CBA approves Corporate Governance Requirements for Investment Companies

The Board of Directors of the Central Bank of Azerbaijan (CBA) has approved the "Corporate Governance Requirements for Investment Companies", Azernews reports.

The President of the CBA, Taleh Kazimov, has signed a new decision regarding this matter.

As per the decision, the Monitoring Board will ensure the implementation of corporate governance in investment companies. The executive body of the company must ensure the effective implementation of strategies and policies approved by the board.

Every investment company must prepare a strategic plan based on its strategic vision and mission statement. The strategic plan will be approved by the Monitoring Board. The strategic plan should cover a period of at least three years, and after the end of each year, it should be reviewed based on the results of the previous year. Changes should be made to the strategic plan when there are changes in the company's business model or significant events and threats affecting the company's operations in the external environment. The strategic plan and any subsequent changes must be submitted to shareholders and the CBA for information within thirty days of their approval.

Furthermore, the Monitoring Board will oversee compliance with legislation and internal rules by the investment company, its structural divisions, and subsidiary companies.

The agenda of the Monitoring Board, Audit Committee, and executive body, as well as proposals submitted by shareholders who own at least five percent of the important share or have voting rights, will be prepared taking this into account.

The Monitoring Board will consist of no fewer than three members and will have a single number of members. The number of members will be determined based on the size and activities of the investment company.

Members of the Monitoring Board are individuals appointed by shareholders or independent third parties for a term of no more than three years. Board members can be re-elected for subsequent terms.

An audit committee must be established in each investment company. Additionally, Compliance, Risk Management, Corporate Governance, or other committees may be established. Committees should have no fewer than three members.

A risk management system tailored to the type of services provided by the investment company, the nature of its activities, and the environment, complexity, and risks it faces must be established. This system should combine three defence lines.

From the date these standards come into force, within thirty days, investment companies must submit the strategic plan approved for the next period to the CBA.

Within the first two years after the enactment of these requirements, the compliance of corporate governance implementation in investment companies with these requirements must be assessed by the investment company every 6 months, and the results must be submitted to the CBA within fifteen business days after the assessment is completed.

The "Corporate Governance Requirements for Investment Companies" will come into force one year later.

The Legal Department of the CBA has been tasked with submitting this decision to the Ministry of Justice for inclusion in the State Register of Legal Acts within three days.