Transparency initiative annual report

2.6.2. Relationship between state-owned enterpirses and Government agencies

The relationships between SOCAR and government agencies are outlined below:

SOCAR implements its activity in accordance with The Constitution of the Republic of Azerbaijan, legislation, the decrees and orders of the President of the Republic of Azerbaijan, the decisions and orders of the Cabinet of Ministers of the Republic of Azerbaijan, other normative-legal acts, international treaties of the Republic of Azerbaijan and international agreements on oil and gas exploration and production areas approved by the laws of the Republic of Azerbaijan and the Regulations. ³⁵
SOCAR continually reports to the appropriate state authorities on its activity. This list includes the Ministry of Ecology and Natural Resources, the Ministry of Emergency Situations, the Ministry of Finance, the Ministry of Taxes, the Ministry of Economy, the Ministry of Labour and Social Protection of Population and the State Statistics Committee of the Republic of Azerbaijan.
SOCAR must submit the reports on forms prepared by the Ministry of Finance and the Ministry of Economy related to the amount of funds received in bank accounts and usage of these funds during the previous month by the 15^th of the following month.
According to Clause 6 of the main Charter (“accounting, reporting and control in a company”), approved by Decree No 844 of the President of the Republic of Azerbaijan and dated 24 January 2003, SOCAR prepares its annual financial statements and submits it to the Ministry of Taxes of the Republic of Azerbaijan in accordance with the Tax Code of Azerbaijan Republic and conducts accounting procedures in accordance with the law of the Republic of Azerbaijan on “Accounting”. The Company also prepares “Official statistics” in accordance with the relevant legislation and submits it to the State Statistical Committee of the Republic of Azerbaijan.
The Company's consolidated financial statements together with the auditor's report is published in the official website no later than 30 June of the subsequent year. SOCAR and its subsidiary companies must report to the Ministry of Finance of the Republic of Azerbaijan when engaged in receiving a state loan or while participating in the projects in order to settle the government debt as well as the projects involving allocation of subsidies, subventions and grants. ³⁶
The process of fund allocation to SOCAR by the government is carried out by the means of share capital and loans allocation. Under the state guarantee the Central Bank acts as a lender, the Azerbaijani banks act as a borrower and SOCAR acts as re-borrower of the loan. The Central Bank of the Republic of Azerbaijan, the Ministry of Finance of the Republic of Azerbaijan, SOCAR and Azerbaijan Banks sign an agreement which is guaranteed by the Ministry of Finance who acted on behalf of the Government.
According to Clause 6 of the main Charter ("accounting, reporting and control in a company"), approved by Decree No 844 of the President of the Republic of Azerbaijan and dated 24 January 2003 any request from the government agencies on relevant reports and information must be prepared and submitted by SOCAR to them. ³⁷