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On Subsoil and Subsoil Use

Updated Unofficial translation

Code of the Republic of Kazakhstan dated December 27, 2017 No. 125-VI.

      Unofficial translation

      In paragraph 4 and subparagraph 2) of paragraph 7 of Article 118, subparagraph 2) of paragraph 10 of Article 119, paragraph 4 of Article 139, subparagraph 6) and 7) of paragraph 10 of Article 140 and article 141 of this Code, the words "geological reserves" shall be considered the word “reserves”, respectively, until 01.01.2024 in accordance with the Code of the Republic of Kazakhstan dated 12/27/2017 No. 125-VI (for enforcement procedure see subparagraph 1) paragraph 12 of Art. 277 of this Code);
      in Article 141 of this Code, the words "central commission" shall be considered as the words "state commission", respectively, until 01.01.2024 in accordance with the Code of the Republic of Kazakhstan No. 125-VI dated 12/27/2017 (for enforcement procedure, see subparagraph 2) paragraph 12 of Art. 277 of this Code).

GENERAL PART SECTION I. PRIMARY PROVISIONS Chapter 1. GENERAL PROVISIONS

Article 1. Legislation of the Republic of Kazakhstan on subsoil and subsoil use

      1. Legislation of the Republic of Kazakhstan on subsoil and subsoil use is based on the Constitution of the Republic of Kazakhstan and consists of this Code and other statutory instruments of the Republic of Kazakhstan.

      2. If an international treaty ratified by the Republic of Kazakhstan establishes the rules other than those contained in this Code, then the rules of the international treaty will apply.

      3. Should any contradictions arise between this Code and other laws of the Republic of Kazakhstan which contain statutory provisions regulating relations in subsoil use, the provisions of this Code shall apply.

      4. If the relations in subsoil use are not regulated by the norms of this Code the civil legislation of the Republic of Kazakhstan shall apply.

Article 2. Relations regulated by this Code

      1. This Code determines the regime for subsoil use, the procedure for exercising the state management and regulation in subsoil use, the peculiar features of the creation, exercising and termination of rights to subsoil plots, the legal status of subsoil users and carrying out the relevant operations by them, as well as the issues of subsoil use and the disposal of a subsoil use right and other relations associated with the use of subsoil resources.

      2. The use of land, water and other natural resources is regulated under the land, water and environmental legislation of the Republic of Kazakhstan, which determines the regime for the use and protection of the relevant natural resources.

      3. The State, citizens and legal entities of the Republic of Kazakhstan are participants in the relations regulated by this Code.

      4. Foreigners, stateless persons, as well as foreign legal entities exercise rights and freedoms in the Republic of Kazakhstan and bear responsibilities in subsoil use relations established for citizens and legal entities of the Republic of Kazakhstan, unless otherwise provided by this Code, laws and international treaties ratified by the Republic of Kazakhstan.

Article 3. Goal and objectives of the legislation of the Republic of Kazakhstan on subsoil and subsoil use

      1. Goal of the legislation of the Republic of Kazakhstan on subsoil and subsoil use is to ensure the sustainable development of the mineral and raw material base of the Republic of Kazakhstan for the economic growth of the State and the welfare of society.

      2. Objectives of the legislation of the Republic of Kazakhstan on subsoil and subsoil use are:

      1) preservation the State’s property right to subsoil;

      2) implementation of the state policy and regulation of relations in the subsoil use;

      3) safeguarding the interests of the State, citizens of the Republic of Kazakhstan and the rights of subsoil users;

      4) increase in the mineral and raw material base of the Republic of Kazakhstan;

      5) establishment of the grounds, conditions and procedure for creation, exercising, modification and termination of subsoil use rights;

      6) provision of the legal basis for sustainable development of subsoil use;

      7) creation of conditions for attracting investment into geological study of the subsurface and mineral management;

      8) strengthening the legality in subsoil use.

Article 4. Principles of the legislation of the Republic of Kazakhstan on subsoil and subsoil use

      Legal regulation of relations in subsoil use shall be based on the following principles:

      1) rational management of the state subsoil fund;

      2) ensuring environmental safety in the use of subsoil;

      3) availability of information concerning subsoil use;

      4) chargeable subsoil use;

      5) good faith of subsoil users;

      6) stability of subsoil use conditions.

Article 5. Rational management of the state subsoil fund

      Rational management of the state subsoil fund is ensured by granting the subsoil use right aimed at economic growth of the State and the welfare of society.

Article 6. Ecological safety in the subsoil use

      Subsoil use should be carried out in environmentally sound ways by adopting measures aimed at preventing subsoil pollution and reducing the harmful impact on the environment.

Article 7. Availability of information concerning subsoil use

      1. Information concerning subsoil use is accessible, unless otherwise provided for by this Code or other laws of the Republic of Kazakhstan.

      2. The State provides open access to:

      1) information on auctions granting subsoil use right, their terms and results;

      2) decisions of state bodies regarding the granting and termination of the subsoil use right;

      3) information on the subsoil use right with due regard to the different types of subsoil use operations;

      4) geological information, except for geological information recognized as confidential under this Code, or secret under the legislation of the Republic of Kazakhstan on state secrets.

      3. Procedure for access to information concerning subsoil use is determined by this Code and other laws of the Republic of Kazakhstan.

      4. Persons concerned may, on the gratuitous basis, use open information the access to which is provided according to this Article.

Article 8. Subsoil use availability against interest payment

      Subsoil use is subject to interest payment (compensated). Payment for the use of subsoil is effected through payment of taxes and other mandatory payments to the budget under the tax legislation of the Republic of Kazakhstan.

Article 9. Good faith of subsoil users

      In the process of exercising state control over subsoil use operations, when subsoil users exercise the rights granted to them and fulfill the obligations provided for in this Code, the good faith of subsoil users’ activities is presumed.

Chapter 2. GENERAL PROVISIONS ON SUBSOIL AND THEIR RESOURCES

Article 10. Subsoil and their resources

      1.      Subsoil is the part of the earth's crust subjacent to the soil layer, and in the absence thereof, the crust below the earth's surface, bottom of water bodies and water channels.

      2.      This Code regulates the use of subsoil with respect to the following resources:

      1)      minerals;

      2)      man-made mineral formations;

      3)      subsoil space.

Article 11. Ownership of the subsoil

      1. According to the Constitution of the Republic of Kazakhstan, subsoil is in state ownership.

      2. The State grants the use of subsoil, subject to the grounds, conditions and to the content, as defined by this Code.

      3. The actions of individuals and legal entities constituting violation of the right of state ownership of subsoil, shall entail liability as provided for by the laws of the Republic of Kazakhstan Transactions concluded in violation of state ownership of subsoil are void.

Article 12. Minerals and their classification

      1. The following is considered as minerals: natural mineral formations containing useful components and organic substances, the chemical composition and physical properties of which allow them to be used in the field of material production and consumption either immediately or after processing.

      2. In terms of their economic significance and for the purpose of establishing appropriate conditions for subsoil use, minerals are divided into the following groups:

      1) underground waters;

      2) hydrocarbon minerals (hydrocarbons);

      3) solid minerals.

      3. Oil, crude gas and natural bitumen are considered as hydrocarbons.

      Crude oil, gas condensate, as well as hydrocarbons obtained after crude oil refining and treatment of oil shale, petroleum bituminous rocks or tar sands are considered as oil.

      Any hydrocarbons, regardless of their specific gravity, extracted from the subsoil in the liquid state at normal atmospheric temperatures and pressures, including those formed from the raw gas by natural condensation are considered as crude oil.

      Any hydrocarbons, regardless of their specific gravity, extracted from the subsoil in the gaseous state at normal atmospheric temperatures and pressures, including untreated natural, associated, shale gas, coalbed methane, and non-hydrocarbon gases contained in them are considered as raw gas.

      Multicomponent mixture of hydrocarbons and non-hydrocarbon gases that forms a part of the oil in a dissolved state in reservoir conditions and which is released from it when the pressure decreases are considered as associated gas.

      Multicomponent mixture of hydrocarbons and non-hydrocarbon gases with a predominant methane content that is in the gaseous state at normal atmospheric temperatures and pressures extracted from coal deposits are considered as coalbed methane.

      Minerals of organic origin with a primary hydrocarbon base, lying in the subsoil in solid, viscous and viscous-plastic states, which production in the natural conditions by downhole methods is technically impossible are considered as natural bitumen.

      4. Natural mineral formations, organic substances and their mixtures being in the solid state in the subsoil or on the earth's surface are considered as solid minerals.

      Solid minerals are divided into ore (metallic) minerals and non-metallic minerals. As metallic solid minerals the native metals, ores of ferrous, non-ferrous, rare, radioactive metals and rare-earth elements are recognized. Remaining solid minerals are considered as non-metallic.

      Non-metallic solid minerals used in the natural state or with insignificant processing and cleaning for construction and other economic purposes and widely distributed in the subsoil are considered as commonly occurring minerals. Commonly occurring minerals include: marbles, quartzites, quartz-feldspar rocks, granites, syenites, diorites, gabbros, rhyolites (liparites), andesites, diabases, basalts, volcanic tuffs, slags, pumice, volcanic glass and vitreous rocks, pebble gravel and granular gravel, gravel-sandy (sandy-gravel) mixture, sand and sandstones, clays and clay rocks (loams, siltstones, argillites, clayey shales), common salt, gypsum rocks, marls, limestones, including shells, chalk rocks, dolomites, limestone dolomite rocks, siliceous rocks (trefoils, gaizes, diatomites), natural pigments, peat, therapeutic mud.

Article 13. man-made mineral formations, rights to man-made mineral formations

      1. The following is considered as man-made mineral formations: accumulations of waste from mining, mining and processing and energy productions that contain useful components and (or) minerals.

      man-made mineral formations of mining industries include wastes from production of solid minerals formed as a result of the separation of solid minerals from the rock mass during their extraction from the subsoil (overburden removal, containing rock, dust, poor (off-grade) ore).

      man-made mineral formations of mining and processing production facilities include processing wastes generated as a result of mining and processing activities (tails and slurries of enrichment) and (or) chemical and metallurgical industries (slag, cakes, clinkers and other similar types of waste of metallurgical processing).

      man-made mineral formations of energy productions include solid wastes generated as a result of combustion of fuel during the generation of electrical and (or) thermal energy by generating facilities (ashes and ash slags).

      2. man-made mineral formations located within a subsoil plot are an accessory of such a site.

      man-made mineral formations originated as a result of the activities of chemical-metallurgical or energy production facilities located outside the subsoil plot being in use are the property of these production facilities. Ownership right for such man-made mineral formations is retained by the owner of the production facilities until the date of closure of the landfill (part of the landfill) of the location of these man-made mineral formations under the environmental legislation of the Republic of Kazakhstan.

      3. The ownership right to man-made mineral formations originated as a result of the subsoil users' activities at a subsoil plot under their use is reserved for them for a period of validity of the subsoil use right.

      Subsoil users that are owners of man-made mineral formations are entitled, subject to the provisions of this Article, to own, use and dispose the man-made mineral formations originated as a result of activities at the subsoil plot granted to them for use, as well as to alienate them to third parties.

      The alienation of these man-made mineral formations to third parties without exclusion from the subsoil plot or the landfill of their location is not allowed, except for the cases of transfer of the subsoil use right or, respectively, the ownership right to the production facilities specified in paragraph 2 of this Article.

      In the event of alienation of man-made mineral formations located at a subsoil plot being in use, to third parties, their seizure shall be carried out during the validity period of the subsoil use right.

      4. Placement of man-made mineral formations from mining, mining and processing (beneficiation) production facilities is carried out only within the subsoil plots being in use under a licence for exploration or production of solid minerals or under a subsoil space use licence, taking into account the restrictions provided for by the Special Part of this Code.

      5. man-made mineral formations left at a subsoil plot after termination of the subsoil use right or, respectively, after the closure of landfill (part of the landfill) are included in the subsoil composition.

      For the purposes of this Code, the legal regime of solid minerals is applied to man-made mineral formations included in the subsoil.

Article 14. Deposits and their classification

      1. A deposit stands for a natural or man-made accumulation of mineral(s), which, in terms of its quantitative, qualitative and mining characteristics, can be suitable for industrial development with a positive economic effect.

      2. According to amount of resources or reserves of minerals and their economic importance, large deposits are separated as a category of its own.

      3. Mineral deposits are considered as large ones if they contain the following resources:

Mineral, unit of measure

Quantity

Iron ores, mln. tons

>100

Manganese ores, mln. tons

>50

Chromite ore, mln. tons

>30

Copper, mln. tons

>5

Lead, mln. tons

>5

Zinc, mln. tons

>5

Bauxite, mln. tons

>50

Nickel, thous. tons

>50

Tungsten, thous. tons

>100

Molybdenum, thous. tons

>200

Gold, tons

>250

Coking coal, mln. tons

>50

Steam coal, mln. tons

>500

Lignite (brown coal), mln. tons

>500

Oil shale, mln. tons

>500

Phosphorites (ore), mln. tons

>200

Sulfuric acid, mixed potassium salts, mln. tons

>100

      Hydrocarbons deposits are considered as large ones if they contain the following geological reserves:

Mineral, unit of measure

Quantity

Oil, mln. tons

>100

Natural gas, bln. m3

>50

Article 15. Ownership of recovered minerals

      Produced minerals belong to a subsoil user on the right of ownership (on the right of economic management or the right of operational administration if a state legal entity), unless otherwise set out by this Code.

Article 16. Subsoil space

      Subsoil space is a three-dimensional spatial property of the subsoil, which, taking into account geotechnical, geological, economic and environmental factors, can be used as an environment for placing objects of production, scientific or other activities.

SECTION II. USE OF SUBSOIL Chapter 3. GENERAL PROVISIONS ON SUBSOIL USE RIGHT

Article 17. Definition and content of the subsoil use right

      1. A subsoil use right represents the opportunity provided by this Code to use subsoil on a reimbursable basis within the limits of an allocated site for entrepreneurial purposes within a certain term.

      2. The subsoil use right is a proprietary and indivisible right. With due regard to the provisions of this Code, provisions on the right of ownership shall apply to the subsoil use right, since this does not contradict the nature of the property right.

      3. The subsoil is used subject to procedure and to the extent set out by this Code.

Article 18. Holders of the subsoil use right

      1. The subsoil use right may be held by individuals and legal entities, unless otherwise provided for by this Code.

      2. Several persons may be the owners of a subsoil use right concurrently. In this case, ownership of the subsoil use right is of common nature. Common ownership of the subsoil use right is originated via the subsoil use right granting to two or more persons simultaneously or as a result of the transfer of a share in the subsoil use right from one person to another.

      Common ownership of a subsoil use right by two or more persons is allowed only upon determination of the share of each of these persons in such a right.

      Provisions of civil legislation of the Republic of Kazakhstan regulating the relations of common share ownership shall apply to the common ownership of a subsoil use right.

      In cases provided for by this Code, only one person can be the owner of a subsoil use right.

      3. Unless otherwise provided for by this Code, a subsoil use right (a share in it) may pass from one person to another one on the grounds provided for by the civil legislation of the Republic of Kazakhstan.

Article 19. Subsoil plot as a property covered by the subsoil use right

      1. A subsoil plot stands for a geometrized part of the subsoil with certain spatial boundaries, which is granted for use according to this Code.

      The spatial boundaries of a subsoil plot are formed by conditional planes emanating from straight lines between points with geographic coordinates (the territory of the subsoil plot), and the depth forming the upper and lower spatial boundaries.

      The upper spatial boundary of a subsoil plot is located subjacent to the soil layer, and in absence thereof below the earth's surface and (or) the bottom of water bodies, water channels. The lower spatial boundary of a subsoil plot is located at depths accessible for geological survey and development.

      In cases provided for by this Code, the upper and (or) lower spatial boundaries of a subsoil may be located at a different depth.

      2. For the purposes of identifying the territory of a subsoil plot for performance of minerals exploration operations (an exploration site) and geological survey operations (a geological survey site), the territory of the Republic of Kazakhstan is conditionally divided into blocks, each side of which is equal to one minute in the geographic coordinate system. Twenty-five blocks form a subsection of blocks, each side of which is equal to five minutes in the geographic coordinate system. One hundred blocks form a block section, each side of which is ten minutes in the geographic coordinate system.

      Each block, subsection and section of blocks have their identifying coordinates and individual codes assigned by the authorized body for subsoil study. The territory of an exploration site (an exploration territory) or a geological survey site (a geological survey territory) may consist of one or more blocks. If the specified territory consists of two or more blocks, each block of the given territory should have a shared side with at least one of its another block.

      In the cases provided for in this Code, the exploration territory may include a part of a block or blocks, each of which shall have a shared side with another block of such a territory or its part.

      3. The territory of a subsoil plot for performance of operations for production of minerals (a production site), for artisanal mining (an artisanal mining site) and for subsoil space use (a subsoil space use site) should be a rectangle. If the natural features or the boundaries of another subsoil plot do not allow to determine the territory of the relevant site of production, artisanal mining or subsoil space use in the form of a rectangle, the territory of such a subsoil plot may have the form of a quadrilateral, which two opposite sides shall be parallel to each other.

      In the cases provided for by this Code, the area of a production plot may be shaped as a polygon with right angles, identified from the external contours of a deposit.

Article 20. Grounds for creation and acquisition of the subsoil use right

      1. The subsoil use right is created on the basis of:

      1) a subsoil use licence;

      2) a subsoil use contract.

      2. The subsoil use right is acquired in the following cases:

      1) granting a subsoil use right;

      2) transfer of the subsoil use right (a share in it) on the basis of civil law transactions;

      3) transfer of subsoil use right by way of succession at reorganization of a legal entity, with the exception of transformation or inheritance.

Article 21. Grounds for termination of the subsoil use right

      1. No one shall be deprived of their subsoil use right otherwise than on the grounds established by this Code and other laws of the Republic of Kazakhstan.

      2. The subsoil use right ceases with the termination of a subsoil use licence or contract.

Article 22. Types of subsoil use operations

      The subsoil use right is granted for performance of the following operations:

      1) geological survey of subsoil;

      2) exploration of minerals;

      3) production of minerals;

      4) subsoil space use;

      5) artisanal mining.

Article 23. Project documents for subsoil use operations

      1. In the cases provided for by this Code, subsoil use operations may be conducted only upon availability of a project document providing for such operations.

      2. Project documents are those containing plans, methods, methodology, technical conditions, technological indicators, scope, timing and other parameters of works carried out for the purposes of subsoil use.

      3. Project documents are developed separately for each subsoil plot for the period of its use, as provided for by the licence or contract.

      4. Project documents are developed taking into account environmental and industrial safety requirements. When carrying out subsoil use operations the subsoil users are obliged to comply with the environmental and industrial safety parameters specified in the project document.

      5. Particularities of development of project documents, taking into account types of subsoil use operations, are established by the provisions of the Special Part of this Code.

Article 24. Performance of subsoil use operations in one territory by different persons

      1. Different subsoil users may conduct subsoil use operations in the same territory (combined territory) unless otherwise provided for in the Special Part of this Code.

      2. Procedure for subsoil user operations on a combined territory is determined by their mutual agreement. The agreement defines the terms and procedure for conducting all or certain types of work on the combined territory.

      The agreement shall be concluded in a simple written form and submitted by the subsoil user to the state body that granted the subsoil use right, within five business days from the date of its conclusion.

      The agreement may provide for reasonable and adequate compensation for the expenditures incurred by one of the subsoil users.

      3. If subsoil users fail to reach an agreement on the procedure for conducting operations on a combined territory, one subsoil user shall have the established primacy over the other in conducting works on the combined territory. In this case, the priority in conducting works on that combined territory belongs to a subsoil user:

      1) conducting operations for production of minerals;

      2) having the subsoil use right granted earlier, if both subsoil users conduct operations for production of minerals;

      3) having the subsoil use right granted earlier if both subsoil users conduct the operations for exploration of minerals;

      4) conducting operations on the subsoil space use, if another subsoil user conducts the operations for exploration of minerals.

      4. A subsoil user not having a priority in performance of works on a combined territory is obliged to take into account the time, duration, location, scope and nature of the works performed or planned by the subsoil user having such a priority and not create obstacles for conduct thereof. The subsoil users are obliged to use their priority in good faith and reasonably, not pursuing the objectives of obtaining unreasonable benefits.

      5. A subsoil user having a priority in carrying out the works in the combined territory is obliged to provide the subsoil user not having a priority the written information on the duration, location, scope and nature of their works performed and planned to be performed on the common subsoil plot within a month from the date of receiving the written request of the latter. Such information may constitute a trade secret.

      Time, duration, scope, location and nature of the works, information about which has been provided to the subsoil user not having a priority on conducting works in the combined territory, may be changed by the subsoil user having such a priority, not more than once in three months. In this case, the subsoil user having a priority shall notify the other subsoil user in writing of changes in the time, duration, scope, location and nature of the planned works not later than one month prior to such changes. The subsoil user not having a priority in conducting work on the combined territory is entitled to complete the works commenced before receipt of such a notification.

Article 25. Territories restricted for subsoil use operations

      1. Unless otherwise provided for by this Article, subsoil use operations are prohibited:

      1) in lands for the needs of defense and national security;

      2) in lands of settlements and adjacent territories at a distance of one thousand meters;

      3) at a land plot occupied by an operating hydraulic engineering structure, other than the object of placement of man-made mineral formations from mining and beneficiation production facilities, and on the adjacent territory at a distance of four hundred meters;

      4) in lands of the water fund;

      5) within the contours of deposits and underground waters sites, which are used or can be used for potable water supply;

      6) at a distance of one hundred meters from the repositories, graves and cemeteries, as well as from the land plots assigned to repositories and cemeteries;

      7) at land plots owned by third parties and occupied by buildings and structures, perennial plantations, and the adjacent territories at a distance of one hundred meters, without the consent of such persons;

      8) in lands occupied by roads and railways, airports, airfields, air navigation facilities and aeronautical centers, railway transport objects, bridges, subways, tunnels, power system and transmission facilities, communication lines, objects providing space activities, trunk pipelines;

      9) at subsoil plots allocated to the state legal entities for state needs;

      10) in other territories on which subsoil use operations are prohibited under other laws of the Republic of Kazakhstan.

      2. It is prohibited to grant for use a subsoil plot the entire external territorial borders of which are located within the territories specified in paragraph 1 of this Article.

      3. The prohibition set out by sub-paragraph 2) of paragraph 1 of this Article shall not cover:

      1) performance of operations on exploration of solid minerals or operations on production of solid minerals by the underground method, approved by the local executive and representative bodies by concluding an agreement that provides for social economic support to the local population residing in the respective territory. In this case, the existence of this agreement constitutes a condition for issuing the relevant licence;

      2) subsoil use operations at the former Semipalatinsk nuclear test site;

      3) performance of geological survey of subsoil in the part of prospecting and evaluation works for underground waters.

      The prohibition set out by sub-paragraph 4) of paragraph 1 of this Article does not apply to artisanal mining and the operations for exploration or production of hydrocarbons.

      The prohibitions set out in paragraph 1 of this Article do not apply to subsoil operations conducted by means of airborne geophysical surveys or surveys with the use of space methods of remote sensing of the Earth.

Article 26. Performance of subsoil use operations in natural areas of preferential protection and subsoil plots of special ecological, scientific, historical-cultural and recreational value

      1. Restrictions on performance of subsoil use operations in natural areas of preferential protection and within subsoil plots of special ecological, scientific, historical-cultural and recreational value are established by the legislation of the Republic of Kazakhstan related to the natural areas of preferential protection.

      2. In case of discovery of geological, geomorphological and hydrogeological objects of special ecological, scientific, historical-cultural and recreational value under the legislation of the Republic of Kazakhstan related to the natural areas of preferential protection, the subsoil users are obliged to immediately stop works on the relevant site and notify in writing the authorized body for subsoil study and the authorized body in the field of environmental protection.

Article 27. Conditions for the development of territories with mineral occurrences

      1. Design and construction of settlements, industrial complexes and (or) other economic facilities are allowed only after receiving a positive conclusion of the local executive body of a region, the city of republican significance, the capital upon approval of the territorial subdivision of the authorized body for subsoil study regarding the absence or insignificance of minerals in subsoil under the site of the upcoming development.

      2. The development of the territories with mineral occurrences is allowed with the permission of the local executive body of a region, the city of republican significance, the capital, issued upon approval of the territorial subdivision of the authorized body for subsoil study, provided it is possible to extract minerals or prove the economic feasibility of construction.

      3. The procedure for issuing a permission for the development of territories with mineral occurrences is determined by the authorized body for subsoil study.

Article 28. Ensuring support to Kazakhstani personnel, producers of goods, suppliers of works and services at performance of exploration and (or) production operations

      1. When conducting operations on exploration and (or) production of minerals, subsoil users are obliged to give preference to Kazakhstan personnel. Engagement of foreign labor is carried out under the legislation of the Republic of Kazakhstan on population employment and migration.

      At that, the number of executives, managers and specialists engaged in labor activities in the Republic of Kazakhstan within the framework of intra-corporate transfer under the legislation of the Republic of Kazakhstan on population employment and migration should not be more than fifty percent of the total number of executives, managers and specialists under each relevant category.

      The local content share in the labor force is calculated according to the methodology approved by the authorized body on employment.

      2. The share of local content in works and services purchased for performance of subsoil use operations, established in the terms and conditions of subsoil use contracts, licences for production of solid minerals, shall be not less than fifty percent of the total volume of works and services purchased during a calendar year.

      The local content share in goods, works and services is calculated by organizations according to the unified methodology for calculating local content in the procurement of goods, works and services, approved by the authorized body in the field of state support for industrial and innovative activities.

Chapter 4. REGIMES OF SUBSOIL USE RIGHT Paragraph 1. Licensing regime of subsoil use

Article 29. Definition of a subsoil use licence

      1. The subsoil use licence is the document issued by a state body and granting its holder the right to use a subsoil plot for the purpose of performance of subsoil use operations within the subsoil plot indicated therein.

      A subsoil use licence does not belong to permits regulated according to the legislation of the Republic of Kazakhstan on permits and notifications.

      2. A subsoil use licence is issued for use of only one subsoil plot.

      3. Unlimited number of subsoil licences may be issued to one person, except for the cases established by this Code.

      4. The licence is issued upon the application of the person concerned. Form of an application for a licence is approved by the competent authority.

      5. The issued licence is subject to publication on the Internet resource of the state body that issued the licence on the issue date.

      6. The state body that issues subsoil use licences maintains a register of issued licences.

      In addition to the information contained in the licence, this register contains:

      1) information on the place of residence of an individual being a subsoil user;

      2) information on registered encumbrances with respect to the subsoil use right;

      3) other information required for the purposes of record keeping.

      Procedure for keeping the register of issued licences is established by the competent authority.

Article 30. Types of subsoil use licences

      The subsoil use licences issued with due regard to the kind of subsoil operations are as follows:

      1) a licence for geological survey of subsoil;

      2) a licence for exploration of solid minerals;

      3) a licence for production of solid minerals;

      4) a licence for production of commonly occurring minerals;

      5) a subsoil space use licence;

      6) an artisanal mining licence.

Article 31. Content of a subsoil use licence

      1. A subsoil use licence is drawn up in the form approved by the competent authority.

      2. The subsoil use licence, taking into account its type, specifies:

      1) type of a subsoil use licence;

      2) name of the state body that issued the licence;

      3) information about the person the licence was issued to:

      for individuals–surname, first name, patronymic (if indicated in the identity document) and citizenship;

      for legal entities–name, location;

      4) number and date of the licence;

      5) the licence terms and conditions: validity period of the licence, boundaries of the subsoil plot and other subsoil use conditions provided for by this Code.

      3. The licence validity period is calculated from the day specified in the licence.

      4. If two or more persons own the subsoil use right, the licence shall contain a reference to the size of the shares owned by the common owners of the subsoil use right.

      5. The licence is issued in Kazakh and Russian.

      6. The terms and conditions of subsoil use licence shall comply with the requirements established by this Code.

      7. If, after the issue of a subsoil use licence, the legislation of the Republic of Kazakhstan regulating relations in subsoil use establishes other conditions for a subsoil use licence, these conditions do not apply to a previously issued licence.

      The provision established by part one of this paragraph does not apply to changes in the legislation of the Republic of Kazakhstan in the field of national security, defense, environmental security, health, taxation, customs regulation and competition protection.

      8. If a subsoil use licence is issued in violation of the content of its terms, the provisions of this Code on the content of subsoil use licence that were in effect on the date of license issue shall apply.

Article 32. Making amendments to a subsoil use licence

      1. Amendments to a subsoil use licence are made by the state body that issued the licence, by reissuing it.

      The reissued licence is subject to publication on the Internet resource of the state body that issued the licence on the day of reissue.

      2. The licence is subject to reissue in the case of:

      1) changes in information about the subsoil user:

      for individuals–changes in the surname, name, patronymic (if specified in the identity document) and (or) citizenship;

      for legal entities–changes in their name or location;

      2) transfer of a subsoil use right and (or) a share in it;

      3) extension of the licence validity period;

      4) changes in the boundaries of the subsoil plot territory.

      3. A licence is reussued at the request of the subsoil user, submitted in the form approved by the competent authority.

      The application shall be accompanied by originals or notarized copies of documents confirming the information specified therein.

      The application and the documents attached thereto shall be executed in Kazakh and Russian. If the application is submitted by a foreigner or a foreign legal entity, the documents attached thereto may be drafted in another language with a mandatory attachment of translations into Kazakh and Russian to each document and notarization of their authenticity.

      4. The state body that issued the licence refuses to reissue the licence if the application does not comply with the requirements of this Code.

      5. The state body that issued the licence shall reissue it or notify about the rejection of reissue within seven business days from the date of application filing.

      6. According to the legislation of the Republic of Kazakhstan, a subsoil user may appeal against the rejection of the license reissue within ten business days from the date of rejection notice receipt.

      7. Reissue of a licence in the cases provided for by sub-paragraphs 2), 3), 4) of paragraph 2 of this Article shall be carried out according to this Code.

      8. Grammatical or arithmetical errors, misprints or other similar errors made when issuing or reissuing a licence are subject to correction by the state body that issued the licence.

      Correction of errors made when issuing or reissuing a licence does not constitute a license reissue.

      Correction of errors can be made on the initiative of the state body that issued the licence, or at the request of subsoil user.

      The state body shall correct errors upon the application of subsoil user within five business days from the date of such application receipt.

      The state body that issued the licence, after correcting the error in the licence, issues it to the subsoil user within two business days.

      The corrected licence is subject to publication on the Internet resource of the state body that issued the licence on the day of correction.

      Disputes arisen in connection with the correction of errors in the licence, are subject to settlement according to the legislation of the Republic of Kazakhstan.

Article 33. Termination of a subsoil use licence

      A subsoil use licence is terminated in the following cases:

      1) expiration of the period for which it was issued, unless otherwise provided by this Code;

      2) death of its sole owner (including declaration of death), if the subsoil use right created on the basis of a licence, is recognized as escheated property according to the civil legislation of the Republic of Kazakhstan;

      3) revocation or invalidation of a licence;

      4) the subsoil user's waiver of the subsoil plot to which the licence was issued.

Article 34. Invalidity of the licences and consequences thereof

      1. A licence may be acknowledged as invalid in a judicial proceeding in the following cases:

      1) when establishing the fact of providing the state body that issued the licence with knowingly false information that influenced its decision to issue a licence;

      2) violation of the procedure for issuing a licence set out by this Code which led to unreasonable decision of the state authority to issue a licence, as a result of the fact of a malicious agreement between an official of the state body and the applicant established by the court;

      3) license issue to a person recognized as legally incapacitated and being such on the issue date;

      4) if the license issue is not provided for or prohibited by this Code.

      2. The person concerned and a prosecutor are entitled to appeal to the court with a claim for recognizing the licence as invalid, and on the grounds provided for by sub-paragraphs 1) and 3) of paragraph 1 of this Article–also the state body that issued the licence.

      The person concerned is the person which right to obtain a licence and legitimate interests are violated or may be violated as a result of the licence issue.

      3. The licence shall be declared invalid from the day the court decision comes into force.

      4. In case of the licence invalidation on the grounds provided for by sub-paragraphs 1) and 2) of paragraph 1 of this Article, the person granted with the licence is obliged to compensate the state for the damage caused at the amount of income gained by such person from illegal use of the subsoil plot and the State’s expenses related to the licence invalidation.

      5. A person shall not be entitled to require the invalidation of a licence that is issued in violation of the requirements of this Code, other laws of the Republic of Kazakhstan, the charter of a legal entity, if such a requirement is caused by lucrative motives or the intention to evade liability.

      6. The statute of limitations for disputes related to the invalidity of a licence is three months from the day when the plaintiff becomes aware or should become aware of the circumstances constituting the grounds for the license invalidation.

Paragraph 2. Contractual regime of subsoil use

Article 35. Definition of a subsoil use contract

      1. Subsoil use contract is a contract, which content, procedure for conclusion, execution and termination are determined by this Code.

      2. Under a subsoil use contract, one party (the Republic of Kazakhstan represented by the competent authority) undertakes to grant to another party (a subsoil user) a subsoil use right for a certain period, and the subsoil user undertakes, at its own expense and at its own risk, to exercise the subsoil use according to the terms of the contract and this Code.

      3. The subsoil use contract is concluded for exploration and production or production of hydrocarbons, as well as for uranium production.

      4. When a contract is concluded, only one subsoil plot is provided for the use.

      In the cases and under the procedure established by the Special Part of this Code, several subsoil plots may be allocated to a contract for hydrocarbons exploration and production through making amendments and additions.

      5. One and the same person may enter into unlimited number of subsoil use contracts, except in cases established by this Code.

      6. The competent authority maintains a register of contracts concluded. The procedure for maintaining the register of contracts concluded is established by the competent authority.

Article 36. Content of a subsoil use contract

      1. Draft subsoil use contracts are developed according to standard contracts approved by the competent authority. Deviation from a standard contract is allowed in the cases, within the limits and under the procedure provided for by this Code.

      2. Among the mandatory conditions contained in a subsoil use contract are:

      1) type of the subsoil use operations;

      2) the contract validity period;

      3) boundaries of the subsoil plot(s);

      4) obligations of the subsoil user in terms of scope and types of works at the subsoil plot during the exploration period provided for in the work program (supplementary works);

      5) obligations of the subsoil user to finance the Kazakhstan personnel training during production period;

      6) obligations of the subsoil user on the minimum share of local content in the personnel;

      7) obligations of the subsoil user on the share of local content in works and services that meet the requirements of this Code, including with regard to types of works and services included in the list of priority works and services approved by the authorized body in hydrocarbons;

      8) obligations of the subsoil user to mitigate the consequences of subsoil use;

      9) obligations of the subsoil user on expenses for research, scientific and technical and development works in the territory of the Republic of Kazakhstan during production period;

      10) obligations of the subsoil user on expenses for the social and economic development of the region and the development of its infrastructure during a production period;

      11) obligations of the subsoil users on compliance by them and their contractors with the procedure for procurement of goods, works and services used at performance of operations for exploration or production of hydrocarbons and uranium production determined by authorized bodies in the field of hydrocarbons and production of uranium;

      12) responsibility of the subsoil user for violation of contractual obligations, including violation of the indices in the core project documents for exploration and production of hydrocarbons attributed by this Code to contractual obligations, and for violation of liabilities to comply with the procedure established for procurement of goods, works and services by subsoil users and (or) their contractors at performance of operations during operations in exploration or production of hydrocarbons and uranium production as well;

      13) other conditions based on which the subsoil use right has been granted.

      3. In case of concluding a contract for a subsoil plot on which a subsoil use contract had been previously terminated and a trust management agreement was concluded with the national company engaged in hydrocarbons, the contract under conclusion should contain the obligations of the new subsoil user as follows:

      1) based on the amount and timeline of the subsoil user compensation for the value of property transferred under paragraph 19 of Article 119 of this Code;

      2) based on the amount and timeline of the trust manager's reimbursement to cover the expenses incurred according to the trust management agreement, as well as payment of remuneration thereto, except for the cases provided for by this Code.

      4. Validity period of the contract for exploration and production of hydrocarbons is determined by the exploration period, the preparatory period (if required) and the production period consecutively fixed in it.

      of a hydrocarbons production contract is determined by the preparatory period and the production period consecutively fixed in it.

      Validity period of any uranium production contract is determined by the period of pilot production and the production period consecutively fixed in it.

      5. Validity period of the exploration and production contract or production contract is extended by the competent authority for the duration of the force majeure circumstances should the subsoil user submit evidence of such circumstances according to the legislation of the Republic of Kazakhstan.

      6. The contract is concluded in Kazakh and Russian. By agreement of the contract parties, the contract text may also be translated into another language.

      7. Amendments and additions to the legislation of the Republic of Kazakhstan that worsen the results of entrepreneurial activities of a subsoil user under subsoil use contracts shall not apply to the contracts concluded before making such amendments and additions.

      The guarantees set forth by part one of this paragraph do not apply to changes in the legislation of the Republic of Kazakhstan in the fields of national security, defense, environmental security, health, taxation, customs regulation and competition protection.

      8. The applicable law on subsoil use contracts is the law of the Republic of Kazakhstan.

Article 37. Making amendments and additions to the subsoil use contract

      1. Amendments and additions to the subsoil use contract shall be made by concluding an addendum to the contract by its parties.

      2. Contract addendum is concluded in the following cases:

      1) changes in information about the subsoil user:

      for individuals–of the surname, first name and patronymic (if specified in the identity document), citizenship;

      for legal entities– name, location;

      2) changes in the information on competent authority;

      3) transfer of the subsoil use right and (or) a share in it;

      4) assignment of the site(s) of production and the preparatory period(s);

      5) allocation of the site(s) and period(s) of production or the production period(s);

      6) extension of the period(s) of exploration or production;

      7) increase or decrease in the size of the subsoil plot(s);

      8) allocation of the subsoil plot(s);

      9) with respect to strategic subsoil plots–the change in economic interests of the Republic of Kazakhstan creating a threat to national security.

      3. Conclusion of addendum to the contract in the case provided for in sub-paragraph 1) of paragraph 2 of this Article shall be made upon the application of the subsoil user, which shall contain:

      1) surname, name, patronymic (if specified in the identity document) or name of the subsoil user;

      2) registration date and number of the subsoil use contract;

      3) reference to the subsoil user details under alteration.

      4. The documents additionally attached to the application are:

      1) documents confirming the necessity of making amendments in information concerning the subsoil user;

      2) the contract addendum signed by the subsoil user and providing for making amendments in the information on subsoil user.

      5. Application shall be considered within twenty business days after its filing in the competent authority. Based on the results of application consideration, the competent authority concludes with the applicant the contract addendum with subsequent sending whether the signed counterpart or notice on rejection of addendum conclusion.

      6. Competent authority may reject conclusion of addendum if the application does not conform to the requirements set out by this Code.

      The competent authority rejection of the addendum conclusion shall not deprive the subsoil user of the right to refile the application.

      7. Conclusion of the contract addendum in the case provided for in sub-paragraph 2) of paragraph 2 of this Article shall be made in the initiative of the competent authority.

      8. Conclusion of the contract addendum in the cases provided for in sub-paragraphs 3) to 9) of paragraph 2 of this Article shall be implemented according to this Code.

Article 38. Termination of a subsoil use contract

      1. Validity of the subsoil use contract shall be terminated in the following cases:

      1) expiry of the term for which it was concluded, including if:

      until the end of the exploration period, no addendum to the contract contemplating assignment of the preparatory period or production period has been concluded;

      until the end of the preparatory period, an addendum to the contract contemplating the production period fixing has not been concluded;

      2) death of the person being the sole owner of the subsoil use right under the contract (including declaration of death), if such subsoil use right is recognized as escheated property according to the civil legislation of the Republic of Kazakhstan;

      3) liquidation of a legal entity being a subsoil user;

      4) early termination or invalidation of the contract;

      5) termination of the contract by agreement of the parties;

      6) adoption by the Government of the Republic of Kazakhstan of a decision on the prohibition to use a subsoil plot according to this Code;

      7) the subsoil user's waiver return) of the entire subsoil plot(s), for which the contract was concluded.

      2. The competent authority is entitled to terminate the subsoil use contract prematurely on the grounds provided for by this Code.

Article 39. Invalidity of a subsoil use contract and consequences thereof

      1. Grounds for invalidation of the subsoil use contract are:

      1) acknowledgement of the auction for granting the subsoil use right as invalid;

      2) the absence in a subsoil use contract of mandatory conditions established by this Code;

      3) establishing the fact of providing the competent authority with knowingly unreliable information having effect on decision to conclude a subsoil use contract with this person;

      4) other grounds provided for by the laws of the Republic of Kazakhstan.

      2. Invalidated subsoil use contract does not entail legal consequences, except for those related to its invalidity, and being invalid from the date of its conclusion.

      Acknowledgement of a contract as invalid does not exempt a subsoil user from fulfilling obligations to liquidate the consequences of subsoil use.

      3. Acknowledgment of a contract as null and void in a judicial proceeding or termination of the contract, on which basis a subsoil use right was transferred and re-registered, entails the invalidity of amendments to the subsoil use contract made in connection with such transfer of the subsoil use right, but not of the contract itself.

      4. Acknowledgement of a subsoil use contract as invalid entails the invalidity of all subsequent transactions, which subject is the subsoil use right granted on the basis of such a contract.

Chapter 5. TRANSFER OF SUBSOIL USE RIGHT AND OBJECTS LINKED TO SUBSOIL USE RIGHT

Article 40. Transfer of the subsoil use right

      1. The subsoil use right (a share in it) is transferred in the event of alienation of the subsoil use right (a share in it) to another person on the basis of civil transactions or in other cases provided for by the laws of the Republic of Kazakhstan.

      2. Transfer of the subsoil use right (a share in it) is prohibited:

      1) under a licence for exploration of solid minerals in the first year of its validity;

      2) under a licence for geological survey of subsoil;

      3) under an artisanal mining licence.

      3. Transfer of the subsoil use right (a share in it) is executed by reissue of a subsoil use licence or, accordingly, amending the subsoil use contract.

      To reissue the subsoil use licence or amend the subsoil use contract, the subsoil use right purchaser shall file application to the state authority that issued the subsoil use licence or entered into a subsoil use contract.

      The application shall be accompanied by:

      1) the original document, based on which the subsoil use right is acquired;

      2) documents confirming information about the purchaser of subsoil use right:

      for individuals–surname, first name and patronymic (if specified in the identity document) of the applicant, place of residence, citizenship, information about the identity documents of the applicant;

      for legal entities– name and location of the applicant, information on state registration as a legal entity (extract from the trade register or other legalized document certifying that the applicant is a legal entity under the laws of a foreign state), information about legal entities which shares are circulating on the organized securities market, states, international organizations and individuals directly or indirectly controlling the acquirer

      3) documents confirming the purchaser's compliance with the requirements of this Code for persons applying for to receipt of a subsoil use right under a contract for exploration and production or production of hydrocarbons, uranium production or under a licence for exploration or production of solid minerals, licences for production of commonly occurring minerals.

      In the case of making amendments and additions to the subsoil use contract, the application shall be accompanied by draft addendum to the subsoil use contract signed by the applicant.

      In the case of the acquisition of the subsoil use right based on the permit issued under Article 44 of this Code, instead of documents confirming the information on the acquirer, the acquirer is entitled to enclose to the application a written confirmation that the information about it has not changed in comparison with the information it submitted for obtaining this permit.

      The application and the documents attached thereto shall be executed in Kazakh and Russian. If the application is submitted by a foreigner or a foreign legal entity, the documents attached thereto may be drafted in another language with a mandatory attachment of translations into Kazakh and Russian to each document and notarization of their authenticity.

      The state body shall reissue or conclude addendum to the contract with the acquirer of the subsoil use right, or reasonably reject reissue or conclusion of addendum to the contract within seven business days from the date of application filing.

      4. The state body reject reissue of the licence or making changes in the contract in the following cases:

      1) the application inconsistency with the requirements of paragraph 3 of this Article;

      2) inconsistency of the conditions for transfer of the subsoil use right with the permit granted, if such transfer is performed according to such permit;

      3) absence of the permit to transfer the subsoil use right, when such permit was required according to this Code;

      4) if transfer of the subsoil use right (a share in it) is executed over a subsoil plot at which it is prohibited to the subsoil user to carry out subsoil use operations or certain types of work according to the imposed administrative penalty;

      5) if transfer of the subsoil use right (a share in it) is prohibited by this Code;

      6) if transfer of the subsoil use right (a share in it) entails the breach of provisions of the international treaties concluded by the Republic of Kazakhstan.

      Acquirer of the subsoil use right may appeal against rejection of the license reissue or making amendments to the contract according to the legislation of the Republic of Kazakhstan within ten business days from the date of rejection notice receipt.

      Rejection of the license reissue or making amendments to the contract on the grounds of sub-paragraph 1) of part one of this paragraph does not deprive the acquirer of the subsoil use right of re-applying for a licence reissue or making amendments to the contract.

      Rejection of the license reissue or making amendments to the contract on the grounds of sub-paragraphs 2) and 3) of part one of this paragraph does not deprive the applicant of the right to re-apply for issue of a permit to transfer the subsoil use right.

Article 41. Definition of objects linked to subsoil use right

      1. The objects linked to subsoil use right are participating interests, stakes, shares and other forms of equity participation, as well as securities that confirm the ownership right or are convertible into shares, participatory interest, stakes and other forms of equity participation in a legal entity that has the subsoil use right under the contract for exploration and production or production of hydrocarbons, under a contract for production of uranium, under a licence for exploration or production of solid minerals.

      The following is also considered as objects linked to subsoil use right: participatory interest, stakes, shares and other forms of equity participation, as well as securities that confirm the ownership right or are convertible into shares, units, stakes and other forms of equity participation in a legal entity or another organization that have the opportunity directly and (or) indirectly to determine the decisions taken by a person that has the subsoil use right, specified in part one of this paragraph.

      2. For the purposes of this Code, the following are not considered as objects linked to subsoil use right under the relevant subsoil use contract or licence:

      1) circulating on the organized securities market of the Republic of Kazakhstan and (or) the stock exchange operating in a foreign state, shares and other securities, including derivative financial instruments, which underlying assets are shares;

      2) shares, participatory interest, stakes and other forms of equity participation in legal entities and organizations that directly or indirectly own the securities provided for in sub-paragraph 1) of this paragraph.

      3. If a legal entity or organization simultaneously owns shares, participatory interest, stakes and other forms of equity participation specified in paragraphs 1 and 2 of this Article, shares, participatory interest, stakes and other forms of equity participation in such person or organization shall be considered as the objects linked to subsoil use right. At that, for the purposes of this Article in order to determine the possibility directly or indirectly to determine the decisions of a legal entity or other organization possessing an object linked to subsoil use right, shares, participatory interest, stakes and other forms of equity participation not being objects linked to subsoil use right under paragraph 2 of this Article shall not be taken into account.

Article 42. Transfer of objects linked to subsoil use right

      1. The following is considered as the transfer of objects linked to subsoil use right:

      1) their alienation on the basis of non-gratuitous or gratuitous civil transactions, including in case of liquidation of a legal entity, as well as their contribution as a contribution to the authorized capital of a legal entity or another organization;

      2) foreclosure on objects linked to subsoil use right, including in case of a pledge;

      3) creation of the right to an object linked to subsoil use right, due to an admission of a new participant, shareholder or placement of shares;

      4) transfer of the objects linked to subsoil use right, in the order of succession based on a transfer deed or a separation balance sheet at reorganization of a legal entity;

      5) transfer of the objects linked to subsoil use right, in the order of inheritance;

      6) issue of shares and other securities being objects linked to the subsoil use right into circulation on the organized securities market.

      Issue of shares and other securities being the objects linked to the subsoil use right into circulation on the organized securities market is recognized as an offer to acquire such objects on the organized securities market in the Republic of Kazakhstan and (or) on the stock exchange operating in a foreign state, and (or) the placement of shares on the organized securities market in the Republic of Kazakhstan and (or) on the stock exchange operating in a foreign state.

      2. A person that acquired objects linked to the subsoil use right or issued shares and other securities being objects linked to subsoil use right into circulation is obliged to notify the competent authority of the acquisition or, accordingly, of the issue into circulation occurred in a timely manner not later than one month from the date of acquisition or such issue into circulation.

      3. For the purposes of this Code, the change in ownership of participatory interest, shares, stakes and other instruments of equity participation or a change of their ratio based on a court decision, inheritance by law, repayment of interest, confiscation and other events or actions of state bodies, third parties that do not depend on the will of the subject of the legal relationship are not acknowledged as a transfer of objects linked to subsoil use right.

Article 43. Priority right of the State

      1. In newly concluded and previously concluded subsoil use contracts, the State has the priority right before any persons and organizations, including individuals and organizations that have pre-emptive rights based on the laws of the Republic of Kazakhstan or the contract, for the acquisition of the alienated subsoil use right (a share in it) related to a strategic subsoil plot, as well as of shares and other securities being objects associated with subsoil right to be issued into circulation on the organized securities market, related to the strategic subsoil plot.

      2. Following subsoil plots are strategic:

      1) containing geological reserves of oil in the volume of more than fifty million tons or natural gas of more than fifteen billion cubic meters;

      2) located in the Kazakhstan sector of the Caspian Sea;

      3) containing a uranium deposit.

      The list of strategic subsoil plots is approved by the Government of the Republic of Kazakhstan.

      3. Provisions of paragraph 1 of this Article shall not apply in the cases provided for by paragraph 2 of Article 44 of this Code.

Article 44. Permit to transfer the subsoil use right and objects linked to subsoil use right

      1. Transfer of the subsoil use right