This Client Update covers amendments to the laws of the Republic of Kazakhstan (“RK”) introduced in May 2015 and various legal developments.
Novelties in Legislation
The laws covered by the present Client Update relate to both public and private sectors. Some of them may be of interest to you as they may affect your business activity in Kazakhstan.
We would like to draw your attention to the following legal acts:
LAW ON NATURAL MONOPOLIES AND REGULATED MARKETS
On 5 May 2015, the President of the RK signed the Law “On Changes and Amendments into Certain Legislative Acts of the Republic of Kazakhstan on Natural Monopolies and Regulated Markets”.
Pursuant to the Law an economic concentration is recognized as acquisition of voting shares (participating interests) of a market entity, which results in owning more than 50% of shares (participating interests) as opposed to previous 25%. Hence, acquisition of 50% and less shares (participating interests) does not require antimonopoly approval any longer.
Furthermore, the Law now expressly excludes founders from antimonopoly approval requirement when setting up a new legal entity.
The timeline for antimonopoly approval process was reduced from 50 to 30 calendar days from the date of submission of the application.
The Law introduces a number of amendments in regulation of natural monopoly activities. The major novelty of this Law is change of pricing of the natural monopoly entities in electric power sector. The Law requires holding public hearings as part of reviewing price tariffs of a regulated market entity in electric power sector. The authorized agency will approve tariffs only based on the outcome of public hearings.
The Law came into force on 15 May 2015.
INTERNATIONAL FINANCE CENTER “ASTANA” AND RELOCATION OF NATIONAL BANK OF THE RK
On 19 May 2015, the President of the RK signed the Decree “On International Finance Center “Astana” and Relocation of National Bank of the Republic of Kazakhstan to Astana city”.
Pursuant to the Decree the International Finance Center (“Center”) will be established in Astana city. The Government and National Bank of the RK must submit a Draft Law to the Mazhilis of the Parliament by September 2015. This Draft Law would cover the following matters:
• Set up and operation of the Center;
• Launching a financial court comprising foreign judges within the Center;
• 10 years exemption from CIT on income obtained on the Center’s territory and from PIT withheld from the income derived in the form of dividends as well as on income earned by employees of the Center’s members, etc.
Pursuant to the Decree the National Bank must arrange for relocation of the headquarters of the National Bank from Almaty to Astana by 1 January 2017.
PRICE CAP FOR COMMERCIAL GAS WHOLESALE TRADE ON THE DOMESTIC MARKET
On 14 May 2015, the Order of the Ministry of Energy of the RK established price cap for wholesale trade of the commercial gas on the domestic market effective from 1 July 2015 through 30 June 2016.
The following price caps are allocated among the regions:
The Order came into force on 15 May 2015.
On 13 May 2014, the Mazhilis of the Parliament of the RK approved the Draft Law “On Changes and Amendments into Certain Legislative Acts of the Republic of Kazakhstan Aimed at Reinforcing Property Rights, Securing Contractual Commitments and Toughening Liability for Breach of Such Commitments”.
The Draft Law introduces a mandatory electronic state registration of the real property rights for transactions certified by a public notary. Also the Draft Law specifies insignificance and disparity conditions for breach of a pledged commitment, i.e. when the amount of unfulfilled obligation (excluding penalty sanctions) is less than 10 percent of the value of the pledged property as contractually agreed by parties, or the period of late payment is less than three months.
Individuals other than those listed in the statutory list of persons entitled to obtain information about a specific real property object and general data about the real property rights of individuals and legal entities, may obtain such information only subject to the titleholder’s consent.
Information contained in this Client Update is of general nature and cannot be used as legal advice or recommendation. Please seek a lawyer for a specific advice. Please note that Kazakhstan is an emerging economy and its legislation and legal system are in constant development. Should you have any questions or would like to discuss matters addressed in this Client Update, please contact us