Legal Alert: September-December 2019

5. Moratorium on Inspections and Periodical Control and Monitoring

The President of the RK issued a Decree⁹ by which the central and local executive authorities are restricted from performing inspections and periodical control and monitoring of the small business including micro business from January 1, 2020, through January 1, 2023.

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.In December 2019, the following changes were introduced to the Law on Rehabilitation and Bankruptcy. The competence of the Creditors Committee was significantly expanded. Now it is authorized to select and appoint the temporary administrator as well as the bankruptcy and rehabilitation manager.

6. New Laws Concerning Rehabilitation and Bankruptcy

In December 2019, the following changes were introduced to the Law on Rehabilitation and Bankruptcy¹⁰. The competence of the Creditors Committee was significantly expanded. Now it is authorized to select and appoint the temporary administrator as well as the bankruptcy and rehabilitation manager.

Filing the bankruptcy claim by the creditor was significantly simplified. Now it is sufficient for the creditor to have a court decision that came into force.

Expedited rehabilitation procedure was replaced by the restructuring procedure that allows the debtor to sign agreements on the restructuring of its debts with all the creditors within 2 months from the date when the court decision on restricting came into force.

This law introduced 3 phases of the financial stability of the debtor that will define the legal consequences of filing to the court. Based on this classification the debtor could belong to the first category for the financially stable, second category for bankruptcy risky but still having a possibility of financial recovery, and the third one for financially unstable.

7. Resolutions of the National Bank of the RK

Regulations on Initiating and Canceling Special Regulatory Order, and Activities During Special Regulatory Order (Regulations)¹¹

The special regulatory order will allow the legal entities developing new financial products and services to conduct experiments in the controlled limited environments on their implementing without risks of the violation of the laws in force. It will promote financial market flexibility, development of and access to the financial services, the introduction of the new financial products. The effective term of the special regulatory order will be established by the agreement between the participant and The National Bank and should not exceed 5 years.

These are the criteria for selecting the participants of the special order:

• An applicant shall be a resident financial organization of the RK and/or any other legal entity of the RK conducting financial activity or activity related to concentration of the financial resources and/or payment services for at least 2 years;

• On the date of application, the liabilities of the applicant should not exceed its assets;

• The applicant has not been incurring any losses within the last 2 financial years;

• The founder, an individual, or the CEO or the CEO of the founder, a company, should not have an unexpired criminal record and/or this person should not have been prosecuted for economic crimes;

• The business plan submitted by the applicant should support the objectives of the special regulatory order.

Amendments to the Regulations of Import-Export Control

The Board of the National Bank approved the following amendments¹². Under the export-import contract in foreign currency initiated by a non-resident counterpart, where the resident counterpart shall receive either property or money transfer, the resident counterpart shall apply for the registration before receiving the property (money transfer).

Exporter or importer who acquired the right to seek performance under the contract of the non-resident or accepted the liabilities to the non-residents as a transfer of rights must apply for such registration within 30 days from the date of the assumption of the rights and before performance under the contract.

8. Business Registration Matters

In November 2019, the new Law¹³ was enacted. It provides for the following novelties aimed at simplification of public services to legal entities:

1. No requirement to submit original Extracts from Trade Registers for registration of a foreign legal entity or a foreign legal entity participant (a copy of the document with a notarized translation into Kazakh and Russian will be sufficient);

2. The Law provides the exhaustive list of amendments to the registration data of a legal entity, branch (representative office) when the notification procedure is required:

• change of a legal address;

• change of the CEO (appointment of the CEO, appointment of the acting CEO, appointment of the manager of property and activities of the legal entity, dismissal of the CEO);

• amendments to the foundation documents (transfer of the participation interest in the charter capital to the trust management, increase of the charter capital of business partnerships, change of the main economic activity, change in the composition of shareholders (participants, members) of non-profit organizations, except for political parties).

Generally, the document introduces innovations such as the Electronic Notification procedure and other provisions aimed at the digitalization of legal relations between applicants and the registration authority.

9. Mandatory Social Security

In December 2019, a new Law on Mandatory Social Security was passed¹⁴. This law emphasizes the correlation between the years worked and the amount of social payments, as well as the increase of the average social payments starting from 2020. This document provides the parameters used while calculating the social payments for disability, loss of the main earner, and unemployment.

The social security installments to be paid to the fund by the participants of the mandatory social security insurance system are 3.5% of the base for the calculation of the social payments. Starting from 1 January 2025, this rate will be increased to 5%.

10. Single Operator for Marking and Tracing of Goods

In September 2019, new Rules on Selecting of a Single Operator for Marking and Tracing of Goods¹⁵ came into legal effect (“the Rules”). These Rules establish a tender process through which a Single Operator will be selected. There are three stages in the tender process:

• Documents assessment;

• Testing of the applicant’s data system for marking and tracing of goods;

• Assessment of the data system quality and readiness.

Following the evaluation of tender applications, Kazakhtelecom JSC was declared the winner of the tender in January 2020.

11. New Construction Standards

The following new constructions standards¹⁶ were approved:

1. Construction standards of the RK 4.04-04-2019 “External Electric Lighting of Cities, Towns and Rural Settlements”;

2. Construction standards of the RK 4.04-07-2019 "Electrical Devices";

3. Construction standards of the RK 4.04-08-2019 “Designing the Power Supply of Industrial Facilities”.

12. Healthcare Program

The Government approved the Health Development Program of the RK for 2020-2025¹⁷ following the recommendations of the Organization for Economic Co-operation and Development (OECD). The World Health Organization also gave its recommendations related to public health, control of the non-infectious diseases, emergency first aid and others.

The major focus of this program is to encourage a healthy lifestyle among children, youth and young adults through preventive measures, access to adequate medical help and rehabilitation following the best world practices and Health Strategy for 2016-2030 of the UNICEF.

13. Technical Testing of Medical Devices

Kazakhstan approved the Rules on Technical Testing of Medical Devices¹⁸. These Rules allow applicants to test the devices in the Kazakhstan-based laboratory and/or to make an evaluation based on the existing data provided by the manufacturer. The manufacturer must submit to the laboratory an application along with supporting documents.

Technical testing includes:

1. Analysis of regulatory, technical and operational documentation for a medical device, technical testing programs, as well as protocols of previously conducted testing and the decision to conduct technical testing;

2. Sampling and identification of a medical device;

3. Conducting technical testing following the technical testing program developed by the applicant;

4. Documenting and releasing of the technical testing results to the applicant.

Technical testing duration depends on the intended use and complexity of medical devices and completeness of the documentation submitted by the applicant but shall not exceed 30 calendar days. The results of technical testing conducted by the laboratory are recorded in the form of a protocol.

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.