Resolution of the Board of the National Bank of the Kyrgyz Republic No. 8/2 of February 15, 2012 on Amendments and Additions to Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic

NATIONAL BANK OF THE KYRGYZ REPUBLIC

RESOLUTION

of February 15, 2012 No. 8/2

On Amendments and Additions to Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic

In accordance with Articles 7 and 43 of the Law of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic", the Board of the National Bank of the Kyrgyz Republic

RESOLVES:

1. Approve amendments to the Regulation "On Corporate Governance in Commercial Banks of the Kyrgyz Republic", approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 26, 2008 No. 13/4, registered in the Ministry of Justice of the Kyrgyz Republic on April 22, 2008, registration number 25-08 (attached).

2. Approve an amendment and addition to the Regulation on minimum requirements for credit risk management in commercial banks and other financial-credit institutions licensed by the National Bank of the Kyrgyz Republic, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of June 30, 2010 No. 52/4 (attached).

3. Approve an addition to the Basic Requirements for the Audit Committee, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of November 20, 2003 No. 32/7, registered in the Ministry of Justice of the Kyrgyz Republic on December 29, 2003, registration number 126-03 (attached).

4. Approve an addition to the Regulation on banks' operations with securities, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of September 14, 2011 No. 52/4 (attached).

5. Publish this Resolution on the official website of the National Bank of the Kyrgyz Republic.

6. After official publication, send this Resolution to the Ministry of Justice of the Kyrgyz Republic for inclusion in the State Register of Regulatory Legal Acts of the Kyrgyz Republic.

7. This Resolution enters into force one month after official publication.

8. The Supervision and Licensing Methodology Department shall bring this Resolution to the attention of commercial banks.

9. Control over the execution of this Resolution is entrusted to the Deputy Chairman of the National Bank of the Kyrgyz Republic, Z.L. Chokoev.

Chairman	Z. Asankhozhayeva

	Approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of February 15, 2012 No. 8/2

AMENDMENTS AND ADDITIONS to certain regulatory legal acts of the National Bank of the Kyrgyz Republic

I. Make the following amendments to the Regulation "On Corporate Governance in Commercial Banks of the Kyrgyz Republic", approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 26, 2008 No. 13/4 "On the Regulation 'On Corporate Governance in Commercial Banks of the Kyrgyz Republic'", registered in the Ministry of Justice of the Kyrgyz Republic on April 22, 2008, registration number 25-08:

1. Rephrase the fourth paragraph of point 3.9 as follows:

"Internal bank documents regulating the activities of all committees established in the bank must define:

• the purpose of the creation and activities of the committee;

• the powers of the committee;

• the procedure for holding meetings;

• the reporting procedure;

• the responsibility of each committee member for the decisions made and signed by them.

Furthermore, the following requirements must be established for each committee member participating in the meeting and making decisions:

• to be informed about the essence of the issue under discussion;

• to understand the impact of their decisions on the bank's activities;

• to assess the possibility of arising risks and consequences of their decisions.

The opinion of a committee member who has comments and proposals on the issue under discussion and disagrees with the adopted decision must be expressed during voting and reflected in the minutes. The minutes must be signed by all committee members present at the meeting and the committee secretary. Committee members who did not participate in the meeting must be familiarized with the minutes and adopted decisions under signature."

2. Rephrase point 3.10 as follows:

"3.10. The high level of responsibility and broad range of powers of the Board of Directors implies that members of the Board of Directors possess sufficient knowledge of the main types of bank activities and the ability to express an opinion independent of the opinions of the bank's management bodies and officials. When making decisions, each member of the Board of Directors must be objective and guided by the interests of the bank, not personal interests or the interests of individual shareholders and bank officials. The opinion of a Board of Directors member who has comments and proposals on the issue under discussion and disagrees with the adopted decision must be expressed during voting and reflected in the minutes. The minutes and verbatim record of the Board of Directors meeting must be signed by the presiding officer and the Board secretary, after approval (verification) by the members of the Board of Directors present at the meeting. Members of the Board of Directors who did not participate in the meeting must be familiarized with the minutes and adopted decisions under signature."

3. Rephrase point 4.5 as follows:

"4.5. In carrying out their activities, members of the Management should be objective and guided, primarily, by the interests of the bank, not personal interests or the interests of individual shareholders and bank officials, making every effort to ensure healthy and safe banking practices. The opinion of a Management member who has comments and proposals on the issue under discussion and disagrees with the adopted decision must be expressed during voting and reflected in the minutes. The minutes and verbatim record of the Management meeting must be signed by the presiding officer and the bank Management secretary, after approval (verification) by the bank Management members present at the meeting. Management members who did not participate in the meeting must be familiarized with the minutes and adopted decisions under signature."

II. Make the following amendment and addition to the Regulation on minimum requirements for credit risk management in commercial banks and other financial-credit institutions licensed by the National Bank of the Kyrgyz Republic, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of June 30, 2010 No. 52/4 "On certain regulatory legal acts of the National Bank of the Kyrgyz Republic":

1. Supplement paragraph 16 of Chapter 3 "Bank Credit Committee" with the following paragraph:

"- the responsibility of each member of the Credit Committee for the decisions made and signed by them."

2. Supplement paragraph 17 of Chapter 3 "Bank Credit Committee" with the following paragraphs:

"Each committee member participating in making a decision must:

• be informed about the essence of the issue under discussion;

• understand the impact of their decisions on the bank's activities;

• assess the possibility of arising risks and consequences of their decisions.

The opinion of a committee member who has comments and proposals on the issue under discussion and disagrees with the adopted decision must be expressed during voting and reflected in the minutes. The minutes must be signed by all committee members present at the meeting and the committee secretary. Committee members who did not participate in the meeting must be familiarized with the minutes and adopted decisions under signature."

III. Make the following addition to the Basic Requirements for the Audit Committee, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of November 20, 2003 No. 32/7 "On Basic Requirements for the Audit Committee", registered in the Ministry of Justice on December 29, 2003, registration number 126-03:

Supplement paragraph 3.4 of Chapter 3 "Committee Organization" with the following paragraphs:

"Each committee member participating in making a decision must:

• be informed about the essence of the issue under discussion and independent in judgment (capable of acting independently, free from anyone's influence on the results of their conclusions, findings, and under conditions excluding any external influence on the expression of opinion);

• understand the impact of their decisions on the bank's activities;

• assess the possibility of arising risks and consequences of their decisions.

The opinion of a committee member who has comments and proposals on the issue under discussion and disagrees with the adopted decision must be expressed during voting and reflected in the minutes. The minutes must be signed by all committee members present at the meeting and the committee secretary. Committee members who did not participate in the meeting must be familiarized with the minutes and adopted decisions under signature."

IV. Make the following addition to the Regulation on banks' operations with securities, approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of September 14, 2011 No. 52/4 "On certain regulatory legal acts of the National Bank of the Kyrgyz Republic":

Supplement sub-paragraph b) of paragraph 11 of Chapter 3 "Investment Policy" with the following paragraphs:

"In this regard, each member of the authorized committee participating in making a decision must:

• be informed about the essence of the issue under discussion;

• understand the impact of their decisions on the bank's activities;

• assess the possibility of arising risks and consequences of their decisions.

The opinion of a committee member who has comments and proposals on the issue under discussion and disagrees with the adopted decision must be expressed during voting and reflected in the minutes. The minutes must be signed by all committee members present at the meeting and the committee secretary. Committee members who did not participate in the meeting must be familiarized with the minutes and adopted decisions under signature;"