“Kazakhstan Regulatory Issues:
Practical Observations
Shaimerden Chikanayev, Partner
May 26, 2011
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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.
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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)
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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
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Inter-Industry Approvals
(Strategic Objects)
 Governmental approval for sale and encumbrance of socalled “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
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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
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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 preemptive right of Kazakhstan in connection with any
transfer (direct or indirect) of the subsoil user (shares) of
the subsoil user.
 Main Law: Subsoil Law
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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
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Other Regulatory Issues and Tips
 Pledges over immovable property have
Foreclosure through auction only (save for
bankruptcy and sale and distribution of
debtor secured creditors have priority
creditors
to be registered.
money etc). Upon
the assets of the
before unsecured
 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
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Contact Information
Shaimerden Chikanayev
Finance and Securities
Partner
Tel.: 7 (727) 2 445 777
E-mail: schikanayev@gratanet.com
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