Legislative News

This CLIENT UPDATE includes amendments and additions to the legislation of the Republic of Kazakhstan (”RK”) in February 2014.

The legislation outlined in this Client Update concern both public and private sectors. Some of them may be of interest to you as it may affect your business in Kazakhstan in certain way.

This month we would like to draw your attention to the following legal acts:

SMALL AND MEDIUM ENTREPRENEURSHIP

1) The Decree of the President of RK dated 27 February 2014 No. 757 “On cardinal measures for improvement of conditions for business activity in the RK” amends regulations for carrying out inspections of small and medium-sized enterprises.

The Decree requires that central government and local executive bodies terminate inspections of small and medium-sized enterprises during the period from 2 April 2014 to 1 January 2015, except for the following inspections:

• Which is required following the request of a small and medium-sized enterprise to inspect its own activity, third-party inspections related to such request;

• those of financial organizations;

• in the sphere of nuclear power, radioactive materials;

• those of individuals and legal entities occupied in the field of turnover of poisons, arms, military equipment and certain types of weapon, including civil and duty, explosive and pyrotechnic substances and products containing such substances;

• carried out for the purpose of prevention or elimination of actions posing direct threat to the constitutional system, national security, rule of law and public order.

Pursuant to the Decree, scheduled inspections of all types of entrepreneurship will be terminated as from 1 January 2015.

INTERNATIONAL TAXATION

1) The President of RK on 18 February 2014 signed the Law “On ratification of Agreement between Government of Kazakhstan and Socialist Republic of Vietnam on the encouragement and mutual protection of investments”.

You may find more information about this Law in our December edition.

The Law comes into force on 8 April 2014.

REHABILITATION AND BANKRUPTCY

1) The President of RK signed the law «On rehabilitation and bankruptcy» on 7 March 2014.

You may find more information about this Law in our November edition. Briefly, the Law sets forth grounds for applying rehabilitation procedure, accelerated rehabilitation procedure and bankruptcy, as well as for holding the debtor bankrupt. It further sets out the procedure and terms for undertaking rehabilitation and bankruptcy procedures and other matters arisen due to the debtor’s inability to settle all creditors’ claims.

The Law comes into force on 25 March 2014.

DRAFT LAWS

1) On 5 March 2014, Mazhilis (the Lower House) of Parliament of RK approved at the first reading the Draft Law “On Amendments to the Code on Administrative Offences of the RK”.

The Draft Law sets forth decreasing penalty amount for exceeding the established quota for greenhouse gas emissions (“GGE“). Pursuant to amendments, the estimated penalty for excess of the GGE quota will be reduced from ten MCI to five MCI (in 2014, Monthly Calculation Index is 1852 KZT)

It is important to note that the Draft Law suspends running of the clause related to liability for excess of the GGE quota from 1 January 2013 to 1 July 2014.

2) On 12 March 2014, Mazhilis of Parliament of RK approved at the first reading the Draft Law “On changes and amendments into certain legislative acts of the RK related to strengthening the protection of property rights, guaranteeing protection of contractual commitments and toughening liability for v breach of such commitments””.

The Draft Law introduces the obligatory electronic state registration of the real property rights for transactions certified by public notary. Also the Draft Law specifies conditions for insignificance and disparity of breach of a pledged commitment, i.e. the amount of unfulfilled obligation (excluding penalty sanctions) is less than 10 per cent of the value of the pledged property, determined by the parties of the pledge contract, or the period of late payment constitutes less than three months.

In addition to the statutory list of persons who are entitled to obtain information about a specific real property object and general data about the real property rights of individuals and legal entities, the Draft Law proposes adding other persons subject to consent of the title holders.

3) On 5 March 2014, Mazhilis approved at the first reading the Draft Law “On changes and amendments into certain legislative acts on further simplification of administration of justice, reducing bureaucratic procedures”.

The Draft Law suggests limiting time period, during which the plaintiff has the right to change subject of or grounds for a claim, to increase claim amount. At the same time, the Draft Law proposes to extend the trial preparation time from seven working days to fourteen working days. In addition, the Draft Law proposes to simplify procedure for considering motions concerning revival of the missed deadlines.

The Draft Law simplifies the trial proceeding for certain types of cases, i.e. the court will rely upon documentary evidence presented by parties.

In addition, the Draft Law expands the list of disputes, which require mandatory preliminary pre-judicial dispute resolution.

One of the innovations proposed by the Draft Law is introduction of the notice mechanism of the parties in the form of text messaging through the Unified Automated Information Analysis System of Judicial Bodies of RK (UAIAS).

Information contained in this Client Update is of general nature and cannot be used as legal advice or recommendation. Please seek for a specific advice in relation to any questions. Please note that Kazakhstan and Turkmenistan are emerging economies and their legislation and legal systems are in constant development. Should you have any questions or would like to discuss subjects addressed in this Client Update please contact us.