PRESIDENTIAL DECREE OF THE AZERBAIJAN REPUBLIC

of May 14, 1997 No. 580

About approval of the Provision "About National Deposit System"

According to Section 5 provisions of "The state program of privatization of state-owned property in the Azerbaijan Republic in 1995 - 98 years", the Azerbaijan Republic approved by the Law of September 29, 1995, I decide:

1. Approve the Provision "About National Deposit System" it (is applied).

2. Create the Commission on securities and the stock market in case of the President of the Azerbaijan Republic.

3. To the Cabinet of Ministers of the Azerbaijan Republic:

- in 10-day time to prepare and submit for approval to the President of the Azerbaijan Republic the project of the Regulations on the Commission on securities and the stock market in case of the President of the Azerbaijan Republic and the offer on its structure;

4. Ceased to be valid based on the Decree No. 161 of July 26, 1999.

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

Approved by the Presidential decree of the Azerbaijan Republic of May 14, 1997 No. 580

Regulations on National deposit system

1. General provisions

1.1. This Provision is prepared for the purpose of ensuring accomplishment of provisions of Section 5 of "The state program of privatization of the State-owned property in the Azerbaijan Republic in 1995 - 1998", the Azerbaijan Republic approved by the Law of September 29, 1995, legal regulation of creation and activities of National deposit system, including, the depository activity connected with securities.

1.2. Activities of National deposit system and depositaries are regulated by the corresponding regulatory legal acts of the Azerbaijan Republic and this Provision.

2. Basic concepts

2.1. In this Provision the following concepts are used:

- The National Deposit System (NDS) - institute, according to the procedure, established by this Provision, providing storage, cash and non-cash flow of securities, including the state privatization shares (checks) and options, the leading shareholder register performing registration of owners of securities and purchase and sale agreements, and also rendering other deposit services;

- The national deposit center (VAT) - the state organization which as component of National deposit system directly is engaged in depository activity and carries out accounting of the depositaries entering deposit system, exercises control of their activities;

- Committee - the State committee on securities of the Azerbaijan Republic;

- Depository activity - the professional activity consisting of rendering the services connected with storage of securities, accounting and assurance of the facts of encumbrance by the rights and obligations on them, and also opening according to the procedure, established by the legislation, the accounts, their maintaining and money transfer;

- Depositary - the legal entity performing depository activity according to the procedure, determined by regulatory legal acts;

- Clearing on securities - offsetting of cross liabilities and requirements of participants of the transactions made with securities on movement (translation) of securities;

- Personalized securities - securities, the information about which owners can be opened for the issuer in the form of the register of owners of securities, requiring obligatory specifying of the owner upon transition to them of the rights and implementation of the rights fixed in them;

- Demand securities - the securities which are not requiring specifying of their owner upon transition to them it is right also implementation of the rights fixed in them;

- The right owner - person according to the legislation of the Azerbaijan Republic owning securities on its own behalf and to own advantage or interests of the state;

- The depositor - person based on the agreement using services of depositary in storage of securities or accounting of the rights concerning stored in securities depository;

- The agreement "custody account" - the agreement signed between depositary and the depositor and governing their relations connected with depository activity;

- The custody account - set of the entries in the accounting register of depositary necessary for execution by depositary of the agreement "custody account" signed with the depositor;

- Cash security - such form of issue of securities in case of which the owner of security demands from the issuer of issue of security to it in physical type (personally), one or general certificates;

- Non-cash security - such form of issue of securities in case of which all securities of this release are placed for storage in depositary or at registry holder and the rights to securities are reflected in the form of entries in the accounting register of depositary or the magazine of registration of registry holder;

- The nominee holder of securities - person who according to the order and for the benefit of the right owner addresses as the authorized representative of the right owner the leader the register registered in system of maintaining the register of owners of valuable personalized papers however in itself is not right owner;

- The issuer of securities - the legal entity who issued securities and incurring on them obligations;

- Issue of securities - the sequence of the actions of the issuer determined by regulatory legal acts in case of placement of investment securities;

- Issue of securities - set of the securities of one issuer who is providing equal amount of the right for their owners and having equal conditions of issue (primary placement) (at the same time all papers of one release shall have one state registration number);

- The professional participant of the security market - the legal entity and physical person based on the license performing the activities determined by regulatory legal acts about securities.

3. Activities of National deposit system

3.1. The VAT performs the depositary services determined by the State program of privatization and this Provision.

3.2. The basis of the VAT is constituted by the National Deposit Center (NDC).

NDTs is created by the State committee on securities of the Azerbaijan Republic in the form of closed joint stock company; the controlling stake of its shares is stored in the State committee on securities of the Azerbaijan Republic.

3.3. The state answers for obligations NDTs in volume of the share in its authorized capital.

NDTs does not answer for obligations the state and the clients.

NDTs answers for the obligations all property belonging to it.

3.4. NDTs acts on the basis of the license granted by Committee. Activities of NDTs are regulated by regulatory legal acts of the Azerbaijan Republic, this Provision and the charter approved by the State committee on securities of the Azerbaijan Republic.

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