This Client Update covers amendments to the laws of the Republic of Kazakhstan (“RK”) and various legal developments introduced in October 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.
BUSINESS CODE AND NEW CIVIL PROCEDURE CODE
On 30 and 31 October 2015, the President signed the Business Code (“BC”) and New Civil Procedure Code (“CPC”) respectively.
BC is a codified legal act which unified numerous laws of the RK, in particular, the Laws “On Investments”, “On Competition”, “On Private Enterprise”, “On Government Support of Industrial Innovation Activity” and others. BC introduces changes into regulation of investment activity, public-private partnership and cooperation.
CPC has been significantly revised. There have been a quite a few amendments related to civil trial proceedings, the value of claim, the number of instances. Also a new specialized court on investment matters and new settlement “Participative Procedure” have been introduced.
We would like to kindly propose you to subscribe for our newsletters in order to receive a more detailed analysis of BC and CPC respectively. In addition, such analysis would be posted on our web-site in the nearest future.
BC and CPC will come into force on 1 January 2016.
TRADE ACTIVITY RELATED UPDATES
On 28 October 2015, the President of the RK signed the Law “On Changes and Amendments into Certain Legal Acts on Regulation of Trading Activity”.
This Law introduces a number of changes to the regulation of trading activity, in particular, to that of trading exchange.
• Electronic stock exchange
The Law provides that the trading exchange will start operating only in an electronic form as from 1 January 2017.
• Charter capital
The Law changes the de minimis charter capital of trading exchanges and establishes the following rates:
• 100,000 MCI starting from 1 July 2016;
• 300,000 MCI starting from 1 January 2018.
• Volume of goods sold
The Law increased the volume of goods sold under the double counter auction regime from 15 percent to 30 percent of the quarterly products turnover of the trading exchange.
The Law came into force on 8 November 2015.
On 29 October 2015, the President of the RK signed the Law “On Agricultural Cooperation”.
You may recall from our September Edition that the aforementioned Law combines all types of agricultural cooperatives into one commercial legal entity as follows:
• Agricultural distribution partnership;
• Agricultural processing partnership;
• Agricultural procurement partnership;
• Agricultural service partnership.
Currently these types of agricultural cooperatives are non-commercial organizations carrying out business activity only to the extent of their charter requirements.
The Law came into force on 11 November 2015.
BANKRUPTCY AND REHABILITATION
On 22 October 2015, the Senate of the Parliament of the RK adopted the Draft Law “On Changes and Amendments into Certain Legal Acts of the RK on Bankruptcy and Rehabilitation”.
The Draft Law contemplates the following changes and amendments:
The Draft Law proposes to introduce insolvency settlement procedure. Such procedure provides for a mechanism whereby a company will be prevented from going bankrupt. The procedure implies the following course of actions:
• Penalty charging with respect to all forms of indebtedness will be suspended immediately upon application of the procedure;
• Creditors will be restricted to file complaints to declare the debtor bankrupt;
• Debtor will be granted with 2 months for entering into settlement agreement with creditors (which, among others, provides for penalty and interest charge suspension, removal of restrictions imposed on the debtor’s accounts, etc.).
The Draft Law also proposes a new mechanism aimed at savoring the existing business which has been declared bankrupt. This particular mechanism provides for the following:
• Provided that a debtor found ways to rehabilitate the existing business during the bankruptcy procedure, the debtor must present a rehabilitation plan to be further agreed with the creditors. Bankruptcy procedure terminates upon implementation of the rehabilitation procedure;
• The parties may enter into settlement agreement at any stage of bankruptcy procedure. Settlement agreement may be concluded only subject to consent of all creditors. Settlement agreement signing is conditional upon full repayment of the wages. Once approved by the court, the judgment on recognition of the debtor as bankrupt cannot be enforced;
• Sale of the bankrupt company and change of control. To save a legal entity, the draft law suggests an option to sell the enterprise as a single entity, including the debts. The judgment on recognition of bankruptcy must be terminated.
• Procedural terms reduced
For the purposes of reducing the procedural terms, the Draft Law sets forth the following:
• Assignment of the same judge for court cases on both rehabilitation and bankruptcy procedures;
• Restriction to appeal the judicial acts to the appellate court;
• Immediate enforcement of the judgment on recognition of the debtor as bankrupt and application of insolvency regulating procedure.
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.