Guidelines on licensing procedures in the capital market

Pursuant to Article 64.1 of the Law of the Republic of Azerbaijan ‘on the Securities Market’ (hereinafter – the Law), stock exchange, clearing, investment fund depository, and investment company activities (hereinafter – licensed activities) in the Republic of Azerbaijan may be carried out only by legal entities licensed in accordance with Chapter 8 of the Law. In addition, investment services (operations) may also be carried out by banks and local branches of foreign banks licensed in accordance with Chapter 8-1 of the Law.

The issuance and revocation of licenses for licensed activities are carried out by the Central Bank.

Licenses for licensed activities are granted for an indefinite period. A license is used only by the licensed entity and may not be transferred to third parties. A license for licensed activities enters into force on the date of its issuance by the Central Bank.

The conduct of licensed activities in the Republic of Azerbaijan by entities not registered in the country, and not subject to regulation and supervision by competent authorities of foreign states, is not permitted.

Entities registered in offshore zones determined by the Central Bank, as well as entities whose founders, qualifying holding owners, or beneficial owners are registered in such zones, may not act as founders or shareholders of a joint stock investment fund or its manager.

Appeals for licenses for licensed activities are reviewed by the Central Bank in two stages (initial and final appeals).

The Central Bank maintains the state register of licensed entities, as well as branches and representative offices of investment companies. The state register includes information on the names and legal addresses of licensed entities, as well as branches and representative offices of investment companies, registration numbers and dates of issued and revoked licenses or permits, termination of activities, the services (operations) provided by investment companies, and the types of securities markets organized by stock exchanges, as well as information on their governing bodies. Licensed entities, as well as branches and representative offices of investment companies, are entered into the state register from the date of issuance of relevant licenses and permits by the Central Bank.

The licensing of stock exchange, clearing, investment fund depositary, and investment company activities is regulated by Chapter 8 of the Law; the licensing of banks engaged in investment services (operations) is regulated by Chapter 8-1 of the Law; and the licensing of activities related to the management of joint stock investment funds or investment funds is regulated by Chapter 8 of the Law of the Republic of Azerbaijan ‘on Investment Funds.’