Legal Alert: February 2019

SIGNUM regularly provides Legislative/Regulatory Alerts to keep Clients informed about important laws and regulatory changes in the Republic of Kazakhstan (“RK”). This Alert includes recent developments introduced in January-February 2019 related to:

1. Notary deposit

2. Sanctioning seizure of money

3. Writ proceedings

4. Out-of-court settlement

5. Arbitration

6. Land

7. Criminal liability

8. Administrative liability

9. Licensing

10. Drafting legal acts

11. Audit

The following changes were introduced to the legislation of the Republic of Kazakhstan with respect to protection of proprietary rights, arbitration , judicial burden optimization and further humanization of criminal law¹:

Notary deposit

A debtor has the right to place indebted money in a deposit in the name of a notary if parties provide for such clause in notarized agreement between a debtor and a creditor. Such novelty allows the debtor an alternative option for debt settlement before the creditor – though the public notary and, among others, relieve oneself from indebtedness before the missing creditor.

Sanctioning a seizure of money

As from 24 April 2019, sanctioning a seizure of money of individuals and legal entities held in bank accounts will be granted by the prosecutor instead of courts in cases as provided under criminal procedure and civil procedure laws.

Writ proceedings

The list of claims brought under court order procedure was expanded. Such claims include collecting customs, tax and other payments from individuals, mandatory pension contributions, performance of dispute settlement by way of mediation under agreements related to commercial, investment activities, protection of intellectual property rights as part of pre-trial settlement.

Out-of-court settlement

The judge returns a claim if a claimant in addition to pre-trial settlement did not follow an out-of-court settlement procedure provided for by an agreement between parties and such procedure is still available.

Arbitration

• A court refuses to issue an enforcement order under arbitral award, if a party against which the arbitral award was made submits to the court an evidence that the arbitration agreement is invalid according to the laws of the state to which the parties have subordinated it, and in the absence of such indication according to the law of the country where the decision was made (previously the applicable law was law of the Republic of Kazakhstan).
  

• A court has the right, upon request of one of the parties, to suspend for a certain period proceeding on cancellation of an arbitral award in order to resume the arbitral proceedings or take other measures to eliminate the grounds for cancellation of the award. If the arbitrators make a new award, the party has a right to apply for cancellation of the award in part related to the new award or changes in the initial award within a period established by the court without submitting a claim.
  

• Arbitration can be started and decision on it can be made prior to determination of jurisdiction of the arbitral tribunal.
  

• Powers of the Arbitration Chamber now include the issue of expert opinions as recommendations on specific matters issues of arbitration.
  

• During the arbitral proceedings, a party may change or increase its claim or objections against claim.
  

• A court does not reconsider an arbitration award on the merits when considering a petition for cancellation of the award.
  

Regulation of arbitration in terms of applicable law, possibility of commencing a trial before determining jurisdiction, as well as changing and supplementing claims or objections have significantly improved. These changes can significantly affect the motivation of parties to include arbitration clause in their agreements.

Land

It was clarified that a compulsory alienation of land for state needs may be in respect of land plots that are in private ownership or were granted for use by the state.

Criminal liability

Criminal liability for employees of companies was reduced if damage is voluntary recovered. Such changes could create favorable conditions for attracting qualified workers to managerial positions.

• For a criminal offense a foreigner may be expelled from the Republic of Kazakhstan as main punishment.
  

• If a director of a company or individual entrepreneur does not repatriate money from abroad in large scale when it is mandatory for the first time and eventually repatriated, then such person is released from criminal liability.
  

• An accountant is exempted from criminal liability for evading documenting of information in accounting, entering false data about company's business and financial activities in accounting documentation, as well as for destroying accounting documentation if these acts were accountant committed for the first time and the damage is voluntarily recovered.
  

• A bank employee is exempted from criminal liability for using bank funds, issuing a deliberately irrevocable loan, making knowingly unprofitable transactions for the bank, knowingly incorrect or untimely transfer of money that caused major damage if these acts were committed for the first time and the damage was voluntarily recovered.
  

• If tax debt is voluntary paid, a company and/or its responsible person is exempted from criminal liability. Previously, persons for such a criminal offense were exempted from liability only if the act was committed for the first time.
  

Administration liability

Administrative fine for issuing a fictitious invoice has increased. Previously the fine was up to 200% of the VAT amount, and now is up to 300% of VAT amount.

Licensing

There is no need now to obtain a license for property valuation and a license for intellectual property assets valuation value of intangible assets.

Drafting legal acts

Drafting legal acts in the field of business requires the participation of representatives of the National Chamber of Entrepreneurs of the Republic of Kazakhstan (“NCE RK”) and accredited associations of private entrepreneurship entities.

Participation of the NCE RK in drafting regulatory legal acts in the field of business will have a positive effect on entrepreneurship in the Republic of Kazakhstan due to constant contact of the chamber with the business community of Kazakhstan.

Audit²

Currently there is no requirement to certify an audit report with signature, personal stamp of an auditor and a stamp of an audit organization.

Information contained in this Client Update is of general nature and cannot be used as legal advice or recommendation. Please note that Kazakhstan is an emerging economy, and its legislation and legal system are in constant development. Should you have any questions or want to discuss matters addressed in this Client Update, please contact us.

1. Law of the RK No. 217-VI dated 21 January 2019 “On Amendments to Certain Legislative Acts of the Republic of Kazakhstan on Strengthening the protection of Property Rights, Arbitration, optimization of courts’ workload and further humanization of Criminal Legislation”. Entered into force on 2 February 2019.
2. Decree of the Minister of Finance of the Republic of Kazakhstan dated 16January 2019 No. 21 On Amending the Decree of the Minister of Finance of the Republic of Kazakhstan dated 30 April 2015 No. 293 “On Approval of the Rules for Tax Audit and Providing an Tax Audit Report”. Entered into force on 7 February 2019.