Recent Changes To The Securities Market Law And NBK Regulation Affecting The AIFC

November 2018 - We discuss below the changes to (i) the Securities Market Law, effective 21 October 2018, and (ii) the NBK Regulation, effective 8 October 2018, affecting certain matters related to the Astana International Financial Center (AIFC). Our note is intended to be a helpful guide - it is therefore not comprehensive and does not constitute legal advice.

The changes effectively created legal framework to trade Kazakhstan securities on the AIFC and use AIX as a local stock exchange in international offerings of Kazakhstan resident securities. This was previously available to the Kazakhstan Stock Exchange only.

On 5 October 2018, Kazakhstan adopted the Law No. 184-VI ЗРК "On amendments and changes to certain legislative acts of the Republic of Kazakhstan on matters of ensuring the uniformity of measurement and standardization" (the “Law”). Among other things, the Law introduces changes to the Securities Market Law, which affects the regulations related to operations of the AIFC. The provisions of the Law regulating the matters related to the AIFC became effective on 21 October 2018.

There were also changes made to the NBK Regulation regarding the prohibition on double listing, which impact the AIFC. These changes became effective on 8 October 2018.

New changes in the Law

The Law provides for the following changes:

Exemption from the Requirements of Article 22-1 if International Offering is made via AIFC

Under Article 22-1 of the Securities Market Law, Kazakhstan residents wishing to issue and/or place securities outside Kazakhstan as well as list such shares on a foreign stock exchange must obtain consents from the National Bank of Kazakhstan (NBK).

The NBK Consents can be granted if (in summary without details):

the securities of the Kazakhstan resident are listed on the KASE (KASE listing); the Kazakhstan resident offers on the KASE at least 20% of the new securities (Local Offer Requirement), (The KASE listing and Local Offer Requirement are hereinafter referred to as the “Article 22-1 Requirements”).

With the new Law, a Kazakhstan resident will no longer need to comply with the Article 22-1 Requirements if it complies with the AIFC Offer Requirement as described below.

If a Kazakhstan resident makes an International Offering, it will not be required to obtain the NBK Consents, undertake a listing on KASE, or comply with the Local Offer Requirement and other formalities under Article 22-1 of the Securities Market Law, if such...