Questions and Answers

Question: Do you immediately inform CSD participants if a third party levies any attachment upon or takes any other measures of compulsory execution in respect to securities held on their clients’ behalf or of any events which affect these securities?

Answer: Attachment or other measures of compulsory execution cannot be applied to securities held on a clients’ behalf on the condition that such securities are held separately from proprietary assets. This is specifically stipulated under paragraph 12 of Article 238 of the Tax Code of Georgia and paragraph 4 of Article 21 of the Law of Georgia on Enforcement Proceedings. In case the attachment of other measures of compulsory execution are applied to a participant’s account, the legislation envisages different approaches to the execution of attachments and/or collection orders issued by different state authorities:

• In case the measures (including collection orders) are applied with the objective of execution of tax obligations or contractual obligations, the legislation does not prohibit notifying the participant about those measures.

• In case the attachment or other measure of compulsory execution are applied as part of the investigation of a criminal case, the law prohibits notifying the participant of such measures. The only exception to the prohibition would be the case where the participant attempts to conduct an operation which falls under the restriction; in this situation, the bank is authorized to notify the participant about the reasons for such prohibition.

Question: Is the NBG entitled to entrust a third party with the effective safe custody of securities or the transfer of securities to another country without the consent of the holder?

Answer: No. Under the applicable laws and other normative acts, it is the NBG’s responsibility to act as depositary for securities issued by the NBG itself or the Government of Georgia, and it is authorized to act upon the instructions of the holders.

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