Definitions stated below are used in the present Law.

Credit organisation represents a corporate body, which is entitled to conduct banking operations, specified by the present Law with the aim of profit extraction being the basic in its activity and on the basis of the license (special permit) of the National Bank.

Bank is a credit organisation, having exclusive right to fulfil in totality the following banking operations: attraction of pecuniary means of natural and juridical entities on the deposit, allocation of stated means on their behalf and at their own expense on terminal conditions and percentage recovery, opening and holding of banking accounts of natural and juridical entities.

Non-banking credit organisation is a corporate body, that have got the license of the National Bank for conducting certain banking operations.

Branch is a separate subdivision of credit organisation, which is not a corporate body and is opened with the National Bank consent apart from the location of the credit organisation, it conducts all or part of banking operations, specified by the license, on the credit organisation behalf.

Representation is a separate subdivision of credit organisation, which is not a corporate body and is opened with the National Bank notification apart from the location of the credit organisation, it does not have the right to lead banking activity, represents and protects the interests of the credit organisation, concludes transactions on its behalf and conducts other legal actions.

Affiliated credit organisation is a corporate body, the activity of which is determined by another credit organisation in accordance with the prevailing participation in the authorised capital or on the basis of contract concluded between them.

Foreign bank is a corporate body, carrying out banking activity in compliance with the legislation of the country, on the territory of which it has been registered.

Branch of the foreign bank is a separate subdivision of a foreign bank, having the right to fulfil on its behalf in the Azerbaijan Republic banking operations, the conducting of which is permitted to the bank on the territory of the country it has been registered at, in the volume, fixed by the license of the National Bank.

1. Banking system of the Azerbaijan Republic includes the National Bank and credit organisations of the Republic.

2. The regulation of the banking activity is conducted by the Constitution of the Azerbaijan Republic, present Law, the Law «About National Bank of the Azerbaijan Republic», other legislative acts, normatives of the National Bank.

1. The credit organisation does not bear responsibility for obligations of the state, whereas the state is not responsible for credit organisation obligations, excluding cases, when the credit organisation and the state have taken appropriate obligations.

2. Under the contracts concluded credit organisations are entitled to conduct operations with budget means, settles accounts with executive power bodies and municipal bodies, provide purpose utilisation of budget means, allocated for the execution of governmental and regional programs. Appropriate contracts are to include mutual obligations of the parties and stipulate their responsibility, terms and forms of the control over the use of budget means.

3. Credit organisation cannot be made bound to fulfil activity, not foreseen by its constituent documents, excluding cases, specified by the legislation.

4. Credit organisation does not depend on legislative bodies, executive power bodies and municipal bodies in the making of decisions, connected to the current banking activity.

Neither state body has the right to interfere with the credit organisation activity.

1. During the fulfilment of banking operations the credit organisation is to submit according to the demand of its client or the juridical or natural entity, willing to become its client, the license for conducting of banking operations, the information about its accounts (accounting balance, account of profits and losses), auditing conclusion for the previous year, as well as monthly accounts for the current year. In case of necessity and according to the demand of the above mentioned persons the reference of accounting documents is to be issued.

2. Credit organisation bears responsibility in accordance with the legislation for leading natural and juridical persons into error by means of non-supply of information or supply of erroneous or unful information.

1. Juridical and natural entities are prohibited to conduct banking activity without the license of the National Bank .

2. Credit organisations are prohibited to conclude agreements and conduct co-ordinated operations, directed to the monopolisation of the market of banking services, as well as the restriction of competition in banking sphere.

Control over the execution of rules, aimed against the monopolisation of banking activity is carried out by the National Bank and appropriate state bodies.

3. Employees of government and municipal bodies are prohibited to participate in the managing structures of credit organisation, including participation by means of combination (excluding cases , specified by the chapter VIII of the present Law).

4. Credit organisation is prohibited to carry out insuring, trade and production activity.

1. Credit organisation has the full official name in Azeri, may have contracted name in Azeri and the name in foreign language. Credit organisation has its seal with the official name, where its official sign may be inserted. Words «bank» or «non-banking credit organisation», included into the official name of the credit organisation reflect the character of activity of this juridical entity, as well as its organisation-legal form. The use of symbols of the Azerbaijan Republic and words «Azerbaijan Republic», «State», «national», «central» in the name of the credit organisation is permitted in the legally established order.

It is not permitted to use one and the same name by different credit organisations.

2. Juridical entities are prohibited to use words «bank» and «non-banking credit organisation» or their derivatives in their name, excluding cases, when the context where the words have been used clearly implies that they do not refer to the banking activity.

1. After the registration in the legally established order the credit organisation is to address the National Bank in written form for the bank license. The application is also to include the following data and documents:

2. Branches of foreign banks, credit organisations, completely owned by foreign investors, and joint credit organisations are to submit the following certified documents for the obtaining of bank license:

1. The National Bank considers applications for obtaining of bank licenses for not more than 30 days after the receipt of all documents, specified by the present Law.

2. After the initial expertise of the documents obtained the National Bank is to notify the applicant of the fact within a three-days period, open a corresponding account for the credit organisation with the requirement to pay 100% of the minimum authorised capital, determined by the National Bank, within a month.

The National Bank makes a decision to grant a license for carrying out banking activity within 3 days against the documents, confirming the payment of 100 % of the minimum authorised capital by the credit organisation.

3. In case of denial of bank license, establishment of certain conditions or restriction of bank license force, the applicant is to be furnished with the official information about reasons for that.

1. The denial of bank license is permitted in the following cases:

2. The applicant is notified of motivated decision about denial of license in written form.

3. The applicant is entitled to appeal the court against decision of bank license denial.

1. Branches of credit organisations are opened on the Republic territory and abroad with the National Bank consent, whereas representations - with the notification of the National Bank in an order established by the legislation.

2. Branches and representations operate in compliance with the provision, adopted by the credit organisation.

3. Heads of branches and representations are appointed by the head of the credit organisation and operate on the basis of power of attorney, issued in the legally established order.

1. The National Bank determines the limit of foreign capital participation in the Republic banking system. The National Bank terminates the issue of bank licenses to credit organisations with participation of foreign capital and branches of foreign banks at the achievement of the stated limit or the establishment of restrictions for credit organisations of the Azerbaijan Republic in the corresponding state.

2. The head or one of the deputies of the credit organisation with participation of foreign capital or the branch of the foreign bank is to be the citizen of Azerbaijan Republic.

3. Credit organisation is to get the National Bank permit for the increase of its authorised capital at the expense of means of non-residents, the alienation of its shares in non-residents favour. In this case the National Bank has the right to ban the increase of authorised capital of the credit organisation at the expense of means of non-residents and the alienation of shares in favour of non-residents, if the result of the transactions mentioned leads to the break of limit for foreign capital participation in the Republic banking system. Such transactions, concluded with non-residents, are considered invalid without the National Bank permit.

4. Non-residents being among the shareholders during the period of credit organisations activity, additional documents, specified by the article 7 of the present Law, are to be submitted to the National Bank.

5. The National Bank is entitled to fix additional requirements to credit organisations with foreign investments and branches of foreign banks concerning the establishment of obligatory normatives, the order of reporting, composition of administration, executed bank operations, as well as the minimum capital amount of newly founded credit organisations with foreign investments and branches of foreign banks and the order of the placement of capital abroad.

6. If the foreign bank has got the permit in the country of its origin for obtaining pecuniary deposits or other means from juridical and natural entities, requiring return, bank licenses can be issued to its branches. In this case the foreign bank is to undertake a full responsibility on its branch debts.

7. The foreign bank is bound to get the National bank license to conduct the activity through its branch. The license issued by the National Bank prohibits the branch to carry out bank operations, not specified by the license, issued to the foreign bank in the country of its origin.

1. The bank license is granted without restrictions to the period of its operation.

2. The National Bank is entitled to determine motivated terms or restrictions during the consideration of the bank license issue. After the issue of bank license the terms and restrictions can be applied to it only in case of meeting by the credit organisation, that have got the license, requirements of the present Law and other normative acts of the National Bank.

1. The central register of licenses and permits for general audits and obtaining of mass information is kept in the National Bank. The register includes names, addresses of all credit organisations, their branches, registration numbers and dates of licenses and permits granted to them.

2. The register contains records and other data, concerning the liquidation of credit organisations, their branches, as well as credit organisations and branches with recalled licenses or permits.

1. Bank licenses or permits, granted to credit organisations and their branches can be recalled only at the resolution of the National Bank Board in the following cases:

2. Prior the recall of license or permit the measures, directed to the prevention of law infringements are to be taken in the legally established order.

The National Bank notifies the credit organisation of the resolution about the recall of bank license or permit in written form with statement of reasons for recall.

1. The National Bank is to notify within 5-day period the state registration body of the recall of license or permit,granted to credit organisation, and publish the official data of that in papers.

2. Since the date of bank license recall coming into force it is prohibited to carry out operations in all kinds of banking activity. The liquidation is fulfilled by liquidation committee under the control of credit organisation, and in case of necessity - under the control of the National Bank. The liquidation committee is to liquidate the assets of the credit organisation, suspend its current agreements on deposits and execute its payments on obligations as soon as possible.

The liquidation committee should fulfil its work in compliance with the requirements of the Civil Code of the Azerbaijan Republic.

1. Credit organisations may be found by one or several juridical or natural entities, except for political parties, non-profit organizations, state bodies and institutions of local governing, in all organisation-legal forms, specified for enterprise by the legislation. Credit organisation in the form of joint-stock society is created by not less than three founders.

2. Founders and shareholders do not have right to use attracted funds to form the charter capital of the credit organisation. Only basic means, necessary for the credit organisation activity are to be used as a share. Credit organisation bears responsibility for the infringement of this requirement. Budgetary means and free pecuniary means from non-budgetary funds, other means, available at the disposal of the state power body and institutions of local governing, cannot be used for the formation of authorised capital of credit organisation, excluding cases, specified by the legislation.

3. Minimum and maximum share contributions amounts of founders and shareholders of credit organisation are not limited.

1. The minimum amount of the necessary capital of credit organisations, obtained bank licenses, and the minimum amount of means, subject to preservation as special funds, are determined by normative acts of the National Bank.

2. The preliminary consent of the National Bank is necessary to get more than 20% of the capital as a result of one or several deals with one juridical or natural entity, or the group of juridical and (or) natural entities connected with each other on contractual terms, being engaged in affiliated or depending relations. The National Bank is to notify the applicant of its decision not later than 30 days after the obtaining of the application. The denial maybe motivated only with unsatisfactory financial state of share buyers, infringement of anti-monopoly rights and other reasons, specified by the legislation.

1. Unless the higher percentage is specified by the normative acts of the National Bank, direct or indirect participation of a juridical entity in the capital of credit organisation is not to exceed 10% of the credit organisation own means, whereas a total amount of all such participations - 40% of the credit organisation own means.

2. In cases, not contradicting the legislation, the credit organisation is entitled to own the whole or part of the juridical entity capital for two years without National Bank consent. To prolong the said ownership for more than two-year period instead of the payment of credit issued the National Bank consent is necessary. Appropriate statement of the fact is to be considered by the National Bank within 30 days.

The reorganisation of credit organisation is permitted only with the National Bank consent and written notification of the creditors. In this case a newly formed credit organisation is to get the bank license in the corresponding order. The credit organisation with recalled license can enter another credit organisation or be reorganised into its branch with the National Bank consent.

1. All credit organisations operate on the basis of Articles, approved by the state registration body. All amendments to the Articles are to be registered in the state registration body and the National Bank is to be notified of that within 5 days. The information about the change of juridical address of credit organisation, its branch or representation is to be submitted to the National Bank within 3 days.

2. Articles, other legal documents of credit organisation, data of its administrative body leaders, as well as signatures samples are kept in the National Bank. Legal effect of the amendments introduced to the charter shall be established by the Civil Code of the Azerbaijan Republic.

1. The supreme managerial body of credit organisation is represented by the general meeting of shareholders. Every credit organisation is governed by the Supervisory Council - the body, responsible for the development of its policy and executing control over its activity, as well as finance-revision committee and the board, representing responsible executive body.

2. During the foundation of credit organisation the problems connected to its management, are solved on the basis of rules, introduced by the founder in compliance with the laws of the Azerbaijan Republic and included into the Articles of the bank.

1. Authorities of the general meeting of shareholders (hereinafter referred to as «general meeting») include:

2. The meeting is considered to be plenipotentiary with participation of shareholders representing over 75 % of votes. The resolution on the issues stated below are adopted by the majority of shareholders participating in the meeting and representing over 75% of votes : adoption and amendments to Articles; reorganisation of credit organisation and termination of its activity; election and recall of staffs of Supervisory Council, finance-revision committee and the board.

Resolutions on other issues are adopted by the simple majority of votes of shareholders, participating in the meeting.

3. Shareholders have votes at the meeting proportionally to their share in the authorised capital of credit organisation. The shareholder has the right to assign the vote to his attorney.

4. The meetings can be held as regular and extraordinary. Regular meetings are to be held annually not later than one month after the composition of the balance of credit organisation for the accounted period. The extraordinary meeting can be called by the request of shareholders, representing 20% of votes, Supervisory Council, finance-revision committee and the board.The notification of the meeting and agenda are to be sent to shareholders not later than 30 days before its holding. In case of extraordinary issues to be considered the extraordinary meeting can be called on the exception terms without the observation of 30-day period condition. The meeting cannot adopt resolutions on issues, not included into the agenda.

1. Supervisory Council represents the body, executing general control over the credit organisation activity and not having executive authorities. In cases, specified by the Articles of credit organisation, at the resolution of the general meeting the Supervisory Council can be assigned some authorities of the general meeting (excluding subparagraphs 2-4 and 6-7 of the first paragraph of article 22). For the consideration of issues stated below and connected with the activity of credit organisation consent or resolution of Supervisory Council (excluding cases when the general meeting has undertaken these authorities) is to be obtained:

2. Supervisory Council is to include the odd number of members, but not less than three. Members of the council are elected by the general meeting among the shareholders for the term not longer than 4 years. The Council is headed by chairman, elected at the general meeting. Council members can be reelected for the next four years. The general meeting is entitled to grant awards for council members; the award is to be given only from the net profit of credit organisation.

3. The member of Supervisory Council is released from membership in the council in the following cases:

4. Supervisory Council and its members do not have the right to impose their duties on others.

5. Resolutions of Supervisory Council are adopted with a simple majority of votes. If the Council is composed of more than three members, the meeting of the Supervisory Council is considered plenipotentiary in case of participation of over 60% of Council members. Abstention from voting is not permitted.

1. Finance-auditing committee is elected by the general meeting for the period not exceeding four years. It is composed of odd number of members, but not less than three. Members of Supervisory Council and the board are not entitled to be at the same time the members of finance-revision committee. The chairman of the committee is elected by the general meeting. Finance-revision committee :

2. Finance-revision committee executes audits according to the plan it adopts and by the demand of the Supervisory Council, the board and shareholders, representing over 10%of votes and in other cases, specified by the Articles. The general meeting does not have the right to approve the annual balance without the statement of finance-revision

committee.

3. Resolution of the committee are adopted with a simple majority of votes.Abstention from voting is prohibited.

4. The general meeting is entitled to award the members of the committee; awards are to be granted only from the net profit of credit organisation.

1. Credit organisation is governed by the Board, which is responsible for its activity.

2. The Board consists of not less than three members. Members of the board are elected by the general meeting for the period, not exceeding four years. Members of the Board may be re-elected for the repeated period. The Board may include both the shareholders of credit organisation and outsiders. The board is headed by the chairman, elected by the general meeting.

3. The member of the board is dismissed from its post in the following cases:

4. The Board makes its decisions by the simple majority of votes. If the board consists of more than three members, its session is considered plenipotentiary with participation of 60% of board members. Asbstention from voting is not permitted.

In cases, specified by the National Bank, the credit organisation is bound to create obligatory reserves, fulfil classification of archives, form reserves for coverage of possible losses, provide the execution of requirements, concerning the minimum amount of authorised capital, maximum volume of risks and liquidation indices.

1. Credit organisation has the right to carry out the following bank operations in accordance with bank license:

• attraction of pecuniary means on the deposits at interests or without hem (to be called for, as a fixed deposit or in another form);
• granting of credits on the basis of contract with creditors;
• opening and keeping of accounts of juridical and natural entities;
• settlements on the accounts of natural and juridical entities, including credit organisations-correspondents, by their orders;
• collection of pecuniary means, promissory notes, payment and settlement documents, cash service of natural and juridical entities;
• purchase-sale of foreign currency in cash and non-cash form;
• attraction on deposits and placement of precious stones;
• granting of bank guarantees.

2. Apart from bank operations, enumerated in the beginning of the present article, the credit organisation is also entitled to carry out the following deals:

• issue of vouchers for third parties, foreseeing the execution of liabilities in pecuniary form;
• acquire of demand right for the execution of liabilities in pecuniary form from the third parties;
• trust control over pecuniary means and other property under the contract with natural and juridical entities;
• carrying out of operations with precious metals and stones in accordance with the legislation of the Azerbaijan Republic;
• rendering of special premises and safes located there for the preservation of documents and valuables for the lease of natural and juridical entities;
• leasing operations;
• rendering of consulting and information services.

Credit organisation has the right to carry out other deals in accordance with the legislation.

1. Under the license of the National Bank for the execution bank operations the credit organisation is entitled to fulfil the issue, purchase, sale, account, preservation and other operations with securities, representing payment documents, securities confirming the attraction of pecuniary means onto the deposits and accounts, with other securities during the execution of bank operations in compliance with the legislation. Credit organisation is entitled to buy, sell, keep state securities and carry out other operations with them.

2. Credit organisations have the right to control the above securities by trust on the basis of contracts with natural and juridical entities. Credit organisation is entitled to lead professional activity at the securities market in accordance with the legislation.

1. Credit organisation grants credits to persons, connected to credit organisations in the order, established by the National Bank. Persons engaged include: administrators of credit organisation, persons, whose share in the capital of credit organisation makes 10%; any corporate body with considerable participation share in the capital of credit organisation; person, being the relative of first grade of the administrator of credit organisation or connected with him by business interests; employees of credit organisation.

2. Total amount of liabilities on credits, granted by credit organisation to the persons mentioned, is not to exceed 20% of the credit organisation own means.

1 Credit organisations may attract on contractual terms and place at each other means in the form of deposits, credits, carry out other mutual operations, specified by licenses.

2. Credit organisations are to monthly inform the National Bank of newly opened correspondent accounts on the territory of the Republic and abroad.

3. At the lack of means for the execution of its liabilities the credit organisation may address the National Bank for credits.

1. Relations between credit organisations and their clients are realised on contractual basis. Credit organisation does not have the right to establish and control the directions for the use of their clients pecuniary means, restrict in any way, not specified by the legislative acts or contracts, the right of clients to use pecuniary means at their discretion.

2. Clients choose credit organisations for the credit -settlement and cash service independently, they may use services of one or several credit organisations on all forms of bank operations. The order of opening and termination of accounts is fixed by the normative act of the National Bank.

3. Credit organisation independently establishes interest rates and the amount of commission on all operations.

4. Credit organisation is not entitled to unilaterally change interest rates on credits, deposits, commission amount and terms of contracts with clients, excluding cases, specified by the legislation or contract with the client.

5. Credit organisation has the right to grant credits on mortgage of property, including property rights, securities, guarantee, voucher or liabilities in any form, applied in banking practice. In case of creditor's infringement of his obligations under the contract, the credit organisation is entitled to demand credits granted by it and interests on them (if it is specified by the contract) ahead of time.

If creditor fails to execute obligation, provided with a mortgage, the payment of credit organisation claims at the expense of mortgaged property cost is effected without court resolution, provided that the agreement about it was concluded between the bank and customer and certified at the notary office. In case of delay of fulfilment of the obligation secured by the mortgage, the credit organization will be entitled to compensate its claims by sale of the mortgaged property at advertised biddings.

6. Credit organisation has the right to make decisions about granting of credits without obtaining the guarantee (blank credit).

Credit organisations effect settlements on forms and rules, established by the normative acts of the National Bank and those applied in the world banking practice.

Credit organisations may form unions and associations, not pursuing the aims of profit extraction, for the protection and representing of interests of its members, co-ordination of their activity, development of inter-regional and international relations, meeting of scientific, information and professional interests; elaboration of recommendations for the fulfilment of banking activity, solution of other mutual problems of credit organisations.

Groups of credit organisations and holdings are created for the solving of joint problems (joint realisation of bank operations) be conclusion of corresponding contract between two and more credit organisations. Holding is a credit organisation, possessing the prevailing participation share in the capital of one or more credit organisations or in accordance with contracts with them, having the force for decisions, connected with their activity.The National Bank is to inform of the creation of groups of credit organisations and holdings 10 days in advance.

1. Credit organisation guarantees the secret of operations, accounts and deposits of their clients and correspondents.

2. All shareholders and employees of credit organisation are bound to keep in secret data of accounts, operations and deposits of its clients and correspondents. This rule remains in force also after their release from work or share participation.

3. References of accounts, operations, deposits of juridical and natural entities are given, besides these entities and their attorneys, court bodies only at the availability of sentence of confinement that have come into force or judgement on arrest, penalties on pecuniary means and other valuables of clients or their confiscation, approved on the basis of appeal of physical or juridical entities (except for state power bodies).

The information about bank accounts or operations of the legal entities may be received in cases and in an order stipulated by the article 76 of the Tax Code of the Azerbaijan Republic.

4. References of accounts and deposits in case of death of their owners are given by the credit organisation to persons, stated in the testament order produced by the owner of the account or the deposit for credit organisation, state notary office (on the inheritance cases on deposits of dead depositors being under their consideration), as well as foreign consulates, experiencing notary functions.

5. Data of banking activity of credit organisation are submitted to the attorney of the National Bank and auditor, assigned by it.

1. Pecuniary means and other valuables of juridical and natural entities, available at the credit organisation can be arrested only on the basis of court sentence and also judgment of the court officers with the purpose of ensuring of judgments execution, in the order, specified by the legislation in force. Credit organisation is to stop spending operations on accounts and deposits (in the amount of means arrested) immediately after the receipt of appropriate resolution about arrest.

2. The penalty of pecuniary means and other valuables of juridical and natural entities, available at the credit organisation, can be applied only on the basis of executive documents, submitted in accordance with the legislation.

3. Credit organisation does not bear responsibility for the damage, caused to its clients as a result of arrest or penalty of their pecuniary means or other valuables.

4. Confiscation of pecuniary means and other valuables is effected on the basis of court sentence that have come into force.

Disputes between credit organisations or credit organisations and their clients are permitted in court in appropriate order.

1. Deposits may be taken from natural entities of the Azerbaijan Republic by credit organisations, that have got the license of the National Bank for the execution of this operation. Licenses for such operations are granted by credit organisations, operating for not less than two years.

2. Attraction of means onto deposits is drawn up with a written contract in two copies, one of which is given to the depositor. Deposits may be registered and on bearer.

3. Credit organisation is bound to provide the preservation of deposits and timely execution of its obligations in part of clients.

1. Depositors of credit organisation may be represented by citizens of the Azerbaijan Republic, foreign citizens and persons without citizenship. Depositors are free in the choice of credit organisation for placement of means onto the deposits they posses and may have deposits in one or several credit organisations.

2. Depositors may be in command of their deposits, get income from them in the form of an interest, carry out clearing settlements. Income on the deposit is paid in pecuniary form.

3. Depositor is entitled by force his order to the credit organisation to bequeath his deposit to any person or state.

4. In case of depositor’s death the deposit, the order have been made on, is to be given to heirs by the credit organisation in the legally specified order. If the legal heir of the deposit is not determined the credit organisation is to carry out its search for not rarer than once a year for 20 years, publishing statements in papers at the expense of this deposit. The deposit which heir has not been identified is used in accordance with legislation in force.

1. Sanctions, specified by the Law «About the National Bank of the Azerbaijan Republic»may be applied in relation to credit organisation for the infringement of banking legislation and normative acts of the National Bank. The resolution about sanctions imposture may be claimed in court.

2. Application of sanctions does not exclude other civil or criminal liability, established in accordance with the legislation of the Azerbaijan Republic depending on the character of infringement.

3. Financial sanctions may be applied in relation to banks and other credit organisations, carrying out some kinds of banking operations in cases and in an order stipulated by the Tax Code of the Azerbaijan Republic.

At the repeated or systematic non-execution of requirement, established or applied in accordance with the present Law, by credit organisation, the board of the National Bank may issue resolution about the conservation, if there is some hope for the improvement of its financial state. Period of conservation is not to exceed 18 months.

1. The resolution of conservation is also to indicate:

2. In case of necessity the period of conservation of credit organisation may be prolonged by the National bank resolution for not more than 18 months on the basis of an application of the person, carrying out the conservation.

3. Appointment of the person, carrying out conservation suspends the rights of the credit organisation administrator in relation to this credit organisation and rights of shareholders for its management until the end of conservation period.

The person, who conducts conservation, is given authorities for taking any measures in the sphere of credit organisation management and execution of operations, he thinks necessary and effective. The said authorities include any measures for the improvement of credit organisation state, namely closing of branches, representations and other similar bodies, dismissal in accordance with the legislation of employees of credit organisation, representing, to his mind, idle labour or not capable of execution of their duties owing to professional non-conformity.

In cases necessary for the improvement of financial state of credit organisation the person, conducting conservation may decide to fully or partially freeze deposits of population, available at this credit organisation, for the period up to three months, provided the measures taken by the person responsible for conservation protect the approximate cost of the said deposits.

The National bank recognising the credit organisation insolvent until the end of conservation period, its license is subject to recall, whereas credit organisation is declared bankrupt in accordance with the legislation in force.

Control over the actions of person, conducting conservation is effected by the National Bank, the National Bank is responsible for conservation results.

Conservation is terminated in the following cases:

1. Regulations of accounting in credit organisation, the character, volume and terms for submitting of its reports are fixed by the National Bank.

2. Accounts, reporting documentation and financial accounting of credit organisation are to reflect operations and financial state of its branches. During the annual report the credit organisation is to submit summarised balance and report of profits/losses with consideration of the report of affiliated credit organisations.

3. Branches of foreign banks are to submit their reports to the National Bank in compliance with the requirements of the present article.

Finance-economic activity of credit organisation is subject to annual audit by auditors, the organisation selects itself or if necessary, appointed by the National Bank. After the notification of the National Bank of audit results, the annual balance and report of profits/losses are published in papers in the form and within terms, established by the National Bank.

1. Credit organisation prepares report of administrative control and conducted operations, its liquidity-credit capability and profitability.Reports are made in the form and with details, established by the normative acts of the National Bank and are periodically submitted to the National Bank. Reports are submitted to the general meeting of shareholders.

2. Audits of credit organisations and their branches are executed only by the National Bank in the order, specified by the article 50 of the present Law, excluding audits, made by the State Tax inspectorate of the Azerbaijan Republic. If other bodies of state power, conducting audits and control functions, provide the National Bank with the motivated applications, the National Bank is entitled to carry out the audit itself or attracting the auditing organisation.

1 This article becomes invalid according to Decree of Constitutional Court dated 19 November, 1999.

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