“Approved”
State Committee for Securities
of the Republic of Azerbaijan
Resolution № 13-q
29 September 2015
Chairman
_______________
R. Aslanly

Regulations on certification for obtaining qualification certificates relating to provision of investment services (transactions)

1. General provisions

1.1. These Regulations have been developed in accordance with Article 43.5 of the Law of the Republic of Azerbaijan "On Securities Market" and annunciate requirements for certification (hereinafter - certification) of individuals for the purpose of obtaining qualification certificates for provision of investment services (transactions) in the securities market, as well as the procedures for conducting certifications by the State Committee for Securities of the Republic of Azerbaijan (hereinafter - the Committee).

2. Purpose of certification

2.1. Certification shall be performed to determine the suitability of knowledge and skills of individuals wishing to provide investment services (transactions) specified in Articles 30.3 and 30.4 of the Law of the Republic of Azerbaijan "On Securities Market" (hereinafter - the Law).
2.2. Certification shall be carried out in the areas of "general theory" and "legislation". The minimum passing score for each area is determined separately.
2.3. Persons who have passed the certification with an acceptable (minimum passing score) or higher score shall be issued a qualification certificate for the corresponding type of service (transaction).
2.4. Certification shall be carried out in two categories: managers and staff members.

3. Scope of certification and types of qualification certificates

3.1. These Regulations shall apply to the issuance of the following types of qualification certificates:
3.1.1. A type certificates:

3.1.1.1. accepting and executing orders of clients related to transactions with securities or derivative financial instruments;
3.1.1.2. placement and underwriting of securities without undertaking obligations;
3.1.1.3. placement and underwriting of securities by undertaking obligations;
3.1.1.4. execution of transactions with securities or derivative financial instruments on its own behalf as a member of the central depository and stock exchange;
3.1.1.5. margin trading;
3.1.1.6. administration of its client’s securities account, including execution of transactions relating to creation of security interest over securities or derivative financial instruments;

3.1.2. B type certificates - management of portfolio of individual investors;
3.1.3. C type certificates – providing investment advice.

3.2. Staff members and managers of type A or B, as defined by paragraph 3.1. of these Regulations, shall be certified accordingly – managers by type A1 (B1) and staff members by type A2 (B2).
3.3. According to these Regulations, a manager is a person holding a managerial position in the structural units of a legal entity.
3.4. It is not allowed to obtain a qualification certificate for the purpose of providing other ancillary investment services, except for ancillary investment services (transactions) provided for in Article 30.4.1 of the Law.
3.5. In order to act as an investment fund administrator, a person applying for a qualification certificate for asset management activities shall be certified in accordance with sub-paragraph 3.1.2. of these Regulations.

4. Certification programs

4.1. The set of test questions for certification on type A2 qualification certificate shall include the following:

4.1.1. legislative acts in the following areas:
4.1.1.1. securities market;
4.1.1.2. combating the legalization of criminally obtained money or other property and the financing of terrorism;
4.1.1.3. investment funds and their activities.

4.1.2. practical (if any) and theoretical knowledge in the following areas:
4.1.2.1. organization of investment services (transactions);
4.1.2.2. assessment of clients' securities, financial condition, tax status and investment strategy;
4.1.2.3. opening accounts, movement of assets and keeping records of accounts;
4.1.2.4. providing information and advice to clients;
4.1.2.5. fulfillment of client orders;
4.1.2.6. microeconomics.

4.2. In addition to those specified in paragraph 4.1 of these Regulations, the certification program for type A1 qualification certificate shall include the following:
4.2.1. corporate governance knowledge;
4.2.1.1. management of investment services;
4.2.1.2. management of trade and market-making activity;
4.2.1.3. management of investment research activity.

4.3. The certification program for the type B2 qualification certificate shall include the following:
4.3.1. legislative acts in the following areas:
4.3.1.1. securities market;
4.3.1.2. corporate governance and commercial legal entities;
4.3.1.3. tax system on the securities market;
4.3.2. practical (if any) and theoretical knowledge in the following areas:
4.3.2.1. financial institutions and financial instruments markets;
4.3.2.2. transactions with corporate finance and financial instruments;
4.3.2.3. preparation and use of financial analyzes.

4.4. In addition to those specified in paragraph 4.3 of these Regulations, the certification program for type B1 qualification certificate shall include the following:

4.4.1. knowledge of individual investors' portfolio management activities.

4.5. The certification program for the type B2 qualification certificate shall include the following:

4.5.1. legislative acts in the following areas:
4.5.1.1. securities market;
4.5.1.2. corporate governance and commercial legal entities;
4.5.1.3. combating the legalization of criminally obtained money or other property and the financing of terrorism;
4.5.2. practical (if any) and theoretical knowledge in the following areas:
4.5.2.1. analysis of economic information;
4.5.2.2. analysis of investment strategies;
4.5.2.3. providing investment advice;
4.5.2.4. microeconomics.

4.6. The Committee shall develop and conduct the certification program.

5. Certification Commission

5.1. Certification shall be performed by a central certification commission established by the Committee and operating on a permanent basis (hereinafter – the Commission). The Certification Commission shall be established by the order of the Chairman of the Committee and shall consist of odd number of at least 5 (five) members from the employees of the Committee.
5.2. The Office of the Committee for the Nakhchivan Autonomic Republic shall establish local certification commission consisting of 3 (three) employees of the Office by the order of the head of the Office.
5.3. The activity of the Commission shall be governed by the Chairman of the Commission. The Chairman of the Central Certification Commission shall coordinate the activities of both commissions and provide them with general management.
5.4. Meetings of the Commission shall be deemed competent when 3 (three) members of the Commission attend.
5.5. Certification Commission shall provide certification and perform the following tasks:

5.5.1. conduct certification examinations on qualification certificates;
5.5.2. determine the certification criteria;
5.5.3. preparation of certification questions;
5.5.4. determine the duration of the certification;
5.5.5. set the date and time of the certification;
5.5.6. decide on the results of the certification;
5.5.7. make proposals to improve the work of the Commission.

5.6. Local Certification Commission shall provide certification relating to provision of investment services (transactions) in the territory of the Nakhchivan Autonomic Republic and perform the following tasks:
5.6.1. set the date and time of the certification;
5.6.2. conduct certification examinations on qualification certificates;
5.6.3. decide on the results of the certification.

6. Certification and evaluation

6.1. Persons wishing to undergo certification shall submit the following documents to the Committee, and to undergo certification in the territory of the Nakhchivan Autonomous Republic - to the Office of the State Committee for Securities in the Nakhchivan Autonomous Republic (hereinafter - the Office):
6.1.1. an application-survey form for certification (Annex 1);
6.1.2. a copy of the document evidencing identity of the candidate;
6.1.3. a copy of the document on higher education of the candidate;
6.1.4. 2 (two) color photos of the candidate in 4x6 size;
6.1.5. a signed and notarized statement evidencing absence of a criminal record for grave or especially grave crimes against property or economic activity and for offenses related to insider trading or abuse in the securities market, as well as absence of a court decision on deprivation of the right to occupy a certain position in the securities market or to engage in professional activities (Annex 2);
6.1.6. a statement of criminal conviction.
6.2. When applying for a qualification certificate of an employee by a legal entity, in addition to the documents specified in paragraph 6.1 of these Regulations, a legal entity shall submit a copy of the certificate of its state registration.
6.3. If no defects or inconsistencies are found in the documents submitted, the Committee shall organize the certification within 30 (thirty) working days. The Committee shall send written or electron information to the applicants on the date and place of certification within at least 5 (five) working days prior to the certification date.
6.4. In case there are flaws or inconsistencies in the submitted documents, an official notification shall be sent to the applicant within 5 (five) working days to eliminate the flaw or inconsistency.
6.5. Certification shall be carried out by automated testing method.
6.6. The certification test shall consist of 75 questions.
6.7. Each certification question shall have 4 (four) answer options, only one of which is completely correct.
6.8. Verification of answers on certification is determined by an automated test system.
6.9. The answers to the certification questions are evaluated as follows:

6.9.1. correct answer - 3 (three) points;
6.9.2. wrong answer – 1 (minus one) point;
6.9.3. unanswered - 0 (zero) point.

6.10. The results of the certification shall be immediately announced on the basis of the relevant extract of the automated system, which shall be presented to the participant.
6.11. The candidate who scored 169 points shall be considered to have successfully passed the certification. A report on the results of the certification shall be drawn up by the central or local certification commission and a decision shall be made in the presence of at least 3 (three) commission members. A copy of the decision made by the local certification commission on the results of certification shall be submitted by the Office to the central certification commission within 3 (three) working days.
6.12. Based on the results of the certification, the Committee shall issue a relevant qualification certificate to the person who scored the minimum passing score or higher within 5 (five) working days.
6.13. The applicant shall not be allowed to use special or informational literature, means of communication and any information carriers, as well as to consult, communicate with other applicants and temporarily leave the certification room during the examination. The certification of an applicant who does not comply with these requirements shall be suspended and a decision shall be made on his/her failing the examination.
6.14. No persons other than members of the relevant commission and persons undergoing certification shall be allowed to be present at the place of certification.
6.15. If the applicant does not agree with the decision on the results of certification, he / she may appeal to the Committee within 7 (seven) working days. The appeal shall be reviewed within 15 (fifteen) working days and a relevant decision shall be made. The candidate shall be notified of the decision in writing within 5 (five) working days.
6.16. The applicant who has failed the certification may re-apply after 3 (three) months, and in case of non-attendance – after 4 (four) months.

7. Issuance of qualification certificates

7.1. To obtain a qualification certificate, an individual shall successfully pass the relevant test examination for certification.
7.2. In the absence of the case provided for in paragraph 9.2 of these Regulations, a qualification certificate shall be issued by the Committee after the successful completion of the relevant test examination by an individual to obtain a qualification certificate.
7.3. The type of qualification certificate shall be indicated in the qualification certificate.

8. Validity of the qualification certificate

8.1. Qualification certificates shall be issued for an indefinite term.
8.2. The Committee shall record qualification certificates.
8.3. A person holding a qualification certificate shall submit a certificate approved by the investment company to the Committee or the Office within 10 (ten) working days after concluding an employment contract with the investment company providing investment services (transactions). If a person holding a qualification certificate changes his / her place of work, he / she shall inform the Committee or the Office accordingly within 10 (ten) working days.

9. Annulation of qualification certificate

9.1. The Committee shall annul the qualification certificate in the following cases:

9.1.1. if the certificate is obtained by submitting incorrect or distorted information;
9.1.2. if the holder of a qualification certificate commits abuse in accordance with Article 78 of the Law of the Republic of Azerbaijan “On Securities Market”;
9.1.3. if the holder of the qualification certificate does not perform the services (transactions) corresponding to the type of qualification certificate within 3 (three) years.

9.2. Except for paragraph 9.1.3 of these Regulations, a person whose qualification certificate has been revoked cannot obtain a new qualification certificate within three years from the date of entry into force of the decision on revocation of the qualification certificate.