‘Approved’
State Committee for Securities
of the Republic of Azerbaijan
Resolution № 11-q
3 February 2016

Chairman

_______________ Rufat Aslanly

Regulations on real estate certificates in the Republic of Azerbaijan

1. General provisions

1.1. These Regulations have been developed in accordance with Article 1078-1.2 of the Civil Code of the Republic of Azerbaijan and determine procedures for issuance, state registration and circulation of real estate certificates in the Republic of Azerbaijan.
1.2. The definitions used in these Regulations bear the following meanings:
1.2.1. issuer – the person that issues real estate certificates;
1.2.2. guarantor – the bank that issues guarantee on real estate certificates;
1.2.3. special savings account – an account opened by the issuer with a bank for storage of funds received from placement of real estate certificates;
1.2.4. 1.2.4. organization for registration of real estate certificates – the National Depository Center (hereinafter - the Central Depository).
1.3. The issuer issues real estate certificates to finance up to 70% (seventy) of total estimated cost of construction works. At least 30% (thirty) of total estimated cost of construction works should be paid by the issuer.
1.4. Real estate certificates issued by public offering and issued in a certified form should be deposited with the Central Depository after state registration.

2. State registration of issuance of real estate certificates

2.1. Issuance of real estate certificates is state registered by the State Committee for Securities of the Republic of Azerbaijan (hereinafter – the Committee).
2.2. Secured and unsecured real estate certificates are issued in the Republic of Azerbaijan. Liabilities on secured real estate certificates are secured with bank guarantees.
2.3. The value of collateral for real estate certificates should not be less than total nominal value of the issuance of real estate certificates and the amount of compensation to be paid in case of failure to meet liabilities on real estate certificates.
2.4. The issuer applies to the Committee for state registration of real estate certificates. The application is submitted by mail or through a special electronic service section of the Committee's official Internet information resource attached with the following:
2.4.1. a decision on issuance of a real estate certificate;
2.4.2. condictions for issuance of a real estate certificate;
2.4.3. copies of the certificate on state registration of the issuer as a legal entity and the charter notarized or approved in accordance with the procedure established by Article 9 of the Law of the Azerbaijan Republic ‘On Administrative Proceedings’;
2.4.4. a copy of the decision to issue a construction permit;
2.4.5. a document reflecting total estimated cost of construction works and information on issuer's payment of at least 30% (thirty) of that amount (extract from the special collection account or a description of the costs incurred);
2.4.6. a bank guarantee (for secured real estate certificates);
2.4.7. a sample real estate certificate (if it is a certified one).
2.5. A real estate certificate is issued only by a printing house licensed to produce and sell securities blanks (if documented).
2.6. The Committee reviews the documents submitted for state registration of issuance of real estate certificates within twenty working days from the date of their submission. In the absence of the cases provided for in Item 2.7 herein for refusal of registration, the issuance of real estate certificates is registered. In this case, the Committee submits to the issuer an extract from the state register of securities.
2.7. The Committee refuses to state register the issuance of real estate certificates if:
2.7.1. the documents specified in Item 2.4 herein are not submitted;
2.7.2. it is discovered that the decision on issuance of real estate certificates (other documents that are the basis for state registration of issuance of real estate certificates) includes inaccurate, or distorted information.
2.8. If the cases specified in Item 2.7 herein are discovered, the Committee takes a resoned decision to refuse to state register the issuance of real estate certificates and sends to the issuer within 2 business days.
2.9. Until the issuance of real estate certificates is state registered, their advertising, official offer to any investor and presentation of the terms of issue to potential investors are prohibited.

3. Conditions for issuance of real estate certificates

3.1. Terms for issuance of real estate certificates should include the following:
3.1.1. issuer’s full and abbreviated name (if any), the state registration date and number;
3.1.2. issuer’s legal address;
3.1.3. in case of changes to the issuer’s name – issuer’s all previous names and organizational-legal forms, as well as the dates of their registration;
3.1.4. in case the issuer is established via reorganization – the reorganization form, the name of that legal entity;
3.1.5. information on persons owning shares (stakes) in the amount of not less than 10% (ten) of issuer's authorized capital;
3.1.6. information on issuer's authorized capital and its composition, including the amount of authorized capital, the number of shares, their nominal value and types, as well as privileges of certain types of shares (for joint-stock companies);
3.1.7. list and requisites of other legal entities if the issuer's share in the authorized capital of other legal entities exceeds 10% (ten);
3.1.8. the name of the body determined by the charter of the issuer that made the decision on the issue and approved the terms of the issue and the date of the decision;
3.1.9. information on total estimated cost of construction works and the issuer's deposit of at least 30% (thirty) of this amount in a special collection account or description of costs incurred in that amount, approved by an independent appraiser;
3.1.10. stages of construction work and estimated cost of each stage;
3.1.11. information on the work done in connection with the construction;
3.1.12. construction start and completion dates;
3.1.13. nominal value and number of issued real estate certificates;
3.1.14. start and end dates of placement of real estate certificates (placement period);
3.1.15. deadline for payment of real estate certificates;
3.1.16. procedure for submission of extracts from the state register of real estate by the issuer on the basis of the power of attorney issued by owners of real estate certificates at the time of payment of the real estate certificate;
3.1.17. amount of compensation to be paid to owners of real estate certificates in case of issuer’s failure to meet obligations on real estate certificates, the period and place of payment;
3.1.18. name, address of the guarantor and rules for payment of real estate certificates by it (for secured real estate certificates);
3.1.19. rules for placement of real estate certificates;
3.1.20. information on the investment company involved in placement of real estate certificates;
3.1.21. rules for transfer of the rights on real estate certificates;
3.1.22. the rights of real estate certificate owners;
3.1.23. information on issuer’s securities in circulation (the type, form and registration number of securities) and liabilities;
3.1.24. the name and place of location of the subcontractor of construction;
3.1.25. information on other construction projects realized by the issuer;
3.1.26. issuer’s financial statements, together with an auditor opinion;
3.1.27. the source of disclosure of information on terms of issuance of real estate certificates and the progress of construction.
3.2. Pages of real estate certificates issuance conditions should be numbered, filed and stamped by the issuer.

4. Mandatory requisites of real estate certificates

4.1. If a real estate certificate is issued in a certified form, it should reflect the following mandatory requisites:
4.1.1. full name and address of the issuer;
4.1.2. the name of the security – ‘Real estate certificate’;
4.1.3. par value of real estate certificates;
4.1.4. a field to indicate the full name of the owner of the real estate certificate;
4.1.5. registration date and number of the issuance of real estate certificates;
4.1.6. issuer’s liability on the real estate certificate;
4.1.7. the rights of the owner of the real estate certificate;
4.1.8. the date of payment of the real estate certificate;
4.1.9. guarantor’s name and address (for secured real estate certificates);
4.1.10. the name and address of the print house licensed to produce and sell blanks of securities that printed real estate certificates, license issuance date, state registration number (if certified).

5. Disclosure of information

5.1. The issuer of real estate certificates placed by public offering should create necessary conditions to get acquainted with the terms of issue of real estate certificates prior to placing them and announce in mass media the address and time where it will be possible to get acquainted with the information on the terms of issue.
5.2. Terms of issue of real estate certificates placed by public offering should be at the address of the issuer, at the point of sale of real estate certificates and presented for review by the issuer or the investment company selling them without any payment.
5.3. When real estate certificates are placed by private placement, the issuer should disclose the terms of issuance of real estate certificates to the persons who will acquire them.
5.4. Upon completion of placement of real estate certificates, the issuer that has placed real estate certificates by public offering should disclose the following information on the progress of construction by the 15th day of the month following each quarter:
5.4.1. the status of construction;
5.4.2. the amount of funds spent.
5.5. The issuer that has placed real estate certificates by private placement should disclose the information specified in Item 5.4 herein to the owners of real estate certificates by the 15th day of the month following each quarter.

6. Placement of real estate certificates

6.1. Placement of real estate certificates is their alienation to their original owners. Real estate certificates are placed by private placement or public offering. Real estate certificates are placed through an investment company.
6.2. Real estate certificates are registered in the name of the first owner after receipt of funds in a special savings account. Ownership of a real estate certificate is considered to have been obtained after transfer to the ‘depo’ account opened in the name of the buyer by the Central Depository (for real estate certificates deposited in the issuer's 'depo' account) and after making appropriate entries in the register of securities owners. An extract from the 'depo' account is provided to the buyer by the Central Depository within 2 (two) working days from the date of transfer of the real estate certificates to the buyer's 'depo' account (for real estate certificates deposited in the issuer's 'depo' account) and relevant entries are made in the register.
6.3. Proceeds from placement of real estate certificates are kept only in the bank account specified in the terms of issue and used for construction purposes.
6.4. During the period of placement of real estate certificates, the issuer should submit a report on placement of real estate certificates to the Committee every six months from the date of state registration of real estate certificates until completion of their placement in accordance with Annex 1 herein.
6.5. The issuer should submit to the Committee a report on results of placement no later than 20 (twenty) working days from the date of completion of placement of real estate certificates in accordance with Annex 2 herein.
6.6. If the report on the results of the placement meets the requirements of these Regulations, the report is considered by the Committee within 15 (fifteen) working days and the issuer is notified in writing.
6.7. Use of funds from placement of real estate certificates is allowed only after completion of placement of real estate certificates.

7. Suspension of placement of real estate certificates and deeming the issue invalid

7.1. Suspension of placement of real estate certificates is suspension of advertising, offer and other measures on placement of real estate certificates by the decision of the Committee.
7.2. In case of violation of the terms of real estate certificates, as well as the requirements of these Regulations after state registration of the issue of real estate certificates, the Committee should make one of the following decisions, indicating the name of the issuer, registration number and date of issue of real estate certificates:
7.2.1. on elimination of violations by the persons who committed the violation within the established time;
7.2.2. on suspension of placement of these real estate certificates and elimination of violations, if it is not possible to eliminate the violations without stopping the placement.
7.3. Within one working day from the date of the decision referred to in Item 7.2 herein, the Committee should disclose the decision to the issuer, the persons carrying out the offer and placement of real estate certificates and publish in mass media.
7.4. The issuer, the persons offering and placing its real estate certificates should immediately inform mass media after receiving the decision specified in Item 7.2 herein, eliminate violations within the period specified by and report to the Committee.
7.5. In case the decision referred to in sub-clause 7.2.1 herein is taken, if the Committee determines from the report specified in Item 7.4 herein that violations have not been eliminated or does not receive the report within the specified timeframe, it should make the decision provided for in sub-clause 7.2.2 herein, indicating the grounds within five working days from the date of receipt or possible receipt of the report.
7.6. In case the decision specified in sub item 7.2.2 is taken, the Committee should take one of the following decisions indicating reasons within five business days from the date of receipt or possible receipt of the report:
7.6.1. if it is determined from the report that the violations have been eliminated - on continuation of the placement;
7.6.2. if it is determined from the report that the violations have not been eliminated or the report is not submitted within the specified timeframe – on failure of the issuance.
7.7. In case the decision specified in sub item 7.6.1 is taken, the Committee sends and publishes related information to the persons specified in Item 7.3 in the order specified in the same item. In this case, offering and the period of placement of real estate certificates are extended for the period of suspension of placement.
7.8. If less than 50% (fifty) of the real estate certificates included to the issuance are placed during the period of placement of real estate certificates, the issuance of real estate certificates is deemed failed by the Committee.
7.9. Within one working day from the date of the decision to deem the issuance of real estate certificates failed, the Committee should inform the issuer, the persons conducting offering and placement of real estate certificates in writing and publish the decision in media.
7.10. When issuance of real estate certificates is deemend failed, the issuer provides compensation to owners of real estate certificates in the amount and within the period specified in the terms of issue in connection with return of funds and non-fulfillment of obligations.

8. Circulation of real estate certificates

8.1. In the absence of a counterparty investment company in trading deals with real estate certificates kept with the Central Depository, the deals should be concluded through an investment company. Deals with real estate certificates not kept with the Central Depository should be notarized if they are not concluded through an investment company or if there is no counterparty investment company in such deals.
8.2. Rights on real estate certificates are transferred by transferring real estate certificates to the 'depo' account of new owners (real estate certificates placed by public offering) and making relevant entries in the register of real estate certificate owners.
8.3. Circulation of real estate certificates is not allowed after the date of payment of real estate certificates.

9. Payment of real estate certificates

9.1. Payment for real estate certificates is made by the issuer. Payment for real estate certificates consists of the transfer of the building specified in the real estate certificate to the property of their owners and state registration of this right in the state register of real estate. In this case, real estate certificates kept with the Central Depository are submitted to the issuer.
9.2. Within 2 (two) months from the start of the date of payment for real estate certificates, the issuer should submit extracts from the state register of relevant real estate to the owners of real estate certificates on the basis of the power of attorney issued by them.
9.3. If the construction is not completed within the period specified in the terms of issue of real estate certificates or the issuer does not provide extracts from the state register of real estate to the owners of real estate certificates within the period specified in Item 9.2 herein, the issuer pays compensation to the owners of real estate certificates determined by the nominal value of real estate certificates and the terms of issue.
9.4. If real estate certificates are secured, the issuer fails to pay for their nominal value and compensation, after the period specified in Item 9.2 expires, the guarantor pays the nominal value of real estate certificates and compensation within one month.
9.5. Within 5 (five) working days from the date of payment for each real estate certificate, the issuer provides related information to owners of real estate certificates, a copy of the extract from the state register of real estate on state registration of transfer of the real estate specified in a real estate certificate to the ownership of real estate owners or a copy of the documents confirming payment of the nominal value of real estate certificates and the compensation specified in the terms of issuance to owners of real estate certificates to the Central Depository and the guarantor (if any).
9.6. If real estate certificates are paid by the guarantor, the information specified in Item 9.5 herein is delivered to the Central Depository by the guarantor.
9.7. Within 3 (three) months upon the date of payment for real estate certificates the National Depository should deliver to the Committee the information on their payment (indicating the number of real estate certificates paid and the order of payment).

Annex №1
on Regulations on real estate certificates
of the Republic of Azerbaijan

REPORT ON PLACEMENT OF REAL ESTATE CERTIFICATES

Issuer’s name: …………………………………………………….…......……………................……

State registration number and date of issuance of real estate certificates: …..……………….

Type of a real estate certificate: ………………………………...….………………………………..

Number of real estate certificates included to issuance: ...............................................................

Reporting period: ………………….……….…………….………….…………………...……………

Number of placed real estate certificates: ……………………………….........................................

Amount of funds received from the placement of real estate certificates:……………………..

Issuer’s address, zip code: …….……...…………….…………………………………………..........

Issuer's contact telephone numbers, long distance telephone code: ..........................................

Position, 1st, last, middle names of the head of the issuer: …..……………….………...............
signature
Date ………………………
M. Y.

Annex №2
on Regulations on real estate certificates
of the Republic of Azerbaijan

REPORT ON RESULTS OF PLACEMENT OF REAL ESTATE CERTIFICATES

Issuer’s name: ……………………………...................……......………………….…......……….........

State registration number and date of issuance of real estate certificates: …..………………..

Type of a real estate certificate: …………………………………......................................................

Number of real estate certificates included to issuance:……..……………………………….….

Start and end dates of placement of real estate certificates: ......................…….…………..........

Number of placed real estate certificates: …………………………………………..……...............

Amount of funds received from the placement of real estate certificates:…………………….

Issuer’s address, zip code:…………………………………..............................................……..…....

Issuer's contact telephone numbers, long distance telephone code: ..........................................

Position, 1st, last, middle names of the head of the issuer: …………………………………......

signature

Date _____________________
STAMP