Legislative News

This Client Update includes amendments to the legislation of the Republic of Kazakhstan and appointments in November 2009

The following 587 legislative acts were adopted in November 2009:

• Laws – 12

• Decrees of the President of the Republic of Kazakhstan – 8;

• Resolutions of the Government of the Republic of Kazakhstan – 228 (13 of which have not been enacted);

• Other regulatory legal acts.

Most of these regulatory legal acts are concerning public sector, but among them there are some which may attract your attention and affect your business in Kazakhstan in a certain way.

We would like to draw your attention to the following regulatory legal acts:

Resolution of the Board of the National Bank of the Republic of Kazakhstan dated 24 August 2009 № 77 «On Amendments to Resolution of the Board of the National Bank of the Republic of Kazakhstan dated 17 August 2006 № 86 «On Approval of Rules of Execution of Export-Import Currency Control in the Republic of Kazakhstan » (effective from 01.11.2009).

Thus, in accordance with amendments to Rules of Execution of Export-Import Currency Control in the Republic of Kazakhstan authorized bank as well as branch offices of National Bank carry out control over fulfillment of repatriation requirements under contracts for amount exceeding equivalent of fifty thousand US Dollars (previously it was ten thousand) except for cases specified in sub-items 1)-5), 7), item 20 of the Rules. Terms and notions used in the Rules have been changed as well.

Resolution of the Government of the Republic of Kazakhstan dated 26 October 2009 № 1669 «On Approval of Standard for Rendering of State Service on Issue of Local Municipal Statements of Residence (effective from09.11.2009).

In accordance with item 2, Article 34 of the Budget Code of the Republic of Kazakhstan dated 4 December 2008 standard for rendering of state service on Issue of Local Municipal Statements of Residence was approved. Standard specifies procedure of rendering of state service on issue of statement of residence to physical persons and legal entities of the Republic of Kazakhstan, foreigners and persons without citizenship. State service is provided free of charge.

Resolution of the Board of the National Bank of the Republic of Kazakhstan dated 24 August 2009 №№ 76 «On Amendments to Resolution of the Board of the National Bank of the Republic of Kazakhstan dated 11 December 2006 № 129 «On Approval of Rules of Foreign Exchange Operations in the Republic of Kazakhstan » (effective from01.11.2009).

In accordance with amendments it is mandatory to provide currency contract for payments and (or) money transfer under foreign currency operations, with regard to which requirements to registration, notification or execution of transaction passport are specified. It is not required to provide currency contract in a number of cases specified in the Rules if payment and (or) money transfer to the bank accounts of residents and non-residents is in the amount not exceeding equivalent of ten thousand US Dollars.

Resolution of the Government of the Republic of Kazakhstan dated 2 November 2009 № 1740 «On General Plan of Golden City – New Town in Almaty Oblast (effective from02.11.2009).

It is planned to implement all project proposals within 22 years. Main task of the general plan is realization of a complex of town-planning activity aimed at establishment of ecological city with favorable, safe and comfortable environment, transfer of some city functions for decongesting of urban areas of Almaty.

Resolution of the Government of the Republic of Kazakhstan dated 2 November 2009 № 1739 On General Plan of Gate City – New Town in Almaty Oblast (effective from02.11.2009).

Favorable location of Gate City in immediate neighborhood of Almaty, main regional roads – highway of republican status Almaty-Kapshagai and BAKAD that will be a part of international motor corridor Western China – Western Europe will allow city to become the most important outpost of Kazakhstan and Central Asia.

Resolution of the Board of the National Bank of the Republic of Kazakhstan dated 25 September 2009 № 91 «On Amendments to Some Resolutions of the Board of the National Bank of the Republic of Kazakhstan on Issues of Transfer to New Structure of Bank Account Number of Bank’s Client and Bank Identification Code» (effective from02.11.2009).

In accordance with Rules of Establishment of Correspondent Relations between National Bank of the Republic of Kazakhstan and banks, organizations carrying out some types of banking operations, bank code, code of bank’s branch office is a unique number consisting of three digit positions that is given by National Bank to banks, organizations and their branch offices for use with purpose of formation of client’s bank account number, export-import currency control and other purposes. Bank code is given to bank or organization simultaneously with opening of correspondent account in the National Bank. Code of bank’s branch office is given to the branch office or organization and is included into reference book of bank identification codes after submission of corresponding documents by bank or organization to the National Bank.

Resolution of the Board of the Agency of the Republic of Kazakhstan on Regulation and Control over Financial Market and Financial Organizations dated2 November 2009 № 228 «On Amendments to the Resolution of the Board of the Agency of the Republic of Kazakhstan on Regulation and Control over Financial Market and Financial Organizations dated 16 July 2007 № 210 «On List and Procedure of Acquisition of Underlaying Assets of Derivative Securities, which Can Be Operated by Second-tier Banks in the Framework of Their Broker or Dealer Activity in the Securities Market » (effective from16.11.2009).

Amendment specifies that second-tier banks can make operations with derivative securities and derivative financial instruments, underlaying asset of which is credit risk by means of acquisition (to act as buyers) of credit default swap and total return swap subject to fulfillment of specific conditions.

INTERNATIONAL LAW

Regulatory Resolution of the Constitutional Council of the Republic of Kazakhstan dated 5 November 2009 № 6 «On Official Interpretation of Provisions of Article 4 of the Constitution of the Republic of Kazakhstan with respect to Procedure of Execution of Decisions of International Organizations and their Bodies »

Decisions of international organizations and their bodies established in accordance with international agreements of the Republic of Kazakhstan can not be in contradiction with the Constitution of the Republic of Kazakhstan. Decisions of international organizations and their bodies with participation of the Republic of Kazakhstan may have legal characteristics of international agreement ratified by the Republic in case of direct specification of obligatory nature of these decisions for Kazakhstan in the international agreement ratified by the Republic of Kazakhstan. In case of conflict between decision of international organization and (or) its body mandatory for the Republic of Kazakhstan and regulatory legal acts of the Republic of Kazakhstan decision of international organization and (or) its body shall be valid until conflict resolution. Decisions of international organizations and their bodies derogative to the constitutional rights and freedoms of the person and the citizen can not be applied and correspondingly can not prevail over regulatory legal acts of the Republic of Kazakhstan.

Law of the Republic of Kazakhstan «On Ratification of Convention between the Republic of Kazakhstan and Japan on Avoidance of Double Taxation and Prevention of Avoidance from Taxation in respect of Income Taxes and Related Protocol»

Convention is applied to the following taxes:

a) in the Republic of Kazakhstan: corporate income tax; personal income tax;

b) in Japan: income tax; corporate tax; local taxes from population.

DRAFT REGULATORY LEGAL ACTS

Brief on Draft Law of the Republic of Kazakhstan «On Amendments to the Law of the Republic of Kazakhstan «On Regulatory Legal Acts »(30 November 2009).

Draft Law was elaborated for execution of Action Plan to carry out commands of the head of state given at the Anti-Corruption Forum on 6 November 2008.

Draft Law specifies legislative establishment of institution of mandatory scientific anticorruption expertise of regulatory legal acts.

Brief on Draft Law of the Republic of Kazakhstan «On Amendments to the Law of the Republic of Kazakhstan «On Private Entrepreneurship»(30 November 2009).

Draft Law proposes Addendum to Appendix to the Law of the Republic of Kazakhstan «On Private Entrepreneurship” with regard to supervision in the sphere of atomic energy by state body in the sphere of power industry, subsoil use and provision of radiation safety.

Addendum to the Law of the Republic of Kazakhstan «On Private Entrepreneurship” is stipulated because activity on use of atomic energy has specific nature and is referred to activity, results of which can cause direct damage to health of population and environment. In this connection use of atomic energy in the Republic of Kazakhstan is subject to state control and supervision.

Brief on Draft Law of the Republic of Kazakhstan «On Amendments to Some Legislative Acts of the Republic of Kazakhstan on Issues of Children’s Villages of Family Type and Youth Houses»(2 November 2009).

Adoption of this draft law will allow improve housing problems of graduates of children’s homes for orphans and children left without parents’ care until they are 23 years old. Every year around 2 thousand children leave such institutions. Only 45% of graduates have right to live in the youth houses as graduates of children’s homes and children’s villages of family type.

In connection with this project it is assumed to establish youth houses not only attached to children’s homes and children’s villages of family type, but also as independent institutions.

KEY APPOINTMENTS

The following appointments were made in November 2009:

• Serik Nygmetuly Akhmetov was appointed to the position of Akim of Karagandy Oblast;

• Kanat Aldabergenovich Bozumbayev was appointed to the position of Akim of Zhambyl Oblast;

• Mr. Makhmetgali Nurgaliyevich Sarybekov was appointed to the position of Vice-Minister of Education and Science of the Republic of Kazakhstan.

Information contained in this Client Update is of general nature and cannot be used as legal advice or recommendation. Please seek for a specific advice in relation to any questions. Please note that Kazakhstan and Turkmenistan are emerging economies and their legislation and legal systems are in constant development. Should you have any questions or would like to discuss subjects addressed in this Client Update please contact us.