Instruction No. 243 on Licensing of Credit Organizations

«Registered» by the Ministry of Justice of the Republic of Tajikistan on February 26, 2021, No. 1062 «Approved» by the Resolution of the Board of the National Bank of Tajikistan on January 19, 2021, No. 8 Instruction No. 243 "On Licensing of Credit Organizations"

Instruction No. 243 "On Licensing of Credit Organizations" (hereinafter – the Instruction) is developed in accordance with Part 6, Article 10 of the Law of the Republic of Tajikistan "On Banking Activity", establishes the procedure for obtaining a license to conduct banking activities by banks and non-bank credit organizations (hereinafter – credit organizations), as well as the reissuance and revocation of licenses.

CHAPTER 1. GENERAL PROVISIONS

1. The following basic terms are used in this Instruction:

• license – a special permit for conducting banking activities issued by the National Bank of Tajikistan in the manner established by legislation and this Instruction to credit organizations in written form, without a fixed term and without the right to transfer it to another person;
• founder(s) – an individual or legal entity (resident or non-resident), whose participation in the creation of a credit organization is not prohibited by the legislation of the Republic of Tajikistan;
• founding documents – the founding agreement and charter of a credit organization, which are executed in the prescribed manner;
• the terms "banking holding company", "supervisory powers", "professionally competent and reliable person" and "controlling interest", provided for in this Instruction, are determined in accordance with their explanations given in the Law of the Republic of Tajikistan "On Banking Activity";
• indirect participation – the ability to exert significant influence on decision-making by the management bodies of a credit organization or persons holding controlling interest or supervisory powers in a credit organization, through holding supervisory powers in other legal entities;
• close relatives – wife (husband), children, parents, brothers, sisters, as well as parents, brothers, sisters and children of the wife (husband), parents-in-law, daughters/sons-in-law, brothers/sisters-in-law, nieces/nephews, grandchildren, adopters, adopted children;
• persons holding a controlling interest jointly with one or more persons – the following persons:
• shareholders (participants) of a credit organization who are close relatives to each other;
• shareholders (participants) of a credit organization who are members of the Supervisory Board and/or senior management, including senior managers of such credit organization;
• shareholders (participants) of a credit organization in which one of them (individual or legal entity) holds supervisory powers in another (legal entity);
• a person holding a controlling interest through another person – is a person if it:
• according to an agreement or otherwise acquired shares (stakes) for its own benefit, but on behalf of another person;
• through a representative by power of attorney or other legal representative acquired shares (stakes).

2. Banking activity in the Republic of Tajikistan is carried out based on a license issued by the National Bank of Tajikistan to conduct banking activities (hereinafter – license).
3. Credit organizations are established as commercial entities in the form of a joint-stock company or a limited liability company.
4. Credit organizations are considered created as legal entities from the date of state registration in the manner established by legislation, and acquire the right to conduct banking activities from the moment of obtaining the license.
5. The National Bank of Tajikistan, when reviewing a license application, must reject the name of a credit organization if such name already exists in the Registry of Credit Organizations.

CHAPTER 2. REQUIREMENTS FOR DOCUMENTS SUBMITTED FOR OBTAINING A LICENSE
6. During the preparation of necessary documents for obtaining a license, the founder(s) of a credit organization may appoint an authorized person to submit documents to the National Bank of Tajikistan. The authorized person may be a person appointed by the Chairman or the Chairman of the Board of the credit organization.
7. The founder(s) of a credit organization (hereinafter – the applicant), prior to state registration and obtaining the license, must submit to the National Bank of Tajikistan an application according to Appendix No. 1 of this Instruction, documents and the following information in the state language and obtain a preliminary conclusion from the National Bank of Tajikistan:

1. draft founding documents indicating the amount of declared share capital;
2. a certificate specifying the surname, first name, patronymic, citizenship, permanent place of residence, business or profession, education, and detailed information on the work experience of each member of the supervisory board and senior management according to Appendix No. 2 of this Instruction;
3. information on the non-application by the banking supervision authority of operational corrective measures and impact measures regarding a senior management member who is a foreign citizen;
4. an autobiography of the senior management member, filled out by hand with the date and personally signed;
5. a copy of the document confirming higher economic education for senior management members and higher education for supervisory board members;
6. a copy of the passport of supervisory board members, senior management member, and controlling interest holder;
7. a copy of the work history book for supervisory board members and senior management;
8. a document on the professional competence and reliability of each controlling interest holder of the credit organization, as well as other legal entities in which these holders have supervisory powers and members of the supervisory board and their senior management from the internal affairs body of the Republic of Tajikistan – for residents (at place of registration), from the corresponding authorized body of a foreign state – for non-residents (at place of registration);
9. a certificate specifying the surname, first name, patronymic, citizenship, permanent place of residence, activity or profession of the controlling interest holder, including the ultimate beneficial owner of the controlling interest, confirming their financial status;
10. a certificate on lawful sources of funds invested in the share capital, with attachments of one and/or several of the following confirming documents:

• salary certificate;
• credit organization certificate on deposit or savings of a legal and physical entity;
• copy of the corresponding resolution of a legal entity on dividend distribution or profit allocation to participants;
• copy of the tax declaration on corporate income from entrepreneurial activity;
• copy of the certificate on legalization of funds;
• other documents provided by legislation;

11. a certificate on the property of the founder contributed as a contribution (share) to the share capital, with attachments of one of the following title documents:

• copy of sales, exchange, gift agreements, etc., regarding the property;
• copy of the certificate on legalization of property;
• copy of the registration certificate for property;
• other documents provided by legislation;

12. a copy of financial reports of the legal entity – controlling interest holder for the last three years with an audit opinion;
13. a copy of the state registration certificate and extract from the unified State Registry of Legal Entities and Individual Entrepreneurs for a founder – legal entity;
14. a list of shareholders (participants), ultimate beneficial owners of shares (stakes) and their close relatives, containing the address of location and number of shares (stakes);
15. a written declaration according to Appendix No. 3 of this Instruction from each controlling interest holder, supervisory board member, and senior management member on the professional competence and reliability of the person;
16. a business plan providing for objectives and types of activity, description of organizational structure, risk management (risk governance) and internal control system, including corresponding measures to counter money laundering, terrorism financing and proliferation financing, as well as a forecast of the balance sheet, income and expenses, and cash flow for the next three years;
17. draft risk management policies and procedures, especially those significant risks that a credit organization may face in the course of its activities in accordance with the business plan;
18. for each controlling interest holder, including the ultimate beneficial owner of such controlling interest, a list of legal entities in which they hold capital participation, indicating their share and place of location;
19. information on the location of the head office and any other place in the Republic of Tajikistan or abroad where banking activity is conducted;
20. a document confirming that the banking supervision authority of the country where the foreign (parent) bank or banking holding company is established and operates has no objection to the conduct of banking activity by a credit organization in the Republic of Tajikistan and exercises consolidated banking supervision over the applicant.
21. a certificate on the building of the credit organization and software-technical equipment, as well as automated banking systems, fire protection signaling, and an application for conducting a check of their compliance with the requirements of relevant regulatory documents of the National Bank of Tajikistan;
22. information on the founders' meeting minutes with an attached draft minutes. The draft minutes, considering the decision to establish a credit organization, approve the name, approve the charter, elect members of the supervisory board and other issues;
23. information on the supervisory board minutes with an attached draft minutes. The draft minutes, considering the decision to elect the chairman of the supervisory board, establish the executive body, elect (appoint) senior management members of a credit organization, which falls within the powers of the supervisory board;
24. information on the founding agreement with an attached draft founding agreement. The draft founding agreement must include the following issues:

• objectives for establishing a credit organization;
• obligations of founders regarding the establishment of a credit organization;
• procedure for joint activity on establishing a credit organization;
• data on the organizational-legal form of a credit organization;
• conditions for property transfer and participation in the activity of a credit organization;
• size of the share capital of a credit organization;
• share of each founder in the share capital of a credit organization;
• conditions and procedure for profit distribution among shareholders and compensation for damages;
• liability of founders for failure to fulfill the obligation to make contributions;
• information on the composition and powers of the management bodies of a credit organization and the procedure for their decision-making.
  Note: The founding agreement must be signed by all founders. In addition, the legal address and their banking details are indicated. If a credit organization is established by one founder, the founding agreement is not signed;

25. information on the charter of a credit organization with an attached draft charter. The draft charter must include the following issues:

• full and abbreviated name of a credit organization, indicating its organizational-legal form;
• information on the location of a credit organization;
• names of banking operations and transactions conducted by a credit organization;
• information on the size of the share capital of a credit organization;
• information on the composition and powers of the management bodies of a credit organization;
• procedure for profit distribution by a credit organization;
• rights and obligations of founders;
• information on the procedure for storing documents of a credit organization;
• supervision (audit) of financial and economic activity of a credit organization;
• procedure for reorganization and liquidation of a credit organization;
• information on its branches and representative offices of a credit organization;
• other issues provided by legislation;

26. a document on payment of the fee for reviewing the application.

8. Documents provided for in paragraph 7 of this Instruction, if more than one page, must be bound and numbered.
9. In case of a positive conclusion from the National Bank of Tajikistan, after state registration, a credit organization must provide the following documents to obtain a license:

• approved copy of the founders' meeting and Supervisory Board minutes of a credit organization;
• copy of the state registration certificate and extract from the unified State Registry of Legal Entities and Individual Entrepreneurs;
• copy of the taxpayer identification number of a credit organization;
• copy of the founding agreement, signed by all founders of a credit organization. The signature of a founder that is a legal entity must be sealed.
• certified copy of the charter of a credit organization.

CHAPTER 3. PROCEDURE FOR REVIEWING A LICENSE APPLICATION AND PROCEDURE FOR ISSUING A LICENSE
10. The National Bank of Tajikistan, within three months from the date of receipt of the application, issues a Board Resolution conclusion to the founder(s) of a credit organization on the compliance or non-compliance of the provided documents and information presented according to paragraph 7 of this Instruction with the requirements of legislation and this Instruction.
11. In case of submission by the founder(s) of a credit organization of an incomplete package of documents and information or non-compliance with the requirements of this Instruction, the application review period starts from the date of submission of documents and information in accordance with the requirements of legislation and this Instruction.
12. For the purpose of preparing a conclusion, after reviewing the submitted documents, the National Bank of Tajikistan requests necessary additional information from the applicant, other state bodies and the corresponding foreign supervision authority.
13. In exceptional cases, the National Bank of Tajikistan extends the period provided for in paragraph 10 of this Instruction by up to two months, and notifies the applicant thereof with an indication of the reasons for such delay.
14. If the conclusion is negative, the National Bank of Tajikistan sends a written refusal to issue a license to the applicant, indicating the reasons for refusal. In this case, the fee paid for reviewing a license application is not refunded.
15. In case of a positive conclusion, the National Bank of Tajikistan issues a license to a credit organization within one month from the date of state registration.
16. The National Bank of Tajikistan makes a decision to issue a license to a credit organization taking into account the following grounds:

• legality and accuracy of the provided information and documents;
• satisfactory financial status and activity of founders;
• compliance of owners, persons holding controlling interest, and senior management with requirements for professionally competent and reliable persons;
• compliance of the structure and composition of staff, current financial reserves and capital formation of a credit organization to fulfill obligations with licensing conditions and requirements;
• acceptability of operations specified in the charter;
• realism of the business plan;
• decision of a credit organization to operate at a permanent address in the Republic of Tajikistan;
• implementation of an acceptable level of observation and supervision by a foreign supervision authority on a consolidated basis.

17. After making a decision to issue a license, a credit organization within one month from the date of such decision deposits the minimum share capital and pays the license issuance fee to the corresponding accounts at the National Bank of Tajikistan. In case a credit organization fulfills these conditions, the National Bank of Tajikistan issues it a license within three working days.
18. The decision to issue a license is published by the National Bank of Tajikistan in its publication and on its website.
19. Credit organizations subsequently notify the National Bank of Tajikistan of any changes concerning the documents submitted for obtaining a license.

CHAPTER 4. REISSUANCE OF A LICENSE
20. In case of reorganization (merger, accession, division, spin-off, transformation) of a credit organization, or change of name, a credit organization is obliged to submit an application for reissuance of the license within fifteen days, with attachments of necessary documents related to reorganization or name change.
21. According to legislative requirements, the reorganization of a credit organization is carried out only with prior consent from the National Bank of Tajikistan.
22. In case of reorganization of a credit organization, the following documents are provided to the National Bank of Tajikistan for reissuance of a license:

1. in case of merger of credit organizations, in addition to the documents provided for in paragraph 7 of this Instruction regarding merger, the following documents are provided:

• copy of minutes of the general meeting of founders of reorganizing credit organizations, in which a decision on reorganization in the form of merger and their transfer acts are adopted (one copy of minutes of the general meeting of founders for each merging credit organization);
• copy of minutes of a joint meeting of founders of merging credit organizations;
• copy of transfer acts of merging credit organizations (one copy of transfer act for each merging credit organization);
• copy of a document confirming notification of creditors by a credit organization about the merger;
• balance sheet of credit organizations on the day of making a decision on merger (one copy of balance sheet for each credit organization);
• copy of the agreement on merger of credit organizations;
• charter of a credit organization taking into account the merger;
• certificate from the Antimonopoly Service under the Government of the Republic of Tajikistan on reorganization in the form of merger;
• copy of a certificate on announcement of reorganization in mass media;

2. in case of accession of a credit organization, in addition to the documents provided for in paragraph 7 of this Instruction regarding accession, the following documents are provided:

• copies of minutes of general meetings of founders of reorganizing credit organizations, in which a decision on reorganization in the form of accession and their transfer acts are adopted (one copy of minutes of the general meeting of founders for each acceding credit organization);
• copy of minutes of a joint meeting of founders of acceding credit organizations;
• copy of transfer acts of acceding credit organizations (one copy of transfer act for each credit organization);
• copy of a document confirming notification of creditors by a credit organization about the accession;
• balance sheet of credit organizations on the day of making a decision on accession (one copy of balance sheet for each credit organization);
• copy of the agreement on accession of credit organizations;
• charter of a credit organization taking into account the accession;
• certificate from the Antimonopoly Service under the Government of the Republic of Tajikistan on reorganization in the form of accession;
• copy of a certificate on announcement of reorganization in mass media;

3. in case of division of a credit organization, in addition to the documents provided for in paragraph 7 of this Instruction regarding division, the following documents are provided:\