The importance of directly determining the nominal value of state privatization vouchers by legislation

The fact that the nominal value (price) of state privatization checks is not directly regulated by law and not overwritten has led to the fact that in practice these checks are released to the privatization process with different prices. This situation has led to the formation of different opinions and discussions in legal doctrine and practice regarding the nominal value (price) of state privatization vouchers. The main debated question is whether check owner’s right to equality regulated in Article 25 of the Constitution of the Republic of Azerbaijan and the "property right" regulated in Articles 13 and 29 of the Constitution are being violated or not, if that it is not written directly that on the check that the nominal value (price) of the state privatization checks is directly regulated by the law.

In the article, this question is analyzed from a legal point of view, taking into account issues such as the concept of nominal value in securities and the importance and procedure of determining this value, taking into account the entire legislation of the Republic of Azerbaijan.

Investment securities status of state privatization vouchers.

Taking into account the legal philosophy accepted in the world regarding securities, international theories in this field, legislation of the Republic of Azerbaijan, we can say that any document can be considered a security depends on the presence of 3 main conditions. The first is that the security is drawn up in the form prescribed by the law, the second is that the security confirms an alienable right with economic value (for example, the right of demand, ownership, share right, etc.), and the third is that the document is directly regulated by the law as a security.

As it is known, state privatization checks were issued by the Republic of Azerbaijan, which is the issuer, in the form established by law (condition 1 fulfilled), and confirmed the right to the state privatization share of economic value given to citizens from state property (condition 2 fulfilled), September 29 It is clearly and directly regulated by the Law of the Republic of Azerbaijan dated 1995 (the 3rd condition has been fulfilled). For this reason, we can say that state privatization checks are securities since September 29, 1995.

Even the absence of a written agreement between the issuer of state privatization vouchers and its owner cannot affect the essence of those documents. Thus, none of the three accepted international theories regarding securities ("creation" theory, "contract" theory, and "contract supported by the principle of apparent trust" theory) require any document to be considered a security in writing between the issuer and the owner of the document. does not necessarily require the conclusion of the contract. So, while one of those theories (the "creation" theory) generally does not require the existence of a contract, the other two require the existence of a contractual relationship, not a written contract. It is known that the absence of a written contract between the issuer and the owner of the security, In general, a contract cannot mean that a relationship is not established. Because that contract can be concluded through an oral agreement. State privatization checks are an example of this. That is, there is an oral contractual relationship between the state of the Republic of Azerbaijan, which is the issuer of state privatization checks, and the citizen of the Republic of Azerbaijan, who is its owner. So , state privatization vouchers were issued and presented by the state again with the aim of facilitating the use and circulation of the state privatization share (property share) given to every Azerbaijani citizen from the state property by attaching it to a security as a means of payment. verbal contractual relations were established between the state and the citizen during the sound period. In other words, the state drew up the check and gave it to the citizen, and the citizen accepted the check. This situation confirms the agreement between the parties, in other words, the conclusion of the contract.

As it is known from the above, it is universally accepted that state privatization vouchers are securities, with some unfounded hesitations. It is known that state privatization vouchers, shares, bonds are included in the category of investment securities. Thus, according to Article 997.2 of the Civil Code, "bonds and shares are investment securities. Investment securities are placed in issues and are securities with the same volume and duration of exercise of rights within an issue, regardless of the time of acquisition of securities".

One of the common features of investment securities is that the nominal value of all of them is determined in advance. The value written on the stock is its nominal value, and the value given to the stock in the market is considered the real value.

2. Analysis of the norms contained in the legislation regarding the nominal value (price) of state privatization vouchers.

State privatization vouchers were issued for the first time with the "I State Program" approved by the Law of September 29, 1995 on the approval of the "State Program of the Privatization of State Property in the Republic of Azerbaijan in 1995-1998", signed by our National Leader Heydar Aliyev. It is said in the 3rd section of the "I State Program" called "State privatization share" that

Privatization share is a free share of privatized state property given to every citizen of the Republic of Azerbaijan (paragraph 2).

Privatization share—is given to citizens of the republic to buy shares of privatized state enterprises and investment funds. The share (cheque) can be sold, pledged to banks, bequeathed, bequeathed and alienated in another form provided for by the current legislation of the Republic of Azerbaijan (paragraph 3).

The share of state privatization consists of 4 (four) checks issued by an unnamed (provider) cash securities company. The moment it is issued has the same value as a check included in the privatization share (paragraph 4).

32,000,000 (thirty-two million) state privatization vouchers with a circulation period of three years are issued for circulation (paragraph 5).

The nominal value of each check included in the privatization share is a material equivalent protected from the effects of inflation, it is 1/32,000,000 of the state property of the Republic of Azerbaijan to be privatized with the check (paragraph 6).

Each citizen of the Republic of Azerbaijan, registered before the start of privatization, is given one state privatization share consisting of 4 (four) vouchers. The list of citizens who will receive a share of privatization is drawn up by the relevant local executive authorities together with the local bodies of the Economic and Social Committee. The mechanism for issuing privatization shares (cheques) is determined by the relevant decree of the President of the Republic of Azerbaijan (paragraph 7).

If we consider the 6th paragraph of this program in particular, we will see that the nominal value of state privatization checks, like all securities, has been adjusted indirectly, but not with a direct number. The main reason for not directly adjusting that nominal value is to protect state privatization vouchers from the effects of inflation.

Thus, at the insistence of the Great Leader Heydar Aliyev, taking into account the legal violations experienced in other countries regarding state privatization checks, the nominal value of each check included in the privatization share was regulated by the law as the property equivalent protected from the effects of inflation.

It is stated in that 6th paragraph that "The nominal value of each check included in the privatization share is a material equivalent protected from the effects of inflation and is 1/32,000,000 of the state property of the Republic of Azerbaijan to be privatized with the check."

In addition, paragraph 7 of Section 3 of the same Program states that "Each citizen of the Republic of Azerbaijan registered before the start of privatization is given one state privatization share consisting of 4 (four) vouchers."

Again, in the 4th paragraph of Section 3 of the same Program, it is stated that the State privatization share consists of 4 (four) checks held in an unnamed (provider) cash securities firm. The moment it is issued has the same value as a check included in the privatization share (paragraph 4).

As it is known from here, the nominal (property) value of each of the state privatization vouchers is protected from the influence of inflation and is the same (equal) material equivalent, it is a share (property) of the state property given by law to every citizen of the Republic of Azerbaijan registered until the moment of privatization.

These rules remain valid as they do not contradict the Law of the Republic of Azerbaijan dated May 16, 2000 "On Privatization of State Property".

That is, the nominal (property) value of each of the state privatization vouchers is protected from the effects of inflation and the same material equivalent and the share (ownership right) of the state property given to every citizen of the Republic of Azerbaijan registered by law until the start of privatization "On Privatization of State Property" Azerbaijan The Law of the Republic of May 16, 2000 remains valid as it does not contradict the Law.

However, as it is known from all this, in order to protect against inflation, the nominal value of the state privatization vouchers is not directly regulated by the legislation, but it is possible to determine it by a bit method that can be calculated.

According to the Rules on "Determination of the State Privatization Option Price" approved by Order No. 222 of the State Property Committee of the Republic of Azerbaijan dated 12.12.1997 and registered by the Ministry of Justice of the Republic of Azerbaijan on 19.12.1997 with registration number No. 75 it is possible to calculate this nominal value.

Thus, paragraph 2 of those Rules states that "the price of the state privatization option is determined at the amount of 0.1 percent of the average sale price of state privatization vouchers (shares) formed in voucher auctions, but not less than 2000 manats".

At that time, 1 dollar was 4000 manats and the price of 1 option was at least 50 cents. Therefore, the State Property Committee in 1997 determined that the nominal value of 1 state privatization check is at least 500 United States dollars.

Of course, if we consider that there are 4 vouchers in one state privatization share, we can say that the ownership property equivalent per share is at least 2000 United States dollars.

In other words, after the issuance of state privatization shares (cheques) in 1997, it became clear from the Order of the State Council dated 1997, which determined the price of options for the participation of foreign investors, that the nominal value of each state privatization check issued by the Great Leader to every citizen value is 500 United States dollars, and considering that there are 4 checks per share, the value of one share is 2000 United States dollars.

It was the genius Heydar Aliyev who repeatedly stated that the state privatization shares (cheques) are a free share of the privatized state property (property) given to every citizen of the Republic of Azerbaijan, and he stated that it is unacceptable to limit this property share to a certain period of time. This legal arrangement was reflected in the Law No. 1120 dated 29.09.1995, signed by the Great Leader, and in the I State Program approved by that law.

Nevertheless, the state did not directly regulate that nominal value (price) of privatization checks in the legislation. However, as mentioned above, the nominal value of the state privatization vouchers is a material equivalent protected from the effects of inflation, and the public announcement of its price every year, taking into account inflation, will facilitate the use of that property by citizens and ensure their right to pledge in banks.

3. Importance of directly regulating the nominal value (price) of state privatization checks in the legislation.

The importance of directly regulating the nominal value (price) of state privatization checks in the legislation can be justified by the following:

1) State privatization is already important for the direct regulation of the nominal value (price) of checks by legislation, protection of property rights and equality rights of check holders, and prevention of violation of these rights by various manipulation methods.

2) A government privatization check is a government security, each check is an inflation-protected property equivalent representing 1/32,000,000 of the 65% state property to be privatized. This situation confirms that the owner of each check is given a share of state property (property), and also confirms the possibility of putting that property as collateral in banks. The obligation to provide this is one of the positive obligations of the state by law. However, since the nominal value of state privatization vouchers is not specifically defined by legislation, voucher holders cannot exercise their rights. At the same time, this situation was manipulated by various persons and caused the violation of the constitutional rights of citizens, especially the rights of property and equality.

3) The specific determination of the nominal value of state privatization checks by legislation will allow the obligation of the state as the issuer of the check to be concrete, as well as the right of equality of citizens will be ensured. For example, let's consider that the real selling price of checks in the market today is 100 US dollars. This does not mean that the state should give $100 worth of shares from the enterprise it has privatized (sold) to the person who presented the check today. If we accept this, then if the real selling price of the checks in the market tomorrow is 100,000 US dollars, then for each check (share) bought, the government should give a share of 100,000 US dollars? In order to prevent this problem, it is important to specifically determine the nominal value of State privatization vouchers by legislation.

4) Specific determination of the nominal value of state privatization vouchers by legislation will prevent violation of the equality rights of voucher holders. As it is known, law is based on justice, and it is the Constitution and Laws that define and protect rights. Taking advantage of the fact that the nominal value of state privatization checks is not specifically defined by legislation, some persons manipulated the value of the checks. Despite the fact that everyone has equal rights before the law, a separate electoral system was created with these manipulations. For example, during the privatization of an enterprise carried out in 2010, one state privatization check (share) was calculated as 1400 manats. Thus, 40,000 state privatization vouchers were issued for 14 million 337 thousand state property.

This situation is a violation of the rule of "everyone is equal before the law and the court" regulated by Article 25 of the Constitution, as well as a violation of the property rights of check owners.

As it is known, the state is responsible to every citizen as much as the obligation taken by the law. This also requires that the price (value) of each of the state privatization vouchers issued by the state to citizens should be the same. Determining that value in a different form, sometimes 100 manats, sometimes 2000 manats, and sometimes 1400 manats, is a violation of Article 25 of the Constitution (right to hairdressing) and Articles 13 and 29 of the Constitution (property right).

We believe that this violation of human rights regulated by the Constitution and Laws in our country kills the desire of both citizens and foreign investors to invest in our country.

As it is known, citizens of the country and foreign companies believed in the state's promise by law and bought state privatization vouchers. According to information given in the media at the beginning of 2011, 600,000 checks belonging to such persons remained unused in the national deposit center. An interesting question arises, which foreign and local investors will invest in the country with these state-guaranteed checks after such injustice against them. In order to prevent all these negative situations, it is important that the nominal value of the state privatization vouchers be specifically determined by legislation.

Conclusion: The answers of the legal analysis related to the question posed in the article are mainly expressed in the relevant sections. However, we think it would be useful to mention the following as a summary.

It is universally accepted that state privatization checks are investment securities. Thus, the state privatization checks were issued by the state to facilitate the use and circulation of the state privatization shares given to every citizen of Azerbaijan from the state property by attaching them to securities as a means of payment. However, the most heated discussion in legal doctrine and practice is the consequences and especially legal violations caused by the fact that the nominal value of state privatization checks is not directly regulated in the legislation in the form of the same amount for everyone.

So, taking into account the 4th, 6th and 7th paragraphs of the 3rd section of the I State Program called "State privatization share", we can say that each of the state privatization vouchers has a nominal (property) value protected from the effects of inflation and the same ( equal to) is a share (property) of state property given to every citizen of the Republic of Azerbaijan registered by law until the moment of privatization. However, the amount of that value is not directly regulated in the legislation. This leads to the violation of the property and barbering rights of citizens, the increase in the number of manipulations and other negative situations. Therefore, we believe that the direct regulation of the nominal value (price) of state privatization checks in legislation is useful in terms of protection of property and barbering rights of citizens, prevention of manipulation, concretization of the state's obligations and others.

Summary:

Government privatization checks, stocks and bonds are included in the category of investment securities. Thus, according to Article 997.2 of the Civil Code, “bonds and shares are investment securities. Investment securities are placed by emission and are securities with the same scope and duration of exercise of rights within one emission, regardless of the time of acquisition of securities. One of the common features of investment securities is the predetermined value of all of them. The value written on the stock is its nominal value, and the value given to the stock in the market is taken as the real value.

State privatization checks are accepted by everyone in a sense that they are investment securities. Thus, state privatization checks were issued by the state in order to facilitate the use and circulation of state privatization shares issued to each Azerbaijani citizen as a means of payment. However, the most heated debate in legal doctrine and practice is the consequences of law violations for fact that the nominal value of state privatization cheks is not directly regulated by law in the form of an equal price for each of them at the moment of emission.

Thus, taking into account paragraphs 4, 6 and 7 of Section 3 of the I State Program, entitled "State Privatization Share", we can say that each of the state privatization checks has a nominal (property) value protected from inflation and has the same ( is a share (property) of state property provided by law to each citizen of the Republic of Azerbaijan registered before the start of privatization. However, the amount is not directly regulated by law. This leads to the violation of property and equality rights of citizens, an increase in the number of manipulations and other negative phenomena. Therefore, we believe that the direct regulation of the nominal value (price) of state privatization checks in the legislation is useful in terms of protection of property and equality rights of citizens, prevention of manipulation, specification of state obligations and others.

Mubariz Yolchiyev

Associate Professor of Law Faculty of Baku State University, Member of the Bar Association, lawyer