Notes From Practice: Pledge Termination In Kazakhstan

When handling client consultation on Kazakhstan law matters, we frequently face situations where, in approaching public bodies for registration purposes (be it the registration of companies/branch or representative offices, or the registration of encumbrances on movable/immovable property), we have to offer the client an ad hoc solution to legal issues. This is largely due to the absence in Kazakhstan of laws with clear and comprehensive requirements for certain legal matters. Consequently, public officials often have room for interpreting law provisions at their own discretion, without reference to a specific legal provision.

In this note, we would like to share two cases from our recent practice on the registration of property pledge termination in Kazakhstan. First, we would like to share our experience with the registration of movable property pledge termination, where our client - a foreign company - acted as a pledge holder. During this seemingly simple legal procedure, we faced a number of unexpected problems, which delayed the process for more than a month. Second, we will share another case in our practice related to the termination of pledge of subsoil use right in Kazakhstan.

Movable Property Pledge Termination

Kazakhstan civil law stipulates that a pledge holder must submit to the competent body the following exhaustive list of documents in order to terminate the registered pledge of a movable property:

Application; Registration fee payment receipt; Pledge registration certificate; Document confirming the fulfilment of the primary obligation. Based on the foregoing, a pledge holder must address the request to the competent body for the termination of the pledge of movable property. The application on the termination of pledge registration is filed by the pledge holder, which, in essence, justifies the pledge holder's intention to terminate the pledge due to the pledger having fulfilled its obligations. Apart from the application, as stated above, the pledge holder must also submit the document confirming the fulfilment of its primary obligation. Kazakhstan laws do not specify the document that actually suffices for this purpose. Therefore, our lawyers presented an official letter on behalf of the pledge holder1, which confirmed the fact of the pledger's fulfilment of its primary obligation.

The competent body2 refused to accept our letter as in its opinion, as the pledge holder's legal representatives, we were not authorized to...