Resolution of the Board of the National Bank of the Kyrgyz Republic No. 91/5 of 16 December 2010 on Amending Resolution of the Board of the National Bank of the Kyrgyz Republic No. 6/2 of 12 March 2010 "On Approval of the Regulation 'On Requirements for the Formation of Financial Statements of Commercial Banks of the Kyrgyz Republic'"

NATIONAL BANK OF THE KYRGYZ REPUBLIC

RESOLUTION

of 16 December 2010 No. 91/5

On Amending the Resolution of the Board of the National Bank of the Kyrgyz Republic of 12 March 2010 No. 6/2 "On Approval of the Regulation 'On Requirements for the Formation of Financial Statements of Commercial Banks 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. To amend the resolution of the Board of the National Bank of the Kyrgyz Republic of 12 March 2010 No. 6/2 "On Approval of the Regulation 'On Requirements for the Formation of Financial Statements of Commercial Banks of the Kyrgyz Republic'" with the supplements (attached).

2. This resolution enters into force upon the expiry of one month after official publication.

3. After official publication, the Legal Department shall send this resolution to the Ministry of Justice of the Kyrgyz Republic for inclusion in the state register of normative legal acts of the Kyrgyz Republic.

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

5. Control over the execution of this resolution shall be assigned to the Acting Deputy Chairman of the National Bank of the Kyrgyz Republic Myrzaev A.A.

Acting Chairman of the Board of the National Bank of the Kyrgyz Republic	B. Zheenbaieva

	Approved by resolution of the Board of the National Bank of the Kyrgyz Republic of 16 December 2010 No. 91/5

SUPPLEMENTS to the Resolution of the Board of the National Bank of the Kyrgyz Republic of 12 March 2010 No. 6/2 "On Approval of the Regulation 'On Requirements for the Formation of Financial Statements of Commercial Banks of the Kyrgyz Republic'"

To introduce into the Regulation "On Requirements for the Formation of Financial Statements of Commercial Banks of the Kyrgyz Republic", approved by resolution of the Board of the National Bank of the Kyrgyz Republic of 12 March 2010 No. 6/2, the following supplements:

1. In Chapter 1. "General Provisions":

• the first paragraph of point 1, after the words "Special Bank Refinancing Fund (hereinafter referred to as the bank)", shall be supplemented with the words ", the parent company (holding company) of the banking group(*)";

(*) The requirements of this regulation apply to parent companies (holding companies) - residents of the Kyrgyz Republic;

• point 1 shall be supplemented with a second paragraph of the following content:

"The financial statements of the banking group shall be presented on a consolidated basis by the parent company of the banking group (hereinafter the consolidated financial statements of the banking group).";

• the second paragraph shall be considered the third paragraph;

• point 4 shall be supplemented with third and fourth paragraphs of the following content:

"- presentation of the results of the banking group's activities and its investments in the capital of other legal entities, operations and transactions with these legal entities;

• presentation of operations and transactions of banking group participants, risks of the banking group.";

• point 5 shall be supplemented with a second paragraph of the following content:

"If a participant of the banking group uses an accounting policy different from the accounting policy adopted for the preparation of the consolidated financial statements of the banking group in respect of similar operations and events under similar conditions, then in the process of preparing the consolidated financial statements its financial statements shall be appropriately adjusted.".

2. In Chapter 2. "General Requirements for Financial Statements and Their Components":

• the first paragraph of point 10, after the words "to assess the bank's ability", shall be supplemented with the words "/banking group";

• point 13 shall be supplemented with a fourth paragraph of the following content:

"If the reporting dates of the parent and subsidiary company do not coincide, then the subsidiary company for consolidation purposes shall prepare additional financial statements.";

• Chapter 2 shall be supplemented with points 18-1 through 18-10 of the following content:

"18-1. The consolidated financial statements of the banking group shall include the financial statements of all its subsidiary, dependent and related companies. At the same time, participants of the banking group shall be responsible for the reliability and completeness of the data submitted to the parent company.

18-2. When preparing the consolidated financial statements of the banking group, the parent company shall consolidate line by line the financial statements of the parent and subsidiary organizations by adding together similar items of assets, liabilities, capital, income and expenses.

18-3. The consolidated statements shall disclose the following information:

• the nature of the relationship between the parent and subsidiary companies, when the parent company does not own, directly or indirectly, through subsidiary companies, more than 50% of the voting shares;

• the reasons why the ownership of a share, direct or indirect, through subsidiary companies, of more than 50% of the voting shares of the investee does not lead to obtaining control over it;

• if the reporting date or period of the financial statements of the subsidiary company used in preparing the consolidated financial statements differs from the reporting date or period of the financial statements of the parent company:

a) the reporting date of the financial statements of the subsidiary company;

b) the reason why a different reporting date or period was used;

• the content and extent of significant restrictions on the ability of subsidiary companies to transfer funds to the parent company in the form of dividends paid in cash, or to repay loans or advances;

• a table presenting the effect of changes in the parent company's ownership interest in a subsidiary company that do not result in a loss of control over it, on the amount of capital attributable to the owners of the parent company;

• in the event of loss of control over a subsidiary company, the parent company shall disclose information on income and expenses (if any) recognized in accordance with IFRS, including:

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

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

18-4. In order for the consolidated financial statements of the parent company to present financial information about the banking group as a single economic organization, it is necessary:

• to eliminate the carrying amount of the parent company's investments in each subsidiary company and the parent company's share in the capital of each subsidiary company;

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

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

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

b) the non-controlling interest (or minority interest) in changes in capital from the date of the business combination.

18-5. When preparing the consolidated financial statements, balances on settlements, transactions, income and expenses within the banking group shall be fully eliminated.

18-6. The financial statements of a subsidiary company cannot be excluded from the consolidated financial statements on the grounds that its activities differ from the activities of other participants of the banking group.

18-7. The financial statements of a subsidiary company cannot be excluded from the consolidated financial statements on the grounds that the role of investors is performed by a venture capital organization, a mutual fund, a trust or a similar structure.

18-8. The relationships between the parent company and subsidiary companies shall be disclosed in the financial statements without fail, regardless of whether transactions between these related parties were carried out.

18-9. The holding company is exempt from presenting consolidated financial statements if the parent company located in the territory of the Kyrgyz Republic prepares and presents consolidated financial statements for this holding company in accordance with IFRS and the requirements of the National Bank.

18-10. Investments in subsidiary, jointly controlled and associated organizations shall be disclosed in the consolidated financial statements in accordance with IFRS.";

• point 19 shall be supplemented with a second paragraph of the following content:

"The correctness and reliability of the reflection of data on the financial condition of the banking group in the consolidated financial statements shall be certified by the Chairman of the Board of Directors (supervisory body), the Board and the chief accountant of the parent company of the banking group".

3. In Chapter 3. "Procedure and Deadlines for Submission and Publication of Financial Statements":

• Chapter 3 shall be supplemented with point 26-1 of the following content:

"The consolidated financial statements of the banking group shall be published and presented to users subject to compliance with the requirements of this chapter of this Regulation.".

4. In Chapter 4. "Daily, Monthly and Quarterly Financial Statements, Procedure and Deadlines for Their Submission":

• the fourth paragraph of point 27, after the words "in equity", shall be supplemented with the words ", as well as the information contained in point 31-1";

• the first paragraph of point 31, after the words "in equity", shall be supplemented with the words ", as well as the information contained in point 31-1";

• Chapter 4 shall be supplemented with point 31-1 of the following content:

"The quarterly financial report shall also contain:

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

• a list of all major shareholders and shareholders holding a controlling block of shares and their shares in the number of bank shares according to the forms specified in Appendix 2;

• information on material facts affecting the financial and economic activities of the bank that occurred in the reporting quarter;

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

Material facts include an event (fact) that may affect the financial and economic activities of the bank and/or the price of securities issued by the bank, including:

• changes in the list of persons who are members of the bank's management bodies (except for the general meeting of participants);

• changes in the size of participation of persons who are members of the elected management bodies of the bank in the capital of the bank, as well as its subsidiary and dependent companies;

• changes in the list of owners of 5 or more percent of shares (interests), as well as changes in the share of owners of 5 or more percent of shares (interests);

• changes in the list of legal entities in which the bank owns 20 or more percent of the charter capital;

• the appearance in the register of a bank owning more than 5 percent of its voting shares (interests, units);

• one-time transactions of the bank, the size or value of property for which amounts to 10 or more percent of the bank's assets on the date of the transaction;

• a fact (facts) that resulted in a one-time increase or decrease in the value of the bank's assets by more than 10 percent;

• a fact (facts) that resulted in a one-time increase in the bank's net profit or net losses by more than 10 percent;

• reorganization of the bank, its subsidiary and dependent companies;

• accrued and (or) payable (paid) income on the bank's securities;

• decisions of general meetings;

• redemption of the bank's securities;

• other events (facts) provided for by normative legal acts of the authorized state body for regulation of the securities market.";

• Chapter 4 shall be supplemented with point 31-2 of the following content:

"The consolidated financial statements of the banking group shall be published and presented to users in accordance with the norms of point 31 of this Regulation.".

5. In Chapter 10. "Notes to the Financial Statements":

• point 68 shall be supplemented with subpoint g) of the following content:

"g) - information on all securities issued by the bank before the reporting period that are in circulation;

• information on all securities issued by the bank during the reporting year;

• data on the total number of shareholders (participants) of the bank;

• a list of all major shareholders and shareholders holding a controlling block of shares and their shares in the number of bank shares according to the forms specified in Appendix 2;

• data on each official of the bank;

• a brief description of the corporate governance practices of the issuer, including a brief description of the practices that were applied or changed during the reporting period;

• a report of the manager on the activities and financial results of the bank for the reporting period, including any other opinions expressed by members of the board of directors;

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

• Chapter 10 shall be supplemented with point 68-1 of the following content:

"68-1. In the notes to the consolidated financial statements it is also necessary to disclose:

• information on the structure and relationships of the banking group participants according to the scheme specified in Appendix 3;

• information on the members of the Supervisory body of the parent company;

• information on major risks;

• information on the concentration of other risks based on the reports received from participants;

• information by segments and the corresponding segment analysis;

• information on withdrawn participants of the banking group (spin-off of a company from the group);

• information on transactions with "related" parties;

• information on all participants of the banking group (on all subsidiary, dependent and related companies, including the name, percentage of ownership, type or types of activities in which each subsidiary, dependent or related company is involved);

• information on the ownership structure of the parent company, as well as on the ownership structure of subsidiary, dependent and related companies;

• information on all transactions of the owners of the parent company with subsidiary, dependent and related companies, as well as the affiliation of the owners of the parent company with subsidiary, dependent and related companies;

• the information specified in subpoint g) of point 68 of this Regulation.".

• The Regulation shall be supplemented with Appendices 2 and 3 of the following content:

	"Appendix 2 to the Regulation on Requirements for the Formation of Financial Statements of Commercial Banks of the Kyrgyz Republic

LIST

of persons exerting significant (direct or

indirect) influence on decisions taken by

the management bodies of the bank

Full corporate name of the bank: ______

Abbreviated corporate name of the bank: ______

Registration number of the bank: ______

Postal address of the bank: ______

┌─────────────────────────────────────┬─────────────┬─────────────────┐

│ Shareholders (participants) of │ Persons │ Relationships │

│ the bank owning 5 or more percent │ exerting │ between the │

│ (%) of shares │ indirect │ shareholders │

├───┬────────────────┬────────────────┤ (through │ (participants) │

│ No│ Full and │ Belonging │ third par- │ of the bank │

│ │ abbreviated │ to the │ ties) │ and persons │

│ │ corporate │ shareholder │ significant │ exerting │

│ │ name of │ (participant) │ influence │ indirect │

│ │ the legal │ shares │ on deci- │ (through │

│ │ entity with │ (interests) │ sions taken │ third parties) │

│ │ indication │ of the bank │ by the │ significant │

│ │ of legal and │ (percentage │ management │ influence on │

│ │ actual │ of votes to │ bodies of │ decisions │

│ │ addresses / │ the total │ the bank │ taken by the │

│ │ full name of │ number of │ │ management │

│ │ the natural │ voting shares │ │ bodies of │

│ │ person with │ (interests) │ │ the bank │

│ │ indication │ of the bank) │ │ │

│ │ of citizen- │ │ │ │

│ │ ship │ │ │ │

├───┼────────────────┼────────────────┼─────────────┼─────────────────┤

│ 1 │ 2 │ 3 │ 4 │ 5 │

├───┼────────────────┼────────────────┼─────────────┼─────────────────┤

│ │ │ │ │ │

└───┴────────────────┴────────────────┴─────────────┴─────────────────┘

Chairman of the Board full name (signature)

LIST

of persons exerting significant (direct or indirect)

influence on decisions taken by the management bodies

of the holding company of the banking group

Full corporate name of the holding company: ______

Abbreviated corporate name of the holding company: ______

Registration number of the holding company: ______

Postal address of the holding company: ______

┌──────────────────────────────────────┬────────────┬─────────────────┐

│ Shareholders (participants) of the │ Persons │ Relationships │

│ holding company of the banking group,│ exerting │ between the │

│ owning 5 or more percent (%) of │ indirect │ shareholders │

│ shares │ (through │ (participants) │

├───┬────────────────┬─────────────────┤ third par- │ of the holding │

│ No│ Full and │ Belonging │ ties) │ company of the │

│ │ abbreviated │ to the │ significant│ banking group │

│ │ corporate │ shareholder │ influence │ and persons │

│ │ name of │ (participant) │ on deci- │ exerting │

│ │ the legal │ shares │ sions │ indirect │

│ │ entity with │ (interests) │ taken by │ (through │

│ │ indication │ of the holding │ the │ third parties) │

│ │ of legal and │ company of the │ management │ significant │

│ │ actual │ banking group │ bodies of │ influence on │

│ │ addresses / │ (percentage │ the │ decisions │

│ │ full name of │ of votes to │ holding │ taken by the │

│ │ the natural │ the total │ company │ management │

│ │ person with │ number of │ of the │ bodies of the │

│ │ indication │ voting shares │ banking │ holding │

│ │ of citizen- │ (interests) │ group │ company of the │

│ │ ship │ of the holding │ │ banking group │

│ │ │ company of the │ │ │

│ │ │ banking group) │ │ │

├───┼────────────────┼─────────────────┼────────────┼─────────────────┤

│ 1 │ 2 │ 3 │ 4 │ 5 │

├───┼────────────────┼─────────────────┼────────────┼─────────────────┤

│ │ │ │ │ │

└───┴────────────────┴─────────────────┴────────────┴─────────────────┘

Position full name signature

INFORMATION

on subsidiary companies, their shareholders and persons

exerting significant (direct or indirect)

influence on decisions taken by the management bodies

of the subsidiary companies of the banking group

Full corporate name of the holding company: ______

Abbreviated corporate name of the holding company: ______

Registration number of the holding company: ______

Postal address of the holding company: ______

┌─┬──────────┬───────────┬──────────┬────────┬───────────┬────────────┐

│№│ Name of │ Name/full │ Share │ Share │ Name/full │Relationships│

│ │ subsidi- │ name and │ of parti-│ of par-│ name and │ between │

│ │ ary com- │ share │ cipation │ ticipa-│ share │shareholders │

│ │ panies │ of parti- │ of the │ tion │ of parti- │ (partici- │

│ │ of the │ cipation │ holding │ of the │ cipation │ pants) of │

│ │ banking │ of share- │ company │ subsi- │ of share- │ the holding │

│ │ group │ holder │ of the │ diary │ holder │ and subsi- │

│ │ (with │ (partici- │ banking │ company│ (partici- │ diary │

│ │ indica- │ pant) of │ group in │ in the │ pant) of │ companies │

│ │ tion of │ the sub- │ the │ charter│ the │ of the │

│ │ legal │ sidiary │ charter │ capital│ holding │ banking │

│ │ and │ company │ capital │ of the │ company │ group and │

│ │ actual │ of the │ of the │ holding│ in the │ persons │

│ │ addresses│ banking │ subsi- │ company│ charter │ exerting │

│ │ ) │ group │ diary │ │ capital │ indirect │

│ │ │ │ company │ │ of the │ (through │

│ │ │ │ │ │ subsidiary│ third │

│ │ │ │ │ │ company │ parties) │

│ │ │ │ │ │ │ significant │

│ │ │ │ │ │ │ influence │

│ │ │ │ │ │ │ on deci- │

│ │ │ │ │ │ │ sions taken │

│ │ │ │ │ │ │ by the │

│ │ │ │ │ │ │ management │

│ │ │ │ │ │ │ bodies of │

│ │ │ │ │ │ │ the subsi- │

│ │ │ │ │ │ │ diary │

│ │ │ │ │ │ │ company of │

│ │ │ │ │ │ │ the banking │

│ │ │ │ │ │ │ group │

├─┼──────────┼───────────┼──────────┼────────┼───────────┼────────────┤

│1│ 2 │ 3 │ 4 │ 5 │ 6 │ 7 │

├─┼──────────┼───────────┼──────────┼────────┼───────────┼────────────┤

│ │ │ │ │ │ │ │

└─┴──────────┴───────────┴──────────┴────────┴───────────┴────────────┘

Position full name signature

INFORMATION

on dependent companies, their shareholders and persons

exerting significant (direct or indirect)

influence on decisions taken by the management bodies

of the dependent companies of the banking group

Full corporate name of the holding company: ______

Abbreviated corporate name of the holding company: ______

Registration number of the holding company: ______

Postal address of the holding company: ______

┌─┬──────────┬───────────┬──────────┬────────┬───────────┬────────────┐

│№│ Name of │ Name/full │ Share │ Share │ Name/full │Relationships│

│ │ depen- │ name and │ of parti-│ of par-│ name and │ between │

│ │ dent │ share │ cipation │ ticipa-│ share │shareholders │

│ │ companies│ of parti- │ of the │ tion │ of parti- │ (partici- │

│ │ of the │ cipation │ holding │ of the │ cipation │ pants) of │

│ │ banking │ of share- │ company │ depen- │ of share- │ the holding │

│ │ group │ holder │ of the │ dent │ holder │ and depen- │

│ │ (with │ (partici- │ banking │ company│ (partici- │ dent │

│ │ indica- │ pant) of │ group in │ in the │ pant) of │ companies │

│ │ tion of │ the depen-│ the │ charter│ the │ of the │

│ │ legal │ dent │ charter │ capital│ holding │ banking │

│ │ and │ company │ capital │ of the │ company │ group and │

│ │ actual │ of the │ of the │ holding│ in the │ persons │

│ │ addresses│ banking │ depen- │ company│ charter │ exerting │

│ │ ) │ group │ dent │ │ capital │ indirect │

│ │ │ │ company │ │ of the │ (through │

│ │ │ │ │ │ dependent │ third │

│ │ │ │ │ │ company │ parties) │

│ │ │ │ │ │ │ significant │

│ │ │ │ │ │ │ influence │

│ │ │ │ │ │ │ on deci- │

│ │ │ │ │ │ │ sions taken │

│ │ │ │ │ │ │ by the │

│ │ │ │ │ │ │ management │

│ │ │ │ │ │ │ bodies of │

│ │ │ │ │ │ │ the depen- │

│ │ │ │ │ │ │ dent │

│ │ │ │ │ │ │ company of │

│ │ │ │ │ │ │ the banking │

│ │ │ │ │ │ │ group │

├─┼──────────┼───────────┼──────────┼────────┼───────────┼────────────┤

│1│ 2 │ 3 │ 4 │ 5 │ 6 │ 7 │

├─┼──────────┼───────────┼──────────┼────────┼───────────┼────────────┤

│ │ │ │ │ │ │ │

└─┴──────────┴───────────┴──────────┴────────┴───────────┴────────────┘

Position full name signature

│ │ │ │ │ │ │ management │

│ │ │ │ │ │ │ bodies │

│ │ │ │ │ │ │ of a │

│ │ │ │ │ │ │ dependent │

│ │ │ │ │ │ │ company │

│ │ │ │ │ │ │ of a │

│ │ │ │ │ │ │ banking │

│ │ │ │ │ │ │ group │

├─┼──────────┼───────────┼──────────┼────────┼───────────┼────────────┤

│1│ 2 │ 3 │ 4 │ 5 │ 6 │ 7 │

├─┼──────────┼───────────┼──────────┼────────┼───────────┼────────────┤

│ │ │ │ │ │ │ │

└─┴──────────┴───────────┴──────────┴────────┴───────────┴────────────┘

Position Full name signature

	Appendix 3 to the Regulation on Requirements for the Formation of Financial Statements of Commercial Banks of the Kyrgyz Republic

INFORMATION

on the structure of a banking group

---

(name of the head company)

as of ______

┌────────────┐ ┌─ ─ ─ ─ ─ ─ ─┐ ┌─ ── ─ ─ ─ ─┐ ┌─────────────┐

│ Person/persons │ Parent company Person/persons │ Parent company │

│able to │ │ company │ │able to │ │ company │

│ exercise │ or (bank/non-bank) exercise or │(bank/non-bank)│

│significant │ │- non-resident │ │significant │ │- non-resident │

│ influence │ KR influence │ KR │

└───────┬────┘ └─ ─ ─┬─ ─ ─ ─┘ └─ ─ ─ ──┬─ ─┘ └─────┬───────┘

│ │ │ │

v v v v

┌────────────────────┐ ┌─────────────────────────┐

│ Resident bank of KR - │ │ Banking holding │

│ head company │ │ company/authorized │

└────┬────────────┬──┘ │ legal │

│ │ │ entity-resident of KR - │

v v │ head company │

┌──────────────┐ ┌──────────────┐ └─┬────────┬──────────┬───┘

│ Subsidiary/ │ │ Subsidiary/ │ │ │ │

│ dependent │ │ dependent │ v v v

│ company - │ │ company - │ ┌────────┐┌──────────┐┌──────────┐

│ non-resident KR│ │ non-resident KR│ │Subsidiary││Subsidiary/ ││Subsidiary/ │

└────┬───────┬─┘ └─────────┬────┘ │ bank - ││dependent ││dependent │

│ │ │ │resident││company -││company -│

v v v │ KR ││non-resident││ resident │

┌──────────┐┌──────────┐┌──────────┐ │ ││ KR ││ KR │

│Subsidiary/ ││Subsidiary/ ││Subsidiary/ │ └────────┘└──────────┘└──────────┘

│dependent ││dependent ││dependent │

│company -││company -││company -│

│ resident ││non-resident││ resident │

│ KR ││ KR ││ KR │

└──────────┘└──────────┘└──────────┘

Position Full name Signature

______ ______ ______".