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Decree of the President of the Republic of Azerbaijan on measures for improving the management of the State Oil Company of the Republic of Azerbaijan

January 23, 2021, 15:50

 

State Oil Company of the Republic of Azerbaijan has played an important role in the socio-economic development of the country going through a great development since its establishment.

 

As a result of the resolute policy provided by National leader Heydar Aliyev, the successful oil strategy implemented since 1994 has played an exceptional role in the integration of the Republic of Azerbaijan into the international economy and attracting foreign investment, as well as significant changes in the State Oil Company. The "Contract of the Century" signed with the world's leading oil companies for the development of hydrocarbon fields in the Azerbaijani sector of the Caspian Sea was a new stage in the development of the oil and gas industry of the republic. At present, State Oil Company of the Republic of Azerbaijan successfully transforming from oil and gas production, transportation and refining enterprise to a transnational company, which successfully represents the Republic of Azerbaijan in the international projects it participates, and making an important contribution to strengthening the country's economic potential, socio-economic progress and national interests.

Taking into account the processes and uncertainties in the global economy, including foreign oil markets, it has become a major challenge to significantly increase the competitiveness of the State Oil Company of the Republic of Azerbaijan in the international environment, its medium and long term financial stability, the efficiency of management, as well as investment and value of assets by improving its corporate management system and business model.

Guided by paragraph 32 of Article 109 of the Constitution of the Republic of Azerbaijan, to increase the efficiency of operation of the State Oil Company of the Republic of Azerbaijan within the framework of best practices and modern management requirements, to improve its management in accordance with the modern corporate management standards, I decide:

For conducting overall direction and supervision of operation of the State Oil Company of the Republic of Azerbaijan (hereinafter SOCAR), to establish Supervisory Council of SOCAR (hereinafter – the Supervisory Council).

To determine that the Supervisory Council consists of 7 (seven) members, including the Chairman appointed and dismissed by the President of the Republic of Azerbaijan.

To entrust the authorities of general meeting of SOCAR to:

3.1. President of the Republic of Azerbaijan:

3.1.1. dissolution and reorganization of SOCAR;

3.1.2. Appointment and dismissal of members of the Supervisory Council and executive body of SOCAR;

3.2. Azerbaijan Investment Holding in coordination with the President of the Republic of Azerbaijan:

3.2.1. Approval of SOCAR’s charter and structure, assess of amount of its statutory fund;

3.2.2. Approval of SOCAR’s annual and financial reports, sharing its profit and losses;

3.2.3. Approval of SOCAR’s dividend policy;

3.2.4. Making decision on issuing SOCAR’s bonds;

3.2.5. Making decision on concluding a transaction (deal of special significance) in the amount of more than 25 (twenty five) percent of the value of SOCAR's net assets, as well as a transaction with the relevant person with the opinion of an independent auditor, the value of which is 5 (five) percent or more of SOCAR's assets.

To determine the authorities of the Supervisory Council of SOCAR as follows:

4.1. To approve long-term development strategy of SOCAR;

4.2. to approve costs and income of SOCAR and control its implementation;

4.3. To submit to the general meeting the proposals on conclusion of a transaction (deal of special significance) in the amount of more than 25 (twenty five) percent of the value of SOCAR's net assets, as well as a transaction with the relevant person in the amount of 5 (five) percent or more of the value of SOCAR's assets to the general meeting;

4.4. to approve transactions considered to be concluded with relevant persons in the amount of up to 5 (five) percent of the value of SOCAR’s assets;

4.5. to give consent to conclusion of transactions dealing with transferring SOCAR’s assets to the governance and their privatization, taking tnto consideration the requirements of existing legal normative acts;

4.6. to approve policy, internal rules on separate areas of its activity, as well as regulations of its branches and representative offices;

4.7. to give consent to approval of SOCAR’s corporate structure and staff list;

4.8. to establish SOCAR’s Audit Committee and other committees, to approve their regulations, to appoint and dismiss their heads and members;

4.9. to resolve other issues within the competence of the Supervisory Council in accordance with the Civil Code of the Republic of Azerbaijan, SOCAR’s Charter and other legal normative acts of the Republic of Azerbaijan regulating relations in this field, taking into consideration Part 3 of this Decree.

Azerbaijan Investment Holding:

5.1. to approve the corporate management standards related to SOCAR’s management, as well as the system of performance appraisal for members of SOCAR’s managing body within six months;

5.2. with the involvement of an international consulting company and providing compliance of the existing contractual commitments of SOCAR, to ensure diagnostics of the results of SOCAR's activities in the legal, financial, tax and commercial spheres within six months and inform the President of the Republic of Azerbaijan on its  results;

5.3. following the completion of diagnostics considered by Clause 5.2 of this Decree and depending on its results, to prepare new charter and structure of SOCAR within two months and submit to the President of the Republic of Azerbaijan for approval;

5.4. to resolve other issues arising from this Decree.

Cabinet of Ministers of the Republic of Azerbaijan:

6.1. regarding the establishment of the Supervisory Council of SOCAR, to submit to the President of the Republic of Azerbaijan the proposals on compliance of Part 4 and Part 5 of its charter with this Decree within 15 (fifteen) days;

6.2. to prepare and submit to the President of the Republic of Azerbaijan the proposals on bringing the acts of the President of the Republic of Azerbaijan in line with this Decree within three months;

6.3. to provide compliance of normative legal acts of Cabinet of Ministers of the Republic of Azerbaijan with this Decree within three months and to inform the President of the Republic of Azerbaijan;

6.4. to retain control over compliance of normative legal acts of the central executive bodies with this Decree and inform the President of the Republic of Azerbaijan of its implementation within five months;

6.5. to resolve other issues arising from this Decree.

 

Ilham Aliyev

President of the Republic of Azerbaijan

Baku city, January 23, 2021.