National Bank of the Azerbaijan Republic

of May 25, 2001 No. 02-10/229

To commercial (joint-stock and commercial) banks

To you go for management in work of "The rule of acquisition of shares (shares) of other legal entities by credit institutions", approved by National Bank of the Azerbaijan Republic on May 25, 2001 and registered in the Ministry of Justice of the Azerbaijan Republic on June 11, 2001.

Approved by Board decision of National Bank of the Azerbaijan Republic of May 25, 2001 the Protocol No. 20

Rules of acquisition of shares (shares) of other legal entities by credit institutions

1. General provisions

1.1. These rules are prepared according to the laws of the Azerbaijan Republic "About National Bank of the Azerbaijan Republic" and "About banks and banking activity in the Azerbaijan Republic" and extend to all commercial (joint-stock and commercial) banks of the republic and branches of foreign banks (further - "bank").

1.2. These rules determine conditions and limit of participation of banks in the capital (shares, shares) of other legal entities (investment investment).

1.3. As participation of banks in the capital of other legal entities is integrated to big risks and can lead to losses, on such participation restrictions are determined.

2. Restrictions for acquisition of shares (shares)

2.1. Except as specified, stipulated in Item 2.3 these rules, the amount of direct or indirect investments of banks of the capital of other legal entities shall not exceed the following restrictions:

(a) equity participation of one legal entity - 10 percent of own means of bank;

(b) cumulative equity participation of other legal entities - 40 percent of own means of bank.

2.2. The "aggregate capital after deduction" determined by regulations of National Bank shall be implied by own means in these rules.

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