1. 1 Structuring M&A transactions in Kazakhstan December 2011

2. Table of contents  Share deal vs Asset deal  Direct purchase vs Indirect purchase  Joint Stock Company vs Limited Liability Partnership  Taxes in general 2

3. Structures of transactions. General Share deal vs asset deal 3 Share Deal + Easy to transfer and understand + Full control (in case of 51 % and more shares) - Buying assets plus liabilities Asset Deal - Burdensome to transfer + Full control - VAT issue + Buying assets only but need to keep current licenses and permits

4. Structures of transactions. Continued Direct purchase vs indirect purchase 4 Direct Purchase + Simple structure - Heavily involve Kazakh law Indirect purchase -Layers of holding companies + Governance provisions under tested foreign law

5. Structures of transactions. Continued Convertible promissory notes Law of the RK “On Subsoil and Subsoil Use” Article 36 (14) “Transactions and other actions aimed at the transfer of subsoil use right, objects related to subsoil use right committed without the permission of the competent authority or local executive authority of the province, city of the republic's significance, capital city as provided for by this Article, as well as upon the expiration of the permit, and also without preliminary consent of the authorised body for study and use of the subsoil issued in accordance with paragraph 6 of this Article, shall be recognised invalid from the moment of their conclusion. 5

6. Structure. JSC and LLP Generally, LLP is preferable 6 JSC + Easy to transfer - Subject to the 30% rule - Governance - Tag along/Drag along etc LLP + Pre-emptive rights (easier to negotiate, do not need to publish an announcement) + Governance as we wish + Exit strategy easier to implement - A bit difficult to transfer (but note register of participants)

7. Structure. Tax implications 7 Often the most important structuring question Paid on the difference between purchase price and sale price In both share and asset deals Rate 0 – 20% Paid on the taxable turnover (basically, sale price) in asset deal only Rate – 12% Capital gains tax VAT

8. Structure. Tax implications. Cont’d 8 Taxation during the life of the project Important for expatriation of money from Kazakhstan Rate 5 – 20% (cross border) 5/10% - under double tax treaties 20% - for “dirty jurisdiction” list countries (with favourable taxation) Important for expatriation of money from Kazakhstan. Rate 10 – 20% (cross border) 10% - under double tax treaties 20% - for “dirty jurisdiction” list countries Withholding tax on dividend Withholding tax on interest

9. ANY QUESTIONS? Zhanara Iskhakova Partner GRATA Law Firm ziskhakova@gratanet.com 9