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AFB Bank's dividend policy

• 1

  The concept of dividend policy

  2.1 Dividend policy is a policy pursued by a bank to use its net profit. The dividend policy is determined by the Supervisory Board, approved by the General Meeting of Shareholders of the Bank and determines the amount of profit to be paid to shareholders in the form of dividends, whether this profit is retained or invested in retained earnings.

  2.2 The choice of dividend policy by the Supervisory Board is very important in terms of capital structure and bank financing.

  2.3 Dividend policy, as part of the bank's overall financial strategy, is to determine the optimal ratio between used and capitalized profits in terms of rising market value of shares. Dividend policy has a significant impact on the bank's position in the capital market, especially on share prices.

  2.4 Dividend on ordinary shares is the part of the Bank's net profit distributed to shareholders in the form of accrued payments per share. Dividend is the cash income of shareholders.

  2.5 Dividends on preferred shares are funds paid to holders of preferred shares, regardless of the results of the Bank's economic activities, as a rule, in the form of a fixed percentage of the nominal value of the share. The Bank may establish special funds at its own expense to ensure the repayment of these funds.

  2.6 Unless otherwise provided in the Bank's Charter, the Bank's obligations to pay annual dividends based on the results of the quarter, half-year or fiscal year arise from the date of the decision to pay them.

  2.7 The decision to pay dividends on any type or category of shares is a right, not an obligation, of the bank. If the value of the Bank's net assets is less than the amount of its authorized capital or will be less as a result of the payment of dividends, the Bank may not declare and pay dividends.

  2.8 Payment of declared dividends to shareholders is the Bank's obligation. The Bank is liable to shareholders for non-fulfillment of this obligation in accordance with the legislation of the Republic of Azerbaijan.

  2.9 If the Bank has any problems with the payment of dividends to shareholders and the solution of this problem is not provided for in the Civil Code of the Republic of Azerbaijan, such problems must be resolved taking into account the interests of shareholders.

• 2

  Final Provisions

  12.1 This Regulation shall be discussed by a majority vote of the members present at the meeting of the Supervisory Board and in absentia and approved by the General Meeting of Shareholders.

  12.2 Additions and amendments to this Regulation shall be discussed by a majority vote of the members present or absent at the meeting of the Supervisory Board, approved by a simple majority of votes of the shareholders present at the General Meeting of Shareholders.

  12.3 If any item or article of this Regulation contradicts the legislation of the Azerbaijan Republic or the Bank's charter, the legislation of the Azerbaijan Republic shall be followed until the relevant amendments are made to that item or article.

• 3

  Liability of the Bank for payment of declared dividends

  11.1 The Bank is obliged to pay dividends on each type of declared shares.

  11.2 If the Bank fails to fulfill its obligations and the shareholders are unable to receive dividends on the declared shares, they may claim their rights in court.

• 4

  Payment of dividends

  10.1 The Bank acts as a tax agent when paying dividends to shareholders. The Bank collects the relevant tax from shareholders entitled to receive dividends in the manner prescribed by the legislation of the Republic of Azerbaijan and transfers it to the budget.

  10.2 Dividends are paid to shareholders after deduction of taxes provided by law.

• 5

  Organization of dividend payment

  9.1 The organization, coordination of dividend payments to shareholders and all related measures are carried out by the relevant structural unit of the bank working with shareholders.

  9.2 Any shareholder may submit to the bank its proposals on the removal or inclusion of his name in the list of persons to be paid dividends, as well as on the procedure for calculating dividends, payment of interest on accrued dividends and the form of dividend payment.

  9.3 The Bank shall publish information on the announcement of dividends, the method and date of payment in the media and on the corporate website of the Bank.

  9.4 The information should reflect the following;

  • Name of the body that decides on the payment of dividends;
  • Date of dividend declaration;
  • List of persons entitled to receive dividends and date of its compilation;
  • Amount of dividend to be paid;
  • Dividend payment form;
  • Dividend payment date;
  • Dividend payment method, if dividend is paid in cash, address where the payment is made;
  • Information on whether the dividend was paid after or before income tax;
  • Dividend payment information (to be announced no later than 15 days from the date of the decision).

  9.5 The Bank may engage an external entity (hereinafter referred to as the payment agent) to arrange and pay the dividends. Involving an agent in the payment of dividends does not release the bank from its obligation to pay dividends to shareholders.

  9.6 In order to attract a payment agent to pay dividends, the bank must enter into an agreement with the agent that sets out the rights and obligations of both parties.

  9.7 The Payment Agent shall be elected by the Chairman of the Management Board.

  9.8 In accordance with paragraph 9.3 of the Bank's Regulations, informs the shareholders about the involvement of the agent in the payment of dividends, replacement or replacement of the agent with a new one.

• 6

  Procedure for calculating dividends on shares

  8.1 No dividends are accrued or paid on the following shares;

  •    Not placed;
  •    Involved in the bank's balance sheet;
  •    Taken to the bank's balance sheet;
  • Shares returned to the Bank due to non-fulfillment of shareholders' obligations;
  • In other cases stipulated by the Legislation of the Azerbaijan Republic.

  8.2 The amount of dividends per shareholder is determined by multiplying the amount of dividends per share by the number of shares owned by the respective shareholder.

  8.3 The amount of dividends accrued for each type and type of stock, the pennies after the comma in the calculation should be rounded to the nearest whole number.

• 7

  Persons entitled to receive dividends

  6.1 For each dividend payment, the Bank's registration authority shall compile a list of shareholders entitled to receive dividends on shares.

  6.2 The list of persons entitled to receive dividends on shares shall be compiled after the decision on payment of dividends has been made, ie after determining which shares will be paid dividends. This list is prepared on the day when the list of persons to participate in the shareholders' meeting is compiled and the decision on payment of dividends is made.

  6.3 The list of shareholders entitled to receive dividends shall include the names of persons registered in the register of shareholders (excluding nominal shareholders) and persons holding shares in favor of nominal shareholders on the date of compiling the list.

  6.4 If there are several owners of a share and the agreement between them does not provide otherwise, then the dividend is distributed in proportion.

• 8

  Restrictions on dividend payments

  5.1 The Bank may not announce the payment of dividends on shares in the following cases;

  • Until the authorized capital of the bank is paid in full;
  • If, in accordance with the legislation of the Republic of Azerbaijan, the bank is declared bankrupt or the payment of dividends causes the bank to go bankrupt;
  • If from the date of the decision on payment of dividends the net assets of the bank are less than its authorized capital or less as a result of payment of dividends, less than the value of the reserve fund and preferential shares provided for in the charter;
  • In other cases stipulated by the Legislation of the Azerbaijan Republic.

  5.2 The Bank may not pay the declared dividends on shares in the following cases;

  • If, in accordance with the legislation of the Republic of Azerbaijan, the bank is declared bankrupt or the payment of dividends causes the bank to go bankrupt;
  •  
  • If on the day of payment of dividends the net assets of the bank are less than its authorized capital, less than the value of the reserve fund and preferential shares provided for in the charter;
  • In other cases stipulated by the Legislation of the Azerbaijan Republic.

  5.3 After the end of the dividend restrictions, the bank pays dividends from the net profit for a certain period.

• 9

  Making a decision on the announcement of dividends

  4.1 The Bank may decide to pay annual dividends on a quarterly, semi-annual or financial year basis.

  4.2 Based on the results of the quarterly, semi-annual or fiscal year, a decision on whether or not to pay annual dividends may be made within three months after the end of the relevant period. is accepted.

  4.3 The decision on distribution of losses / profits in the form of dividends on the results of the financial year is first discussed at the meeting of the Supervisory Board and, after a majority vote, is submitted to the General Meeting of Shareholders.

  4.4 The decision to pay dividends must specify the following;

  • Category and type of shares for which dividends have been declared;
  •    Dividend amount for any share category and type;
  •    Payment term;
  •    Type of payment.

  4.5 If the legislation provides for the deduction of any taxes on dividends, dividends are declared without taking into account the taxes levied on shareholders.

• 10

  Procedure for calculating the amount of dividends

  3.1 Dividend is calculated in manats for each share.

  3.2 To calculate the amount of dividends per share, the net profit allocated for the payment of dividends is divided by the actual number of ordinary and fully paid shares. In this case, the bank's balance sheet does not take into account the shares in its name. When calculating dividends, the amount per share must be the same for each type and par value of shares.

  3.3 The Bank calculates (distributes) dividends on ordinary shares after calculating (distributing) dividends on all types of preferred shares.

  3.4 Dividends on preferred shares that give priority to the calculation (distribution) of dividends shall be distributed before dividends on other preferred shares.

  3.5 The amount of dividends is determined based on the amount of profit at the end of the financial year. If intermediate dividends are paid to shareholders during the year, then this figure is deducted from the amount of dividends declared based on the results of the financial year by the decision of the general meeting of shareholders.

  3.6 In accordance with the decision of the general meeting of shareholders, any percentage of net profit may be determined for the purpose of payment of annual dividends.

• 11

  General provisions

  1.1 This Regulation has been prepared in accordance with the Civil Code of the Republic of Azerbaijan, the Law of the Republic of Azerbaijan “On Banks” and the Charter of AFB Bank OJSC and payment of dividends in “AFB Bank” ASC (hereinafter referred to as “Bank”). determines the conditions and the minimum amount, the sequence of payments, the mechanism for determining the part of the profit to be used to pay dividends.

  1.2 The purpose of this regulation is to inform shareholders and other stakeholders about the Bank's dividend policy.