Monthly Legal Alert: March 2023
SIGNUM regularly provides Legislative/Regulatory Alerts to keep Clients informed about important laws and regulatory changes in the Republic of Kazakhstan (“RK”). This Alert covers recent developments introduced in March 2023 related to:
1. Restoration of solvency and bankruptcy of citizens.
2. New special economic zone in the RK.
1. Restoration of solvency and bankruptcy of citizens
General provisions
On 1 March 2023, the Law “On the Restoration of Solvency and Bankruptcy of Citizens of the Republic of Kazakhstan” (hereinafter referred to as the Law) has come into force. We have previously covered the Law in our December Legal Alert available at the following link: https://signumlaw.com/en/posts/monthly-legal-alert-december-2022
The Law provides for 3 types of procedures: out-of-court bankruptcy, judicial bankruptcy and restoration of solvency.
The grounds for filing an application as part of the out-of-court bankruptcy procedure is unfulfilled obligations not exceeding 1,600 times the monthly calculation index (KZT 5,520,000).
The debtor is defined by the Law as a citizen of the RK whose insolvency is the basis for the application of procedures for restoring solvency, as well as out-of-court and judicial bankruptcy. A bankrupt is a debtor in respect of which the out-of-court bankruptcy procedure has been completed or a court decision on the completion of the judicial bankruptcy procedure has entered into force.
The obligations of the debtor include the following:
1) to notify creditors of the filing of an application no later than 2 business days from the filing date;
2) to apply to the authorized body in written form (paper and (or) electronic) through the "Government for Citizens" State Corporation to terminate the out-of-court bankruptcy procedure if, during the period of such a procedure, property came into his ownership or otherwise changed his property status, which allows him to fully or more than 30% fulfill his obligations to creditors, or an agreement has been concluded with the creditor to settle the debt to the creditor;
3) to take part in the development of a draft plan for restoring solvency and carry out the activities of the plan;
4) to provide the authorized body, the financial manager, as well as creditors with reliable information about their financial position, property and obligations on the basis of their written request no later than 10 business days from the date of its receipt;
5) to assist the financial manager in obtaining information about his financial position, property and obligations;
6) to comply with the requirements of the financial manager and not interfere with the exercise of his powers;
7) to provide the creditor (creditors) with information on the progress of the implementation of the solvency restoration plan;
8) not to assume new monetary or property obligations, except for transactions provided for by the solvency restoration plan;
9) to notify creditors within 7 business days from the date of the event that the implementation of the solvency restoration plan has become impossible due to force majeure, that is, extraordinary and unavoidable circumstances under the given conditions (natural disasters, military operations, state of emergency, and others), or through the fault of third parties;
10) to apply to the court for completion of the solvency restoration procedure at the end of the execution period or in case of early execution of the solvency restoration plan;
11) to transfer the property mass to the management of the financial manager within3 business days from the date of entry into force of one of the following court decisions:
ü on the application of the judicial bankruptcy procedure;
ü on termination of the solvency restoration procedure and application of the judicial bankruptcy procedure;
12) to perform other duties stipulated by the laws of the RK.
Fines related to the restoration of solvency and bankruptcy of citizens
In our Legal Alert for January 2023, we have indicated that the Administrative Code of the RK introduced the liability of citizens related to the bankruptcy of individuals. These fines came into effect on 3 March 2023. You can review our Legal Alert for January 2023 at the following link: https://signumlaw.com/en/posts/monthly-legal-alert-january-2023
In particular, the Code has been supplemented[1] with new articles related to the following:
Ø Concealment of property, information, obligations, as well as concealment, destruction, falsification of title documents in the process of out-of-court or judicial bankruptcy (administrative fine up to 100 MCI (KZT 345,000));
Ø Violation of the legislation of the RK on the restoration of solvency and bankruptcy of citizens by a financial manager, which includes failure to perform or improper duties, failure to submit or late submission of information to the court, alienation of the debtor's property mass, unlawful satisfaction of the property claims of individual creditors, etc. (administrative fine up to 100 MCI (KZT 345,000)).
2. New special economic zone in the RK
The G4 City Special Economic Zone is created[2] for the period until 2048 and is located on an area of 30,000 hectares in the Almaty region, north of the Almaty city, along the 80-kilometer Almaty-Konaev highway.
The goals of creation are as follows:
ü ensuring a favorable investment climate for attracting domestic and foreign investments within the framework of the G4 City project, which will give a new impetus to the development of the region;
ü accelerated development of modern highly efficient, competitive tourist, medical, educational, cultural and leisure infrastructure capable of providing and satisfying the needs of arriving Kazakh and foreign citizens, the formation of a qualitatively new level of service provision in the Almaty region.
A special legal regime is established on the territory of the Special Economic Zone.
According to the Law of the RK “On Special Economic and Industrial Zones”, a special economic zone is a part of the territory of the Republic of Kazakhstan with clearly defined boundaries, on which a special legal regime of a special economic zone operates in order to carry out activities in accordance with the Law. Benefits in the territory of the special economic zone include:
ü CIT exemption;
ü exemption from land tax;
ü exemption from property tax;
ü value added tax at a zero rate when selling the goods that are fully consumed in the implementation of activities that meet the goals of creating special economic zones, according to the list of goods determined by the Government of the RK;
ü simplified procedure for hiring foreign labor force - issuance of permits for attracting foreign labor force by local executive bodies is carried out in accordance with the legislation of the RK, but in a simplified procedure without searching for candidates in the domestic labor market.
- Law of the Republic of Kazakhstan No. 180-VII dated 30 December 2022 “On Amendments and Additions to the Code of the Republic of Kazakhstan on Administrative Offenses on Restoring Solvency and Bankruptcy of Citizens of the Republic of Kazakhstan”. Entered into force on 3 March 2023.
- Resolution of the Government of the Republic of Kazakhstan No. 211 dated 15 March 2023 “On the Creation of a Special Economic Zone “G4 City”. Entered into force on 15 March 2023.
