DUAL LISTING IN LONDON AND KAZAKHSTAN:
KAZAKH LAWYER PERSPECTIVE
Shaimerden Chikanayev
29 June 2012
Kazakhstan | Uzbekistan | Azerbaijan | Kyrgyzstan | Turkmenistan | Tajikistan | Mongolia |United Kingdom | USA
MAIN ISSUES
 What are the possible options to do an IPO in
London?
 Advantages and disadvantages of using offshore
company.
 Kazakh law restrictions for IPO and regulatory
issues.
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Direct Listing of Shares: Option I
 Through issuance (if applicable) and placement of shares of a Kazakh joint-stock
company (“JSC”) on London Stock Exchange.
 This option has not been tested in practice so far because of absence in Kazakhstan
of centralized depositary and clearing system.
Need to seek prior permission of the FMSC (financial regulator) for issuance and
placement of securities abroad and for listing on foreign stock exchange.
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Issue and Listing of GDRs: Option II
Through issuance of Global Depositary Receipts (GDRs) on the existing shares of a
Kazakh JSC.
In practice, most Kazakhstan companies list their securities on foreign stock
exchanges through issuance of GDRs due to the absence of a clearing system and
centralised depositary in Kazakhstan (for instance, JSC KazMunaiGas EP, JSC
Kazkommertsbank, JSC Halyk Bank, JSC Alliance Bank, JSC BTA Bank IPOs).
This option is available for JSCs only. In order to apply this option, it is necessary to
convert the limited liability partnership to the joint stock company form first.
Arguably, NO need to seek prior permission of the FMSC (financial regulator), but
the JSC needs to notify the FMSC on proposed issuance of the GDRs.
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Use Offshore Entity: Option III
Through issuance of new shares / GDRs on its shares by foreign controlling entity
(for instance, Kazakhmys, Zhaikmunai, ENRC, KazakhGold IPOs).
This option is available for joint stock companies, as well as for limited liability
partnerships.
Need to seek prior permission of the FMSC (financial regulator) for issuance and
placement of securities abroad and for listing on foreign stock exchange.
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Issue GDRs on New Shares: Option IV
Through issuance of GDR on new shares of the Kazakh JSC.
This is in theory a legally possible option, but never been tested in practice so far.
Various local and foreign law issues might arise (e.g. underlying security does not exist
upon issuance of the GDR that is, apparently, not acceptable) .
Need to seek prior permission of the FMSC (financial regulator) for issuance and
placement of securities abroad and for listing on foreign stock exchange.
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Kazakh Law Restrictions
A “resident” Company is allowed to issue and place securities on the territory of a
foreign state after obtaining the FMSC’s permission upon complying with the
following (new FMSC Resolution N70 to take legal effect shortly):
1. The Company’s prior issued securities (i.e. bonds or shares) are listed on
KASE (or if the Company is an offshore subsidiary, securities of parent
company that owns 50% or more shares of the Company must be listed
on KASE) ;
2. In case of placement of shares of the JSC or GDRs, the underlying assets
of which are the shares of the JSC, (i) the shares should be included into
the relevant first or second category of KASE, and (ii) provided there is
demand, at least 20% of the shares should be offered and sold on KASE;
3. No cross-default provisions in prospectuses of previously issued bonds
because of change of ownership of 10% or more shares of the JSC.
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Kazakh Law Restrictions
A “resident” company shall obtain a prior permission of the FMSC to list its
securities on a foreign stock exchange and as prior condition these securities shall
be listed on KASE in the relevant category.
For the purposes of Kazakh Securities Law, a “resident” company is a company
(i) of which at least 2/3 of assets are located in Kazakhstan or issued in
accordance with legislation of Kazakhstan and/or (ii) other legal entities with
effective management (i.e. control) in Kazakhstan.
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GRATA IPO Experience

Advising JSC NWF Samruk-Kazyna on People’s IPO

Advising a Kazakhstani company on the proposed London Stock Exchange AIM IPO

Advice to a Russian company with assets in Kazakhstan on the proposed London Sock Exchange IPO

Advice to a gold mining company on additional issuing of shares on the London Stock Exchange

Advice on the proposed LSE IPO of a metallurgic company with substantial assets in the Republic of
Kazakhstan

Advice to ABN Amro Rothschild, Deutsche Bank, Credit Suisse and Morgan Stanley as underwriters in the
IPO of Eurasian Natural Resources Company

Advice to JP Morgan on the IPO of Arawak Energy

Advice to Deutsche Bank and Credit Suisse on the IPO of JSC “Halyk bank”

Advice to Numis as an underwriter in the IPO of Bateman Litwin
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Contacts
Shaimerden Chikanayev
Partner, Finance & Securities
Tel.: +7 (727) 2 445 777
Mob.: +7 701 787-80-20
E-mail:
schikanayev@gratanet.com
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