The Ministry of Economy and Industry prepared a draft law on amendments to the Civil Code, according to which the rights of shareholders in limited liability companies and shareholders in joint stock companies are expanding.
Under the draft law placed in the e-government portal (https://projects.e-gov.az/allservices.aspx), owners of companies will have the right decision to enter into transactions with related parties, which amount to 5 or higher per cent of its assets.
According to the amendments provided to the Civil Code (Article 91-4, 107-12 ), transactions with related parties with the company, the amount of which is 5 percent higher than its assets, are subject to the provision on the discussion with the owners of the auditor's report. The decision is taken by a simple majority vote. In this case the contracting party that is a person associated with the company cannot take part in the vote. In joint-stock companies voting is not attended by members of the Supervisory Board or the Board.
Persons associated with the company must notify the Supervisory Board or Management Board in writing of the nature of their interest in a corporate transaction.
The bill approved by the Ministry of Justice and the State Securities Committee and submitted to the court the public until June 22.
Azerbaijan is widespread use of company assets by its owners on the basis of the lease. In most cases, these contracts are signed without consulting the shareholders at board level of society. One example is the leasing of assets of Bakelektroqaynaq by the 99% owner (LLC Baku Steel Company), A. Ansukhsky adina Balakan Konserv Zavodu by the owner of 85% (LLC Balakans), Baki Ayaqqabi- 2 (JSC Xalq Bank and LLC Azerfon), etc.
Experts believe that the right of approval at a general meeting of transactions with related parties now contracts should apply not only to the amount of the concluded agreement , but also on the amount of assets provided . In some cases, stakeholders use this space, trying to conclude contracts below the value of assets, which leads to abuse. A good example of this is the fact that since 2006 the existing lease between JSC Bakelektroqaynaq and LLC Baku Steel Company. All assets of the company are estimated at 20 million manat provided for rent in the amount of 300,000 manat per year. It does not cover depreciation JSC. The Ministry is currently investigating the tax that fact. - 08B-
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