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 2019 related to:
- Property Rights, Arbitration, optimization of courts’ workload and further Humanization of Criminal Legislation
- AIFC Private Equity Fund
- Tenge base rate
1. Property Rights, Arbitration, optimization of courts’ workload and further Humanization of Criminal Legislation
The Law1 signed by the President of the RK on 21 January 2019 in addition to numerous editorial changes, introduces significant amendments to a variety of laws, including:
- LLP Law2 – the net profit of an LLP can now be distributed between its participants (shareholders) based on the quarter-end, half-year-end and year-end financial results;
- Law “On State Registration of Legal Entities”3 – a legal entity can now be denied re-registration by justice authorities in the event such legal entity or its sole participant (shareholder) is dormant;
- Law “On State Registration of Immovable Property Rights” – legal claims over immovable property may be released at the request of interested parties in the following cases: i) if circumstances which served as a basis for registration of a legal claim are no longer available; ii) at the request of an interested party subject to consent of the person who initiated registration of the legal claim.. If after three years from the date of the state registration the legal claim was not released, the state registration will be deemed terminated;
- Law “On banks and banking activities in the RK” – as from 2 February 2019 second-tier banks will be prohibited from charging interest accrued after 180 days overdue on mortgage loans;
- Law “On the National Bank of the RK”- The National Bank is now authorized to cooperate with central banks, regulatory government agengies of other jurisditions, international and other organizations by exchanging confidential information that constitutes a trade secret in the securities market, bank secrecy, insurance secrets or other secrets protected by the law, which are required for monitoring and oversight functions;
- Law “On State Property” – some changes were introduced to the procedure for alienation of the land for public use;
- Law "On Enforcement Proceedings and Enforcement Officers" – some significant changes were introduced, including provisions setting out a procedure for compulsory appearance of debtors, preventing application of levies on various types of cash and assets, and others;
- Law “On Arbitration” – novelties were introduced in relation to the arbitration proceedings.
The new legislation prohibits posting an information about goods (works, services) for the purpose of sale with the price (tariffs, pricing, rates) indicated other than a national currency.
Violation of the foregoing requirement leads to an administrative fine of up to 200 MCI5 for large scale entities.
3. AIFC Fund6
As part of the Joint Action Plan of the Government of the RK and the National Bank of the RK on Establishment and Long-term Development of the Astana International Financial Center (AIFC) a Private Equity Fund will be set up based in the AIFC (the “Fund”).
The English law governed Fund will increase an efficiency of the AIFC and give foreign investors the level of confidence they need.
The Fund will focus on investing in breakthrough projects in non-resource sectors of the economy with a mandatory co-financing obligation.
4. Tenge base rate
The National Bank of Kazakhstan retained the tenge base rate at 9.25% with a fixed interest rate in January 20197.
Any further decisions on the tenge base rate will be made based on dynamics of actual inflation, its forecast values and the extent to which risk scenarios will be implemented.
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.