On 6 April 2024, Kazakhstan adopted a law that will amend and supplement certain legislative acts on doing business (the Law). The Law amends a number of fundamental national legislative acts, including the Land Code, the Entrepreneurial Code, and the Code on Administrative Offenses, among others. This LawFlash covers only those changes that have been introduced into the Entrepreneurial Code (the EC), including Section 4 of the EC, “Economic competition.” The Law will come into force on 8 June 2024.
The Law[1] gives the following new definitions:
|
Positive aspects of the changes |
Negative aspects of the changes
|
|
Formally changed the terms for consideration of an application for economic concentration; the period for consideration is now 5 working days for the first stage (review for completeness) and 15 working days for the second stage (review on merits). In fact, the terms have not changed, but it will now be easier to calculate the deadline if there are holidays or weekends falling within the consideration period. |
The Law establishes the maximum period for consideration of an application for economic concentration, which should not exceed 12 months, subject to all suspensions. Previously, there was no such time limit. This period, while bringing some clarity, is nevertheless a significant unfavourable factor for the planning of transactions. |
|
Added exceptions to subparagraph (3) of Article 201.1 of the EC. Now, receiving into ownership, possession and use of “land plots and buildings (structures, constructions) that are not intended for industrial use, and their complexes, premises, [and] objects of construction-in-progress,” does not constitute the economic concentration and does not require notification of the antimonopoly authority. |
|
|
Increased the threshold of the book value of fixed production assets and intangible assets of the market entity that disposes of or transfers the property, exceeding which requires notification of the antimonopoly authority, to now be 20% (previously was 10%). |
|
|
Introduced the concept of “rights allowing to give binding directions to other market entity.”
Example: Conclusion of the loan agreement, which provides the lender with the right to influence the strategic decisions made by the borrower, such as determination of the market for sale, list of goods produced and sold, etc., requires notification of the antimonopoly authority if the threshold is exceeded. |
The inclusion of such rights in contracts, including constituent documents, will require (if the thresholds are exceeded) notification to the antimonopoly authority. |
|
Introduced the concept of “negative control,” which previously was not defined in the antimonopoly legislation of Kazakhstan.
Example: Conclusion of the loan agreement, under which the lender has the right to nominate a candidate to the executive body or controlling body (supervisory board) of the borrower. |
Contracts concluded within the framework of financing will require (if the thresholds are exceeded) notification to the antimonopoly authority. |
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following:
[1] Law of the Republic of Kazakhstan dated 6 April 2024, No. 71-VIII, On amending certain legislative acts of the Republic of Kazakhstan on doing business.