Charter

Charter

Approved by

Presidential Decree of October 4, 2018

 

Republic of Azerbaijan

Financial Market Supervision Authority

 

1. General

1.1. The Financial Market Supevision Authority of the Republic of Azerbaijan (hereinafter referred to as FIMSA) will be responsible for securities, equity fund, insurance, credit institution (bank, non-bank credit institutions and the national postal services provider), currency exchange and payment systems (hereinafter referred to as financial markets) licensing, regulation and effective and transparent supervision.

1.2. FIMSA will operate in conformance with the Constitution, and laws, acts and statutes of the Republic of Azerbaijan, this Charter, other Presidential Decrees and Ordinances, resolutions and ordinances of the Cabinet of Ministers of Azerbaijan, and other regulations and legal documents.

1.3. FIMSA, in discharge of its responsibilities and exercise of its powers, will work in conjunction and close cooperation with central and local governments, international and non-governmental organizations, other entities and individuals.

1.4. FIMSA’s role is to pursue public policy objectives. FIMSA may not engage in business transactions. FIMSA’s revenues will be directed to fund its operations.

1.5. FIMSA will have independent books, treasury and bank accounts, a corporate seal, stamps and letterheads.

1.6. FIMSA will be entitled to sign contracts, acquire and exercise proprietary and non-proprietary rights, and assume any associated obligations on its own behalf, under the existing laws. FIMSA will have the right to represent itself or be represented in courts of law.

1.7. FIMSA will be headquartered in Baku.

2. Mission

2.1. FIMSA’s principal objective is to license, regulate and supervise the financial markets, to ensure viability and sustainability of the financial markets, and to protect creditors, policyholders and other financial market actors. In doing so hereunder, FIMSA will be guided by best practices of financial regulation.

2.2. FIMSA will:

2.2.1. provide inputs to, and enforce the public policy on financial markets, regulate and enforce compliance;

2.2.2. facilitate development of the financial markets;

2.2.3. supervise the financial markets;

2.2.4. produce financial market regulations, and provide inputs to the pertinent legislative drafting process;

2.2.5. license and de-license financial market institutions;

2.2.6. ensure continuous and comprehensive control and inspection of the financial markets, including delegated inspections and reporting;

2.2.7. enforce a system of controls for the deposit insurance scheme;

2.2.8. introduce and promote an integrated information system for the financial markets.

3. Rights and responsibilities

3.1. FIMSA will have the following responsibilities, as per its objectives defined hereunder:

3.1.1. to identify the stress-testing procedures for supervised entities, and have such tests conducted at the supervised entities, to assess systemic risks inherent in the financial markets, to conduct stress-test and scenario analysis, and to use analysis findings to inform selection and implementation of regulatory choices;

3.1.2. to take supervisory actions with respect to the supervised entities;

3.1.3. to develop, coordinate and oversee execution of recovery plans for supervised entities;

3.1.4. to identify and enforce governance standards for supervised entities;

3.1.5. to determine and enforce excise stamp ordering, sale and record-keeping procedures;

3.1.6. to protect financial consumers and investors;

3.1.7. to recommend development activities for the financial markets;

3.1.8. to coordinate the financial market-related activities of government agencies, local administrations, legal entities and individuals;

3.1.9. to provide development and implementation inputs to financial legal drafting, development concepts and programs;

3.1.10. to issue financial market regulations and guidelines;

3.1.11. to perform obligations as assumed by the Republic of Azerbaijan under international treaties in relation to FIMSA’s purview;

3.1.12. to issue authorizing documents and provide feedback on financial market-related issues;

3.1.13. to take actions under the Administrative Penalties Code of Azerbaijan in response to any administrative financial market infractions suspected, or to report any suspected criminal activities accordingly;

3.1.14. to promote financial markets and tools, and to increase financial market and investment awareness;

3.1.15. to act as the authorized supervisor pursuant to the Anti-Money Laundering and Terrorism Financing Law of Azerbaijan;

3.1.16. to align financial electronic services with the Presidential Decree No.429 of May 23, 2011, identifying Select Measures Regarding Provision of Electronic Services by Government Agencies and Public Legal Entities Established by the President of Azerbaijan;

3.1.17. to process FIMSA-related queries in accordance with the Public Grievances, Administrative Processing and Access to Information Laws of Azerbaijan;

3.1.18. to have in place document and audience management procedures in line with the existing laws and regulations, and to ensure continued skill and knowledge development for FIMSA’s staff;

3.1.19. to communicate its performance, set up a website, wherein publicly disclosable information under the Access to Information Law of Azerbaijan is to be posted and updated regularly;

3.1.20. to use budget, credit, grant and other financial resources allocated to FIMSA efficiently and effectively;

3.1.21. to keep confidential any sensitive, classified and privileged information and data;

3.1.22. to procure the necessary data for FIMSA, and ensure its security;

3.1.23. to improve its structure and operations on a continuous basis;

3.1.24. to work to implement relevant innovations, in line with best practices;

3.1.25. to recommend and provide implementation inputs to specialist training programs;

3.1.26. to discharge such other functions and responsibilities as may be defined from time to time by the President of Azerbaijan.

3.2. FIMSA will have the following rights to support its functions and responsibilities:

3.2.1. to provide feedback and input regarding adoption, modification, interpretation, suspension and termination of financial market laws and regulations;

3.2.2. to recommend, and to provide drafting inputs to international financial market treaties for the Republic of Azerbaijan to join;

3.2.3. to collaborate with international institutions, foreign government agencies and central banks, and study foreign experiences as part of exploring implementation possibilities for various foreign practices;

3.2.4. to conduct reviews and inspections, produce binding directives and take other actions with respect to financial institutions;

3.2.5. to charge state fees and other levies as defined under the State Fees Law of Azerbaijan for the services rendered in line with said Law;

3.2.6. to retain a portion of the state fees charged as determined by the President of the Republic of Azerbaijan;

3.2.7. to examine and explore pertinent issues and matters, and to establish taskforces and working groups to this end;

3.2.8. to request, and be granted access to necessary records from governnment agencies, local administrations, legal entities and individuals;

3.2.9. to provide feedback, conduct analyses and assessments, develop analytical notes and reports on pertinent areas of business;

3.2.10. to contract external expertise in line with the existing laws;

3.2.11. to organize conferences, consultations, seminars and other events in relations to its line of business;

3.2.12. to propose staff members for public commendations and awards, and to take measures to incentivize personnel;

3.2.13. to issue special newsletters and other publications;

3.2.14. to exercise such other rights as may be defined from time to time by the President of the Republic of Azerbaijan.

4. Governance

4.1. FIMSA’s management and operations will be guided by best practices of governance.

4.2. FIMSA’s governing body is the Executive Board.

4.3. FIMSA’s Executive Board (hereinafter referred to as the Executive Board) will be responsible for the overall management and oversight of FIMSA. The Executive Board will have five members, including the chairperson to be appointed and dismissed by the President of the Republic of Azerbaijan, two deputies and two other members.

4.4. Any national of the Republic of Azerbaijan with economic or legal background, economic, legal, financial or banking experience, no criminal record, especially for major crimes, including property, economic and service-related offences and felonies, and no outstanding obligations to any foreign government or country, will be eligible for Executive Board membership.

4.5. Executive Board members, as well as other officials, during their tenure with FIMSA, may not engage in any paid activities, including private business undertakings, other than research, teaching and creative endeavours. Executive Board members, as well as any other FIMSA officials, may not be on board of the governing bodies of other legal entities, except as otherwise provided by the existing laws.

4.6. Members of the Executive Board, their immediate and close family, as well as any other FIMSA officials, may not have significant shares and profit interests in FIMSA’s supervised entities.

4.7. Members of the Executive Board as well as any other FIMSA officials will have no partisan or public fund affiliations.

4.8. Members of the Executive Board will promptly report any conflicts of interest to the chairperson of the Executive Board, who will report it to the President of the Republic of Azerbaijan.

4.9. In absence of the chairperson of the Executive Board, his/her duties will be temporarily delegated to one of his/her deputies, in the absence of the latter, to one of the other members of the Executive Board.

4.10. The Executive Board will have the following responsibilities:

4.10.1. to submit proposals and documents (including FIMSA’s financial statement and performance report) regarding performance of the constituent authorities to the President of the Republic of Azerbaijan;

4.10.2. to identify and report progress on the Agency’s development objectives, strategic targets and plans to the President of the Republic of Azerbaijan;

4.10.3. to identify FIMSA’s capital reserve formation and spending procedures;

4.10.4. to determine, subject to Presidential approval, the amount and payment procedures for supervisory fees;

4.10.5. to take licensing and permit decisions in accordance with the existing laws (for banking and insurance licenses, subject to Presidential approval);

4.10.6. to identify FIMSA’s organizational chart, staff numbers, remuneration parameters, subject to Presidential approval,  to design a bonus and incentive system to be funded from FIMSA’s revenues (other than state budget and other state-funded allocations);

4.10.7. to authorize FIMSA’s financial plans and budget, subject to Presidential approval;

4.10.8. to appoint an external auditor, and accept the audit report for FIMSA, subject to Presidential approval;

4.10.9. to establish FIMSA’s offices, branches and representative offices, subject to Presidential approval;

4.10.10. to authorize transactions in excess of 25 percent of FIMSA’s net assets (significant transactions) and related party transactions in excess of 5 or more percent of FIMSA’s assets, subject to Presidential approval;

4.10.11. to authorize related party transactions up to 5 percent of the Agency’s assets;

4.10.12. to approve regulations, including economic regulatory (prudential) requirements;

4.10.13. to appoint and terminate temporary administrators for supervised entities;

4.10.14. to oversee FIMSA’s operations;

4.10.15. to approve the Agency’s internal policies and procedures (including conflict of interest policies), and by-laws for the Head Office departments, divisions, branch and representative offices;

4.10.16. to review FIMSA’s annual performance report;

4.10.17. to act upon the external audit and other inspection findings;

4.10.18. to oversee, and get reports from the internal audit department, as well as appoint and terminate internal audit officers;

4.10.19. to report the country’s financial market conditions for the previous year and development prospects to the President of the Republic of Azerbaijan by March 31st every year;

4.10.20. to manage FIMSA’s operations;

4.10.21. to oversee execution of FIMSA’s strategic objectives and plans, and budget;

4.10.22. to spend the funding referenced under sub-clause 3.1.20 hereof effectively and efficiently;

4.10.23. to process inquiries and requests from the Executive Board members;

4.10.24. to approve the risk-based annual audit plan;

4.10.25. to take steps to resolve the issues referenced under sub-clauses 3.1.9 and 3.2.1 hereof.

4.11. The Executive Board will meet at least once a month. Any member of the Executive Board may request an Executive Board meeting. An Executive Board meeting willl be quorate in the presence of at least a half of its members. Votes shall be cast by a majority vote, with each member having a single vote. Members may not abstain from voting. In event of a tie, the chairperson of the Executive Board (or the substituting member of the Executive Board) will cast the final vote.

4.12. Members of the Executive Board will get at least a 3 (three) days’ notice regarding the upcoming meeting’s venue and time as well as agenda, and the supporting documents.

4.13. If a meeting agenda includes any issue that concerns the interests of any of the Executive Board members, such member will describe the interests in detail, and will not take part in discussing and voting on the matter.

4.14. Issues not included in the agenda or not supported with documents distributed ahead of the meeting will not be decided upon, unless all members in attendance agree otherwise.

4.15. Chairperson of the Executive Board will:

4.15.1. manage and represent FIMSA;

4.15.2. manage the Executive Board, determine the agenda, and chair meetings;

4.15.3. convene Executive Board meetings at his/her own discretion or upon request from any other member of the Executive Board;

4.15.4. invite other persons to Executive Board meetings at his/her own discretion or upon request from any other member of the Executive Board;

4.15.5. issue binding circulars and directives pertaining to FIMSA’s operations;

4.15.6. implement, monitor and enforce legal and regulatory documents pertaining to FIMSA’s operations;

4.15.7. nullify any unlawful decisions by FIMSA’s executive officers;

4.15.8. approve the organizational chart, staff numbers and budgets for the Head Office and business units, in line with the pre-established organizational chart, payroll and staff numbers;

4.15.9. ensure that FIMSA staff’s salaries, bonuses, salary supplements and other fees are paid in line with the pre-established payroll;

4.15.10. appoint or terminate, incentivize or discipline staff members of the Agency, and its divisions, branch and representative offices, as well as its affiliates;

4.15.11. monitor the use of FIMSA’s assets as designated hereunder;

4.15.12. transact, sign and enforce contracts on behalf of FIMSA, within his/her purview hereunder;

4.15.13. establish advisory boards and taskforces as pertinent for FIMSA’s operations;

4.15.14. take precautions to safeguard state secrets and sensitive data relating to FIMSA’s operations;

4.15.15. have document management and filing systems put in place;

4.15.16. ensure query processing and audience management processes at FIMSA;

4.15.17. address any other issues as may be outside of the Executive Board’s purview.

4.16. Members of the Executive Board will:

4.16.1. participate in processing and handling matters within the Executive Board’s purview;

4.16.2. review meeting agendas and discussion points beforehand;

4.16.3. provide feedback on the Executive Board’s proposed decisions;

4.16.4. propose discussion points for Executive Board meetings, within the Executive Board’s purview;

4.16.5. review the Executive Board’s decisions, minutes of meetings/transcripts and other records and documents.

4.17. Executive Board members shall be unbiased towards issues discussed in Executive Board meetings, and shall refrain from any conduct unbecoming, and comply with other requirements as defined under Article 49 of the Civil Code of the Republic of Azerbaijan.

5. Capital, assets and financials

5.1. FIMSA will have a paid-in capital of AZN5 000 000 (five million).

5.2. FIMSA’s assets include paid-in capital, other assets and property provided by the founder (constituent), and state budget appropriations, operating revenues, donations, grants and other lawful resources.

5.3. FIMSA may only use its assets as designated hereunder. FIMSA will dispose of state-owned property and assets in its use in accordance with the applicable laws.

5.4. FIMSA’s disposable income will be kept at the State Treasury Agency of the Republic of Azerbaijan.

5.5. FIMSA will be free to dispose of its own as well as  its affiliates, divisions, branch and representative offices’ income after tax and social contributions at its own discretion.

5.6. FIMSA will charge state fees and other levies as defined under the State Fees Law of Azerbaijan for the services rendered in line with said Law.

5.7. A portion of the state fees charged as determined by the President of the Republic of Azerbaijan will be transferred to FIMSA’s account to support its operations.

5.8. FIMSA’s pricing shall be subject to government regulation.

6. Accountability

6.1. President of the Republic of Azerbaijan will oversee FIMSA.

6.2. FIMSA will submit its annual performance report to the President of the Republic of Azerbaijan.

7. Internal and external audit

7.1. FIMSA will establish an internal audit function. The internal audit function and internal auditors will be independent, and will be entitled to make independent evaluations and conclusions in discharge of their responsibilities.

7.2. FIMSA’s internal auditors will meet the requirements defined under the Internal Audit Law of Azerbaijan.

7.3. FIMSA’s internal audit function will report to the Executive Board. Intenal auditors will be appointed and terminated by the Executive Board.

7.4. The internal audit function will have the following key responsibilities:

7.4.1. to develop and submit to the Executive Board for approval the risk-based annual audit plan;

7.4.2. to support FIMSA in achieving its goals and objectives by using a systematic and efficient approach to evaluating risk management, internal management and control systems as well as governance processes, and to assist in improving the risk management, internal management and control systems, and governance processes;

7.4.3. to regularly audit operations in all areas in order to properly evaluate FIMSA’s financial and economic performance, and financial position;

7.4.4. to report audit findings and recommend actions to remove deficiencies identifies to the Executive Board;

7.4.5. to perform such other functions as may be defined under the Internal Audit Law of Azerbaijan and this Charter.

7.5. All relevant business units and employees of FIMSA will provide access to the necessary records and will otherwise assist internal auditors in discharge of their functions and duties at their request.

7.6. FIMSA’s financial and economic audit will be appointed by the Executive Board.

7.7. FIMSA will contract an external auditor to conduct an independent review of its operations.

7.8. The same external auditor may not be contracted for more than 3 consecutive years.

8. Accounting and reporting

8.1. FIMSA will keep records, prepare, submit and disclose financial statements in accordance with the public law entity provisions of the Accounting Law of Azerbaijan.

8.2. FIMSA will keep statistical records, prepare and submit statistical reports in accordance with the Official Statistics Law of Azerbaijan.

8.3. FIMSA will mandate financial and operating audits of its divisions, branch and representative offices, and affiliates.

9. Liquidation and reorganization

President of the Republic of Azerbaijan shall have the power to order liquidation and reorganization of FIMSA.