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Monthly Legal Alert: July-August 2024

Published
September 17, 2024
Sergazy Tuleu
Associate
Doszhan Kassymbekov
Associate
Ulan Stybayev
Senior Associate

SIGNUM regularly publishes reviews to inform Clients about important regulatory changes in the Republic of Kazakhstan (hereinafter – RK). This review includes the latest developments adopted in July-August 2024 on the following issues:

1.     Administrative offenses;

2.     Renewable energy sources;

3.     Citizenship of the Republic of Kazakhstan;

4.     Liquidation of legal entities;

5.     Cassation courts of RK;

6.     Internet resources and foreign online platforms;

7.     Free trade zone between Kazakhstan and Singapore;

8.     Advertising of bookmakers and (or) totalizators, gambling;

9.     State registration of small business entities;

10.  Law "On Thermal Power Engineering";

11.  Public procurement;

12.  Electronic register of entrepreneurs;

13.  Infrastructure for electric vehicles.

 

1. Administrative Offenses

Unauthorized Connection to Electrical Networks

A new article has been added1 to the RK Code on Administrative Offenses regarding unauthorized connection to electrical networks. Such unauthorized connection now results in a fine of 50 MCI2, 100 MCI for small businesses or non-profit organizations, 200 MCI for medium businesses, and 500 MCI for large businesses. This article will take effect on 18 September 2024.

 

Gambling Business

The RK Code on Administrative Offenses has also been supplemented with a new article3 concerning the gambling business. Failure by a gambling business organizer to comply with the requirements for placing warnings about the risks and harms of participating in gambling and/or betting in gambling establishments, betting shops, or totalizators, in casino and gaming machine hall cash desks, as well as on their own Internet resources, will result in a fine of 300 MCI for medium businesses and 1,000 MCI for large businesses, along with the suspension of the license.

 

Administrative Offenses in the Energy Sector

Amendments have been made4 to the Code of Administrative Offenses, according to which the liability of the energy transmission organization for failure to implement the investment program has been introduced. Failure to comply, as well as failure to implement or improper implementation by the energy producing or energy transmitting organization of the activities of the approved investment program entails a fine for officials in the amount of 50 MCI, for small business entities - in the amount of 280 MCI, for medium-sized businesses - in the amount of 320 MCI, for large business entities - in the amount of 1600 MCI. Let us recall that before this change, only the energy producing organization was liable for failure to comply with the order of the authorized body.

An article has also been introduced into the Code for violation of the rules for organizing the maintenance and repair of equipment, buildings and structures of power plants, heat sources, heat and electrical networks. Violation of such rules entails a fine for officials or top managers of the energy producing, energy transmitting organizations and the heat supply entity in the amount of 50 MCI. Violation of the rules for organizing the maintenance and repair of equipment, buildings and structures of power plants, heat sources, heat and electrical networks in terms of compliance with the deadlines and types of repairs, including uncoordinated postponement of the repair deadlines for the main equipment of power plants, heat sources, power transmission lines, substations and heat networks entails a fine for officials or top managers of energy producing, energy transmitting organizations and the heat supply entity in the amount of 50 MCI.

 

Administrative offenses in the field of public procurement

According to the amendments5, failure to submit or untimely submission by the customer to the authorized body in the field of public procurement of information on the supplier's evasion of concluding a public procurement contract by failing to provide security for the execution of the public procurement contract and (or) the anti-dumping amount in accordance with the legislation of the RK on public procurement entails a fine for officials in the amount of 30 MCI.

Failure to apply or untimely application to the court by the customer with a claim for recognition of suppliers as unfair participants in public procurement in the event of failure to fulfill or improper fulfillment by the supplier of obligations under the public procurement contract concluded with him, with the exception of cases stipulated by the legislation of the RK on public procurement, shall entail a fine for officials in the amount of 30 MCI.

 

2. Renewable Energy Sources

As of 1 July 2024, amendments6 to the legislation regulating renewable energy sources have come into force. The law aims to further improve the mechanisms for supporting and developing the energy sector.

To promote small-scale renewable energy generation, the concept of a "small-scale renewable energy facility" has been introduced. These are technical devices with a capacity of no more than 200 kilowatts that produce electricity and/or heat using renewable energy sources. Owners of small-scale RES facilities will be able to use the electricity and/or heat generated by such facilities for their own needs and sell excess electricity to energy supply organizations.

A natural person who is a net electricity consumer is not required to register as an individual entrepreneur in connection with the activities of generating electricity and/or heat or selling electricity produced by a small-scale renewable energy facility.

 

3. Citizenship of the Republic of Kazakhstan

Rejection of Citizenship Application

A new ground for denying citizenship to foreigners has been added7. Now, an application for admission to or restoration of citizenship of the RK will be rejected if the applicant does not know the governmental language (Kazakh) at an elementary level, the basics of the RK Constitution, as well as the history of Kazakhstan to the extent determined by the authorized body in the field of science and higher education.

 

Governmental control in the field of population migration8

One of the functions of internal affairs bodies is now to exercise governmental control over population migration within their competence. The subjects of governmental control are individuals and legal entities that host foreigners and stateless persons or use foreign labor.

 

Governmental control is conducted in the form of unscheduled inspections. Grounds for unscheduled inspections include:

  • Complaints from individuals and legal entities regarding specific facts and circumstances indicating the illegal stay of foreigners or stateless persons, as well as citizens of the RK violating RK migration legislation;

  • Prosecutor’s demands;

  • Requests from governmental bodies regarding specific facts and circumstances indicating the illegal stay of foreigners or stateless persons, as well as citizens of the RK violating RK migration legislation;

  • Orders from the criminal prosecution body on grounds provided for by the Code of Criminal Procedure.

 

During an unscheduled inspection, the subjects of governmental control are required to:

  • Ensure unhindered access for an official of the territorial police authorities to the territory and premises of the control subject;

  • In compliance with the requirements provided by RK legislation, and in accordance with the subject of the inspection, present the official of the territorial police authorities with documents (information) in paper and electronic form or their copies for inclusion in the inspection results report;

  • Make a note of receipt on the second copy of the inspection results report on the day of the inspection's completion;

  • Prevent alterations and additions to the inspected documents (information) of the control subjects during the inspection;

  • Ensure the safety of persons arriving to conduct the inspection from harmful and dangerous production factors in accordance with the established standards for the given object.

 

4. Liquidation of Legal Entities

From 1 July 2024, to 1 July 2025, a pilot project9 on the automatic liquidation of legal entities will be implemented in all regions, cities of governmental significance, and Astana.

The organization that decides to terminate its activities must publish information about the liquidation of the legal entity and then submit an application for termination of activities with an attached interim liquidation balance sheet through the e-government web portal.

The submitted documents will be sent to the integrated tax administration system for the checks provided by the Tax Code. If a positive decision is made based on the results of the checks, an order for the governmental registration of the legal entity's termination will be issued, or a refusal to register will be issued, which will be sent to the organization's "Personal Account." Payment of the governmental duty is made through the e-government payment gateway. Only commercial organizations can process termination of activities under this pilot project.

 

5. Cassation courts of RK

As of 1 July 2025, the three independent cassation courts will be established in the capital - for civil, criminal and administrative cases.

1) Location – Astana10 (all three courts).

2) Filing a motion directly with the cassation court, without preliminary examination.

3) Consideration by three judges, orally, with invitation of the parties.

5) Consideration period - not more than 6 months.

 

6. Internet Resources and Foreign Online Platforms

Rules11 on restricting access to Internet resources, foreign online platforms, and instant messaging services by the order of the authorized body in the field of mass media have been approved. Monitoring of materials that violate the legislation, posted by users of instant messaging services, is carried out based on a user’s complaint if the violation is repeated.

 

If a violation is detected:

  • The authorized body sends a notification letter to the administration of the foreign online platform or instant messaging service to remove the information;

  • If the foreign online platform fails to comply with the authorized body's requirements within 8 months after the notification is sent, the authorized body sends a request to the governmental technical service for statistical data on the traffic bandwidth parameters of the foreign online platform across the regional facilities of the RK's centralized telecommunications network management system at different times of the day.

  • The governmental technical service, after receiving the request from the authorized body, collects and analyzes statistical data on the traffic bandwidth parameters of the foreign online platform and sends the analysis results to the authorized body.

 

The outcome of not rectifying the violation is traffic blockage in the following proportions:

  • Within 8 months – 10% of the traffic will be blocked;

  • Within 1 year – 50% of the traffic will be blocked;

  • Within one and a half years – 90% of the traffic will be blocked.

 

7. Free Trade zone between Kazakhstan and Singapore

The Agreement between the Republic of Kazakhstan and the Republic of Singapore on Trade in Services and Investment has been ratified12. The Agreement provides for the establishment of a free trade zone in accordance with the General Agreement on Trade in Services (GATS). Each Party to the Agreement shall create favorable conditions for investors of the other Party to invest in its territory in accordance with its legislation and general economic policies, and shall provide fair and equitable treatment and full protection to the investments of investors of the other Party. In addition, the Agreement shall affect the movement of individuals between the Parties. The competent authorities of each Party shall promptly process applications for entry permits from individuals of the other Party, including applications for renewal or extension.

 

8. Advertising of bookmakers and/or totalizators, gambling.

Amendments have been made13 to the Law of the Republic of Kazakhstan dated 19 December 2003 "On Advertising". Now the following advertising of bookmakers and/or totalizators is prohibited:

•       outdoor (visual), with the exception of advertising located at the location of the bookmaker and/or totalizator, inside sports facilities and on athletes' equipment;

•       on vehicles;

•       in mass media, film, video and reference services, with the exception of advertising in mass media registered with the authorized body in the field of mass media, with a sports-themed focus, as well as during live broadcasts of international sports competitions by domestic TV channels.

 

Advertising of bookmakers and/or totalizators may contain only the name, elements of the trademark, location, Internet resource (if any) of the bookmaker and/or totalizator, date of issue, validity period and number of the license to engage in the activities of a bookmaker and/or totalizator. Telecom operators are also prohibited from providing services for sending text messages to subscriber devices of cellular communication of the population containing advertising of an electronic casino, Internet casino, as well as advertising of gambling and/or betting.

 

9. State registration of small business entities

Changes14 have been made to the procedure for state registration of small business entities. Now, instead of the notification nature of carrying out entrepreneurial activity, state registration has been reintroduced by filing an application for registration. A document confirming the right to register a commercial organization in the Republic of Kazakhstan in accordance with the Law of the Republic of Kazakhstan "On Migration of the Population" (for a foreign founder) has been added to the list of documents required for submission.

 

10. Law "On Thermal Power Engineering"

The Law "On Thermal Power Engineering" has been signed15. The law regulates public relations arising in the process of production, transportation, sale and consumption of thermal energy for utility and production needs, as well as the high-quality functioning and development of heat supply systems and state regulation in the field of thermal power engineering. Subjects of thermal power engineering are heat supply entities and consumers of thermal energy. The law introduced tools for planning the development and assessing the state of the thermal power industry to ensure its consistent and effective development. In particular, the Ministry of Energy of the RK will approve key and target indicators of thermal power engineering by regions, sectors of production, transportation, sales, consumption of thermal energy, developed by industry government agencies. The updates affected the mechanisms of tariff regulation, support for energy conservation, the use of renewable energy sources in thermal power engineering to increase the investment attractiveness of the sector.

 

11. Public procurement

A new law "On public procurement"

The new law "On public procurement" has been adopted16. The law is aimed at optimizing the procurement process procedures, improving the quality of purchased goods, works and services, increasing the responsibility of participants in public procurement and developing competition. In order to simplify and shorten procurement procedures, the law provides for new mechanisms for considering complaints, updated deadlines for conducting public procurement procedures, revised grounds for recognizing public procurement as invalid, simplified the procedure for procurement of research institutes and organizations of higher and (or) postgraduate education. The law also establishes a ban on participation in public procurement for potential suppliers whose directors or founders have previously committed corruption offenses, and introduces the possibility of public monitoring of public procurement.

Amendments to the Rules for Public Procurement

 

Amendments17 have been made to the Rules for Public Procurement by the Ministry of Finance.

A list of customers and potential suppliers

The amendments provide that public procurement through a single-source method via direct contracting shall be carried out with consideration of format-logical control established on the web portal, based on a list of customers and potential suppliers formed by the authorized body (the List).

The authorized body includes customers and potential suppliers in the List based on their applications. The application must be accompanied by documents confirming the compliance of the customer’s or potential supplier's authority with the goods supplied, works performed, and services provided. The List is then updated by the authorized body and posted by a single operator on the web portal.

Civil liability insurance contract

The procedure for submitting a civil liability insurance contract by the supplier has been amended in the Rules for Public Procurement.

The Supplier submits the insurance contract electronically or in hard copy according to the standard form18 with the attachment of a copy of the payment document confirming full payment of the insurance premium on the web portal. The Purchaser records the receipt of the insurance contract and its annex in the supplier's insurance contract register. The relevant amendments regarding the civil liability insurance contract are introduced in the tender documentation and Model Public Procurement Contracts..

The order is effective as of 18 August 2024.

12. Electronic register of entrepreneurs

The Ministry of National Economy has developed the Rules for the maintenance and use of the Register of Entrepreneurship Entities.

Interested parties, including state bodies, can find information about the subject of entrepreneurship in the Register, which is updated annually by 15 December 2024.

Information on legal entities and individual entrepreneurs will contain such data as name, BIN/IIN, form of entity, category, type of activity and presence or absence of joint venture status.

Subjects of entrepreneurship are searched in the register by (1) BIN/IIN, (2) name of the legal entity, (3) full name or name of the individual entrepreneur.

 

13. Infrastructure for electric vehicles

Amendments have been adopted19 to several laws that relate to the development of electric vehicle infrastructure. The Law of the Republic of Kazakhstan dated 17 April 2014 "On Road Traffic" introduces the concept of "electric vehicle" - a mechanical vehicle equipped with and driven by an electric motor that receives energy from batteries, capacitive storage devices and (or) fuel cells, and charged exclusively with an external source of electrical energy. The Law of the Republic of Kazakhstan dated 9 July 2004 "On Electric Power Industry" introduced the concept of "electric charging station" - this is an electrical installation designed to charge mechanical vehicles equipped with electric engines. Also, according to the amendments, parking in places equipped with electric charging stations is carried out by drivers of mechanical vehicles equipped with electric engines for charging them using electric charging stations. Drivers of vehicles are prohibited from parking in places equipped with electric charging stations without charging them. Local executive bodies of regions, cities of republican significance, the capital and districts (cities of regional significance), in agreement with the territorial divisions of the authorized body, are obliged to organize specially designated places for parking mechanical vehicles equipped with electric engines, intended for equipping with electric charging stations, designated by road signs and road markings.

  1. The Law of the Republic of Kazakhstan dated 18 July 2024 No. 127-VIII "On Amendments and Additions to the Code of the Republic of Kazakhstan on Administrative Offenses". Enters into force on 18 September 2024.
  2. Monthly calculation index. 1 MCI for 2024 is KZT 3,692.
  3. The Law of the Republic of Kazakhstan dated 8 July 2024 No. 117-VIII "On Amendments and Additions to the Code of the Republic of Kazakhstan on Administrative Offenses". Enters into force on 9 September 2024.
  4. The Law of the Republic of Kazakhstan dated 8 July 2024 No. 122-VIII "On Amendments and Additions to the Code of the Republic of Kazakhstan on Administrative Offenses." Enters into force on 10 September 2024.
  5. The Law of the Republic of Kazakhstan dated 1 July 2024 No. 108-VIII "On Amendments and Additions to the Code of the Republic of Kazakhstan on Administrative Offenses." Enterst into force on 1st January 2025.
  6. The Law of the Republic of Kazakhstan dated 19 June 2024 No. 96-VIII ЗРК "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on the Issues of Supporting the Use of Renewable Energy Sources and Electric Power Industry". Entered into force on 1st July 2024.
  7. The Law of the Republic of Kazakhstan dated 16 May 2024 No. 82-VIII "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on the Issues of Improving Legislation in the Spheres of Population Migration and the Penitentiary System". Paragraphs 13, 14, 15 of subparagraph 3 of paragraph 9 entered into force on 17 July 2024.
  8. The Law of the Republic of Kazakhstan dated 16 May 2024 No. 82-VIII "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on the Issues of Improving Legislation in the Spheres of Population Migration and the Penitentiary System". Paragraphs 13, 14, 15 of subparagraph 3 of paragraph 9 entered into force on 17 July 2024.
  9. Joint order of the Minister of Justice of the Republic of Kazakhstan dated 16 February 2024 No. 121 and the Minister of Digital Development, Innovation and Aerospace Industry of the Republic of Kazakhstan dated 16 February 2024 No. 72/НК "On the implementation of a pilot project to terminate the activities of a legal entity on the basis of liquidation in automated mode."  Entered into force on 1st July 2024.
  10. According to Majilis deputy Imasheva Snezhanna and Chairman of the Judicial Collegium for Criminal Cases of the Supreme Court Nazgul Rakhmetullina
  11. Order of the Minister of Culture and Information of the Republic of Kazakhstan dated 24 June 2024 No. 267-НК "On approval of the Rules for restricting access to Internet resources, foreign online platforms and instant messaging services by order of the authorized body in the field of mass media." Entered into force on 8 July 2024.
  12. The Law of the Republic of Kazakhstan dated 16 July 2024 No. 125-VIII "On Ratification of the Agreement between the Republic of Kazakhstan and the Republic of Singapore on Trade in Services and Investments" AGREEMENT BETWEEN THE REPUBLIC OF KAZAKHSTAN AND THE REPUBLIC OF SINGAPORE ON TRADE IN SERVICES AND INVESTMENTS (Astana, May 22, 2023).
  13. The Law of the Republic of Kazakhstan dated 8 July 2024 No. 116-VIII "On Amendments and Supplements to Certain Legislative Acts of the Republic of Kazakhstan on Gambling Business, Lottery Activities, Health Protection, State Labor Inspection, State Control and Elimination of Excessive Legislative Regulation". The clauses shall enter into force on the date of entry into force of the Law of the Republic of Kazakhstan "On Mass Media".
  14. The Law of the Republic of Kazakhstan dated 5 July 2024 No. 115-VIII "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on State Control and Statistics, Improving the Population Protection System, Data Management, Registration of Legal Entities and Elimination of Excessive Legislative Regulation. Enters into force on 7 January, 2025.
  15. The Law of the Republic of Kazakhstan dated 8 July 2024 No. 120-VIII "On Thermal Power Engineering". Enters into force on 8 September 2024.
  16. The Law of the Republic of Kazakhstan dated 1st  July 2024 No. 106-VIII "On Public Procurement". Enters into force on  1st January 2025.
  17. Order of the Minister of Finance of the Republic of Kazakhstan dated 30 July 2024 № 495 “On Amendments and Additions to the Order of the Minister of Finance of the Republic of Kazakhstan dated 11  December 2015 № 648 ”On Approval of the Rules of Public Procurement”
  18. The standard form is approved by the Order of the Minister of Finance of the Republic of Kazakhstan dated  23 February 2022 № 206 “On approval of the standard contract of civil liability insurance”
  19. The Law of the Republic of Kazakhstan dated 18 July 2024 No. 126-VIII "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Transport and Development of Infrastructure for Electric Vehicles". Enters into force on 18 September 2024.
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