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1 Shaimerden Chikanayev, Partner May 26, 2011 “Kazakhstan Regulatory Issues: Practical Observations.

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Presentation on theme: "1 Shaimerden Chikanayev, Partner May 26, 2011 “Kazakhstan Regulatory Issues: Practical Observations."— Presentation transcript:

1 1 Shaimerden Chikanayev, Partner May 26, 2011 “Kazakhstan Regulatory Issues: Practical Observations

2 2 General Legal Environment  Formalistic approach (form-over-substance)  Not exhaustive list of permits/approvals/registrations  Not exhaustive list of documents to be filed (may request additional documents)  Ambiguous provisions of law and absence of court precedents as a guidance pose risk of not expected interpretation of the law by courts  Need to seek pre-transaction approvals  Failure to comply with the procedure may entail judicial invalidation of the transaction and an administrative fine.  Post-filing/reporting is often mandatory.  General statute of limitation is 3 years; 5 years for tax matters.

3 3 Useful tips (i)  It is better to procure a state authority approval/clarification even if it is unclear whether it is mandatory  Official requests (can be made by your law firm on “no name” basis) for clarifications may help (although such clarifications are not binding)

4 4 Useful tips (ii)  It is recommended to meet with senior state officials to check their perception of the proposed transaction  International agreements (bilateral investment protection treaties provide for a non-discrimination clause)  To be on the safe side notarization is recommended

5 5 Inter-Industry Approvals (Strategic Objects)  Governmental approval for sale and encumbrance of so- called “strategic objects”  Not needed for approval for sale on a secondary market on a stock exchange of less than 20% of the shares to one person (affiliated persons)  State pre-emptive right to purchase the strategic object  Strategic Objects in general are all assets (both shares in companies and individual assets) that may affect national security, e.g., trunk pipelines, international airports, hydroelectric power plants, etc.  Main Law: State Property Law

6 6 Inter-Industry Approvals (Antimonopoly)  Mergers and acquisitions which constitute so-called "economic concentration" are subject to the prior approval of the Antimonopoly Agency  Certain transactions by natural monopolists or involving natural monopolists (their assets) require a prior approval or notification of the Natural Monopolies Agency  Natural Monopolies Agency must be notified if acquirer plans to acquire 10% and more of voting shares in a natural monopoly entity  Main Laws: Competition Law and Natural Monopolies Law

7 7 Industry-Specific Approvals (Subsoil Use)  Any sale (even indirect) of the interest in a Kazakhstan subsoil user may entail the necessity to obtain the Government approval.  Article 12 of the Subsoil Law also provides for a pre- emptive right of Kazakhstan in connection with any transfer (direct or indirect) of the subsoil user (shares) of the subsoil user.  Main Law: Subsoil Law

8 8 Industry-Specific Approvals (Finance)  Prior National Bank consent for "large participant" status in a bank or insurance company or pension fund is required for the direct or indirect acquisition of ≥10% of the voting shares (i.e., control) in a company  Companies incorporated in black-listed offshore jurisdictions cannot be shareholders of a Kazakh bank etc.  Main Laws: Banking Law, Insurance Law and Pension Law

9 9 Other Regulatory Issues and Tips  Pledges over immovable property have to be registered. Foreclosure through auction only (save for money etc). Upon bankruptcy and sale and distribution of the assets of the debtor secured creditors have priority before unsecured creditors  Local Governments’ (Akimats) cannot issue guarantees  Assignment of rights agreement is not a security and shall be governed by the same law as the principle agreement  Kazakh law only for mortgage agreements and SPAs  English court judgments are not enforceable in Kazakhstan

10 10 Contact Information Shaimerden Chikanayev Finance and Securities Partner Tel.: 7 (727) 2 445 777 E-mail:

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