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Including: Licences; Supervisory Functions of the National Bank; Financial and Other Requirements; Foreign Investment; Liquidation and Reorganization of Banks
Proposed currency controls could see the imposition of a special currency regime. Its strongest impact would probably be on Kazakh resident exporters, requiring them to remove funds from offshore accounts and hold such funds in non-interest-bearing accounts in Kazakhstan, and to convert hard currency into tenge.
When two of Kazakhstan's systemically important banks defaulted on their debt in April 2009, it exposed a lack of legislation on consensual financial restructurings. A new law provides a procedure for restructuring a bank with the approval of creditors holding at least two-thirds of its obligations. It also introduces a framework for segregating a distressed bank's assets and creating a stabilization bank.
The Financial Markets Supervision Agency has proposed certain amendments to Kazakhstan's capital adequacy regulations in an effort to protect the banking industry, limit its exposure to international investors and prevent the economy from overheating. However, the changes could hit local banks which have sought to tap the international capital markets through securities offerings.
The Kazakhstan Parliament recently passed a number of laws which will be of interest to players in the banking sector. Among them is a law which regulates the legal status, activities, creation, reorganization and liquidation of credit partnerships. New legislation on micro-credit has also been passed in order to assist the development of small businesses.
Including: Legislative Framework; National Securities Commission; Organized Market; Professional Participants and Nominal Holders; Share Transfer; Offering Restrictions; T-Bills; Private Securities; Bonds; NBK Notes; Repos and Reverses; Futures, Forwards, Options & Swaps; Pension Funds; Blue-Chip Programme; Documentation
The Agency for the Regulation of the Activity of the Regional Financial Centre Almaty (RFCA) has developed new listing rules for the special trading platform of the RFCA. The new rules do not apply to the entire Kazakhstan Stock Exchange, but similar regulations are due to be introduced by September 2008.
Parliament recently amended the Law on Securities Markets to simplify international public offerings of Kazakh companies. The revised provisions have been successfully tested in the initial public offering of the production arm of Kazakhstan's state oil and gas company on the London Stock Exchange.
In a major step towards the liberalization of currency operations and the export of capital, Kazakhstan adopted a new currency control law in June 2005. In December 2005 the National Bank introduced a number of regulations which clarified the new provisions and expanded the range of foreign investments and derivative transactions open to Kazakh investors, removing the need for a licence from the national bank.
The National Bank of Kazakhstan has approved regulatory amendments which introduce the concept of termless (hybrid) subordinated debt obligations which may be included in Tier 1 capital. This new provision is intended to address the shortage of capital for banks, a consequence of the explosive growth in bank assets brought about by high oil prices and the overall expansion of Kazakhstan's economy.
A new regulation permits certain qualified non-residents to become members of the Kazakhstan Stock Exchange, the country's only securities trading establishment. However, the membership requirements include the existence of certain information exchange agreements between Kazakhstan and the non-resident member's country of incorporation; as yet, there are no such treaties with other jurisdictions.
In a move to restrict the influx of funds into Kazakhstan, and into the domestic property market in particular, the Kazakh Parliament has recently approved a number of changes to the legislation governing the securities market.
Amendments to the terminology for financial instruments in the Civil Code could have unforeseen consequences. Previously, the term 'derivative financial instrument' could be held to include derivative securities or derivative contracts, but its definition has been narrowed to cover only contracts. Among other things, this theoretically limits the capacity of Kazakh banks to enter into derivatives transactions.
A decree issued by the Agency of the Republic of Kazakhstan for the Regulation and Supervision of Financial Markets and Financial Organizations significantly expands the scope of derivatives transactions that commercial banks may perform and clarifies the treatment of swaps and foreign exchange transactions.
New legislation enacted by the financial markets regulator limits the types of derivative transaction that may be entered into by Kazakhstan's commercial banks. The legislation is vague and contradictory, but it appears that the regulator wishes to limit transactions which involve assets that are difficult to evaluate or that are intended to circumvent the existing limitations.
Investment companies managing pension assets are the main beneficiaries of a recent regulatory amendment which authorizes them to undertake certain derivative transactions, namely futures, options and swaps for the purposes of hedging. Previously, pension funds could be used only for reverse repo operations with a term of less than 30 days.
In its preparations to offer offshore blocks for tender, the government of Kazakhstan is shortly expected to adopt the Production-Sharing Agreement (PSA) Law. The law includes provisions on the terms of PSAs, tenders for offshore blocks and the economic benefits for Kazakhstan. Programmes for the development of Kazakhstan’s petrochemical and gas industries have also been approved.
The new Law on Investments aims to improve the investment climate in Kazakhstan and create a level playing-field for investments that utilize Kazakhstan-source capital. It is of considerable importance to investors in Kazakhstan's energy and natural resources sector, which has enjoyed the majority of Kazakhstan's foreign direct investment to date.
New rules set out the procedures for the procurement of goods, works and services by contractors under oil operation contracts. The rules aim to help develop Kazakhstan's oil and gas supply and service sector by putting pressure on contractors to utilize domestic resources.
KazMunaiGas has been reorganized and merged with Kazakhoil, the former state oil company, and the former state oil and gas transportation company. The merger aims to create a more powerful, efficient and transparent national oil and gas company. Other recent developments include the adoption of a model subsoil use contract.
Kazakhstan's biggest development in the field of restructuring in 2010 was undoubtedly the Special Financial Court of Almaty's decision to recognise a plan for BTA Bank. In part, the rescue was made possible by the provisions of the Restructuring Law, which is similar to UK and US corporate rescue regimes and is intended to allow bank restructurings to be recognised in London, New York and other leading financial centres.
Two recent laws relating to national securitization transactions regulate the establishment and activities of special purpose companies, the effects of their bankruptcy remote status and the composition and investment of the assigned assets and their proceeds.