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.

At the same time, foreign legal entities, as well as legal entities in the authorized capital of which the share of foreign legal entities is more than fifty percent may have agricultural lands only on the right of temporary use of land under lease for up to twenty-five years.[1]

2) No provision of land plots located in the border zone and the border area of the Republic of Kazakhstan, in a private ownership of foreign legal entities.[2]

3) Foreign legal entities are not allowed to have land on the right of permanent land use.[3]

4) Foreign legal entities prohibits direct and (or) indirectly own, use, dispose of and (or) control more than 20 percent of the shares (stakes) of the legal person – the owner of the media in the Republic of Kazakhstan, or carrying out activities in this area.[4]

5) It is prohibit to foreign entities management or operation of the main communication lines.[5]

6) Do not allow pipeline owned by legal entities registered in accordance with the laws of a foreign state (item 3, article 12 of the Law on the main pipeline).[6]

7) It is not allowed the financing of political parties and trade unions by foreign legal entities.[7]

8) Foreign legal entities who is the founder of the bank, in addition to general documents, is obliged to attach to the application for a permit to open a bank written notice to the authorized body (for non-resident banks of the Republic of Kazakhstan – the banking supervisory authority) of the State that this person is permitted to hold shares of the bank -residents of the Republic of Kazakhstan, or a statement of the authorized body (for non-resident banks of the Republic of Kazakhstan – the banking supervisory authority) of the State that such a permit under the law of the founder of this is not required.[8]

9) Opening of branches of non-resident banks in the Republic of Kazakhstan is prohibited.

10) The founder of the insurance (reinsurance) organization, a non-resident of the Republic of Kazakhstan, is obliged to provide the corresponding document the supervisory authority of the state, confirming that he is allowed to purchase shares of the insurance (reinsurance) organizations – residents of the Republic of Kazakhstan, or a statement that under the laws of the State is resolution is not required.

Documents founder – a non-resident of the Republic of Kazakhstan, issued by a foreign government agency to be legalized in accordance with the legislation of the Republic of Kazakhstan.[9]

11) It is forbidden on the territory of the Republic of Kazakhstan activities of security organizations of foreign countries.

12) Foreign legal entities, legal entities with foreign participation may not: 1) to carry out all kinds of security activities; 2) establish or be founders (participants) of private security organizations; 3) have in trust private security organization.[10]

 

Should be noted that most of these constraints are used, and in other countries.

[1] The Land Code of the Republic of Kazakhstan dated June 20, 2003 № 442-II.

[2] The Land Code of the Republic of Kazakhstan dated June 20, 2003 № 442-II.

[3] The Land Code of the Republic of Kazakhstan dated June 20, 2003 № 442-II.

[4] Law of the Republic of Kazakhstan “On mass media” dated July 23, 1999 № 451-I.

[5] Law of the Republic of Kazakhstan “On National Security of the Republic of Kazakhstan” dated January 6, 2012 № 527-IV.

[6] Law of the Republic of Kazakhstan “On the main pipeline” dated June 22, 2012 № 20-V.

[7] Law of the Republic of Kazakhstan “On Associations” dated May 31, 1996 № 3-I.

[8] Law of the Republic of Kazakhstan “On Banks and Banking Activity in the Republic of Kazakhstan” dated August 31, 1995 № 2444.

[9] Law of the Republic of Kazakhstan “On insurance activity” dated December 18, 2000 № 126-II.

[10] Law of the Republic of Kazakhstan «On security activity» dated October 19, 2000 № 85-II.

Saida Shukurova

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