The present Law determines principles and organisation-legal basis of privatisation of state property in Azerbaijan Republic.

Under privatisation of state property we shall mean transfer of state property into private property according to provisions of the present Law.

1. Legislation concerning privatisation of state property consists of the Law of Azerbaijan Republic «About property», the present Law, other legislative acts of Azerbaijan Republic issued based on the present Law.

2. Privatisation of land and housing fund is controlled by other legislative acts of Azerbaijan Republic.

Privatisation of state property in Azerbaijan Republic will be accomplished by the body subordinate to the President of Azerbaijan Republic that exercises control over state property.

All enterprises and property constituting state property of Azerbaijan Republic are considered objects of privatisation, except enterprises and objects that cannot be privatised.

Subjects of privatisation (buyers) might be:

• working collective of privatised object;
• citizens of Azerbaijan Republic;
• legal entities that are not state enterprises, companies and organisations;
• legal entities with the state share in their ownership capital not more than 25 percent;
• foreign legal entities and physical persons.

General principles of privatisation of state property are:

• state control over the process of privatisation of state property, with establishment of stages, succession, classification into groups, ways, forms and options of privatisation;
• consideration of economical interests of the state, working collectives and all social layers during privatisation;
• determination of privatisation share in order to provide participation of citizens of Azerbaijan Republic in privatisation;
• consideration of opinion of working collective when choosing forms and ways of privatisation, except enterprises (objects) subject to obligatory privatisation;
• consideration of requirements of antimonopoly policy during privatisation;
• development of conditions for participation of foreign legal entities and physical persons in privatisation process with the objective of attraction of foreign capital into national economy of Republic and use of experience of business circles;
• accomplishment of privatisation in conditions of publicity, state and public control over results of privatisation.

1. Privatisation of state property in the Republic is accomplished on the basis of national currency — Azerbaijan manat.

2. Privatisation of state property is accomplished after preparation of necessary documents (forms) according to order determined by the body exercising control over state property.

3. Participation of foreign legal entities and physical persons in privatisation is controlled by regulations envisaged by Clause 8 of the present Law.

4. Housing and social-cultural objects, auxiliary economy objects being on balance of enterprises under privatisation might be privatised both together with their total property and separately. If it is impossible to accomplish privatisation of these objects they are transferred under control of the body governing state property.

5. Privatisation of state property is accomplished by means of auctions (sales), competitions, various investment funds, securities and stock exchanges.

6. Each member of working collective of the enterprise, being privatised by means of auction (sale) and competition, who had not received right for property will be given compensation at the expense of the new owner at the moment of his dismissal.

Amount and procedure of compensation payment are determined by provisions on organisation and realisation of auctions and competitions.

7. On transformation of state enterprises into stock companies various privileges are granted to members of working collective, particularly the right to purchase part of shares at their nominal value or with partial payment.

1. Participation of foreign legal entities and physical persons in privatisation is allowed according to legislation of Azerbaijan Republic, in an order determined by state program of privatisation.

2. Whenever foreign legal entities and physical persons participate in privatisation of state property jointly with local capital the former shall have priority over the latter.

3. Enterprises with foreign investments, wherein share of local participant is compensated by private (individual) capital might take part in privatisation based on reinvestment (repeated investment) of profit obtained at the territory of Azerbaijan Republic.

Reference about sources of profits shall be submitted to the body that exercises control over state property before beginning of the auction (sale) and competition.

1. State control over privatisation is exercised by the body having control over state property within the limits of authority determined by the present Law and other legislative acts of Azerbaijan Republic issued on the basis of the present Law.

2. The body exercising control over state property:

• develops state program of privatisation of state property in Azerbaijan Republic;
• exercises methodical control over privatisation all over the territory of the Republic;
• establishes its own territorial structures exercising privatisation program in respective regions, accomplishes control over their activity;
• analyses cases of privatisation of state property before the commencement of the present Law, submits to Law Courts or Courts of Arbitration appeals about annulment of decisions and deals that contradict legislation on privatisation;
• accomplishes other functions envisaged by the present Law and other legislative acts of Azerbaijan Republic.

3. Ways, forms and options of privatisation, procedure of their accomplishment, specificity’s in various branches of economy, various enterprises and objects, estimation of their cost, normative, methodical and also other necessary documents concerning distribution and use of money obtained as a result of privatisation are developed by the body exercising control over state property and approved by the President of Azerbaijan Republic.

1. State program of privatisation determines:

• list, technical-economical indices of enterprises under privatisation, objects (property) and their initial estimation;
• stages, term of privatisation;
• classification of enterprises and objects under privatisation, ways and forms of privatisation, specific options of formation of stock companies;
• amount, terms of granting of privatisation share and procedure of its use;
• use of money obtained as a result of privatisation.

2. Every year, not later than on the 1^st of November, state program of privatisation is submitted for approval by Supreme Council of Azerbaijan Republic by the President of Azerbaijan Republic.

Supreme Council of Azerbaijan Republic approves state program of privatisation not later than on the 20^th of December.

Amendments to the state program of privatisation might be introduced after approval of Supreme Council of Azerbaijan Republic.

List of enterprises, objects (property) that are not subject to privatisation is approved by the Supreme Council of Azerbaijan Republic on presentation of the President of Azerbaijan Republic.

In the course of privatisation of state property the following classification of enterprises and objects is proposed:

• enterprises and objects being privatised on decision of the bodies of legislative power and executive power;
• enterprises and objects being privatised on decision of the body accomplishing control over state property;
• enterprises and objects being privatised on decision of the local power bodies.

1. Sale of privatised property with full compensation of the cost.

2. Sale of privatised property with individual (privilege) compensation of cost.

1. Sale of property that has been taken on lease before to leaseholder on agreement of the body controlling state property.

2. Redemption of the property by the enterprise' collective.

3. Organisation of auctions (sales) and competitions.

4. Establishment of Limited liability company and close stock companies.

5. Establishment of open stock companies.

1. Establishment of stock companies when the state possesses the control package of shares.

2. Establishment of stock companies when the state doesn't possess the control package of shares.

1. Estimation of cost of state property is accomplished either by the enterprise itself or on agreement with specialised enterprises, with subsequent expertise and approval of its results by the body exercising control over state property, according to instructions and methodical recommendations, developed by abovementioned body.

2. Questions on sale or long-term leasing of land site together with privatised state enterprise and object located thereon shall be solved individually, according to existing legislation and order, by the body exercising control over state property in pursue to agreed mutual decision of respective bodies depending on location of said land site, its cost, communication network under this land site, electrical lines, cables, on type of activity and aim of the enterprise' activity, on the subject accomplishing privatisation and other factors.

1. Working collectives might redeem state enterprise at the expense of money taken from the following sources:

• privatisation shares;
• individual sources;
• bank credits.

1. Privatisation share is share of privatised state property given to all citizen of Azerbaijan Republic free of charge.

2. Privatisation share is given to citizens of Republic for establishment of equal starting conditions for participation in privatisation process.

3. Amount of privatisation share is established based on cost of state enterprises and objects chosen for privatisation.

4. Privatisation share is being kept at specially opened accounts in respective bank on the names of all citizen of Republic.

5. Privatisation shares might be used by citizens of Republic only for the purposes of privatisation.

6. Privatisation shares having special purpose are not handed out, cannot be used for payment in the sphere of money circulation, and might be only transferred from one account to the other.

7. Whenever privatisation share is transferred as legacy it should be also used only with the same specific purpose.

8. Procedure of giving out and use of privatisation shares is controlled by the President of Azerbaijan Republic.

1. With the objective of efficient use of part of privatisation shares belonging to the citizens of Republic that were not used due to some reason the state establishes specialised investment fund. With the same objective private (individual) investment funds might be also established in the Republic.

2. Regulations concerning specialised, private (individual) investment funds and other normative documents controlling their activity are approved by the President of Azerbaijan Republic.

3. Investment funds exercise their activity on the basis of licenses given by National bank and under control of this bank; they are subordinate to National bank.

Investment funds are included into Common State register.

Money obtained as a result of privatisation of state property constitute national property and are used for social-economic development of Azerbaijan Republic.

1. Applications for privatisation of state property are submitted after publishing the program of state privatisation in mass media.

2. List of documents and data that should be enclosed with applications submitted in connection with privatisation is determined by state program.

3. When submitting application for privatisation respective state duty is paid; amount of said duty is equal to initial cost of property declared at the auction.

1. Auctions on privatisation of state property are organised by the body exercising control over state property.

2. Procedure of sale of the objects at the auction is governed by respective Provisions approved by the body exercising control over state property.

1. To carry out privatisation of state property in the form of competition participant of the competition should establish specific conditions in connection with this property.

2. Competitions are being held according to Provisions approved by the Body controlling state property.

1. With the purpose of privatisation enterprises are transformed into open or closed stock companies.

2. Transformation of state enterprises into stock companies is governed by respective legislation.

1. The Body exercising control over state property shall grant documents confirming right for property to the buyer of the object to be privatised.

2. Whenever working collective is buying the enterprise on credit terms it acquires proprietary right after payment of first instalment and presentation of guarantees of subsequent payments secured by the part of property already paid off.

3. Until cost of the enterprise is completely redeemed by working collective its right for charge of free transfer or sale of the enterprise' property to the other party is limited.

1. People who lost their job because of privatisation of state enterprises shall enjoy rights and privileges established according to respective legislation for the people dismissed on reorganisation and liquidation of enterprises.

2. When paying compensations and granting other privileges at the enterprises transformed into stock companies with the objective of privatisation pensionaries having worked at the enterprise at least seven years and also persons having right to return to their former posts according to existing legislation are also accounted for.

1. Privatisation processes in Azerbaijan Republic are accomplished in conditions of wide publicity and under public control.

2. State program of privatisation is published in mass media, and people should be provided with necessary information concerning auctions, competitions, transformation of state enterprises into stock companies at least one month before.

Becomes null and void according to the Law dated 16 May, 2000, № 878-IG («LegalActs»).

© LegalActs
Non-official translation