Regulation on Requirements for Formation, Publication, and Submission of Financial Reporting by Non-Bank Financial Credit Organizations Operating According to Islamic Principles

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Creation date: 2025-09-19

Approved

by the resolution of the Board of Directors

of the National Bank

of the Kyrgyz Republic

of February 14, 2024 No. 2024-P-12/5-4-(NPA)

REGULATION

"On Requirements for the Formation, Publication, and Submission to the National Bank of the Kyrgyz Republic

of Financial Reporting by Non-Bank Financial Credit Organizations Carrying Out Operations in Accordance with Islamic Principles of Banking and Finance"

(Changes and additions approved by the resolution of the Board of Directors of the National Bank of the Kyrgyz Republic of September 12, 2025 No. 2025-P-12/46-1-(NPA))

CHAPTER 1. GENERAL PROVISIONS

This Regulation defines the components, content, and main rules for the publication and submission of financial reporting

by non-bank financial credit organizations and other legal entities under the supervision of the National Bank of the Kyrgyz Republic (hereinafter referred to as the National Bank), carrying out operations in accordance with Islamic principles of banking and finance, including through an "Islamic window".

The norms of this Regulation apply to microfinance companies (hereinafter - MFC), microcredit companies conducting external audits of their activities on an annual basis (hereinafter - MCC), credit unions having a license to attract deposits (deposits) from their participants (hereinafter - CU), and specialized financial credit organizations (hereinafter - SFCO) (hereinafter collectively referred to as NBFCO) carrying out operations in accordance with Islamic principles of banking and finance, including through an "Islamic window".

NBFCOs under temporary administration also prepare and submit financial reporting in accordance with this Regulation.

The norms of this Regulation do not apply to NBFCOs undergoing liquidation and bankruptcy proceedings.

Financial reporting of an NBFCO represents a structured presentation of the financial position and financial results of activities carried out by the NBFCO for the reporting period.

Financial reporting of an NBFCO must objectively present the financial position and financial results of the NBFCO's activities and comply with the standards of the Accounting and Auditing Organization for Islamic Financial Institutions (hereinafter - AAOIFI), and in the absence of certain AAOIFI standards, comply with IFRS standards provided they do not contradict Shariah standards approved by AAOIFI and the legislation of the Kyrgyz Republic.

Financial reporting of an NBFCO having an "Islamic window" is presented in accordance with Chapter 1.3 of this Regulation.

The purpose of financial reporting of an NBFCO is:

• structured presentation of information on the financial position, financial results of activities, assets, liabilities, capital, income, expenses, profits, and losses of the NBFCO, useful for a wide range of users in making economic decisions;

• presentation of information on the results of resource management in the NBFCO;

• presentation of information on the results of activities of the banking group including the NBFCO and their investments in the capital of other legal entities, as well as operations and transactions with these legal entities;

• presentation of information on operations and transactions of participants of the banking group, risks of the banking group including the NBFCO.

Users of financial reports are interested parties, including state bodies, owners of the NBFCO (shareholders/participants), external auditors, investors, creditors, clients, the National Bank, and others.

Financial reporting is prepared in accordance with the accounting policy of the NBFCO.

If a participant of a banking group uses an accounting policy different from the accounting policy adopted for the preparation of consolidated financial reporting of the banking group regarding similar transactions and events under similar conditions, then in the process of preparing the consolidated financial reporting of the banking group participant, it is transformed in accordance with the accounting policy for the banking group.

The management of the NBFCO must ensure the timely and accurate publication and submission of the NBFCO's financial reporting to the National Bank within the established deadlines.

In case of violation by the NBFCO of the procedure and deadlines for submitting financial reporting, submission of unreliable information, as well as publication of reports without complying with established legislative requirements, measures of impact provided for by the legislation of the Kyrgyz Republic are applied to the NBFCO and its management.

CHAPTER 2. GENERAL REQUIREMENTS FOR THE STRUCTURE AND CONTENT OF FINANCIAL REPORTING

For the purposes of this Regulation, the financial reporting of an NBFCO consists of the following components:

• statement of financial position as of the end of the period;

• statement of comprehensive income for the period;

• statement of cash flows for the period;

• statement of changes in equity for the period;

• statement of sources of formation and use of funds of the Qard fund (Appendix 3 to this Regulation);

• Shariah Council report;

• notes to the financial reporting;

• comparative information for the preceding period.

(In the edition of the resolution of the Board of Directors of the National Bank of September 12, 2025 No. 2025-P-12/46-1-(NPA))

When publishing financial reporting, each component of the reporting must be distinguished from other information. The financial reporting must reflect the following information:

• name of the reporting NBFCO and other identification details;

• whether the presented financial reporting of the NBFCO is individual or consolidated reporting;

• the date of completion of the reporting period or the period covered by this set of financial reports or notes;

• the currency of presentation of financial reporting;

• the unit of measurement used when presenting amounts in the financial reporting.

When preparing financial reporting, the management of the NBFCO must assess the ability of the NBFCO to continue its operations. Financial reporting must be prepared on the going concern basis unless the management has neither the intention nor the need to liquidate or significantly reduce the scale of activities of the NBFCO. When the management, in the process of forming an opinion, is aware of material uncertainties related to events or conditions that may cause significant doubt about the ability of the NBFCO to continue its operations in the future, these uncertainties must be disclosed.

If financial reporting is prepared on a basis other than the going concern basis, this fact must be disclosed, as well as the basis on which the reporting was prepared and the reason why the NBFCO is not considered a going concern.

The NBFCO must prepare financial reporting using the accrual method, except for the preparation of the statement of cash flows.

For annual financial reporting, the reporting period for the NBFCO is the period from January 1 to December 31 of the calendar year inclusive.

For an NBFCO newly created before October 1, the first reporting year is considered the period from the day of its state registration to December 31 inclusive.

For an NBFCO created after October 1, the first reporting year is considered the period from the day of its state registration to December 31 of the following year inclusive.

In exceptional cases where the reporting period of the NBFCO is changed, and financial reporting is submitted for a period longer or shorter than one year, the NBFCO must disclose in addition to the period covered by the financial reporting:

• the reason for using a longer or shorter period different from the reporting period;

• the fact that the amounts presented in the financial reporting are not fully comparable.

If the reporting dates of the parent and subsidiary NBFCO do not match, the subsidiary NBFCO prepares additional financial reporting

as of the end of the reporting period of the parent company for consolidation purposes.

Each material class of items must be presented separately in the financial reporting. The NBFCO is obliged to present items separately that differ in nature or purpose, except in cases where items are immaterial. The materiality of items for the purpose of forming financial reporting is determined independently by the NBFCO in the accounting policy of the NBFCO and disclosed in the notes to the financial reporting.

The content and forms of financial reporting are applied consistently from one reporting period to another (principle of consistency).

Classification and disclosure of items in financial reporting must be maintained from period to period, except in cases where:

• due to a significant change in the nature of activities of the NBFCO or accounting policy, another presentation of information or another classification is more appropriate taking into account the criteria for selection and application of accounting policy;

• AAOIFI standards change.

For each indicator of financial reporting, comparative indicators of the previous reporting year must be provided, unless otherwise permitted or required by AAOIFI standards. Comparative information must be included in the narrative and descriptive part when appropriate for understanding the financial reporting for the current period.

If the presentation or classification of items in financial reporting is changed, comparative amounts must be reclassified (unless this is practically infeasible) to ensure comparability with the current period.

In addition, disclosure must be made of the nature, amount of each item or class of items that were reclassified, as well as the reason for the reclassification. If reclassification of comparative amounts is practically impossible, the NBFCO must disclose the reason why the reclassification of the corresponding amounts was not carried out, and the nature of adjustments that would have been made in case of reclassification of amounts.

An NBFCO at the head of a banking group prepares and submits financial reporting to the National Bank on a consolidated basis in accordance with the requirements of regulatory legal acts of the National Bank, taking into account the features provided for by banking legislation and AAOIFI standards regarding the submission of consolidated reports.

Consolidated financial reporting of a banking group must include the financial reporting of all its subsidiaries, dependent, and affiliated companies. At the same time, participants of the banking group are responsible for the accuracy and completeness of data submitted by the parent company.

When preparing consolidated financial reporting of a banking group, the parent company consolidates the financial reporting of the parent and subsidiary organizations line by line by adding similar items of assets, liabilities, capital, income, and expenses, and cash flows.

The following information must be disclosed in consolidated reporting:

1. the nature of relationships between the parent and subsidiary companies, when the parent company does not own (directly or indirectly through subsidiary companies) more than 50% of voting shares (more than 50% of participation share);

2. the reasons why ownership of a share (direct or indirect through subsidiary companies) of more than 50% of voting shares (more than 50% of participation share) of the investment object does not lead to obtaining control over it;

3. if the reporting date or period of financial reporting of the subsidiary company used in the preparation of consolidated financial reporting differs from the reporting date or period of financial reporting of the parent company:

• the reporting date of financial reporting of the subsidiary company;

• the reason why another reporting date or period was used;

4. the content and scale of significant restrictions on the ability of subsidiary companies to transfer funds to the parent company in the form of cash dividends or to repay loans or advances;

5. a table representing the impact of changes in the parent company's participation share in the subsidiary company, not leading to loss of control over it, on the amount of capital attributable to owners of the parent company;

6. in case of loss of control over a subsidiary company, the parent company must disclose information on income and expenses (if any) recognized in accordance with AAOIFI standards, including:

a) the portion of income or expense attributable to recognition at fair value on the date of loss of control over the investment retained in the former subsidiary company;

b) the item(s) in the consolidated statement of comprehensive income, within which the income or expense is recognized (if it is not presented separately in the consolidated statement of comprehensive income).

In order for the consolidated financial reporting of the parent company to present financial information about the banking group as a single economic entity, it is necessary to:

• exclude the book value of the parent company's investment in each subsidiary company and the parent company's share in the capital of each subsidiary company;

• determine the non-controlling interest (or minority interest) in the profit or loss of consolidated subsidiary companies for the reporting period;

• determine the non-controlling interest (or minority interest) in the net assets of consolidated subsidiary companies separately from the parent company's share in them.

Non-controlling interest (or minority interest) in net assets consists of the following:

• the amount of non-controlling interest (or minority interest) on the date of initial business combination;

• non-controlling interest (or minority interest) in changes in capital since the business combination.

When preparing consolidated financial reporting, balances on settlements, transactions, income, and expenses within the banking group must be fully excluded.

Financial reporting of a subsidiary company cannot be excluded from consolidated financial reporting on the grounds that its activities differ from the activities of other participants of the banking group.

Financial reporting of a subsidiary company cannot be excluded from consolidated financial reporting on the grounds that the investors are an organization with venture capital, mutual fund, trust, or similar structure.

Relationships between the parent company and subsidiary companies must be disclosed in financial reporting regardless of whether transactions were carried out between these related parties.

A parent company located in the Kyrgyz Republic is exempt from providing consolidated financial reporting in accordance with this Regulation if it prepares and submits consolidated financial reporting in accordance with AAOIFI standards and the requirements of the National Bank.

Investments in subsidiary (jointly controlled and associated) organizations are disclosed in consolidated financial reporting in accordance with AAOIFI standards.

Financial reporting must be signed by the head, chief accountant of the NBFCO, and sealed with the seal of the NBFCO.

The correctness and accuracy of the reflection of data on the financial state of the banking group in consolidated financial reporting is certified by the chairman of the supervisory board (if any), the executive body, and the chief accountant of the parent company of the banking group.

In the forms of financial reporting, in items for which no operations were carried out by the date of preparation of the reporting, the numerical value "zero" is indicated.

Financial reporting of an NBFCO must be prepared in the national currency of the Kyrgyz Republic, unless otherwise agreed by international treaties ratified in the established order.

Correction of errors in financial reporting is confirmed by the signature of the persons specified in paragraph 33 of this Regulation, and the seal of the NBFCO with the indication of the date and reason for the correction.

CHAPTER 3. PROCEDURE AND DEADLINES FOR SUBMISSION AND PUBLICATION

OF ANNUAL FINANCIAL REPORTING

Publication in mass media (hereinafter - MM) of annual financial reporting of MFC (statement of financial position as of the end of the day of December 31 of the reporting year, statement of comprehensive income for the period, statement of cash flows, statement of changes in equity, and statement of sources of formation and use of funds of the Qard fund, Shariah Council report) together with the audit opinion is carried out in the state language and, if necessary, in the official language after the completion of the audit no later than April 30 of the year following the reporting year.

MFC must place annual financial reporting (statement of financial position as of the end of the day of December 31 of the reporting year, statement of comprehensive income for the period, statement of cash flows, statement of changes in equity, statement of sources of formation and use of funds of the Qard fund, and Shariah Council report) on their information boards in all offices, branches, representative offices, and structural subdivisions.

Financial reporting of MFC, including all components, notes to financial reporting, statement of sources of formation and use of funds of the Qard fund, Shariah Council report, and audit opinion, must be published on the official website (if available).

Additionally, MFC provide annual financial reporting/consolidated financial reporting and audit opinion in electronic form by June 1 of the year following the reporting year to the authorized body for publication via the Public Depository of Financial Reporting, in accordance with the requirements of the legislation of the Kyrgyz Republic.

MCC and CU must publish annual financial reporting together with the audit opinion (if available) either in mass media, or on the official website, or on their information boards in all offices, branches, representative offices, and structural subdivisions in the state language and, if necessary, in the official language after the completion of the audit (in case it is conducted in accordance with the requirements of the legislation of the Kyrgyz Republic) no later than April 30 of the year following the reporting year.

When publishing annual financial reporting in mass media or on an information board, MCC and CU must place the statement of financial position as of the end of the day of December 31 of the reporting year, statement of comprehensive income for the period, statement of cash flows, and statement of changes in equity, statement of sources of formation and use of funds of the Qard fund, and Shariah Council report together with the audit opinion (if available), and when publishing on the official website - annual financial reporting, including all components, notes to financial reporting, statement of sources of formation and use of funds of the Qard fund, Shariah Council report, and audit opinion (if available).

When publishing in mass media, a note must necessarily be included that the annual financial reporting, notes, and explanations to it in full can be reviewed in the head office of the NBFCO, its branches, representative offices, and structural subdivisions located outside the location of the head office.

(In the edition of the resolution of the Board of Directors of the National Bank of September 12, 2025 No. 2025-P-12/46-1-(NPA))

Annual financial reporting of an NBFCO may be published on the portal of an information agency.

A link to the portal of the information agency must be sent by email to the authorized structural subdivision of the National Bank.

The NBFCO selects mass media for publishing forms of financial reporting together with the audit opinion to ensure its wide dissemination and accessibility to users.

Annual financial reporting must be available in NBFCOs operating in accordance with Islamic principles of banking and finance in the state and official languages (head office, branches, representative offices, structural subdivisions located outside the location of the head office) for users in full and must be provided upon their first request for review.

Information about the publication of financial reporting must be provided to the National Bank within 5 (five) working days after publication with an attachment of 1 (one) copy (duplicate) of the publication or with an indication of a link to the official website of the NBFCO (portal of the information agency) on which the annual financial reporting was published, with an attachment of a copy of the publication.

Consolidated financial reporting of a banking group is published and submitted to users in compliance with the requirements of this chapter of this Regulation.

CHAPTER 4. QUARTERLY FINANCIAL REPORTING, PROCEDURE AND DEADLINES FOR SUBMISSION

In addition to publishing annual financial reporting, MFC publish quarterly financial reporting in mass media and submit a message about publication to the authorized structural subdivision of the National Bank.

Quarterly financial reporting consists of:

• statement of financial position as of the end of the current interim reporting period and for a similar period of the financial year preceding the reporting year, and as of the end of the previous reporting financial year;

• statement of comprehensive income for the current period, for a similar period of the previous year, and for the previous financial year immediately preceding the reporting period;

• information on all securities issued by the NBFCO during the reporting quarter;

• a list of all major shareholders and shareholders-holders of a controlling block of shares and their share in the number of shares of the NBFCO according to the forms specified in Appendix 1 (NBFCOs not formed as a joint-stock company indicate a list of participants and their participation shares in the NBFCO);

• information on significant facts affecting the financial and economic activities of the NBFCO that occurred during the reporting quarter;

• other information provided for by regulatory legal acts adopted in accordance with the legislation of the Kyrgyz Republic.

Quarterly financial reporting of MFC must be published on the official website (if available), in mass media, and on their information boards in all offices, branches, representative offices, and structural subdivisions in the state language and, if necessary, in the official language no later than 30 calendar days from the end of the quarter.

When publishing in mass media, a note must necessarily be included that the quarterly financial reporting in full can be reviewed in the head office, branches, representative offices, and structural subdivisions located outside the location of the head office.

Mass media must meet the criteria specified in paragraph 39 of this Regulation.

MCC and CU must publish quarterly financial reporting on the official website (if available) or on information boards in all offices, branches, representative offices, and structural subdivisions no later than 30 calendar days from the end of the quarter.

Information about the publication of quarterly financial reporting must be provided to the National Bank within 5 (five) working days after publication with an attachment of 1 (one) copy (duplicate) of the publication and/or with an indication of a link to the official website (portal of the information agency) on which the financial reporting was published, with an attachment of a copy of the publication.

A link to the official website/portal of the information agency must also be sent by email to the authorized structural subdivision of the National Bank.

Users of financial reporting of the NBFCO must have the opportunity to receive quarterly financial reporting in full as specified in paragraph 44 of this