Legislative news

This Client Update covers amendments to the laws of the Republic of Kazakhstan (“RK”) and various legal developments introduced in June 2015.

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.

THE LAW ON PROTECTIVE, ANTI-DUMPING MEASURES AGAINST THIRD COUNTRIES

On 8 June 2015, The President of the RK signed the Law “On Protective, Anti-Dumping and Compensation Measures against Third Countries”.

The special protective measure applies to the products imported into the customs territory of the Eurasian Economic Union (“EEU”), which quantity and import conditions cause serious damage or threat to cause such damage to the respective economies of the member states.

The Code of the RK “On Customs in the Republic of Kazakhstan” in relation to the import customs duties regulates the calculation, payment (recovery), enrolment, distribution, repayment and offset of special, anti-dumping and compensation duties.

The Law came into force on 18 June 2015.

DRAFT LAWS

NEW CIVIL PROCEDURE CODE

On 25 June 2015, the Senate of the Parliament of the RK approved in the first reading the Draft New Civil Procedure Code (“the Draft CPC”).

The Draft CPC introduces the following developments:

1. Changes to procedural periods

Case review preparation period in the first instance is increased from 7 days to 15 days.

Appeal period is increased from 15 days to one month from the date of judgment.

Appellate review period is increased from one month to two months.

2. Write proceedings list expanded

The Draft CPC proposes to expand the writ proceedings list by adding the following cases:

• on reclamation of the leased asset under lease agreement or laws of the RK;

• on reclamation of the rent payments under rent agreement.

3. The Astana Specialized Court introduced

The specialized court of Astana city will review property and non-property civil cases involving the regional financial center member and civil cases on investor’s investment activity under the rules of the first instance court.

4. Summary proceedings

Summary proceedings will apply to the claims with the amount of no more than KZT 198,000 for individuals and KZT 991,000 for legal entities (based on MCI for 2015) and the cases based on written documents introduced by plaintiff irrespectively of the claim amount. These cases will be reviewed in one month period based on the written evidence and without conducting a hearing.

5. Mediation use expanded

The settlement agreement approved by the court during mediation will be executed the same way as an amicable agreement.

6. Participation procedure

Participation procedure means settlement of the dispute by parties and their advocates. Absence of pre-trial settlement procedure must be a cause for the court to return the case without consideration and allocate court expenses to a party opposing to the dispute amicable settlement.

7. New notary action “executor endorsement” introduced

For the purposes of debt and property recovery from the debtor the notary executes executor endorsement on the document confirming indebtedness. This notarial act will enable participants of civil-law relations to avoid the courts when restoring the infringed rights under uncontested claims.

BUSINESS CODE

On 10 June 2015, the Mazhilis of the Parliament of the RK approved in the first reading the Draft Business Code of the RK (“the Draft BC”).

The Draft BC is a consolidated code of various laws on entrepreneur’s activity. Upon adoption of the Draft ВС the following laws will become null and void:

• The Law of the RK dated 31 March 1998 “On Country and Farm Enterprise”;

• The Law of the RK dated 28 December 1998 “On Protection Measures of the Domestic Market Against Importation”;

• The Law of the RK dated 13 July 1999 “On Anti-Dumping Measures”;

• The Law of the RK 16 July 1999 “On Subsidies and Compensation Measures”;

• The Law of the RK 8 January 2003 “On Investments”;

• The Law of the RK dated 9 November 2004 “On Technical Regulation”;

• The Law of the RK dated 31 January 2006 “On Private Entrepreneurship”;

• The Law of the RK dated 5 July 2008 “On Accreditation in the Area of Conformity Assessment”;

• The Law of the RK dated 25 December 2008 “On Competition”;

• The Law of the RK dated 6 January 2011 “On Government Control and Monitoring in the Republic of Kazakhstan”;

• The Law of the RK dated 9 January 2012 “On Government Support of the Industrial-Innovation Activity”.

The Draft BC introduces the following key developments:

1. Changes into investment activity regulation

For the purposes of investment priority project a newly established legal entity will be a legal entity registered not earlier than 36 months prior to application filing for investment preferences as opposed to 12 months under the current Law “On investments”.

The Draft BC proposes to provide investment preferences not only to investment priority project, but also to legal entities managing the project under the industrial assembly agreement.

The Draft BC expands tax preferences list with VAT exemption for the finished-products under the project on advanced technology products manufacturing in the framework of the industrial assembly agreement.

2 .Government and entrepreneurs cooperation

The Draft BC mandates entrepreneurs and National Chamber of Entrepreneurs to participate in development of the laws on entrepreneurial activity.

As part of the government support the Draft BC proposes to introduce additional support measures for domestic car manufacturers including, but not limited to:

• exemption from import duties and import tax for vehicle components and materials;

• VAT exemption for the finished-products;

• subsidization to utilization fee payment;

• subsidization of the shipping costs of vehicle components and finished products;

• partial compensation of housekeeping expenses;

• partial compensation of the costs connected with issue and support of warranty obligations with respect to wheeled vehicles meeting the Euro-4 and Euro-5 standards.

The Draft BC expands the list of public-private partnerships under the following agreements:

• concession;

• public property trust management;

• rent of public property;

• leasing;

• agreements on production engineering, pilot-line production, pilot test and job-lot production;

• life cycle contract;

• service agreement;

• other agreements meeting the criteria of public private partnership.

3. Entrepreneurs rights defense and remedies

The Draft BC outlines all procedures of non-judicial and pre-court dispute settlement. In addition, the Draft BC sets out general provisions with respect to Entrepreneurs’ Ombudsman.

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.