Law On Minimisation Of Risks

The Law on Minimisation of Risks1 came into effect on 1 February 2012 (apart from certain provisions). The main purpose of the Law is to separate Kazakh banks from expressly or impliedly affiliated structures. In addition the Law has introduced further improvements of IPO regulation and legislation relating to securities.

The most noteworthy of the provisions concerning securities regulation include the following:

Central Registrar

From 2013 all existing corporate registrars would cease to exist and there would only be one single registrar responsible for maintaining the system of registers of security holders. It is envisaged that the National Bank of Kazakhstan would own a majority stake in the Central Registrar. The establishment of the Central Registrar is supposed to improve control over the registration of transactions with securities, ensure secure storage of information and generally aid the development of the securities market in Kazakhstan. Ownership Structure of Pension Funds

Specific conditions would become applicable to the ownership structure of Kazakh pension funds'2, as of 1 January 2013: (i) All shares shall be listed on KASE; (ii) A pension fund shall have at least three so-called "large shareholders" (i.e. that have 10% or more shares in each case) not affiliated with each other. A single shareholder or group of affiliated shareholders shall not have more than 75% of voting shares of a pension fund. Alternatively, the total stake of minority shareholders in a pension fund must be more than 25% of voting shares. Approval for the Listing of Securities Abroad and Placement Abroad

A new provision of the Law on the Minimisation of Risks requires that a "resident"3 of Kazakhstan receive the prior approval of the National Bank for the listing of securities on a foreign stock exchange. Local Offer Requirement

The Law on the Minimisation of Risks obliges resident Kazakh resident not only to offer bonds on local stock exchange simultaneously with a placement on a foreign stock exchange, but to actually sell at least 20 per cent of the total issuance, if there is demand. Insider Trading

The Law on the Minimisation of Risks has also considerably expanded the list of persons classified as "insiders" for the purposes of the Securities Law. Auditors, brokers, independent appraisers, stock exchange, state officials of the National Bank and any other persons who have access to insider information would now be considered insiders...