‘Approved’
State Committee for Securities of
the Republic of Azerbaijan
Resolution № 16-q
3 February 2016

Chairman

_______________ Rufat Aslanly

Regulations on disclosure of information by persons conducting research on securities and their issuers and disseminating their outcome, as well as proposing or recommending investment strategies

1. General provisions

1.1. These Regulations have been developed in accordance of Article 37.3 of the Law of the Republic of Azerbaijan on Securities Market (hereinafter – the Law).
1.2. These Regulations determine the requirements for preparation and disclosure of investment research on securities or derivative financial instruments underlying assets of which are those securities placed by public offering or traded on a regulated market.
1.3. These Regulations do not apply to investment consulting services.
1.4. The main definitions used herein:
1.4.1. investment research – a research provided for the public that, directly or indirectly, recommends or suggests an investment strategy for one or more securities, derivative financial instruments or their issuers, including current or future value of those securities or derivatives;
1.4.2. financial researcher – a person that develops an investment research.

2. Requirements for an investment research

2.1. A financial researcher and a person disclosing an investment research ensures objectivity of analyzes and recommendations in the investment research.
2.2. A person participating in preparation of an investment research in an investment company may not directly or indirectly participate in provision of other investment services by that investment company.
2.3. When preparing the investment research, a financial researcher and a person disclosing the investment research ensure that:
2.3.1. facts of the investment research are separated from comments, assessments and opinions;
2.3.2. sources of reference in the investment research are provided;
2.3.3. forecasts in the investment research are separated from other information.
2.4. The investment research includes the following:
2.4.1. 1st, last names and position of the person preparing the research, and the name, the license number and the date of issue of the investment company he/she employed with;
2.4.2. the name of the issuer the investment research relates to;
2.4.3. sources of information used to prepare the investment research;
2.4.4. development of forecasts on prices for securities or derivative financial instruments the investment research relates to, or brief information on the methodologies used in assessment of the issuer's performance;
2.4.5. duration of recommendations related to the acquisition, sale or holding of securities and the risks associated with those recommendations;
2.4.6. if investment research is to be updated, information on the method and date of that update;
2.4.7. the date on which the investment study was first published;
2.4.8. if the price of a security or derivative financial instrument is in the investment research, the date, time and place of recording of this price;
2.4.9. if recommendations reflected in the investment study differ from those disclosed in investment researches of previous 12 months on securities, derivative financial instruments or issuers that are the subject of the investment research, accurate and detailed related information and the date of publication of the previous investment research;
2.4.10. information on probabilities that give rise to forecasts in the investment research.
2.5. If the information specified in sub items 2.4.3-2.4.4 herein cannot be reflected in the investment research, the place or source from which that information can be obtained directly and easily is indicated

3. Information to be disclosed on a conflict of interests in an investment research

3.1. The financial researcher discloses information in the investment research if there is an interest in securities and derivatives that are the subject of the investment research or a conflict of interest with the issuer on which the investment research is conducted.
3.2. The financial researcher mentions the following information on a conflict of interests in the investment research:
3.2.1. on direct or indirect ownership of 5% or more of authorized capital of the issuer the investment research is conducted on or the investment company he/she is employed with;
3.2.2. on direct or indirect ownership of 5% or more of authorized capital of the issuer or its officials, the investment research is conducted on, the investment company preparing the research;
3.2.3. if there is an agreement between the investment company, the financial researcher is employed with, and the issuer in respect of which the investment research is conducted on preparation of the investment research;
3.2.4. on financial interest of him-/herself or the investment company he/she is employed with, in the issuer in respect of which the investment research is conducted;
3.2.5. on the investment company, in which the financial researcher works, being a market maker of securities of the issuer in respect of which the investment research is conducted;
3.2.6. on provision of investment services to the issuer by the investment company the financial researcher is employed with, within 12 months prior to the date of the investment research;
3.2.7. on technical and organizational measures, as well as internal procedures for detection, management and prevention of conflict of interest specified in sub-items 3.2.1-3.2.6 herein due to provision of investment research services by the investment company.
3.3. The related party involved in preparation of the investment research by the investment company on a contractual basis, includes the following information in the investment research in addition to the information specified in Item 3.2 herein:
3.3.1. whether his/her income is related to trading deals of the investment company that hired him/her;
3.3.2. information on the date of acquisition and price of the shares of the issuer in respect of which the investment research was conducted before public offering.

4. Publication of investment researches

4.1. An investment research is published by developing or another investment company.
4.2. If an investment research is disclosed by another investment company, it mentions its name in the investment research.
4.3. If another investment company that discloses the investment research makes changes to the content of the report, it makes a related note in the research. In case the changes relate to the recommendations in the investment research, the investment company that publishes the investment research follows the requirements specified in Sections 2 and 3 herein.
4.4. The investment company that publishes the investment research making changes to it, discloses information on the sources that provide direct and easy access to the following information for those who receive the research:
4.4.1. information on the financial researcher specified in sub item 2.4.1 herein;
4.4.2. information on conflict of interests with that financial researcher, if any;
4.4.3. the content of the investment research.