stateless persons, foreign legal entities and their representations, and also legal entities of the Azerbaijan Republic in whose authorized capital the share of foreign investments exceeds 50%;

1.0.10. the strategic investor - the legal entity having potential to attract on the company new technology and know-how, intended to be directly involved in activities of the company and management of it and having in the field rich managerial and know-how.

Article 2. Main objective and principles of privatization of state-owned property

2.1. The main objective of privatization of state-owned property consists in increase in efficiency of economy, achievement of its structural transformations and increase in level of living of the population by liberalization of economy, expansion of entrepreneurship, forming of competitive environment, investment attraction in economy.

2.2. Treat the basic principles of privatization of state-owned property:

2.2.1. implementation of actions for privatization in the conditions of publicity and ensuring the state and public control over its course;

2.2.2. protection of the interests of labor collective established by the legislation in the course of privatization of state-owned property;

2.2.3. forming of healthy competitive environment;

2.2.4. creation in the course of privatization of equal conditions for all buyers.

Article 3. Legislation on privatization of state-owned property

The legislation on privatization of state-owned property in the Azerbaijan Republic consists of the Constitution of the Azerbaijan Republic, this Law and other legal acts adopted according to them.

Article 4. Restriction of scope of the Law

4.0. This Law does not extend on:

4.0.1. privatization of land fund (except for the state parcels of land which are under the privatized companies and objects, and also objects which are under construction at the expense of means of physical or non-state legal entities);

4.0.2. privatization of the state housing stock;

4.0.3. privatization of mineral deposits;

4.0.4. cases of accomplishment of the obligations arising from the international treaties supported by the Azerbaijan Republic.

Article 5. The state program of privatization of state-owned property in the Azerbaijan Republic

5.1. Priorities, restrictions when implementing privatization of state-owned property, procedure for acquisition of state-owned property by physical persons and legal entities are established for certain period by the State program approved by relevant organ of the executive authority.

5.2. It is provided in the State program:

5.2.1. the list of property which is privatized according to the solution of this Law of relevant organ of the executive authority specified in Items 6.1.3 and 6.1.4 of Article 6.1;

5.2.2. procedure for the choice of methods of privatization of state-owned property;

5.2.3. procedure for use of the state privatization shares (checks);

5.2.4. the restrictions introduced during privatization;

5.2.5. procedure for participation of local and foreign investors (buyers) in the course of privatization;

5.2.6. payment procedure of cost of the privatized state-owned property;

5.2.7. preprivatization restructuring and improvement of the companies and objects;

5.2.8. the privileges provided to labor collective at the privatized state company;

5.2.9. other questions connected with privatization of state-owned property.

Article 6. Classification of state-owned property

6.1. The property which is in state-owned property is classified proceeding from possibility of its privatization as follows:

6.1.1. property which privatization is forbidden;

6.1.2. the property which is in state-owned property until decision making about its privatization;

6.1.3. property which privatization is performed according to the decision of relevant organ of the executive authority;

6.1.4. property which privatization is performed according to the decision of the seller of state-owned property.

6.2. Types of the property which is in state-owned property of the Azerbaijan Republic which privatization is forbidden:

6.2.1. subsoil, forest fund, water resources, the state borderlands with the real estate which is on them, airspace, waters of the sector of the Caspian Sea belonging to the Azerbaijan Republic (lakes;

6.2.2. protected and in a special way the used natural territories;

6.2.3. according to the Law of the Azerbaijan Republic "About culture", the state-owned property included in the list of the world natural and cultural heritage, and also carried to national cultural and natural heritage including historical and cultural monuments of the Azerbaijani people (excepting historical and cultural monuments of local value), exhibits and fund of the State museum, the Public Records Office and the Central state library;

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