Category Archives: Government Relations

Recent changes to the subsoil use laws

The law of the Republic of Kazakhstan “On Subsoil and Subsoil Use» (hereinafter – the Law) has been significantly amended by virtue of the laws of the Republic of Kazakhstan № 269-V from 29.12.2014, № 271-V from 29.12.2014. The content of amendments is set forth below.

1) As per the amended Law, the priority right of the state in relation of acquisition of subsoil use right (or part thereof) and (or) objects related to subsoil use rights was retained and applicable only for the subsoil areas, deposits of strategic importance, the list and the criteria for their classification as such, it is approved Government of the Republic of Kazakhstan.

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Some legislative restrictions for foreign (non-governmental) legal entities in the Republic of Kazakhstan

Since gaining independence, one of the priorities of the state policy of the Republic of Kazakhstan is to maintain a favorable investment climate and further promotion of foreign direct investments in the country.

However, today, for foreign legal entities in the Republic of Kazakhstan legislation established a number of restrictions, including:

1) In private ownership of foreign legal entities cannot be land designated for agricultural production and afforestation.

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The novelty of permits system of Kazakhstan

In November 2014 came into force the Law “On permits and notifications” (hereinafter – the Law), which is addressed to the most effective way of consumer right protection by the reasonably required burden on entrepreneur. The Law implements the regulatory approval and notification requirement orders of performance by entrepreneurs certain activities or actions. The permits are hereby categorized in order of level of danger of activity, as follows:

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Reflections on the restriction of foreign law firms’ activities in Kazakhstan

The Majilis Parliament of the Republic of Kazakhstan has recently discussed an issue of restricting the activities of foreign law firms in Kazakhstan at the round table meeting dedicated to the issues of the legal services regulation. The material can be accessed through the following link.

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Сhanges in structure of Kazakhstani government

By virtue of decree of Government of the Republic of Kazakhstan of 14 August 2014 “On departments of central executive agencies of the Republic of Kazakhstan”, 5 ministries of 17 and all 9 agencies have been abolished., the latter will merge with the ministries as committees Thus, the government consists of 12 ministries now and 30 committees. The following committees were established in the following ministries.

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System of government procurement in Kazakhstan

The system of government procurement in Kazakhstan is to be described as follows:

  • the state organizations carry out government procurement under the Law of the Republic of Kazakhstan „on government procurements”. The state control of carrying out of government procurements on their compliance to the Law, provides their legitimacy and transparency.

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Administrative barriers restricting business development (continuation)

Following up upon administrative barriers restricting business development, we offer to consider following cases from our practice.

  1. Licensing

Dealing with the cases on the licenses in construction sphere, we can provide following example, which demonstrate vague provisions regulating the license issues in Kazakhstan.  Well, in case of obtainment the license in construction sphere (for design works or for installation and civil works)applicant shall meet the qualification requirement on presence of minimal material and technical equipment.  The matter is interpretation of the word “minimal”, who determinates minimal rate and quantity.  In other words, negative circumstances for applicants like rejection in issuance of the license happened due to inaccurate wording of legislation acts.

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The government has approved a list of Samruk-Kazyna companies to be privatized

The Government of the Republic of Kazakhstan at the meeting on 29 April 2014 approved a list of companies of Samruk-Kazyna (the National Welfare Fund), which will be sold to the private sector within the privatization framework.

According to Nurlan Rakhmetov, CFO and a member of the board of Samruk-Kazyna, the government of Kazakhstan and JSC “Samruk-Kazyna” over the past few months have analyzed all 599 companies owned by the Fund and have identified companies that can be transferred to the private sector. Thus, shares in 106 different companies of Samruk-Kazyna will be sold to the private sector, mostly in 2014.

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The Second Wave of Privatization

The second wave of privatization of state-owned organizations will be launched in Kazakhstan.

April 14, 2014 Umirzak Shukeyev, the Chairman of the Board of Sovereign Wealth Fund Samruk-Kazyna JSC, informed that the Fund is going to put up a third of its assets for privatization.

Organizations selected for privatization are related to those which operate non-core business and which are unrelated to organizations of strategic importance or national security. The preliminary list includes 32 organizations belonging to republican ownership, 586 facilities of communal (municipal) ownership and 191 organizations belonging to holdings.

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Administrative barriers to business development

In our practice, we often face with the so-called administrative barriers, which hinder development of entrepreneurship in Kazakhstan. We believe that other practitioners can identify many of such barriers, but we are going to focus only on those that are relevant today in accordance with our practice:

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