July 29 2008
With the aim of establishing a transparent market and granting all companies access to it, the Agency for the Regulation of the Activity of the Regional Financial Centre Almaty (A-RFCA) has developed new listing rules which came into force on June 2 2008.
The new rules do not apply to the entire Kazakhstan Stock Exchange, but rather to the special trading platform of the Regional Financial Centre Almaty (RFCA).(1) At present, the old stock exchange listing rules remain in force; new rules, which will be similar to the new RFCA rules, are due to be introduced by September 1 2008. The authorities aim ultimately to merge the RFCA and the Kazakhstan Stock Exchange, although it is unclear at this stage how this will be done or what will happen to the regulatory exemptions applicable to RFCA members.
Under the previous rules the official list of the RFCA's special trading platform comprised only one category. Securities of any type could be listed, provided that (among other things): (i) the issuer was not in default; and (ii) the securities were listed on a stock exchange or the securities and the issuers were rated by an approved rating agency at or above a level set by the A-RFCA.
The new regulations have substantially changed both the structure of the official list and the listing rules of the special trading platform. The rules have been altered by the introduction of new requirements relating to profits and quantities of free-float shares, among other things. In addition, some of the requirements must be complied with not before, but after listing.
The official list is divided into:
Some sectors include further categories and subcategories.
The shares sector is divided into three categories: blue-chip companies, medium-capitalization companies and start-up companies.
The most stringent requirements apply to listings in the blue-chip category. Shares may be listed in this category if:
Shares may be listed in this category if:
Shares may be listed in this category if:
Thus, listing in the blue-chip and medium-capitalization categories is subject to relatively stringent requirements in respect of both issuer and shares, whereas almost any Kazakhstan joint stock company may be listed in the start-up category, as the minimum share capital for a Kazakhstan joint stock company is approximately $480,000.
The debt securities sector is divided into two categories: rated securities and non-rated securities (and their various subcategories).(2)
Rated securities may be either debt securities, including those issued by a special purpose vehicle (ie, a non-Kazakh company), or securitized debt securities issued by a special financial company as part of a Kazakh securitization.
Listing in the debt securities subcategory is subject to the following conditions:
Securitized debt securities must be rated by an approved rating agency at or above a level set by the A-RFCA and must meet the market-maker requirement.
Securities may be listed in the first subcategory of non-rated securities(3) if:
Securities may be listed in the second subcategory of non-rated securities if:
Depositary receipts may be listed in the depositary receipts sector only if their base assets are shares. The base assets and the issuers must comply with the requirements for medium-capitalization companies. Depositary receipts based on debt securities are listed in the derivative securities sector; the relevant listing requirements are set forth in the applicable Kazakhstan Stock Exchange regulations, which must be approved by the A-RFCA and the Agency for the Regulation and Supervision of Financial Markets and Financial Organizations.
Securities issued by certain international financial organizations(4) may be listed in the sector for securities of international financial instruments, provided that the securities are recorded in the Kazakhstan Central Depository and meet the market-maker requirement.
Foreign state securities may be listed in the state securities sector if the state in question has a long-term foreign currency sovereign credit rating of at least B- (Standard & Poor’s or Fitch) or B3 (Moody’s). The requirements for listing are the same as those for the securities of international financial organizations.
For further information on this topic please contact Yuriy Maltsev or Pavel Kornilov at White & Case LLP by telephone (+7 3272 50 74 91) or by fax (+7 3272 50 74 93) or by email (firstname.lastname@example.org or email@example.com).
(1) The RFCA special trading platform is the Kazakhstan Stock Exchange trading platform on which RFCA members trade in financial instruments. A special legal regime covering certain tax, registration and immigration exemptions (among other things) applies to RFCA members.
(3) With the exception of infrastructure bonds. An infrastructure bond is a bond under which the performance of the issuer’s obligations is secured by a state surety as part of a concession agreement on the implementation of an infrastructure project between the state and the issuer. The value of the bond is equal to the value of the facility transferred to the state. Infrastructure bonds are listed in the non-rated second subcategory, subject to compliance with the corporate management code and market-maker requirements.
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