Legal Alert On Kazakhstan Banks M&A

Under Kazakhstan law, generally, both resident and non-resident legal entities may own shares in a Kazakhstan bank.

National Bank Pre-Transaction Consent. Generally, there are two thresholds entailing the necessity to obtain the National Bank of Kazakhstan (the 'NBK') (financial regulator) pre-transaction consent: (i) "large participant", whereby an entity controls ≥10% of voting shares; and (ii) "bank holding", whereby an entity controls ≥25% of voting shares of a bank. The applicable triggering thresholds are both quantitative and substantive, e.g. NBK consent is required if the acquiring entity either owns said percentage of shares in a Kazakhstan bank or it has the right to control the bank via other means, including, but not limited to, by virtue of an agreement or otherwise. Please note that in order to receive large participant status (applies to non-resident entities), the participant must have a minimum rating - the acquirer's long-term rating in foreign currency must not be lower than the Kazakhstan sovereign rating - from a qualified rating agency approved by the NBK. A single rating by an approved agency should be sufficient. Antimonopoly Pre-Transaction Approval Acquisition of >25% of voting shares in a company may be deemed an "economic concentration". Pre-transaction antimonopoly approval for economic concentration is required, inter alia, where the combined balance sheet value of the target and the acquirer exceeds certain threshold. The threshold is also both quantitative and substantive. The Competition Law is drafted very broadly giving the Antimonopoly Agency wide discretion to interpret the law. The Antimonopoly Agency approval process is quite bureaucratic, non-transparent, document-intensive and time-consuming (in practice the overall process may take more than 3 months). The...