“Approved”
State Committee for Securities of the Republic of Azerbaijan
Resolution № 09-q
29 September 2015

Chairman

R. Aslanly

Regulations on prevention of abuses in the securities market

1. General provisions

1.1. These Regulations have been prepared in accordance with Articles 78.5, 80.8, 81.6, 82.1 and 82.3 of the Law of the Republic of Azerbaijan “On Securities Market” (hereinafter - the Law).
1.2. These Regulations determine the procedure for detection and prevention of abuses in the securities market, disclosure and submission of insider information, requirements for compiling insider lists, disclosure and submission of information on transactions concluded by the insider with securities of the issuer (hereinafter – the issuer), whose securities are publicly offered and admitted to trading in a regulated market or with derivative financial instruments for which such issuer’s securities comprise the underlying assets.
1.3. These Regulations shall not apply to:

1.3.1. operations carried out by the Central Bank of the Republic of Azerbaijan or other state bodies for the purpose of implementing monetary, public debt and currency regulation policy;
1.3.2. operations on stabilization of securities prices and redemption of securities by the issuer in accordance with Article 12 of the Law and Article 105-1 of the Civil Code of the Republic of Azerbaijan (hereinafter - the Code).

1.4. The main terms used in these Regulations are the following:
1.4.1. abuse in the securities market - is the conclusion and manipulation of transactions in the securities market with the use of inside information.
1.4.2. inside information – is an undisclosed, accurate information that directly or indirectly belongs to one or more issuers, securities or derivative financial instruments and, if disclosed, can significantly affect the price of securities or derivative financial instruments;
1.4.3. the following persons shall be considered insiders:
1.4.3.1. members of the issuer’s corporate bodies and its audit committee;
1.4.3.2. beneficiaries;
1.4.3.3. any person, who may obtain inside information due to its position, under agreement or due to transfer of any right by the issuer or other insider;
1.4.3.4. a person, who fulfills duties of the issuer’s executive body based on an agreement;
1.4.3.5. any person holding, either directly or indirectly, 10 or more percent of share in the capital of the issuer;
1.4.3.6. any person, who obtains inside information illegally;
1.4.3.7. any person, who may obtain inside information under agreement or due to transfer of any right by the issuer or other insider;
1.4.3.8. if persons indicated in sub-paragraphs 1.4.3.4 and 1.4.3.5. of these Regulations are legal persons, a person, who participates in making decision on behalf of such legal persons;
1.4.3.9. close relatives (husband, wife, parents and parents of husband or wife, grandfather and grandmother, children, adopters (adopted children), brothers and sisters) of persons listed in sub-paragraphs 1.4.3.1.-1.4.3.5. of these Regulations.

2. Disclosure of inside information

2.1. Issuers shall ensure that their inside information is disclosed immediately from the moment of its creation in the “Electronic Disclosure System in the Securities Market of the Republic of Azerbaijan” and on their website (if any).
2.2. The inside information may be disclosed by the issuer in other mass media after the disclosure in accordance with the procedure specified in paragraph 2.1 of these Regulations.
2.3. The disclosed inside information shall include:
2.3.1. date and number of disclosure;
2.3.2. note on “disclosure of inside information”;
2.3.3. title of disclosed inside information;
2.3.4. content of inside information;
2.3.5. information about the issuer (full name, legal and actual address, website and e-mail address, contact numbers).
2.4. Information disclosed by the issuer shall be unambiguous and fluent. Disclosure of incomplete, uncertain, misleading or ambiguous information is not allowed.
2.5. The issuer shall be liable for disclosure of inside information, completeness and correctness of the information.
2.6. In the event of changes in the disclosed information, the issuer shall immediately ensure the disclosure of the information in the sources from which the original information was disclosed.
2.7. The issuer shall adopt internal rules on protection, disclosure and access to insider information.2.8. The investment company shall not provide other persons with information on the order submitted by the client or in the process of execution, except as provided by the laws of the Republic of Azerbaijan.
2.9. The investment company shall not use the information contained in the order submitted to it by the client for its own benefit.
2.10. The issuer may not link the disclosure of insider information to marketing activities.

3. Postponement of disclosure of inside information

3.1. Under the following circumstances, the issuer may postpone disclosure of inside information with the aim to avoid creating a misunderstanding, provided it ensures confidentiality of the information and the issuer is liable for protection of its valid interest and for preventing any possible damage:
3.1.1. disclosure of information may affect negotiation process or its results;
3.1.2. disclosure of information may create danger of putting the issuer in difficult financial situation or affect the results of negotiations aimed at restoring financial condition of a solvent issuer for a long term, and, consequently, may endanger interest of its investors;
3.1.3. approval of the issuer’s other corporate body is outstanding for the decision of issuer’s corporate body or agreement entered into by the issuer to enter into force.
3.2. If the issuer disclose information about the decision or agreement provided for in sub-paragraph of these Regulations, the information shall contain a note to the effect that consent of other corporate body’s is outstanding for the decision or agreement to enter into force.
3.3. In the event the issuer adopts decision to postpone disclosure of information as provided for paragraph 3.1. of these Regulations, it immediately provides information the Committee of this together with the reasons for the postponement. If the Committee determines that the reasons for postponing the disclosure of information does not comply with paragraph 3.1. of these Regulations, it shall, within 3 (three) business days, demand disclosure of the information.
3.4. Delayed insider information shall be disclosed in accordance with Part 2 of these Regulations as soon as the reasons for the delay have been eliminated and the Committee shall be notified of this.
3.5. If the inside information, disclosure of which was postponed, was disclosed to a third party by the issuer or any other person acting, either directly or indirectly, on behalf of the issuer, the issuer shall ensure immediate disclosure of such information according to the Part 2 of these Regulations.
3.6. If the inside information, disclosure of which was postponed, was provided to the person, who under an agreement has obligation of confidentiality towards such information, the disclosure of such information is not required.

4. List of insiders

4.1. The issuer shall prepare and maintain the list of insiders, including information about persons who may have access to inside information (Annex 1).
4.2. Changes in the information contained in the Insider List are immediately recorded in the Insider List.
4.3. Persons who have access to insider information are immediately included in the Insider List by the issuer from the moment of obtaining that right.
4.4. The issuer shall inform persons, who have been included into or excluded from the list of insiders.
4.5. The issuer shall determine the person responsible for compiling the Insider List.
4.6. The issuer shall keep the insider list for the period of 5 (five) years from the date the list is prepared and in case of updating the list five years from the date the list was last updated.
4.7. The issuer shall submit the Insider List in electronic or documentary form within 1 (one) business day after the date of receipt of the request at the request of the Committee.

5. Submission and disclosure of information relating to transactions of insiders

5.1. The persons specified in sub-paragraphs 1.4.3.1.-1.4.3.4. of these Regulations shall, when entering into transactions with securities of the issuer, whose securities are publicly offered and admitted to trading in a regulated market and whose insider those persons are, or with derivative financial instruments for which such issuer’s securities comprise the underlying assets, shall, within one business day from the date of the transaction, provide information about such transactions (Annex 2) to the Committee and the issuer. The issuer within 4 (four) working days from the date of receipt of the information shall provide the disclosure of such information in the manner prescribed by Part 2 of these Regulations.
5.2. When the persons specified in sub-paragraph 1.4.3.5 of these Regulations conclude a deal with shares of the issuer to which they belong or with derivative financial instruments whose underlying asset are those shares, they shall disclose this information in accordance with Article 76 of the Law.

6. Submission of information on suspicious transactions

6.1. If there is a suspicion of transactions and manipulations in the securities market using inside information, the investment company and the stock exchange shall immediately notify the Committee in electronic or written form. Disclosure of this information to third parties shall not be allowed.
6.2. The information on the suspicious transaction shall include the following:
6.2.1. reasons giving grounds for making the assignment (order) or transaction suspicious;
6.2.2. information on the person instructing the investment company (if an individual: name, surname, patronymic, address, telephone number, identification document, depot account number, if a legal entity: full name, TIN, legal address, depot account number)
6.2.3. information on the investment company ordering the trading system of the stock exchange (full name, name, surname, patronymic and number of the qualification certificate for the provision of investment services by the authorized representative of the investment company exercising the rights to use the exchange trading system).
6.2.4. other information needed for the study of the suspicious transaction;
6.2.5. name, surname and signature of the person providing the information.

7. Measures to prevent abuses in the securities market

7.1. Abuse in securities market is prohibited.
7.2. To prevent the circumstnces of abuse in the securities market, the following shall not be allowed:
7.2.1. intentional conclusion of purchase and sale deals at the end of the trading day (session) for the purpose of influencing the closing prices of securities or derivative financial instruments;
7.2.2. issuance and subsequent cancellation of orders at a price different from previous orders to provide a false or misleading information about prices of securities and derivative financial instruments, demand and supply to them;
7.2.3. issuance of orders or instructions for the simultaneous purchase and sale of the same securities by the same person or several persons at the same volume and price on the basis of a secret agreement, except as provided by the laws of the Azerbaijan Republic;
7.2.4. conclusion of transactions that do not result in a change in the beneficiary of securities or derivative financial instruments, or result in a such change between the persons acting on the basis of a joint or secret agreement;
7.2.5. conclusion of additional purchase deals on securities and (or) dissemination of false positive information in order to increase the value of the acquired securities and their subsequent sale at a higher price;
7.2.6. conclusion of purchase deals on the basis of a secret agreement by the persons who acquired the securities during the public offering, in order to artificially raise the price of the securities and increase the interest of other investors in the securities;
7.2.7. incite or recommend to other persons to purchase (sell) or refuse to buy (sell) securities and derivative financial instruments on the basis of insider information;
7.2.8. attempt to purchase or sell securities or derivative financial instruments directly or indirectly at the expense of oneself or other persons using inside information or to attempt to make such transactions;
7.2.9. dissemination of news, gossips or other information though mass media or other means, which news, gossip or information either creates or may create false or misleading impression about securities or derivative financial instruments;
7.2.10. dissemination of information reflected in sub-paragraph 7.2.9 of these Regulations by journalists in the performance of their professional duties for the purpose of obtaining direct or indirect benefits or income;
7.2.11. disclosure of inside information to other persons, except in cases of disclosure in connection with the performance of official duties.
7.3. When persons conducting research on securities and their issuers and disseminating their results, as well as proposing or recommending an investment strategy, disseminate information on securities or derivative financial instruments, they shall disclose information about the conflict of interest or interests in those securities or derivative financial instruments if there is any.
7.4. Sub-paragraph 7.2.8 of these Regulations shall not apply to transactions concluded for the implementation of obligations to purchase or sell securities and derivative financial instruments arising from a previously concluded contract without having inside information.
7.5. The stock exchange shall adopt internal rules to detect and prevent abuses.
7.6. In case of detection of abuses in the securities market, the Committee shall take measures established by the Code and the Law.