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dentons.com © 2015 Dentons. Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. Please see dentons.com for Legal Notices. ^ Preface
Welcome to the 2015 edition of Kazakhstan Business Updates, which provides helpful and practical guidance on recent legislative changes affecting investors’ day-to-day operations in the country, as well as articles of interest on specific areas of law. New trends and developments are explained concisely for quick reference and ease of understanding. The purpose of this publication is to present a summary of new legislation that we feel may be of interest to you. It is beyond the scope of such a summary to review all new legislation in depth, or to provide particulars of the legal and other considerations which should be reviewed when dealing with a particular industry. Should you require further detail on any of the laws referenced in this publication, please contact us. We wish you prosperity in your business and hope that this issue of Kazakhstan Business Updates will serve as a practical reference to help you establish, maintain and build a successful business in today’s competitive environment. Please note that information contained in this edition does not constitute legal or any other advice on any particular matter. We recommendDRAFT our readers seek comprehensive professional advice to ensure that their endeavors are structured in compliance with local laws and to ensure maximum benefit. Our global reach International standards and local knowledge
4 dentons.com Contents
Expected amendments to the legislation on personal data: 6 requirement for “localization of personal data” in Kazakhstan
Nuances pertaining to the regulatory consent for M&A 8 transactions in the field of subsoil use
Common pharmaceutical market of the Eurasian Economic 12 Union: rules of access and competition
IP legislation has undergone changes 19
Exhaustion of trademark rights in the Eurasian Economic 24 Union and distributor agreements
Kazakhstan’s accession to the World Trade Organization: new 27 local content requirements
Accession to the World Trade Organization: Kazakhstan’s 29 commitments related to intellectual property
Antimonopoly regulation of tenders 31
Reform of Kazakhstan’s corporate governance framework 34
Creation of Astana International Financial Center 38
Rule of Law in Kazakhstan: maintaining momentum 40
Dentons Corporate Counsels’ Club 50
dentons.com 5 Expected amendments to the legislation on personal data: requirement for “localization of personal data” in Kazakhstan Aliya Seitova
Active use of the Internet—in particular social networks—by users in Kazakhstan, where the information contains personal data (i.e. name, date of birth, residential address, place of work/study, personal photos, etc.); the growing number of cases of leaked personal data; concerns regarding “Internet surveillance” on the part of some states about nationals of other states – all these elements have set the scene for the initiation of a legislative requirement for “localization of personal data” in Kazakhstan.
Such measures have proved 1. Accumulation of personal data To date, Kazakhstan operators and/or controversial when introduced shall be carried out by collecting owners of the databases that contain in other countries. Although personal data, necessary and personal data are typically registered proponents of these rules say sufficient to accomplish the tasks abroad and, as a consequence, they that they are necessary to protect carried out by the owner and/ maintain the databases outside against foreign threats to information or operator, as well as by a third the jurisdiction of the Republic of security, critics describe them as party. Kazakhstan (such operators and leading to potential restrictions owners, for example, are Google, on freedom of information, loss of 2. Storage of personal data shall be Microsoft, Facebook, Apple, VKontakte, privacy and the facilitation of State carried out by the owner and/ or etc.). In such cases, law enforcement surveillance and censorship. operator, as well as by a third party agencies are deprived of direct access in the database, which is kept in to the personal data of RK citizens. It is It is planned to add to the RK Law the territory of the Republic of argued that this creates a threat to the dated 21 May 2013 No. 94-V “On Kazakhstan. informational security of the country. Personal Data and Protection Thereof” The aim of the planned changes is to (hereinafter referred to as “the Law”) a The period of storage of personal prevent the moving and storage of rule obliging owners and/or operators data shall be determined by the date personal data outside of the Republic to keep personal databases in the of the achieving the objectives of of Kazakhstan. territory of Kazakhstan (proposed the data collection and processing, changes are underlined): unless otherwise provided by The requirement for “localization of the legislation of the Republic of personal data” exists in China and “Article 12 of the Law: Accumulation Kazakhstan”. India, where the storage of sensitive and Storage of Personal Data
6 dentons.com data (medical data of citizens; collect information about medical it clear what the penalties for non- information about political, religious workers and patients, etc. The compliance will be. It is only known and sexual preferences of citizens) amendments would likely create that the Majilis of the RK Parliament outside the country is prohibited. approved in the first reading on In 2014 in Russia, amendments to 22 April 2015, the draft RK Law on the Federal Law on Personal Data In Kazakhstan, it is Amendments to Some Legislative dated 27 July 2006 No. 152-FZ Acts of the Republic of Kazakhstan were adopted. Thus, starting from expected that the on the Issues of Informatization, 1 September 2015, personal data of requirement for ,which contains the proposed Russian citizens may only be stored localization of personal amendment concerning localization on servers located on the territory of of personal data. the Russian Federation. data will apply to all companies (including In Kazakhstan, it is expected that the requirement for localization subsidiaries), as well of personal data will apply to all as to branches and companies (including subsidiaries), representative offices of as well as to branches and representative offices of foreign foreign companies. Aliya Seitova companies. The amendments Associate, Patent Attorney will materially affect transnational business opportunities of local IT Aliya focuses on intellectual companies working with large companies, as data storage and property law. She assists clients amounts of personal data. Such encryption services should be in in drafting and negotiating companies include banks; travel demand. agreements on transfer of rights agencies; companies engaged to use intellectual property, in international passenger As can be seen, the current proposed assignment and registration of transportation; companies which amendment to the Law is very intellectual property objects. use IT-infrastructure-based services simple, and many questions remain outside of Kazakhstan, for example, regarding the implementation of web hosting, software, which is the requirement for personal data available online via the Internet; localization and possible implications 1Information on the passage of draft laws pharmaceutical companies that for business in the country. Neither is in the Majilis of the RK Parliament as of 15 July 2015.
dentons.com 7 Nuances pertaining to the regulatory consent for M&A transactions in the field of subsoil use Nurzhan Albanov
In Kazakhstan the transfer of subsoil use rights and/or objects connected therewith is subject to a prior consent of the competent body. The RK Ministry of Energy serves as the competent body in the field of exploration and production of oil and gas, coal and uranium, while the RK Ministry of Investments and Development serves as the competent body in the field of exploration and production of other solid minerals. As the competent body’s consent often becomes one of the key issues when conducting M&A transactions in the fields of oil and gas and mining, we would like to point out several issues related to this consent in the present note. These little nuances can become bigger issues if you ignore them.
1. The scope of objects, • Securities evidencing title to also considered to be Objects, but transfer of which requires the shares, or securities convertible only if the principal activity of such competent body’s consent into shares, of a legal entity a holding company is connected The definition of objects connected holding a subsoil use right, with subsoil use in Kazakhstan. From with subsoil use rights (Objects) is as well as a legal entity which Kazakhstan law perspective, transfer broad and includes: may directly and/or indirectly of such participatory interests and determine, and/or influence, the shares would require the competent • Participatory interests and shares decisions adopted by a subsoil body’s consent only if they constitute in a legal entity holding a subsoil user if the principal activity of Objects. use right, as well as in a legal such legal entity is connected with entity which may directly and/ subsoil use in Kazakhstan. It is generally accepted that the or indirectly determine, and/or activities of a holding company influence, decisions adopted by a As seen from the above definition, include those of its subsidiaries. subsoil user if the principal activity participatory interests and shares Unfortunately, Kazakhstan law does of such legal entity is connected in ultimate or intermediary holding not contain any rules or tests for with subsoil use in Kazakhstan. companies (wherever incorporated) of a Kazakhstan subsoil user are determining whether the “principal
8 dentons.com activity” of a given company is Kazakhstan, is to analyze the wording The response provided by the RK connected with subsoil use in of the foundation documents of the Ministry of Energy3 is not clear at all Kazakhstan. Criteria for determining respective entity. If these documents and only contains a general reference the level of activity in Kazakhstan is mention that the purpose of the to the fact that an entity’s foundation not clear: should it be such criteria entity or its principal activity is documents shall reflect the description as value of assets, level of profits, to be engaged in subsoil use or of its principal activity. amount of reserves, number of associated operations in Kazakhstan, employees, etc. This legal gap then such entity’s principal activity Therefore, as a practical matter, if it creates a lot of confusion in practice. should be considered connected could be demonstrated that by each In the absence of clear guidance, it with subsoil use in Kazakhstan. The of the possible criteria all activities is often difficult to reach a definitive Ministry further notes that if the of a relevant entity worldwide on a conclusion on whether the principal entity’s foundation documents do country-by-country basis, as well as activity of a foreign company is not allow to determine its principal on an overall basis, are less than 50 associated with subsoil use in activity, analogy with Article 192.1 percent, then it could be possible to Kazakhstan or not. of Kazakhstan’s Tax Code should invoke the exemption. However, even be made. It could be concluded in such case there would be a risk of For the purposes of getting based on this analogy that the the competent body taking a different guidance on this issue, we applied entity’s principal activity should view. Therefore, if the parties would for clarification to the RK Ministry of be treated as connected with like to use this exemption, and there is Investments and Development and subsoil use in Kazakhstan if the any doubt, the risk could be avoided the RK Ministry of Energy. assets of a Kazakhstan subsoil user by receiving a prior view from the constitute 50 percent or more of competent body in this respect. Pursuant to the clarifications the value of such a foreign entity’s provided by the RK Ministry of assets or shares. We note that this The Subsoil Law also exempts certain - Investments and Development , is an unofficial interpretation of types of transactions from the consent the first criterion to determine Kazakhstan law by the Ministry and requirement. For example, transfer of whether the entity’s main activity does not have obligatory force for a subsoil use right or Object between is connected with subsoil use in the State authorities. legal entities, in each of which not
dentons.com 9 less than 99 percent interest (shares) on disposal of subsoil use rights by are owned, directly or indirectly, by In Kazakhstan the affiliated or other persons, as well as the same entity or person, does not of participatory interests or shares in require the competent body’s consent, transfer of subsoil its charter capital. provided that an acquirer is not use rights and/or registered in a country with preferential objects connected 3. Groundwater: a minor issue tax treatment. that can become a significant therewith is subject to problem 2. Notification requirement a prior consent of the When selling or buying Objects (for Article 37.11 of the Subsoil Law example, shares in an oil producing requires a purchaser of a subsoil competent body. company or in its parent company), use right or Object to notify the Law and was introduced only during the parties must identify carefully competent body about a relevant the subsequent discussions of the all subsoil use rights pertaining to transaction within five business days draft in the Kazakhstan Parliament. a Kazakhstan operating company. of the completion date. According According to the parliamentarian It happens sometimes in practice to Article 36.14 of the Subsoil Law, Zhamalov,4 this requirement was that oil exploration and production failure to do so shall be reason to necessary for tax administration companies have, in addition to their invalidate of the transaction. The law purposes and occasioned by Article main subsoil use rights, certain rights does not provide any exemptions 583.6 of the Kazakhstan Tax Code with respect to groundwater. In these from this rule and does not establish which requires the competent body cases, a separate consent would any inter-dependence between the in the field of subsoil use to provide be required from the RK Ministry of notification requirement and the the tax authorities with information Investments and Development for consent requirement. on participants and parameters of a completion of a transaction. This transaction that entails tax obligations consent would be in addition to the However, it happens sometimes in in Kazakhstan within 10 business days consent of the RK Ministry of Energy. practice that acquirers decide not to of the completion date. Failure to obtain it would entail a risk submit a notification simply because of invalidating the entire transaction, their transaction is not subject to the Therefore, any transaction on although the value of an oil consent requirement. transfer of a subsoil use right or exploration or production company’s Object is subject to the notification rights to groundwater could be In our view, the notification requirement. As failure to comply insignificant if compared with its oil requirement applies in all cases of with this requirement could invalidate exploration or production rights. transfer of a subsoil use right or the transfer, it is recommended that Object regardless of whether such a acquirers always notify the competent In Kazakhstan the subsoil use transfer is exempt from the consent body about their transactions. rights to groundwater are granted requirement or not. Such conclusion in different forms: (i) a subsoil use follows from literal interpretation of the An additional notification contract for exploration or production law which does not link the notification requirement is envisaged by Article of groundwater; (ii) a permit for requirement and the consent 76.1.30 of the Subsoil Law. This time production of groundwater of requirement. An analysis of the this requirement applies to subsoil drinking and industrial purpose with historical background of enactment of users and not to the parties of the production limits from 50 to 2,000 the notification requirement also bears transaction. A subsoil user has an cubic meters per day; and (iii) a out this interpretation. obligation to, inter alia, notify the permit for exploration or production competent body within 5 days of the of technical groundwater in volumes The notification requirement was completion date about transactions more than 2,000 cubic meters per day absent in the initial draft of the Subsoil for their injection into the stratum in
10 dentons.com connection with extraction of minerals in such a subsoil user or its direct or competent body. However, the need or for production of groundwater for indirect holding companies. According to obtain this waiver complicates the purpose of dewatering during the to the Subsoil Law, wide-spread the overall process of obtaining the mining operations. minerals include sand, clay, gravel and consent. other minerals used in their natural Under the Subsoil Law, all these state or with little processing and rights to groundwater are considered cleaning mainly for the satisfaction of to be subsoil use rights and, local economic needs. The mentioned consequently, the consent of the consent is not required if a subsoil use RK Ministry of Investments and right is for production of wide-spread Development should generally minerals for the satisfaction of the be necessary for their transfer or user’s own economic needs. transfer of Objects connected Nurzhan Albanov therewith. However, the problem is 4. Fields of strategic importance Senior Associate that in practice the Ministry provides Under the Subsoil Law, the Republic Nurzhan focuses on oil and gas consents only with respect to those of Kazakhstan has a priority right and mining projects, M&A and subsoil use rights that are granted to purchase subsoil use rights and corporate law. In addition to through execution of subsoil use Objects related to fields of strategic counseling on Kazakh law, Nurzhan contracts. This is because a contract importance. In this case, a relevant regularly advises investors on for exploration or production of transaction would also be subject Kyrgyz law issues. His practice, groundwater is concluded between to the waiver by the Republic of to a large extent, is dedicated to the Ministry and a subsoil user, while Kazakhstan of its priority right. consulting major subsoil users and the Ministry itself is not directly financial organizations on various engaged in the process of granting It is within the RK Government’s matters of doing business in both the above mentioned permits (ii) competence to approve the list of Kazakhstan and Kyrgyzstan. and (iii). These issues require careful fields having strategic importance. analysis on a case-by-case basis. Therefore, when conducting M&A transactions in the field of subsoil Similarly, if a Kazakhstan subsoil user use, it is always recommended to also has the rights for exploration or verify whether a relevant field falls production of wide-spread minerals, within this list. then the additional consent of local 3Available at http://blogs.e.gov.kz/ru/ bodies would be necessary for transfer The waiver and consent are normally blogs/isekeshev_a/questions/296283 4Available at http://blogs.e.gov.kz/ru/ ofDRAFT participatory interests or shares expressed in one letter issued by the blogs/shkolnik_v/questions/296280 Common pharmaceutical market of the Eurasian Economic Union: rules of access and competition Akylbek Kussainov, Ilmira Yuldasheva
DRAFT Since the breakup of the Soviet Union, the former Soviet republics have been on a quest for independent development. At the same time, modern trends in international relations and inter-dependence of the post-Soviet economies, once part of a common and centralized economic complex, have prompted these nations to find ways to work together and integrate in order to expand economic cooperation.
Serious integration processes in on common principles. Taking into one-third of the commodity items, terms of expanding economic account that such a market should including pharmaceuticals) into the cooperation began in 2009, when commence functioning in the near territory of Kazakhstan for sale in the an agreement was signed to create future, one of the first agreements domestic market would be subject a common customs space in the signed within the Treaty’s framework to lower customs tariffs as compared territory of Belarus, Kazakhstan and was, therefore, an Agreement on to the tariffs set for the EEU. It is Russia. The agreements to establish common principles and rules of anticipated that relevant administrative a Customs Union became effective turnover of pharmaceuticals within the mechanisms will be introduced in order in July 2010, and in December of that Eurasian Economic Union, dated 23 to regulate these matters which will year—at a summit of the Eurasian December 2014 (the Agreement.) The allow applying the EEU customs tariffs Economic Union—an agreement was Agreement was ratified in accordance when moving such goods across the reached to establish the Eurasian with the law of the Republic of border to the other EEU member states Economic Union (the EEU or Union) Kazakhstan dated 12 October 2015. (i.e. out of the territory of Kazakhstan.) on the basis of the Common Economic space of Belarus, The Agreement sets common This article examines the matters of Kazakhstan and Russia. A couple principles and rules for the turnover of access and sale of pharmaceuticals of years later, the aforementioned pharmaceuticals within the common within the common pharmaceutical agreement was implemented, and market. However, there remain a market of the Union as well as general a tri-party treaty on the Eurasian great number of questions about rules of competition which will need Economic Union was signed on 29 how this will be implemented in to be followed by the pharmaceutical May 2014 at a summit in Astana (the practice. Moreover, considering that market participants. Treaty.) The Treaty came into force on many pharmaceutical companies are 1 January 2015. working in the territory of the member Access to the common states through their distributors, there market of pharmaceutical One of the first common markets within will be questions in this regard as products within the Union the Union will be a common market of well, in particular with respect to how Regulation of the common market pharmaceuticals which should begin the economic activity of the market of pharmaceuticals functioning as early as 1 January 2016. participants will be coordinated. As stated above, since the beginning Article 30 of the Treaty states that the of 2016 the common market of member-states shall create, within the It should be noted that in view of pharmaceuticals within the Union framework of the Union, a common Kazakhstan’s recent acceptance to will be regulated in accordance market of pharmaceuticals which will the WTO,5 Kazakhstan has assumed with the Treaty and the Agreement. comply with the standards of good obligations whereby the import For the purposes of implementing pharmaceutical practices and be based of certain goods (approximately the Agreement, which lays out the
5 As a reminder, the negotiations on Kazakhstan joining the WTO were finalized in mid-2015. In early October 2015, Senate of the Parliament of the Republic of Kazakhstan ratified the Protocol of Kazakhstan joining the Marrakesh agreement establishing the World Trade Organisation of 15 April 1994. After all necessary procedures have been completed, Kazakhstan will become the 162nd member state of the WTO.
6V. Boitsov, Drugs for the Union, http://www.rg.ru/2015/02/10/lekarstva1.html.
dentons.com 13 principal rules for the turnover of national pharmaceutical markets in the never registered on the territory of pharmaceuticals within the Union, it member states will continue to operate any of the member states before (i.e. is also anticipated that a number of throughout the transitional period. before 1 January 2016) remains open. documents would be adopted by The Agreement does not explicitly the Eurasian Economic Commission Therefore, despite the practical provide that such pharmaceuticals “which will result in a significant degree difficulties of implementing the goals must be registered under the common of harmonization of the systems set by the Agreement, it is anticipated rules of the Union. Nevertheless, the of regulation of pharmaceuticals.”6 that starting from the beginning of Agreement envisages the transitional In particular, it is anticipated that 2016, pharmaceuticals will be sold period as stated above during which common rules for registration and in the Union member states in the the national pharmaceutical markets expertise of pharmaceuticals, common following manner: will continue to operate along with requirements for labeling and package the common one. There is an opinion leaflets, as well as other documents, 1) Sale of pharmaceutical that starting from 1 January 2016 such would be adopted. Through the products on the common “new pharmaceuticals” will have to be adoption of such documents, the market within the Union registered under the common rules. plan is to ensure the consistency of Pharmaceuticals registered in How this matter will be dealt with in mandatory requirements for safety and accordance with the procedure practice, however, remains to be seen. quality of pharmaceuticals across the established by the Eurasian Economic territory of the Union. Commission (the EEC”) and Certain matters such as, among registered in the Unified Register of others, licensing of the pharmaceutical In terms of the practical Pharmaceuticals (the Unified Register) market participants, advertising implementation of the Agreement, it may be sold freely in the territories of of pharmaceuticals and activity of should be noted that the Agreement all the member states of the Union.9 pharmacies are left outside the scope provides for a transitional period until of the common regulation. Those 31 December 20257 during which the 2) Sale of pharmaceutical matters as well as other issues that pharmaceuticals which have been products in the national are not covered in the Agreement will registered before 1 January 2016 markets of the member states be regulated by national legislation within the territories of the Union of the Union in accordance with the laws of each member states should be brought The Agreement does not provide particular member state. into compliance with the Union’s for an automatic inclusion into requirements and rules. In addition, the Unified Register of those Registration of the Agreement envisages that those pharmaceuticals that were registered pharmaceutical products pharmaceuticals that were authorized in the territory of the member states under the common rules for sale in the territory of the member before 1 January 2016. Therefore, The Agreement does not provide for states will be allowed for sale in such products may be sold only on the establishment of a supra-national those states until the expiry of their the relevant national markets up until body which would be responsible for registration certificate.8 In this regard, the expiry of the transitional period. the registration of pharmaceuticals it appears that once the common intended for sale in the common market of pharmaceuticals begins At the same time, the question about market. It is anticipated that an functioning within the Union, the those pharmaceuticals which were applicant will have the ability to apply
7Clause 1 Article 20 of the Agreement. 8Clause 2 Article 8 of the Agreement 9Clause 1 of Article 8 of the Agreement.
14 dentons.com for registration of pharmaceuticals 2) Mutual recognition – at an If, however, the referring state’s expert in the territory of one of the member applicant’s discretion, the evaluation report is not approved by states (i.e. reference state). pharmaceutical may be the recognizing state, the documents recognized in other member will be handed over to the Expert Registration of pharmaceuticals will states (recognizing states). Committee on Pharmaceuticals under be carried out in accordance with the the EEC Collegium for the settlement rules of registration and expertise of During the first stage, the authorized of any disagreement. Based on the pharmaceuticals as approved by a body of the reference state will carry results of the settlement procedure, resolution of the EEC.10 As of today, out expertise of the pharmaceutical the recognizing state’s authorized body a draft of the Rules of Registration and, if positive, will issue a registration will make a decision as to whether the and Expertise of Pharmaceuticals certificate to the applicant and will registration will be granted or denied. for Medical Use has been developed make an entry on the pharmaceutical (the Draft Rules of Registration of in the Unified Register. Therefore, based on the results of Pharmaceuticals), and the discussion the mutual recognition procedure, thereof concluded. During the second stage, after the a pharmaceutical may be permitted pharmaceutical is registered in for sale in the territory of the referring It follows from the Draft Rules of the reference state (i.e. when the state and those recognizing states Registration of Pharmaceuticals registration in one of the Union which have decided on the registration (Section III) that pharmaceuticals member states is made) the applicant favorably (i.e. in the reference state and will be registered according may apply to the authorized bodies in one or more recognizing states). to a consecutive procedure or expert organizations of other (mutual recognition procedure) member states and for registration of Under the decentralized registration or a simultaneous procedure the pharmaceutical under the mutual procedure it is anticipated that the (decentralized registration procedure). recognition procedure. The expertise registration of a pharmaceutical will be Below is a brief summary of these of pharmaceuticals in the recognizing carried out by several member states. procedures as provided in the states is carried out in the form of The applicant independently selects Draft Rules of Registration of a review of the applicant’s request the reference state when lodging the Pharmaceuticals available on the and supporting documents as well registration request (i.e. in those cases EEU’s electronic law portal.11 as an expert evaluation report of the where there is no registration in place in reference state. If the recognizing state any one of the member states). Under the mutual recognition approves the reference state’s expert procedure it is anticipated that the evaluation report and issues a positive Registration of a pharmaceutical registration of a pharmaceutical will decision on the registration of the under the decentralized registration be made in two stages: pharmaceutical, then the recognizing procedure is also carried out in two state will issue a registration certificate stages which occur simultaneously: 1) National registration – the to the applicant, on the basis of which reference state carries out such pharmaceutical will be granted 1) Registration in the reference state; registration for the purposes of the permission to be sold in the territory of 2) Approval of the expert evaluation pharmaceutical in question being the recognizing state. sold in the market of such state report in the recognizing states.
10Clause 1 of Article 7 of the Agreement. In accordance with clause 7 of Article 7 of the Agreement, it is anticipated that when carrying out registration and expertise of pharmaceutical products, the member states of the EEU will be mutually recognizing the results of preclinical (non-clinical), clinical and other studies (tests) of pharmaceutical products, the results of inspections of production, preclinical (non-clinical), clinical studies (tests) of pharmaceutical products, and systems of pharmacological control, for their compliance with good pharmaceutical practices and requirements as established by the Eurasian Economic Commission.
11See: https://docs.eaeunion.org/ru-ru/Pages/DisplayRIA.aspx?s=e1f13d1d-5914-465c-835f-2aa3762eddda&w=9260b414-defe-45cc-88a3- eb5c73238076&l=d70984cf-725d-4790-9b12-19604c34148c&EntityID=587.
dentons.com 15 For the purpose of registration Union. At the same time, despite the domination by an individual market under this procedure, the authorized creation of the common market of participant, and not less than 50% bodies of both the reference state pharmaceuticals, each member state or 70% of domination by several and recognizing state work together will keep an individual approach to market participants)14 which result to carry out expert examination of the registration of pharmaceuticals. or may result in the prevention, a pharmaceutical. If both states’ limitation, elimination of competition authorised bodies make favorable In addition, it is worth noting that and (or) impairment of the interests decisions on the registration, the the Agreement provides for those of third parties, are prohibited;15 applicant is issued the relevant categories of pharmaceuticals which registration certificates. are not subject to registration within 2) unfair competition is not allowed;16 the Union.12 If a decision is made to deny 3) 3) Agreements between registration, the reference state’s Rules of competition in the competing business entities (market authorized body notifies the common pharmaceutical participants) of the member states applicant accordingly. market carrying out their activity within the As noted above, from 2016 the same market which result or may Therefore, based on the Draft Rules manufacturers of pharmaceuticals result in certain consequences,17 are of Registration of Pharmaceuticals will be able to complete registration prohibited; as a result of the decentralized under the common rules in one of registration procedure, a the EEC member states and gain 4) 4) “Vertical” agreements pharmaceutical may be registered in access to the common market without between business entities (market the reference state and the relevant having to wait until their national entities) are prohibited, except for recognizing states. At the same registration certificates expire. Since “vertical” agreements which have time, it is not entirely clear what that moment, the manufacturers will been recognized as permissible decision will be made in practice, if need to bear in mind that a cross in accordance with the criteria of 18 disagreement between the member border market may be triggered13 in permissibility; states which have considered the the event the pharmaceuticals are sold 5) Other agreements between application (for example, when two/ in the territory of two or more member business entities (market three states give positive opinions, states, and consequently the Union’s participants) are prohibited, whereas one or two give negative common principles and rules of except for “vertical” agreements opinions) remains. competition will need to be applied. which have been recognized as In light of the foregoing, the General rules of competition permissible in accordance with 19 manufacturers of pharmaceuticals According to the general rules of the criteria of permissibility, if it will have the possibility to choose competition, as provided for in the has been established that such the reference state to lodge an Agreement: agreements result or may result in application for registration and to limitation of competition; and select the procedure for registration 1) Acts (omission to act) of a market of pharmaceuticals that are intended participant holding the dominant 6) individuals, commercial and non- for sale in the common market of the position (i.e. not less than 35% of commercial entities are prohibited
12Clause 6 of Article 7 of the Agreement.
16 dentons.com from coordinating economic common market of the Union. If a Agreements between business entities activity of business entities (market pharmaceutical is included into the (market participants) of the member participants) of the member Unified Register and thus permitted states, which are competing and which states, if such coordination for sale in the common market of the carry out their activity on one and same results or may result in any of the Union, entering into a distributorship market, that result or may result in: consequences specified in items contract confining the sales of such “(3)” and “(4)” above which may pharmaceutical (for instance, to the • Setting or maintaining of prices not be recognized as permissible territory of only one certain member (tariffs), discounts, increases in accordance with the criteria of state) may conflict with the common (surcharges), mark-ups; permissibility. rules of competition as set out in the Agreement. Such provisions • Increase, decrease or Entering into distributorship of distributorship contracts maintenance of prices at auctions; contracts in the new reality may particularly be qualified as • Division of the commodity market Practice shows that today many “coordination by business entities by territory, volume of sales or pharmaceutical companies work of economic activity of business purchase of goods, assortment of through distributors and enter into entities (market participants) of the goods on sale, or composition of individual distributorship contracts member states” or as other “vertical” sellers or buyers (customers); generally dividing the EEC market by relations which are not recognised as the territories of member states. It permissible in accordance with the • Reduction or termination of may well be that the manufacturers criteria of permissibility, and which production of goods; or have their own commercial reasons result or may result in limitation of for that. However, from a legal point competition.” • Refusal to deal with certain sellers of view, this is also explained by the or buyers (customers).20 fact that up until the present there Moreover, other coordination of have been different requirements and economic activity of business “vertical” agreements between rules for sales of pharmaceuticals as entities (market participants) of business entities (market entities), well as national rules of competition the member states (including by except for “vertical” agreement that in each member state. means of distributorship contracts) are deemed permissible, if: is prohibited, if such coordination From 2016, pharmaceutical results or may result in any of the • Such agreements result or may companies and distributors will following consequences which result in fixation of resale price for also need to adhere to common may not be deemed permissible the goods, except for cases when rules of competition when selling in accordance with the criteria of a seller sets the maximum resale pharmaceuticals admitted to the permissibility: price for a buyer;
13In accordance with Clause 2 of the Resolution of the Supreme Eurasian Economic Council No. 29 dated 19 December 2012: “…a market shall be deemed transboundary if geographic boundaries of the commodity market extend over the territory of two or more member states.” 14See Resolution of the Supreme Eurasian Economic Council No. 29 of 19 December 2012. 15 Clause 1 of Article 76 of the Treaty, further, explains which acts (omissions to act) specifically are prohibited. 16 Clause 2 of Article 76 of the Treaty, further, lists the types of unfair competition. 17Clause 3 of Article 76 of the Treaty, further, disclosed the consequences such agreements result or may result in. 18Clause 4 of Article 76 of the Treaty, further, lists the types of vertical agreements. 19In accordance with Annex 19 to the Treaty, agreements may be deemed permissible if they do not impose on business entities (market entities) limitations which are not necessary for obtaining the purpose of such agreements, and do not create possibilities for eliminating competition in the relevant commodity market, and if the business entities (market entities) prove that such agreements result or may result in: 1) improvement of production (sale) of goods or stimulation of technological (economic) progress or increase of competitiveness of the goods manufactured by the member states on the global commodity markets; 2) receipt by the consumers of the commensurable share of benefits (profits) which the involved persons obtained as a result of such actions. Conversely, “vertical” agreements are permissible if: 1) such agreements are the contracts of commercial concession; 2) the share of each business (market) entity participating in such an agreement on the commodity market that is subject of such “vertical” agreement does not exceed 20 percent.
dentons.com 17 • Such agreements provide for a may be sold freely in the territory buyer’s obligation not to sell the of those states which issued the goods of the business entity (market national registration. Under such an participant) that is in competition to approach, during the transitional the seller. Such prohibition does not period the pharmaceutical companies extend to agreements for the buyer’s will most likely be able to enter into sale of goods under a trademark or distributorship contracts dividing the Akylbek Kussainov other means of individualization of a common EEU market (for example, by Associate, Head of Dentons’ seller or manufacturer.21 the territories of individual member Kazakhstan Competition Practice states). Akylbek focuses on real estate Pharmaceutical companies and/or and corporate/commercial their distributors may also violate For the sake of fairness, it should be law with a particular focus on other common rules of competition noted that the participants of the competition issues. His experience as listed above. pharmaceutical market should in any includes drafting due diligence case comply with the requirements reports and complex analysis of At the same time, if pharmaceutical of the national legislation in effect clients’ operations from various companies wish to keep their national in the relevant member states. perspectives in advance of M&A registration certificate, throughout However, this article does not transactions, as well as counseling the transitional period (i.e. up until the examine the requirements and on anti-corruption issues. end of 2025) the pharmaceuticals specifics of national legislation.
Ilmira Yuldasheva Associate Ilmira focuses on corporate, antimonopoly and securities law and has particular experience advising on creating business ventures, corporate structuring, arranging and closing M&A transactions. She regularly acts for a broad range of companies in the pharmaceutical, fashion and beauty, FMCG and energy industries.
20Clause 3 of Article 76 of the Treaty. 21Clause 4 of Article 76 of the Treaty.
18 dentons.com IP legislation has undergone changes Aliya Seitova
Interested NGOs, representatives of foreign investors in Kazakhstan22 and patent attorneys have campaigned for amendments to the IP legislative acts of the Republic of Kazakhstan in order to reduce the amount of time it takes to register a trademark; to simplify the procedure for registration of IP rights transfer agreements; and to make the regulation in general more “user-friendly” for titleholders. As a result, the Law on Amendments to Certain Legislative Acts of the Republic of Kazakhstan on the Issues of Legal Regulation in the Area of Intellectual Property was adopted with effect from 20 April 2015.
Exhaustion and parallel import national principle of exhaustion, which the Eurasian Economic Commission The Trademark Law now was contrary to the obligations of the to develop exceptions from the establishes a regional principle of Republic of Kazakhstan under the regional principle of exhaustion ‘exhaustion’. This change is related EAEU Agreement. of trademark rights for certain to the harmonization of the national categories of goods in the territory The regional (as well as the national) legislation with the provisions of the of the EAEU. If these amendments principle of exhaustion implies that Agreement on the Eurasian Economic are adopted, in exceptional cases the it is not possible to import, without Union (EAEU). A number of actions international principle of exhaustion the permission of the trademark in respect of a product, which has of rights will be in effect and the owner (parallel import), a trademark been lawfully introduced into civil parallel import of goods into the product into the EAEU, but deprives circulation in the EAEU by a trademark EAEU will be allowed. According the trademark owner of the right to owner itself or upon its consent, does to some media, parallel imports subsequently control the circulation not constitute an infringement of the could be allowed in respect of of the product in the Union’s territory. exclusive right to the trademark. Prior pharmaceuticals, medical products to the adoption of the amendments, and automotive parts. On 11 March 2015, it was proposed at 1 European Business Association of Kazakhstan the trademark law provided for a the meeting of the working group of (EUROBAK) and the American Chamber of Commerce in Kazakhstan (AmCham).
dentons.com 19 Simplified registration of expert organization may require Abolished certificates of assignment and licensing submission of evidence in respect trademark registration agreements of any statement contained in the After the entry of the Law into force, The Singapore Treaty on the Law of application for registration. Such registration certificates will no longer Trademarks 2006 came into force documents may include: be issued to trademark owners, and for the Republic of Kazakhstan on 5 the exclusive right to a trademark will • a certified (by a public notary or September 2012. It allows for simplified be certified by a registration entry in any other competent authority) procedures for amending trademark the State Register of Trademarks of extract from an assignment or registrations, registering trademarks, the RK and confirmed by an extract licensing agreement identifying licensing agreements and assignment from such Register. the parties and the scope of rights agreements as well as for trademark being assigned/licensed; renewal and some other procedures. Simplified procedure for the In practice, however, there have been transfer of the right to obtain • an uncertified application for difficulties in the application of the a trademark registration the registration of a license or treaty. The rules of the Singapore Treaty From the date the Law enters into force, assignment agreement, the content have not yet been fully implemented applicants will have the right to apply of which corresponds to the into the national legislation. for the assignment of a trademark application form signed by both the application without executing and owner and the assignee/licensee. Currently, the trademark law registering an assignment agreement. provides that the expert examination Neither the Law on amendments to Instead, they will be able just to file an and registration of agreements certain RK legislative acts on IP legal application with the expert organization. on the transfer of trademark regulation nor the trademark law Previously, in order to assign a rights (assignment and licensing provide for direct application of other trademark application, it was necessary agreements) is to be carried out in provisions of the Singapore Treaty to execute and register an assignment accordance with the provisions of the not dealing with the registration of agreement. Singapore Treaty, if one of the parties assignment or licensing agreements. to the agreement is an individual or a Reduced timing of the legal entity of a foreign member state The introduced amendments regarding trademarks registration of the Treaty. Where both parties to the application of the Singapore The Law establishes timeframes for all a trademark transfer agreement are Treaty are progressive as a whole stages of the expert examination of an Kazakhstan persons, the provisions of and accommodate the interests of application for trademark registration the Treaty do not apply. titleholders with respect to reducing and specifies in detail the timing of and simplifying various registration the approval of preliminary and final The Singapore Treaty rules procedures with the state authorities. expert opinions by the Ministry of prohibit the expert organization However, it is too soon to assert that Justice, and the timing of the delivery from requesting submission of an comfortable conditions have been of such opinions to the applicants. assignment agreement or licensing created for business. The Treaty allows This amendment is significant and will agreement itself or a translation some freedom to patent agencies in contribute to a reduction in the time thereof or specification of the determining a list of documents which taken to register a trademark. financial terms thereof. Therefore, the may be enquired from titleholders during registration of license agreements registration. Only the practice of the Change in the list of absolute must now be carried out on the expert organization and the authorized grounds for refusal in basis of an application specifying body will show to what extent the trademark registration the parties to the agreement, the interests of titleholders are respected. The list has again been changed. scope of the transferred rights and Now, the registration is refused if other information. However, the
20 dentons.com a trademark consists exclusively associated with the applied goods designs, selection achievements, of designations which are non- and/or services. trademarks and integrated circuit distinctive or represent the topographies, if registered). Earlier, international unpatentable names Mandatory registration of a the Franchising Law established that of pharmaceuticals (e.g., amoxicillin, franchising agreement such agreement had be executed ampicillin). The direct associative The RK Civil Code sets the rule for in a simple written form. Now, the connection with goods or services the mandatory state registration of a provisions on the registration of a for the designation of which franchising agreement. It specifically licensing agreement will apply to trademarks are used has been states that franchising agreements the procedure for the registration of excluded from the list of absolute are subject to registration with franchising agreements. grounds. Previously, the existence of respect of intellectual property items, such ground for refusal precluded the exclusive right to which arises the registration of almost all from the moment of their registration Aliya Seitova trademarks that could howsoever be (inventions, utility models, industrial Associate, Patent Attorney
dentons.com 21 Intellectual Property treaties to which the Republic of Kazakhstan is a party
Group of Treaties Treaties Entry into force Intellectual property covered General World Intellectual Property December 25, 1991/ The constituent instrument Organization (WIPO) Declaration of continued of the World Intellectual Convention application – February Property Organization 16, 1993 IP Protection Berne Convention for the April 12, 1999 Copyright items This group of Protection of Literary and treaties defines the Artistic Works, 1886 internationally agreed Nairobi Treaty on the Protection March 9, 2011 Olympic symbol basic standards of of the Olympic Symbol, 1981 intellectual property Paris Convention for the December 25, 1991/ Inventions, protection in each Protection of Industrial Declaration of continued country. Property, 1883 application – February industrial designs, 16, 1993 utility models, trademarks, trade names (designations under which an industrial or commercial activity is carried out), geographical indications (indications of source and appellations of origin). The agreement covers provisions related to of unfair competition Patent Law Treaty, 2000 October 19, 2011 Inventions Convention for the August 3, 2001 Related rights objects, Protection of Producers namely phonograms of Phonograms against Unauthorized Duplication of their Phonograms, 1971 Trademark Law Treaty, 1994 November 7, 2002 Trademarks WIPO Copyright Treaty, 1996 November 12, 2004 Copyright items WIPO Performances and Related rights items, Phonograms Treaty, 1996 namely phonograms and November 12, 2004 performances Singapore Treaty on September 5, 2012 Trademarks Trademark Law, 2006`
22 dentons.com Rome Convention for the June 30, 2012 Related rights objects, Protection of Performers, namely performances, Producers of Phonograms and phonograms and Broadcasting Organizations, broadcasts 1961 Global Protection Budapest Treaty on the April 24, 2002 Inventions System International Recognition This group of treaties of the Deposit of ensures that one Microorganisms for the international filing can Purposes of Patent Procedure, be further transferred to 1977 the relevant signatory Madrid Agreement December 25, 1991/ Trademarks states for substantive Concerning the International Declaration of continued examination based Registration of Marks, 1891 application – February on which the decision 16, 1993 on grant of protection Protocol Relating to December 8, 2010 Trademarks in rendered by each the Madrid Agreement signatory state (except Concerning the International Eurasian Patent Registration of Marks, 1989 Convention according to which one title Patent Cooperation Treaty, December 25, 1991/ Inventions document is valid in 1970 Declaration of continued all member-states). application – February The services provided 16, 1993 by WIPO under these Eurasian Patent Convention, November 5, 1995 Inventions treaties simplify and 1994 reduce the cost of making individual applications or filings in all countries in which protection is sought for a given intellectual property right. Classification Locarno Agreement November 7, 2002 Industrial Designs Conventions Establishing an International This group of treaties Classification for Industrial consists of classification Designs, 1968 treaties which Nice Agreement Concerning April 24, 2002 Trademarks create classification the International Classification systems that organize of Goods and Services for the information concerning Purposes of the Registration inventions, trademarks of Marks, 1957 and industrial Strasbourg Agreement January 24, 2003 Inventions designs into indexed, Concerning the International manageable structures Patent Classification, 1971 for easy retrieval.
dentons.com 23 Exhaustion of trademark rights in the Eurasian Economic Union and distributor agreements Saule Massalina
The exhaustion of trademark rights implications the regional exhaustion rights in the use of the trademark together with the related question rule could have for certain provisions with respect to goods which have of parallel import is now a hot topic of distributor agreements.23 Finally, we been lawfully released into civil within the Eurasian Economic Union consider certain competition issues circulation on the territory of any (the EAEU). On 23 June 2014, the of the distributor agreements in the of the Member States directly by Eurasian Economic Commission EAEU context. the trademark rightholder or other (the executive body of the EAEU) persons upon its consent.” In other created the Working Group to study What Is Exhaustion? words, once trademarked goods are the question of the exhaustion and The principle of ‘exhaustion’ of lawfully released into free circulation parallel import. The Working Group trademark rights provides that it is not in Kazakhstan by the rightholder is currently considering solutions to an infringement of a trademark to use it or upon its consent, these goods balance the interests of industry (i.e. on goods which have been put on the may be further resold without the IP rightholders) and consumers. On 21 market within a particular territory by the rightholder’s consent in Kazakhstan, August 2015, the Working Group was trademark owner or with its consent. as well as in Russia, Belarus, Kyrgyz instructed to draft, by 31 December of Republic and Armenia. this year, amendments allowing the The EAEU Agreement, which took parallel import for selected categories force on 1 January 2015, sets forth The principal of regional exhaustion of goods. In this article, we first look the regional exhaustion of trademark is intended to struggle against at what the principle of exhaustion rights as follows: “There shall be parallel import, i.e. import of means, and then we discuss what found no infringement of trademark original trademarked goods from
23The same discussion may be applicable to dealer agreements.
24 dentons.com outside the EAEU but without the allow parallel import for selected rightholder is allowed to consent to rightholder’s consent. The exhaustion categories of goods. Therefore, it is such sale. The Territory Restriction is a principle is not completely new to expected that the existing system of case when the first sale is to be made to Kazakhstan law. In 2010 (with the regional exhaustion will be replaced the territory of another EAEU Member effect in Kazakhstan only in 2012), by a “hybrid” system of the regional State. Therefore, the rightholder would the principal of regional exhaustion exhaustion as the default rule with be entitled to restrict this first sale by was introduced within the framework international exhaustion in defined the Distributor to the territory of another of the Customs Union (i.e. between exceptional cases. Member State. Kazakhstan, Russia and Belarus). This principal can be contrasted with Distributor agreements and Form of the consent that of ‘international exhaustion’, the exhaustion principle The EAEU Agreement is silent on what that is, once the rightholder sells its Distribution agreements often qualifies as “consent.” In our view, this goods, they may be further sold and allocate a specific territory to the question is left for national laws to imported to any country in the world distributor, and require the distributor decide. According to Kazakhstan law, without restrictions. The recognition to obtain the prior consent of the the situation is not completely clear: of ‘international exhaustion’ legalizes supplier to supply goods outside of whether a consent letter would suffice the parallel import of goods. this territory (a Territory Restriction). or a licensing agreement is required. Among other contractual restraints Within the EAEU authorities and on the distributor, there may be a Rightholders certainly would be in national regulators of Kazakhstan, requirement for a rightholder’s prior a safer position if they conclude a there are now two opposing views. consent for the sale of goods to licensing agreement. A distributor Antimonopoly bodies insist that the certain persons (e.g. governmental agreement with incorporated licensing regional exhaustion be substituted organizations), and a restriction on provisions would have the same status by the international exhaustion, quantity of a product that may be as a licensing agreement. Without which would keep prices for sold per customer. the licensing agreement in place, use trademarked goods lower, thus of the trademark by the Distributor would protect competition and Rule of the “First Sale” would not be considered as “use” in consumers’ interests. Trade and In view of the freedom on movement the sense of the Trademark Law of economy regulators, on the contrary, of goods in the EAEU and the Kazakhstan. As a result, a trademark believe that the principal of regional exhaustion rule, the question arises would be vulnerable to an application exhaustion should be retained, as whether the Territory Restriction for cancellation on a non-use basis at it facilitates the development of which relates to a territory within the the instigation of any interested party. local industries. The pharmaceutical EAEU (e.g. Kazakhstan) is legitimate. industry, for example, argues that It should be noted that licensing moving to a principle of international We believe that it is legitimate for the agreements (thus also distributor exhaustion would cause the flow of following reason. agreements with incorporated licensing low quality medicine into the country. provisions) are subject to registration In our view, the exhaustion rule requires with the IP office in Kazakhstan and There has as yet been no solution that the “first sale” by the Distributor may be invalidated if not registered. adopted by the EAEU Working Group. on the EAEU territory must be on the If, however, the rightholder is from On 21 August 2015 the Council of rightholder’s consent, and further a country which is a signatory to the Eurasian Economic Commission sales do not need consent. Since the Singapore Treaty on the Law of convened and decided that the the market of the EAEU is common, Trademarks, instead of the licensing Working Group has to draft, by 31 regardless of whether the first sale is agreement, parties may simply file an December of this year, amendments made domestically or to the territory application for registration. to the EAEU Agreement that would of another EAEU Member State, the
dentons.com 25 Consent for Specific Goods The question is whether the What is also very important in Territory Restriction might qualify as the exhaustion rule is that the restricting access of the Distributor As a concluding note, the EAEU rightholder’s consent appears to to the market and thus be unlawful. legislation has only started to develop be for specific goods imported and and has not yet been tested in further sold by the Distributor. The Under the Competition Law of practice. In addition, while the EAEU consent is given for “goods which Kazakhstan, there are certain Agreement took force only on this have been lawfully released into civil exceptions when an agreement is not year, the Working Group studying circulation on the territory of any considered as an anti-competitive the question of exhaustion and of the Member States.” It may be agreement. One exception is related to parallel import is already considering concluded that where goods have agreements on the exercise of IP rights. amendments to the EAEU Agreement not yet been lawfully released into Distributor agreements are a mixed kind in the part of the regional exhaustion. free circulation, the rightholder has of agreements: they contain provisions Therefore, businesses operating on the not yet exercised its right to consent on organization of distributor’s business EAEU market are advised to receive to the sale of such goods. Therefore, and include conditions on exercise regular updates on relevant rules and the rightholder’s consent would not of IP rights. As mentioned, those regulations. cover all goods of the same type and conditions on IP rights in distributor of the same trademark that could be agreements are licensing provisions. If brought to the country in the future. those licensing provisions are drafted For each new import the rightholder’s and formalized taking into account of consent would be required. mandatory requirements of Kazakhstan law, we believe that such a distributor Distributor agreements and agreement could be considered as competition rules an agreement on exercise of IP rights Saule Massalina The Competition Law of Kazakhstan in the sense of the Competition Law. Senior Associate, Patent Attorney prohibits anti-competitive agreements Hence, a Territory Restriction would Saule focuses on intellectual between market entities that result not qualify as restricting access of the property law (with particular or may result in the restriction of Distributor to the market and would be emphasis on the protection competition, including agreements allowed. and enforcement of copyright, that restrict access to the market. trademark and patent rights), By paying attention to the way in information technology, media and which territorial distribution and According to the EAEU Agreement, telecommunications, corporate licensing arrangements are drafted, similarly, vertical agreements that and commercial law. She has such agreements may fall within the result or may result in the restriction more than 10 years’ experience of exception granted for IP licensing of competition shall be prohibited. transactions and advisory work in arrangements, and on this basis may Restriction of competition may be the telecommunications, energy, avoid a challenge to the validity of such seen, for example, in market entities’ pharmaceutical, luxury and fashion agreements on competition grounds. giving up from independent acts on a sectors. market, or in other circumstances that create a possibility for a market entity to influence the general conditions of circulation of goods unilaterally.
26 dentons.com Kazakhstan’s accession to the World Trade Organization: new local content requirements Nurzhan Albanov
On 9 November 2015, in connection with Kazakhstan’s accession to the WTO, amendments to the subsoil use legislation came into force and significantly altered the existing local content requirements. Below we summarize the key changes to the requirements for local content in goods, works and services and for personnel.
dentons.com 27 1. Local content in goods subsoil use contracts which were percent of the total number of • Newly concluded subsoil use concluded during the period all managers and experts in each contracts shall not contain any from September 2011 to the date respective category (to increase to requirements related to: of Kazakhstan’s accession to the 50 percent after 1 January 2022). WTO, shall be decreased down • Local content in goods. to 50 percent over the next five 3. Local content in personnel years (according to the terms • When hiring personnel, a subsoil • Support of Kazakhstan of Kazakhstan’s accession to user shall give preference to producers (for example, the the WTO ). Kazakhstan citizens, except in the existing requirement for a case of managers and specialists. conditional reduction of bids • The following requirements When engaging managers and received from Kazakhstan remain in effect: specialists within the framework producers of goods by 20 of intra-corporate transfers, the percent when determining • Kazakhstan producers of works number of Kazakhstan citizens the winner of a tender). and services must be granted a shall be at least 50 percent of putative 20 percent reduction in the total number of employees • There is a transitional period for the price of their bids during the in each respective category. subsoil use contracts concluded tender procedure. before 1 January 2015. Any • Existing subsoil use contracts, requirements in such contracts • Subsoil users and their which were concluded during regarding the local content contractors shall purchase the period from September in goods and the support of works nd services from 2011 to the date of Kazakhstan’s Kazakhstan producers are Kazakhstan producers, accession to the WTO, shall be effective only until 1 January 2021. provided that they satisfy amended over the next five the requirements of design years in order to bring them • If the term of a subsoil use documents and Kazakhstan law into compliance with the above contract concluded before on technical regulation. requirement (according to the 1 January 2015 is amended, terms of Kazakhstan’s accession • The term “Kazakhstan producer the “local content in goods” to the WTO). of works and services” means requirements existing thereunder individual entrepreneurs and shall be excluded. Kazakhstan legal entities, where at 2. Local content in works least 95 percent of all employees and services are citizens of Kazakhstan, without Nurzhan Albanov • The minimum local content of taking into account managers Senior Associate works and services in the newly and specialists engaged in labor concluded subsoil use contracts activities in Kazakhstan within shall not exceed 50 percent. the framework of intra-corporate transfers. At the same time, the • The minimum local content of number of such managers and works and services in existing specialists shall not exceed 25
28 dentons.com Accession to the World Trade Organization: Kazakhstan’s commitments related to intellectual property Aliya Seitova
The Protocol on Kazakhstan’s accession to the World Trade Organization (WTO) was signed in Geneva on 27 July 2015. In consideration of the accession, Kazakhstan has made specific commitments in 10 different sectors, including intellectual property. As an example, Kazakhstan committed to implement fully the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) as of the date of accession.
dentons.com 29 TRIPS is an international agreement property without the consent of administered by the WTO that sets The principle of the right holder; down minimum standards for many forms of intellectual property regulation. ‘exhaustion’ of 3. The RK Health Code: TRIPS remains the most comprehensive trademark rights amendments that provide for international agreement on intellectual provides that it is not requirements prohibiting the property to date. disclosure of information use an infringement of a in the registration of an original Specifically, TRIPS requires that the trademark to use it on pharmaceutical: an applicant protection and enforcement of all for registration of an original intellectual property rights shall goods which have been pharmaceutical will be provided meet the objectives of contributing put on the market within a period of six (6) years within to the promotion of technological a particular territory by which no other pharmaceutical innovation and to the transfer and containing the new chemical dissemination of technology, to the the trademark owner or substances may be registered mutual advantage of producers and with its consent. with a reference to the testing users of technological knowledge data and other inside information and in a manner conducive to social developed by the applicant of the and economic welfare, and to a 1. The RK Civil Code (special part), the original pharmaceutical. balance of rights and obligations. RK Administrative Code and the RK Trademark Law: amendments that The RK Parliament is expected to In order to bring Kazakhstan legislation provide for liability in case counterfeit ratify the accession documents by 31 into conformity with the provisions of goods are detected, trademarks October 2015. Kazakhstan will become TRIPS, a draft Law on Amendments are removed, goods are destroyed, a fully-fledged member 30 days after it to Some Legislative Acts of the except for cases where the right notifies the WTO of the ratification. Republic of Kazakhstan in Connection holder requests the transfer of such with the Accession to the World goods; Trade Organization was presented to the Majilis of the RK Parliament 2. The RK Patent Law: amendments in June 2015. It is planned that the that provide for the terms of issue Aliya Seitova following legislative acts in the area of for a compulsory license and the intellectual property will be amended: terms of use for items of industrial Associate, Patent Attorney
30 dentons.com Antimonopoly regulation of tenders
Elena Maksimenko, Akylbek Kussainov
In Kazakhstan, the regulation of tender procedures, both public and private, is generally divided into four categories:
1. Antimonopoly regulation of (prices, charge rates) or tariff maintenance of prices at tenders maximum levels and tariff cost tenders, or distortion of the Antimonopoly regulation of tenders sheets for regulated services results of tenders, auctions or is carried out by the antimonopoly (products, works) which are the trading, including by way of body – the Committee of the Ministry subject of a natural monopoly. separation by lots; of the National Economy of RK for • Under the RK Law on Competition b) agreements reached in any the Regulation of Natural Monopolies (Competition Law): in terms of form, which lead or may and Protection of Competition, and any anticompetitive agreement lead to the restriction of its territorial units: between market participants, competition, including those • Under the RK Law on Natural such as: related to the distortion of the Monopolies and Regulated results of tenders, auctions or a) horizontal agreements, i.e. Markets (Natural Monopolies trading due to the breach of those which infringe upon the Law): with respect to purchases, the established procedure for legitimate rights of consumers the expenses for which are taken conducting thereof, including and/or result/may result in into account in approving tariffs by way of separation by lots. the increase, decrease or
dentons.com 31 Antimonopoly regulation of tenders two applications for tariff approval agreements, the antimonopoly body conducted in accordance with the submitted by two subjects of natural does not take part in tenders. Usually RK Law on Natural Monopolies and monopoly on the basis of a violation the antimonopoly body is notified Regulated Markets is carried out by by the subjects of a natural monopoly of a violation of a tender procedure the antimonopoly body in exercising of the requirement to hold a tender by public bodies, the media, private the following powers vested upon it for the regulated services of water citizens, legal entities as well as by by the Law: supply system and access roads. way of actual discovery of the event of an antimonopoly violation. Often a) Canceling the results of a tender Antimonopoly regulation of tenders the motivation behind a notification held by a natural monopolist under the Competition Law is carried to the antimonopoly body made by a before it enters into an agreement out by the antimonopoly body in market participant is to remove unfair with the winner of a tender relation to both tenders conducted competition. Given that, it seems that conducted in violation of the RK in relation to government purchases, the market participants tend not to legislation and obliging it to hold a and tenders conducted by be fixed with administrative liability new tender; commercial entities. Under this Law, for anti-competitive agreements regulation is effected in two ways: entered into as a result of tenders. b) Rejecting an application by a The competition authority has a poor natural monopolist for the approval 1) Regulating horizontal agreements record when it comes to bringing of tariffs (prices, fee rates) or their which lead to an increase, market participants to administrative maximum levels if any violation is decrease or maintenance of liability for anticompetitive found in the course of examination prices at tenders, distortion of agreements entered into as a result of such application by the the results of tenders, auctions of or in connection with tenders. authorized body; or trading, including by way of separation by lots. The negative We note that application of the law in c) Initiating a change in tariffs consequences of such violation this area has not yet been laid down. (prices, fee rates), or maximum of the antimonopoly legislation However, it is already clear that in levels thereof, for regulated include the infringement upon the order to avoid the objections of the services (goods, work) of a natural legitimate rights of consumers of courts in the course of inspections monopolist, and approving of a goods, work and services. of the procedure of the tender for temporary compensating tariff to its legality and any violations, the reimburse losses to consumers Bearing in mind that the above rule was antimonopoly body has the right caused by the natural monopolist, if introduced recently, as from 6 March to engage experts from other State the authorized body found violations 2013, it is rarely applied in practice. bodies and cooperate with law resulting in losses to consumers enforcement bodies. In other words, 2) Regulating agreements which during the period when such tariffs having detected the violations in the distort the results of tenders, (prices, fee rates) or their maximum course of a tender, experts from the auctions, contests as a result of levels have been applied. authorized bodies of public revenue the violation of the established (Financial Control Committee, Experience shows that the procedure, which includes Public Revenue Departments, etc.) antimonopoly body rarely applies separation of lots, resulting in the issue administrative protocols and the first measure, while the second restriction of competition. examine administrative materials. measure is applied quite often. For After receipt of the results of the example, over the 1st quarter of 2012, Notwithstanding the fact that it administrative case, and review the Almaty Oblast Department of the is within the competence of the of the content of agreements of RK Agency on Regulation of Natural antimonopoly body to prevent the tender participants and upon Monopolies (the “DRNM”) refused the conclusion of anticompetitive completion of the antimonopoly
32 dentons.com investigation, the antimonopoly companies and their affiliated legal body may issue an administrative entities where 50% or more of the protocol under Part 1 of Article 159 (i.e. shares belong to the state. “Anticompetitive agreements”) of the new Administrative Code and forward Tenders held by the aforementioned it to the courts for examination. companies are regulated by the RK Law on the National Welfare Elena Maksimenko 2. Regulation of state Fund, the Rules for the Centralized Associate procurement Procurement of Goods, Work and Elena represents clients in disputes In Kazakhstan, the state procurement Services by Samruk-Kazyna JSC with various state authorities. procedure is regulated by the and the organizations, the 50% or Her clients include businesses in authorized body, which is the State more of voting shares of which are the consumer goods, food and Procurement Committee of the RK owned or held in trust by Samruk- beverages, telecommunications, Ministry of Finance, and, accordingly, Kazyna JSC (as approved by Decision and energy/natural resources the implementation and control No. 02/14 of the Board of Samruk- sectors. In addition to dispute functions are performed by the Kazyna JSC dated 22 January 2014 resolution, she also advises Financial Control Committee of the and as amended on 24 June 2014), on competition, employment, RK Ministry of Finance . the Rules for the Procurement of corporate and regulatory issues. Goods, Work and Services by Samruk- 3. Regulation of purchases Kazyna National Welfare Fund and of goods, work, services in organizations, the 50% or more voting the course of subsoil use shares of which are owned or held operations in trust by Samruk-Kazyna JSC (as The acquisition of goods, work and approved by Resolution No. 80 of the services in the course of subsoil use Board of Directors of Samruk-Kazyna operations is carried out through National Welfare Fund dated 26 May tenders (Article 77 (part 1) of the RK 2012, as amended as of 19 June 2015). Law on Subsoil and Subsoil Use) Akylbek Kussainov via the state informational system In the above case, the Authorized Body Associate, Head of Dentons’ ‘Register of Purchases of Subsoil responsible for procurement of goods, Kazakhstan Competition Practice Users’, the coordinator and operator work and services is represented by Akylbek focuses on real estate of which is the National Agency for a business unit of the Fund and/or and corporate/commercial the Development of Local Content by a subsidiary to be determined by law with a particular focus on Joint Stock Company (NADLoC) – the Fund’s Management Board. The competition issues. His experience whose shareholder is the Ministry for Tender Commission is the collective includes drafting due diligence Investment and Development of the RK. body established by a Customer/ reports and complex analysis of procurement arranger (unified clients’ operations from various 4. Purchases by Samruk- procurement arranger) for conducting perspectives in advance of M&A Kazyna National Welfare Fund procurement by way of a tender. transactions, as well as counseling JSC Customers may appeal against audit on anti-corruption issues. In Kazakhstan, the area of acts of the Authorized Body by applying government purchases includes, to the commission in charge of along with the state bodies, reviewing complaints on procurement agencies and enterprises, joint-stock issues, established within the Fund. companies where the government holds a controlling share, i.e. national
dentons.com 33 Reform of Kazakhstan’s corporate governance framework Igor Lukin
DRAFT One of the expected draft laws that will soon be submitted to the Parliament of the Republic of Kazakhstan is the draft Law “On Amendments to Some Legislative Acts of the Republic of Kazakhstan on Issues of Corporate Governance” (hereinafter, the Draft Law). Its purpose is to improve the Kazakhstan corporate governance framework and bring it into line with the world best standards. The text of the Draft Law as of the date of the writing of this article was not published. However, based on the concept of the Draft Law (hereinafter, the Concept), available from open sources,24 we can already form our first opinion on the key areas of the proposed reform.
The most important, in our view, of the executive body at any time or joint stock company may cease to be set of changes will be aimed at appeal the decisions of the executive mandatory. However, given the depth “separation of powers, functions body in court. Another fundamental of this change, it seems unlikely to us and responsibilities of the bodies problem is that the board structure at this stage of the development of of a joint stock company.” There is in Kazakhstan joint-stock companies corporate legislation of Kazakhstan. no doubt that for the purposes of as a whole is deformed: it does corporate governance a balanced not have any flexibility of a single- Another area of the reform is distribution of authorities between tier board structure (mandatory closely related to the previous one, the bodies of a company is crucial. In creation of an executive body), it is indicated in the concept as our opinion, such changes must first or strict division of the functions “a clear definition of the purpose address the issue of strengthening of control and management of a of an independent director.” The the control functions of the board of two-tier board structure (the chief Concept rightly points to a formal directors of Kazakhstan joint-stock executive officer has the right to be approach to the use of the institute companies. One of the main global a member of the board of directors of independent directorship in trends in corporate governance and its committees.) In this respect Kazakhstan and, among other things, development is to strengthen the the Concept notes that the JSC Law it proposes to define clearly the control role of the board of directors does not reflect the general principle functions of an independent director of a single-tier board structure of delegation of authority, and that and a number of the mandatory (towards which the Kazakhstan board the board of directors should have qualification criteria. These measures, structure gravitates). full authority to manage the joint of course, can have a positive stock company and control its influence on further development of Despite this, in the current edition operating activity. On the basis of corporate governance in Kazakhstan. of the JSC Law, very little attention these statements, one may assume However, in our opinion, the problem is given to the control function of that the Kazakhstan board structure of independent directorship in the board of directors. For example, will be changed with a view to Kazakhstan lies on a deeper system the law does not establish such further approximation to the classical level. First of all, one must understand powers of the board of directors as one-tier board structure. Then the why independent directors in the possibility to check the activities formation of an executive body of a Kazakhstan, in most cases, are not
24www.online.zakon.kz Dossier on the draft Law of the Republic of Kazakhstan On Amendments to Some Legislative Acts of the Republic of Kazakhstan on Issues of Corporate Governance
dentons.com 35 effective and are included in the in the framework of the Anglo- of independent directors discussed board of directors exclusively under American system of corporate above. Unfortunately, it is impossible the pressure of the requirements of governance as mechanisms of to understand from the content of the the JSC Law (box-ticking approach). enhancing the independence of Concept, whether these problems will Among the many issues underlying a one-tier board of directors from be taken into account in the drafting this inefficiency, for example, we can the management of the company. of the Draft Law. note dependence of “independent The most important committees directors.” In the vast majority of recognized in international theory Another set of changes will have as joint stock companies in Kazakhstan, and practice are as follows: an audit its subject the institute of fiduciary independent directors—as well as committee, remuneration committee duties of directors and officers of other board members—are appointed and nomination committee. Their a joint stock company. The current and dismissed by the decision of the aim is to establish effective control edition of the JSC Law contains sole or dominant shareholder. In such over the management of the some elements of the institution, circumstances, one cannot speak company. Despite this, the main such as prohibition from the use by about independence of a director, function of the committees of the directors and officers of assets even if he meets the independence the board of directors under the of the joint stock company for their criteria set forth in the JSC Law. JSC Law is advisory and consists personal benefit and the obligation With such direct dependence, in preparing recommendations to act in the interests of the joint “independent directors” are powerless for the board of directors. The stock company. However, there is no to fulfill one of their central functions difference of Kazakhstan legislation institute of fiduciary duties as a single - to ensure that the interests of all from international best practices integral set of norms of Kazakhstan shareholders, and first of all minority is most evident in the fact that the legislation. For example, the JSC Law shareholders, are respected. This head of the executive body may lacks some important aspects of the issue, in our opinion, should be one of be a member of any committee duty of loyalty, does not establish the first on the agenda of the reform of the board of directors. Another the duty of care, does not impose to be discussed. drawback is that any and all joint the burden of proof on the directors companies are obliged to have at and officers, etc. In addition, it should The Draft Law provides for least one committee of the board of be understood that the institution amendments to the Kazakhstan directors. At the same time the world of fiduciary duties is perhaps the Institute of Committees of the board best practice requires formation of most complicated mechanism for of directors. The Concept only sets committees of the board of directors application in corporate governance. the aim of “specification of the only in those cases where an agency The most important condition for functions of the board of directors problem arises in the company, and its effective use is the availability committees, taking into account it is necessary to establish control of competent and influential court international standards.” In our over the management, for example, that has sterling knowledge of opinion, regulation of committees in the case of listed companies. In the doctrine of fiduciary duties. In of the board of directors in the JSC Kazakhstan, however, the majority Kazakhstan, this condition is absent. Law is one of the perfect examples of private joint stock companies It is also necessary to remember of inconsistent implementation of have a sole or dominant shareholder that the concept of fiduciary duties an Anglo-American Institute in the who independently carries out is based on the perception of the corporate governance system of control over the management or company’s managers as agents, Kazakhstan. Firstly, we have here a the manager-shareholder. In such and the shareholders as the owners- misunderstanding of the purpose circumstances, committees of the principals. Such interpretation is of the institution by the legislator. board of directors may not only be alien to Kazakhstan corporate law. Committees of the board of unnecessary, but also burdensome. Therefore great care must be taken directors appeared and developed This conclusion is to some extent true in implementing this typically Anglo-
36 dentons.com Saxon institute in the legal system can assume that this principle will Kazakhstan on corporate governance of Kazakhstan. We believe that, be enshrined at the legislation level. taking into account international along with the general principles This approach is used, for example, principles and standards of corporate of fiduciary duties, it is necessary in German corporate law. However, governance.” Given the significance to provide for a number of specific it remains unclear what joint stock of the corporate sector and the need actions (omissions), which will be companies will be subjects of the for integration of Kazakhstan into the grounds for responsibility of corporate governance code. In the global economy, the importance the directors and officers of a joint the international best practice, the of harmonization of Kazakhstan stock company. Such regulation, principle of “comply or explain” is legislation on corporate governance for example, is used in Germany. generally applicable only to listed with recognized world samples seems It should also be noted that this companies. We believe that this to us unquestionable. It should be approach, although to a very limited trend should also be established in noted, however, that implementation extent, is already established in Kazakhstan. Along with the changes of corporate governance institutions Article 63 of the JSC Law. in the legislation, the Model Code of developed economies of the of Corporate Governance will be world by way of their blind copying The Draft Law provides for changes in updated. We hope that specific usually does more harm than good. the status of the corporate governance guidelines for different groups of joint That is why in introduction of the code. Currently, the Model Code of stock companies (listed companies, principles of best practices, the Corporate Governance adopted in family businesses, companies of the national peculiarities of the system 2005 does not perform the tasks quasi-public sector, etc.) will also be of corporate governance should be that are assigned to such samples of formulated. taken into account. We can only hope soft law in international best practice. that this approach will be the basis for This is primarily due to the lack of Other important aspects of the the proposed reform of Kazakhstan mechanisms to ensure compliance corporate governance system in corporate governance framework. with the recommendations of the Kazakhstan, which according to the Code. One of the objectives of Concept will be changed, include: the reform will be to create such disclosure by joint stock companies Igor Lukin mechanisms. The most important of information in the securities innovation of the corporate market and risk management in the Junior Associate governance system in Kazakhstan will joint stock company, etc. Igor provides advice on M&A and be the introduction of the recognized corporate governance matters international principle of “comply or The purpose of the Draft Law, to clients across various industry explain.” While this is not apparent according to the Concept, is sectors, with an emphasis on the from the text of the Concept, we “improving the legal framework of financial and energy sectors.
dentons.com 37 Creation of Astana International Financial Center Adam Kaucher
Following the decree of the President of Kazakhstan issued in May of this year, a draft constitutional law (the Bill) has been presented for consideration to the lower house of parliament, taking the creation of the Astana International Financial Center (AIFC) a step closer to reality.
38 dentons.com The Bill sets out the objectives of financial services, employment permits the derogation from national the AIFC, which will be to promote relations, to name a few, provide a laws. The detailed establishment of investment, develop the markets system separate from national law. the Center’s institutions, their rules, in banking, insurance and Islamic and the laws which will be adopted in finance, develop the securities market The Center will have its own two- the Center will follow in the two years in Kazakhstan and to develop financial tier court system to apply these following the passing of this law. and professional services in accordance laws, again applying the procedural with best international practice, leading principles and norms of the justice to the recognition of Astana as an system of England and Wales, or the international financial center. standards of leading global financial centers. An agreement has been The AIFC will constitute a financial entered into with the DIFC Court ‘free zone’ within a physical area to in Dubai to advise and assist in the be delineated in future. It is expected establishment of the new court that eventually the Center will be system. An international arbitration located on the site currently being center will also be created within Adam Kaucher developed to house Expo2017. the AIFC. It is expected that foreign Counsel Participants in the Center will be judges and arbitrators will be invited Adam’s practice to date has been entitled to benefit from exemptions to sit in these courts and tribunals. built around a core of private from corporate and individual and public company M&A work, income tax, and from a relaxed visa The operating language in the advising buyers, sellers and and work permitting regime for their courts, and in the administration of funders. He has advised on many senior employees. the Center itself, will be English. The public markets transactions AIFC’s laws are also to be developed including AIM IPOs, pre-IPO The Center will have its own legal in English. fundraisings and secondary system in certain areas, which will, fundraisings. He has for many according to the Bill, be based on The Center will be overseen by an years advised on transactions the principles and rules of English Administration to be created under in CIS countries. He has solid law and/or the standards of leading the auspices of the National Bank, mid-market private equity global financial centers. It is expected which shall be responsible for the experience, having advised equity that the system of laws which are development and operation of the houses, management teams and to be developed over the next two Center, including the development of investee companies. Adam has years will bear quite some similarity its laws for approval by the governing also acted on many banking and to the system introduced in the body of the AIFC - the Center finance transactions, including Dubai International Financial Center, Governance Council - to be chaired commercial lending, acquisition in which separate laws governing, by the President of Kazakhstan. finance and bond issues. among others, civil law relations with perspectives in advance of M&A The Bill, when passed, will create a and between participants of the transactions, as well as counseling constitutional law which makes the Center, the formation, governance on anti-corruption issues. and registration of companies, creation of the Center possible and Rule of Law in Kazakhstan: maintaining momentum Aigoul Kenjebayeva
Twenty years ago, Kazakhstan’s Constitution was adopted, which declared it a “rule of law” country. While Kazakhstan has not yet met this standard, it is moving quickly toward this goal. Kazakhstan is a unique country in many respects. Apart from its vast territory, rich natural resources, small population, multiple nationalities and well-educated society, Kazakhstan is also known as a country that was able to build, rapidly and successfully, a strong state with a foundation for future development. During the years of independence, we have witnessed the country’s successes and failures in various political and economic spheres, but the fact that the country has continued to move forward is very encouraging.
Once an independent state, reforms in all spheres of Kazakh one of the most important elements of Kazakhstan introduced a legal society and economics. Legislative a rule of law system. However, little had system that was quite liberal and and judicial systems reforms were been done in Kazakhstan to achieve encouraged foreign investment. Over the most important, in addition to this goal. The Presidential Program time, conservatism and bureaucracy, certain organizational reforms. includes a number of steps that could as well as Soviet heritage and other be characterized as revolutionary, factors, overtook progress. Kazakhstan Significant measures aimed at as they aim to change the mindset was trying to find its way to develop improving the investment climate of decision makers. The Presidential through trial and error. We have now were introduced one year ago, and a Program appears to promote the started to see changes that bring us path toward more significant reforms following main principles: closer than ever to reaching the goal is beginning. This is reflected in the of having a “rule of law” country. recently announced Presidential Improved access to the Program, “100 Concrete Steps.” judicial system Over the past 20 years, civil society This principle is not new, but this is became more mature and conscious “Assurance of the Supremacy of Law” the first time it has been brought of its desires, values and preferences, is included in this program as one of forward as a cornerstone of judicial and the Government became more the most important tasks, and 19 of reform. Although the Program attuned to society’s wishes. The the 100 steps are devoted to concrete itself mentions this principle in the global economic crisis contributed measures related to the rule of law context of reducing the number of to a better understanding of the (steps 16 to 34). Most of these steps court instances from five to three, it problems and challenges, which are aimed at improving the judiciary. should be noted that the supporting as a result, started unprecedented An independent and professional legislation now being drafted (in judiciary has long been recognized as
40 dentons.com particular the new Civil Procedure Secondly, the level of accountability of recognition that the judiciary is not Code), already contains numerous judges is to be increased. For example, to be viewed as a source of budget provisions promoting this principle. the mentioned Draft Law provides that financing, either formally or informally. the appeals of individuals and legal Such proposals could simplify entities could be a basis for initiation Courts should not be concerned procedures and ensure very quick of a disciplinary investigation against a with revenue streams for the state resolution of disputes. However, the judge or establishes a mechanism for budget when establishing court fees legislator should be cautioned that assessment of the professional activity or penalties and deciding substantive speed and simplicity are not always of the judge. matters. The amount of penalties desirable, since the provision of and other monetary awards in court justice remains the main goal. Quick Utilizing international expertise judgments should not be included as and simple procedures could be an The Program announced the creation an income source in the state budget. impediment to justice where multiple, of an International Council at the especially foreign, parties happen to Supreme Court consisting of reputable Another problem when considering be involved. This would require time foreign judges and lawyers. The aim disputes with investors, in particular for preparing for the case, obtaining of the Council would be to assist with foreign investors, is that apostilled Powers of Attorney, translating with the introduction of international many judges are not familiar with lengthy documents and so on. The law standards into the judicial system. This international standards, basics of should allow for adequate argument is a truly revolutionary idea, since the international law, or international and deliberation in complex cases. Supreme Court was considered a very business transactions. The Program conservative and closed organization. envisions steps to improve the Stricter requirements for judges Whether this idea will take hold or selection process for judges, The Program includes steps to whether this Council will have any enhance educational programs and tighten the requirements for judges. significant impact is unpredictable. ensure compliance with ethics rules. However, the door is open, and the The Program includes establishment Firstly, the qualification requirements international legal community has a of a distinct type of judicial for candidate judges are to be great chance to provide support to proceedings with regard to all civil increased. For instance, the “Draft Law Kazakhstan in its judicial reform. on Amending and Supplementing disputes related to investment the Constitutional Law On the Treatment of investment disputes activities – the investment judicial Judicial System and Status of Judges” The Kazakh judicial system is proceedings. The Supreme Court that is now under discussion in often criticized for not being able will have exclusive competence the Parliament provides that the to consider disputes with foreign to consider investment disputes age of a candidate judge must be investors fairly and professionally. involving large investors. For this at least 30 years old instead of 25 In many cases involving investors purpose a special Investment Panel years in the current legislation or against the state authorities, courts of the Supreme Court will be created. establishes the physiological test and are biased in favor of the authorities, The Specialized Court of Astana polygraph examination the successful based on a quest for greater revenue City will be authorized to hear as the completion of which is a prerequisite in the state budget. Therefore, first instance all other investment for admission of a candidate. improving the judiciary requires a disputes with no large investors
dentons.com 41 Twenty years ago, Kazakhstan’s Constitution was adopted, which declared it a “rule of law” country.
involved, where the Supreme Court that the Program does not include The transfer of certain functions to will serve as an appellate instance. this into the “rule-of-law-steps”, it will self-regulated and non-governmental have a significant impact, negative organizations is now an important The idea of creating special or positive, on the law and judicial principle of the reforms. One such proceedings for consideration of systems of Kazakhstan. organization is the Kazakhstan Bar disputes involving large investors Association, which should be given is revolutionary. Considering the The key specific feature of AIFC is the opportunity to play a serious role circumstances, this could be viewed that its governing law will be English in the implementation process as a as recognition that the judicial system law. It will be a distinct law system whole, as well as in the parts related to is not well equipped to provide justice independent from the general the rule of law. to investors. In this sense, the creation statute law of Kazakhstan. Following of this Panel is a bold step by the state this, an independent court with its In conclusion, this Program shows in recognizing inherent problems in own jurisdiction will be established that Kazakhstan is making serious the judicial system and working to to settle disputes involving AIFC efforts to break through to become a find ways to resolve them. Therefore, members in accordance with English true “rule of law” country. Undeniably, the creation of this Panel should be law. The AIFC court itself will consist not everything necessary has supported as a first step in testing new of foreign judges, and the English been done or is planned. However, approaches. However, it is essential language will be used throughout the the country is moving in the right that these new principles be expanded court proceedings. direction, which is important, and this to the rest of the judicial system. momentum should be maintained. The reform is going to be a deep Creation of the investment judicial one. Significant amendments are proceedings is described in more to be made to a wide number of detail in the Draft Civil Procedure major legislative acts, in particular the Code that is now under discussion Constitution, Civil Procedure Code, in the Parliament. The scope of Tax Code, etc. The “Draft Law on competence of the investment Amending and Supplementing the courts is still not clear. This idea will Constitutional Law on the Judicial Aigoul Kenjebayeva only work if the “Law on Investments” System and Status of Judges” that is Managing Partner is significantly amended to expand now under discussion in the Parliament With more than 35 years’ and clarify the definition of provides for a special status of AIFC’s experience as a practicing lawyer, “investor”. Without such changes, the court and its independence from the Aigoul’s particular areas of focus investment courts will have very little judicial system of Kazakhstan. include oil and gas and mineral to do as the current definition is too resource projects, corporate/ narrow and would actually only cover State accountability and self- M&A, PPP/infrastructure projects, a small number of companies. regulated organizations competition law, IP and dispute The Program pays close attention to resolution. International Financial Center the mechanisms for accountability of One of the boldest and promising the state through a number of steps, Aigoul is consistently named as a steps of the Program is creation of including the creation of “The State leading expert in Kazakhstan by the Astana International Financial for Citizens,” a state corporation Chambers Global, The Legal 500, Center (“AIFC”) in the capital of similar to the “Canada Service” and PLC Which Lawyer? Who’s Who Kazakhstan with Dubai International “Centrelink” (Australia). Involving Legal, IFLR1000, and Who’s Who in Financial Centre serving as a society in the management of the the Republic of Kazakhstan. prototype. Notwithstanding the fact country’s affairs is an important task.
42 dentons.com Tax havens list
The list of jurisdictions with the preferential taxation, approved by the Resolution of the Government of the Republic of Kazakhstan No.595 of 29 December 2014 (with amendments as of 2 July 2015)
1 The Principality of Andorra 19 Republic of Colombia 37 Kingdom of the Netherlands 2 Antigua and Barbuda 20 Federal Islamic Republic of (only with respect to the island of Aruba and the dependent 3 Commonwealth of the Bahamas Comoros territories Antilles islands) 4 Republic of Barbados 21 Republic of Costa Rica 38 Federal Republic of Nigeria 5 Kingdom of Bahrain 22 Malaysia (only with respect to the Labuan enclave) 39 New Zealand (only with respect 6 State of Belize to the Cook and Niue islands) 23 Republic of Liberia 7 The Sultanate of Brunei 40 United Arab Emirates (only with 24 Republic of Lebanon Darussalam respect to the city of Dubai) 8 The Republic of Vanuatu 25 Principality of Liechtenstein excluded pursuant to the order 9 Cooperative Republic of Guyana 26 Republic of Mauritius of the RK Ministry of Finance 10 Republic of Guatemala 27 Islamic Republic of Mauritania dated 27 February 2015 No.139 11 State of Grenada 28 The Portuguese Republic (only 41 Republic of Palau with respect to its Madeira 12 Republic of Djibouti 42 Republic of Panama Island) 13 The Dominican Republic 43 Independent State of Samoa 29 Republic of Maldives 4 Commonwealth of Dominica 44 The Republic of San Marino 30 Republic of the Marshall Islands 15 The Republic of Ireland (only 45 Republic of Seychelles 31 The Principality of Monaco with respect to the cities of 46 Saint Vincent and the Dublin and Shannon) 32 Malta Grenadines 16 The Kingdom of Spain (only with 33 Mariana Islands 47 Federation of St. Kitts and Nevis respect to the Canary Islands) 34 The Kingdom of Morocco 48 State of Saint Lucia 17 The Republic of Cyprus (only with respect to the city of 49 United Kingdom of Great Britain Tangier) 18 China (only with respect to the and Northern Ireland (only with Special Administrative Regions 35 Union of Myanmar respect to the following areas): of Macau and Hong Kong) 36 Republic of Nauru a. Islands of Anguilla
dentons.com 43 Kazakhstan: Double taxation treaties with 49 Countries
Currently Kazakhstan has a network of 49 ratified double taxation treaties with various nations that provide for discounted tax rates. The table below outlines the applicable tax rates with respect to dividends, interest, royalties and net income:
Payee resident in Dividends (%) Interest (%) Royalties (%) Net income tax (%) 1 Armenia 10 10 10 5 2 Austria 5/15 10 10 5 3 Azerbaijan 10 10 10 2 4 Belarus 15 10 15 5 5 Belgium 5/15 10 10 5 6 Bulgaria 10 10 10 10 7 Canada 5/15 10 10 5 8 China 10 10 10 5 9 Czech Republic 10 10 10 5 10 Estonia 5/15 10 15 5 11 Finland 5/15 10 10 5 12 France 5/15 10 10 5 13 Georgia 15 10 10 5 14 Germany 5/15 10 10 5 15 Hungary 5/15 10 10 5 16 India 10 10 10 10 17 Iran 5/15 10 10 5 18 Italy 5/15 10 10 5 19 Japan 5/15 10 10 0 20 Korea 5/15 10 10 5 21 Kyrgyzstan 10 10 10 10 22 Latvia 5/15 10 10 5 23 Lithuania 5/15 10 10 5 24 Luxembourg 5/15 10 10 10 25 Macedonia 5/15 10 10 5 26 Malaysia 10 10 10 10 27 Moldova 10/15 10 10 5 28 Mongolia 10 10 10 10 29 Netherlands 5/15 10 10 5 30 Norway 5/15 10 10 5
44 dentons.com 31 Pakistan 12.5/15 12.5 15 15 32 Poland 10/15 10 10 10 33 Qatar 5/10 10 10 10 34 Romania 10 10 10 15 35 Russian Federation 10 10 10 10 36 Singapore 5/10 10 10 5 37 Slovakia 5/10 10 10 5 38 Spain 5/15 10 10 5 39 Sweden 5/15 10 10 5 40 Switzerland 5/15 10 10 5 41 Tajikistan 10/15 10 10 10 42 Turkey 10 10 10 10 43 Turkmenistan 10 10 10 5 44 UAE 5/15 10 10 5 45 Ukraine 5/15 10 10 5 46 United Kingdom 5/15 10 10 5 47 United States 5/15 10 10 5 48 Uzbekistan 10 10 10 15 49 Vietnam 5/15 10 10 5
Tax Treaties not yet in force Croatia* 5/10 10 10 5 Kuwait* 0/5 10 10 0 Saudi Arabia* 5 10 10 0 Serbia* 10/15 10 10 10 Slovenia* 5/15 10 10 5
*Kazakhstan has also signed – but not yet ratified – double taxation treaties with Saudi Arabia, and is now in various stages of the process of negotiating treaties with Croatia, Serbia, Slovenia, Kuwait and other countries.
Please note that in certain instances there are additional conditions to meet in order for the reduced rates to apply. Therefore, in each particular instance it is necessary to consult the actual text of the treaty in question.
dentons.com 45 List of agreements and conventions regarding international legal assistance entered into by the Republic of Kazakhstan
No. Name, venue and date Document of the Republic of Kazakhstan regarding Joining / Approval / Ratification or other Information 1. Agreement on Legal Assistance and Interaction of Customs RK Law No. 511-IV dated December Bodies of Party States of the Customs Union regarding Criminal 14, 2011 Cases and Cases on Administrative Violations, Astana, July 5, 2010 2. Agreement between the Republic of Kazakhstan and the Turkish RK Law No. 367-I dated April 6, 1999 Republic on Legal Assistance regarding Criminal Cases and Extradition, Almaty, August 15, 1995 3. Agreement between the General Prosecutor’s Office of the Order No. 12 of the RK General Republic of Kazakhstan and the General Prosecutor’s Office Prosecutor dated April 12, 2007 of the Republic of Tajikistan regarding Legal Assistance and Cooperation, Astana, April 26, 2007 4. Agreement between the Republic of Kazakhstan and the RK Law No. 387-I dated May 20, Republic of Azerbaijan on Legal Assistance regarding Civil Cases, 1999 Almaty, June 10, 1997 5. Agreement between the Republic of Kazakhstan and the RK Law No. 229-I dated May 8, 1998 Republic of Uzbekistan on Legal Assistance and Legal Relations on Civil, Family and Criminal Cases, Almaty, June 2, 1997 6. Agreement between the Republic of Kazakhstan and RK Law No. 311-I dated December Turkmenistan on Legal Assistance and Legal Relations on Civil 10, 1998 and Family Cases, Almaty, February 27, 1997 7. Agreement between the Republic of Kazakhstan and the Turkish RK Law No. 180-I dated October 31, Republic on Legal Assistance regarding Civil Cases, Almaty, June 1997 13, 1995 8. Agreement between the Republic of Kazakhstan and the RK Law No. 292-I dated November Republic of Lithuania on Legal Assistance and Legal Relations on 9, 1998 Civil, Family and Criminal Cases, Vilnius, August 9, 1994 9. Agreement between the Republic of Kazakhstan and the People’s Decree of the President of the RK Republic of China on Legal Assistance for Civil and Criminal No. 2309 dated May 30, 1995 Cases, Beijing, January 14, 1993 10. Convention on Legal Assistance and Legal Relations on Civil, RK Law No. 531-II dated March 10, Family and Criminal Cases, Kishinev, October 7, 2002 2004 11. Convention on Legal Assistance and Legal Relations for Civil, Resolution of the RK Supreme Family and Criminal Cases, Minsk, January 22, 1993 Council No. 2055-XII dated March 31, 1993
46 dentons.com 12. Agreement between the Republic of Kazakhstan and United Arab RK Law No. 492-IV dated November Emirates on Mutual Legal Assistance regarding Criminal Cases, 15, 2011 Abu Dhabi, March 16, 2009 13. Agreement between the Republic of Kazakhstan and Republic RK Law No. 453-IV dated July 8, of Korea on Mutual Legal Assistance regarding Criminal Cases, 2011 Seoul, November 13, 2003 14. Agreement between the Republic of Kazakhstan and the RK Law No. 49-II dated May 17, Republic of India on Mutual Legal Assistance regarding Criminal 2000 Cases, New Delhi, August 17, 1999 15. Agreement between the Republic of Kazakhstan and the RK Law No. 291-1 dated November Democratic People’s Republic of Korea on Mutual Legal 9, 1998 Assistance regarding Civil and Criminal Cases, Pyongyang, April 7, 1997 16. Agreement between the Republic of Kazakhstan and Georgia RK Law No. 119-III dated January 14, on Mutual Legal Assistance regarding Civil and Criminal Cases, 2006 Tbilisi, September 17, 1996 17. Agreement between the Republic of Kazakhstan and the Islamic RK Law No. 293-1 dated November Republic of Pakistan on Mutual Legal Assistance regarding Civil, 9, 1998 Family and Criminal Cases, Almaty, August 23, 1995 18. Convention between the Republic of Kazakhstan and the RK Law No. 45-V dated October 19, Kingdom of Spain on Mutual Legal Assistance regarding Criminal 2012 Cases, Astana, June 17, 2011 19. Agreement between the Republic of Kazakhstan and Mongolia Resolution of the RK Supreme on Mutual Legal Assistance regarding Civil and Criminal Cases, Council dated June 22, 1994 Ulan Bator, October 22, 1993 20. Agreement between the Republic of Kazakhstan and Czech RK Law No. 145-V dated November Republic on Mutual Legal Assistance regarding Criminal Cases, 25, 2013 Astana, June 6, 2013 21. Agreement between the Republic of Kazakhstan and Kyrgyz RK Law No. 142-1 dated June 30, Republic on Mutual Legal Assistance regarding Civil and Criminal 1997 Cases, Almaty, August 26, 1996 22. Agreement between the Republic of Kazakhstan and the RK Law No. 331-V dated July 16, Republic of United States of America on Mutual Legal Assistance 2015 regarding Criminal Cases, Washington, February 20, 2015 23. Agreement between the Republic of Kazakhstan and Socialist RK Law No. 186-V dated April 9, Republic of Vietnam on Mutual Legal Assistance regarding Civil 2014 Cases, Hanoi, October 31, 2011 24. Agreement between the Republic of Kazakhstan and the RK Law No. 350-V dated Republic of Bulgaria on Mutual Legal Assistance regarding September 21, 2015 Criminal Cases, Sofia, 2014 25. Agreement between the Republic of Kazakhstan and Italian RK Law No. 349-V dated September Republic on Mutual Legal Assistance regarding Criminal Cases, 21, 2015 Astana, 2015 26. Inter-American Convention on Mutual Assistance in Criminal RK Law No. 351-V dated September Matters, Nassau, 1992 21, 2015 27. Agreement between the Republic of Kazakhstan and Romania on RK Law No. 352-V dated September Mutual Legal Assistance in Criminal Matters, Bucharest, 2014 22, 2015
dentons.com 47 List of agreements on stimulation and mutual protection of investments
No. Counterparty, Venue and Date Document of the Republic of Kazakhstan regarding Joining / Approval / Ratification or other Information 1. Kingdom of the Netherlands, The Hague, November 27, 2002 RK Law No. 250-III dated May 8, 2007 2. State of Kuwait, El-Kuwait, August 31, 1997 RK Law No. 36-II dated February 22, 2000 3. Czech Republic, Prague, October 8, 1996 RK Law No. 119-1 dated June 11, 1997 4. Republic of Estonia, Tallinn, April 20, 2011 RK Government Resolution No. 423 dated April 18, 2011 5. Republic of Romania, Astana, March 2, 2010 RK Law No. 119-V dated July 2, 2013 6. Republic of Austria, Vienna, January 12, 2010 RK Law No. 41-V dated October 17, 2012 7. Socialist Republic of Vietnam, Astana, September 15, 2009 RK Law No. 174-V dated February 18, 2014 8. Qatar, Astana, March 4, 2008 Draft law on ratification being considered 9. Slovak Republic, Bratislava, November 21, 2007 Draft law on ratification being considered 10. Republic of Finland, Astana, January 9, 2007 RK Law No. 16-IV dated January 11, 2008 11. Hashemite Kingdom of Jordan, Amman, November 29, 2006 RK Law No. 21-IV dated March 20, 2008 12. Republic of Armenia, Astana, November 6, 2006 RK Law No. 278-IV dated May 22, 2010 13. Kingdom of Sweden, Stockholm, October 25, 2004 RK Law No. 133-III dated March 17, 2006 14. Republic of Latvia, Astana, October 8, 2004 RK Law No. 132-III dated March 17, 2006 15. Islamic Republic of Pakistan, Islamabad, December 8, 2003 RK Law No. 134-III dated March 17, 2006 16. Hellenic Republic, Almaty, June 26, 2002 Draft law on ratification being considered 17. Republic of Tajikistan, Dushanbe, December 16, 1999 RK Law No. 249-II dated October 17, 2001 18. Republic of Bulgaria, Sofia, September 15, 1999 RK Law No. 202-II dated May 15, 2001 19. Russian Federation, Moscow, July 6, 1998 RK Law No. 314-1 dated December 11, 1998
48 dentons.com 20. Belgium-Luxembourg Economic Union, Almaty, April 16, 1998 RK Law No. 23-II dated December 30, 1999 21. French Republic, Paris, February 3, 1998 RK Law No. 77-II dated July 5, 2000 22. Republic of Uzbekistan, Almaty, June 2, 1997 RK Government Resolution No. 1309 dated August 29, 1997 23. Kyrgyz Republic, Almaty, April 8, 1997 RK Law No. 174-1 dated October 28, 1997 24. Republic of India, Deli, December 9, 1996 RK Law No. 226-1 dated May 8, 1998 25. Georgia, Tbilisi, September 17, 1996 RK Law No. 199-1 dated December 5, 1997 26. Republic of Azerbaijan, Baku, September 16, 1996 RK Law No. RK Law No. 198-1 dated December 5, 1997 27. Malaysia, Kuala Lumpur, May 27, 1996 RK Law No. 120-1 dated June 11, 1997 28. Republic of Romania, Bucharest, April 25, 1996 RK Law No. 43-I dated November 22, 1996 29. Republic of Korea, Almaty, March 20, 1996 RK Law No. 45-I dated November 22, 1996 30. Islamic Republic of Iran, Almaty, January 16, 1996 RK Law No. 17-I dated July 2, 1996 31. Israel, Jerusalem, December 27, 1995 RK Law No. 22-1 dated July 12, 1996 32. United Kingdom of Great Britain and Northern Ireland, London, RK Law No. 44-I dated November November 23, 1995 22, 1996 33. Republic of Hungary, Budapest, December 7, 1994 Decree of the President of the RK No. 2276 dated May 12, 1995 34. Mongolia, Almaty, December 2, 1994 Decree of the President of the RK No. 2249 dated April 29, 1995 35. Republic of Poland, Almaty, September 21, 1994 Decree of the President of the RK No. 2277 dated May 12, 1995 36. Ukraine, Almaty, September 17, 1994 Decree of the President of the RK No. 2218 dated April 20, 1995 37. Republic of Lithuania, Almaty, September 15, 1994 Resolution of the RK Supreme Council No. 299-XIII dated February 20, 1995 38. Swiss Federal Council, Almaty, May 12, 1994 RK Law No. 228-1 dated May 8, 1998 39. Arab Republic of Egypt, Cairo, February 14, 1993 Decree of the President of the RK No. 2460 dated September 15, 1995 40. People’s Republic of China, Beijing, August 10, 1992 Resolution of the RK Supreme Council dated June 8, 1994 41. Republic of Turkey, Almaty, May 1, 1992 Resolution of the RK Supreme Council No. 1943-XII dated January 29, 1993 42. Kingdom of Spain, Madrid, March 23, 1994 Decree of the President of the RK No. 2240 dated April 26, 1995 43. Italian Republic, Rome, September 22, 1994 Decree of the President of the RK No. 2294 dated May 22, 1995 44. Republic of Macedonia, July 2, 2012 Draft law on ratification being considered
dentons.com 49 Dentons Corporate Counsels’ Club
The Corporate Counsels’ Club serves as a forum for our clients to meet for discussion, knowledge-sharing and informative presentations by Dentons’ lawyers.
More than just a platform for As always, your suggestions The Corporate Counsels’ Club had discussion are welcome another consistent year of dynamic Through participation in our To provide you with the maximum meetings to address a number of roundtables, you have an opportunity benefit from these sessions, we are topics, share best practices and not only to share issues of concern, always happy to hear from you about approaches to challenges. but also to identify ways of improving the issues that are of importance the business and legal environment to you. Should you wish to raise a and then channel them to the state particular topic, please email it to us executive bodies. at [email protected].
29 April 2015 • Contract termination: have the Max Petroleum, Sozak Oil&Gas, Changes to the subsoil law: two steps risks changed? Equuspetroleum. forward, one step back? • Project documentation and In light of the recent amendments to working programs: current the subsoil law, Dentons addressed procedures and requirements the issues of concern and importance to companies from the energy and • Transformation of the contract natural resources industry. territory: is there a room for maneuver? The roundtable agenda addressed the following issues: The event was very well attended and received positive feedback • The procedure for the acquisition from the participants: Shell, JV Inkai, of subsoil use rights: the new rules Chevron Munaigas, OMV Petrom, of the game
50 dentons.com dentons.com 51 11 June 2015 • Personal data of employees, The participants had a chance Personal data: why it is important customers, counterparties: to look into contentious issues Dentons invited its clients to discuss everything you wanted to know. together with Dentons’ lawyers, and look into the contentious and check whether their procedures for • Use by employees of the employer’s ambiguous issues of collecting and collecting and processing personal information system for personal processing personal data together, data of employees, clients and purposes. and to understand what awaits counterparties comply with the us if the draft amendments to the legislation and understand what • Something new for our clients – procedures of data processing legislation on personal data are self-assessment questionnaires. adopted. should be introduced or changed in Check your company’s compliance! their respective companies.
Dentons’ IP lawyers addressed a • The proposed amendments to number of topics: the legislation on personal data: there’s worse to come!
52 dentons.com 15 July 2015 The topics under discussion included: • Project documentation and Changes to the subsoil law: two working programs: current • The procedure for the acquisition steps forward, one step back? procedures and requirements of subsoil use rights: the new At the request of our clients from rules of the game • Transformation of the contract the uranium mining industry, we territory: is there room for held the second round of roundtable • Contract termination: have the maneuver? discussions devoted to the changes risks changed? to the subsoil law.
dentons.com 53 28 September 2015 The event also featured a guest The event offered participants an An inside perspective: recent speaker from the Kazakhstan opportunity to raise questions about developments in international and International Arbitrage, Assel dispute resolution at the SCC and domestic arbitration Duisenova. about international arbitration in At the end of September, general. In addition, all participants Key topics for discussion included Dentons had the opportunity to received first-hand information about the latest developments in arbitration host a roundtable on the recent • Investor-state disputes at the SCC developments in international in Kazakhstan, including proposed changes to the draft arbitration law. commercial arbitration with a special • Energy disputes and cases involving guest speaker, Annette Magnusson, state and private enterprises Secretary General of the Arbitration Institute of the Stockholm Chamber • Arbitration in Kazakhstan: major of Commerce (SCC) and General trends and current practice Counsel of the SCC.
54 dentons.com 23-24 November 2015 • What are the conditions, Dentons’ trade law experts Kazakhstan’s accession to the concessions and commitments represented by the Almaty and WTO, impact on the economic and which the negotiators agreed in Brussels lawyers, Kanat Skakov, Igor integration processes in Kazakhstan certain sectors of the economy? Danilov and Stanislav Lechshak and in the region answered the above, and many other • What differences are there In November 2015, Kazakhstan practical questions, during the one- between the conditions of became a fully-fledged member day sessions in Almaty and Astana WTO membership for Kazakhstan, of the World Trade Organization held on 23 and 24 November 2015, and those for other member (WTO), following 18 years of delicate respectively. states of the Eurasian Economic negotiations. Union and Kazakhstan’s major Both events were well attended and The membership has raised many trading partners received positive feedback from the questions, such as: participants: Agip Karachaganak B.V., • What are the expected BG Kazakhstan, Chevron Munaigas, • What are the specifics of consequences for business EBRD, KazRosGas, Kazakhlesprom, Kazakhstan’s accession to in Kazakhstan, and what Lukoil Overseas Karachaganak B.V., the WTO? opportunities may be created? KLPE, NC Astana EXPO-2017, TMK, RG Brands Kazakhstan.
We intend to maintain the same regularity of roundtable discussions in the coming months.
We look forward to seeing you and your colleagues at our next roundtables, and we hope that the Dentons Corporate Counsels’ Club will serve as a valuable instrument in building a better working environment.
dentons.com 55 Dentons key service areas in Kazakhstan
Corporate and M&A Banking and finance Energy and natural resources • Acquisitions and Disposals • Acquisition Finance • Subsoil Use Contracts • Cross Border Investments • Asset-based Lending • Regulatory and Compliance • Joint Ventures • Asset Finance • Farm-out and Joint Operating • Corporate Governance • Consumer Finance Agreements • Company Formation • Bilateral and Syndicated Lending • Renewable Energy Projects • Private Equity Investments • Financial Institutions Regulation • Consortium Agreements • Anti-monopoly Clearances • Debt Capital Markets • Well Services and Drilling Contracts • Company Law • Project Finance • Oil Sales, Marketing and • Shareholders’ Agreements • Real Estate Finance Transportation Agreements • Securities Law • Trade Finance • Environmental Law • Capital Markets • Licensing and Permitting of • Due Diligence Operations • Reorganization and Restructuring • Negotiations with State Investors • Competition Law • Joint Ventures • Local Content and Procurement Issues
Real estate and construction Employment and labor Competition • Development Projects • Executive Employment Contracts • Competition and Antitrust • Landlord and Tenant • Employment Law Compliance Litigation • Management Agreements • Collective Agreements • Competition and Antitrust • Leasing • Corporate Employment Audits Counseling and Compliance • Regulatory and Permitting Advice • Expatriate Immigration and Visa • Merger Control and Review • Real Estate Due Diligence Issues • Acquisitions and Disposals • Staff reductions, Layoffs, and • Construction Contracts Transfers • Joint Ventures • Health and Safety Issues • Employment Litigation
56 dentons.com Litigation, arbitration and Tax and customs Intellectual dispute resolution • Tax Structuring property and technology • Pre-action Case Assessment • Tax Compliance • Trademarks and Industrial • Tax & Customs Disputes • Tax Disputes and Investigations Property Items Prosecution • Commercial Disputes • Free Trade Zones • Assignment and Licensing • Domestic and International • Tax Due Diligence • E-commerce Arbitration • Corporate Tax Planning • IP and IT Consultancy Services • Mediation • Preparation for Tax Inspections • IP Litigation • Construction Disputes • Customs Advice • Anti-counterfeiting Programs • Representation in Economic and • International Tax • Advertising Administrative Courts • Personal Tax Advice
Complimenting our strength in Kazakhstan’s market, we have recognized areas of sector experience in which we provide a full range of domestic and international legal service to clients operating in all of the following industries:
• Banks and Financial Institutions • Energy and Natural Resources • Information Technology • Leisure and Hospitality • Life Sciences • Real Estate • Shipping and International Trade • Telecommunications
dentons.com 57 Contacts
Aigoul Kenjebayeva Almas Zhaiylgan Managing Partner Partner Almaty/Astana Almaty D +7 727 2582380 D +7 727 2582380 [email protected] [email protected]
Abai Shaikenov Victoria Simonova Partner Partner Almaty Almaty D +7 727 2582380 D +7 727 2582380 [email protected] [email protected]
Kanat Skakov Birzhan Zharasbayev Partner Partner Almaty Astana D +7 727 2582380 D +7 7172 552151 [email protected] [email protected]
Almaty 135, Abylai Khan Ave. 050000 Almaty Republic of Kazakhstan T +7 727 258 2380 F +7 727 258 2381 [email protected]
Astana 15 A, Kabanbai Batyr St. 010000 Astana Republic of Kazakhstan T +7 7172 55 21 51 F +7 7172 55 21 52 [email protected]
58 dentons.com DRAFT ^Dentons is the world’s first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world’s largest law firm, Dentons’ global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.
^Dentons Kazakhstan
In Kazakhstan Dentons has been active for more than 20 years. With offices in Almaty and Astana, the Firm is the largest, and the leading, international full service legal practice in the country with fully qualified legal and professional staff numbering well over 70. Deep practice focus of lawyers allows Dentons to offer competitive prices while securing all the benefits and the highest standards of services of a reputable global law firm.
Dentons is consistently ranked #1 among law firms in Kazakhstan by Chambers Global, The Legal 500, IFLR1000 and Who’s Who Legal. The firm secures leading positions in oil and gas, mining, PPP/infrastructure, banking and finance, corporate, M&A, dispute resolution and intellectual property.
FirstDRAFT in Kazakhstan in: First in Kazakhstan in: First in Kazakhstan • First in Kazakhstan in: • Energy and Natural • Energy and Natural • Financial and Corporate Resources Resources • Energy and Infrastructure • Dispute Resolution • Dispute Resolution
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CS28552-Kazakhstan Business Updates — 02/12/2015