Law

of the Republic Tajikistan

on securities and stock exchange

            This Law determines the general principles for the issuance, circulation and regulation of activities and relationship between participants in the security market in  other words issuers of securities, investors and other professional participants.

            The aim of this Law is to develop the security market in the Republic of Tajikistan, to promote economic growth by rationalizing the use of financial resources; to encourage enterprises to issue and sell securities; to establish legal guarantees so that people who acquire securities have the necessary information about the enterprises whose securities are being sold.

            The Law establishes necessary requirements for persons engaging in the issuance and circulation of securities, creates conditions for the organization in the Republic of Tajikistan of the necessary structures to carry out operations with securities, ensuring they are performed efficiently and in accordance with the interest of developing a national security market.

Chapter I

General provisions

Article 1                Legislation on securities and stock exchange

Relationships related with the issuance and circulation of securities, and activities of professional participants in the securities markets are regulated by the present law and other legislation of the Republic of Tajikistan.

                Peculiarities of professional activities of foreign legal persons and enterprises with foreign investments in the securities market are regulated by the legislation on foreign investments in the Republic of Tajikistan.

Article 2                Basic terms

                The following basic terms are used in this law:

                The Issuer of securities is a legal person who pledges to bear all responsibilities arising from the conditions of issue of securities (hereafter called the  issuer).

                The Investor is a physical or legal person possessing securities.

                Securities are financial documents certifying the property rights of its owner in relation to its issuer upon issuance or transfer. In cases stipulated in the this Law,  registered securities must  be registered  a special register (usual or computer).

                Prospectus is a packet of documents with information about the issuer, his financial status and the registered securities issued by him;

                Certificate of a security is a document issued by the issuer of securities for a security holder to confirm his property rights on securities; the certificate  is not a security;

                Issue of shares is sale of securities to form the authorized capital and attract  additional capital;

                Organized securities market is the market  for  securities   regulated  by the procedure and conditions  established by the organizer  for the participants of the deals pursuant to the current law;

                Non-organized securities market is the  market where  securities are sold   without the observance of the organized market requirements;

                Circulation of securities is the performance of civil-legal transactions with securities;

                Securities market professionals are licensed legal persons who may perform one or several kinds of professional activity in the securities market;

                For bearer securities  presentation is enough to demonstrate ownership;

                For registered securities  the owner is required to  be  registered in the State Registration List;

Article 3                Form of issue of securities

The present law  covers the following securities:

a)   materialized  securities;

b)  dematerialized  securities.

Securities are materialized if ownership for securities is physically  fixed  (in  paper or in other materials).

Bearer securities are issued only in materialized form.

Securities are dematerialized if ownership for registered securities is fixed in a special register  (ordinary or computerized).

The issuer can change the form of issue of registered securities by introducing appropriate  changes in the documents submitted for state registration.

The issuer, or a specialized organization, or a body (organization)  authorized by the Government of the Republic of Tajikistan that  keeps the registration of securities,  must issue a document  confirming the holderÒs ownership  at his or her request.

Article 4                Securities covered by the present Law

                The present law covers the following securities:

a) Shares in accordance with the definition of Article 6 of the present Law;

b) Bonds in accordance with the definition of Article 12 of the present Law;

c) Documents certifying the rights of an owner on  buying or selling  the securities mentioned in Article 4 a) and b) of the present Law.

Article 5                Types of securities, issue and circulation of which are  regulated by other laws

                The present law does not regulate issue and circulation of the following securities:

a) Bonds of the State and Local State Authorities, other securities issued or guaranteed by the Government of the Republic of Tajikistan and the National Bank of the Republic of Tajikistan, and by Local State Authorities;

b) Deposit and savings certificates of banks;

c) Commercial bills;

d) Any debentures appearing in the course of normal commercial activity with a term of less than one year;

e) Securities that are circulated only among the enterpriseÒs employees.

                Issuance and circulation of all state securities mentioned in point a) of the present Article are regulated by the Ministry of Economy and Finance of the Republic of Tajikistan, and the National Bank of the Republic of Tajikistan. The Procedure of issuance of local bonds is defined by Local Majlises of PeopleÒs Deputies pursuant to the current  law. State securities and local bonds are circulated in the market on equal grounds with other securities.

                Deposit and savings certificates are regulated by the National Bank of the Republic of Tajikistan.

                Securities enumerated in points c), d), e) are regulated by the corresponding law of the Republic of Tajikistan.

Article 6                The main characteristics of shares

A share of stock gives the right  to a part of the companyÒs profits as  dividends and gives the right to participate in the management  of the enterprise, and to a part of the companyÒs property after its liquidation.

                 The minimal nominal value of a share is 100 rubles. When the nominal value of the  share exceeds 100 rubles, it must be a multiple of the minimum cost of a share.

The share must contain the following information:

a)   The name and location  of the issuer;

b)  The name of the type of security in other words a share;

c)   Series and the number of shares;

d)  The date of issuance; 

e)   The state registration number;

f)    The type of  a share (ordinary or preference shares);

g)   Nominal value of a share;

h)   Name  of the shareholder (for a registered share), or  indication that a share is owned by the   bearer;

i)     Term for dividend payment;

j)    Signature of the two issuerÒs authorized officials;

k)  Terms of circulation;

l)     Name and address of a specialized organization, or a body authorized by the Government of the Republic of Tajikistan that keeps the registration list (on the back side).

The  share certificate must contain the following information:

a)   The name of the security in other words a share certificate;

b)  The  number of the certified shares;

c)   The category of shares;

d)  The issuerÒs firm name and location;

e)   The firm name (for legal persons);

f)    The name and address (for natural persons) of the registered shares  or an indication that the share is owned by the bearer;

g)   The face value of shares;

h)   The term of dividend payment;

i)     The place and  date of issuance;

j)    The state registration;

k)  The series and number of shares;

l)     The signature of the issuerÒs  officials and a list of the rights accompanying the shares;

m) The name and address of the specialized organization, or authorized body of the Republic of Tajikistan that keeps the Registration List (on the back side).

The share certificate may contain other information about the issuer;

                The shares certificate may be supplied with a coupon sheet for dividend payment.

 The coupon sheet consists of two parts: the coupon and the counter-foil.

 The coupons for dividend payment confirm the ownerÒs right to income received as dividends during the indicated year and must contain the following elements:

a) The number of the coupon for dividend payment;

b) The state registration number,

c) The series and number of shares providing dividends;

d) The name of the issuer;

e) The place and date of issuance;

f)    The year of the dividend payment,

g) The signatures of the companyÒs officials.

 The counter-foil of the coupon sheet authenticates the right of the owner to receive a new coupon sheet after paying all coupons, and must contain the following elements:

a) The shareÒs registration number,

b) The series and number of shares providing dividends;

c) The name of the issuer;

d) The place and date of issuance;

e) The signatures of the companyÒs officials.

A share is indivisible. In cases when one share belongs to several persons, it is  their joint property. Shareholders can exercise their rights through one of the shareholders, or through a common representative.

Article 7                Transference of share ownership

Physical transference of bearer  shares  is sufficient to transfer ownership.

Transference of the registered materialized  shares, share certificates confirming ownership of the indicated person, is only concluded after registration in the established procedure and entrance of the appropriate changes in the registration list.

Transference of ownership on  registered dematerialized shares may be performed only through  entrance of the appropriate changes in the registration list and in the established procedure.

Article 8                Decisions on issuance

                The founders of the joint stock company or the general meeting may decide to issue shares in accordance with the procedures set by the Law and the charter of the company.

                A written decision to issue a share must contain the following information:

·       Name and address of the company;

·       The size of the authorized fund of the company;

·       The purpose of its activities,

·       The companyÒs leading officials;

·       The name of its auditing firm;

·       Information on  placing of the previously issued securities;

·       The purpose of the issuance;

·       The quantity of registered and bearer shares;

·       The quantity of preferred shares;

·       The nominal value of the shares;

·       The number of voting shareholders;

·       The order of dividend payment;

·       The date of the signatures on the shares;

·       The order of the signatures;

·       Where and when the payment s are to be made on the purchase of shares;

·       What is the term for the assets to be returned if there is  a refusal to issue;

·       The order of priority of share issuance in cases where shares are issued in different series;

·       The order  of the advertisement on issuance;

·       The order of distribution of shares;

·       The order of payment for the shares;

·       The order of sale of shares;

·       The order of exchange of shares,

·       The ownership rights of preferred shares;

·       The right to buy shares first in the new issuance of shares and other questions connected with the issuance.

Article 9                Issue of shares

                The issue of shares is carried out in relation to the size of the authorized fund of the company in accordance with the existing legislation.

A supplementary issuance of shares is possible in cases when all previously issued shares where acquired at a price not less than the nominal cost. Sales of shares are not permitted at a price below the nominal cost.

The issue of shares is forbidden for compensation of losses connected with the economic activity of the enterprise.

                The investor cannot transfer the property rights of his shares before he has paid for the shares in full.

                A joint stock company may buy shares of its own in order to resell them or distribute them among their employees or to annul them. The sale of the shares must be completed during a year from the day of their purchase by the joint stock company, afterwards unsold shares are annulled with a simultaneous reduction of the authorized charter. The distribution of profits, voting, and the definition of a quorum are made without taking into account the shares obtained by the company at the general meeting. The total amount of shares purchased by the joint stock company can not exceed the nominal cost of 10% of the sum of the authorized fund of the joint stock company.

Article 10                Dividend payment on shares

                Dividends on shares are paid after half a year, a year, or a quarter of a year according to the terms prescribed by the conditions of share issuance, on the basis of the profit of the joint stock company remaining after payment of fiscal obligations.

Article 11                The privileges of preferred stock

                Dividends on preferred shares at fixed percentage rates are determined from their nominal cost regardless of the profits received by the joint stock company in the corresponding year. In case where there is no profit, payment on preferred stock dividend is effectuated from the reserve fund, and the dividend payment may be postponed to the following year and be paid out of the following years profits if the reserve is extended.

                An owner of preferred shares has a right to immediate payment on the shares in the event of the joint stock companyÒs liquidation.

An owner of preferred shares has other rights defined by the conditions of share issuance and the charter of the issuing joint stock company.

                An owner of preferred shares does not participate in the management of the joint stock company, unless otherwise provided for in the charter of the joint stock company.

                The total size of issue of preferred shares at nominal value cannot exceed 10 % of the authorized fund of the joint stock company.

Article 12                The basic characteristics of bonds

                A bond is an obligation confirming the liability of the issuer to pay its nominal value and a fixed interest rate to the owner of the bond unless otherwise stipulated by the conditions of issuance.

Bonds are issued in a series consisting of similar securities with an equal nominal value and identical conditions of issuance and repayment.

The minimal nominal value of a bond is not limited. The nominal value of a bond must be a multiple of 10 rubles.

                Bonds are issued by enterprises and organizations which are legal entities.

The conditions of issue and sale of bonds are defined by the Law and the charter of the issuing enterprise.

                Bonds may be issued as registered or bearer bonds.

                A bond certificate contains the following information:

·       The name of the type of security in other words a bond;

·       The name and address of the issuer;

·       The name of the issuing firm;

·       The name of the buyer or an inscription that the bond belongs to the bearer;

·       The nominal value;

·       The rate of interest if determined;

·       The procedure;

·       The repayment date and interest payment date;

·       The place and date of issuance,

·       The state registration number;

·       The series and number of  the bond,

·       The signature of the issuing authorized officials and rights ensured by the bond.

·       The name and   address of a specialized organization, or authorized by the Government of the Republic of Tajikistan body (organization) that keeps  the Registration List.

A bond certificate  contains the following information:

·       The name of the type of security in other words a bond;

·       The quantity of bonds issued confirmed by the certificate;

·       The name and location of the issuing firm;

·       The name of the buyer or an inscription that the bond belongs to the bearer;

·       The nominal value;

·       The rate of interest if determined;

·       The procedure, the repayment date and interest payment date;

·       The place and date of issuance,

·       The state registration number;

·       The series and number of  the bond,

·       The signature of  two issuerÒs officials and rights ensured by the bond, and the body authorized by the Government of the Republic of Tajikistan that keeps the registration list of  the bondholders.

  A bond certificate may contain other information about the issuer.

                  A coupon sheet may be attached with the bond for interest payment.

  A coupon sheet for the payment of an interest rate must contain the following elements:

·       The number of the coupon for interest payment,

·       The number of the bond on which interest is paid;

·       The name of the issuer;

·       The year of interest payment and signatures of the officials of the issuing company.

Article 13                Decision on bond issuance

                Enterprises or associations of enterprises may decide to issue bonds in the order determined by the Law and their charters.

                A joint-stock company may decide to issue bonds only after all the initial shareholders have paid for their shares.

                The Ministry of Finance of the Republic Tajikistan together with the National Savings Bank of the Republic Tajikistan establish a normative indicator for issuers corresponding to the ratio of the issuerÒs debt on issued bonds and the sum of the authorized fund.

                A decision on bond issuance must contain:

·       The name and address of the issuer;

·       The size of the issuerÒs authorized fund;

·       Provisions on its economic activity;

·       An indication of the leading officials of the issuer;

·       The name of the auditing firm;

·       Information on  placing of the securities issued;

·       The purpose of the bond issue;

·       An indication of the type of bonds such as registered or bearer bonds;

·       The total amount of issuance and quantity of bonds;

·       The nominal value of the bonds;

·       The order of income payment;

·       Where and when the payments are made for purchase;

·       The time of payment if the bond issuance is rejected;

·       The order of the advertisement and the bond issuance;

·       The order of bond distribution;

·       The order of bonds payment;

·       Other questions related to the bond issuance.

Article 14                Interest payments on bonds

                The interest on bonds is paid via periodic coupons for a single payment or other methods determined in the conditions of bond issuance.

Article 15                Consequences of default

                When the issuer does not fulfill the interest payment obligation and repay the nominal value of the bond, the recovery on the debt is made according to the laws of the Republic of Tajikistan.

Article 16                The use of cash received from bond sale

                The proceeds of bond sales are directed to the purpose described at their issuance.

Bond issuance is not allowed to form or renew the authorized fund for the compensation of losses and dividend payments.

Article 16 ⁽¹⁾  Transactions with securities.

                Transactions with securities are carried out in the organized and non-organized securities markets. Transactions with securities  in the organized securities market involves transactions on security sales and purchase by professionals on behalf of themselves, or their clients, and at their own or their clientsÒ  expense.

                Transactions with securities in the non-organized securities market can be carried out by non-licensed investors, or by securities market professionals.

                Authority of a securities market professionalÒs activity regarding securities is established in the agreement with his client that defines terms and conditions to carry out securities transactions.

The procedure for securities transactions is regulated by organizations that operate in the organized securities market.

Chapter II

Professional activity regarding securities

Article 17                Forms of professional activities regarding securities

                The following forms of professional activity regarding securities are possible:

a) Intermediary activity regarding securities issuance;

b) Commercial ( dealerÒs ) activity regarding securities;

c)   Commission  (brokerÒs) activity regarding securities;

d)  Portfolio management;

e)   Definition of mutual claims and obligations (clearing) in the field  of securities operations;

f)    Activity associated with the keeping, and registering of security holders;

g)   Other forms of professional activity

Intermediary activity regarding  issue of securities involves fulfillment of  the issuersÒ orders to organize subscriptions, as well as to sell securities on behalf of the issuers with an obligation to sell securities according to the provisions of the present Law and purchase unsold securities at its own expense.

Commercial (dealerÒs) activity regarding securities involves civil-legal transactions on securities by a legal person on his behalf at the expense of the other person.

Commission (brokerÒs ) activity regarding securities involves civil-legal transactions on securities by a legal person on his behalf and in the interest of and at the expense of the other person.

 Portfolio management regarding securities involves securities transactions on realization of specific property rights given to a legal person by the security holder in accordance with the agreement concluded.

                Definition of mutual claims and obligations (clearing) on securities transactions  involves clearing of claims and obligations of the parties in settlements of the securities transactions. 

 Keeping and registering of securities holders involves collection, posting, processing, keeping, and presenting the data to identify the holder on a specific date.

                Other forms of professional activity involve activities related to those mentioned above, like consulting services on  securities transaction and services associated with the keeping, accounting and registering of securities transactions (depository activity).

Article 18                Licensing of professional activity in the securities market

                Legal persons perform professional activities in the organized securities market on the basis of a license provided by the Ministry of Finance of the Republic of Tajikistan.

                The license may be provided to perform several forms of professional activity regarding securities or a definite form of activity.

Article 19 Restrictions on the combining of  professional activities regarding securities

Persons having received a license to carry out commercial activities regarding securities may undertake commission activity only through the stock exchange.

Persons having received a license to carry out commercial and  commission activities in the securities market have no right to conclude securities deals if they contradict to the clientsÒ interests.

Article 20                Securities market professionals

                Legal persons carrying out activities defined by Article 17 of this Law are called securities market professionals.

Legal persons can be securities market professionals if they are:

a) Banks;

b) Joint stock companies having their authorized fund exclusively based on registered shares and involved exclusively in security operations.

c)   Limited-liability companies carrying out professional activities exclusively in the  securities market.

d) Other securities market professionals carrying out professional activities exclusively in the securities market;

                                Securities market professionals carrying out  activity in the security market have no right to combine their activity with other kinds of entrepreneur activity.

Article 21 Qualifications of persons performing professional activities in the security market

                The Ministry of Finance of the Republic of Tajikistan determines the qualifications required for the receiving licenses to carry out professional activities in the security market.

                In order to guarantee the regulation of professional activities regarding securities, the Ministry of Finance of the Republic Tajikistan:

a) Establishes common standard rules for securities transactions, and the accountancy and settlement of these transactions;

b) Establishes normative indications to limit the risk securities transactions  for securities market  professionals;

c) Defines the contents of training programs and tests to determine the specialistsÒ qualifications implementing professional activity regarding securities;

d) Determines the order and rules of delivery, abolition or suspension of qualification certificates for specialists carrying out operations in the securities market.

Article 22 Conditions to prohibit securities market professionalsÒ activity

                Licenses on the right to engage in professional activities regarding securities for security market professionals are not issued to banks, joint-stock companies and limited-liability companies of which any securities market professional owns more than 5 % of the stated capital, or of a legal entity owned wholly or partially by a securities market professional another words more than 10 % of its capital.

                A security market professional cannot indirectly purchase more than 10 % of the authorized fund of another security market professional and directly more than 5%.

                If the share of a legal entity who is not a securities market professional, or a natural person in the authorized capital of several securities market professionals, goes beyond 5 % of each of their capitals, the securities market professionals cannot conclude transactions between each other.

                A securities market professional cannot trade in:

a) Bearer securities issued by himself;

b) Shares of an issuer in which he is a direct or indirect owner of more than 5 % of the authorized  capital.

                Information on transactions indicated in points 1, 2, 3 and 4 of the present article cannot be considered the commercial secret of the participants in the transaction.

Article 23 Modifying the activity or charter of a securities market professional

                In order to change the charter of a securities market professional that is a bank it is necessary to obtain the permission of the National Bank of the Republic Tajikistan (depending on the place of registration of the commercial bank), and for other securities market professionals the permission of the Ministry of Finance of the Republic Tajikistan is necessary.

Article 24 Invalidation and forfeit of licenses on the right to engage in professional activities regarding securities

                The Ministry of Finance of the Republic Tajikistan can invalidate or forfeit a license on the right to engage in professional activities regarding securities if the officials of the organization in question:

a) Submit false information in the application to acquire a license or in other current records;

b) Upon decision of the Ministry of Finance of the Republic of Tajikistan, are not  considered  to be  qualified enough to engage in professional activities involving  securities;

c) Violate the regulations on professional activity regarding securities established by the Ministry of Finance of the Republic of Tajikistan.

                A license can also be invalidated if securities market professionals do not follow the regulations established by the Ministry of Finance of the Republic of Tajikistan prescribed in Articles 20, and 23 of the present Law, as well as the conditions prescribed in Article 22 of the present Law.

Chapter III

 registration OF EMISSION ON SECURITIES

AND PROCEDURE OF circulation OF SECURITIES

Article 25                Procedure of registration of issue of securities

                The issuer has the right to issue securities after registering them and receiving the state registration number of in the Ministry of Finance of the Republic Tajikistan.

Issuance of unregistered securities is illegal. Money acquired from the illegal selling of securities is subject to seizure for retribution to the investors.

Registration of issue of securities is carried out by the Ministry of Finance of the Republic Tajikistan regardless of the total amount of issuance and method of sale (public or limited).

                The following documents are required to be submitted for registration:

a) Application for registration of  securities;

b) Notarized copy of the decision to issue securities established in accordance with Article 8.2 and Article 13.4 of the present Law for both shares and bonds;

c) Notarized copies of the founding documents;

d)  Sample of the security certificate in case of materialized form of issue;

e)   Two copies of securities prospectus;

f)    Document confirming the stamp duty payment for registration of issuance of securities

Regulations on the preparation of registration, issuance and standards of securities certificates are defined by the Ministry of Finance of the Republic Tajikistan.

                State registration should be undertaken within 30 days after remitting the application and all the necessary documents. Security registration entitles to the allocation of a state registration number.

Registration can be refused if the established procedure is violated or if the submitted documents do not meet the requirements of the Law.

The Ministry of Finance of the Republic of Tajikistan establishes the size and order of payment of stamp fees required for  their registration of prospectus. The stamp duty is  not paid when prospectus containing the information of securities only, and belonging to the state, is registered.

                The State Registration of securities is carried out by the Ministry of Finance of the Republic Tajikistan.

                Registration of securities by the financial state entities in accordance with the present article is not a guarantee on  the value of the security.

                The Ministry of Finance of the Republic Tajikistan defines the regulations of circulation in the Republic of Tajikistan of securities of issuers not covered by the jurisdiction of the Republic Tajikistan.

                Advertisement of issue of securities in the press or media is not allowed before state registration.

Article 26                The permission to issue securities on a public sale

                The issuer is required to obtain permission from the Ministry of Finance of the Republic Tajikistan for a public sale (subscription)  of securities.

Sales of (subscription for) securities are considered public if they meet at least one of the following  criteria:

a) Securities offered for sale are intended to be distributed among unidentified legal and physical persons;

b) Securities are offered for sale to more than fifty investors;

c) The total amount of securities to be issued exceeds the maximum quantity of issuance for private sales established by the Ministry of Finance of the Republic of Tajikistan.

                In order to obtain permission for the public sale of securities, the issuer is required to submit information about the public sale in addition to the documents prescribed in Article 26 of the present Law to the financial entity.

Article 27                Prospectus

                The information on the public sale which is published in the prospectus should be correct and be presented in order to conform with an evaluation of the financial conditions of the issuer.

                The information in the prospectus  may  not be  more than six months old.

                The following data must be included in the prospectus:

a) The issuerÒs characteristics including: the name of the company, its location, the date of its foundation, the field of its activity certified by an auditing firm, the balance sheet and accounts of profits and losses, the number of its staff as well as the qualifications of its leading officials;

b) A description of the issuerÒs business activity, certified by the auditing firm. A list of necessary data on the issuerÒs financial state as determined by the Ministry of Finance of the Republic Tajikistan;

c) Data on security issuance: the date and number of the record on the decision to issue securities, the purpose of use of the financial resources acquired as a result of the issuance, the quantity planned to be issued; the type and category of securities, and their associated rights. The founders of the company and the special rights granted to holders of preferred shares, their quantity, nominal value and the value of issued securities, serial numbers; place of issuance, the dates of issuance, information on the possible privileges of shareholders, interest rates; name of the security market professional conducting operations for the issuer; actions undertaken in case of exceeding or not attaining prescribed sale limits; interest rates on bearer securities and their method of calculation, terms of issuance, location of payments, carrying out transactions and depositing;

d) List and results of former security issuance as well as distribution of securities according to their types;

e) Number of registered shares issued including those which belong to its officers.

                The prospectus is signed by the issuer and the securities market professional if the latterÒs services are used.

                In case of the foundation of a joint stock company the information should include all requirements prescribed in points a) and b) of article 27.3 of the present law.

                In case of bond issuance except for cases prescribed in article 27.3 the prospectus should include:

a) The terms of retribution;

b) Other conditions connected with securities;

c) Guarantees of implementation of liabilities.

                The prospectus should be provided if the issuer or the previous owner of the issuerÒs company carried out a financial rehabilitation scheme or if an instruction to liquidate the company was given within the last three years.

                Related prospectus should be provided if another legal person guarantees retribution of liabilities stated in the securities.

                The risk factors of the issuerÒs activity should be indicated.

                The prospectus  must be issued in sufficient quantities to cover all potential buyers of securities and be available in security sale locations.

When conducting subscription for securities the issuer is obliged to register and inform all buyers of any current modifications on the information already provided on the public sale of securities.

Article 28                The order of prohibition or suspension of security issuance

The Ministry of Finance of the Republic Tajikistan may prohibit or suspend securities issuance in case of:

a) Violation of the law;

b) Proof in the prospectus of information allowing to draw a conclusion that the terms of security issuance contradict the Law;

c) Incompleteness of the information submitted according to the requirements of the Ministry of Finance of the Republic Tajikistan;

d) Contradiction of the information submitted in the prospectus to the following requirements:

·       The issuer must have undergone no loss during the last 3 fiscal years or since the date of its foundation if the company was founded within the last 3 years;

·       No administrative and economic sanctions were applied against the issuer in the past 3 years since its foundation by any state authority;

·       The issuer must not have overdue arrears to creditors and the Government;

·       The issuer must have completely paid its investment in the authorized fun of the company when deciding to issue bonds.

Non-conformity with the purpose of issuance of securities may not be used as a reason to prohibit the issuance of securities.

                The Ministry of Finance of the Republic Tajikistan has the right to suspend the issue of securities or declare the results of the issuance invalid if the issuance is being carried out or has been carried out in violation of the law and in case the prospectus submitted for registration of the issuance of securities is found to be inaccurate or does not meet the other requirements of the present Law or in case new information in the course of selling is received which essentially changes the terms of issuance and requires notification to the investors.

                In case of suspension of issue of securities the issuer is obliged to eliminate the causes of violation. The issuance may then proceed in accordance with a special written authorization of the Ministry of Finance of the Republic Tajikistan.

                If either the issuers or founders of the joint stock company consider the ban on securities issuance groundless they may contest the decision in an economic court. In this case the issuance of securities is discontinued until final decision by court.

Article 29                Approval of the report on the results of a public security sale

                The issuer is required to submit to the Ministry of Finance of the Republic of Tajikistan a report on the results of an issuance indicating the amount of securities sold not less than 7 days after termination of the public sale.

                The Ministry of Finance of the Republic of Tajikistan determines the list of the documents to be attached for the approval of the report, and procedure of their drawing up

                An issuance of securities is considered valid if after 10 days following submission to a financial authority of the report on the results of the security issuance, the financial authority does not invalidate the issuance.

Article 30                Standard information about the issuer

                The issuer who carries out a public sale of securities is obliged to disclose to the public essential information on its financial conditions and activity (hereafter called the financial report).

                Information on the annual report including the place, time and ways of consulting it, should be available for all holders.

                The annual report must be published not later than May 1 of the year following the accounting year and sent to the registered shareholders and the Ministry of Finance.

Article 31                Information on modifications of an issuerÒs economic activity

                The issuer within two days is required to send and publish information regarding changes in the economic activity related to the values and interest rates of securities according to the procedure prescribed in Article 30, provided that the last annual information on these modifications or reference to them was not previously reported to the Stock Exchange where its security transactions take place and to a financial registration authority. Such information includes:

·        Planned modifications on security rights;

·       Change of the companyÒs officials and employees;

·       Freezing of an issuerÒs bank account;

·       Initiation of activity on financial rehabilitation and liquidation;

·       Suspension or cessation of the issuerÒs activity;

·       Decision on significant organizational changes (fragmentation, mergers, reorganizations, etc.);

·       Destruction of at least 10 % of the companyÒs property because of emergency circumstances;

·       Information on actions carried out against the issuer of a sum exceeding 10 % of the authorized fund;

·       Obtaining credit or security investments exceeding 50 % of the authorized fund.

                Stock Exchanges are obliged to publish information about official publications mentioned in Article 31.1.

                In case of inaccurate information infringing the value and interests of securities, the issuer is obliged within the next two working days to take measures to correct the false information.

Chapter IV

Stock exchange

Article 32                Definition and legal status of stock exchange

                Stock exchange (hereafter Exchange) is defined as an organization created by securities market professionals to provide necessary conditions for the circulation of securities, establishment of their rate of exchange and their publication for examination by all people concerned, and the maintenance of the professionalism of  securities market professionals. The Exchange doesnÒt aim for profit, it is founded on the basis of self-payment and doesnÒt pay profits from its activity to its members.

                The Stock Exchange is established in the  form of a joint stock company. All the shares of the Exchange should be registered. Only shareholders can be its members.

Article 33 The foundation, registration and licensing of the stock exchange activity

                A stock exchange is established by legal persons having the license of securities market professionals.

                The conditions of foundation of a stock exchange are the following:

a) A stock exchange has its own charter and its own internal regulations on the performance of transactions, permissions and limitations to trade securities at the stock exchange (regulations on securities  transactions).

      The charter and regulations of a stock exchange for carrying out security transactions guarantee the compliance to fair competition principles between securities market professionals, the defense of their interest from any type of misuse by issuers, securities market professionals and employees of the stock exchange.

b) The founders of the stock exchange agree upon common qualification requirements of members of the stock exchange, they conclude and negotiate deals, establish regulations on settlements and accounting which are approved by the Ministry of Finance of  the Republic Tajikistan.

                The stock exchange is registered in the Ministry of Finance of the Republic Tajikistan in the order prescribed for the registration of joint stock companies.

                A companyÒs stock department dealing in commodity exchange and carrying out securities transactions is covered by this law. Stock departments dealing with commodity exchange can be founded as independent structural subdivisions of a company with separate balance sheets.

                Delivery of licenses on conducting stock exchange activity and the approval of regulations on security transactions are executed by the Ministry of Finance of the Republic Tajikistan. The Ministry of Finance of the Republic Tajikistan has the right  to stop the activity of stock exchanges or suspend licenses if:

·       The Charter and other founding documents, stock exchange regulations and their practice do not comply with the law of the Republic Tajikistan;

·       Members and staff of the Stock Exchange violate the legislation of the Republic of Tajikistan.

Article 34                Members of a stock exchange

                Members of a stock exchange can be bank institutions, joint stock companies and limited-liability companies which:

a) Obtain a license on the right to carry out activities in the securities market as securities market professionals;

b) Appoint officials to conclude the deals who  have the licenses to carry out professional activity in the securities market issued by the Ministry of Finance of the Republic Tajikistan;

c) Have paid the established entry fee to the stock exchange, comply with the rules of the charter and other regulations on stock exchanges regulations and have paid annual membership fees;

d)  Were not instituted criminal proceedings against the ÑLaw on Security Market and Entrepreneur Activity of the Republic of TajikistanÒ.

                Applications of admittance of a member of a stock  exchange are considered at the general meeting of shareholders constituted by other members of the Exchange.

The stock exchange council notifies an applicant about the decision taken in written form within 30 days.

                Rejection of an application is possible only if the applicant doesnÒt meet the requirements prescribed in the present article. The decision to reject an application should be based on good reasons.

Article 35                Suspension of membership in a stock exchange

                Membership in a Stock Exchange is suspended because of:

a) Voluntary exits of members;

b) Exclusion from membership in a stock exchange;

c) Invalidation of a license on the activities of securities market professionals.

Article 36                The general meeting of members of a stock exchange

                The supreme body of the Stock Exchange is the general meeting of its  members.

The general meetingÒs terms of reference cover exclusively:

a) The introduction of amendments in the charter and regulations on the Stock Exchange;

b) The election of the leading entities of the Stock Exchange;

c) The acceptance of the reports of the board of directors of the stock exchange and its secretariat;

d) Approval of the budget of the stock exchange;

e) Approval of the stock exchangeÒs decisions;

f) Approval of decisions on questions which according to the charter are to be decided by the stock exchangeÒs general meeting;

g) Enrollment and expulsion from the Stock Exchange of its members.

                The stock exchangeÒs general meeting is called according to the periods defined in its charter and not less than once a year.

                At the general meeting every stock exchange member has one vote.

                The general meeting takes decisions as a rule by a majority of votes; a three quarter majority at least is required to amend the charter and take decisions on the activities of the stock exchange.

                Elections and the determination of officials at the general meeting are held in a secret ballot.

                If a quorum is not obtained at the general meeting, repeated general  meeting convened within 15 days, may be held to obtain a quorum and consider all the primary questions on the agenda regardless of the number of members present.

Article 37                The board of directors of a Stock exchange

                The board of directors of a stock exchange is the leading entity managing the stock exchange, working out stock exchange regulations, and training the staff of the stock exchange.

                The majority of members of the board of directors of the stock exchange is elected from among the members of the stock exchangeÒs general meeting. Representatives of issuers and investors of securities operating transactions can be elected as members of the stock exchange.

                Members of the board of directors of the stock exchange can be directors of not more than one legal person of the stock exchange or an issuer of securities operating transactions through the stock exchange.

Article 38 Regulations on employees of organizations being members of a stock exchange and stock exchange employees

                Physical person having shares in the authorized fund of a stock exchange cannot be the manager or employee of other stock exchanges.

                Stock exchange employees and members cannot be employed by issuerÒs whose securities are transacted at the stock exchange, and cannot have legal relationships with the issuerÒs employees and have share in the issuerÒs authorized fund.

Article 39                State inspectors of stock exchange

                State inspectors of stock exchange are appointed by the Ministry of Finance of the Republic Tajikistan and control the compliance by stock exchange legislation. They have the right to attend meetings of the stock exchange.

Article 40                Stock exchange representation

                The representative of the board of directors of a stock exchange and his deputy represent the stock exchange before third persons, courts and State Authorities.

Article 41                The liquidation of a stock exchange

                A stock exchange is liquidated if:

a) The general meeting takes a decision to liquidate the stock exchange without assignee;

b) The Ministry of Finance of the Republic Tajikistan suspends the license on the activity of a stock exchange.

                                c) The court takes the decision.

Article 42                The usage of the official designation of a Ñstock exchangeÒ

                The designation of ÓStock ExchangeÔ or the designation in which the expression Ñstock exchangeÒ figures is used only as prescribed by article 33 of the present law.

Chapter V

Additional measures to defend the interests of investors

Article 43 Invalidation of the agreement to sell and purchase securities in public sales

               If while carrying out public sales of securities, the issuer corrects false information on securities issuance containing in the prospectus, the persons having purchased securities can within fifteen days after advertisement of the new information invalidate the agreement if they think that the corrective information in the prospectus unfavorably affects the rate of the security. In case of invalidation of the agreement by the buyer, the issuer is responsible for indemnity of expenditures and losses of investors dealing with the sale or purchase of securities.

                If the actual sale or purchase sum turns out to be under the amount announced by the issuer through its prospectus, the buyers of securities can within fifteen days after expiration of subscription terms liquidate the agreement. The issuer is then obliged to remit received money to the investor without paying interests and compensation for expenditures and losses.

                In case the sale rate exceeds the sum announced through prospectus the issuer is obliged to pay buyers the excess. The order of retribution of money is described within the advertisement on security issuance.

Article 44                Compensation for losses caused by inaccurate information on securities

                While securities are in circulation, the issuer bears responsibility for the compensation of losses to the investors caused by inaccurate information on securities.

Article 45                The keeping of financial resources obtained from the purchase of securities

                The issuer and security market professionals, if they are involved, are obliged to keep money in the bank until they carry out obligations on liabilities prescribed in Article 43 on payments or until it will be obvious that the liabilities no longer exist.

Article 46                Requirements on important shareholders

                Any person acquiring more than 5 % of the total amount of shares, whose purchase is backed up by a vote, must inform the Ministry of Finance of the Republic of Tajikistan, stock exchanges carrying out transactions with the shares, and the issuer of such a purchase within 5 working days after purchase. Analogous requirements are claimed every time the given person acquires an additional 5 % of the issuerÒs shares.

Article 47                Shares belonging to the officials of the issuer

Directors of an enterprise, issuers (including members of the board of directors as well as staff members) having carried out share issuance through public sales, must inform the Ministry of Finance of the Republic Tajikistan, stock exchanges executing transactions with these shares as well as issuers on shares in their possession and all the deals concerning these shares.

Article 48         IssuerÒs operations with its own shares

                Issuers must inform the Ministry of Finance of the Republic of Tajikistan  and  stock exchanges executing with these transactions of all operations concerning  their shares.

Article 49                Proposals to purchase shares to all the shareholders

                Proposals to purchase shares to all shareholders including similar proposal on behalf of the issuer must comply to the regulations defined by the Ministry of Finance of the Republic Tajikistan. Such proposals should offer common prices for all shareholders.

Article 50                The mandatory purchase of shares

                Any person intending to buy more than 50 % of the shares of an issuer having approved the intention by vote is required to make a proposal of purchase of all the shares of the given issuer to all shareholders.

Article 51                Interdiction to use internal professional information

                Persons having access to internal information referring to issuers of securities which can affect the market value of the securities must not use this information for personal interests or diffuse the information to the third persons and advice on security transactions on the basis of this information.

                Any not to be publicly available information about the  issuer and securities issued by him that drives the officials into a primary situation in comparison with other securities market professionals is admitted to be confidential information.

Article 52 Restrictions on operating securities transactions by  persons who have access to internal information

                Physical persons having access to internal information dealing with the issuer, and members of their families are allowed to acquire securities of these issuers only on condition that the securities are kept for at least 6 months. Such people include:

a) Leading employees of the issuers company (including members of its supervision council and administration);

b) Auditing employees carrying out audits of the issuing company.

c) Officials and employees of the Ministry of Finance of the Republic of Tajikistan, state employees engaged in the work of the issuing company, issuing licenses on the carrying out security market activity concerning all types of securities.

Chapter VI

OTHER REGULATIONS

Article 53                Regulation of securities transactions  outside the security market

                Transactions outside the security market are carried out within the framework of the Law of the Republic of Tajikistan.

The President

of the Republic of Tajikistan                                                             Mr. R. Nabiev

Dushanbe, March 10, 1992

No. 552