Legal Alert: December 2018 | SIGNUM Law Firm

Published
February 15, 2019

SIGNUM regularly provides Legislative/Regulatory Alerts to keep Clients informed about important laws or regulatory changes in the Republic of Kazakhstan (“RK”). This Alert includes recent developments introduced in December 2018 related to:

Intellectual Property
Securities
Banks Insolvency
Tax Matters
Subsoil Use
Corporate Matters
Employment Matters
Construction
Base Rate of the NB RK

1. Intellectual Property

The Government of the RK¹ approved the ‘Agreement on Formation and Development of the Intellectual Property Market of CIS Member States’. The member states will aim at developing the CIS intellectual property market.

2. Securities

The National Bank of the RK² introduced the notion of ‘international identification number (ISIN code)’ as from January 1, 2019. International identification number is an alphanumerical code assigned by the central depositary to securities and other financial instruments for identification purposes as well as to systematize the records.

3. Banks Insolvency

1) The National Bank of the RK³ approved types of non-arms’ length transactions, which may serve as a basis for determining certain banks as insolvent as listed below:

Transactions (except for those carried out as part of implementation of government-run programs) which comply with one of the following conditions:
The bank loan amount does not conform to the financial standing and (or) revenue of the borrower (co-borrowers if there is any) and to the value of the collateral
Deferred payment of remuneration and (or) debt repayment on bank operations exceeds 1 year
Interest rate is much lower than market interest rates of similar bank transactions
Provision of bank guarantees or surety to secure obligations of the debtor for the amount which does not conform to the financial standing and (or) revenue of the debtor or without a right of recourse against the debtor
Deals which satisfy claims of major shareholders and (or) managers of a bank
Deals which entitle individuals and legal entities to fully or partially refuse to fulfil financial obligations before the bank.

2) The National Bank of the RK⁴ approved the following restructuring procedure:

Before deciding on compulsory restructuring, the authorized body assesses financial and property standings of an insolvent bank.
The authorized body publishes an announcement on a specific measure for such bank within 5 business days from the date of the decision.
The authorized body develops a Plan on Compulsory Debt Restructuring (‘Plan’) and sends it to the insolvent bank or a its temporary administration.
Debts of an insolvent bank before creditors of the same ranking must be restructured among such creditors in proportion to the amount of debts being restructured. Upon receiving the Plan an insolvent bank or its temporary administration appoints a person responsible for implementation of the Plan.
Upon implementation of the Plan the insolvent bank reports to the authorized body accordingly.

4. Tax Matters

The Ministry of Finance of the RK⁵ approved the list of large taxpayers (please refer to this link)

5. Subsoil Use

1) The Ministry of Energy of the RK⁶ approved the procedure for organizing tenders for liquefied petroleum gas through electronic trading platforms as outlined below:

Requirements for organizers, bidders and electronic trading platforms
Functions of the tender managing
Conditions and procedure for suspension and resume of electronic platforms
Procedure for payment processing on the deals concluded at electronic trading platforms.

2) The marginal price of liquefied petroleum gas⁷ under the Kazakhstan domestic market supply plan outside the electronic trading platforms for the period from January 1, 2019 to March 31, 2019 is KZT 38 701,67 per ton excluding VAT.

6. Corporate Matters

The Ministry of National Economy of the RK⁸ approved the Model Corporate Governance Code in state-controlled joint stock companies, except for the National Wealth Fund (‘Model Code’).

Pursuant to the Model Code, corporate governance is built upon justice, honesty, responsibility, transparency, professionalism and competence and the following principles:

Separation of powers
Protection of rights and interests of shareholders
Effective board of directors and management governance
Sustainable development
Risk management, internal control and audit
Management of corporate disputes and conflict of interests
Transparency and fairness in disclosing information regarding joint stock company’s activity.

7. Employment Matters⁹

Pursuant to the employment laws individuals, legal entities including government agencies, branch and representative offices of legal entities are subject to control and monitoring. Those monitored entities operating in the field of electricity, gas and steam supply, air-conditioning, as well as in the field of information and communication were referred to a high level risk for the monitoring purposes based on objective criteria.

The regulatory agency monitors such entities and frequency of such monitoring varies depending on different factors (for example, companies operating with over 250 employees preventive monitoring is carried out once a year and companies operating with less than 100 employees preventive monitoring is carried out every 5 years).

8. Construction

The Committee for Construction and Housing¹⁰ approved the following construction standards:

Construction Standard of the RK 3.04-01-2018 ‘Hydro-technical Constructions’
Construction Standard of the RK 3.04-03-2018 ‘Foundations of Hydro-technical Constructions’
Construction Standard of the RK 3.04-09-2018 ‘Hydro-technical River Constructions’
Construction Standard of the RK 3.04-2018 ‘Hydro-technical Sea and River Transport Constructions’

9. Base Rate of the NB RK¹¹

The National Bank of Kazakhstan retained 9.25% base rate with constant +/- 1 percentage point interest rate.

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.

Resolution of the Government of the Republic of Kazakhstan No. 863 dated 24 December 2018 “On Approval of the Agreement on Formation and Development of the Intellectual Property Market of CIS Member States”. Entered into force on 24 December 2018.
Resolution of the National Bank of the Republic of Kazakhstan Board No. 307 dated 29 November 2018 “On Approval of the Rules for the Implementation of Activities of the Central Depositary”. Entered into force on 12 December 2018.
Resolution of the National Bank of the Republic of Kazakhstan Board No. 275 dated 29 October 2018 “On approval of the List of Transactions in Non-Market Conditions, the Conclusion of which is a Ground for Making a Decision on Referring Bank to the Category of Insolvent banks”. Entered into force on 1 January 2019.
Resolution of the National Bank of the Republic of Kazakhstan Board No. 251 dated 29 October 2018 “On Approval of the Rules of Compulsory Restructuring of Liabilities of an Insolvent Bank”. Entered into force on 1 January 2019.
Order of the Ministry of Finance of the Republic of Kazakhstan No. 1082 dated 14 December 2018 “On Approval of the List of Taxpayers to be Monitored by Large Taxpayers”. Entered into force on 1 January 2019.
Order of the Ministry of Energy of the Republic of Kazakhstan No. 481 dated 6 December 2018 “On Approval of the Rules on Organizing Bids of Liquefied Petroleum Gas through Electronic Trading Platforms”. Entered into force on 3 January 2019.
Order of the Minister of Energy of the Republic of Kazakhstan No. 497 dated 11 December 2018 “On Approval of the Marginal Price of Liquefied Petroleum Gas Sold under the Supply Plan to the Domestic Market of the Republic of Kazakhstan outside Electronic Trading Platforms”. Entered into force on 20 December 2018.
Order of the Ministry of National Economy of the Republic of Kazakhstan No. 21 dated 5 October 2018 “On approval of the Model Corporate Governance Code in State-controlled Joint-Stock Companies except for the National Wealth Fund”. Entered into force on 1 December 2018.
Joint Order of the Minister of Labor and Social Protection of Population of the Republic of Kazakhstan No. 473 dated 31 October 2018 and Minister of National Economy of the Republic of Kazakhstan No. 43 dated 31 October 2018 “On Amendments to the Joint Order of the Minister of Health and Social Development of the Republic of Kazakhstan dated 25 December 2015 No. 1022 and the Minister of National Economy of the Republic of Kazakhstan dated 28 December 2015 No. 801 “On approval of the Criteria for Assessing the Degree of Risk and Checklists for Compliance with the Labor Legislation of the Republic of Kazakhstan”. Entered into force on 4 December 2018.
Order of the Chairman of the Committee for Construction and Housing of the Ministry of Investment and Development of the Republic of Kazakhstan No. 249-нқ dated 5 December 2018 “On Approval of State Standards in the Field of Architecture, City Planning and Construction of the Republic of Kazakhstan”. Entered into force on 24 December 2018.
Press release of the National Bank of Kazakhstan No. 44 dated 4 December 2018 “On Maintaining the 9,25% Base Rate”