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On Banks and Banking Activities in the Republic of Kazakhstan

Updated Unofficial translation

The Law of the Republic of Kazakhstan dated 31 August 1995 No 2444.

      Unofficial translation
      Footnote. The title is in a new version, the preamble is excluded, throughout the text the words "by Decree, “of Decree”, “the Decree” shall be replaced by the words "by the Law", “of the Law”, “the Law” -by the Law of the Republic of Kazakhstan, dated 2 March 2001 No 162 (see Art. 2).

      Throughout the text, the word "(of the interest)" is excluded by the Law of the Republic of Kazakhstan dated 8 July, 2005 No 69.

Section I. The grounds and conditions for establishment and functioning of banks
Chapter 1. General provisions

Article 1. Bank, its status and location

      1. A bank - a legal entity which is a commercial organization, entitled to perform banking activities in accordance with this Law.

      2. The official status of a bank shall be determined by the state registration of a legal entity as a bank in the State corporation "Government for citizens" (hereinafter – the Corporation) and availability of the license of the National Bank of the Republic of Kazakhstan to conduct banking operations..

      3. No legal entity that does not have the official status of the bank, may be called a "bank" or describe itself as the entity engaged in banking activities.

      4. The location of the bank shall be the address (correspondence address) of its Board.

      Footnote. Article 1 as amended by the Laws of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 16.07.1999 No 436; dated 02.03.2001 No 162 (see Art. 2); dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.04.2019 № 241-VI (shall be enforced from 01.07.2019).

Article 2. Basic definitions, used in this Law

      The following definitions shall be used in this Law:

      1) control – the ability to determine the decisions of the legal entity that occurs when one of the following conditions are met:

      direct or indirect possession by one entity alone or together with one or more entities of over fifty percent of the shares in the authorized capital or the allotted shares (net of the preferred and those, repurchased by the company) of the legal entity or presence of the opportunity to vote on their own with more than fifty percent of the shares of the legal entity;

      when one entity has the opportunity to elect at least half of the governing body or the executive body of the legal entity;

      inclusion of financial statements of the legal entity, with the exception of the financial statements of a special financial company, incorporated in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization, into the financial statements of the legal entity in accordance with the audit report;

      the ability of one entity alone or together with one or more other entities to determine the decisions of the legal entity by virtue of a contract (supporting documents) or otherwise in the cases, provided by the regulatory legal act of the authorized body;

      2) indirect ownership (voting) of the shares of the bank – the ability to influence the bank’s decisions, a major participant of the bank, bank holding company or other entities, that are the major participant of the bank, the bank holding company through the ownership of the shares (the ownership interest in the authorized capital) of the legal entities;

      2-1) inter-bank clearing – a collection, checking, sorting and confirmation of payments, as well as the organization of their netting and determination of net positions of clearing members - banks and organizations, performing certain types of banking operations;

      3) banking conglomerate – a group of legal entities consisting of a bank holding company (if any) and a bank, as well as subsidiaries of a bank holding company and (or) subsidiaries of the bank, and (or) organizations in which the bank holding company and (or) its subsidiaries and (or) the bank have a significant participation in the capital;

      The banking conglomerate shall not include the national managing holding company, the bank holding company - non-resident of the Republic of Kazakhstan, as well as the subsidiaries and organizations in which the bank holding - non-resident of the Republic of Kazakhstan has a significant share in the capital, which are non-residents of the Republic of Kazakhstan;

      3-1) subordinated debt of the bank – unsecured obligation of the bank on the issued bonds or the received loan conforming to the conditions provided by Article 16-1 of this Law;

      3-2) information system of a bank or an organization carrying out certain types of banking operations (hereinafter-the information system) – a system designed to store, process, search, distribute, transmit and provide information using hardware and software, through which banking and other services are provided;

      4) a bank holding company - a legal entity (except for the cases where such owner is a state or a national managing holding, an organization, specializing in improving the quality of credit portfolios of second tier banks, subsidiaries of the National Bank of the Republic of Kazakhstan, as well as the cases provided by this Law), which is in accordance with the written agreement of the authorized body may own directly or indirectly twenty-five or more percent of placed (excluding privileged and repurchased by the bank) shares of the bank or be able to:

      vote directly or indirectly with twenty-five percent or more of voting shares of the bank;

      determine the decisions made by the bank, by virtue of an agreement or otherwise, or have control;

      5) a regulatory equity capital (hereinafter - the equity capital) of the bank – the amount of equity capital, net of the bank’s investments;

      6) a major participant of the bank – an individual or legal entity (except for the cases when such owner is the state or a national managing holding, an organization specializing in improving the quality of credit portfolios of second tier banks, subsidiaries of the National Bank of the Republic of Kazakhstan, as well as the cases provided by this Law) which is in accordance with the written agreement of the authorized body may own directly or indirectly ten or more percent of the placed (excluding privileged and repurchased by the bank) shares of the bank or be able to:

      vote directly or indirectly with ten percent or more of voting shares of the bank;

      influence the decisions made by the bank by virtue of the agreement or otherwise in the manner determined by the regulatory legal act of the authorized body;

      7) a parent organization – the legal entity that has control over another legal entity;

      8) a deposit – the money, given by one person (depositor) to another person - the bank, including to the National Bank of the Republic of Kazakhstan and the National Post, under the terms of its return in the nominal terms (with the exception of the investment deposit in the Islamic Bank) regardless of whether the money shall have to be returned on demand or in any period time wholly or partially with a pre-arranged bonuses or without it to the depositor directly or submitted to the third parties under the instructions;

      9) a subsidiary -a legal entity, controlled by another entity;

      10) indirect ownership interest in the equity capital or ownership (voting) of the shares of a legal entity– the ability to influence the decisions of the legal entity, a major participant of the legal entity or the persons who are a major participant of the legal entity through possessing (voting) of the shares (the ownership interest in the equity capital) of other legal entities;

      11) a major participant of a legal entity – an individual or legal entity (except for the cases where such holder is the state or a national holding company), which owns, directly or indirectly, ten or more percent of the ownership interest in the equity capital or of the voting shares of the legal entity;

      12) significant participation in the capital – the possession, directly or indirectly, alone or together with one or more entities of twenty or more percent of the voting shares (the ownership interest in the equity capital) or the ability to vote by twenty or more percent of the shares;

      12-1) specialized branches bank – the second-tier bank, which is regulated by the separate legal act of the Republic of Kazakhstan;

      12-2) perpetual financial instrument – an unsecured obligation of the bank on the bonds issued or the loan received, conforming to the conditions provided by Article 16-2 of this Law;

      13) impeccable business reputation – existence of the facts confirming professionalism, reliability, absence of unexpunged or outstanding criminal conviction, including absence of the court decision entered into force about the use of criminal punishment in the form of deprivation of the right to occupy the position of an executive employee of financial organizations, banking and (or) insurance holding company and to be a major participant (major shareholder) of financial organization for life;

      13-1) insolvent bank – a bank classified by the decision of the authorized body to the category of insolvent banks in accordance with this Law;

      14) a stabilization bank – a second-tier bank, established under the decision of the authorized body for transference of assets and liabilities of the bank, which is under the conservation regime. Particularities of establishing a stabilization bank are established by this Law.

      Footnote. Article 2 is in the wording of the Law of the Republic of Kazakhstan dated 20.11.2008 No 88 -IV (the order of enforcement See Art. 2); as amended by the Laws of the Republic of Kazakhstan dated 12.02.2009 No 133 -IV (the order of enforcement See Art. 2); dated 13.02.2009 No 135 -IV (the order of enforcement see Art. 3); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 12.01.2012 No 539 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 24.11.2015 № 422-V (shall be enforced from 01.01.2016); dated 27.02.2017 № 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 № 168-VI (shall be enforced from 01.01.2019).

Article 2-1. The affiliates of the bank

      1. The affiliates of the bank shall be the entities, specified in Article 64 of the Law of the Republic of Kazakhstan "On Joint Stock Companies", as well as the participants of the banking conglomerate.

      Unless otherwise provided by this Article, the presence of a characteristic of a major shareholder of a bank at the national management holding company shall not be the ground for defining the affiliates of the bank in accordance with Article 64 of the Law of the Republic of Kazakhstan "On Joint Stock Companies".

      2. Unless otherwise provided by this Article, the national managing holding or legal entities, one hundred percent of voting shares (participation stakes) of which belong to the national managing holding on the list, approved by the authorized body for state planning, as well as officials of the national managing holding and the above mentioned legal entities shall not be the affiliated persons of the bank, a major shareholder of which is the national managing holding.

      Presence of the shareholders of these banks of the national management holding company shall not be the ground for recognizing the banks affiliated to each other.

      3. Provisions of the second part of paragraph 1 and paragraph 2 of this Article shall not be taken into account for the purposes of the tax legislation of the Republic of Kazakhstan and the legislation of the Republic of Kazakhstan on transfer pricing.

      Footnote. Article 2-1 is in the wording of the Law of the Republic of Kazakhstan, dated 13.02.2009 No 135 -IV (the order of enforcement See Art. 3); as amended by the Law of the Republic of Kazakhstan, dated 30.12.2009 No 234 -IV (shall be enforced from 21.02.2009); dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 3. The banking system of the Republic of Kazakhstan

      1. The Republic of Kazakhstan shall have the two-tier banking system.

      2. The National Bank of the Republic of Kazakhstan shall be the central bank of the state and be the top (first) tier bank of the banking system.

      The tasks, principles of work, the legal status and powers of the National Bank of the Republic of Kazakhstan (the authorized body) shall be defined by the Law of the Republic of Kazakhstan "On the National Bank of the Republic of Kazakhstan" and other Laws of the Republic of Kazakhstan.

      The authorized body shall regulate and with its agency control and supervise the banking activities within its competence and contribute to creation of the general conditions for the functioning of banks and organizations, engaged in certain types of banking operations.

      Regulatory functions of the authorized body for the banks and organizations, engaged in certain types of banking operations, shall be aimed at maintaining stability of the monetary system of the Republic of Kazakhstan, protection of the interests of the banks’ creditors, their depositors and clients.

      3. All other banks shall be the lower (second) tier banks of the banking system with the exception of the Development Bank of Kazakhstan, which has a special legal status, determined by the legislative act of the Republic of Kazakhstan.

      4. (Is excluded - No 162 dated 02.03.01)

      5. A bank with foreign capital – the second-tier bank, more than one-third of the outstanding shares of which are owned, possessed and/or managed:

      a) by non-residents of the Republic of Kazakhstan;

      b) by legal entities - residents of the Republic of Kazakhstan, more than one-third of the outstanding shares or the ownership interest in the equity capital of which are possessed, owned and/or managed by non-residents of the Republic of Kazakhstan or their equivalent legal entities - residents of the Republic of Kazakhstan;

      c) by residents of the Republic of Kazakhstan, that are the managers of funds (agents) of non-residents of the Republic of Kazakhstan or legal entities, referred to in subparagraph b) of this paragraph.

      5-1. The Islamic Bank – the second-tier bank, performing banking activities, specified in Chapter 4-1 of this Law, on the basis of a license of the authorized body.

      The Islamic bank shall not be a participant of the obligatory deposits guarantee system, and the deposits in the Islamic bank shall not be guaranteed by the obligatory deposit guarantee system. The Islamic banks shall have the right to create a non-commercial organization in the organizational-legal form of a joint-stock company that guarantees the return of deposits, attracted by Islamic banks.

      Particularities of establishing and functioning of the Islamic bank shall be specified in Chapter 4-1 of this Law.

      6. The Interstate bank – the bank, established and functioning under the international treaty (agreement), established by the Government of the Republic of Kazakhstan (or a state body, authorized by it) and the government (the governments) of the state (states) that signed the treaty (agreement).

      7. Establishment of the specialized branch banks with the state capital shall be not allowed in the Republic of Kazakhstan, except for the joint stock company "Housing Construction Savings Bank of Kazakhstan".

      Footnote. Article 3 as amended by the Laws of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 02.03.2001 No 162 (see Art. 2); dated 25.04.2001 No 179; dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 08.07.2005 No 72 (the order of enforcement see Art. 2); dated 12.02.2009 No 133 -IV (the order of enforcement see Art. 2); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication.); dated 27.04.2015 No. 311-V (shall be enforced upon expiry of ten calendar days after its first official publication).

      Article 4. Banking legislation of the Republic of Kazakhstan

      1. Banking legislation of the Republic of Kazakhstan shall be based on the Constitution of the Republic of Kazakhstan and shall consist of this Law and other regulatory legal acts of the Republic of Kazakhstan.

      2. If an international treaty, ratified by the Republic of Kazakhstan, shall establish the rules other than those, provided in this Law, the rules of the international treaty shall be applied.

      Footnote. Article 4 is in the wording of the Law of the Republic of Kazakhstan dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009); as amended by the Law of the Republic of Kazakhstan dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 5. An organization, engaged in certain types of banking operations

      Unless otherwise provided by this Law, an organization carrying out certain types of banking operations, shall be recognized a legal entity, that is not a bank, which is under the license of the authorized body or in accordance with the laws of the Republic of Kazakhstan is authorized to conduct certain types of banking operations provided by this Law.

      Footnote. Article 5 is in the wording by the Law of the Republic of Kazakhstan dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the laws of the Republic of Kazakhstan dated 16.05.2014 № 203-V (shall be enforced upon expiry of six months after its first official publication); dated 29.03.2016 No. 479-V (shall be enforced upon expiry of twenty-one calendar days after its first official publication); dated 27.02.2017 No. 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 5-1. Organization specializing in improving the quality of loan portfolios of second-tier banks

      1. The government of the Republic of Kazakhstan shall be the sole shareholder of the organization specializing in improving the quality of loan portfolios of second-tier banks.

      2. The organization specializing in improving the quality of loan portfolios of second-tier banks shall have the right to carry out the following types of activities:

      1) to issue shares for formation of the authorized capital, as well as bonds for financing own activities;

      2) to reacquire own placed shares and bonds;

      3) to conduct assessment of the quality of assets, rights of claims of banks and (or) legal entities that were previously banks, in order to make a decision on their acquisition;

      4) to acquire dubious and hopeless assets, other rights of claim and assets from the authorized body and banks, to manage them, including by transferring into trust management, to own and (or) to sell them.

      In case of transfer of the rights (claims) from the authorized body to the organization specializing in improving the quality of loan portfolios of second-tier banks, the consent of the borrower, the pledgor, the guarantor and other persons to such transfer shall not be required;

      5) to conduct assessment of the quality of shares and (or) bonds issued by banks and (or) placed by banks, legal entities that were previously banks;

      6) to acquire shares and (or) stakes in the authorized capital of legal entities, including legal entities, the rights of claims to which were acquired from banks and (or) legal entities that were previously banks, to manage them, including by transfer to trust management, to own and (or) to sell them;

      7) to acquire shares and (or) bonds issued and placed by banks, to manage them, including by transfer to trust management, to own and (or) to sell them;

      8) to provide in property hiring (rent) the property, acquired and (or) obtained from banks and (or) the legal entities that were previously banks or to use other form of paid temporary use of such property, to transfer it to trust management;

      9) to perform operations on securitization of the rights of claims and other assets, acquired from banks and (or) legal entities that were previously banks;

      10) independently, as well as jointly with banks, to create (acquire) an organization, acquiring dubious and hopeless assets;

      11) to acquire from legal entities that were previously banks the rights of claims and assets, including shares and (or) stakes in the authorized capital of legal entities, to maintain, to ensure safety, to manage them, including by transfer to trust management, to own and (or) to sell them.

      If as a result of transaction, provided in passage one of this subparagraph, the property is acquired in the amount of ten and more percent of the size of assets of an organization specializing in improving the quality of loan portfolios of second tier banks, the decision on conclusion of such a transaction shall be made by the shareholder of this organization.

      If as a result of transaction, provided in passage one of this subparagraph, the transfer of rights (claims) of the creditor occurs, the consent of the borrower, the pledgor, the guarantor and other persons will not be required to such a transfer. In this case the identity of a new creditor is recognized not having essential value for the debtor;

      12) to place money in securities and other financial instruments, as well as in second-tier banks, the authorized body and organization, specified in paragraph 8 of Article 61-4 of this Law, on the conditions of contracts of the bank account and bank deposit;

      13) to carry out financing on the conditions of payment, urgency and repayment of banks and (or) legal entities that were previously banks;

      14) to acquire services of organizations on the issues related to improving the quality of loan portfolios of

      15) to carry out implementation of special programs, developed and approved by the Government of the Republic of Kazakhstan and (or) the National Bank of the Republic of Kazakhstan;

      16) other types of activities, established by the Government of the Republic of Kazakhstan.

      The procedure for carrying out by the organization, specializing in improving the quality of loan portfolios of second-tier banks, of types of activities provided by this paragraph, as well as claims for the acquired (purchased) assets by it and rights of claim shall be established by the regulatory legal act of the sole shareholder.

      The organization, specializing in improving the quality of loan portfolios of the second-tier banks on the rights of claims, assigned to it under the contract of the bank loan shall be recognized as the creditor (lender) on bank loan operation and shall have all rights and obligations established by the bank loan contract.

      3. The organization, specializing in improving the quality of loan portfolios of the second-tier banks on implementation of the types of activities specified in paragraph 2 of this Article shall have the right to receive the target transfer from the budget.

      Footnote. Chapter 1 is supplemented by Article 5-1 in accordance with the Law of the Republic of Kazakhstan dated 28.12.2011 № 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan; is in the wording of the Law of the Republic of Kazakhstan dated 27.02.2017 № 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan dated 25.12.2017 №. 122-VI (shall be enforced from 11.03.2017); dated 02.07.2018 № 168-VI (shall be enforced from 01.01.2019).

Article 6. The ban on non-authorized activity

      1. No one, who does not have the appropriate license from the authorized body, shall be entitled:

      1) to carry out the banking transactions as a main or additional activity;

      2) to use in its name, documents, announcements and advertising the word "bank" or a derived word (expression) from it, giving the impression that it performs banking operations. This prohibition shall not apply to the authorized body, branches and representative offices of banks, organizations specified in paragraph 8 of Article 61-4 of this Law, international financial organizations.

      2. Banking operations, carried out without a license of the authorized body shall be invalid, except for the activities (operations) carried out by the state body, credit partnerships, National postal operator, organizations, specified in paragraph 8 of Article 61-4 of this Law, as well as the Development Bank of Kazakhstan within the powers enshrined in this Law and other laws of the Republic of Kazakhstan.

      Footnote. Article 6 is in the wording by the Law of the Republic of Kazakhstan dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the laws of the Republic of Kazakhstan dated 27.04.2015 No. 311-V (shall be enforced from 01.01.2015); dated 24.11.2015 No. 419-V (shall be enforced from 01.01.2016); 29.03.2016 No. 479-V (shall be enforced upon expiry of twenty-one calendar days after its first official publication).

Article 7. Delineation of responsibilities of banks and the state. Independence of banks

      1. The banks shall not be liable for the obligations of the state, as well as the state shall not be liable for their obligations, except for the cases, provided in paragraph 2 of this Article, as well as for the cases where the banks or the state assume such responsibility.

      2. The state shall guarantee safety of deposits, taken by the interstate banks - residents of the Republic of Kazakhstan, and shall be liable for their obligations in proportion to the ownership interest of the Government of the Republic of Kazakhstan (or the state body, authorized by it) in the equity capital of these banks.

      3. Interference in any form of the state bodies and their officials in the activities of the banks shall be prohibited, except for the cases, expressly provided by the legislation of the Republic of Kazakhstan.

      Footnote. Paragraph 3 is supplemented by the second part by the Law of the Republic of Kazakhstan dated 7December, 1996 No 50. As amended by the Laws of the Republic of Kazakhstan dated 11 July1997 No 154; dated 2 March2001 No 162 (see Art. 2); dated 10 July 2003 No 483 (shall be enforced from 1 January 2004); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009); dated 02.07.2018 № 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

Article 8. Activities, prohibited or restricted for banks and bank holding companies

      1. Banks shall be prohibited to carry out operations and transactions as entrepreneurship activity, not related to banking activity or not stipulated by paragraph 9 of this Article and paragraph 12 of Article 30 of this Law, as well as acquisition of stakes in the authorized capital or shares of legal entities, creation of and participation in activities of non-commercial organizations, except for membership in the National chamber of entrepreneurs of Kazakhstan, and cases established by this Law, and carrying out transactions with the securities in the cases, provided by paragraph 8 of this Article.

      2. Bank holding companies shall be prohibited to carry out operations and transactions as entrepreneurship activity, as well as acquisition of participation stakes in the authorized capital or shares of legal entities, creation and participation in the activities of non-commercial organizations, except for membership in the National chamber of entrepreneurs of Kazakhstan, and cases established by this Law, and carrying out transactions with the securities in the cases, provided by paragraph 8 of this Article.

      3. Prohibition, set in paragraphs 1 and 2 of this Article shall not apply to the following cases of establishment, as well as the acquisition of the ownership interest or the shares in the equity capital by:

      1) by banks:

      financial organizations, as well as legal entities-non-residents of the Republic of Kazakhstan, having the status of banks, insurance organizations, pension funds, professional participants of the securities market, in the amount of ten percent or more of the placed (less preferred and redeemed by the company) shares (participation stakes in the authorized capital) if it has a bank holding company. At the same time, the requirement for availability of a bank holding company does not apply to the banks, more than fifty percent of voting shares of which belong to the state or the national management holding;

      legal entities in the amount of less than ten percent of the placed (less preferred and redeemed by the company) shares (participation stakes in the authorized capital) provided that the acquired shares (participation stakes in the authorized capital) comply with the requirements of the regulatory legal act of the authorized body;

      subsidiaries of special non-resident organizations of the Republic of Kazakhstan created for the purpose of issuing and placing securities under the bank guarantee;

      subsidiaries of special financial companies created for securitization transactions in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization;

      organizations-residents of the Republic of Kazakhstan, acquiring dubious and hopeless assets, created (acquired) together with an organization, specializing in improving the quality of credit portfolios of second-tier banks;

      subsidiaries-residents of the Republic of Kazakhstan acquiring dubious and hopeless assets of the parent bank;

      subsidiaries whose exclusive activity is the collection of banknotes, coins and valuables;

      organizations rendering services to the operator of the electronic money system;

      subsidiaries carrying out leasing activities;

      organizations rendering services on ensuring information, telecommunication and technological interaction between the participants of calculations on banking activity, including calculations on transactions with payment cards;

      organizations carrying out activity on certification of conformity of the public key of an electronic digital signature to the private key of an electronic digital signature, as well as confirming the authenticity of a registration certificate;

      legal entities, specified in Article 10 of this Law;

      legal entities, when the shares or participation stakes in the authorized capital of these organizations accepted as collateral become the property of banks in accordance with the civil legislation of the Republic of Kazakhstan and the legislation of a foreign state;

      stock exchanges and central depository carrying out activity on the territory of the Republic of Kazakhstan;

      credit bureau;

      organizations, specified in paragraph 8 of Article 61-4 of this Law;

      other legal entities - in carrying out banking activities provided by chapter 4-1 of this Law by the Islamic bank;

      2) bank holding companies:

      financial institutions;

      organizations- residents of the Republic of Kazakhstan, acquiring doubtful and loss claims of the second tier banks for their management and (or) their subsequent selling, restructuring, and (or) the securitization;

      special organizations - non-residents of the Republic of Kazakhstan, established to issue and allot securities, guaranteed by the bank holding company;

      special financial companies, established for securitization transactions in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization;

      the organizations whose sole activity is the collection of banknotes, coins and valuables, and leasing activities;

      the organizations, providing services for information, telecommunication and technological cooperation between the participants of calculations on bank activities, including the transactions with payment cards;

      the legal entities – non-residents of the Republic of Kazakhstan, having the status of banks, insurance companies, pension funds, professional participants of the securities market;

      organizations, specified in paragraph 8 of Article 61-4 of this Law.

      Subsidiaries of the bank, except for the cases, provided in Article 11-2 of this Law shall be entitled to purchase only the shares or ownership interest in the equity capital of legal entities that meet the requirements, established by the regulatory legal act of the authorized body. Insurance (reinsurance) subsidiary organizations of the bank are also entitled to acquire shares of the organization, guaranteeing the insurance payments to the policyholders (the insured, beneficiaries) in case of a forced liquidation of insurance companies, and the organizations for creation and maintenance of the database.

      Subsidiary organizations of the bank holding company are entitled to acquire only the shares or ownership interest in the equity capital of legal entities that meet the requirements, established by the regulatory legal act of the authorized body. Subsidiary insurance (reinsurance) companies of the bank holding company are also entitled to acquire the shares of the organization, guaranteeing the insurance payments to policyholders (the insured, the beneficiaries) in case of a compulsory liquidation of insurance companies, and the organizations for formation and maintenance of the database. This requirement does not apply to:

      the bank subsidiaries- residents of the Republic of Kazakhstan;

      the legal entities in which a bank holding company is the parent company through possessing (the possibility to vote, make decisions and (or) influence the decisions made under a contract or otherwise) the shares of a bank resident of the Republic of Kazakhstan, which owns directly (has the ability to vote, to determine solutions and (or) influence the decisions made under a contract or otherwise) the shares or ownership interest in the equity capital of these legal entities;

      non-residents of the Republic of Kazakhstan, which are the subsidiaries of non-resident companies of the Republic of Kazakhstan, that are the bank holding company if any of the following conditions are observed:

      a bank holding company’s individual credit rating is not lower than A rating in one of the rating agencies, the list of which shall be established by the authorized body, and a written confirmation from the financial supervision body of the country of origin of these legal entities that they are subject to the consolidated supervision;

      existence of an agreement between the authorized body and the relevant supervisory body of a foreign state on the information exchange, as well as the minimum required rating of one of the rating agencies. Minimum rating and the list of rating agencies are established by the regulatory legal act of the authorized body.

      4. Purchase of the ownership interest by a bank in the equity capital or the shares of the legal entities, referred to in subparagraph 1) of paragraph 3 of this Article shall not exceed ten percent of the bank's equity capital per entity. This limitation applies to the bank’s ownership interest in the equity capital or the shares of the said legal entities, including in the cases of their establishment.

      The aggregate value of the bank's ownership interest in the equity capital or the shares of the legal entities, referred to in subparagraph 1) of paragraph 3 of this Article shall not exceed the amount, defined by the regulatory legal act of the authorized body.

      The restriction established in part one of this paragraph shall not apply to the banks in connection with their acquisition of control over another bank:

      in respect of which restructuring has been conducted in accordance with this Law;

      carried out the operation provided by Article 61-4 of this Law.

      5. Acquisition and possession by the bank of ten or more percent of the allotted (net of the preferred shares and those, repurchased by a joint stock company) shares or the ownership interest in the equity capital of financial institutions, as well as the legal entities - non-residents of the Republic of Kazakhstan, having the status of banks, insurance companies, pension funds, professional participants of securities market, shall be permitted provided that the bank meets the additional requirements to the minimum sufficiency of own capital, set by the regulatory legal act of the authorized body. This requirement shall apply to the cases of establishing of the said legal entities by the bank.

      6. The aggregate percentage of shares (ownership interest in the equity capital) of the parent organization of a banking conglomerate, a bank or a bank holding company, owned by the subsidiaries of the bank or the bank holding company, the organizations in which the bank or the bank holding company has a substantial shareholding, shall not exceed the limits, established by the regulatory legal act of the authorized body.

      7. When the banks acquire shares or ownership interest in the equity capitals of legal entities in the cases when the shares or ownership interest in the equity capitals of these institutions, taken as collateral, become the property of the banks in accordance with the Civil legislation of the Republic of Kazakhstan and the foreign law, the bank's interest in such legal entities shall not exceed ten percent of the equity capital of the bank.

      The term of sale of shares or participation stakes in the authorized capital shall not exceed twelve months, except for the following cases:

      transfer of shares or participation stakes in the authorized capital of these organizations accepted by the bank as collateral to a subsidiary of the bank created (acquired) under the conditions determined by Article 11-2 of this Law;

      transfer to the ownership of the bank of shares or participation stakes in the authorized capitals of the organizations, specified in subparagraph 1) of paragraph 3 of this Article accepted as collateral.

      The limitations, imposed by this paragraph, shall apply to the subsidiaries of the banks, with the exception of the bank’s subsidiary, established (acquired) under the conditions, specified in Article 11-2 of this Law.

      8. Prohibition, set by paragraphs 1 and 2 of this Article, shall not apply to the cases of purchase of ownership of:

      the bonds of international financial institutions, the list of which shall be established by the authorized body;

      bonds, complying with the requirements established by the regulatory legal act of the authorized body;

      the bonds of a special financial company which is the subsidiary of a bank or the bank holding company, incorporated in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization, issued under the securitization transaction between the bank or the bank holding company and a special financial company;

      the own bonds by the bank or the bank holding company and the bonds, issued by subsidiaries of the bank or the bank holding company, the obligations on which are guaranteed by the bank or the bank holding company. The order of transactions with these bonds is determined by the regulatory legal act of the authorized body.

      The limitations, imposed by this Article, shall not apply to the cases of purchasing by the bank, the bank holding company, of the bonds instead of the previously acquired ones, the organizations that are under restructuring, subject to the inclusion of obligations on the previously issued bonds into the list of the restructured obligations of the organization.

      9. In addition to the activities, referred to in paragraph 1 of this Article, the banks shall be entitled to perform the following types of activities:

      1) to sell the specialized software, used to automate the banks’ activities and organizations, engaged in certain types of banking operations, in accordance with the legislative acts of the Republic of Kazakhstan;

      2) to sell the special literature on banking activity on all types of data storage devices;

      3) to sell its own property;

      4) the issuance, sale and distribution of payment cards and checkbooks;

      5) to conduct inter-bank clearing;

      6) the issuance, sale, purchase and redemption of electronic money, as well as the provision of services for collection and processing of information on electronic money transactions;

      7) to sell the property, mortgaged by the borrowers, in accordance with the legislative acts of the Republic of Kazakhstan;

      8) to provide consulting services on the issues, related to the financial activities;

      9) to represent the interests of other persons on the issues, related to banking activities, or as a representative of the bondholders;

      10) to organize trainings to improve personal skills of the experts of banking and financial activities;

      11) for the certification of conformity of the public key of an electronic digital signature to the private key of an electronic digital signature as well as on confirmation of authenticity of the registration certificate in respect of its customers, using its banking services under the license of the authorized body in the sphere of informatization;

      12) to conclude contracts of insurance on behalf of insurance companies - residents of the Republic of Kazakhstan in the existence of an agreement between the bank and the insurance companies - residents of the Republic of Kazakhstan to conclude the insurance contracts on behalf of the organizations;

      13) lease its own property to subsidiaries in accordance with the contract of property lease (rent);

      14) to lease on the basis of a property lease (rent) contract a dwelling, which has become the property of the bank as a result of levy against it in connection with non-fulfillment or improper fulfillment by the borrower of obligations under the contract of mortgage housing loan (mortgage loan) or provision by the borrower of compensation in the form of dwelling, acting as collateral under the contract of mortgage housing loan (mortgage loan).

      This activity shall be carried out in accordance with the Program of refinancing of housing mortgage loans (mortgage loans), approved by the National Bank of the Republic of Kazakhstan.

      As tenants of the dwelling, specified in part one of this subparagraph may act only individuals whose dwelling became the property of the bank as a result of levy against it in connection with non-fulfillment or improper fulfillment by the borrower of obligations under the contract of mortgage housing loan (mortgage loan) or provision by the borrower of compensation in the form of dwelling acting as collateral under the contract of mortgage housing loan (mortgage loan).

      10. In addition to the activities, referred to in paragraph 2 of this Article, the bank holding companies shall be entitled to perform the following types of activities:

      1) to purchase property from a person, not bounded with the bank holding by the special relationships, and which is acquired for their own needs;

      2) to provide consulting services on the issues, related to financial activities;

      3) sale of own property.

      11. Banks and bank holding companies shall be prohibited to issue a "golden share".

      12. Transactions with the state securities and non-state securities in the secondary market, as well as with the derivative financial instruments shall be made by the banks solely at the organized securities market, except for the cases, stipulated by the regulatory legal act of the authorized body.

      13. The requirements of this Article shall not apply to:

      1) the bank holdings of Islamic banks;

      2) the bank holding companies, indirectly possessing (having the opportunity to vote, to make decisions and (or) influence the decisions under the contract or otherwise) the bank’s shares through the possessing (the possibility to vote, make decisions and (or) influence the decision making under the contract or otherwise) of the shares or ownership interest in the equity capital of the bank holding company-resident of the Republic of Kazakhstan, which owns directly (has the opportunity to vote, make decisions and (or) influence the decision making under the contract or otherwise) the shares of the said bank;

      3) non-residents of the Republic of Kazakhstan that are a bank holding company, an entity, possessing the characteristics of the bank holding company, if any of the following conditions are provided:

      presence of an individual's credit rating not lower than the A rating of one of the rating agencies, the list of which shall be established by the authorized body, as well as by a written confirmation from the Financial Supervisory Authority of the country of origin of the bank holding company, the entity, having the characteristics of a bank holding company, about the fact that the said entities –non-residents of the Republic of Kazakhstan are subject to the consolidated supervision;

      existence of an agreement between the authorized body and the relevant supervisory body of a foreign state on the information exchange, as well as the minimum required rating of one of the rating agencies. Minimum rating and the list of rating agencies are established by the regulatory legal act of the authorized body;

      4) the bank holding companies - residents of the Republic of Kazakhstan, which are the financial institutions.

      5) banks in connection with acquisition of shares of another bank or other securities, the holder of which is another bank, or participation stakes in the authorized capital of legal entities belonging to another bank, during their reorganization in the form of accession in the manner prescribed by the legislation of the Republic of Kazakhstan, or operation provided by Article 61-4 of this Law.

      Footnote. Article 8 is in the wording by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (the order of enforcement See Art. 2); as amended by the Laws of the Republic of Kazakhstan dated 12.01.2012 No 539 -IV (shall be enforced upon expiry of 10 calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 26.12.2012 No 61 -V (shall be enforced from 04.02.2012); dated 21.06.2013 No 106 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 19.03.2014 No. 179-V (shall be enforced from the date of its first official publication); dated 10.06.2014 № 206-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 27.04.2015 No. 311-V (the order of enforcement see Article 2); dated 24.11.2015 No. 419-V (shall be enforced from 01.01.2016); dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016); dated 26.07.2016 No. 12-VI (shall be enforced upon expiry of thirty calendar days after its first official publication); dated 27.02.2017 No. 49-IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

Article 8-1. Restrictions imposed to the banks when making transactions

      1. A bank shall have no right to issue bank loans and bank guarantees to the individuals, bounded with it by the special relationships, defined in accordance with Article 40 of this Law, except for:

      the bank loans and bank guarantees, granted to the entities that are the members of the banking conglomerate;

      the secured bank loans and bank guarantees, the amount and form of which meet the requirements, established by the regulatory legal act of the authorized body;

      the bank loans and bank guarantees, granted to the entities that have no the signs of unstable financial condition, defined by the regulatory legal act of the authorized body.

      2. A bank shall have no right to issue bank loans and bank guarantees to a legal entity (resident and non-resident of the Republic of Kazakhstan), that does not meet one of the following conditions:

      1) there is information about an individual that owns more than fifty percent of the ownership interest in the equity capital or of the allotted (net of the preferred shares and those, repurchased by a joint stock company) shares of a legal entity or has the opportunity to vote by more than fifty percent of the shares (ownership interest in the equity capital) of the legal entity or controls such an entity;

      2) there is information about the individuals who together own more than fifty percent of the ownership interest in the equity capital or the allotted shares (net of the preferred shares and those, repurchased by a joint stock company) of a legal entity or are entitled to vote by more than fifty percent of the shares (ownership interest in the equity capital) of the legal entity;

      3) there is information about all shareholders (ownership interest in the equity capital) of the legal entity, owning ten or more percent of the ordinary shares (ownership interest in the equity capital) to the ultimate owners of the ordinary shares (ownership interest in the equity capital) of the legal entity;

      4) is a legal entity that is controlled by the Government of the Republic of Kazakhstan, a local executive body or a foreign state, having the minimum required rating. The minimum required rating and the list of rating agencies are established by the regulatory legal act of the authorized body;

      5) is an international organization that is included in the list, established by the authorized body;

      6) is an organization that has the minimum required rating. The minimum required rating and a list of rating agencies shall be established by the regulatory legal act of the authorized body;

      7) there is information about individual and legal entities, referred to in subparagraphs 4) - 6) of this paragraph, owing together more than fifty percent of the ownership interest in the equity capital or the allotted shares (net of the preferred shares and those, repurchased by a joint stock company) of a legal entity or entitled to vote by more than fifty percent of the shares (ownership interest in the equity capital) of the legal entity;

      8) there is information about a management company of an investment fund, as well as the individual and legal entities, referred to in subparagraphs 4), 5), 6) and 7) of this paragraph, who are the shareholders (interest-holders) of the investment fund and exercising control over the entity;

      9) is a legal entity for which there is information, which may be disclosed in the order, established by the regulatory legal act of the authorized body.

      3. The requirements of paragraph 2 of this Article shall not apply to the bank loans and bank guarantees, the value of which does not exceed the amount, defined by the regulatory legal act of the authorized body.

      The total amount of all bank loans and bank guarantees, referred to in paragraphs 1 and 2 of this Article shall not exceed the amount, the calculation order of which shall be determined by the regulatory legal act of the authorized body.

      4. The bank shall not be allowed to transfer assets worth more than ten percent of the own equity capital as collateral or other form of encumbrance without the prior approval of the transaction by the board of directors of the bank.

      Footnote. Chapter 1 is supplemented by Article 8-1 in accordance with the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 9. The ban on advertising that is untrue

      1. Banks shall be prohibited to advertise their activities that are untrue on the day of publication.

      2. The authorized body shall be entitled to require that the bank makes changes to the advertisement that does not reflect reality, its termination or a publication of official contradiction.

      In case of non-fulfillment of the requirement within the time limit, set by the authorized body, the authorized body shall be entitled to publish an announcement on discrepancy of the information, contained in the advertisement with the reality, or specify it at the expense of the bank that published such advertisement.

      3. Legal entities that are not licensed by the authorized body for banking operations shall be prohibited to advertise the services, falling under the category of banking operations.

      Footnote. Article 9 as amended by the Laws of the Republic of Kazakhstan dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 08.07.2005 No 72 (the order of enforcement see Article 2); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 10. Associations (unions) of banks

      1. In order to coordinate their activities, protect and represent common interests, implement joint projects and other common tasks, the banks shall be entitled to establish associations and unions of banks in accordance with the existing legislation.

      2. Associations (unions) of banks shall be the non-profit organizations.

      3. Associations (unions) of banks may not be used to restrict competition in the banking system, manipulation of interest rates, terms of offering loans and other banking services.

      Footnote. Article 10 as amended by the Law of the Republic of Kazakhstan dated 11 July 1997 No 154.

Article 10-1. Consortia and other associations involving banks

      In order to implement joint projects on providing loans and resolving other tasks, the banks shall be entitled to establish consortia under an agreement on joint activities and participate in the activities of other consortia and associations.

      Footnote. Article 10-1 is supplemented by the Law of the Republic of Kazakhstan dated 16 July, 1999 No 436.

Article 11. Subsidiary banks, branches and representative offices and cash and settlement departments (savings banks) of the banks

      Footnote. Article 11 is excluded by the Law of the Republic of Kazakhstan dated 23December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107).

Article 11-1. Subsidiaries of banks and bank holding companies and significant participation of banks and bank holding companies in the capital

      1. In order to implement the powers, vested to them by Article 8 of this Law, a bank and bank holding company shall be entitled to establish or have a subsidiary only with the prior approval of the authorized body.

      The requirement to obtain permission of the authorized body for establishment or acquisition of a subsidiary shall not apply to the bank holding companies, indirectly owing (having the opportunity to vote, make decisions and (or) influence the decisions made under a contract or otherwise) the shares or ownership interest in the equity capital of the organization through possession (the opportunity to vote, make decisions and (or) influence the decision making under a contract or otherwise) of the shares of a bank-resident of the Republic of Kazakhstan, which owns directly (having the opportunity to vote, make decisions and (or) influence the decisions under a contract or otherwise) the shares or ownership interest in the equity capital of this organization and having the corresponding permission of the authorized body.

      Requirement on receipt of permission of an authorized body for establishment or acquisition of a subsidiary shall not apply to a bank in connection of its acquisition of control of other bank, in relation of which the restructurisation was conducted in accordance with this Law.

      The procedure for issuing the permit for establishment or acquisition of a subsidiary shall be defined by the regulatory legal act of the authorized body.

      2. Subsidiaries of the banks shall not be entitled to establish and (or) have subsidiaries, as well as to have a significant shareholding in the capital.

      This restriction does not apply to the banks, which had been restructured in accordance with this Law and the control of which was acquired by another bank, as well as to the banks, carried out the operation provided by Article 61-4 of this Law, and control of which was acquired by another bank.

      The following shall not be a subsidiary of the bank:

      1) legal entities whose shares or ownership interests in the equity capital become the property of the bank in the event of their acceptance as collateral in accordance with the civil legislation of the Republic of Kazakhstan and the legislation of a foreign country, subject to the restrictions, specified in paragraph 7 of the Article 8 of this Law;

      2) legal entities in the authorized capital of which the bank’s interest shall be carried out through the ownership (opportunity to vote, make decisions and (or) influence the decisions made under a contract or otherwise) of the shares or the ownership interest in the equity capital of the subsidiary, established (purchased) under the terms, defined by Article 11-2 of this Law;

      3) legal entities whose shares or ownership interest in the authorized capital are purchased by the Islamic Bank in the banking operation, specified in Article 52-9 of this Law.

      3. Subsidiaries of bank holding companies, except for the subsidiaries of the banks- residents of the Republic of Kazakhstan, shall have no right to establish and (or) have subsidiaries.

      3-1. For issuance of permission to creation, acquisition of a subsidiary and (or) significant participation in the capital of the organizations a fee shall be charged, which amount and procedure of payment shall be determined by the tax legislation of the Republic of Kazakhstan.

      4. An application for obtaining a permit to establish, purchase a subsidiary shall be attached with the following documents:

      1) the charter (if any) and the memorandum or the decision on establishment of a subsidiary - in the case of its creation, the charter of a subsidiary (if any) - in the case of its acquisition;

      2) the decision of the bank and (or) the bank holding company on establishment or acquisition of the subsidiary;

      3) information about the top managers of the subsidiary (or the candidates recommended for appointment or election to the post of the top managers);

      4) the organizational structure of the subsidiary and information on its affiliates.

      If a bank does not have a bank holding company, the additional information on the organizations shall be provided, bounded with the subsidiary by:

      management of their operations on a consolidated basis in accordance with the terms of the memorandum or provisions of the association of these organizations;

      if the structure of the executive body, the management body (for joint stock companies), the Supervisory Board (for Limited Liabilities Partnerships) of the said organizations is represented by the same persons by more than one-third;

      5) information about the types of activities of the subsidiary organization with submission of a business plan;

      6) on the basis of the analysis of the legislation of the country of the subsidiary organization’s location, the information on the absence of circumstances, suggesting impossibility of conducting a consolidated supervision of a banking conglomerate due to the fact that the legislation of the country of location of the participants of the banking conglomerate - non-residents of the Republic of Kazakhstan makes it impossible to fulfill the requirements, stipulated by legislative acts of the Republic of Kazakhstan by them and the banking conglomerate;

      7) the information on the percentage and the amount of ownership interest of a bank and (or) a bank holding company in the authorized capital of a subsidiary organization, as well as the number of the shares, purchased by them and the amount of the advance payment of the shares (ownership interest in the authorized capital);

      8) a report of the audit company and the financial statements of the acquired subsidiary organization, certified by the audit organization;

      9) a certificate of state registration (re-registration) of a legal entity - the acquired subsidiary organization;

      10) the information about the amount of the equity capital of the acquired subsidiary organization (if such information is not contained in the audit report), as well as about the ownership interest of a bank and (or) a bank holding company in the equity capital or the number of shares of the acquired subsidiary organization, about the terms and conditions for purchasing the subsidiary organization;

      11) information about the legal entity, through the acquisition of the ownership interest and the shares in the equity capital of which the bank and (or) the bank holding company acquires a subsidiary organization, which includes:

      the name and the address of the legal entity;

      the information on the amount of the ownership interest of the bank and (or) the bank holding company in the authorized capital of the legal entity, its purchase price, the founder (participant) of which is the bank and (or) the bank holding company;

      the information about the number of shares, the purchase price, their percentage in the total number of the allotted shares (net of the preferred shares and those, repurchased by a joint stock company) of the legal entity, the shareholder of which is the bank and (or) the bank holding company;

      the information about the ownership interest of the legal entity (the founder, the participant, the shareholder of which is a bank and (or) a bank holding company), its purchase price in the authorized capital of another legal entity;

      the information on the number of shares, the purchase price, their percentage in the total number of the allotted shares (net of the preferred shares and those, repurchased by a joint stock company), acquired by the legal entity, the shareholder (the founder, the participant) of which is a bank and (or) a bank holding company.

      These requirements shall be applied to the cases of purchasing a subsidiary organization by a bank and (or) a bank holding company through the acquisition of ownership interest in the authorized capital or the shares of several legal entities;

      12) is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      13) analysis of the financial implications of establishment, acquiring of a subsidiary organization by a bank or bank holding company, including the probable settlement balance sheet of a bank and (or) a bank holding company and of the subsidiary organization after its establishment or acquisition, as well as the presence of a plan and an offer of the bank and (or) the bank holding company for selling the assets of the subsidiary organization or for making significant amendments to the management of the subsidiary organization;

      13-1) the document confirming payment of fee for the issuance of permission;

      14) other documents on the basis of which it is planned to acquire control or those, confirming control over a subsidiary organization, specifying the reasons for such control.

      5. A bank and (or) a bank holding company shall be entitled to establish a subsidiary organization under a condition of a break-even activity on the consolidated and unconsolidated basis upon the results of each of the last two fiscal years and compliance with the prudential standards, including on a consolidated basis, established by the authorized body, during the last three months, preceding the date of submitting an application for a permit to the authorized body.

      6. The grounds for refusal in issuance of permission for creation, acquisition of a subsidiary shall be:

      1) non-submission of documents required for obtaining a permission;

      2) non-compliance of the legislation in the field of consolidated supervision over financial organizations of the country of location of the created or acquired subsidiary with the requirements for consolidated supervision established by the legislative acts of the Republic of Kazakhstan;

      3) non-compliance of the executives of a subsidiary (or candidates recommended for appointment or election to the positions of executives) with the requirements of subparagraphs 3), 4), 5) and 6) of paragraph 3 of Article 20 of this Law;

      4) a banking conglomerate’s failure to comply with the prudential standards, which includes a bank and (or) a bank holding company as a result of the probable presence of a subsidiary of a bank and (or) a bank holding company;

      5) analysis of the financial implications, forecasting worsening of the financial condition of the bank, the bank holding company or the bank conglomerate due to the activities of the subsidiary organization or the investments, planned by the bank and (or) the bank holding company;

      6) non-compliance of risk management and internal control systems, including in relation to risks associated with the activities of a subsidiary, with the requirements of the authorized body for risk management and internal control systems;

      7) a subsidiary organization’s failure to comply with the established prudential standards in the cases, provided for by the legislation of the country of location of the subsidiary, as well as the prudential standards by the bank and the bank holding company, including on a consolidated basis, and other mandatory standards and limits for the last three months, preceding the date of submitting an application for a permit to the authorized body, and (or) during consideration of the application;

      8) availability at the bank and (or) the bank holding company and (or) the proposed to acquisition of a subsidiary of the existing supervisory response measures and (or) administrative penalties for administrative offenses provided by parts six, eight of Article 213, Article 227 of the Code of the Republic of Kazakhstan on administrative offenses, on the filing date and during the period of documents consideration;

      9) in the cases of establishment or acquisition by the bank and (or) the bank holding company of a subsidiary organization - a bank, an insurance (reinsurance) company, managing the investment portfolios - residents of the Republic of Kazakhstan –the failure to comply with the requirements, provided by this Law, the legislation of the Republic of Kazakhstan on insurance and insurance activities, securities market on issuance of a consent to obtain the status of a banking or an insurance holding company, a major participant of a bank, insurance (reinsurance) company, managing the investment portfolios - residents of the Republic of Kazakhstan.

      7. The authorized body shall issue a permit or reject to issue a permit within three months after submission of the application.

      In case of refusal to issue a permit, the authorized body shall notify the applicant about the grounds for refusal in a written form.

      8. Within thirty calendar days a subsidiary organization of a bank, and (or) a bank holding company shall notify the authorized body of any changes and additions, made to the constituent documents.

      9. A subsidiary organization of a bank, and (or) a bank holding company - non-resident of the Republic of Kazakhstan, as well as the organization-non-resident of the Republic of Kazakhstan in which the bank and (or) the bank holding company has a substantial shareholding, shall have to disclose the necessary information to the authorized body on the basis of the relevant request in order to ensure quality and timely performance of the functions, delegated to the authorized body for a consolidated supervision. In this case, the received information shall not be disclosed.

      10. In case of acquisition by the bank and (or) bank holding company of characteristics of control over other legal entity in the absence of permission of the authorized body, the authorized body shall apply to the bank and (or) the bank holding company the measures of supervisory response provided by this Law. In this case, within six months from the date of occurrence of characteristics of control or detection of the specified violation by the authorized body, the bank and (or) the banking holding company shall be obliged to alienate the shares (participation stakes in the authorized capital) belonging to them of the legal entity to the persons not related to them by special relations, and to submit confirming documents to the authorized body.

      11. A significant shareholding of the bank and (or) the bank holding company in the capital of organizations shall be permitted only with the preliminary permission of the authorized body.

      The requirement on obtaining the permission of the authorized body for a significant participation in the capital of the organization shall not apply to:

      1) bank holding companies, indirectly possessing (having the possibility to vote, to determine decisions and (or) influence the taken decisions by virtue of a contract or otherwise) by the shares or participation stakes in the authorized capital of this organization through ownership ( possibility to vote, to determine decisions and (or) influence the taken decisions by virtue of a contract or otherwise) by the shares of a bank-resident of the Republic of Kazakhstan that directly possessing (having the possibility to vote, determine decisions and (or) influence the taken decisions by virtue of a contract or otherwise) by the shares or participation stakes in the authorized capital of the specified organization and having the appropriate permission of the authorized body;

      2) banks, in case of participation in the authorized capital of legal entities through ownership (the possibility to vote, determine decisions and (or) to influence the taken decisions by virtue of a contract or otherwise) by the shares or participation stakes in the authorized capital of a subsidiary created (acquired) on the terms determined in Article 11-2 of this Law;

      3) banks in case of transfer to their ownership of shares or participation stakes in the authorized capital of legal entities accepted by the bank as collateral in accordance with the civil legislation of the Republic of Kazakhstan and the legislation of a foreign state, subject to the restrictions established by paragraph 7 of Article 8 of this Law.

      Permission of the authorized body for a significant shareholding in the capital of organizations shall not be required for Islamic bank if it purchases the shares (ownership interest in the authorized capital) while financing the production and trading activities through a shareholding in the authorized capital of legal entities and (or) on a partnership basis.

      Issuance of permits for significant shareholding in the capital of organizations shall be performed in the order, specified by the regulatory legal act of the authorized body.

      In case of acquisition by the bank and (or) the bank holding company of a significant participation in the capital of the organization without the prior consent of the authorized body, the authorized body shall apply to the bank and (or) the bank holding company the supervisory response measures provided by this Law. In this case, the bank and (or) the bank holding company must alienate their shares (participation stakes in the authorized capital) of the organization in the capital of which they have a significant participation, to the persons not related to the bank and (or) the bank holding company by special relations, and to submit confirming documents to the authorized body within six months.eholding, to the persons, who are not bounded with the bank and (or) the bank holding company by a special relationship, and submit the supporting documents to the authorized body within six months.

      12. The application for obtaining permission to significant participation in the capital of the organizations shall be submitted with the documents provided by subparagraphs 2), 3), 5), 6), 7), 10) and 11) of paragraph 4 of this Article, and also the document confirming payment of fee for issuance of permission to significant participation in the capital of organizations..

      Refusal to issue a permit for a significant shareholding in the capital of organizations shall be based on the grounds, provided for in paragraph 6 of this Article.

      13. The authorized body shall revoke the permit for establishment, acquisition of the subsidiary organization, the significant shareholding in the capital of the organization in the following cases:

      1) revelation of false information on the basis of which the permit was issued;

      2) making a decision by the bodies of a subsidiary organization of the bank and (or) the bank holding company, as well as organizations in which the bank and (or) the bank holding company has a substantial shareholding, or the court’s decision on termination of the activities of these organizations through their reorganization or liquidation;

      3) absence of the signs of control over a subsidiary of the bank and (or) the bank holding company;

      4) alienation of the shares (ownership interest in the authorized capital) of the organization by the bank and (or) the bank holding company;

      5) revelation of non-compliance of the subsidiary organization of the bank and (or) the bank holding company, and the organization in which the bank and (or) the bank holding company has a substantial shareholding, with the requirements of paragraph 3 of Article 8 of this Law.

      If a permit for establishment, acquisition of a subsidiary organization, a significant shareholding in the capital of the organization is revoked, the authorized body shall take a decision to cancel a previously issued permit within two months from the date of revelation of the facts that was the ground for revocation of the permission, or filing of an application for revocation of the permission by the bank and (or) the bank holding company.

      In case of revocation of the permission for establishment, acquisition of the subsidiary organization, a significant shareholding in the capital of the organization, within six months, the bank and (or) the bank holding company shall alienate their shares (ownership interest in the authorized capital) in these organizations to the persons, who are not bounded with the bank or the bank holding by a special relationship, and submit the supporting documentation to the authorized body.

      The order of revocation of the permission for establishment, acquisition of a subsidiary, a significant shareholding in the capital of the organization, shall be established by the regulatory legal act of the authorized body.

      14. The requirements of this Article shall not apply to:

      1) the cases of establishment (acquisition) of a subsidiary by the bank under the conditions, specified in Article 11-2 of this Law;

      2) non-residents of the Republic of Kazakhstan that are the subsidiaries or the affiliated organizations of non-residents of the Republic of Kazakhstan, that are a bank holding company, a legal entity with the characteristics of a bank holding company, as well as non-residents of the Republic of Kazakhstan that are a bank holding company, a legal entity with the characteristics of a bank holding company, when they establish or purchase the subsidiaries and the affiliates-non-residents of the Republic of Kazakhstan with one of the following conditions fulfilled:

      when a bank holding company, a legal entity with the sings of a bank holding company has an individual credit rating not lower than A rating of one of the rating agencies, the list of which shall be established by the authorized body, as well as a written confirmation from the Financial Supervisory Authority of the country of origin of these entities that they are subject to the consolidated supervision;

      existence of an agreement on information exchange between the authorized body and the relevant supervisory body of a foreign state, as well as the minimum required rating of one of the rating agencies. Minimum rating and the list of the rating agencies are established by the regulatory legal act of the authorized body.

      3) cases of acquisition by the bank of shares of another bank or shares and participation stakes in the authorized capital of legal entities belonging to another bank, during their reorganization in the form of accession in the manner determined by the legislation of the Republic of Kazakhstan.

      15. If a bank holding company creates or acquires a subsidiary financial organization or acquires a significant participation in the capital of a financial organization, in respect of which obtaining of the appropriate permits for participation in the capital is provided by the legislation of the Republic of Kazakhstan, the permission for creation or acquisition of a subsidiary and (or) a significant participation in the capital shall be issued by the authorized body to the bank holding company simultaneously with the issuance of the relevant document granting the right to own, use and (or) dispose the shares of a financial organization in the amounts, established by the legislation of the Republic of Kazakhstan, without submission of relevant documents provided by this Article, except for a document confirming the payment of a fee for the issuance of a permit.

      The requirements of part one of this paragraph shall apply to the persons wishing to acquire the status of a bank holding company.

      16. If the acquisition by the bank of a subsidiary or a significant participation in the capital of the organization occurred as a result of transfer to its property of accepted by the bank as collateral of the shares or participation stakes in the authorized capitals of the organizations, specified in subparagraph 1) of paragraph 3 of Article 8 of this Law, the bank shall be obliged to obtain permission from the authorized body for creation or acquisition of a subsidiary or a significant participation in the capital of the organizations within the term, established by the authorized body in the framework of application of the supervisory response measure to the bank.

      Footnote. Article 11-1 is in the wording by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Laws of the Republic of Kazakhstan dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 24.12.2012 No 60 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 26.12.2012 No 61 -V (shall be enforced from 04.02.2012); dated 21.06.2013 No 106 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 19.03.2014 No 179 -V (shall be enforced from the date after its first official publication); dated 24.11.2015 № 422-V (shall be enforced from 01.01.2016); dated 27.02.2017 № 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 25.12.2017 № 122-VI (shall be enforced from 01.01.2018); dated 02.07.2018 № 168-VI (the enforcement see article 2).

      Article 11-2. Subsidiaries of banks acquiring dubious and hopeless assets of the parent bank, and the organization acquiring dubious and hopeless assets, the members of which are the bank and the organization specializing in improving the quality of loan portfolios of second-tier banks

      Footnote. Title of Article 11-2 is in the wording of the Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016).

      1. In order to implement the powers, vested by Article 8 of this Law, the bank shall have the right to establish or acquire a subsidiary, purchasing doubtful and loss assets of the parent bank, only if a preliminary permission of the authorized body is provided.

      The procedure for issuing a permit for establishment or acquisition of the subsidiary, acquiring doubtful and loss assets of the parent bank shall be determined by the regulatory legal act of the authorized body.

      1-1. The bank shall have the right to create (acquire) an organization acquiring dubious and hopeless assets, together with an organization specializing in improving the quality of loan portfolios of second-tier banks.

      If as a result of creation or acquisition of the organization specified in part one of this paragraph, the bank shall have a significant participation in the capital of this organization, this participation shall be allowed only with the prior permission of the authorized body.

      The property specified in the civil legislation of the Republic of Kazakhstan, as well as dubious and hopeless assets of banks and (or) the rights of claim on dubious and hopeless assets of the bank acquired by the organization specializing in improving the quality of loan portfolios of second-tier banks may be a contribution to the authorized capital of the organization, specified in part one of this paragraph, created in the organizational-legal form of a limited liability partnership.

      The organization, specified in part one of this paragraph, shall be obliged to transfer money received from its activities to its members (shareholders) in the manner and amount provided by the action plan on improvement the quality of dubious and hopeless assets, approved by the general meeting of participants (shareholders) of this organization, with the exception of money aimed at payment of expenses, related to carrying out types of activities, provided by paragraph 4 of this Article.

      2. A subsidiary organization, purchasing the doubtful and loss assets of the parent bank shall be obliged to transfer the money, received from its activities to the parent bank, with the exception of the money, allocated for payment of costs, associated with the activities, provided for by paragraph 4 of this Article.

      3. The operating procedures of the subsidiary, acquiring doubtful and loss assets of the parent bank, the time limit within which the subsidiary manages the purchased doubtful and loss assets, as well as the requirements to the acquired (purchased) doubtful and bad assets, shall be established by the regulatory legal act of the authorized body.

      4. A subsidiary of the bank acquiring dubious and hopeless assets of the parent bank, as well as an organization acquiring dubious and hopeless assets, the participants of which are the bank and an organization specializing in improving the quality of loan portfolios of second-tier banks, shall have the right to:

      1) acquire and sell dubious and hopeless assets of the bank;

      2) acquire and sell movable and immovable property and (or) the right of ownership to the objects of unfinished construction, which became the property of the bank as a result of levy on the pledged property on the acquired dubious and hopeless rights of claim;

      3) acquire and sell shares and (or) participation stakes in the authorized capital of legal entities in cases of their acceptance as collateral (compensation or security) for the acquired dubious and hopeless rights of claim or transfer to the ownership of the parent bank as a result of levy on the pledged property;

      4) lease the property transferred to its ownership as a result of levy on the property that acted as a collateral, other security or received in the form of compensation for dubious and hopeless rights of claims acquired from the bank, as well as specified in subparagraph 2) of this paragraph, or use another form of paid temporary use of such property;

      5) carry out other types of activity in order to improve the quality of the acquired dubious and hopeless rights of claim or other assets established by the regulatory legal act of the authorized body.

      5. The application for obtaining the permission on creation, acquisition of a subsidiary, acquiring dubious and hopeless assets of the parent bank shall be attached by the documents and information provided in subparagraphs 1), 2), 3), 4), 7), 9), 10), 11), 13-1) and 14) of paragraph 4 of Article 11-1 of this Law, and:

      1) is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication);

      2) the financial statements of the subsidiary organization for the last completed quarter before submission of the relevant application - in the case of acquisition of the subsidiary;

      3) a business plan and an action plan to improve the quality of the doubtful and loss assets, the requirements for which are determined by the regulatory legal act of the authorized body.

      5-1. The application for obtaining the permission to significant participation in the capital of the organization, acquiring dubious and hopeless assets, created (acquired) together with the organization specializing in improving the quality of loan portfolios of second-tier banks shall be attached by the documents and information, provided in subparagraphs 2), 3), 7), 10) and 11) of paragraph 4 of Article 11-1 of this Law and in subparagraphs 2) and 3) of paragraph 5 of this Article, as well as the document, confirming the payment of the fee for issuing a permit to a significant participation in the capital of organizations.

      Refusal to issue the permission for significant participation in the capital of the organization acquiring dubious and hopeless assets, created (acquired) together with the organization specializing in improving the quality of loan portfolios of second-tier banks shall be made on the grounds provided by paragraph 6 of this Article.

      6. The grounds for refusal to issue a permit for establishment, acquisition of the subsidiary organization, purchasing the doubtful and loss assets of the parent bank shall be:

      1) the grounds, specified in subparagraphs 1), 3) and 4) of paragraph 6 of Article 11-1 of this Law;

      2) non-compliance of the doubtful and loss assets, transferred to the subsidiary organization, with the requirements of paragraph 4 of this Article and (or) the requirements of the regulatory legal act of the authorized body.

      7. Subsidiaries of banks, acquiring dubious and hopeless assets of the parent bank, as well as the organization acquiring dubious and hopeless assets, the members of which are the bank and the organization specializing in improving the quality of loan portfolios of second tier banks, for the assigned rights of claim by the banks under the bank loan contracts, shall be recognized as creditors (lenders) on a banking loan operation and shall have all the rights and liabilities of the bank, established by the bank loan contract, rights of claim under which were assigned in favour of the organization by the bank.

      8. Is excluded by the Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016
      9. Is excluded by the Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016).
      Footnote. Chapter 1 is supplemented by Article 11-2 in accordance with the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced from 01.01.2011); as amended by the laws of the Republic of Kazakhstan dated 27.04.2015 No. 311-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016); dated 25.12.2017 No. 122-VI (shall be enforced from 01.01.2018); dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

Chapter 2. Establishment of a bank and banking activities

      Footnote. The title is revised by the Law of the Republic of Kazakhstan dated 10 July 2003 No 483 (shall be enforced from 1 January 2004). The amendments were made, dated 8 July 2005 No 72 (the order of enforcement see Article 2).

Article 12. The legal structure of banks

      Footnote. Article 12 is excluded by the Law of Republic of Kazakhstan dated 10.07.2003 No. 483 (shall be enforced from 01.01.2004).

Article 13. Permission of the authorized body for opening of a bank

      1. The order of issuance and the grounds for refusal to issue a permit to open a bank shall be defined by the banking legislation of the Republic of Kazakhstan.

      2. A permission to open a bank shall have legal force until the authorized body makes a decision on issuance of a license to the bank to conduct banking operations.

      A permit to open a bank may be revoked by the authorized body.

      3. A permission to open a bank shall be subject to be returned by the bank to the authorized body during the issuance of a license for performing banking operations or the court’s decision to terminate the bank’s activities, as well as in the event of revocation of the permission on the grounds, provided for by paragraph 2 of Article 49 of this Law.

      4. A bank shall have the right to voluntarily return of the permit to open a bank and re-registering in accordance with the legislation.

      Footnote. Article 13 is in the wording by the Law of the Republic of Kazakhstan dated 11 July 1997 No 154; as amended by the Laws of the Republic of Kazakhstan dated 10.07.2003 No 483 (shall be enforced from 1 January 2004); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009).

Article 14. Constituent documents of a bank

      1. A bank shall be established in the order, specified by the civil legislation of the Republic of Kazakhstan for legal entities, taking into account the specifications, established by the banking legislation of the Republic of Kazakhstan.

      2. In addition to the information, defined by the acting legislation, the constituent documents on establishment of a bank shall contain:

      the information about the founders, including the full name and address of each of them, as well as the data on their state registration (for legal entities), name, nationality, place of residence, and the data of the identification document (for individuals);

      the information on the number, categories and the offering price of the shares.

      3. In addition to the information, specified by the current legislation, the bank’s charter shall contain:

      full and abbreviated name of the bank;

      information on the types and the order of use of funds of the bank;

      the procedure for taking decisions by the bank.

      the information, provided for by Article 52-4 of this Law (for the Islamic Bank).

      Footnote. Article 14 as amended by the Laws of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 16.07.1999 No 436; dated 16.05.2003 No 416; dated 12.02.2009 No 133 -IV (the order of enforcement See Art. 2); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009); dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016).

Article 15. The legal structure and the name of a bank

      1. Banks shall be established in the form of joint stock companies.

      1-1. The bank shall use the name, specified in its charter, as its name.

      The name of the bank shall contain the word "bank" or its derivative word.

      2. All banks, except for the authorized body, shall not be allowed to use the words "national", "central" in its name in full or abbreviated form in any language.

      3. All banks shall be prohibited to use the word "state" in its name in full or abbreviated form in any language.

      3-1. The name of an Islamic bank shall contain the phrase "Islamic bank".

      4. It shall be prohibited to use the names that are identical or similar and may be mixed with the name of the previously established banks, including the banks - non-residents of the Republic of Kazakhstan, except for the subsidiary banks.

      Subsidiary banks shall use the name of the parent banks in their name.

      The requirement, provided by part two of this paragraph shall not apply to the subsidiaries, which have been restructured in accordance with this Law, as well as to the subsidiaries which carried out an operation provided by Article 61-4 of this Law.

      Footnote. Article 15 as amended by the Laws of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 16.07.1999 No 436; dated 02.03.2001 No 162 (see Art. 2); dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 12.02.2009 No 133 -IV (the order of enforcement see Art. 2); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 27.04.2015 № 311-V (shall be enforced from 01.06.2014); dated 27.02.2017 № 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 16. The authorized and equity capital of a bank

      1. The authorized capital of the bank shall be formed in the national currency of the Republic of Kazakhstan through the placement of shares, except for the cases established by paragraph 2 of this Article.

      2. The bank's shares while allocation shall be paid exclusively in cash. This requirement shall not apply to the banks in the following cases:

      1) offering of the bank’s shares to the creditors of the bank and their payment through the offset of any rights (claims) on a monetary obligation of the bank to the appropriate creditor, during the restructuring, in the cases, provided for in this Law and other Laws of the Republic of Kazakhstan;

      1-1) conversion of securities and other monetary obligations of the bank into ordinary shares of the bank in case of application of measures on settlement of an insolvent bank on the basis and in the manner provided by Article 61-10 of this Law;

      2) conversion of securities into shares of the bank on the basis of the prospectus of equity securities issue, convertible into the shares of the bank;

      2-1) exchange of placed shares of the bank of one type for the shares of this bank of another type on the basis of the charter of the bank and its prospectus for the issue of shares;

      3) payment of the bank’s shares during the reorganization, conducted in the order, established by the Law of the Republic of Kazakhstan "On Joint Stock Companies".

      When allotting the shares the assessment shall not be required in the cases, provided for in this paragraph;

      4) payment of shares of the bank by state securities of the Republic of Kazakhstan in the case provided by Article 17-2 of this Law.

      3. In case of converting the securities into shares of the bank within the procedure of its restructuring and (or) as part of application of measures on settlement of an insolvent bank in the manner provided by Article 61-10 of this Law, the right of preemptive purchase shall not be granted to the shareholders of the bank upon placement of its shares through converting securities and (or) monetary obligations of the bank into its shares.

      3-1. The bank shall have the right to issue preferred shares, the prospectus of which provides the right of the executive body of the bank not to accrue dividends on the preferred shares in case, if the accrual of dividends on shares reduces the prudential standards below the values, established by the regulatory legal act of the authorized body.

      4. The minimum amount of the authorized capital of a newly created bank must be paid by its founders or shareholders in full after the state registration and before applying for a license to conduct banking and other operations.

      5. The method of calculation of equity capital and investments of the bank shall be defined by the authorized body.

      If the amount of the bank's liabilities exceeds its assets, the bank's equity capital shall be negative.

      6. When establishing a negative amount of own capital of the bank, the authorized body shall have the right to decide on compulsory redemption of shares of its shareholders and to immediately sell them to a new investor at the purchase price, on conditions guaranteeing an increase in the bank's capital and its normal functioning, taking into account the obligations undertaken by the investor.

      Compulsory acquisition of the bank's shares by the authorized body shall be made at the price, determined by the value of the bank assets net of its liabilities as of the date of the decision making on compulsory redemption of the shares (the shares of the shareholders ) of the bank for their subsequent sale to a new investor. Selling of the repurchased shares of the bank shall be carried out by the authorized body immediately at their purchase price. Rights and obligations of owners of all compulsorily repurchased shares shall be transferred to the new investor.

      In case of maturation of obligations for which the claims may be filed to the bank, but which were not filed before a decision making on compulsory redemption of the bank’s shares, such claims are deemed satisfied, except for the claims on deposits of individual and legal entities.

      The order of compulsory repurchase of the shares of the bank and their mandatory subsequent sale to the investors shall be established by the authorized body.

      Footnote. Article 16 as amended by the Law of the Republic of Kazakhstan dated 30.12.2009 No 234 -IV; as amended by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 27.04.2015 № 311-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 24.11.2015 № 422-V (shall be enforced from 01.01.2016); dated 02.07.2018 № 168-VI (shall be enforced from 01.01.2019).

      Article 16-1. Subordinated debt

      The conditions for assigning an unsecured obligation to the subordinated debt shall be simultaneous existence of the following conditions:

      1) the term for which the unsecured obligation is issued or received shall be not less than five years;

      2) the creditors may not file a claim for early repayment or performance of an unsecured obligation;

      3) an unsecured obligation may be prematurely repaid or performed at the initiative of the bank, provided that this does not lead to a decrease in prudential standards below the values established by the regulatory legal act of the authorized body;

      4) in case of liquidation of the bank, the unsecured obligation shall be satisfied in the tenth priority determined by Article 74-2 of this Law.

      Footnote. Chapter 2 is supplemented by Article 16-1 in accordance with the Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016); as amended by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      Article 16-2. Perpetual financial instruments

      The conditions for classifying an unsecured obligation as perpetual financial instruments shall be the simultaneous existence of the following conditions:

      1) the term for which the unsecured obligation is issued or received shall be not less than fifty years;

      2) the creditors may not file a claim for early repayment or performance of an unsecured obligation;

      3) an unsecured obligation may be prematurely repaid or performed at the initiative of the bank, provided that this does not lead to a decrease in prudential standards below the values established by the regulatory legal act of the authorized body;

      4) in case of liquidation of the bank, the unsecured obligation shall be satisfied in the tenth priority determined by Article 74-2 of this Law after the subordinated debt claims.

      Footnote. It is supplemented by Article 16-2 in accordance with the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      Article 16-3. Features of issue and (or) placement of equity securities by the bank on the territory of a foreign state, as well as inclusion of equity securities issued by the bank in the list of securities of the stock exchange operating on the territory of a foreign state

      1. A bank-resident of the Republic of Kazakhstan shall have the right to issue and (or) place equity securities on the territory of a foreign state only with the appropriate permission of the authorized body, subject to the conditions established by paragraph 1 of Article 22-1 of the Law of the Republic of Kazakhstan "On the Securities Market".

      2. When issuing and (or) placing by the bank – resident of the Republic of Kazakhstan of debt securities on the territory of a foreign state or when issuing and (or) placing of debt securities on the territory of a foreign state, by the conditions of issuance of which, granting of guarantees of the bank – resident of the Republic of Kazakhstan is provided, the permission of the authorized body shall be issued subject to, in addition to the conditions specified in paragraph 1 of Article 22-1 of the Law of the Republic of Kazakhstan "On the Securities Market", the following additional conditions:

      1) the conditions for issuing debt securities contain provisions that the debt securities may be forcibly restructured in case of application by the authorized body of measures on settlement of an insolvent bank in the manner provided by this Law;

      2) the conditions for issuing of debt securities contain provisions that the holders of debt securities do not have the right to demand early fulfillment of obligations to them in case of application to an insolvent bank of measures for its settlement provided by this Law.

      3. Equity securities issued by the bank – resident of the Republic of Kazakhstan or by the conditions of issuance of which, granting of guarantees of the bank – resident of the Republic of Kazakhstan is provided, may be included and (or) to be in the list of securities, traded on a stock exchange operating on the territory of a foreign state, with the appropriate permission of the authorized body and compliance with the conditions, established by paragraph 2 of Article 22-1 of the Law of the Republic of Kazakhstan "On the Securities Market".

      4. The requirements of paragraphs 1, 2, 3, and 6 of this Article shall not apply to a bank-resident of the Republic of Kazakhstan and (or) organization when issuing and (or) placement of equity securities by it, by the conditions of issuance of which, granting of guarantees of the bank– resident of the Republic of Kazakhstan is provided, in case of a forced restructuring of obligations of an insolvent bank–resident of the Republic of Kazakhstan in the manner provided by this Law.

      5. The bank-resident of the Republic of Kazakhstan or organization, by the conditions of issuance of equity securities of which, granting of guarantees of the bank–resident of the Republic of Kazakhstan is provided, within fifteen calendar days from the date of completion of the securities placement on the territory of a foreign state shall submit to the authorized body the information in the form established by the regulatory legal act of the authorized body, confirming compliance with the conditions provided by subparagraph 2), passage three of subparagraph 5) of paragraph one of Article 22-1 of the Law of the Republic of Kazakhstan "On the Securities Market".

      6. The requirements of subparagraphs 1) and 2) of paragraph 2 of this Article shall apply to the cases of issuance and (or) placement of equity securities by the banks-resident of the Republic of Kazakhstan on the territory of the International financial center "Astana".

      Footnote. It is supplemented by Article 16-3 in accordance with the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 17. Founders and shareholders of a bank

      1. Legal entities and individuals - residents and non-residents of the Republic of Kazakhstan may be the founders and shareholders of a bank (taking into account the restrictions imposed by paragraph 5 of this Article and Article 18 of this Law).

      2. The state may be a founder and shareholder of the bank only in the person of the Government of the Republic of Kazakhstan, except for the cases provided by this Article. State-owned enterprises and organizations, more than fifty percent of the participation stakes in the authorized capital or placed shares of which belong to the state, may not be the founders and shareholders of the bank, except for the national management holding, the organization specializing in improving the quality of loan portfolios of second-tier banks, and subsidiaries of the National Bank of the Republic of Kazakhstan.

      The authorized body may be the sole founder of the stabilization bank in order to carry out operation on the transfer of assets and obligations of the bank provided by Article 61-12 of this Law.

      3. (Is excluded - No 162 dated 2.03.01)

      4. In order to protect the interests of creditors and ensure stability of the banking system of the Republic of Kazakhstan, in case if the measures, taken by the authorized body have not improved the financial condition of the bank:

      1) in case of a single violation by the bank of capital adequacy ratio and (or) the liquidity ratio, or violation of other prudential standards and (or) other compulsory for observance norms and limits two and more times within twelve consecutive calendar months, the Government of the Republic of Kazakhstan on the proposal of the authorized body shall be entitled to make decision on acquisition by the Government of the Republic of Kazakhstan or national managing holding of the announced shares of the bank in the amount, necessary to improve its financial condition and the bank's compliance with prudential standards and (or) other mandatory standards and limits, in the manner prescribed by Article 17-2 of this Law;

      2) if the bank has a negative amount of capital, the authorized body shall have the right to carry out compulsory redemption of the bank's shares with the condition of their obligatory subsequent immediate sale at the purchase price to a new investor, guaranteeing necessary improvement in the financial situation of the bank.

      5. The legal entities, registered in the offshore zones, the list of which shall be established by the authorized body, may not directly or indirectly possess and (or) use and (or) dispose the voting shares of the banks - resident of the Republic of Kazakhstan.

      This restriction shall not apply to the banks that are the subsidiaries of the banks - non-residents of the Republic of Kazakhstan, having the minimum required rating of one of the rating agencies.

      The list of the rating agencies and the minimum required rating shall be defined by the authorized body

      The requirements of this paragraph shall not apply to the cases of forced restructuring of the obligations of an insolvent bank in accordance with Article 61-10 of this Law..

      5-1. A shareholder, participating in the general meeting of the shareholders, shall submit an application on implementation of the requirements of paragraph 5 of this Article by its shareholders (participants), in case if the information about the country of registration of such shareholders (participants) is not available in the bank.

      A shareholder that has not submitted such application shall not be permitted to participate in the general meeting of the shareholders.

      When revealing unreliability of the information, specified in the application, or revelation of violation of the requirement, specified in paragraph 5 of this Article:

      1) in case if majority of the voting shares (without the voting shares of the shareholder, who submitted the application) voted for adoption of a decision, the decision of the general meeting of the shareholders shall be deemed adopted without including the votes of the shareholder;

      2) in case if the vote of the shareholder, that submitted the application, was decisive, this fact shall be the ground for annulment of the decision of the general meeting of the shareholders at the request of the authorized body or other interested persons, in the order, established by the legislation of the Republic of Kazakhstan.

      6. (Is excluded – dated 23December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107).

      7. The persons, directly or indirectly owing the shares of the bank or influencing the decisions taken by the shareholder of the bank, except for the national holding company, at the request of the authorized body, shall be obliged to submit the constituent documents and other information, necessary to define the major participants of the bank and its financial condition.

      Footnote. Article 17 as amended by the Decree of the President of the Republic of Kazakhstan shall be enforced, dated 27.01.1996 No 2830; the Laws of the Republic of Kazakhstan dated 07.12.1996 No 50; dated 11.07.1997 No 154; dated 29.06.1998 No 236; dated 10.07.1998 No 282; dated 16.07.1999 No 436; dated 02.03.2001 No 162 (see Art. 2); dated 25.04.2001 No 179; dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 08.07.2005 No 72 (the order of enforcement see Art. 2); dated 07.07.2006 No 178 (shall be enforced from the day of its official publication); dated 19.02.2007 No 230 (the order of enforcement see Art. 2); dated 23.10.2008 No 72 -IV (the order of enforcement see Art. 2); dated 12.02.2009 No 133 -IV (the order of enforcement see Art. 2); dated 13.02.2009 No 135 -IV (the order of enforcement see Art. 3); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009); dated 01.03.2011 No 414 -IV (shall be enforced from 01.01.2010); dated 27.02.2017 No. 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 17-1. A bank holding company and a major bank participant

      1. No person alone or jointly with another (other) person (s) may (may not) directly or indirectly own, use and (or) dispose ten or more percent of the bank's placed (excluding preferred and redeemed by the bank) shares of the bank, as well as to have control or possibility to influence the decisions made by the bank in the amount of ten or more percent of the placed (excluding preferred and redeemed by the bank) of shares of the bank without obtaining the prior written consent of the authorized body. This requirement shall not apply to the state or the national managing holding, an organization, specializing in improving the quality of loan portfolios of second tier banks, subsidiaries of the National Bank of the Republic of Kazakhstan, the unified accumulative pension fund in case of owning by them of ten or more percent of the placed (excluding preferred and redeemed by the bank) shares of the bank at the expense of pension assets managing the investment portfolio in the case of possession, use and (or) disposal of ten or more percent of the placed (excluding preferred and redeemed by the bank) shares of the bank at the expense of pension assets, as well as in the cases provided by this Law.

      Non-resident legal entities of the Republic of Kazakhstan may obtain the consent of the authorized body to acquire the status of a bank holding company or a major bank participant in the presence of the minimum required rating of one of the rating agencies. Minimum rating and the list of the rating agencies shall be established by the regulatory legal act of the authorized body.

      The presence of this rating shall not be required for a nonresident legal entity of the Republic of Kazakhstan, planning to own indirectly ten or more percent of the allotted shares of the bank or vote indirectly by ten or more percent of the voting shares of the bank through the ownership (voting) of the shares (ownership interest) in the non-resident legal entity of the Republic of Kazakhstan, which is the major participant of the bank, directly owning ten or more percent of the allotted shares or having the opportunity to vote by ten or more percent of the voting shares of the bank, which has the minimum required rating.

      Major participants of the bank – individuals shall pay for the shares of the bank in an amount not exceeding the value of the property owned by them on the right of ownership. In this case, the value of the property (excluding the value of previously acquired shares of the bank) should not be less than the total value of previously acquired and being acquired shares of the bank.

      1-1. A financial institution - nonresident of the Republic of Kazakhstan, subject to the consolidated supervision in the country of its location, shall be entitled to be a bank holding company - non-resident of the Republic of Kazakhstan, directly owning twenty-five or more percent of the allotted shares (net of the preferred and those, repurchased by the bank) of the bank or having the opportunity to vote directly by twenty-five or more percent of the voting shares of the bank.

      2. The rules for issuance, revocation of the consent for obtaining the status of a major participant of a bank or a bank holding company, the requirements to the documents, submitted to obtain the consent, shall be defined by the authorized body.

      2-1. The requirements for obtaining the status of a bank holding company or a major participant of a bank shall not apply to the person that is recognized as indirectly owning (having the opportunity to vote, make decisions and (or) influence the decisions made under a contract or otherwise) the shares through the ownership (the possibility to vote, make decisions and (or) influence the decisions made under a contract or otherwise) of the shares of another financial institution, having the status of a major participant (a bank holding company) of the bank.

      The requirements for obtaining the status of a bank holding company or a major participant of the bank shall not apply to the non-resident legal entity of the Republic of Kazakhstan indirectly owning(having the opportunity to vote, make decisions and (or) influencing the decisions made under a contract or otherwise) the shares of the bank through the ownership of the shares (the possibility to vote, make decisions and (or) influence the decisions made under a contract or otherwise) of another financial institution - non-resident of the Republic of Kazakhstan, which is subject to the consolidated supervision in the country of its location and has the status of a major participant (a bank holding company) of the bank.

      Requirements on receipt of status of banking holding or big participant of bank shall not apply to the cases of the bank’s acquisition of shares of another bank, upon their reorganization in the form of affiliation in the manner, determined by the legislation of the Republic of Kazakhstan, if one of the reorganized banks is the bank, in relation of which the restructurisation was conducted in accordance with this Law.

      2-2. In order to obtain the consent for acquisition of the status of a bank holding company or a major participant of the bank, a fee shall be paid, the amount and procedure of payment of which shall be determined by the tax legislation of the Republic of Kazakhstan.

      3. To obtain the consent, a person wishing to become a major participant of the bank must submit to the authorized body an application for the acquisition of the status of a major participant of the bank with attachment of documents and information determined by paragraphs 4, 4-1, 5, 6, 7, 7-1 of this Article.

      Note of the RCLI!
      Subparagraph 3-3) is provided in the wording of the Law of the Republic of Kazakhstan dated 18.11.2015 No. 412-V (shall be enforced from 01.01.2021).

      4. In order to obtain the consent for acquisition of the status of a major participant of the bank, the individual shall submit the following documents:

      1) information on conditions and the order of acquisition of the bank’s shares, including the previously purchased shares, including description of the sources and the funds, used for the acquisition of the shares, with the copies of supporting documents.

      The source, used for the purchase of the bank’s shares shall be:

      the income, received from business, labor or other paid activity;

      monetary documented savings of the applicant.

      In addition to the sources, listed in the second part of this subparagraph, the money, received as a gift, winnings, income from selling the gratuitously received property, in an amount not exceeding twenty-five percent of the value of the purchased shares, may be used for the purchase of shares of the bank.

      When purchasing the shares of the bank at the expense of the property, received as a gift, the applicant shall submit information about the grantor, and the source of origin of such property of the grantor;

      2) the power of attorney to the representative of the applicant, that is entrusted to represent the interests of the applicant (if any);

      3) a list of legal entities in which it is a major participant, and the notarized copies of their constituent documents;

      3-1) the bank’s recapitalization plan in case of a possible worsening of its financial condition;

      3-2) information on the impeccable reputation with the copies of supporting documents attached;

      3-3) information on income and assets, as well as the information on the existing debt on all the obligations of the applicant, according to the form, established by the regulatory legal act of the authorized body;

      4) short profile of the applicant in the form, specified by the regulatory legal acts of the authorized body, including the information about education, employment;

      5) a written confirmation of the relevant state body of the country of residence of an individual - non-resident of the Republic of Kazakhstan that the acquisition of the shares of a bank-resident of the Republic of Kazakhstan is permitted by the national legislation of the country or a statement of the authorized body of the country that such permission of the country of the specified founder is not required under the legislation;

      6) a document confirming the payment of the fee for issuance of the consent.

      4-1. If an individual began to comply with the characteristics of a major participant of the bank without obtaining the prior written consent of the authorized body on the basis of the gift agreement, when submitting an application for acquisition of the relevant status in accordance with the requirement established by paragraph 16 of this Article, the following shall be additionally submitted:

      1) information on the conditions and procedure for the gift of shares of the bank with attachment of copies of confirming documents;

      2) documents provided by subparagraphs 2), 3), 3-1), 3-2), 3-3), 4), 5) and (6) paragraph 4 of this Article;

      3) information on the value of shares, which are the subject of the gift agreement, determined by the appraiser in accordance with the legislation of the Republic of Kazakhstan with attachment of copies of confirming documents.

      To obtain the consent on acquisition of the status of a major participant of the bank, additionally by an individual, who acquired shares of the bank as a result of the gift agreement, the following conditions are fulfilled on the date of submission of the application for acquisition of the status of a major participant of the bank:

      1) the value of the property (excluding the value of previously acquired shares of the bank) owned by an individual on the right of ownership shall not be less than the total value of the shares that are the subject of the gift agreement and the shares of the bank previously acquired by it;

      2) income, received from entrepreneurial, labor or other paid activity of an individual, as well as his/her monetary savings, confirmed by the documents, make up not less than seventy-five percent of the value of donated shares of the bank, determined by the appraiser.

      5. In order to obtain the consent for purchase of the status of a major participant of the bank, a resident legal entity of the Republic of Kazakhstan shall submit the following documents:

      1) a copy of the decision of the relevant body of the applicant on acquisition of shares of the bank;

      If the applicant is a bank, acquiring the status of a major participant of the bank, which carried out the operation provided by Articles 61-4 and 61-11 of this Law, or a non-resident financial organization of the Republic of Kazakhstan, then a copy of the decision of the applicant's management body on the acquisition of shares of the bank shall be submitted;;

      1-1) the information and supporting documents about the persons (alone or jointly with other persons), owning ten or more percent of the shares (ownership interest in the authorized capital) of the legal entity, as well as having the ability to influence the decisions of the legal entity under a contract or otherwise or to have control;

      1-2) a list of the affiliated persons of the applicant;

      2) information and documents specified in subparagraphs 1), 2), 3), 3-1) and (6) of paragraph 4 of this Article;

      2-1) the information on the impeccable reputation of its executives;

      3) the notarized copies of constituent documents, short profiles of the major participants of the applicant, as well as the major participants of the major participants of the applicant;

      4) short profiles of the executives of the applicant in the form, specified by the regulatory legal acts of the authorized body, including information about education, employment;

      5) the annual financial statements for the last two completed financial years, certified by the audit organization, as well as the financial statements for the last completed quarter before submission of the relevant application;

      6) an analysis of the financial implications of obtaining the status of a major participant of the bank, including the estimated payment balance of the applicant and the bank after the acquisition, the plans and proposals of the applicant, if any, for the sale of the bank's assets, reorganization or amendment of operations or management of the bank, including an action plan and organizational structure.

      6. In order to obtain the consent for acquiring the status of a major participant of the bank, a nonresident legal entity of the Republic of Kazakhstan shall submit the following documents:

      1) information and documents specified in subparagraphs 1), 2), 3), 3-1) and 6) of paragraph 4 and sub-paragraphs 1), 1-1), 1-2), 2-1), 3), 4), 5) and 6) of paragraph 5 of this Article;

      2) the information about the credit rating of the legal entity that is assigned by one of the international rating agencies, the list of which shall be established by the authorized body, except for the cases, provided for in paragraph 1 of this Article.

      In order to obtain the consent for acquiring the status of a major participant of the bank, a financial institution -non-resident of the Republic of Kazakhstan, in addition to the documents, referred to in this paragraph, shall submit a written confirmation from the Financial Supervisory Authority of the country of location of the applicant that the applicant is authorized to perform financial activities under the Laws of that country, or a statement of the financial supervisory body of the country of location of the applicant that such permission is not required in compliance with the legislation of this country.

      6-1. The requirements of sub-paragraph 3) of paragraph 4 and sub-paragraph 3) of paragraph 5 of this Article in terms of provision by the applicant of notarized copies of constituent documents shall not apply to a legal entity-non-resident of the Republic of Kazakhstan when one of the conditions is met:

      1) a legal entity - non–resident of the Republic of Kazakhstan has a credit rating not lower than A of one of the rating agencies, the list of which shall be established by the authorized body;

      2) availability of information on legal entities (participation stake, types of statutory activities) in which the applicant is a major participant, and the major participants of the applicant, as well as information on the financial state of the applicant on the Internet resource of the supervisory authority of the applicant's country of residence.

      7. In order to obtain permission to acquire the status of a bank holding, a financial institution -non-resident of the Republic of Kazakhstan shall submit the following documents:

      1) the information and documents referred to in paragraph 6 of this Article;

      1-1) a written confirmation from the Financial Supervisory Authority of the country of location of the applicant that the financial institution – non- resident of the Republic of Kazakhstan shall be subject to the consolidated supervision;

      1-2) a written permission (consent) of the Financial Supervision Authority of the country of the location of the applicant for acquiring by a financial institution - non-resident of the Republic of Kazakhstan of the status of a bank holding company or a statement of the authorized body of the relevant country that such permission (consent) is not required in accordance with the legislation of the country;

      2) a written confirmation from the Financial Supervisory Authority of the country of origin of the applicant that the applicant is authorized to perform financial activities under the legislation of this country, or a statement of financial supervisory body of the country of origin of the applicant that such permission is not required in accordance with the legislation of this country.

      7-1. The individuals, wishing to acquire the status of a major participant of the bank with the ownership interest of twenty-five or more percent (net of the preferred and those, repurchased by the bank) of the allotted shares, as well as the legal entities, wishing to acquire the status of a bank holding company, in addition to the documents and information, referred to in this Article, are to submit a business plan, the requirements for which are established by the authorized body, for the next five years.

      8. The persons, that are jointly a major participant of the bank, shall be recognized the persons in total owning ten or more percent of the allotted shares (net of the preferred and those, repurchased by the bank), or having the opportunity to vote directly or indirectly by ten or more percent of the shares of the bank and:

      1) jointly influencing the bank's decision under an agreement between them or otherwise;

      2) being the major participants of each other separately or mutually;

      3) one of them is an official or a representative of another person;

      4) one of them provided an opportunity to another person to purchase the bank’s shares in accordance with the contract, concluded between them;

      5) are close relatives or spouses;

      6) one of them provided an opportunity to another person to purchase the bank’s shares at the expense of the granted money or gratuitously received property.

      9. The grounds for refusal in issuance the consent by the authorized body to the persons wishing to become a major participant of the bank or a bank holding company shall be:

      non-compliance with the requirements of subparagraphs 3), 4), 5) and 6) of paragraph 3 of Article 20 of this Law (in respect of an individual or executives of the applicant-legal entity);

      unsustainable financial situation of the applicant;

      non-elimination of the comments of the authorized body on the submitted documents;

      violation of the requirements of the legislation of the Republic of Kazakhstan in the field of competition protection as a result of acquisition by the applicant of the status of the major participant of the bank or the bank holding company;

      cases when in the transaction on acquisition of the status of the major participant of the bank or the bank holding company, the acquiring party is the legal entity (its large participant (large shareholder) registered in offshore zones which list shall be established by the authorized body;

      non-compliance by the applicant with other requirements established by legislative acts of the Republic of Kazakhstan to major participants of the bank and bank holding companies;

      analysis of financial consequences of acquisition by the applicant of the status of a major participant of the bank or bank holding company assumes deterioration of financial state of the bank;

      lack of powers to carry out financial activities under the legislation of the country of origin at the applicant-a non-resident financial organization of the Republic of Kazakhstan;

      lack of the minimum required rating of one of the international rating agencies, the list of which is determined by the authorized body except for cases provided by paragraph 1 of this Article at the applicant-legal entity- non-resident of the Republic of Kazakhstan;

      inefficiency of the presented recapitalization plan of the bank in case of possible deterioration of financial state of the bank;

      lack of impeccable business reputation at the applicant - an individual, at an executive employee of the applicant - a legal entity;

      cases when a person has previously been or is a major participant-an individual or the first head of a major participant - a legal entity and (or) a senior employee of a financial organization for a period of not more than before adoption by the authorized body of a decision on classification of a bank as insolvent banks, on conservation of an insurance (reinsurance) company, on forced redemption of its shares, on deprivation of a license of financial organization, as well as on forced liquidation of a financial organization or its recognition as bankrupt in accordance with the legislation of the Republic of Kazakhstan. This requirement shall apply within five years after adoption by the authorized body of the decision on classification of a bank as insolvent banks, on conservation of an insurance (reinsurance) organization, on forced redemption of its shares, on deprivation of a license of financial organization as well as on forced liquidation of a financial organization or its recognition as bankrupt in accordance with the legislation of the Republic of Kazakhstan;

      non-compliance of the legislation in the field of consolidated supervision over financial organizations of the country of location of the applicant-legal entity with the requirements for consolidated supervision established by the legislative acts of the Republic of Kazakhstan;

      for major participants – legal entities and bank holding companies that are financial organizations, - non-residents of the Republic of Kazakhstan – absence of an agreement between the authorized body and the financial supervision bodies of the state of which the applicant is resident, providing the exchange of information, except for the cases established by regulatory legal act of the authorized body;

      cases when the applicant-financial organization is not subject to supervision on a consolidated basis in the country of its location;

      impossibility of consolidated supervision over banking conglomerate due to the fact that the legislation of the countries of location of participants of the banking conglomerate – non-residents of the Republic of Kazakhstan makes it impossible to execute by them and by the banking conglomerate of requirements, provided by the laws of the Republic of Kazakhstan;

      availability of grounds for refusal to issue a permit to open a bank.

      If a person wishing to acquire the status of a bank holding company creates or acquires a subsidiary financial organization or acquires a significant participation in the capital of a financial organization, the grounds for refusal provided in paragraph 6 of Article 11-1 of this Law shall be taken into account when considering the documents, submitted by the authorized body. If there are grounds for refusal to issue permission for creation (acquisition) a subsidiary, a significant participation in the in the authorized capital of organizations, the authorized body shall refuse to issue a consent for acquisition of the status of a bank holding company or a major participant of a bank.

      10. A sign of unstable financial situation of the applicant shall be the presence of one of the following conditions:

      a legal entity-applicant was created less than two years prior to the date of filing an application;

      an applicant's obligations exceed its assets minus the amount of assets placed in shares and participation stakes in the authorized capital of other legal entities, and expected to acquire shares of the bank;

      losses on the results of each of the two completed financial years;

      the amount of the applicant's obligations poses a significant risk to the financial condition of the bank;

      availability of overdue and (or) related to the balance of the bank of the applicant’s debt before the bank;

      analysis of financial consequences of acquisition by the applicant of the status of a major participant of the bank assumes deterioration of financial state of the applicant;

      the value of the applicant's property (minus the applicant's obligations) is not sufficient to purchase shares of the bank;

      other grounds indicating the presence of an unstable financial situation of the applicant and (or) the possibility of causing damage to the bank and (or) its depositors.

      11. Upon acquisition by a person of the characteristics of a major participant of a bank or a bank holding company without the written consent of the authorized body, the authorized body shall have the right to apply to this individual the measures of supervisory response provided by this Law, including coercive measures provided by Article 47-1 of this Law in terms of requirements for realization of the bank shares within a period not exceeding six months.

      12. Issuance of the consent of the authorized body to the persons wishing to become a bank holding company, shall be carried out under the conditions and in the order, specified for a major participant of the bank.

      A person wishing to become a bank holding company, in addition to the documents and information provided by paragraphs 5, 6 and 7 of this Article, shall submit:

      1) the documents confirming the existence of risk management and internal control systems, including in relation to the risks associated with the activities of a subsidiary;

      2) the estimated calculation of prudential standards of the banking conglomerate in case, if the acquisition by the applicant of the status of a bank holding company leads to the formation of a banking conglomerate.

      The grounds for refusal to issue the consent of the authorized body to the person, wishing to become a bank holding company, in addition to the grounds, provided for in paragraph 9 of this Article, shall be the following:

      the cases where the applicant - financial institution is not subject to supervision on a consolidated basis in the country of its location;

      the impossibility to conduct a consolidated supervision of banking conglomerate due to the fact that the legislation of the countries of location of the participants of the banking conglomerate –non-residents of the Republic of Kazakhstan makes it impossible to fulfill the requirements, stipulated by the legislative acts of the Republic of Kazakhstan by them and by the banking conglomerate.

      The authorized body, when issuing consent to a person for acquisition of the status of a bank holding company, simultaneously shall issue a permit for a significant participation in the capital of the bank or creation (acquisition) of a subsidiary bank.

      12-1. The shareholders who collectively own ten or more percent of the allotted shares (net of the preferred and those, repurchased by the bank), or of the voting shares of the bank and acting on the basis of an agreement, concluded between them, providing for making their decisions on the following issues, shall not be the major participants of a bank, bank holding companies:

      1) the convening of an extraordinary general meeting of the shareholders or the appeal to the court to convene it in case if the board of directors refused to convene a general meeting of the shareholders;

      2) inclusion of additional items on the agenda of the general meeting of the shareholders;

      3) convenience of the meeting of the board of directors;

      4) conducting of an audit of the bank by the audit organization at the bank's own expense.

      13. The entities, jointly being a bank holding company, are those, in total owning twenty-five or more percent of the allotted shares (net of the preferred and those, repurchased by the bank), or having the ability to vote directly or indirectly by twenty-five or more percent of the shares of the bank and:

      1) jointly influencing the bank's decision under the agreement between them or otherwise;

      2) separately or mutually being the major participants of each other;

      3) one of them is a representative of another person;

      4) one of them granted the ability to purchase shares to another person in accordance with the contracts, concluded between them.

      14. The decision on the application, submitted for obtaining the status of a bank holding company or a major participant of the bank in accordance with the requirements of this Article shall be taken by the authorized body within three months after the application submission.

      The authorized body shall notify the applicant in a written form about the results of its decision, at that, in the case of refusal to grant consent for purchase of the corresponding status, the grounds for refusal are given in the written notice.

      The authorized body, when issuing consent to a person for acquisition of the status of a bank holding company, simultaneously shall issue a permit for a significant participation in the capital of the bank or creation (acquisition) of a subsidiary bank.

      15. The authorized body shall have the right to revoke the consent issued in accordance with this Article, having taken the decision on its cancellation within two months from the date of detection of the fact that is the basis for withdrawal of the consent, in case of revealing inaccurate information, based on which the consent was issued, or violation as a result of purchase by the applicant of the status of a major participant or a bank holding company of requirements of the legislation of the Republic of Kazakhstan in the field of competition protection or non-compliance with the requirements of the laws of the Republic of Kazakhstan by major participants or bank holding company. In this case, the person to whom such measure is applied shall be obliged within six months, to reduce the number of shares of the bank belonging to him/her to the level below the level established by this Article.

      The person, from whom the consent, issued in accordance with this Article, was revoked, shall not be entitled to transfer the bank's shares to the trust management to the third party.

      In the case of non-compliance of the persons, in respect of which the authorized body made a decision to revoke the relevant consent, with the requirements of this paragraph, the authorized body shall be entitled to apply to the court for fulfillment of the requirements of the authorized body by those persons.

      16. If the person meets the requirements of a bank holding company, a major participant of the bank without the prior written consent of the authorized body, it shall not be entitled to take any actions, aimed at influencing the management or the policy of the bank, and (or) to vote on such shares until it receives a written consent from the authorized body in accordance with the provisions of this Article.

      In this case, the person, meeting the characteristics of a bank holding company, a major participant of the bank, shall be obliged to notify the authorized body within ten calendar days from the moment when it became aware that it meets the characteristics of a bank holding company, a major participant of the bank.

      An application on acquisition of the corresponding status shall be submitted to the authorized body within thirty calendar days from the moment when it became aware that it meets the characteristics of a bank holding company, a major participant of the bank, unless that person is planning to dispose the shares within the specified period. Information about the decision on alienation of the shares shall be submitted to the authorized body immediately from the date of the decision making.

      If the authorized body refuses to issue a consent to the person corresponding to the characteristics of a bank holding company, a major participant of the bank, the specified person shall be obliged within six months from the date of receipt of the written notification to reduce the number of shares of the bank belonging to him/her to the level below the level established by this Article.

      17. The authorized body shall be entitled to request information from the individuals and legal entities in the presence of the data, confirming that the entity meets the characteristics of a bank holding company or a major participant of the bank or the direct, indirect shareholder of the bank, or, on the basis of an agreement or otherwise, has the opportunity to vote by the shares of the bank in the amount equal or exceeding the limits, set by this Article, without the consent of the authorized body in accordance with the requirements of this Law. Information may be claimed from any entity which has it, as well as from organizations, controlled by these entities.

      18. A major participant of the bank, bank holding company shall be obliged, within thirty calendar days from the date of taking the decision, to notify the authorized body about the change in percentage ratio of the number of owned bank shares to the number of placed (excluding privileged and repurchased by the bank) shares and (or) to the number of voting shares that it owns directly or indirectly or has the power to vote, directly or indirectly, with presentation of confirming documents, except for cases, when such a change occurs as a result of redemption of own shares by the bank or bank holding company from other shareholders.

      If the number of the bank’s shares has changed (in percentage or in absolute value), owned by a major participant of the bank, bank holding company, to the number of the allotted shares (net of the preferred and those, repurchased by the bank) and (or) to the number of voting shares of the bank in the upwards direction, the major participant of the bank, bank holding company shall submit information to the authorized body on the sources of funds, used to purchase the bank’s shares, with the copies of supporting documents attached. The sources of funds, used for the acquisition of the bank’s shares by major participants – individuals, shall be defined in subparagraph 1) of paragraph 4 of this Article.

      In case of change in the percentage ratio of the number of bank shares to less than ten or twenty-five percent owned by a major participant of the bank, a bank holding company, to the number of placed (excluding preferred and repurchased by the bank) shares and (or) to the number of voting shares of the bank at the request of a major participant of the bank, a bank holding company, the previously issued written consent of the authorized body shall be considered cancelled from the date of receipt by the authorized body of the specified application.

      In case of increasing the number of shares owned by him/her to twenty-five percent or more of the placed (excluding preferred and repurchased by the bank) shares of the bank, a major participant of the bank, who is an individual, in addition to the documents and terms specified in this paragraph, shall submit a business plan, the requirements to which are established by the authorized body, for the next five years.

      19. Quarterly, no later than the tenth day of the month following the reporting quarter, a bank and a bank holding company shall submit to the authorized body the list of all of its major participants or bank holding companies (for banks) with the amount of their allotted shares (excluding the preferred shares and the repurchased) or the ownership interest in the authorized capital of the bank or the bank holding company, as well as their percentage.

      20. Banks shall be required to inform the authorized body of the changes made to the composition of the shareholders, owning ten or more percent of the voting and (or) the allotted (net of the preferred and those, repurchased by the bank) bank's shares, within fifteen calendar days from the date of revelation of this fact by them.

      21. Is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).
      Footnote. Article 17-1 is in the wording by the Law of the Republic of Kazakhstan dated 23 December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107); as amended by the Laws of the Republic of Kazakhstan dated 19 February, 2007 No 230 (the order of enforcement see Article 2); dated 23.10.2008 No 72 -IV (the order of enforcement see Article 2); dated01.03.2011 No 414 -IV (shall be enforced from 01.01.2010); dated 28.12.2011 No 524 - IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 19.03.2014 No 179 -V (shall be enforced from the date after its first official publication.); dated 27.04.2015 № 311-V (shall be enforced from 01.01.2014); dated 29.10.2015 № 376-V (shall be enforced from 01.01.2016); dated 24.11.2015 № 422-V (shall be enforced from 01.01.2016); dated 27.02.2017 № 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 25.12.2017 № 122-VI (shall be enforced from 01.01.2018); dated 02.07.2018 № 168-VI (the order of enforcement see Art. 2).

Article 17-2. Particularities of purchasing the authorized shares of the bank by the Government of the Republic of Kazakhstan

      1. In the case provided by subparagraph 1) of paragraph 4 of Article 17 of this Law, on the proposal of the authorized body, the Government of the Republic of Kazakhstan shall consider the possibility of acquisition by the Government of the Republic of Kazakhstan or national managing holding of the authorized shares of the bank in the amount of not less than ten percent from the total number of the placed shares, including the shares purchased by the Government or the national managing holding.

      After considering the proposal of the authorized body about the possibility of acquisition by the Government of the Republic of Kazakhstan or national managing holding of the authorized shares of the bank in the amount of not less than ten percent from the total number of the placed shares, the government of the Republic of Kazakhstan shall take the decision to purchase or refuse to purchase the shares of the bank.

      The right of the state ownership to the bank's shares shall be registered for the state body, authorized by the Government of the Republic of Kazakhstan for disposal of the republican state property.

      2. The decision of the Government of the Republic of Kazakhstan to acquire the bank’s shares shall contain:

      the number of the shares by which the total number of the authorized shares of the bank is increased, in case of absence of the authorized unallocated or repurchased shares of the bank or in insufficiency of their number;

      the offering price (sale) and the number of the compulsorily allotted (sold) shares.

      3. The offering price (sale) and the number of the compulsorily allotted (sold) shares shall be defined by the decision of the Government of the Republic of Kazakhstan on the basis of the conclusion of the authorized body, made in coordination with the national management holding company or state body, authorized by the Government of the Republic of Kazakhstan for disposal of the republican state property, at the market price as of the date of the decision making on allotment (sale) of the shares.

      At the initiative of the state body, authorized by the Government of the Republic of Kazakhstan for disposal of the republican state property, or the national holding company, the offering price of the shares may be determined by an appraiser in accordance with the legislation of the Republic of Kazakhstan.

      In the case of determining the offering price of the shares by the appraiser, the costs associated with the assessment, shall be covered by the bank.

      4. Within three working days from the date of the decision making by the Government of the Republic of Kazakhstan on acquisition and on increase of the authorized shares of the bank, the authorized body shall:

      1) make changes to the share issue prospectus in the order and under the conditions provided for by the legislation of the Republic of Kazakhstan;

      2) carry out the state registration of amendments and changes, made to the prospectus;

      3) send the certificate of state registration on the issue of shares to the bank and notify the central securities depository about the increase in the number of the authorized shares.

      The bank shall be obliged to return the original of previously issued certificate of state registration of the shares issue within five calendar days after the date of receipt of the certificate of state registration of the shares issue.

      5. After acquiring the shares of the bank, the state body, authorized by the Government of the Republic of Kazakhstan for disposal of the republican state property, or the national management holding company, shall appoint the members of the executive body and (or) the governing body of the bank in the amount of not more than thirty percent of their total number to represent the interests of the state or the national management holding company.

      The state body, authorized by the Government of the Republic of Kazakhstan for disposal of the republican state property or the national management holding company shall convene an extraordinary general meeting of the shareholders of the bank to consider the change of officials or employees of the bank, the bank's asset optimization, increase of the authorized capital and other issues, according to the procedure, provided by the legislation of the Republic of Kazakhstan.

      5-1. Since the acquisition of the bank’s authorized shares by the Government of the Republic of Kazakhstan or the national management holding, the decisions on the subsidiaries of the bank shall be taken by the Board of Directors of the bank.

      6. In case of improving the financial condition of the bank, which led to fulfillment of the prudential standards by it and (or) other mandatory standards and limits, the Government of the Republic of Kazakhstan shall take the measures on selling the bank’s shares, acquired in accordance with this Article through direct targeted sales or through the trading at a stock exchange.

      The selling of the bank's shares, acquired in accordance with this Article, shall be carried out in the order and within the timeframes, established by the Government of the Republic of Kazakhstan.

      7. The increase in the number of the authorized shares, the purchase of the bank’s authorized shares by the Government of the Republic of Kazakhstan or the national management holding company, and the appointment of the members of the executive body and (or) the governing body of the bank pursuant to this Article shall be implemented without the decision-making of the bodies of the bank.

      The shareholders shall not have the right of pre-emption for the authorized shares of the bank, allotted (sold) in accordance with paragraph 1 of this Article.

      Footnote. Chapter 2 is supplemented by Article 17-2, in accordance with the Law of the Republic of Kazakhstan dated 23.10.2008 No 72 -IV (the order of enforcement see Article 2); as amended by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 № 166-VI (the order of enforcement see Art. 2); dated 02.07.2018 № 168-VI (shall be enforced from 01.01.2019);

Article 18. Particularities of establishing subsidiary banks by the banks - non-residents of the Republic of Kazakhstan

      1. A parent bank in relation to the subsidiary bank may be the banks - non-residents of the Republic of Kazakhstan, with a relevant rating of one of the rating agencies. The list of the rating agencies and the minimum required rating shall be established by the authorized body.

      2. (The paragraph is excluded by the Law of the Republic of Kazakhstan dated 10 July 2003 No 483 (shall be enforced from 1 January 2004).

      Footnote. Article 18 is amended by the Laws of the Republic of Kazakhstan,dated 11 July, 1997 No 154; dated 16 July, 1999 No 436; dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication.)

Article 19. Application on issuance of a permit to open a bank

      1. An individual or legal entity may apply to the authorized body with the application on issuance of a permit to open a bank.

      2. The application shall be submitted in the Kazakh and Russian languages, and shall contain the address of the applicant.

      3. The application for issuance of a permit to open a bank shall be attached with the following documents:

      a) four copies of constituent documents (the Articles of association, the constituent agreement), a copy of the minutes of the constitutive meeting, notarized and executed in the order, established by the legislation of the Republic of Kazakhstan;

      b) information about the founders-individuals and legal entities (according to the list determined by the authorized body), including financial reporting of the founder – legal entity for the last two completed financial years (including consolidated if any), certified by the audit organization;

      b-1) documents and information provided by Article 17-1 of this Law, if the applicant needs to obtain the status of a major participant of the bank or a bank holding company;

      b-2) the information about the conditions and the procedures for acquiring the shares of the bank, including a description of the sources and the funds, used for acquiring the shares, with the copies of the supporting documents attached;

      c)-d) (Is excluded – dated 23December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107);

      e) (Is excluded – by the Law of the Republic of Kazakhstan dated 23.10.2008 No 72 -IV (the order of enforcement see Article 2);

      f) the detailed organizational structure of the newly established bank;

      g) (Is excluded – by the Law of the Republic of Kazakhstan dated 23.10.2008 No 72 -IV (the order of enforcement see Article 2);

      h) (Is excluded – by the Law of the Republic of Kazakhstan dated 23.10.2008 No 72 -IV (the order of enforcement see Article 2);

      i) a business plan of the newly established bank, approved by the person, authorized by the founders to sign the documents, presenting the strategy, directions and scope of activities of the bank, the financial perspective (budget, balance, profit and loss for the first three financial (operational) years, the marketing plan (formation of the bank’s customers), a plan of attracting of human resources, and organization of risk management;

      k) (Is excluded - dated 23December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107);

      l) the notarized or otherwise legally certified document, confirming the applicant’s powers to submit the application on behalf of the founders.

      4. A report of the audit organization shall be valid provided that the following documents are submitted, confirming that it:

      independent from the shareholders of the audited banks and their officials;

      is authorized to perform audits in accordance with the license and qualification requirements for mandatory audit of financial institutions of the authorized state body, exercising the state regulation in the auditing area and supervising the auditing and the professional auditing organizations, or in accordance with the license to perform audits of the authorized state body, the resident of which it is.

      5. The authorized body may request additional information or documents necessary for decision making on issuance of a permission to open a bank.

      6. Application for issuance of a permission to open a bank may be revoked by the applicant at any time of its consideration by the authorized body.

      Footnote. Article 19 is amended by the Laws of the Republic of Kazakhstan dated 11 July, 1997 No 154; dated 2 March, 2001 No 162 (see Art. 2); dated 10 July 2003 No 483 (shall be enforced from 1 January, 2004); dated 8 July, 2005 No 72 (the order of enforcement see Article 2); dated 23 December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107); dated 5 May, 2006 No 139 (the order of enforcement see Article 2 of the Law No 139 ); dated 23.10.2008 No 72 -IV (the order of enforcement see Article 2); dated 20.11.2008 No 88 -IV (the order of enforcement see Article 2); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009); dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

      Article 20. Requirements for the executive employees of the bank and a bank holding company

      1. The head and members of the management body, the head and members of the executive body, other heads of the bank, carrying out coordination and (or) control over the activities of structural subdivisions of the bank and having the right to sign documents on the basis of which banking operations are conducted shall be recognized as the executive employees of the bank.

      The first heads of separate subdivisions of the bank and their chief accountants, as well as persons having the right to sign documents on the basis of which banking operations are conducted, and carrying out control over the activities of only one structural subdivision, except for the chief accountant of the bank shall not be the executive employees of the bank.

      2. The bank shall be obliged, within one hundred and twenty calendar days after the end of financial year, to submit to the authorized body the report, including information on incomes, paid by the bank to all the bank's executives during the financial year, in the form, established by the regulatory legal act of the authorized body.

      Requirements to the internal policy of the bank on remuneration of labor, accrual of monetary remuneration, as well as other types of material incentives for the bank executives shall be determined by the regulatory legal act of the authorized body.

      3. A person may not be appointed (elected) as the bank's executive employee:

      1) not having higher education;

      2) not having the work experience established by this Article in international financial organizations, the list of which is established by the authorized body, and (or) work experience in the sphere of provision and (or) regulation of financial services and (or) audit services of financial organizations;

      4) previously was the head, member of the management body, head, member of the executive body, chief accountant of a financial organization, a major participant – an individual, the head of a major participant (bank holding company) – legal entity of financial organization for a period of not more than one year prior to adoption by the authorized body of the decision on classifying the bank to insolvent banks, on conservation of the insurance (reinsurance) organization or forced redemption of its shares, deprivation of the license of financial organization that resulted in its liquidation and (or) the termination of activities on the financial market, or the entry into legal force of the court decision on forced liquidation of the financial organization or declaring it bankrupt in accordance with the legislation of the Republic of Kazakhstan.

      This requirement shall apply within five years after the adoption by the authorized body of the decision on classifying the bank as insolvent banks, on conservation of the insurance (reinsurance) organization or forced redemption of its shares, deprivation of the license of the financial organization that resulted in its liquidation and (or) the termination of activities on the financial market, or entry into legal force of the court decision on forced liquidation of the financial organization or declaring it bankrupt in accordance with legislation of the Republic of Kazakhstan.

      The requirement of this subparagraph shall not apply to the executives employees of banks, fifty and more percent of voting shares of which directly or indirectly belong to national managing holding in respect of which restructuring was carried out in accordance with this Law, except for the executive employees, appointed (elected) before the purchase by the Government of the Republic of Kazakhstan or national managing holding of the shares of such banks in accordance with Article 17-2 of this Law;

      5) whose consent to the appointment (election) to the position of a senior employee in this and (or) another financial organization has been revoked. The specified requirement shall be applied within the last twelve consecutive months after the decision by the authorized body on revocation of the consent for appointment (election) to the position of an executive employee.

      A person who has committed a corruption offence or who has been brought to disciplinary responsibility for committing a corruption offence within three years prior to the date of appointment (election) may not be appointed (elected) as an executive employee of the bank;

      6) previously was the head, a member of the management body, the head, a member of the executive body, chief accountant of a financial organization, a major participant (a major shareholder) – an individual, the head, a member of the management body, the head, a member of the executive body, a chief accountant of the major participant (major shareholder) – a legal entity-issuer, defaulted in the payment of coupon interest on the issued securities for four or more consecutive periods or the amount of debt of which on the payment of coupon interest on the issued securities, on which the default was made, is fourfold, and (or) a size of the coupon interest or the amount of default on principal repayment on the issued securities is the amount at ten thousand times exceeding the monthly calculation index, established by the Law on the republican budget on the date of payment. The specified requirement shall be applied within five years from the moment of occurrence of the circumstances provided by this subparagraph.

      4. A major participant of the bank may not be appointed (elected) to the position of the head of the executive body of the bank.

      The number of members of the executive body must be at least three persons.

      5. In order to meet the requirement provided by subparagraph 2) of paragraph 3 of this Article, it is necessary to have labour experience for the candidates to the positions of:

      1) the head or a member of management body, being a member of the executive body of the parent bank, the head of an executive body, chief accountant of the bank for at least three years;

      2) the head of the management body, members of the executive body of the bank for at least two years;

      3) other heads of the bank, carrying out coordination and (or) control over the activities of structural subdivisions of the bank and having the right to sign documents on the basis of which banking operations are conducted, for at least one year.

      For the candidates to the positions of members of the management body and members of the executive body supervising exclusively bank security issues, administrative-economic issues, the availability of labour experience provided by subparagraph 2) of paragraph 3 of this Article, is not required.

      The labour experience determined by this paragraph shall not include the work in the subdivisions of a financial organization related to the implementation of economic activities.

      6. The executive employee shall have the right to perform the relevant functions without the consent of the authorized body no more than sixty calendar days from the date of his/her appointment (election, assignment of the relevant functions) or from the date of acquisition of the bank shares upon receipt of the status of a bank holding company by the legal entity.

      Upon expiration of the term, specified in this paragraph, and in cases of non-submission of a full package of documents for approval to the authorized body or refusal by the authorized body to agree, the bank shall be obliged to terminate the employment contract with this person or in the absence of an employment contract to take measures on termination the powers of this executive employee.

      It is prohibited to perform the duties (replacement of temporarily absent) of the bank executive employee without the approval of the authorized body over the period established by this paragraph.

      The authorized body shall consider the documents submitted for the issuance of consent for appointment (election) of the bank executive employees within thirty working days from the date of submission of the full package of documents in accordance with the requirements of the regulatory legal act of the authorized body.

      7. The procedure for issuing the consent of the authorized body for appointment (election) of the executive employee of the bank, a bank holding company, including the criteria for absence of impeccable business reputation, the documents necessary to obtain consent, shall be determined by the regulatory legal acts of the authorized body.

      A fee shall be charged for the issuance of consent for appointment (election) of the executive employee of the bank, bank holding company, which amount and procedure of payment shall be determined by the tax legislation of the Republic of Kazakhstan.

      8. The authorized body shall refuse to issue consent for appointment (election) of the bank executive employees on the following grounds:

      1) non-compliance of the executive employees with the requirements established by this Article, subparagraph 20) of Article 1, paragraph 4 of Article 54, paragraph 2 of Article 59 of the Law of the Republic of Kazakhstan "On Joint Stock Companies" and Article 9 of the Law of the Republic of Kazakhstan "On Accounting and Financial Reporting";

      2) negative test result.

      Negative test results shall be:

      the candidate's test result is less than seventy percent of correct answers;

      violation by the candidate or the translator (if this translator was presented by the candidate) of the order of testing established by the authorized body;

      failure to appear for testing at the appointed time before the deadline for approval of the candidate by the authorized body;

      3) non-elimination by the bank of the comments of the authorized body or submission by the bank, bank holding company of the documents finalized taking into account the comments of the authorized body upon expiration of the period of consideration of documents by the authorized body, established by paragraph 6 of this Article;

      4) submission of the documents after the expiry of the term, established by paragraph 6 of this Article, during which the executive employee holds his/her position without the approval of the authorized body;

      5) is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).
      6) is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      7) availability at the authorized body of information (facts) that the candidate was a party of the transaction, recognized as committed for the purpose of manipulation in the securities market, and (or) caused damage to a third party (third parties).

      This requirement shall be applied for one year from the date of occurrence of the earliest one of the listed events:

      recognition by the authorized body of the transaction concluded in the organized and (or) unorganized securities markets as committed for the purpose of manipulation;

      receipt by the authorized body of the facts confirming the damage caused to the third party (third parties) as a result of committing this transaction;

      8) availability at the authorized body of information that the candidate was an employee of a financial organization, in respect of which the authorized body has applied supervisory response measures and (or) imposed an administrative penalty for an administrative offense, provided by Article 259 of the Code of the Republic of Kazakhstan on administrative offenses, for conclusion of a transaction recognized as committed for the purpose of manipulation in the securities market, and (or) an employee of a financial organization, whose actions caused damage to the financial organization and (or) a third party (third parties) involved in the transaction.

      This requirement shall be applied for one year from the date of occurrence of the earliest one of the listed events:

      recognition by the authorized body of the transaction concluded in the organized and (or) unorganized securities markets as committed for the purpose of manipulation;

      receipt by the authorized body of the facts confirming the damage caused to the third party (third parties) as a result of committing this transaction;

      For the purposes of this subparagraph, an employee of a financial organization is understood to be an executive employee or a person who performed his/her duties, and (or) a trader of the stock exchange, whose competence included making decisions on the issues that entailed the above specified violations.

      9. In case of termination of the employment contract with the bank executive employee, or termination of his/her powers, or transfer to another position in this bank in connection with refusal of the authorized body to issue consent to his/her appointment (election) or non-submission of documents to the authorized body for approval within the period provided by paragraph 6 of this Article, this person may be re-appointed (elected) to the position of an executive employee of this bank not earlier than ninety calendar days after receiving a refusal to issue consent to his/her appointment (election) or termination of an employment contract with him/her, or termination of powers, or transfer to another position, but not more than twice within twelve consecutive months.

      The bank shall be obliged to notify an authorized body within ten working days from the date of the decision of the relevant body of the bank about all changes in the composition of executive employees, including their appointment (election), transfer to another position, termination of the employment contract and (or) termination of the powers, on bringing the executive employee to disciplinary liability for committing corruption offences, as well as changes in surname, name, patronymic (if specified in the document, identity document) of the executive employee with attachment of confirming documents copies.

      In case of criminal prosecution of an executive employee, the bank shall notify the authorized body within ten working days from the date when this information became known to the bank.

      10. In case of two consecutive refusals of the authorized body to issue consent for appointment (election) to the position of the bank executive employee, this person may be appointed (elected) as the bank executive employee after twelve consecutive months from the date of the decision of the authorized body on the second refusal to issue consent for his/her appointment (election) in this bank.

      11. The authorized body shall revoke the issued consent for appointment (election) to the position of the bank executive employee on the following grounds:

      1) identification of false information on the basis of which the consent was issued;

      2) is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      3) application by the authorized body of the supervisory response measure specified in subparagraph 12) of paragraph 1 of Article 46 of this Law;

      4) is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      5) presence of unexpunged or outstanding criminal conviction.

      The revocation by the authorized body of the consent to appointment (election) of the bank executive employee is the basis for revocation of the previously issued (issued) consent (s) to this executive employee in other financial organizations.

      In case of revocation by the authorized body of the consent to appointment (election) to the position of the bank executive employee, the bank shall be obliged to terminate the employment contract with this person or, in the absence of an employment contract, to take measures to terminate the powers of this executive employee.

      12. is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      13. The head of the executive body of the organization, carrying out certain types of banking operations shall comply with the requirements established by this Article for the heads of the executive body of the bank. In case of compliance with the specified requirements, the head shall be appointed (elected) to the position without the consent of the authorized body. An organization carrying out certain types of banking operations shall, at the request of the authorized body, shall suspend the head of the executive body in case of non-compliance with the requirements of this Article.

      In case of application by the authorized body of supervisory response measures specified in subparagraph 12) of paragraph 1 of Article 46 of this Law to the head of the executive body of the organization carrying out certain types of banking operations, this organization shall be obliged to terminate the employment contract with this person or to take action on termination of powers of the head of the executive body."

      14. The head and members of the management bodies, executive body, chief accountant, other heads of the bank holding company, carrying out coordination and (or) control over the activities of the subsidiary (subsidiaries) of the organization (s) and (or) the organization (s) in which the bank holding company has a significant participation in the capital shall be recognized as executive employees of the bank holding company.

      15. The requirements of this Article shall apply to the executive employees of the bank holding company, except for the executives of bank holding companies-non-residents of the Republic of Kazakhstan, if one of the following conditions is met:

      the bank holding company has an individual credit rating not lower than the A rating of one of the rating agencies, the list of which shall be established by the authorized body, as well as a written confirmation from the financial supervision authority of the country of origin of the bank holding company that it is subject to consolidated supervision;

      availability of an agreement between the authorized body and the relevant supervisory body of a foreign state on the exchange of information, as well as the minimum required rating of one of the rating agencies. The minimum rating and the list of rating agencies shall be established by the regulatory legal act of the authorized body.

      Footnote. Article 20 is in the wording of the Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016); as amended by the laws of the Republic of Kazakhstan dated 25.12.2017 No. 122-VI (shall be enforced from 01.01.2018); dated 02.07.2018 No. 168-VI (the order of enforcement see Article 2).

Article 21. Additional requirements to establishment of a bank with participation of non-residents of the Republic of Kazakhstan

      An individual or legal entity - non-resident of the Republic of Kazakhstan, which is a founder of the bank, in addition to the documents, specified in Article 19 of this Law, shall attach the application for a permit to open a bank with a written notice of the authorized body (for non-resident banks of the Republic of Kazakhstan - the bank supervisor body) of the corresponding state that the entity is permitted to own the shares of a resident bank of the Republic of Kazakhstan, or the application of the authorized body (for non-resident banks of the Republic of Kazakhstan - the bank supervisor body) of the corresponding state that such permission is not required in accordance with the legislation of the country of the specified founder.

      Footnote. Article 21 is in the wording by the Law of the Republic of Kazakhstan dated 23 December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107).

Article 22. Additional requirements for establishment and operation of banks with foreign capital

      Footnote. Article 22 is excluded - dated 23 December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107).

Article 23. The order of consideration of an application for a permit to open a bank

      1. An application for permission to open a bank shall be considered by the authorized body within three months from the last date of submission of additional information or document by the applicant, requested by the authorized body, but not more than six months from the date of the application receipt.

      2. The authorized body shall notify the applicant of its decision in a written form. Notification shall be sent to the address, specified in the application for a permit to open a bank.

      3. The authorized body shall keep the records of the issued permits to open a bank.

      Footnote. Article 23 is amended by the Law of the Republic of Kazakhstan dated 11 July, 1997 No 154; dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004).

Article 24. Refusal to issue permission to open a bank

      1. Refusal to issue permission to open a bank shall be made under any of the following grounds:

      a) submission of an incomplete set of documents or the constituent documents’ non-compliance with the current legislation;

      b) non-compliance of the bank's name with the requirements of paragraphs 2-4 of Article 15 of this Law;

      c) non-compliance of the amount, composition and structure of the equity capital of the bank with the requirements of Article 16 of this Law;

      d) unstable financial condition of the founders of the bank;

      e-1) in the cases when the founder - individual or the first head of the executive body or the governing body of the founder - legal entity:

      has a conviction which is outstanding or unexpunged in accordance with the Law;

      he/she held the position of the first head of the board of directors, the first head of the management board or his/her deputy, chief accountant of a financial organization for a period not exceeding one year before the authorized body made a decision to classify the bank as insolvent banks, on conservation of an insurance (reinsurance) organization, forced purchase of its shares, on deprivation of the license of a financial organization, as well as on forced liquidation of a financial organization or recognition it bankrupt in accordance with the legislation of the Republic of Kazakhstan. The specified requirement shall be applied within five years after the adoption by the authorized body of the decision to classify the bank as insolvent banks, on conservation of an insurance (reinsurance) organization, forced purchase of its shares, on deprivation of the license of a financial organization, as well as on forced liquidation of a financial organization or recognition it bankrupt in accordance with the legislation of the Republic of Kazakhstan;

      e-2) failure to comply with the requirements of Article 17-1 of this Law;

      f) failure to comply with the restrictions imposed by Article 17 of this Law;

      f -1) the refusal to issue the consent by the authorized body for the purchase of a status of a major participant of the bank;

      g) (Is excluded – by the Law of the Republic of Kazakhstan dated 23.10.2008 No 72 -IV (shall be enforced from 01.01.2009);

      h) (Is excluded - dated 23 December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107);

      j) the business plan of the newly established bank and other documents, submitted by the applicant, do not confirm that:

      upon expiry of the first three financial (operational) years the bank’s activity will be profitable;

      the bank intends to comply with the requirements to limit risk and to establish an appropriate management structure;

      the bank has the organizational structure, meeting the plans of its activities;

      the bank has accounting and control structure, meeting the plans of its activities.

      2. The authorized body shall notify the applicant of the grounds for refusal in a written form.

      3. Issuance of the permission to open a bank shall not be permitted in case of non-compliance with the provisions of Articles 18-21 of this Law.

      Footnote. Article 24as amended by the Laws of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 23.12.2005 No 107 (the order of enforcement see Article 2 of the Law No 107); dated 12.01.2007 No 222 (shall be enforced upon expiry of six months from the date of its official publication); dated 23.10.2008 No 72 -IV (the order of enforcement see Article 2); dated 05.07.2012 No 30 - V (shall be enforced upon expiry of ten calendar days after its first official publication.); dated 02.07.2018 № 168-VI (shall be enforced from 01.01.2019).

      Article 25. State registration of the bank

      The state registration of the bank shall be carried out by the Corporation on the basis of the permission of the authorized body to open the bank and data confirming the approval of its constituent documents with the authorized body.

      The founders shall be obliged to apply to the Corporation for state registration of the bank within one month from the date of obtaining the permission of the authorized body to open the bank.

      Footnote. Article 25 is in the wording of the Law of the Republic of Kazakhstan dated 02.04.2019 No. 241-VI (shall be enforced from 01.07.2019).

      Article 26. Licensing of banking and other operations

      Footnote. The title of Article 26 as amended by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

      1. Licenses for conducting banking and other operations established by this Law shall be issued by the authorized body in the procedure, established by the authorized body, in accordance with the requirements of this Law.

      Licenses for conducting banking and other operations provided by Article 52-5 of this Law shall be issued by the authorized body only to Islamic banks.

      When issuing a license, the authorized body shall have the right to specify the names of authorized operations by banks and (or) organizations carrying out certain types of banking operations in accordance with the legislation of the Republic of Kazakhstan.

      A fee shall be charged for the issuance of a license, which amount and procedure for payment shall be determined by the legislation of the Republic of Kazakhstan.

      2. To obtain a license for conducting banking and other operations within one year from the date of state registration, the applicant must perform all organizational and technical measures, including to prepare premises, equipment and software for automation of accounting and the general account book, complying with the requirements of regulatory legal acts of the authorized body, to hire appropriate personnel, and then to submit to the authorized body the following documents:

      1) an application;

      2) a notarized copy of the applicant's charter;

      3) a document confirming the payment of the license fee to the budget for the right to engage in certain types of activities;

      4) documents of persons proposed for the positions of the bank executive employees in accordance with the requirements of Article 20 of this Law;

      5) regulation on the internal audit service approved by the board of directors of the bank;

      6) regulation on the credit committee approved by the board of directors of the bank;

      7) staffing time-table (indicating surnames, names and patronymics of the employees if any);

      8) is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication);

      9) copies of the documents confirming payment of the authorized capital, the minimum amount of which is established by the regulatory legal act of the authorized body.

      3. To obtain a license for conducting additional banking and other operations, the current bank must:

      1) ensure compliance with prudential standards for three consecutive months prior to applying for a license to conduct additional banking operations;

      2) ensure availability of risk management and internal control systems that meet the requirements of the authorized body;

      3) submit the rules on general conditions for conducting additional types of banking operations.

      4. Simultaneously with the application for a license to conduct banking and other operations, the licensee shall be obliged to submit the documents, confirming compliance with the requirements of paragraph 2 of this Article in the manner established by the regulatory legal acts of the authorized body.

      5. An application for a license to conduct banking and other operations shall be considered by the authorized body within thirty working days from the date of submission of documents that meet the requirements of the legislation of the Republic of Kazakhstan.

      6. The license for conducting banking and other operations in national and (or) foreign currency shall be issued for an unlimited period.

      7. The license for conducting banking and other operations shall not be transferable to third parties.

      8. All types of banking and other operations can be carried out only if there is a direct indication in the license for the right to conduct them.

      9. The decision on granting a license for conducting banking and other operations shall be posted on the Internet resource of the authorized body in the Kazakh and Russian languages.

      10. A duly certified copy of the license for conducting banking and other operations shall be subject to placement in a place accessible for viewing to the bank’s customers.

      Footnote. Article 26 is in the wording of Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016); as amended by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 166-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (entry into force see Article 2).

      Article 27. Grounds for refusal to issue a license for conducting banking or other operations

      Footnote. The title of Article 27 as amended by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).\

      Refusal to issue a license for conducting banking or other operations shall be made in the case of:

      1) non-compliance with any of the requirements established by paragraphs 2 and 3 of Article 26 of this Law;

      1-1) non-compliance of a banking conglomerate, which includes the bank, with the established prudential standards and other mandatory standards and limits within the period of six months prior to the application submission;

      2) if within one year from the date of its state registration the bank did not apply for a license;

      3) non-compliance of the submitted documents with the requirements of the legislation of the Republic of Kazakhstan;

      4) Is excluded by the Law of the Republic of Kazakhstan dated 15.07.2011 No 461 -IV (shall be enforced from 30.01.2012).

      5) non-coordination of the executive employee from those, elected by the bodies of the company ( for a newly established bank).

      Footnote. Article 27 is in the wording by the Law of the Republic of Kazakhstan dated 23.10.2008 No 72 -IV (the order of enforcement see Article 2); as amended by the Laws of the Republic of Kazakhstan dated 15.07.2011 No 461 -IV (shall be enforced from 30.01.2012); dated 28.12.2011 No 524-IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 24.11.2015 No. 422-M (shall be enforced from 01.01.2016); dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from its first official publication).

Article 28. Changes and amendments to the constituent documents of a bank

      1. Is excluded by the Law of the Republic of Kazakhstan dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication.)

      2. Is excluded by the Law of the Republic of Kazakhstan dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication.)

      2-1. After the state registration of changes and (or) additions made to the constituent documents requiring re-registration in the Corporation, the bank shall, within fourteen calendar days from the date of re-registration, submit to the authorized body a notarized copy of the changes and (or) additions to the constituent documents with the mark and seal of the Corporation.

      In case of making changes and (or) additions to the constituent documents that do not require re-registration, the bank shall, within fourteen calendar days from the date of the Corporation's mark on acceptance of the bank's letter, submit to the authorized body a copy of this letter of the bank, as well as a notarized copy of the changes and (or) additions to the constituent documents.

      3. Conditions, grounds and the order of voluntary reorganization of the bank into the organization, performing certain types of banking transactions, shall be determined by the regulatory legal acts of the authorized body.

      Footnote. Article 28 as amended by the Laws of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 16.07.1999 No 436; dated 02.03.2001 No 162 (see Art. 2); dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.04.2019 № 241-VI (shall be enforced from 01.07.2019) .

Article 29. Establishment, closure of branches and representative offices of banks

      1. Resident bank of the Republic of Kazakhstan on the basis of a decision of the board of directors of the bank without the consent of the authorized body shall have the right to open its subdivisions - branches and representative offices on the territory of the Republic of Kazakhstan and out of it.

      2. The bank within thirty working days from the date of registration of its branch and representative office in the Corporation shall notify the authorized body in writing about their opening with attachment:

      1) is excluded by the Law of the Republic of Kazakhstan dated 16.05.2014 No. 203-V (shall be enforced upon expiry of six months after its first official publication);

      2) a notarized copy of the regulation on the branch or representative office with the mark and seal of the Corporation;

      3) Is excluded by the Law of the Republic of Kazakhstan dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication);

      4) a notarized copy of power of attorney, issued to the first head of a branch or representative office.

      3. Consent of the local representative and executive bodies shall not be required for establishment, closure of a branch or representative office in the territory of the Republic of Kazakhstan.

      4. A branch of a bank shall be a separate subdivision of the bank, which is not a legal entity, located outside the bank, conducting the banking activities on behalf of the bank and acting within the powers, vested to it by the bank. A bank’s branch shall have a single balance with the bank, as well as the name which is identical to the name of the bank.

      A branch of the bank shall have the right to have premises located in several places (addresses) within the same area (a city of republican status, the capital).

      5. A representative office shall be a separate subdivision of the bank, which is not a legal entity, located outside the bank, acting on behalf of and for the bank and not conducting banking activities.

      6. A mandatory condition for opening branches by the bank, increasing the number of additional premises of existing branches, including those located at several addresses, shall be non-application by the authorized body to the bank within three months preceding the date of registration of the branch in the Corporation or the date of the Corporation's mark on acceptance of the bank's letter on amendments to the regulation on the branch in terms of increasing the number of additional premises of the existing branch of the bank, including those located at several addresses, of sanction provided by subparagraph 1) of paragraph 1 of Article 47-2 of this Law, as well as of administrative penalties for administrative offenses provided by parts six, eight of Article 213, part one of Article 227 of the Code of the Republic of Kazakhstan on administrative offenses.

      7. A resident bank of the Republic of Kazakhstan shall have the right to open representative offices if it had break-even operation for the last completed financial year.

      8. When making changes and (or) additions to the regulations on the branch, representative office requiring accounting re-registration in the Corporation, the bank-resident of the Republic of Kazakhstan shall be obliged within thirty working days from the date of accounting re-registration in the Corporation to submit to the authorized body a notarized copy of changes and (or) additions to the regulations on the branch, representative office.

      When making changes and (or) additions to the regulations on the branch, representative office, not requiring accounting re-registration in the Corporation, the bank-resident of the Republic of Kazakhstan shall, within thirty working days from the date of mark of the Corporation on acceptance of the bank’s letter, submit to the authorized body a copy of the specified bank’s letter, notarized copies of changes and (or) additions to the regulations on the branch or representative office.

      8-1. A resident bank of the Republic of Kazakhstan shall have the right to open a branch outside the Republic of Kazakhstan only if there is an agreement between the authorized body and the relevant supervisory body of a foreign state for the information exchange.

      9. In case of opening of branches and representative offices outside the Republic of Kazakhstan, within thirty calendar days from the date of registration in the relevant state body, in a written form, the resident bank of the Republic of Kazakhstan shall notify the authorized body of their opening and attach the documents, confirming registration of the relevant body of the state.

      10. A non-resident bank of the Republic of Kazakhstan shall have the right to open its representative office without the consent of the authorized body.

      11. The representative office of a bank-non-resident of the Republic of Kazakhstan within thirty working days from the date of registration in the Corporation shall notify the authorized body in writing about opening with attachment:

      1) is excluded by the Law of the Republic of Kazakhstan dated 16.05.2014 No. 203-V (shall be enforced upon expiry of six months after its first official publication);

      2) a notarized copy of the provision on the representative office with a mark and seal of the judicial body that registered it;

      3) a written confirmation of the banking supervisory body of the relevant state that the non-resident bank of the Republic of Kazakhstan has a valid license for banking activities;

      4) a written notice from the banking supervisory body of the relevant state that it had no objections to the opening of a representative office of non-resident bank of the Republic of Kazakhstan in the Republic of Kazakhstan, or the statements of the bank supervisory body or the State Legal Service authority of the state that such permission is not required in compliance with the legislation of the state of the non-resident bank of the Republic of Kazakhstan;

      5) a notarized power of attorney for the head of the representative office of the bank.

      Note of the RCLI!
      Paragraph 12 is provided in the wording of the Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V (shall be enforced from 16.12.2020).

      12. The opening of branches of banks-non-residents in the Republic of Kazakhstan shall be prohibited, except for the cases, provided by the laws of the Republic of Kazakhstan.

      13. A representative office of a bank-non-resident of the Republic of Kazakhstan shall, within thirty working days from the date of accounting registration (re-registration) in the Corporation, notify the authorized body on changes and (or) additions to the regulation on representative office with attachment of notarized copies of these documents.

      In case of introducing changes and (or) additions to the regulation on the representative office, not requiring re-registration, the representative office of the bank – non-resident of the Republic of Kazakhstan shall, within thirty working days of the date of mark of the Corporation on acceptance of the letter of the representative office of the bank – non-resident of the Republic of Kazakhstan submit to the authorized a copy of the specified letter of the representative office of the bank – non-resident of the Republic of Kazakhstan, the notarized copies of changes and (or) additions to the regulation on the representative office.

      14. The bank within thirty working days from the date of accounting re-registration of its branch and (or) representative office in the Corporation (appropriate registering body of the state at termination of activities of a branch or representative office outside the Republic of Kazakhstan) shall notify the authorized body about termination of their activity with application a notarized copy of the document of the Corporation (appropriate registering body of the state – upon termination of the activity of a branch or representative office outside the Republic of Kazakhstan), confirming the deregistration of the branch and (or) representative office of the bank.

      15. The authorized body requires the closure of the branch or additional premises of the branch or representative office of a bank-resident and representative office of the bank-non-resident of the Republic of Kazakhstan, in case of non-compliance with the requirements of paragraphs 6, 7, 8-1, 11 and 13 of this Article.

      The authorized body shall apply supervisory response measures to the bank in case of non-compliance with the requirements of paragraphs 2, 8, 9 and 14 of this Article.

      16. The requirements of paragraphs 6 and 7 of this Article shall not apply to the bank in connection with opening of branches and (or) representative offices by it and (or) an increase in the number of additional premises of existing branches, including those located at several addresses, as a result of conducting an operation provided by Articles 61-4 and 61-11 of this Law, as well as at reorganization of a bank in the form of accession of another bank to it.

      Footnote. Article 29 is in the wording by the Law of the Republic of Kazakhstan dated 23.12.2005 No 107 (the order of enforcement See Art. 2 of the Law No 107); as amended by the Law of the Republic of Kazakhstan dated 19.02.2007 No 230 (the order of enforcement See Art. 2); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 24.12.2012 No 60 -V (shall be enforced upon expiry of ten calendar days after its first official publication.); dated 16.05.2014 No. 203-V (shall be enforced upon expiry of six months after its first official publication); dated 05.07.2014 No. 236-V (shall be enforced from 01.01.2015); dated 27.04.2015 No. 311-V (shall be enforced from 01.09.2014); dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016); dated 27.02.2017 No. 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (entry into force see Article 2); dated 02.04.2019 No. 241-VI (shall be enforced from 01.07.2019).

Chapter 3 (The title of Chapter 3 is excluded by the Law of the Republic of Kazakhstan dated 8 July, 2005 No 72 (the order of enforcement see Article 2).

Article 30. Banking activity

      1. The banking activity shall be the performance of banking and other operations by the banks, specified in this Article.

      2. Banking operations shall include:

      1) deposit taking, opening and maintaining the bank accounts of legal entities;

      2) deposit taking, opening and maintaining the bank accounts of individuals;

      3) opening and maintenance of correspondent accounts of banks and organizations, engaged in certain types of banking transactions;

      4) opening and maintenance by the banks of the precious metal accounts of individual and legal entities, reflecting the physical quantity of refined precious metals and precious metal coins, owned by the entity;

      5) cash transactions: taking and issuing by the banks and the National Post of cash, including the exchange, counting, sorting, packing and storage;

      6) transactions: implementation of the instructions of individual and legal entities on payments and money transfers. A license for the transfer operations shall be issued to the banks and legal entities, referred to in paragraph 6-1 of this Article;

      7) accounting operations: discounting bills (discount) and other debt obligations of individual and legal entities;

      8) bank loan operations: provision by a bank, a mortgage organization, an organization that is not a bank, carrying out brokerage and (or) dealer activities in the securities market, or subsidiaries of the national management holding in the field of agricultural complex of credits in cash on the terms of payment, urgency and repayment;

      9) organization of exchange operations with foreign currency, including organization of exchange operations with cash foreign currency;

      10) (Is excluded – dated 12 January, 2007 No 222)

      11) (Is excluded - dated 12 January, 2007 No 222)

      12) collection of banknotes, coins and valuables;

      13) taking the documents for collection (except for the bills);

      14) opening (issuance) and confirmation of the letter of credit and fulfillment of obligations thereunder;

      15) issuance of bank guarantees by the banks, providing execution in the monetary form;

      16) issuance of bank guarantees and other obligations by the bank for the third parties, providing execution in the monetary form.

      3. Banking operations shall not include:

      1) provision of micro-credits by the microfinance organizations in accordance with the legislation of the Republic of Kazakhstan on microfinance institutions;

      2) acceptance of cash from the consumers as a payment for services, other than financial one, implemented by an agent, acting on behalf of and under the instruction of the principal (the service provider), based on the agency contract, including through the electronic terminals. The documents, confirming the right of the agent to make payments in favor of the principal (the service provider) shall be submitted to the payer for information at his request.

      4. Banking operations, listed in paragraph 2 of this Article may be performed ??electronically in the order, established by the authorized body.

      5. A license for banking and other transactions, specified in this Article, shall be issued by the authorized bodies to the banks.

      Banking operations provided by sub-paragraphs 1), 3), 5), 9) and 12) of paragraph 2 of this Article shall be carried out by the National postal operator without a license of the authorized body.

      6. One or more types of banking transactions, provided for in paragraph 2 of this Article, may be carried out by the organization, engaged in certain types of banking transactions, if the license of the authorized body is provided, except for the following cases:

      1) where the Law of the Republic of Kazakhstan, regulating the activities of such organizations, provides the possibility of performing such operations without a license;

      2) when the banking transactions, provided by subparagraph 8) of paragraph 2 of this Article shall be performed by the subsidiaries of banks that acquire doubtful and loss assets of the parent bank, as well as by the organization, involved in improving the quality of loan portfolios of banks, without a license.

      Organizations, engaged in certain types of banking transactions, may receive a license for banking operations, provided for in paragraph 2 of this Article, from the authorized body, except for the cases, provided for in paragraph 7 of this Article.

      A license for a banking operation provided by subparagraph 9) of paragraph 2 of this Article shall be issued to the organizations carrying out certain types of banking operations:

      regarding the organization of exchange operations with cash foreign currency-to the organizations, carrying out its activity only by opening of exchange offices;

      regarding the organization of exchange operations with non-cash foreign currency-to other organizations.

      6-1. The banking operation provided by subparagraph 6) of paragraph 2 of this Article shall be carried out by the stock exchange, the clearing organization, carrying out the functions of the central counterparty, the central depository in the presence of the license of the authorized body for carrying out banking operations provided by subparagraphs 1) and (or) 3) of paragraph 2 of this Article at the specified legal entities, as well as by the operating center of the interbank money transfer system.

      Other legal entities shall carry out banking transactions, provided by subparagraphs 1) and 6) of paragraph 2 of this Article, within the limits, imposed by the Laws of the Republic of Kazakhstan.

      Organizations that are not banks carrying out brokerage and (or) dealer activities in the securities market shall have the right to carry out certain types of banking operations on the basis of the relevant licenses of the authorized body in the manner prescribed by the legislation of the Republic of Kazakhstan on the securities market.

      7. The banking operation provided by subparagraph 6) of paragraph 2 of this Article shall be carried out without a license of the authorized body by the state bodies, credit partnerships, the National postal operator, as well as the Development Bank of Kazakhstan in accordance with the laws of the Republic of Kazakhstan regulating their activities.

      7-1. The organizations, performing transactions on collection of banknotes, coins and valuables under the license of the authorized body, shall be prohibited to perform other types of activities (transactions), except for the activity on counting, sorting, packaging, storage of banknotes, coins and valuables, and their issuance to the banks and their customers under the banks’ instructions.

      8. The licensing procedure of banking operations and other transactions, performed by banks under this Article, shall be established by the regulatory legal act of the authorized body.

      9. The licensing procedure of banking operations, performed by the organizations engaged in certain types of banking transactions, provided by this Article, shall be established by the regulatory legal act of the authorized body.

      10. The regulatory legal acts of the authorized body may establish additional requirements for banks and organizations, engaged in certain types of banking transactions related to obtaining the licenses by them for certain types of activities.

      11. Banks, in addition to the banking transactions, provided for in paragraph 2 of this Article, shall be entitled to perform the following transactions if the license of the authorized body is provided:

      1) acquisition, acceptance for pledge, registration, storage and sale of the refined precious metals (gold, silver, platinum and platinum group metals) in bars, coins, made ??of the precious metals;

      2) acquisition, acceptance for pledge, registration, storage and sale of jewelry, containing precious metals and precious stones;

      3) transactions with the bills: acceptance of bills for collection, rendering of the services for payment of bills by the payer, and payment of domiciled bills, the acceptance of bills through mediation;

      4) leasing activities;

      5) issuance of own securities (with the exception of shares);

      6) factoring transactions: acquisition of rights to demand payment from the buyer of goods (works, services) with non-payment risk assumption;

      7) forfeiting (forfeiting) transactions: payment of the debt obligations of the buyer of the goods (works, services) through the discount without recourse;

      8) trust operations: management of money, the right of claim for mortgage loans and refined precious metals in the interest and under the instruction of the principal;

      9) safe operations: storage of the certificated securities, documents and valuables of the clients, including the leasing of safe boxes and strong rooms.

      12. Banks shall be entitled to perform the following types of professional activities in the securities market:

      1) brokerage activity –with the state securities of the Republic of Kazakhstan and the countries that have a minimum required rating of one of the rating agencies, or without it under the decision of the authorized body, derivative securities and derivative financial instruments, the list and the order of acquisition of the basic assets of which are determined by the authorized body;

      2) dealer activity–with the state securities of the Republic of Kazakhstan and the countries that have a minimum required rating of one of the rating agencies, or without it under the decision of the authorized body, as well as derivative securities and derivative financial instruments, the list and the order of acquisition of the basic assets of which are determined by the authorized body, other securities, in the cases, established by Article 8 of this Law;

      3) custodian activity;

      4) transfer-agent activity.

      A license for performing by the banks of one or more of the above-specified compatible types of professional activity in the securities market shall be issued by the authorized body.

      The list of the rating agencies and the minimum required rating, specified in subparagraphs 1) and 2) of this paragraph shall be determined by the authorized body.

      13. Banking operations, provided in subparagraph 2) of paragraph 2 of this Article shall be performed by banks only that are the members of the obligatory deposit insurance system, as well as the National Post in accordance with the legislative act of the Republic of Kazakhstan, regulating its activity, based on the license, issued by the authorized body.

      Banking operations provided by subparagraph 2) of paragraph 2 of this Article may be carried out by the central depository, organizations that are not banks, carrying out brokerage and (or) dealer activities in the securities market, taking into account the features determined by the legislation of the Republic of Kazakhstan on the securities market.

      Banks (excluding the banks, more than fifty percent of the placed shares of which directly or indirectly belong to the state and (or) the national managing holding), not having a parent bank or bank holding company, having minimal required rating of one of the rating agencies, which list is established by regulatory legal act of the authorized body or a major participant – individual shall not have the right to conduct banking operations, provided by subparagraph 2) of paragraph 2 of this Article.

      14. The provisions of this Article shall apply to the activities of Islamic banks to the extent not contrary to the requirements, set out to the Islamic banks, specified in Article 52-1 of the Law.

      Footnote. Article 30 is in the wording by the Law of the Republic of Kazakhstan dated 23.12.2005 No 107 (the order of enforcement See Art. 2 of the Law No 107); dated 07.07.2006 No 178 (shall be enforced on the day of its official publication); as amended by the Laws of the Republic of Kazakhstan dated 12.01.2007 No 222 (shall be enforced upon expiry of six months from the date of its official publication); dated 23.10.2008 No 72 -IV (the order of enforcement see Art. 2); dated 10.12.2008 No 101 -IV (shall be enforced on 01.01.2009); dated 12.02.2009 No 133 -IV (the order of enforcement see Art. 2); dated 13.02.2009 No 135 -IV (the order of enforcement see Art. 3); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009); dated 01.03.2011 No 414 -IV (shall be enforced from 01.01.2010); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 26.11.2012 No 57 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 16.05.2014 № 203-V (shall be enforced upon expiry of six months after its first official publication); dated 27.04.2015 № 311-V (shall be enforced from 01.01.2015); dated 24.11.2015 № 419-V (shall be enforced from 01.01.2016); dated 24.11.2015 № 422-V (shall be enforced from 01.01.2016); dated 09.04.2016 № 499-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 29.03.2016 No. 479-V (shall be enforced upon expiry of twenty-one calendar days after its first official publication); dated 26.07.2016 No. 12-VI (shall be enforced upon expiry of thirty calendar days after its first official publication); dated 27.02.2017 No. 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 166-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

Article 31. General requirements to the transactions, performed by banks

      1. Banks shall be entitled to carry out banking activities only in the presence of rules, defining the general terms of operations and the internal rules.

      1-1. Is excluded by the Law of the Republic of Kazakhstan dated 29.03.2016 № 479-V (shall be enforced upon expiry of twenty-one calendar days after its first official publication).

      2. The rules on general terms of operations shall be approved by the board of directors of the bank and shall contain the following information and procedures:

      1) the maximum amounts and time limits of the deposits received and the loans allocated;

      2) the maximum interest rates of remunerations on deposits and loans;

      3) the terms of paying the remunerations on deposits and loans;

      4) the requirements to the security, accepted by the bank;

      5) limit values of rates and tariffs for conducting banking operations;

      6) deadlines for decision making on rendering the banking services;

      7) the procedure of considering the customers’ appeals, appearing after rendering the banking services;

      8) the rights and liabilities of the bank and its customer, and their responsibility;

      9) the rights and obligations of an Islamic bank and its client, the conditions of performing the banking transactions of an Islamic bank and the associated risks;

      10) the provision on the order of work with the clients;

      11) other conditions, requirements and restrictions that may be included in the general terms for operations by the board of directors.

      The rules on general terms of operations shall have to comply with the order of rendering the banking services and consideration of the customers’ requests by the banks and organizations, engaged in certain types of banking operations, appearing during the rendering of the banking services, established by the regulatory legal act of the authorized body.

      2-1. The rules on general terms of operations of an Islamic bank shall be approved by the board of directors of the Islamic bank, taking into account the requirement, provided by paragraph 3 of Article 52-2 of this Law.

      3. The internal rules of the bank shall define:

      a) the structure, tasks, functions and powers of the branches of the bank;

      b) the structure, objectives, functions and powers of the internal audit service, credit committee and other regular bodies;

      c) the rights and duties of the heads of the departments;

      g) the powers of the officials and employees of the bank when performing transactions on its behalf and at its expense.

      4. is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      5. The bank shall be liable for wrongful actions (inaction) of the person rendering services to the bank on the basis of the contract (agreement) on attraction the clients, on carrying out checks for compliance with the requirements of the bank, transfer of the clients’ documents to the bank (hereinafter – a person rendering services to the bank) on the conditions of the relevant contract (agreement) of the bank with the specified person.

      A contract (agreement) between the bank and the person rendering services to the bank, subject to presentation to the client for review and shall contain the bank's liability for misconduct of the person rendering the bank services specified in part one of this paragraph, before the client.

      The order of the activities of the person, rendering services to the bank on the basis of a contract (agreement) between the bank and the person rendering services to the bank, shall be established by the rules of rendering services to the bank on attraction the clients, carrying out checks for compliance with the requirements of the bank, transfer of the clients’ documents to bank approved by the authorized body.

      Footnote. Article 31, as amended by the Laws of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 16.07.1999 No 436; dated 16.05.2003 No 416; dated 19.02.2007 No 230 (the order of enforcement See Art. 2); dated 23.10. 72 No 2008 -IV (the order of enforcement see Art. 2); dated 12.02.2009 No 133 -IV (the order of enforcement see Art. 2); dated 10.02.2011 No 406 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication.); dated 16.05.2014 No. 203-V (shall be enforced upon expiry of six months after its first official publication); dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016); dated 29.03.2016 No. 479-V (shall be enforced upon expiry of twenty-one calendar days after its first official publication); dated 09.04.2016 No. 499-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 31-1. Notification on approval of financial products by the bank, an organization carrying out certain types of banking operations

      The bank, an organization, carrying out certain types of banking operations, shall notify the authorized body on approval of financial products by the body of the bank, organization, carrying out certain types of banking operations, authorized for approval of financial products within ten working days from the date of their approval.

      The list of financial products, about the approval of which, the bank, organization, carrying out certain types of banking operations, shall notify the authorized body, the order of notification of the authorized body on approval of financial products of the bank, organization, carrying out certain types of banking operations, as well as the list of documents attached to the notification, shall be determined by the regulatory legal acts of the authorized body.".

      Footnote. Chapter 3 is supplemented by Article 31-1 in accordance with the Law of the Republic of Kazakhstan dated 16.05.2014 No. 203-V(shall be enforced upon expiry of six months after its first official publication); is in the wording of the Law of the Republic of Kazakhstan dated 29.03.2016 No. 479-V (shall be enforced upon expiry of twenty-one calendar days after its first official publication).

Article 32. Bank’s obligations on disclosure of general conditions of transactions

      1. Terms and conditions of making transactions shall be the public information and may not be a commercial or bank secrecy.

      This regulation shall not apply to the conditions of performing a specific transaction, which, in accordance with this Law, is related to the bank secrecy or assigned by the bank to the category of commercial secrets in accordance with the applicable law.

      2. At the request of a client, the banks shall be required to provide the Rules on general conditions of making transactions.

      3. Banks shall have no right to refuse the client to provide information on the possible risks, associated with performing the operations.

      4. (Is excluded - dated 19 February, 2007 No 230 (the order of enforcement see Article 2).

      5. Islamic banks shall be obliged to explain the clients the particularities of the banking operations, specified in Article 52-5 of this Law and the associated risks.

      Footnote. Article 32 as amended by the Laws of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 23.12.2005 No 107 (the order of enforcement See Art. 2 of the Law No 107); dated 19.02.2007 No 230 (the order of enforcement See Art. 2); dated 12.02.2009 No 133 -IV (the order of enforcement see Art. 2).

Article 33. Contractual nature of relationship between a bank and a client

      1. The relationships between banks and between the banks and their clients shall be based on contracts, unless otherwise provided by the legislation of the Republic of Kazakhstan.

      2. The bank’s clients shall have the right to open bank accounts in other banks with the notice of the bank creditor, unless otherwise provided by the legislation of the Republic of Kazakhstan.

      Footnote. Article 33 as amended by the Law of the Republic of Kazakhstan dated 11 July, 1997 No 154.

Article 34. Bank borrowing transaction

      1. Information on contracts for bank borrowing, leasing, factoring, for faiting transactions, bill discounting, issuance of guarantees, letters of credit, concluded by a bank, an organization, engaged in certain types of banking operations, shall be subject to a mandatory submission to the credit bureau with the state shareholding under the conditions, specified by the legislation of the Republic of Kazakhstan on credit bureaus and formation of credit records.

      2. The list of the mandatory conditions of a bank borrowing contract shall be defined by the regulatory legal act of the authorized body.

      The form of a memo for the borrower-an individual shall be established among others as the list of mandatory conditions of the bank loan contract.

      The memo for the borrower – individual shall contain the total amount and the currency of the loan, term of the loan, number of loan payments, view interest rates (fixed or floating), the size of the interest rate in annual percent in the reliable, annual, effective, comparable basis, the total amount to be repaid on the loan, the total amount of remuneration, the amount of forfeit (fine, penalty) for untimely repayment of the principal and interest, term of prolongation of insurance contracts, other types of fines, penalties under the terms of the bank loan contract.

      The memo for the borrower-individual shall be attached to the bank loan contract.

      2-1. The requirements of parts II, III and IV of paragraph 2 of this Article shall not be applied to the loan, issued for a period not exceeding one month, the loan granted under the credit line on payment card, credit overdraft and the agreement on granting (opening) of the credit line under which for obtaining a loan it is necessary to conclude a contract (contracts) or the borrower submits an application (s) on provision of a loan.

      3. A bank, an organization, performing certain types of banking operations, shall be entitled to change unilaterally the terms of the bank borrowing contract for their improvement for a borrower.

      3-1. Is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

      4. Indexation of commitments and payments under the bank loan contract, issued in the national currency, with reference to any currency equivalent, shall be prohibited. This restriction shall not apply to the contracts, concluded between banks.

      5. Provision of bank loans to the entities, registered in offshore zones, the list of which shall be established by the authorized body, shall be prohibited.

      6. A bank, an organization, performing certain types of banking operations, shall have no right to unilaterally suspend the issuance of new loans in the frames of the concluded bank borrowing contract (s), except for the following cases:

      1) specified by the bank borrowing contract under which a bank, an organization, engaged in certain types of banking operations, has the right not to allocate new loans;

      2) when the borrower breaches obligations to the bank, the organization, engaged in certain types of banking operations under the bank loan contract;

      3) worsening of the financial condition of the borrower, revealed after the monitoring, conducted by the bank, the organization, engaged in certain types of banking operations, in accordance with the requirements of the regulatory legal act of the authorized body;

      4) changes in the requirements of the legislation of the Republic of Kazakhstan, affecting the proper performance of the bank loan contract by the bank, the organization, engaged in certain types of banking operations.

      7. Within fourteen calendar days from the date of the loan contract concluding, a borrower - individual entity, that has received a loan that is not associated with business activities, for the purchase of goods, works and services, shall be entitled to return the loan with payment of the remuneration, charged by the bank from the date of the loan allocation.

      In the case, provided for in this paragraph, penalty or other kinds of fines for return of the loan shall not be charged.

      7-1. The amount of payment made by the borrower under the bank loan contract concluded with an individual, if it is insufficient to fulfill the obligations of the borrower under the bank loan contract, shall repay the debt of the borrower in the following order:

      1) arrears on the principal debt;

      2) arrears on the remuneration;

      3) forfeit (fine, penalty) in the amount determined in accordance with paragraph 2 of Article 35 of this Law;

      4) the amount of the principal debt for the current payments period;

      5) remuneration accrued for the current payments period;

      5-1) commissions and other payments related to the issuance and maintenance of the loan;

      6) the costs of the creditor in obtaining performance.

      Upon expiry of one hundred and eighty consecutive calendar days of delay, the amount of payment made by the borrower under the bank loan contract, concluded with an individual, in case if it is insufficient to fulfill the borrower's obligations under the bank loan contract, shall repay the borrower's debt in the following order:

      1) arrears on the principal debt;

      2) arrears on the remuneration;

      3) the amount of the principal debt for the current payments period;

      4) remuneration accrued for the current payments period;

      5) forfeit (fine, penalty) in the amount determined in accordance with paragraph 2 of Article 35 of this Law;

      5-1) commissions and other payments related to the issuance and maintenance of the loan;

      6) the costs of the creditor in obtaining performance.

      8. The bank borrowing transactions shall be performed in accordance with the Rules of internal credit policy, approved by the governing body of the bank, mortgage company or a subsidiary of the national management holding company in agri-business area.

      9. The body, conducting the internal credit policy, shall be the credit committee of the bank.

      10. The rules of internal credit policy shall be designed to reduce risks of the bank borrowing transaction and define:

      1) the loan conditions for individual and legal entities;

      2) the loan conditions for the bank’s officials and employees;

      3) the organizational structure, functions and powers of the credit committee;

      4) responsibilities of the members of the credit committee;

      5) credit limits;

      6) the procedure for approval of loan agreements;

      6-1) the need for credit scoring for issuing a bank loan to an individual;

      7) time limits for consideration of applications for credit granting, a decision making to allocate (or refuse to issue) a loan, and the changing of the credit conditions.

      10-1. When considering the issue of a bank loan, the bank shall take into account the credit scoring of an individual calculated on the basis of its own methodology, or the credit scoring provided by the credit bureau.

      11. In case if the terms of the loan contract stipulate the requirements for conclusion of insurance contracts and (or) organization of assessment in order to define the market value of the property as the collateral, the bank, the organization, performing certain types of banking transactions, shall not be entitled to restrict the borrower, the mortgagor in selecting an insurance organization and (or) an appraiser.

      The bank loan contract may not oblige the borrower to insure his life or health.

      12. The norms, established by paragraphs 4, 5, 8-11 of this Article shall be applied to the operations of banks in issuing guarantees and sureties, as well as to the operations of Islamic banks specified in subparagraphs 3), 4), 4-1) and 5) of paragraph 1 of Article 52-5 of this Law.

      13. Particularities and limitations of bank loan and other operations of an Islamic bank shall be established by Chapter 4-1 of this Law.

      14. Upon assignment by the bank, organization, carrying out certain types of banking operations, the rights (claims) under the bank loan contract to a third party, the requirements and restrictions imposed by the legislation of the Republic of Kazakhstan to the relationship of the lender to the borrower under the bank loan contract, shall extend its effect to the relationship of the borrower with a third party whom the right (claim) was assigned.

      Violation by a third party to whom the right (claim) was assigned, of the requirements and restrictions imposed by the legislation of the Republic of Kazakhstan to the relationship between the lender and the borrower under the bank loan contract shall entail liability, established by the laws of the Republic of Kazakhstan.

      Footnote. Article 34 is in the wording by the Law of the Republic of Kazakhstan dated 10.02.2011 No 406 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Laws of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication.); dated 27.04.2015 No. 311-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 17.07.2015 No. 333-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 24.11.2015 No. 422-V (the procedure for enforcement, see Article 2); dated 06.05.2017 No. 63-VI (shall be enforced upon expiry of twenty - one calendar days after its first official publication); dated 24.05.2018 No. 156-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (entry into force see Article 2).

Article 34-1. Features of a mortgage loan of an individual not related to entrepreneurial activity

      1. Before signing the mortgage loan contract with an individual not related to entrepreneurial activity, the bank, organization, carrying out certain types of banking operations shall be obliged to carry out comprehensive, complete and qualitative assessment of creditworthiness (solvency) of the borrower in accordance with the internal rules of the bank, organization, carrying out certain types of banking operations (hereinafter – the proper assessment of the borrower’s creditworthiness).

      For the purposes of this Article, a proper assessment of the borrower’s creditworthiness shall be recognized the activities of the bank, an organization carrying out certain types of banking operations, by determination of:

      1) the possibility to fulfill the obligations by the borrower under the mortgage loan contract of an individual not related to entrepreneurial activity, confirmed by one of the following documents at the discretion of the bank, organization, carrying out certain types of banking operations:

      the statement of the unified accumulative pension bund from the individual pension account for the last six months;

      the certificate of income from the place of work for the last six months;

      tax return on individual income tax of the borrower-an individual for the last tax period;

      other documents reflecting availability of possibility for execution of obligations of the borrower under the mortgage loan contract of an individual, not related to entrepreneurial activity, in accordance with internal documents and procedures of the bank, organization, carrying out performing certain types of banking operations;

      2) presence or absence of the borrower's credit history for the last six months;

      3) presence or absence of debts on taxes and other mandatory payments to the budget;

      4) presence or absence of debt reflected in the credit report to third parties.

      Proper assessment of the borrower’s creditworthiness together with information on the borrower shall take into account the information on the individual (co-borrower), acting under the mortgage loan contract of an individual not related to entrepreneurial activity, as jointly and severally responsible for the fulfillment of obligations on repayment of the loan.

      A bank, an organization, carrying out certain types of banking operations, shall not be responsible for submission of false information by the borrower (co-borrower) to the bank, organization, carrying out certain types of banking operations, for proper assessment of the borrower’s creditworthiness, provided by this paragraph.

      2. It is prohibited to provide mortgage loans not related to entrepreneurial activity in foreign currency to the individuals who do not have income in this currency within six consecutive months preceding the date of the individual’s appeal.

      3. A bank, an organization carrying out certain types of banking operations, shall not be entitled under the mortgage loan contracts of an individual, not related to entrepreneurial activity to establish and charge fees for maintaining a bank account related to the issuance and maintenance of a mortgage loan, as well as for crediting a loan to a bank account.

      4. Upon changing the conditions of execution of the mortgage housing loan contract of an individual, not related to entrepreneurial activity or issuing a new loan to repay a mortgage housing loan, capitalization (the summation of) the past due interest payments, forfeit (fine, penalty) to the amount of the principal debt shall not be allowed.

      5. The borrower, who is an individual, shall be obliged to ensure the targeted use of the mortgage housing loan.

      A bank, an organization, carrying out certain types of banking operations, shall exercise control over the targeted use of housing mortgage loan of an individual in the manner established by the mortgage housing loan contract.

      In case of improper use of mortgage housing loan of an individual, not related to entrepreneurial activity, the borrower shall be obliged to prematurely return to the bank, organization, carrying out certain types of banking operations, the mortgage housing loan and to pay compensation in parts of the used housing mortgage loan, accrued under the mortgage housing loan contract for the entire period of use of the subject of the mortgage housing loan.

      6. The borrower shall inform the bank, the organization carrying out certain types of banking operations, of all changes related to the personality of the borrower, within fifteen working days from the date of such changes.

      ъChanges related to the personality of the borrower include changes in his/her place of residence, change of surname, name, patronymic (if it is specified in the identity document), replacement of identity documents, change of contact information used to communicate with the borrower, and the method of communication.

      The statement of the bank, the organization carrying out certain types of banking operations, about non-receipt of information from the borrower about all changes, related to his/her personality, shall not be violation from the part of the borrower of requirements of this Article if the borrower proves that information was sent properly.

      7. In the presence of delay in performance of obligation under the mortgage loan contract of an individual, not related to entrepreneurial activity, the bank, organization, carrying out certain types of banking operations, within thirty calendar days from the date of occurrence of the delay in performance of obligation, shall notify the borrower in the manner and terms provided by the mortgage loan contract of an individual, not related to entrepreneurial activity, on:

      1) the occurrence of delay in the performance of obligation and the need to make payments under the mortgage loan contract indicating the amount of overdue debt;

      2) the possibility of debt settlement by changing the terms of the mortgage loan contract in the presence of objective reasons.

      Changes in the terms of the mortgage loan contract of an individual not connected with entrepreneurial activity shall include, but not limited:

      1) change in the direction of decreasing of the interest rate under the mortgage loan contract;

      2) delay of payment on the principal debt and (or) remuneration;

      3) change in the method of debt repayment or the order of debt repayment, including the repayment of principal debt in the priority order;

      4) change in the validity term of the mortgage loan contract;

      5) release of overdue principal debt and (or) remuneration, cancellation of forfeit (fine, penalty).

      8. The borrower within thirty calendar days from the date of receipt of the notification shall inform the bank, the organization carrying out certain types of banking operations, about the decision in the manner provided by the mortgage loan contract.

      9. In order to prevent the increase of indebtedness of the borrower who is an individual, the bank, organization, carrying out certain types of banking operations, shall not be entitled to demand payment of remuneration, forfeit (penalties, fines) and commissions, and other payments related to issuing and servicing of the loan, accrued upon expiry of one hundred and eighty consecutive calendar days of delay of execution of obligations on repayment of any payments on the amounts of the principal debt and (or) remuneration under the mortgage housing loan contract of an individual, not related to entrepreneurial activity.

      Under the mortgage loan contract of an individual, not related to entrepreneurial activity and secured by real estate collateral, a bank, an organization carrying out certain types of banking operations, shall not be entitled to demand payment of remuneration accrued upon expiry of one hundred and eighty consecutive calendar days of delay in the performance of the obligation to repay any of the payments on the amounts of the principal debt and (or) remuneration.

      10. The amount of the payment made by the borrower, if it is insufficient to fulfill the borrower's obligation under the mortgage loan contract of an individual not connected with entrepreneurial activity, shall repay the borrower's debt in the following order:

      1) arrears on the remuneration;

      2) arrears on commissions and other payments related to the issuance and maintenance of a mortgage loan;

      3) forfeit (fine, penalty) in the amount determined in accordance with paragraph 2 of Article 35 of this Law;

      4) remuneration accrued for the current payment period;

      5) commissions and other payments related to the issuance and maintenance of a mortgage loan;

      6) the costs of the bank, an organization carrying out certain types of banking operations, in obtaining execution;

      7) arrears on the principal debt;

      8) the amount of the principal debt for the current payments period.

      Footnote. Chapter 3 is supplemented by Article 34-1 in accordance with the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication); as amended by the Law of the Republic of Kazakhstan dated 21.01.2019 No. 217-VI (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 35. Ensuring the loans’ recovery

      1. The loans’ recoverability may be ensured by forfeit, pledge, guarantee, warranty and other means, provided by the legislation of the Republic of Kazakhstan or by the contract.

      2. The size of forfeit (fine, penalty) for violation of the obligation to return the amount of the loan and (or) payment of remuneration on the bank loan agreement, concluded with an individual, cannot exceed within ninety days of delay 0.5 percent of the overdue payment for each day of delay, upon expiry of ninety days of delay, cannot exceed 0.03 percent of the overdue payment for each day of delay, but not more than ten percent of the amount of the loan granted for each year of the contract of a bank loan.

      3. Under the condition of high creditworthiness and reliability of a client, the bank shall have the right to take a decision on allocating a loan without security (blank credit). The criteria for the unsecured loan (a blank credit) shall be established by the regulatory legal act of the authorized body.

      4. If several collaterals are provided to ensure the loan’s recovery, in the event of proper fulfillment of obligations by the borrower under the bank loan contract and under the condition that the market value of the collateral, defined by the appraiser at the time of the borrower, the mortgagor application on reduction of the collateral, exceeds the amount of the unexecuted part of the borrower’s obligations, taking into account the requirements of the bank’s collateral policy (the organization performing certain types of banking operations), within ten working days from the date of the borrower, the mortgagor application, the bank (organization, fulfilling certain types of banking operations) shall take measures to terminate (change) contract (contracts) on pledge of one or more collaterals in the part, exceeding the amount of the borrower’s obligation.

      5. In cases stipulated by the pledge contract, as well as by legislative acts of the Republic of Kazakhstan, the bank shall have the right to independently sell the pledged property out of court by means of bidding (auction).

      6. The standards, established by paragraphs 1 - 5 of this Article shall apply to the bank operations on guarantees and warranties issuance.

      Footnote. Article 35 is in the wording by the Law of the Republic of Kazakhstan dated 10.02.2011 No 406 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 24.11.2015 No. 422-V (shall be enforced from 01.07.2016); dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

      Article 36. Measures applied to an insolvent borrower

      1. If there is a delay in the performance of obligations under the bank loan contract, but not later than thirty calendar days from the date of its occurrence, the bank (organization carrying out certain types of banking operations) shall be obliged to notify borrower in the manner and for the terms provided in the bank loan contract, about:

      1) the need to make payments under the bank loan contract indicating the amount of overdue debt;

      2) the consequences of the borrower's failure to fulfill his/her obligations under the bank loan contract.

      A bank (an organization, carrying out certain types of banking operations) shall have the right to attract a collection agency to notify the borrower.

      1-1. Within thirty calendar days from the date of occurrence of delay in the performance of obligations, the borrower – an individual shall have the right to visit the bank (organization, carrying out certain types of banking operations) and to submit a written application, containing information about the causes of delay in the performance of obligations under the bank loan contract, incomes and other confirmed circumstances (facts) that lead to his/her application on making amendments in the terms of the bank loan contract, including related to:

      1) the change in the direction of reduction of the interest rate under the bank loan contract;

      2) the change of the currency of the amount of the balance of the principal debt on a bank loan issued in foreign currency to the national currency;

      3) deferred payment on the principal debt and (or) remuneration;

      4) the change of the method of debt repayment or the order of debt repayment, including the repayment of principal debt in the priority order;

      5) the change of the validity term of the bank loan contract;

      6) release of overdue principal debt and (or) remuneration, cancellation of forfeit (fine, penalty).

      1-2. The bank (organization carrying out certain types of banking operations) within fifteen calendar days after the date of receipt of the written application of the borrower shall consider the proposed changes to the terms of the bank loan contract and in writing shall inform the borrower about (about):

      1) the acceptance of the proposed amendments to the terms of the bank loan contract;

      2) their proposals on the amendments to the terms of the bank loan contract;

      3) refusal to change the terms of the bank loan contract with the indication of a reasoned justification of the reasons for such refusal.

      2. If the requirements arising from the notifications specified in paragraph 1 of this Article and paragraph 7 of Article 34-1 of this Law are not satisfied, the bank (an organization carrying out certain types of banking operations) shall have the right to:

      1) recover in an undisputed (non-acceptance) manner the money, including by presenting a payment claim, available on any bank accounts of the borrower (if such recovery is stipulated in the bank loan contract), except for the money received by the borrower in the form of benefits and social benefits paid from the state budget and (or) the State social insurance fund, which are on the bank accounts opened at the request of the borrower, in the order determined by the regulatory legal act of the authorized body, alimony (money, for the maintenance of minors and disabled adult children) held in bank accounts opened at the request of the borrower, in the order, determined by the regulatory legal act of the authorized body, as well as housing payments provided by the Law of the Republic of Kazakhstan "On Housing Relations", money held in bank accounts in housing construction savings banks in the form of housing construction savings accumulated through the use of housing payments, money held in bank accounts intended for crediting compensation for investment costs in accordance with the legislation of the Republic of Kazakhstan in the field of public-private partnership and on concessions, money deposited on the terms of a notary deposit, and money, held in bank accounts under the contract on educational savings deposit, concluded in accordance with the Law of the Republic of Kazakhstan "On the State Educational Savings System";

      Restrictions regarding the withdrawal of money held in bank accounts intended for crediting compensation for investment costs shall not apply to the claims relating to the first, second and third stages in accordance with the priority provided by paragraph 2 of Article 742 of the Civil code of the Republic of Kazakhstan.

      Note of the RCLI!
      A change is provided in part three of subparagraph 1) by the Law of the Republic of Kazakhstan dated 21.01.2019 No. 217-VI (shall be enforced upon expiry of eight months from the date of its first official publication).

      Collection of debts of the borrower-an individual under the bank loan contract by presenting a payment claim is limited to fifty percent of the amount of money in his/her bank account, and (or) of each amount of money received subsequently to the bank account of the borrower, and is carried out without waiting for the receipt to the bank account of the entire amount necessary for the full execution of the payment claim. This restriction shall not apply to the money held in the savings account of the borrower-an individual;

      2) consider the issue on application of measures in relation to the borrower. The decision making on application of measures shall be carried out in accordance with the Rules on the internal credit policy of the bank, an organization carrying out certain types of banking operations;

      3) apply any measures provided by the legislation of the Republic of Kazakhstan and (or) the bank loan contract, including to change the terms of execution of the bank loan contract, to file a lawsuit to recover the amount of debt under the bank loan contract, as well as to recover the mortgaged property out of court (except for the cases provided by the legislative act of the Republic of Kazakhstan on mortgage of immovable property) or in the court.

      Changes in the terms of execution of the bank loan contract shall be made in the manner provided in the bank loan contract;

      4) file a lawsuit to the court for recognition the borrower- an individual entrepreneur, a legal entity bankrupt in accordance with the legislation of the Republic of Kazakhstan.

      2-1. In cases of non-realization by the borrower of the right under paragraph 1-1 of this Article and paragraph 8 of Article 34-1 of this Law, as well as non-satisfaction of the requirements arising out of the notification, specified in paragraph 1 of this Article, or the lack of agreement between the borrower and the bank (the organization carrying out certain types of banking operations) to change the terms of the bank loan contract, the bank (the organization carrying out certain types of banking operations), in addition to the measures provided by paragraph 2 of this Article, shall have the right to:

      1) transfer the debt for pre-trial collection and settlement to the collection agency.

      Transfer of the debt for pre-trial collection and settlement to the collection agency shall be allowed if there is a right of the bank (the organization carrying out certain types of banking operations) in the bank loan contract to engage the collection agency if the borrower assumes the delay in fulfillment of obligations under the bank loan contract.

      During the period when a debt is in pre-trial collection and settlement with the collection agency, the bank (an organization carrying out certain types of banking operations) shall not have the right to:

      file a claim to the court for debt collection;

      require payment of remuneration accrued in the period when a debt is in work with the collection agency and accrue during the specified period forfeit (penalty, fine) for late repayment of the principal debt and remuneration;

      2) assign the right (claim) under the bank loan contract to the person specified in paragraph 4 of Article 36-1 of this Law, if the borrower has a delay in the performance of the obligation under the bank loan contract over ninety consecutive calendar days, for a mortgage loan issued to an individual – over one hundred and eighty consecutive calendar days.

      2-2. The bank (organization carrying out certain types of banking operations) in case of satisfaction of the petition of the mortgagor, whose property secures the obligations of the borrower – an individual under the mortgage loan contract, not related to carrying out entrepreneurial activities in self-realization of real estate filed in the manner prescribed by the Law of the Republic of Kazakhstan "On Mortgage of Immovable Property", suspends measures against the borrower and the mortgagor, provided by paragraphs 2 and 2-1 of this Article.

      3. Is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).
      4. Is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).
      Footnote. Article 36 is in the wording of the Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016); as amended by the laws of the Republic of Kazakhstan dated 26.07.2016 No. 12-VI (shall be enforced upon expiry of thirty calendar days after its first official publication); dated 06.05.2017 No. 63-VI (the order of enforcement see Article 2); dated 12.12.2017 № 114-VI (shall be enforced from 01.01.2018); dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication); dated 04.07.2018 No. 171-VI (shall be enforced upon expiry of ten calendar days after the date of its first official publication); dated 21.01.2019 No. 217-VI (shall be enforced upon expiry of ten calendar days after the date of its first official publication).

      Article 36-1. The procedure for transfer of debt to pre-trial collection and settlement or assignment of the right (claim)

      1. The bank, organization, carrying out certain types of banking operations, shall be prohibited to conclude a contract with third parties, the subject of which is rendering services for pre-trial collection and settlement of debt, as well as to gather information related to the debt (hereinafter – the contract on debt recovery), except the case of concluding such contract with the collection agency.

      2. Is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).
      3. Is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

      4. The bank, an organization carrying out certain types of banking operations, shall be is prohibited to make the assignment of the right (claim) under the bank loan contract to a third party, except for assignment of the right (claim) to the following persons:

      collection agency;

      bank;

      organizations carrying out certain types of banking operations;

      a subsidiary of the bank acquiring dubious and hopeless assets of the parent bank;

      organization specializing in improving the quality of credit portfolios of second-tier banks;

      a special financial company created in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization in a securitization transaction.

      The requirements of this paragraph shall not apply to the cases of assignment by the bank of the right (claim) to the authorized body in order to fulfill the obligations under the loan of last resort.

      5. The bank, an organization carrying out certain types of banking operations shall not have the right to assign the right (claim) under a bank loan contract without the consent of the borrower, unless otherwise provided by the laws of the Republic of Kazakhstan or a bank loan contract.

      The requirements of part one of this paragraph shall not apply to the relations arising between the bank and the authorized body for assignment of the rights (claims).

      6. Assignment of the right (claim) under the bank loan contract in relation of one borrower to several persons shall not be allowed.

      7. When concluding the contract, containing the conditions for the transfer the right (claim) of the bank, organization, carrying out certain types of banking operations, under the bank loan contract to a third party (hereinafter – the contract on assignment of the right of claim), the bank, organization, carrying out certain types of banking operations, shall be obliged:

      1) before conclusion of the contract on assignment of the right (claim) to notify the borrower (or his/her authorized representative) about the possibility of transfer of the rights (claims) to a third party, as well as on processing of personal data of the borrower in connection with such assignment in the manner provided in the bank loan contract or not contradicting the legislation of the Republic of Kazakhstan;

      2) to notify the borrower (or his/her authorized representative) about the transfer of the right (claim) to a third party in the manner provided in the bank loan contract or not contradicting the legislation of the Republic of Kazakhstan, within thirty calendar days from the date of conclusion of the contract of transfer of the right with indication of further repayments on a bank loan contract to a third party (name and address of the person to whom the right (claim) on a bank loan contract) was transferred, the full amount of the transferred rights (claims), as well as balances of overdue and current amounts of principal debt, remuneration, commissions, forfeits (fines, penalties) and other amounts subject to payment;

      3) transfer the originals and (or) copies of the following documents to the person to whom the right (claim) under the bank loan contract was transferred:

      title documents for the subject of pledge (if the bank loan is secured by a pledge);

      surety contracts or guarantees (if the performance of the obligation under the bank loan is secured by a surety or guarantee);

      calculations of the borrower's debt at the date of assignment of the right (claim);

      claim correspondence with the borrower;

      constituent documents of the borrower- a legal entity, identity document of the borrower- an individual;

      documents confirming repayment of the debt by the borrower;

      documents for the sale of mortgaged property;

      other documents in accordance with the contract of assignment of the right of claim.

      In case of assignment of all rights (claims) to the borrower the bank, organization carrying out certain types of banking operations, shall transfer to the person to whom the right (claim) under the bank loan contract is assigned, all originals of documents available to them.

      For loss of originals of title documents on the property which is security under the bank loan contract, the bank (organization carrying out certain types of banking operations), the person to whom the right (claim) under the bank loan contract is assigned, shall bear responsibility established by the laws of the Republic of Kazakhstan.

      In case of assignment of rights (claims) to the borrower, the bank, organization, carrying out certain types of banking operations, shall have the right to save the originals of the documents certifying such rights (claims) and transfer notarized copies of these documents to the person to whom the right (claim) under the bank loan contract has been partially assigned;

      4) after conclusion of the contract on assignment the right of claim to transfer money received from borrowers in repayment of the debt, to the bank account of the person, whom the right (claim) under the bank loan contract was assigned, providing transcripts of payments by each borrower.

      8. A person who has been assigned the right (claim) of the bank, organization, carrying out certain types of banking operations, under the bank loan contract, concluded with an individual, shall be prohibited to reassign such a right (claim) to other persons, except for the reverse sale (return) of the purchased right (claim) to the original creditor, assignment (reassignment) of the right (claim) to collection agencies, special financial companies created in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization, while securitization deal, as well as to other banks, organizations carrying out certain types of banking operations.

      Footnote. Chapter 2 is supplemented by Article 36-1 in accordance with the Law of the Republic of Kazakhstan dated 06.05.2017 No. 63-VI (shall be enforced upon expiry of twenty - one calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (the order of enforcement see Article 2).

      Article 37. Limitation period

      The limitation period at the request of banks, subsidiaries of banks acquiring dubious and hopeless assets of the parent bank, the organization specified in paragraph 8 of Article 61-4 of this Law, as well as the organization specializing in improving the quality of credit portfolios of second-tier banks, to the borrowers for non-execution and (or) improper execution of bank loan contracts shall be five years.

      Footnote. Article 37 is in the wording of the Law of the Republic of Kazakhstan dated 06.05.2017 No. 63-VI (shall be enforced from 01.10.2017).

      Article 38. Making payments and money transfers

      1. Banks shall make payments and money transfers on the territory of the Republic of Kazakhstan in the order established by the legislation.

      1-1. Second-tier banks and organizations, carrying out certain types of banking operations, for provision of services to the population related to reception and payment for rendering services in electronic form through the web portal "electronic government", shall carry out integration of their information systems with the payment gateway of "electronic government" directly or through the information system of the operator of interbank money transfer system.

      1-2. Banks and organizations, carrying out certain types of banking operations, for provision the state revenues bodies with information on current accounts, opened for value added tax accounting, shall carry out interaction of their information systems with the information system of the state revenues bodies in the order, determined by the authorized body in the field of informatization.

      2. In case of improper payments and money transfers, the bank shall be liable in accordance with the legislation of the Republic of Kazakhstan and the contract concluded with the client (depositor).

      3. International payments and money transfers shall be carried out by the banks in the forms, methods and in the order, used in international banking practice and not contradicting the current legislation of the Republic of Kazakhstan.

      4. The bank shall have the right to withdraw money from the accounts of customers (depositors) without their consent in the presence of documents confirming the forgery of payment documents, as well as in establishing the fact of their erroneous crediting.

      Footnote. Article 38 as amended by the laws of the Republic of Kazakhstan from 11.07.1997 No. 154; dated 16.07.1999 No. 436; dated 24.11.2015 No. 419-V (shall be enforced from 01.01.2016); dated 25.12.2017 No. 122-VI (shall be enforced from 01.01.2019); dated 02.04.2019 No. 241-VI (shall be enforced from 01.01.2019).

Article 39. Rates and tariffs

      1. Interest rates and fees as well as the tariffs for banking services shall be established by the banks, the organizations, performing certain types of banking operations independently, taking into account the restrictions, imposed by the Laws of the Republic of Kazakhstan.

      2. In bank loan contracts concluded with individuals, including mortgage loan contracts, a fixed or floating interest rate shall be established and the method of repayment of the loan at the choice of the borrower from those proposed by the bank on the date of conclusion of the bank loan shall be specified by the banks, organizations carrying out certain types of banking operations,.

      Before signing the bank loan contract in the cases provided by regulatory legal act of the authorized body, the bank, organization, carrying out certain types of banking operations, shall be obliged to provide an individual with the drafts of schedules of the loan repayment, calculated by different methods to choose the method of the loan repayment. The borrower on a mandatory manner, must be presented with draft of schedules of the loan repayment calculated in accordance with the methods of calculating regular payments on loans issued by banks, organizations, carrying out certain types of banking operations, to the individuals and temporary bases for calculating remuneration on such loans, established by the regulatory legal act of the authorized body, with the frequency, established in the bank loan contract, with the following methods of repayment:

      the method of differentiated payments, in which the repayment on a bank loan debt shall be carried out with decreasing payments, comprising equal amounts of payments on the principal debt and interest accrued for the period on the principal debt balance;

      the method of annuity payments, in which the repayment of a bank loan debt shall be carried out in equal payments over the entire period of the bank loan, including increasing payments on the principal debt and decreasing payments on interest accrued for the period on the principal debt balance. The sizes of the first and last payments may differ from others.

      The bank, organization, carrying certain types of banking operations, shall have the right to offer the borrower additional methods of repayment of the loan, calculated according to their internal rules.

      The fixed rate of remuneration shall not be subject to change unilaterally, except in cases of its change in the direction of decrease or temporary change in the direction of decrease by the bank, an organization, carrying out certain types of banking operations, performed in the order, established by Article 34 of this Law.

      Temporary change of the interest rate in direction of decrease means the decrease of size of interest rates by the bank, organization, carrying out certain types of banking operations, for a certain period after which the interest rate shall be set at a rate not exceeding the interest that was rate in effect before the temporary change.

      By agreement of the parties, the fixed rate of remuneration may be changed to a floating rate of remuneration during the term of the contract.

      By agreement of the parties, the fixed interest rate may be changed in the direction of increase upon expiration of its validity period determined by the contract, but not earlier than three years from the date of conclusion of the bank loan contract. Each subsequent change in the direction of increasing the fixed rate of remuneration shall be possible by agreement of the parties upon expiration of the fixed rate, but not earlier than three years from the date of the previous change in the fixed rate of remuneration.

      The procedure of calculation, the conditions of the floating rate of remuneration shall be determined by the regulatory legal act of the authorized body.

      Banks, organizations, carrying out certain types of banking operations shall not have the right to unilaterally change in the direction of increase the amounts and procedure for calculating commissions and other payments for servicing the loan, established on the date of conclusion of the bank loan contract.

      3. Before signing the bank loan contract with an individual, not related to entrepreneurial activity, the bank, organization, carrying out certain types of banking operations, shall be obliged to provide an individual with the loan terms for choice, under which the collection of fees and other payments taken into account in calculation of an annual effective interest rate on the loan in accordance with the procedure, established by the regulatory legal act of the authorized body is not provided, as well as credit terms, stipulating the right of the bank, organization, carrying out certain types of banking operation, to charge, in addition to the interest rate, commissions and other payments related to the issuance and servicing of the loan and provided by the bank loan contract.

      Banks, organizations carrying out certain types of banking operations shall be obliged to specify in the bank loan contracts a full list of commissions and other payments, as well as their amounts to be charged in connection with the issuance and servicing of the loan, and shall not have the right to unilaterally introduce new types of commissions and other payments under the concluded contract.

      3-1. Banks, organizations, carrying out certain types of banking operations shall not have the right under the bank loan contracts, concluded with individuals for the purchase of goods, works and services not related to entrepreneurial activity, to establish and charge commissions for maintaining a bank account related to the issuance and servicing of a bank loan, as well as for crediting a loan to a bank account.

      4. The Internet site of the bank shall have the information about the rates and fees for banking and other services, provided to individuals and legal entities. Information on rates and tariffs shall be the latest, and contain the date of changes made to the current rates and tariffs, the number of the internal document and the body that made those changes.

      5. Banks, organizations, carrying out certain types of banking operations, shall be not have the right to charge forfeit or other types of penalties for early repayment of loans, except for the cases of partial early repayment or full early repayment of the principal debt up to six months from the date of receipt of the loan, issued for a term of up to one year, up to one year from the date of receipt of the loan, issued for a term exceeding one year.

      6. Banks, organizations, performing certain types of banking operations, shall not be entitled to unilaterally increase the interest rates, established on the date of the bank loan agreement, concluded with legal entities, except for the following cases:

      1) breach of obligations by the borrower on providing accurate information, related to obtaining and servicing of the loan, in the cases, stipulated by the bank loan contract;

      2) when a bank, an organization, engaged in certain types of banking operations, receive the right to claim the early performance of obligation in the cases, stipulated by the Civil Code of the Republic of Kazakhstan, as well as in the following cases, stipulated by the bank loan contract:

      changes in the composition of members (shareholders) of the borrower, together owning ten or more percent of the shares (ownership interest) of a joint stock company (business partnership), without a preliminary written consent of the bank (the organization performing certain types of banking operations);

      when the borrower and (or) the mortgagor violates the rights of a bank, an organization, engaged in certain types of banking operations, which are the mortgagees, to check the documents and factual presence, size, condition and storage conditions of the mortgaged property, and the third parties’ claims to the property of the borrower (mortgagor), including to the property, mortgaged to the bank, the organization engaged in certain types of banking operations.

      7. The banks, with the exception of the Islamic banks, organizations, performing certain types of banking operations, shall be required to reflect the interest rates in the reliable, annual, effective, comparable calculation (actual cost), the order of which shall be established by the authorized body in the contracts, concluded with the clients, as well as the disclosure of the information on the amounts of the interest on loans and deposits ( excluding the interbank ones), including its publication.

      In case of non-compliance with the requirements, established by this Article, the authorized body shall apply to the bank, the organization, carrying out certain types of banking operations, the supervisory response measures provided by this Law.

      Footnote. Article 39 is in the wording by the Law of the Republic of Kazakhstan dated 10.02.2011 No 406 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V (the procedure for enforcement see Article 2); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019); dated 21.01.2019 No. 217-VI (shall be enforced upon expiry of ten calendar days after its first official publication).

      Article 40. Prohibition on granting preferential terms to the persons, related to the bank by special relations

      1. Banks shall be prohibited to grant preferential terms to the persons, related to the bank by special relations.

      Banks shall be prohibited to issue unsecured loans (blank loans) to the persons, related to the bank by special relations, except for loans in the amount not exceeding the amount established by the regulatory legal act of the authorized body, as well as loans to the persons who are the members of the banking conglomerate.

      Banks shall be prohibited to issue loans to the members of the board of directors and major participants of these banks, except for bank loans and financing provided by subparagraphs 4) and 5) of paragraph 1 of Article 52-5 of this Law, issued in an amount not exceeding the amount established by the regulatory legal act of the authorized body.

      2. Granting preferential terms to a person, related to the bank by special relations means making a transaction with a person, related to the bank by special relations, or in its interests, which by its nature, purpose, features and risk, the bank would not make with a person not related to it by special relations, namely:

      1) charging of remuneration and fees for performing banking operations is lower than under the terms, offered to third parties;

      2) payment of remuneration on deposits and other funds attracted by the bank from a person related to the bank by special relations is higher than under the terms, offered to third parties;

      3) acceptance of pledges, guarantees, sureties or other means of ensuring the performance of obligations in an amount lower than required for similar transactions with third parties;

      4) provision of deferral for charging of remuneration, repayment of the principal debt and (or) other payments for banking operations more than for similar operations with third parties;

      5) payment of the acquired property and (or) services to a person, related to the bank by special relations at a price higher than the payment of similar acquired property and (or) services to third parties on a transaction or a set of transactions, the value of which exceeds the amount established by the regulatory legal act of the authorized body;

      6) sale of property to a person, related to the bank by special relations at a value lower than the sale of similar property to third parties or below the market value;

      7) sale of securities to a person related to the bank by special relations at a value lower than the sale of similar securities to third parties or below the market value;

      8) making transactions previously referred by the authorized body to the transactions with preferential conditions through the use of reasoned judgment.

      Additional criteria for classifying transactions as transactions with preferential conditions shall be established by the regulatory legal act of the authorized body.

      3. The following persons shall be recognized as persons, related to the bank by special relations:

      1) an official or executive employee, heads and permanent members of the committees of the board of directors and the relevant body of the bank, whose powers include making decisions on the alienation of assets, change of the pledge and termination of the pledge (except for the cases of repayment by the debtor of obligations to the bank, secured by the pledge, or charging of charging of the pledge by the bank), decisions on the issuance of bank loans and bank guarantees in the amounts above the established by the regulatory legal act of the authorized body, as well as their spouses and close relatives;

      2) an individual or a legal entity, who is a major participant of this bank, or an official of a major participant of the bank, as well as their spouses and close relatives;

      3) a legal entity in which the persons, specified in subparagraphs 1) and 2) of this paragraph own ten or more percent of the placed shares (excluding the preferred and redeemed shares) or participation stakes in the authorized capital or are officials;

      4) affiliated persons of the bank;

      5) an individual or legal entity corresponding to the characteristics of connection with the bank by special relations, established by the regulatory legal act of the authorized body.

      The authorized body shall have the right to classify an individual or a legal entity to the persons, connected with the bank by special relations, by using a reasoned judgment. In this case, this individual or a legal entity shall be recognized by the bank as a person connected with it by special relations, from the date of receipt by the bank of the appropriate supervisory response measures of the authorized body.

      For the purposes of this Article, an independent director, the national managing holding, being the shareholder of the bank and legal entities, which ten and more percent of shares (participation stakes in the authorized capital) belong to such national managing holding as well as legal entities in which the official of the bank, being an independent director, is an independent director in the administrative bodies, an organization, specializing in improving the quality of loan portfolios of second tier banks, and the organizer of the auctions, the shareholder of which is the authorized body, if an official of the bank is an official in these organizations, as well as other persons determined by the regulatory legal act of the authorized body shall not be recognized as persons, related with the bank by special relations.

      4. The bank cannot make a transaction with any person, the value of which exceeds the amount, established by the regulatory legal act of the authorized body, and which entails:

      payment of obligations to the person related with the bank by special relations;

      purchase of any property from a person connected with the bank by special relations;

      acquisition of securities, issued by a person, related with the bank by special relations, except for the securities owned by the bank.

      5. A transaction with a person, related with the bank by special relations may be made subject to the requirements of paragraph 1 of this Article only by the decision of the board of directors of the bank, except for the cases when the standard terms of such transactions are approved by the board of directors of the bank and shall be applied to similar transactions with third parties.

      The waiver of the rights of claims in respect of assets granted (placed) to the persons (at the persons) related with the bank by special relations shall be carried out with the subsequent notification of the general meeting of shareholders, except for subsidiaries of the bank acquiring dubious and hopeless assets of the parent bank.

      The person, specified in paragraph 3 of this Article shall not participate in consideration and decision-making of any transaction between the bank and:

      by him/her;

      any of his/her close relatives or his/her spouse;

      any legal entity in which he/she or any of his/her close relatives, his or her spouse is an official (except for an independent director) or a major participant.

      The decision of the board of directors on any transaction between the bank and a person related with the bank by special relations may be taken only after consideration of all its terms by the board of directors.

      6. The bank shall be obliged to submit to the authorized body information on the persons, related with the bank by special relations, as well as on all transactions, concluded with these persons, in the order, terms and forms provided by the regulatory legal act of the authorized body.

      7. The requirements of this Article shall apply to bank holding companies and organizations, carrying out certain types of banking operations.

      The list of persons, related with the banking conglomerate by special relations shall be established by the regulatory legal act of the authorized body.

      8. The requirements of paragraphs 1, 2 and 4 of this Article shall not be applied to the transactions, made by a subsidiary created (acquired) under the conditions, determined by Article 11-2 of this Law with a parent bank or a subsidiary of a banking conglomerate.

      The requirements of paragraph 4 of this Article shall also not be applied to the transactions of the bank with third parties, which entail the acquisition of property from a subsidiary of the bank and (or) a subsidiary of a subsidiary of the bank, created (acquired) under the conditions determined by Article 11-2 of this Law.

      9. The requirements of this Article shall not apply to the non-residents of the Republic of Kazakhstan who are a bank holding company, a person, possessing the characteristics of a bank holding company, if one of the following conditions is met:

      availability of an individual credit rating not lower rated A of one of the rating agencies, the list of which shall be established by the authorized body and a written confirmation from the financial supervision body of the country of origin of a bank holding company, the persons, possessing the characteristics of a bank holding company, that the specified persons are non – residents of the Republic of Kazakhstan subject to consolidated supervision;

      existence of an agreement between the authorized body and the relevant supervisory body of a foreign state on the exchange of information, as well as the minimum required rating of one of the rating agencies. The minimum rating and the list of rating agencies shall be established by the regulatory legal act of the authorized body.

      Footnote. Article 40 is in the wording of the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 40-1. Banking Ombudsman, his status and the procedure of electing

      1. The banking ombudsman shall be an independent individual, carrying out settlement of disagreements arising from the mortgage loan contract, between the bank, organization, carrying out certain types of banking operations and the borrower – an individual upon his request in order to reach agreement on satisfaction of the rights and interests protected by the Law of the borrower and the bank, organization, carrying out certain types of banking operations, as well as in the cases provided by paragraph 1-1 of this Article.

      Banking Ombudsman’s activities shall be governed by the following principles:

      1) equality of the parties;

      2) impartiality of the Ombudsman;

      3) banking and other confidentiality, protected by the Law;

      4) observance of the rights and respect of the parties’ interests, protected by the Law;

      5) transparency of the decision making and the validity of the decision.

      1-1. The bank ombudsman shall carry out settlement of disagreements arising between the borrower, who is an individual, and the person to whom the right (claim) has been assigned under the bank loan contract, concluded with such a borrower or the contract on providing a micro-credit, on the basis of the borrower's appeal.

      The person to whom the right (claim) under the bank loan contract or the micro-credit has been assigned, shall be obliged to interact with the bank ombudsman and to provide any information requested by the bank ombudsman and the data at the appeal of the borrower, whose obligations under the bank loan contract or the contract on providing micro-credit were acquired by him/her.

      2. Election and early termination of the banking ombudsman’s powers shall be carried out by the board of representatives. The board of representatives shall contain one representative from:

      1) each bank, organization, engaged in certain types of banking operations, allocating the mortgage loans;

      2) an association (union) of public organizations of consumers and (or) the republican public association of consumers, registered in the judicial bodies and performing the activities, aimed at realization and protection of the rights of the consumers of financial services, if any;

      3) the authorized body.

      Participation of banks, organizations, performing certain types of banking operations, allocating the mortgage loans, in the board of representatives shall be mandatory and shall be conducted in the order, established by this Law and the internal rules of the banking ombudsman, approved by the board of representatives.

      3. The competence of the board of representatives shall be:

      1) to offer candidatures for election to the position of the banking ombudsman and its approval;

      2) to approve the structure and the staff (the office of the banking ombudsman);

      3) to define the order of financing of the banking ombudsman’s activity;

      4) and other issues related to the work of the banking ombudsman, in accordance with this Law.

      4. Meeting of the board of representatives shall be deemed valid and the conditions of quorum are met if the members of the board, attending it, have in aggregate fifty or more percent of the total number of votes.

      Banking Ombudsman shall be elected by the majority vote of the board members, attending the meeting of the board. Each member of the board of representatives shall have one vote during a voting. In case of equality of votes, the vote of the representative of the authorized body is casting.

      The voting on election of a banking ombudsman shall be carried out by secret ballot. The ballot shall contain the following information about the candidates, recommended for election to the position of the banking ombudsman:

      1) name, surname, and patronymic at will;

      2) information on education;

      3) information about the affiliation to the banks, organizations, engaged in certain types of banking operations;

      4) information about the places of work and positions held;

      5) other information, confirming qualification and work experience of the candidates;

      6) the voting options on the issue, expressed by the words "yes" or "no."

      5. A banking ombudsman shall be elected for a term of two years.

      Early termination of the banking ombudsman’s powers on his initiative shall be based on a written notification to the board of representatives.

      A written notice shall be submitted to the board of representatives a month before termination of the powers in the order, established by the internal rules of the banking ombudsman, approved by the board of representatives.

      Footnote. Chapter 2 is supplemented by Article 40-1 in accordance with the Law of the Republic of Kazakhstan dated 10.02.2011 No 406 -IV (shall be enforced upon expiry of ten calendar days after its first official publication.); as amended by the Law of the Republic of Kazakhstan dated 06.05.2017 No. 63-VI (shall be enforced upon expiry of twenty - one calendar days after its first official publication).

Article 40-2. Requirements to the banking ombudsman

      1. The following person may not be recommended for election to the position of the banking ombudsman:

      1) without higher education;

      2) without an impeccable business reputation;

      3) the person, having less than three years’ work experience in providing financial services and (or) regulation of financial services;

      4) previously being an executive employee of a financial organization for a period not more than one year before the decision of the authorized body to classify the bank as insolvent banks, on conservation of an insurance (reinsurance) organization, on forcible redemption of its shares, on deprivation of the license of a financial organization, as well as on forcible liquidation of a financial organization or recognition it bankrupt in the order, established by the legislation of the Republic of Kazakhstan. This requirement shall be applied within three years after the decision of the authorized body to classify the bank as insolvent banks, on conservation of the insurance (reinsurance) organization, on forcible redemption of its shares, on deprivation of the license of a financial organization, as well as on forcible liquidation of a financial organization or recognition it bankrupt.

      2. A banking ombudsman shall not be entitled to hold any positions in the financial institutions and microfinance organizations, to be an affiliated person of the banks, organizations, performing certain types of banking operations.

      Footnote. Chapter 2 is supplemented by Article 40-2, in accordance with the Law of the Republic of Kazakhstan dated 10.02.2011 No 406 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan dated 26.11.2012 No 57 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 40-3. A decision-making procedure of a banking ombudsman

      1. A decision shall be made by a bank ombudsman individually and shall be submitted in a written form to the parties of a dispute.

      When making decisions a banking ombudsman shall be governed by the legislation of the Republic of Kazakhstan and the terms of the concluded contracts.

      2. A banking ombudsman shall not consider the appeals:

      admitted to the court consideration and (or) on which there is a court decision, which has come into force;

      on which the applying person has not submitted a written proof of his applying to the bank, the organization, engaged in certain types of banking operations, in order to resolve the situation arising under the mortgage loan contract;

      re-applied in the absence of the new facts of the case;

      under the mortgage loan contract, the amount of which exceeds twenty thousand monthly calculation indexes.

      The requirements of this paragraph shall apply to the appeals of the borrower-an individual in the case provided by part one of paragraph 1-1 of Article 40-1 of this Law.

      3. A decision of the banking ombudsman shall be mandatory for the bank, the organization, engaged in certain types of banking operations in the event of its making by the borrower.

      In case of disagreement with the decision of the banking ombudsman, the interested party shall have the right to apply to the court for protection of their rights.

      4. On the appeals of the borrowers - individuals, concerning changes in the terms of performance of obligations under the mortgage loan contracts, the banking ombudsman shall assist the parties to reach a mutually acceptable solution by conducting meetings and providing recommendations without taking decisions, provided by this Article.

      At the appeal of the borrower – an individual in the case, provide by paragraph 1-1 of Article 40-1 of this Law, the banking ombudsman shall assist the parties to reach a mutually acceptable result by conducting meeting and providing recommendations without taking decisions, provided by this Article.

      The results of consideration of shall be drawn up in a protocol, signed by the interested parties or their representatives with bringing it to the attention of the borrower and the bank, organization, carrying out certain types of banking operations, the person to whom the right (claim) has been assigned under the bank loan contract or the contract on providing micro-credit.

      Footnote. Chapter 2 is supplemented by Article 40-3 in accordance with the Law of the Republic of Kazakhstan dated 10.02.2011 No 406 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 06.05.2017 No. 63-VI (shall be enforced upon the expiry of twenty-one calendar days after its first official publication).

Article 40-4. A banking ombudsman’s activities

      1. A banking ombudsman’s activities, including the order and the time limits of consideration of appeals on resolving disputes and decision-making shall be carried out on the basis of internal rules, coordinated with the authorized body and approved by the board of representatives.

      2. In order to ensure proper performance of its functions, the banking ombudsman shall be funded at the expense of mandatory contributions from banks and organization, engaged in certain types of banking operations, included in the board of representatives. The banking ombudsman in consultation with the board of representatives shall have the right to establish a structure and a staff (an office of the banking ombudsman).

      3. The banking ombudsman shall be obliged to keep confidentiality of information obtained during resolving the disputes, and not to disclose it to the third parties.

      The banking ombudsman shall bear responsibility, established by the Laws of the Republic of Kazakhstan, for disclosure of information received during performance of his functions.

      In the case of the banking ombudsman’s non-compliance with the requirements, provided for in paragraph 1 of this Article and this paragraph, the board of representatives shall early terminate his powers.

      Footnote. Chapter 2 is supplemented by Article 40-4 in accordance with the Law of the Republic of Kazakhstan dated 10.02.2011 No 406 -IV (shall be enforced upon expiry of ten calendar days after its first official publication.)

Article 40-5. The system of risk management and internal control

      1. The banks shall form a system of risk management and internal control, which shall include:

      1) the powers and responsibilities for risk management and internal control of the board of directors, the management board, the bank’s departments, their liability;

      2) internal policies and procedures for risk management and internal control;

      3) the limits on the permissible extent of risks separately for by types of banking operations;

      4) internal reporting procedures for risk management and internal control to the bank’s bodies;

      5) internal criteria for evaluating the effectiveness of the risk management system.

      The order of formation of the system of risk management and internal control shall be established by the regulatory legal act of the authorized body.

      2. A banking conglomerate shall have a system of risk management and internal control, meeting the requirements, established by the regulatory legal act of the authorized body.

      The parent organization of the banking conglomerate shall ensure compliance with the system of risk management and internal control on a consolidated basis.

      The parent organization of the banking conglomerate shall be responsible for compliance of the banking conglomerate’s participants with the requirements, established for the system of risk management and internal control.

      3. The authorized body shall carry out assessment of compliance of the risk management and internal control system with the requirements, established by this Article.

      Footnote. Chapter 3 is supplemented by Article 40-5 in accordance with the Law of the Republic of Kazakhstan dated 28.12.2011 № 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Chapter 4. Regulation of banks’ activities

      Footnote. The title of Chapter 4 is in the wording by the Law of the Republic of Kazakhstan dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009).

Article 41. The measures applied to the banks and their officials. The ways of banking regulation

      In order to ensure financial stability of the banks, to protect interests of their depositors and to maintain stability of the monetary system of the Republic of Kazakhstan, the authorized body shall regulate the banks’ activities, including through:

      establishment of prudential standards and other mandatory standards and limits, mandatory for fulfillment by the banks, the provisions against doubtful and loss assets;

      publication of regulatory legal acts which shall be fulfilled by banks;

      inspection of the banks’ activities;

      application of supervisory response measures;

      imposition of sanctions.

      Bank regulation shall be carried out in respect of an individual bank, and on a consolidated basis, that is to the banking conglomerate. The consolidated supervision rules shall be established by the authorized body.

      Footnote. Article 41 as amended by the Laws of the Republic of Kazakhstan, dated 11 July, 1997 No 154; dated 16 July, 1999 No 436; dated 2 March 2001 No 162 (see Art. 2); dated 10 July 2003 No 483 (shall be enforced from 1 January 2004); dated 8 July, 2005 No 69; dated 23 December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107); by the Law of the Republic of Kazakhstan dated 31 January 2006 No 125; as amended by the Law of the Republic of Kazakhstan dated 23.10.2008 No 72 -IV (the order of enforcement see Article 2); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 42. Prudential standards and other mandatory standards and limits

      1. The structure of prudential standards, established by the authorized body for their mandatory fulfillment by the banks, shall include:

      the minimum amount of the authorized capital of the bank;

      the minimum amount of the equity capital of the bank;

      the equity capital adequacy ratio;

      the maximum exposure to a single borrower;

      liquidity ratio;

      the limits of open currency position.

      The structure of the prudential standards, established by the authorized body for their mandatory observance by the banking conglomerates, shall include:

      the minimum amount of the authorized capital;

      the equity capital adequacy ratio;

      the maximum exposure to a single borrower.

      The authorized body shall be entitled to establish additional prudential standards and other mandatory standards and limits used in the international banking practice.

      In accordance with the banking legislation of the Republic of Kazakhstan, the authorized body shall take steps to bring the banks and (or) bank holding companies or their officials and (or) the major participants of banks to responsibility for violation of prudential standards by the banks and (or) other mandatory standards and limits.

      The authorized body shall be entitled to establish on banks and banking conglomerates that do not have a bank holding company, certain prudential standards and their values ??at the level, sufficient to cover the potential significant losses, arising from the possible maximum changes of the risk factors, inherent in the bank and the banking conglomerate.

      1-1. Prudential standards and other mandatory standards and limits for Islamic banks, their normative values ??and calculation methods, the forms of relevant report and time limits for its submission shall be established by the authorized body, taking into account the particularities of the Islamic banks’ banking activities, specified by this Law.

      2. In order to resolve the issue on compliance of the bank's financial situation with the established requirements, the authorized body shall be entitled to define the amount of the bank's capital for a certain date.

      3. Normative values ??and calculation methods of prudential standards and other mandatory standards and limits, the amount of the bank's capital and the banking conglomerate for a certain date, the order of calculation and limits of the open currency position, the forms of relevant reports and the time limits for the submission shall be established by the authorized body.

      3-1. In case of failure of a bank or a participant of a bank conglomerate to fulfill the requirements of the authorized body, indicated in a written prescription, on correcting the data in the financial and (or) other statements, the calculation of prudential standards and other mandatory standards and limits shall be carried out by the authorized body on the basis of the statements, corrected by it.

      4. In case of breaking of the capital adequacy ratios by the bank, the banking conglomerate, established by the regulatory legal acts of the authorized body, the bank, the bank holding company shall submit a recapitalization plan to the authorized body. The plan shall be submitted within one month from the date of breaking the capital adequacy ratio with the detailed description of the measures and deadlines, set for elimination of violations.

      5. Bank holding companies, as well as the major participants of the bank shall take measures, specified by the regulatory legal acts of the authorized body to maintain the equity capital adequacy ratios of the bank and the banking conglomerate.

      In case of worsening of the financial condition of the bank or the bank conglomerate, the bank holding company, the major participant of the bank, at the request of the authorized body, shall take measures to improve the financial situation of the bank or the banking conglomerate, including to increase the equity capital of the bank or the banking conglomerate in the amount sufficient to ensure financial stability of the bank or the banking conglomerate.

      If the requirements, provided by this paragraph, the authorized body shall have the right to apply compulsory supervisory response measures, provided by Article 47-1 of this Law to the bank holding company, a major participant of a bank.

      Note of the RCLI!
      Article 42 is provided to supplement by paragraph 6 in accordance with the Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V (shall be enforced from 16.12.2020).
      Footnote. Article 42 as amended by the Laws of the Republic of Kazakhstan dated 07.12.1996 No 50; dated 11.07.1997 No 154; dated 16.07.1999 No 436; dated 02.03.2001 No 162 (see Art. 2); dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated08.07.2005 No 69; dated 23.12.2005 No 107 (the order of enforcement see Art. 2 of the Law No 107); dated 19.02.2007 No 230 (the order of enforcement see Art. 2); dated12.02.2009 No 133 -IV (the order of enforcement see Art. 2); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009); dated28.12.2011 No 524 - IV (shall be enforced upon expiry of ten calendar days after its first official publication.) ; dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 43. Provisions (reserves)

      1. Is excluded by the Law of the Republic of Kazakhstan dated 25.12.2017 No. 122-VI (shall be enforced from 01.01.2018).

      2. In order to ensure an appropriate level of control and reliability of their activities in accordance with the nature and scale of the operations performed, the banks shall be required to establish provisions (reserves) in accordance with the international financial reporting standards.

      3. Assessment of the adequacy of provisions (reserves) created by the bank shall be carried out by the authorized body, including the use of the reasoned judgment, for conformity, compliance and application of international financial reporting standards.

      Footnote. Article 43 is in the wording by the Law of the Republic of Kazakhstan dated 26.12.2012 No 61 -V (shall be enforced from 01.01.2013); as amended by the Law of the Republic of Kazakhstan dated 25.12.2017 No. 122-VI (shall be enforced from 01.01.2018); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      Article 44. Verification of activities of the banks, major participants of banks, bank holding companies and members of banking conglomerates

      Footnote. The title of Article 44 as amended by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

      1. Verification of activities of the banks, major participants of banks, bank holding companies and participants of bank conglomerates shall be conducted by the authorized body independently or with involvement of other state bodies and (or) the organizations.

      When conducting verification of activities of the banks and (or) participants of banking conglomerates (except for bank holding companies), the authorized body shall have the right to inspect the activities of the affiliated persons of banks solely for the purpose of determining the extent and nature of their influence on the activities of banks.

      2. Banks, major participants of the banks, bank holding companies, participants of bank conglomerates, and also their affiliated persons shall be obliged to provide assistance to the inspection on the issues specified in the task of the authorized body for verification, and also to provide opportunity to interview any officials and employees and access to any sources of information necessary to perform verification.

      3. Employees of the authorized body shall be prohibited from disclosing or transferring information to third parties, obtained during the verification of activities of the banks, major participants of banks, bank holding companies and members of banking conglomerates.

      4. The persons carrying out the verification shall be responsible for disclosure of information, obtained during the verification of activities of the banks, major participants of banks, bank holding companies, members of banking conglomerates and constituting a banking or commercial secret.

      5. The requirements of paragraphs 1 and 2 of this Article shall not apply to non-residents of the Republic of Kazakhstan, being a major participant of the bank – a legal entity, bank holding company, a person having characteristics of a major participant of the bank or bank holding company if one of the following conditions is met:

      availability of an individual credit rating not lower rated A of one of the rating agencies, the list of which shall be established by the authorized body and written confirmation from the financial supervision body of the country of origin of the major participant of the bank – a legal entity, bank holding company, the person, having characteristics of the major participant of the bank or bank holding company, that the specified persons-non-residents of the Republic of Kazakhstan subject to consolidated supervision;

      existence of an agreement between the authorized body and the relevant supervisory body of a foreign state for the information exchange, as well as the minimum required rating of one of the rating agencies. Minimum rating and the list of the rating agencies are established by the regulatory legal act of the authorized body.

      Footnote. Article 44 is in the wording by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan dated 26.12.2012 No 61 -V (shall be enforced from 04.02.2012); dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the of its first official publication).

Article 45. Early response measures

      1. In order to protect the legitimate interests of depositors and creditors of banks, ensure financial stability of the bank, to prevent deterioration of its financial situation and increase risks, associated with banking activities, the authorized body shall carry out analysis of the activities of banks to identify factors, affecting the deterioration of financial situation of the bank. The factors, affecting the deterioration of financial situation of the bank shall be established by the regulatory legal act of the authorized body.

      2. In order to ensure financial stability of the banking conglomerate, to prevent deterioration of its financial situation and increasing risks associated with the activities of the banking conglomerate, the authorized body shall carry out analysis of the activities of the banking conglomerate to identify factors, affecting the deterioration of financial situation of the banking conglomerate.

      The factors affecting the deterioration of financial situation of the banking conglomerate shall be established by the regulatory legal act of the authorized body.

      3. In the case of revelation of the factors, specified in paragraph 1 of this Article, in the result of the analysis of the financial condition of the bank and (or) upon the results of its inspection, the authorized body shall send a written claim to the bank and (or) its shareholders to submit an action plan, providing the measures of early response to improve the financial stability of the bank, preventing worsening of its financial condition growth of risks, associated with the banking activities.

      The bank and (or) its shareholders shall be obliged to develop and submit to the authorized body an action plan specifying the deadlines for each paragraph and responsible executives within no more than five working days from the date of receipt of the specified requirement.

      When the authorized body approves the action plan, the bank and (or) its shareholders shall start its implementation, notifying the authorized body of the results of its implementation within the timeframes, set by the plan.

      In case of disapproval of the action plan, the authorized body shall apply to the bank and (or) its major participants (bank holding companies) the supervisory response measures provided by this Law.

      4. In the case of revelation of the factors, specified in paragraph 2 of this Article, in the result of the analysis of the financial condition of the banking conglomerate and (or) upon the results of inspection of the bank holding company or the members of the banking conglomerate, the authorized body shall send a written claim to the bank holding company and (or) its major participants to submit an action plan, providing for the early response measures to improve the financial stability of the banking conglomerate, to prevent worsening of its financial condition and growth of risks, associated with the activities of the banking conglomerate.

      The bank holding company and (or) its major participants shall obliged to develop and submit to the authorized body an action plan specifying the deadlines for each paragraph and responsible executives within no more than five working days from the date of receipt of the specified requirement.

      When the authorized body approves the action plan, the bank holding company and (or) its major participants shall start implementing it, notifying the authorized body of the results of its implementation within the planned timeframes.

      In case of disapproval of the action plan, the authorized body shall apply to the bank holding company and (or) its major participants the supervisory response measures provided by this Law.

      5. In case non-submission within the terms established by paragraphs 3 and 4 of this Article, of the action plan aimed at improving financial stability of the bank (banking conglomerate), or untimely execution of measures of this plan, as well as non-execution or untimely execution of early response measures in accordance with the requirement of the authorized body to the bank (bank holding company) and (or) its major participants, the supervisory response measures provided by this Law shall be applied."

      6. The procedure for approval of the action plan providing for early response measures and the methodology for determining factors affecting deterioration of financial situation of the bank (banking conglomerate) shall be established by the regulatory legal act of the authorized body.

      7. The requirements of this Article shall not apply to the non-residents of the Republic of Kazakhstan, that are the bank holding company, the entity, having the characteristics of a bank holding company, if any of the following conditions are observed:

      presence of an individual credit rating not lower than the A rating of one of the rating agencies, the list of which shall be established by the authorized body, as well as a written confirmation from the Financial Supervisory Authority of the country of origin of the bank holding company, the entity, having the characteristics of a bank holding company, about the fact that the said entities-non- residents of the Republic of Kazakhstan shall be subject to the consolidated supervision;

      existence of an agreement between the authorized body and the relevant supervisory body of a foreign state for the information exchange, as well as the minimum required rating of one of the rating agencies. Minimum rating and the list of the rating agencies are established by the regulatory legal act of the authorized body.

      Footnote. Article 45 is in the wording by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan dated 26.12.2012 No 61 -V (shall be enforced from 04.02.2012); dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      Article 45-1. Supervisory response measures

      1. In order to protect the legitimate interests of depositors, creditors, customers and correspondents of the bank, organization, carrying out certain types of banking operations, ensuring financial stability of the bank and (or) the banking conglomerate, organizations carrying out certain types of banking operations and prevent deterioration in their financial situation and increasing risks associated with banking activities, the authorized body shall apply supervisory response measures to the bank, organization, carrying out certain types of banking operations, bank holding company, their executive employees, organizations, members of a banking conglomerate, major participants of the bank, persons possessing the characteristics of a major participant of the bank or a bank holding company.

      2. The grounds for application of supervisory response measures shall be:

      1) violation of the legislation of the Republic of Kazakhstan on the issues within the competence of the authorized body;

      2) deficiencies and (or) the risks in the activities of the bank, organization, carrying out certain types of banking operations, organizations, members of the banking conglomerate, revealed by the authorized body in the framework of implementation of functions on control and supervision, including with the use of reasoned judgment, which can lead to a situation that threatens stable functioning of the bank or organization carrying out certain types of banking operations, and (or) the interests of their depositors, and (or) creditors and (or) customers, and (or) stability of the banking system;

      3) identification of illegal actions or inaction of the executive employees of the bank, organization carrying out certain types of banking operations, the bank holding company, which may threaten their stable functioning and (or) the interests of their depositors, creditors, customers and correspondents;

      4) sufficient data to recognize the actions (inaction) of the executive employee (executives) not complying with the requirements of the legislation of the Republic of Kazakhstan on the issues within the competence of the authorized body, and (or) evidencing on damage to the bank and (or) its depositors, creditors and customers;

      5) commission of actions by a person having characteristics of a major participant of the Bank or bank holding company and a major participant of the bank (including organizations over which a major participant has control), bank holding company or legal entities, members of the banking conglomerate, as a result of which the bank caused or may be caused damage;

      6) unstable financial situation of the persons having characteristics of a major participant of the bank or bank holding company and major participants of the bank (including organizations over which a major participant of the bank has control), bank holding company or organizations, that are members of the banking conglomerate;

      7) non-fulfillment of supervisory response measures previously applied in accordance with this Law;

      8) non-submission to the authorized body or submission of false reports or information, as well as other information requested by the authorized body;

      9) obstruction by the bank, organization carrying out certain types of banking operations, bank holding company, organizations which are a part of the banking conglomerate, major participants of the bank to conduct audit, which caused impossibility of its conducting in the established terms;

      10) non-elimination by the bank, a bank holding company, organization in which the bank and (or) bank holding company are major participants, of deficiencies that affect financial state of the bank or the banking conglomerate specified in the audit report within the terms provided by paragraph 6 of Article 57 of this Law.

      3. When determining the appropriateness of applying supervisory response measures and choosing a supervisory response measure, the following shall be taken into account:

      1) risk level, nature of violations and (or) deficiencies and their consequences;

      2) scale and significance of committed violations and (or) deficiencies and their consequences;

      3) regularity and duration of violations and (or) deficiencies;

      4) impact of committed violations and (or) deficiencies on the financial state;

      5) ability to adjust the situation as a result of applying the chosen supervisory response measure;

      6) availability and effectiveness (efficiency) of the previously applied supervisory response measures;

      7) adequacy of the applied supervisory response measure to the bases of its application;

      8) reasons which caused occurrence of the revealed violations and (or) deficiencies and (or) risks;

      9) adoption by the bank, organization, carrying out certain types of banking operations, bank holding company, organizations within the banking conglomerate, the major participant of the bank of independent measures aimed at elimination of violations and (or) deficiencies identified in the activity, effectiveness of implementation (non-implementation) in connection with this, of specific measures for realization of the adopted measures and (or) willingness to take such measures.

      4. The authorized body shall apply the following supervisory response measures:

      1) recommendatory measures of supervisory response in accordance with Article 45-2 of this Law;

      2) measures on improving financial status and (or) minimize risks in accordance with Article 46 of this Law;

      3) compulsory measures of supervisory response in accordance with Article 47-1 of this Law.

      5. The authorized body shall have the right to apply to the bank, organization, carrying out certain types of banking operations, bank holding company, the organizations which members of a banking conglomerate, major participants of the bank any of the measures of supervisory response determined by paragraph 4 of this Article, irrespective of the measures of supervisory response applied to them earlier.

      6. The order of application of supervisory response measures shall be established by the regulatory legal act of the authorized body.

      Footnote. Chapter 4 is supplemented by Article 45-1 in accordance with the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      Article 45-2. Recommendatory measures of supervisory response.

      1. The authorized body shall apply recommendatory measures of supervisory response in the cases when deficiencies, risks or violations, identified in the bank activity, organization, carrying out certain types of banking operations, the banking conglomerate and (or) organizations included in the banking conglomerate, bank holding company, major participant of the bank, including with the use of reasoned judgment, do not have an essential impact on the financial stability of the bank and (or) banking conglomerate, do not pose a threat to their financial situation and (or) the interests of bank depositors.

      2. Recommendatory measures of supervisory response shall include:

      1) notification on identified deficiencies, risks or violations with bringing (if necessary, determined by the authorized body) of this information to the attention of individual bodies of the bank, organization carrying out certain types of banking operations, organization included in the banking conglomerate, a major participant of the bank, the bank holding company;

      2) providing recommendations of the authorized body on elimination of the revealed deficiencies, risks or violations;

      3) warning about the possibility of applying other supervisory response measures in case of repeated detection by the authorized body of deficiencies, risks or violations, as well as non-fulfillment of recommendatory measures of supervisory response.

      3. The recommendatory measure of supervisory response shall be drawn up by a letter of the authorized body.

      Footnote. Chapter 4 is supplemented by Article 45-2 in accordance with the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      Article 46. Measures for improving financial situation and (or) minimizing risks

      1. The authorized body in order to eliminate deficiencies, risks or violations, including those identified with the use of reasoned judgment, shall apply measures for improving financial situation and (or) minimizing the risks of the bank, an organization carrying out certain types of banking operations, a bank holding company, a banking conglomerate and (or) organizations included in a banking conglomerate, a major participant of the bank by filing claims for:

      1) maintenance of equity capital adequacy ratios and (or) liquidity ratios above the minimum values established by the authorized body;

      2) suspension and (or) restriction of carrying out certain types of banking and other operations, commission of certain types of transactions or establishment of a special procedure for their implementation;

      3) restructuring of assets and (or) liabilities of the bank, including changes in their structure;

      4) reducing costs, including through the termination or limitation of additional hiring of employees, closure of certain branches and representative offices, subsidiaries, limitations on monetary rewards and other types of material incentives for the executives;

      5) suspension and (or) limitation of investments in certain types of assets or establishment of a special procedure for their implementation;

      6) formation of provisions (reserves) according to international financial reporting standards;

      7) recognition of an individual or a legal entity as a person related with a bank, a bank holding company, an organization carrying out certain types of banking operations by special relations;

      8) changing the terms of a transaction made on preferential terms with a person related with the bank, a bank holding company, an organization carrying out certain types of banking operations by special relations, on the terms of similar transactions with third parties on the date of transaction with preferential terms;

      9) restriction of transactions with the persons related with a bank, a bank holding company, an organization carrying out certain types of banking operations by special relations;

      10) termination of accrual and (or) payment of dividends on ordinary and (or) preferred shares and (or) perpetual financial instruments;

      11) revision of internal policies and procedures, limits on the allowable amount of risks, procedures for assessing the effectiveness of the risk management and internal control system;

      12) suspension from performing duties of the persons specified in Article 20 of this Law, including in case of suspension by a bank, a bank holding company, organization carrying out certain types of banking operations, of the persons, specified in Article 20 of this Law, from performing duties until applying this supervisory response measure by the authorized body. When applying this supervisory response measure to the executive employee, the authorized body shall withdraw the consent for appointment (election) to the position of an executive employee;

      13) conducting assessment of property value owned by a major participant of the bank and (or) a bank holding company;

      14) elimination of the causes and (or) conditions that contributed to violation of the rights and legitimate interests of depositors and (or) creditors and (or) customers of banks, organizations carrying out certain types of banking operations;

      15) ensuring compliance of their activities with the legislation of the Republic of Kazakhstan.

      2. The measures provided by paragraph 1 of this Article shall be applied in the form of a written order or a written agreement.

      3. A written order is an instruction to the bank, an organization, carrying out certain types of banking operations, a bank holding company, organizations included in the banking conglomerate, a major participant of a bank for adoption of binding measures established by paragraph 1 of this Article, and (or) the need to submit within the established term an action plan on their implementation (hereinafter – the action plan).

      The action plan shall include a description of deficiencies, risks or violations, causes that led to their occurrence, a list of planned activities, the terms of their implementation, as well as responsible executives.

      4. A written agreement is concluded written agreement between the authorized body and the bank or an organization carrying out certain types of banking operations, and a bank holding company, or organizations included in a banking conglomerate or a major participant of the bank, on execution of measures established by paragraph 1 of this Article, indicating the terms for elimination of the revealed deficiencies, risks or violations and (or) the list of restrictions, which these individuals take to themselves until elimination of the revealed violations and (or) deficiencies.

      The written agreement shall be subject to mandatory signature by the bank or an organization carrying out certain types of banking operations, or a bank holding company, or organizations included in a banking conglomerate, or a major participant of the bank.

      5. A bank, an organization carrying out certain types of banking operations, a bank holding company, an organization included in a banking conglomerate, or a major participant of the bank shall be obliged to notify the authorized body of execution of the measures, specified in the written order and written agreement within the terms provided by these documents.

      6. In the absence of possibility to eliminate the violations within the terms, specified in the written order and (or) action plan, a written agreement for reasons independent from the bank, a bank holding company, an organization included in a banking conglomerate, a major participant of the bank, an organization, carrying out certain types of banking operations, the term for execution of the written order and (or) action plan, a written agreement can be extended until the date established by the authorized body.

      Footnote. Article 46 is in the wording of the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 47. The sanctions

      Footnote. Article 47 is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 47-1. Coercive supervisory response measures

      Footnote. The title of article 47-1 is in the wording of the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VІ (shall be enforced from 01.01.2019).

      1. The authorized body shall apply the coercive supervisory response measures to the persons, having characteristics of a large participant of the bank or a bank holding company and major participants of the bank, a bank holding company and organizations included in a banking conglomerate, in cases:

      1) provided by paragraph 11 of Article 17-1, paragraph 5 of Article 42 and paragraph 6 of Article 57 of this Law;

      2) if application of other supervisory response measures cannot ensure protection of legitimate interests of depositors and creditors, financial stability of the bank and (or) a bank conglomerate, minimization of risks, connected with activity of the bank, a bank holding company;

      3) if the actions (inaction) of a bank holding company and (or) a major participant of the bank may lead to further deterioration of financial situation of the bank, a bank holding company.

      2. In the cases, provided for in paragraph 1 of this Article, the authorized body shall be entitled:

      1) to require an entity, having the characteristics of a major participant, as well as the major participant of the bank to reduce its share of the direct or indirect ownership to the level lesser than ten percent of the voting shares of the bank;

      2) to require an entity, having the characteristics of a bank holding company, as well as the bank holding company to reduce the share of direct or indirect ownership to the level lesser than twenty-five percent of the voting shares of the bank and to suspend transactions (direct or indirect) between the entity and the bank, that expose risks to the bank;

      3) to require the bank and bank holding company in relation to the organizations, in which the bank or bank holding company is a shareholder (participant), as well as the organizations, incorporated in the banking conglomerate, to suspend transactions (direct or indirect) between them, exposing risks to the bank and (or) the bank holding company or the organizations, incorporated in the banking conglomerate;

      4) to require the bank or the entity, having the characteristics of a bank holding company and a bank holding to alienate its share of ownership or control over a subsidiary organization of the organizations in the capital of which they have a significant ownership interest;

      5) to require the organizations, incorporated in the banking conglomerate, to suspend transactions (direct or indirect) between them and their affiliates that expose risks to the organizations, incorporated in the banking conglomerate;

      6) in order to increase the equity capital of the bank or banking conglomerate in the amount sufficient to ensure financial stability of the bank or the banking conglomerate, to require the bank holding company, the major participant of the bank to take measures for additional capitalization of the bank or the banking conglomerate.

      3. In case if the major participant of the bank, bank holding company or the entity, having the characteristics of a major participant of the bank or bank holding company, fail to fulfill the requirements, provided for in paragraph 2 of this Article, and paragraph 6 of Article 57 of this Law, on the basis of the authorized body’s decision, the trust management of the bank's shares shall be established, that are owned by a major participant of the bank, bank holding company or the entity, having the characteristics of the major participant of the bank, bank holding company. These shares shall be transferred in trust management to the authorized body for up to three months.

      The authorized body shall be entitled to make a decision on transference of the bank’s shares, owned by a major participant of the bank, bank holding company or the entity, having the characteristics of the major participant of the bank or bank holding company, to the trust management of the national management holding company.

      In the case of transference of the bank’s shares, owned by a major participant of the bank, bank holding company or the entity, having the characteristics of a major participant of the bank or bank holding company, to the trust management of the national management holding, the period for which the trust management of the shares is established, shall be defined by the decision of the authorized body on establishment of the trust management.

      During the trust management of the bank’s shares, performed by the authorized body or the national managing holding, the owner of the shares shall have no right to take any action in respect of the shares, held in trust.

      A major participant of the bank, bank holding company or the entity, having the characteristics of a major participant of the bank, bank holding company, shall be entitled to apply to the authorized body for the sale of all the owned shares to the persons, specified in the petition.

      The petition shall be granted by the authorized body if the purchasers of the shares, specified in the petition, comply with the requirements of the legislative acts of the Republic of Kazakhstan.

      If the grounds are not eliminated for transference of the bank’s shares, owned by a major participant of the bank, bank holding company or the entity, having the characteristics of a major participant of the bank or bank holding company in trust management until the expiry of the timeframe, for which the trust management was established, the authorized body or the national management holding company shall alienate the bank’s shares, held in trust, through their selling at the organized securities market at the market price, prevailing on the date of the decision making on selling the shares. In the absence of the information on the market value of the shares, the shares’ price may be defined by the appraiser in accordance with the legislation of the Republic of Kazakhstan. The money, received from selling the shares shall be transferred to the entities, which shares were transferred in trust.

      The actions for selling the bank’s shares, owned by a major participant of the bank, bank holding company or the entity, having the characteristics of a major participant of the bank, bank holding company, shall be performed at the expense of the bank.

      The order of the trust management of the bank’s shares, owned by a major participant of the bank, bank holding company or the entity, having the characteristics of the major participant of the bank or bank holding company, and the actions of the authorized body or the national holding company during the trust management, shall be established by the regulatory legal act of the authorized body.

      4. is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).
      Footnote. Article 47-1 is in the wording by the Law of the Republic of Kazakhstan dated 23.10.2008 No 72 -IV (the order of enforcement See Art. 2); as amended by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      Article 47-2. Sanctions

      1. The authorized body shall have the right to apply the following sanctions to the bank, a bank holding company, organizations included in a banking conglomerate, major participants of the bank, as well as an organization carrying out certain types of banking operations, regardless of the supervisory response measures previously applied to them:

      1) suspension or deprivation of the license and (or) the Appendix to the license for conducting all or certain banking operations on the grounds established by Article 48 of this Law;

      2) revocation of permission to open a bank on the grounds provided by Article 49 of this Law.

      2. The decision on suspension or deprivation of the bank's license for conducting all or certain banking operations shall enter into force from the date of its adoption.

      The validity of the bank's license for conducting all or certain banking operations shall be deemed suspended from the date of bringing such a decision to the attention of the bank.

      3. Information on the taken decision to suspend or deprive the license and (or) the Appendix to the license shall be published on the Internet resource of the authorized body in the Kazakh and Russian languages.

      4. The decision on deprivation of the license for conducting all banking operations may be appealed on behalf of the bank only by its shareholders.

      5. The sanctions provided by sub-paragraph 1) of paragraph 1 of this Article shall be applied to the organization carrying out certain types of banking operations.

      The requirements of paragraphs 2, 3 and 4 of this Article shall apply to the cases of deprivation of the license and (or) the Appendix to the license of the organization carrying out certain types of banking operations.

      Footnote. Chapter 4 is supplemented by Article 47-2 in accordance with the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI(shall be enforced from 01.01.2019).

      Article 48. Grounds for suspension, termination or deprivation of the license and (or) the Appendix to the license for conducting all or certain banking operations

      Footnote. The title of Article 48 is in the wording of the Law of the Republic of Kazakhstan dated 16.05.2014 No. 203-V (shall be enforced upon expiry of six months after its first official publication).

      1. Suspension or deprivation of the license and (or) the Appendix to it for conducting all or certain banking operations shall be carried out on any of the following grounds:

      a) non-compliance with the requirements of Article 20, paragraphs 2 and 7 of Article 26 of this Law in the course of the activities of the bank and an organization carrying out certain types of banking operations;

      a-1) revocation of the status of a bank holding company, a major participant of the bank –individual, owning twenty-five or more percent of the allotted (net of the preferred and those, repurchased by the bank) shares of the bank, if the bank does not have another bank holding or a major participant- individual, owning twenty five or more percent of the bank’s shares;

      a-2) absence of the bank (except for the banks, more than fifty percent of placed shares of which directly or indirectly belong to the state and (or) the national managing holding), having license to accept deposits, open and maintain bank accounts of individuals, a parent bank or a bank holding company, having the minimum required rating of one of the rating agencies, the list of which is established by the regulatory legal act of the authorized body, or a major participant-an individual;

      b) performance of the banking operations with the systematic (three or more times within twelve consecutive calendar months) violation of the norms of the acting legislation;

      c) is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).
      d) is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      e) failure to comply with the obligations to disclose general terms of bank operations, established by Article 32 of this Law;

      f) violation of the prohibition, established in Article 40 of this Law, to provide preferential terms to the entities, having special relationship with the bank;

      g) is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      h) systematic (three or more times within twelve consecutive calendar months) violation of the legislation of the Republic of Kazakhstan on the issues within the competence of the authorized body, or systematic (three or more times within twelve consecutive calendar months) non-execution of supervisory response measures applied by the authorized body;

      h-1) non-compliance of the risk management and internal control system with the requirements of the authorized body;

      m-1) non-execution by the bank holding company, a major participant of the bank of requirements of the authorized body on increasing the bank's equity capital, as well as the requirements imposed in accordance with paragraph 2 of Article 47-1 of this Law;

      j) implementation of the activities, prohibited or limited for banks in accordance with the requirements of Article 8 of this Law;

      k) fulfillment of operations by the bank that are beyond the limits of its legal capability, established by this Law, the charter of the bank and the license (licenses) for banking operations;

      k-1) failure to exercise by the bank, an organization carrying out certain types of banking operations, in accordance with the license issued to them and (or) the Appendix to it the activity within twelve consecutive calendar months from the date of its issue;

      k-2) failure to exercise by a legal entity having the license to organize exchange operations with cash foreign currency within twelve consecutive calendar months the activity in accordance with the issued license and (or) the Appendix to the license;

      k-3) non-compliance with the qualification requirements for the activity on organization of exchange operations with cash foreign currency of a legal entity having the license to organize exchange operations with cash foreign currency;

      l) the court's decision to terminate the bank’s activities;

      l-1)is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).
      m )is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).
      n) is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      o) classification of the bank to the category of an insolvent bank in accordance with this Law.

      1-1. The bank (with the exception of the Islamic Bank), which is not a member of the obligatory deposit insurance, forfeits its license to accept deposits, open and maintain bank accounts of individuals.

      1-2. Is excluded by the Law of the Republic of Kazakhstan dated 10.06.2014 No. 206-V (shall be enforced upon expiry of ten calendar days after its first official publication).
      1-3. Is excluded by the Law of the Republic of Kazakhstan dated 10.06.2014 No. 206-V (shall be enforced upon expiry of ten calendar days after its first official publication).

      1-4. Termination of the license and (or) the Appendix to the license for conducting all or certain banking operations shall be carried out on the grounds provided by the Law of the Republic of Kazakhstan "On Permits and Notifications", as well as upon issuance to the bank of a permit for voluntary liquidation.

      2. In determining the appropriateness of applying sanctions and choosing the sanction in the form of suspension or deprivation of the license and (or) the Appendix to the license for conducting all or certain banking operations, the following shall be taken into account:

      1) the level of risk, nature of violations and (or) deficiencies and their consequences;

      2) the scale and significance of the violations and (or) deficiencies and their consequences;

      3) regularity and duration of violations and (or) deficiencies;

      4) the impact of violations and (or) deficiencies on the financial situation;

      5) the reasons which caused occurrence of the revealed violations and (or) deficiencies;

      6) adoption by the bank, an organization carrying out certain types of banking operations, of independent measures aimed at eliminating deficiencies, risks or violations revealed in the activity;

      7) the possibility of taking settlement measures against an insolvent bank.

      Footnote. Article 48 as amended by the Decree of the President of the Republic of Kazakhstan having the force of Law dated 27.01.1996 No 2830, the Laws of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 08.12.1997 No 200; dated 16.07.1999 No 436; dated 02.03.2001 No 162 (see Art. 2); dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 08.07.2005 No 69; dated 23.12.2005 No 107 (the order of enforcement see Art. 2 of the Law No 107); dated 31.01.2006 No 125; dated 12.01.2007 No 222 (shall be enforced upon expiry of six months from the date of its first official publication); dated 19.02.2007 No 230 (the order of enforcement see Art. 2); dated23.10.2008 No 72 -IV (the order of enforcement see Art. 2); dated 12.02.2009 No 133 -IV (the order of enforcement see Art. 2); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009); dated 28.08.2009 No 192 -IV (shall be enforced from 08.03.2010 ); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 21.06.2012 No 19 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforce upon expiry of ten calendar days after its first official publication.); dated 16.05.2014 No. 203-V (shall be enforced upon expiry of six months after its first official publication); dated 10.06.2014 No. 206-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 27.04.2015 No. 311-V (shall be enforced from 01.09.2014); dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016); dated 02.07.2018 No. 168-VI (see Article 2 for enforcement).

Article 48-1. Consequences of revocation of the bank’s license

      1. The bank, whose license to perform banking transactions was revoked, shall not be entitled to conduct banking and other activities.

      From the date of revoking of the bank license for all banking operations:

      1) all operations on bank accounts of clients and the bank itself shall be terminated, except for the cases related to:

      expenses provided by regulatory legal acts of the authorized body;

      crediting money received in favor of the bank;

      return of money received on closed accounts of the persons who were previously clients of the bank;

      expenses on execution of the clients’ instructions on transfers of the money received on their bank accounts after deprivation of the bank of the license, provided absence of debt of the client to the bank or repayment by the client of the available debt to the bank;

      conducting operation provided by Articles 61-11 and 61-12 of this Law;

      2) the founders (participants), the bodies of the bank shall have no right to dispose the assets of the bank;

      3) the executive employees, and, if necessary, other employees of the bank shall be suspended from work in accordance with the labor legislation of the Republic of Kazakhstan;

      4) the creditors’ claims against the bank may only be brought in a liquidation proceeding, except for the claims, related to the current costs for the bank’s maintenance;

      5) recovery of money from bank accounts of bank according to the claims of the creditors, state revenue bodies, including those subject to satisfaction in the indisputable (non-acceptance) order, as well as foreclosure on property of the bank shall not be allowed;

      6) officials and major participants of the bank shall be prohibited from alienating their shares of the bank;

      7) the implementation of the previous decisions, taken by the courts in respect of the bank shall be suspended;

      8) the obligations on repayment of the principal, interest and penalties (fines, penalties) shall be executed by the debtors of the bank in accordance with the bank loan contracts and other types of transactions;

      9) the liabilities of the bank which is a clearing participant for transactions with financial instruments concluded in the trading systems of the trade organizers by the open bidding method and (or) with participation of the central counterparty, shall be performed by the clearing organization (central counterparty), including through the full use by the clearing organization (central counterparty) of financial instruments that are the full or partial collateral for obligations on transactions under which clearing activity is carried out, by margin contributions, contributions to the guarantee funds of the clearing organization (central counterparty), in accordance with the procedure established by the regulatory legal act of the authorized body and internal documents of the clearing organization (central counterparty).

      1-1. After deprivation of the bank of the license for conducting all banking operations, the authorized body shall appoint the temporary administration (temporary administrator) of the bank.

      The powers of the previously existing bodies of the bank shall be suspended.

      1-2. The temporary administration (temporary administrator) of the bank within ten working days from the date of deprivation of the bank's license shall have the right to make a decision on carrying out the operation provided by Articles 61-11 and 61-12 of this Law and apply to the authorized body for approval of the issue on conducting this operation.

      The authorized body shall, within a period of not more than ten working days, approve or refuse to conduct the operation provided by Articles 61-11 and 61-12 of this Law by the temporary administration (temporary administrator) of the bank.

      The authorized body after conducting by the temporary administration (temporary administrator) of the bank of the specified operation shall apply to the court within ten working days with an application for compulsory termination of the activity (liquidation) of the bank in the manner established by the legislation of the Republic of Kazakhstan.

      In case of failure by the temporary administration (temporary administrator) of bank to take decision on conducting the operation, provided by Articles 61-11 and 61-12 of this Law, within the period specified in part one of this paragraph, or refusal by the authorized body in the conduct of this operation, the authorized body within ten working days shall apply to the court with an application on the forced termination of activity (liquidation) of the bank in the order established by the legislation of the Republic of Kazakhstan.

      1-3. Temporary administration (temporary administrator) of the bank on transactions executed by the bank, deprived the license for conducting all banking operations, or a person authorized by him within three years prior to the date of deprivation of the license, shall have the right to apply to the court with an application for recognition of transactions invalid if there are grounds for invalidity of transactions provided by the civil legislation of the Republic of Kazakhstan and paragraph 2 of Article 61-13 of this Law.

      The consequences of recognition of transactions invalid, provided by paragraph 3 of Article 61-13 of this Law shall apply to the bank deprived of a license for conducting all banking operations.

      2. The procedure for work of the bank, appointment of its temporary administration (temporary administrator), powers of temporary administration (temporary administrator), as well as the procedure, forms and terms for submission by the temporary administration (temporary administrator) of the accounts and other information to the authorized body shall be determined by regulatory legal acts of the authorized body.

      3. The temporary administration (temporary administrator) of the bank shall carry out its activity until the appointment of liquidation commission of the bank by the authorized body.

      Control over the activity of the temporary administration (temporary administrator) of the bank until the appointment of liquidation commission of the bank shall be carried out by the authorized body.

      In order to carry out control over the activity of the temporary administration (temporary administrator), the authorized body shall have the right in case of revealing in the activity of the temporary administration (temporary administrator) violations of requirements of the legislation of the Republic of Kazakhstan, rights and legitimate interests of creditors to issue compulsory for execution by temporary administration (temporary administrator) written orders on elimination of the revealed violations and (or) reasons and conditions, promoting to commit them, in the established term and (or) submission of the action plan the established term.

      The action plan, submitted within the term, established by a written order shall specify the descriptions of the violations, the reasons that led to their occurrence, a list of planned activities, terms for their carrying out and responsible officials.

      Appeal against a written order of the authorized body in the court does not suspend its execution.

      4. A report of temporary administration (temporary administrator) of the bank about the work accomplished shall be submitted to the authorized body for approval.

      5. The temporary administration (temporary administrator) of the bank shall lay down its powers and transfer the documents and property of the bank to the chairman of the liquidation commission of the bank within one month from the date of appointment of the liquidation commission of the bank.

      6. Acceptance and transfer of documents and property of the bank from the temporary administration to the chairman of the liquidation commission shall be drawn up in the protocol, which is made in four copies, one of which is sent to the authorized body, the second – to the court that has made a decision on the liquidation of the bank.

      7. During the period of its activity, the temporary administration (temporary administrator) of the bank shall not have the right to:

      carry out expenditure operations, except for the cases provided by paragraph 1 of this Article;

      change the terms of contracts previously concluded by the bank, except for making changes by agreement of the parties that do not deteriorate financial situation of the bank.

      8. Financing of expenses related to the forced reorganization and termination of activity of the banks on the basis of forced liquidation shall be prohibited by the authorized body, except for the expenses related to the payment of employees of the authorized body included in the temporary administration (temporary administrator) of the bank and the liquidation commission, as well as the costs for publishing in the official publications of the Ministry of Justice of the Republic of Kazakhstan in the Kazakh and Russian languages of information on the court decision about the forced liquidation of the bank and the costs, related with state registration of termination of activity of the bank on the basis of forced liquidation by the Corporation and with the delivery of documents for storage in archive after the completion of liquidation of the bank in cases of absence of the bank property or if its value is insufficient to cover these costs.

      Footnote. The Law is supplemented by Article 48-1in accordance with the Law of the Republic of Kazakhstan dated 11.07.1997 No 154; as amended by the Law of the Republic of Kazakhstan dated 10.02.2011 No 406 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication.); dated 07.11.2014 No. 248-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 27.04.2015 No. 311-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016); dated 02.07.2018 No. 168-VI (the order of enforcement see Art. 2); dated 02.04.2019 No. 241-VI (shall be enforced from 01.07.2019).

Article 49. The grounds and procedure for revocation of permission to open a bank

      1. The authorized body shall revoke the issued permit to open a bank in the following cases:

      a) the bank makes a decision on voluntary termination of its activities through reorganization or liquidation;

      b) the court's decision to terminate the activities of the bank;

      c) revelation of violations in the activity of the legal entity, registered as a bank, that are specified in paragraph 2 of this Article.

      2. Revocation of the permission to open a bank, issued to the legal entity, shall be carried out by the authorized body under any of the following grounds:

      a) within one year from the date of the state registration of a legal entity as a bank, revelation of the false information on the basis of which the permit was issued;

      a-1) violation of the timeframes, provided for in Article 25 of this Law;

      b) the failure to obtain a license to conduct banking operations within one year from the date of the state registration of a legal entity as a bank;

      c) non-payment of the equity capital within one year after the state registration of a legal entity as a bank;

      d) violation of the terms of activities, specified by the banking legislation of the Republic of Kazakhstan for a legal entity, registered as a bank.

      3. (The paragraph is excluded by the Law of the Republic of Kazakhstan dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004).

      4. The authorized body’s decision to revoke the permission to open a bank shall be the ground for re-registration or termination of the legal entity.

      Footnote. Article 49 is in the wording by the Law of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 16.05.2003 No 416; as amended by the Laws of the Republic of Kazakhstan dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009); dated 27.04.2012 No 15 -V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 50. Bank secrecy

      1. Bank secrecy includes information about the clients and correspondents of banks, their transactions and relationships with banks related to the receipt of banking services, including without limitation: information about the presence, owners and numbers of bank accounts and correspondents of banks, balances and movement of money in these accounts and the accounts of the bank itself, limitations on the transferred accounts (decisions and (or) orders of state bodies on suspension of expenditure operations, arrests, pledges), transactions of the clients and correspondents and the bank itself (except for general conditions of conducting banking operations), as well as availability, owners, nature and value of the property of the clients, stored in safe boxes, cabinets and premises of the bank, information on the receipt of loans by the clients (except for the cases, determined in this Article), transactions on payments and (or) money transfers, including those performed without opening a bank account.

      Information on loans, issued by the bank in the process of liquidation does not belong to bank secrecy.

      2. Banks shall guarantee the secrecy on transactions and accounts of their depositors, clients and correspondents of banks, as well as the secrecy of property stored in safe boxes, cabinets and premises of banks, and other information constituting a banking secrecy in accordance with this Article.

      3. Officials, employees of banks, bank holding companies-residents of the Republic of Kazakhstan, legal entities, specified in subparagraphs 8), 8-1) and 8-2) of part two of paragraph 4 of this Article, and other persons who by virtue of their official duties have received access to information constituting a bank secrecy, shall bear criminally liability for their disclosure, except for the cases provided by paragraphs 4-8, 8-1 of this Article.

      4. Bank secrecy may be disclosed only to the client, any third party with the consent of the owner of the account (property), given in writing or by means of identification of the account owner, the credit bureau for a bank loan, leasing, factoring and forfeiting operations, accounting of promissory notes, and issued bank guarantees, sureties, letters of credit in accordance with the laws of the Republic of Kazakhstan, as well as to the persons specified in paragraphs 5, 6, 6-1, 7, 7-1, 7-2, 8 and 8-1 of this Article, on the grounds and to the extent provided by this Article.

      The following shall not be a disclosure of the banking secrecy:

      1) mandatory notification of state revenue bodies by banks exclusively for the purposes of tax administration on opening of bank accounts to an individual registered as an individual entrepreneur, private notary, private bailiff, lawyer, professional mediator, a foreigner and a stateless person, a legal entity, including a non-resident, its structural subdivisions;

      1-1) provision by banks to the authorized body for financial monitoring of information, of data and documents in accordance with the Law of the Republic of Kazakhstan "On Counteraction of Legitimization (Laundering) of Incomes Received by Illegal Means, and Financing of Terrorism";

      Note of the RCLI! A change is provided in subparagraph 1-2) by the Law of the Republic of Kazakhstan dated 02.08.2015 No. 342-V (shall be enforced from 01.01.2020).

      1-2) provision of data and information on payments and money transfers related to payments into the budget, transfer of obligatory pension contributions, obligatory professional pension contributions and social contributions, payment of public services performed by banks directly when making these payments and money transfers to the operator of the payment gateway of "electronic government", state bodies and courts through the payment gateway of "electronic government", as well as submission of information on returned payments and money transfers, carried out by the central authorized body for budget execution;

      1-3) submission by banks to the state revenue body solely for the purpose of tax administration of information on contracts of cession concluded with collection agencies, in the form established by the authorized state body, carrying out management in the field of taxes and other obligatory payments to the budget, as agreed with the National Bank of the Republic of Kazakhstan;

      1-4) submission by banks to the state revenue body of information on export or import operations of the clients in the manner determined by the legislation of the Republic of Kazakhstan;

      1-5) submission by banks to the state revenue body of information and documents required for conducting tax audit and horizontal monitoring;

      1-6) submission to the state revenue bodies of information on payments and (or) money transfers on currency transactions in cases, established by the laws of the Republic of Kazakhstan;

      2) submission of the securities to the issuer and the representative of the holders of the

      securities of the information on loans, the claims on which are transferred as collateral for the securities, including in the frames of the securitization transaction;

      2-2) disclosure by the authorized body of information on transactions with securities and other financial instruments concluded in the organized and unorganized securities market, corresponding to one of the conditions of manipulation in the securities market;

      3) submission of information on the balance of money in the bank accounts of individuals and the interest, accrued on them by the bank and (or) the temporary administration, established in view of revocation of the license to conduct all banking operations, to the organization, performing the obligatory deposit insurance and to the banks - agents to implement activities, associated with the money refund to the depositors; to the audit organization, on the basis of the written consent of the owner of the account;

      3-1) submission by the bank – a member of mandatory deposit guarantee system, classified as a bank with an unstable financial situation that threatens the interests of its depositors and creditors and (or) a threat to the stability of the financial system, and (or) classified as insolvent banks, by temporary administration for the bank management (temporary bank manager) of information about individuals’ deposits, as well as information about their obligations in case of coincidence of the depositor and the debtor in one person of the organization carrying out obligatory deposits guarantee, to perform functions, provided by the legislation of the Republic of Kazakhstan on mandatory deposit guarantee;

      4) submission to other banks of the data necessary for carrying out operations, provided by Articles 61-2, 61-4, 61-11 and 61-12 of this Law;

      4-1) submission in electronic form by banks at the request of the subject of the provision of services in electronic form and the subject of receipt of services in electronic form, information about the bank account belonging to the person specified in the request, and the existence of a contract of pledge of movable property - in the provision of public services in electronic form in in accordance with the Law of the Republic of Kazakhstan "On Informatization";

      4-2) submission in electronic form by banks at the request of the subject of the provision of services in electronic form and the subject of receipt of services in electronic form, information about the amount of money, date of payment, the sender of the money and the beneficiary when individuals and legal entities make payments for the services provided in electronic form in accordance with the Law of the Republic of Kazakhstan "On Informatization";

      4-3) submission by the bank to the state revenue bodies of information about the presence (opening), owners and numbers of bank accounts of depositors, clients and correspondents of the bank, being the residents (taxpayers) of a foreign state and (or) major participants of which are residents (taxpayers) of a foreign state, as well as on balances and movement of money on these accounts and the accounts of the bank itself, bank operations and other information necessary for carrying out by the bodies of state revenues of obligations, provided by international treaty of the Republic of Kazakhstan;

      4-4) submission by banks within the framework of tax administration to the state revenue bodies of information on the owners and numbers of current accounts opened for accounting of value added tax, as well as balances and movements of money on such accounts;

      4-5) submission by banks to the state revenue body of information on the balances and movement of money on bank accounts of persons registered with the state revenue bodies as taxpayers, carrying out activity on electronic trade in goods;

      4-6) provision by the bank to the authorized body of information on incidents of information security of the bank, including information on violations, failures in information systems;

      4-7) provision by the authorized body to the National coordination center for information security of information on incidents of information security of the bank, including information on violations, failures in information systems, if there is a threat to the stability of the financial and (or) payment system of the Republic of Kazakhstan;

      4-8) provision by the authorized body to the audit organization of information, specified in part five of paragraph 9 of Article 57 of this Law;

      5) submission of information by second-tier banks to an organization, specializing in improving the quality of credit portfolios of second-tier banks, as well as to a legal entity carrying out an independent assessment of assets, technical and (or) financial and (or) legal audit, as well as other services necessary to carry out its statutory activity by the organization, specializing in improving the quality of credit portfolios of second-tier banks;

      5-1) submission of certificates on availability and numbers of bank accounts, balances and money movement on these accounts, bank operations (except for general conditions of conducting banking operations), as well as information about the availability, nature and value of the property, stored in safe boxes, cabinets and premises of the bank, represented by an organization specializing in improving the quality of loan portfolios of second-tier banks, in respect of a person that is a borrower, guarantor, surety, lessee or mortgagor of the organization, upon written request of the organization, signed by the chairman of the board or his/her deputy, subject to submission of copies of the documents, confirming acquisition by the organization of the rights of claim on this credit with the mark of the organization "True Copy".

      The inscription "True Copy" is specified without quotation marks, shall be signed by the authorized person of the organization with appropriate authority to certify copies of documents, indicating his/her position, name and initials, the date of certification and affixed with seal of the organization, with the exception of subjects of private entrepreneurship;

      5-2) submission by the second-tier banks of the stability organization, one hundred percent of voting shares of which belong to the National Bank of the Republic of Kazakhstan, of information necessary for implementation of Programs of refinancing of mortgage housing loans (mortgage loans) and (or) improving the financial stability of the banking sector of the Republic of Kazakhstan, approved by the authorized body;

      6) submission of information to the bank’s creditors by the bank, which is under restructuring, the liabilities to which are to be restructured, to other banks within the framework of the restructuring on the restructured assets and liabilities;

      7) submission by the banks and organizations, engaged in certain types of banking transactions, of the negative information to the credit bureaus and submission of negative information by the credit bureaus about the subject of a credit record in part of the arrears of more than one hundred and eighty days;

      8) provision by banks of the information connected with the credit (loan) on which there is an overdue debt on the principal debt and (or) the accrued remuneration, to the persons, specified in paragraph 4 of Article 36-1 of this Law, at assignment of rights (claims) on this credit (loan);

      8-1) provision by an organization specializing in improving the quality of credit portfolios of second-tier banks to a legal entity, carrying out trust management of dubious and hopeless assets, of information on a credit (loan), the rights of claim on which have been acquired by this organization;

      8-2) provision by banks to the collection agency of information on the credit (loan) in the framework of the concluded debt collection contract with this collection agency;

      9) submission of information by a bank to the bank holding company-resident of the Republic of Kazakhstan for calculation of prudential standards by the banking conglomerate, as well as the formation of the system of risk management and internal controls of the banking conglomerate;

      10) submission of documents to other banks, confirming the issuance of a bank loan;

      11) is excluded by the Law of the Republic of Kazakhstan dated 07.03.2014 No. 177-V (shall be enforced upon expiry of ten calendar days from the date of its first official publication);

      Note of the RCLI!
      Subparagraph 12) shall be enforced from 01.01.2014 and is valid until 01.01.2020 (see Article 2 of the Law of the Republic of Kazakhstan dated 02.07.2014 No. 225-V).

      12) submission by the bank of the list of debtors on credits (loans), the debt on which is subject to forgiveness:

      to the National Bank of the Republic of Kazakhstan;

      to the authorized state body for state planning;

      to the authorized state body, carrying out management in the sphere of ensuring receipts of taxes and other obligatory payments to the budget.

      The provisions of this subparagraph shall apply to the bank:

      in respect of which restructuring has been conducted by the court decision, more than 90 percent of the voting shares of which as of December 31, 2013 belong to the national management holding;

      being the legal successor of the bank, specified in paragraph two of this part, as a result of reorganization by way of merger.

      5. Certificates on availability and numbers of bank accounts shall be issued to the bank, in relation to which the account owner (s) is a borrower, guarantor, surety, lessee or pledgor, on the basis of the bank's request, subject to submission of the documents confirming the receipt of credit, the list and procedure for submission of which shall be established in the regulatory legal acts of the authorized body.

      The bank may send requests and documents confirming the receipt of the credit, on paper or in electronic form.

      6. Certificates about availability and numbers of bank accounts of legal entities and (or) its structural subdivision, as well as current accounts of an individual carrying out entrepreneurial activity without forming a legal entity, private notary, private bailiff, lawyer, professional mediator about the balances and movement of money on these accounts shall be issued to:

      a) the state bodies and officials carrying out the functions of criminal prosecution: on criminal cases in their proceedings on the basis of a written request certified by the seal and authorized by the Prosecutor;

      b) the courts: on cases in their proceedings on the basis of determination, resolution, decision and sentence of the court;

      c) the public prosecutor: on the basis of the decision on examination, within his competence, for the case that is under his consideration;

      c-1) the national security bodies and state security Service of the Republic of Kazakhstan with the sanction of the Prosecutor for the purpose of prevention, opening and suppression of intelligence and (or) subversive actions;

      d) is excluded by the Law of the Republic of Kazakhstan dated 28.11.2014 No. 257 (the order of enforcement see subparagraph 12)of Article. 10);

      e) the state revenue bodies for tax administration, customs control in respect of:

      the audited legal entity and (or) its structural subdivision on the issues related to taxation;

      Note of the RCLI!
      Subparagraph e) is provided to supplement by passage three in accordance with the Law of the Republic of Kazakhstan dated 18.11.2015 No. 412-V (shall be enforced from 01.01.2021).

      the audited individual registered as an individual entrepreneur, private notary, lawyer, private bailiff, professional mediator, on the issues related to taxation;

      an individual, removed from the registration as an individual entrepreneur and terminated activity in a simplified manner for a period of time not exceeding the limitation period established by the tax legislation of the Republic of Kazakhstan;

      legal entity and (or) its structural subdivision, individual entrepreneur, private notary, private bailiff, lawyer, professional mediator, the actual absence of whom at the place of location is confirmed in the procedure established by the tax legislation of the Republic of Kazakhstan and who have not submitted the tax reports before the expiration of six months after the deadline for its submission, established by the tax legislation of the Republic of Kazakhstan, with the exception of extension period of such term in cases, provided by the tax legislation of the Republic of Kazakhstan;

      a legal entity, an individual entrepreneur, a private notary, a private bailiff, a lawyer, a professional mediator, who are subject to the execution peculiarities of tax obligation upon termination of activity in accordance with the tax legislation of the Republic of Kazakhstan;

      inactive legal entity, individual entrepreneur, private notary, lawyer;

      the audited legal entity and (or) its structural subdivision, individual entrepreneur, who are residents of the Republic of Kazakhstan, as part of the customs inspection;

      legal entities, structural subdivisions of legal entities, individuals registered as an individual entrepreneur, having within four months from the date of occurrence, the outstanding tax debt in the amount of more than 10,000 times the monthly calculation index, established by the Law on republican budget and effective on the 1st of January of the relevant financial year;

      e -1) to state bailiffs: on the cases of proceedings in their production on the basis of the order of the state bailiff, certified by the seal of the justice body and sanctioned by the Prosecutor, only in part of information on availability and numbers of bank accounts of legal entities and (or) its structural subdivision, on availability of money in these accounts within the recovered amount;

      e -2) to private bailiffs: on the cases of proceedings in their production on the basis of the order of the private bailiff, certified by the personal seal and sanctioned by the Prosecutor, or its copy certified by the personal seal, only in part of information on availability and numbers of bank accounts of legal entities and (or) its structural subdivision, on availability of money in these accounts within the recovered amount;

      e-3) the authorized body in the field of rehabilitation and bankruptcy in relation of a person, on whom there is the court decision on recognition as bankrupt for the period within five years before initiation of a bankruptcy case and (or) rehabilitation from the sanctions of a prosecutor.

      6-1. Certificates on availability and numbers of bank accounts of an individual, about the rests and movement of money on these accounts shall be issued to the bodies of state revenues in relation to:

      a person registered in accordance with the procedure established by the Law as a candidate for the President of the Republic of Kazakhstan, deputies of the Parliament of the Republic of Kazakhstan and maslikhat, as well as members of local self-government bodies, and his/her spouse;

      a person who is a candidate for a state position or for a position related to the performance of state or

      a person holding a public position during the period of performing his/her powers and his/her spouse during the same period;

      a person released on parole from serving a sentence.

      Note of the RCLI!
      Part two of paragraph 6-1 is provided in the wording of the Law of the Republic of Kazakhstan dated 18.11.2015 No. 412-V (shall be enforced from 01.01.2021).

      The information provided by this paragraph and subparagraph d) of paragraph 6 of this Article shall be submitted upon request of the state revenue body solely for the purpose of tax administration and customs control in the form established by the authorized state body, carrying out management in the field of ensuring receipts of taxes and other obligatory payments to the budget, in agreement with the authorized body.

      Note KEEP!
      Clause 6-1 is provided to be supplemented with part three in accordance with the Law of the Republic of Kazakhstan dated 11.11.2015 No. 412-V (shall be enforced from 01.01.2021).
      Note of the RCLI!
      Article 50 is provided to supplement by paragraph 6-2 in accordance with the Law of the Republic of Kazakhstan dated 18.11.2015 No. 412-V (shall be enforced from 01.01.2021 and valid until 01.01.2026).
      Note of the RCLI!
      Article 50 is provided to supplement by paragraphs 6-3 and 6-4 in accordance with the Law of the Republic of Kazakhstan dated 18.11.2015 No. 412-V (shall be enforced from 01.01.2021).

      6-5. The information on availability (opening), numbers of bank accounts and balances of money on these accounts, as well as availability, type and cost of other property, including placed on metal accounts or under management, shall be submitted by the banks and organizations carrying out certain types of banking operations, to the authorized state body, carrying out management in the field of ensuring receipts of taxes and other obligatory payments to the budget, in accordance with the tax legislation of the Republic of Kazakhstan in relation to:

      1) individuals non-residents and legal entities non-residents, as well as legal entities whose beneficial owners are non-residents;

      2) individuals and legal entities specified in the request of the authorized body of a foreign state sent in accordance with the international treaty of the Republic of Kazakhstan.

      The order, terms and form of submission of the information, specified in this paragraph shall be established by the authorized state body, carrying out the management in the sphere of ensuring receipts of taxes and other obligatory payments to the budget, in agreement with the authorized body.

      7. The information about the presence and numbers of bank accounts of an individual, the balance and flow of money in these accounts, as well as available information about the nature and value of his property, kept in safe boxes, strong rooms and bank’s premises shall be issued to:

      a) the representatives of an individual entity: on the basis of a notarized power of attorney;

      b) bodies of inquiry and preliminary investigation: on criminal cases under their production in cases when money and other property of an individual held on the accounts or kept in the bank, can be seized, levied or applied confiscation of property on the basis of a written request, signed by the first head or an investigator, certified by the seal of the body of inquiry or preliminary investigation or request in an electronic form, certified by the electronic digital signature of the first head or an investigator, imposed Prosecutor’s sanction, including in electronic form;

      c) the courts: for the cases that are under their proceedings on the basis of a decision, resolution, court verdict in the cases when the money and other property of an individual which is in the accounts or kept in the bank may be seized, charged or confiscated

      d) the Prosecutor: on the basis of the resolution on production of the audit submitted on paper or in the form of the electronic document, within its competence on the material which is under his/her consideration;

      d-1) national security bodies and state security Service of the Republic of Kazakhstan with the sanction of the Prosecutor for the purpose of prevention, opening and suppression of intelligence and (or) subversive actions;

      g) state bailiffs: on the cases of enforcement proceeding under their production, on the basis of the order of the state bailiff, certified by the seal of the justice body and sanctioned by the Prosecutor, only in part of information on availability and numbers of bank accounts of individual-debtor about the availability of money on these accounts within the amount levied, and in case of insufficiency of money – as well as about the movement of money on these accounts since the commencement of enforcement proceedings and availability of safe deposit boxes;

      h) private bailiffs: on the cases of enforcement proceeding under their production, on the basis of the order of the state bailiff, certified by the seal of the justice body and sanctioned by the Prosecutor, only in part of information on availability and numbers of bank accounts of individual-debtor about the availability of money on these accounts within the amount levied, and in case of insufficiency of money – as well as about the movement of money on these accounts since the commencement of enforcement proceedings and availability of safe deposit boxes;

      7-1. Certificates on availability and numbers of bank accounts, balances and movement of money on bank accounts of the client, provided by paragraphs 6 and 7 of this Article, shall be submitted on paper or in electronic form within three business days from the date of receipt of the request of the authorized body.

      The certificate may be submitted in the form of an electronic document upon receipt of the decision of the bailiff authorized by the Prosecutor in electronic form by means of the state automated information system of enforcement proceedings.

      Certificates on availability and numbers of bank accounts, balances and movement of money on bank accounts of the client, submitted on paper, shall be sent in the form of an extract on movement of money on bank accounts of the client and contain information determined by the regulatory legal act of the authorized body.

      Certificates on availability and numbers of bank accounts, balances and movement of money on bank accounts of the client shall be issued to the persons specified in subparagraphs a), b), c), d), d-1) and d-2) of paragraph 6, as well as subparagraphs b), c), d), g) and h) of paragraph 7 of this Article, on the basis of a request on paper or in electronic form.

      7-2. Banking secrecy may be disclosed to the banking ombudsman on the applications of borrowers-individuals under consideration for the settlement of disputes arising from bank loan contracts.

      8. The information about the presence and the numbers of bank accounts of an individual, and about the balance of money in them, as well as the available information about the presence, nature and value of his property, kept in the safe boxes, strong rooms and premises of the bank, in case of death of the owner shall be issued to:

      a) the persons, specified by the account (property) holder in the testamentary arrangement;

      b) the courts and notaries: for the inheritance cases that are under their proceedings on the basis of the decision, the court decision or a written request of a notary, certified by the seal. The written request of a notary shall be attached with the copy of the death certificate of the account holder;

      c) the foreign consular offices: for the inheritance cases that are under their proceedings.

      8-1. Certificates about availability and numbers of bank accounts of an individual, including those carrying out entrepreneurial activity without forming a legal entity, private notary, private bailiff, lawyer, professional mediator about the balance and movement of money on these accounts, opened to the subjects of legalization to legalization of money in accordance with the Law of the Republic of Kazakhstan "On Amnesty of Citizens of the Republic of Kazakhstan, Repatriates and Persons Having a Residence Permit in the Republic of Kazakhstan in Connection with Legalization of Property", shall be submitted to the bodies of inquiry and preliminary investigation, state revenue bodies with the sanction of the General Prosecutor or his/her deputies.

      9. Is excluded by the Law of the Republic of Kazakhstan dated 29.06.1998 No 236.

      10. The authorized body shall provide information containing banking secrecy to the organizations specified in paragraph 4 of Article 61 of the Law of the Republic of Kazakhstan "On the National Bank of the Republic of Kazakhstan" on the conditions provided by this Article.

      The authorized body shall provide information received in accordance with international treaties of the Republic of Kazakhstan, treaties providing for the exchange of confidential information, to other state bodies of the Republic of Kazakhstan only with the consent of the party that provided it with such information.

      11. Requests, resolutions of the state bodies or officials listed in points 6 and 7 of this Article, except for the requests of state revenue bodies, on paper shall be subject to certification by the seal of the state body or the official.

      When submitting the copies of requests, resolutions of state bodies or officials in copies of the specified documents the mark "True copy" shall be put down. The mark "True copy" is specified without quotes, certified by the signature of the authorized person empowered to certify the copies of documents, indicating his/her position, surname and initials, the date of certification and the seal of a state body or an official.

      12. Seizure and (or) reclamation of documents that contain information constituting a bank secrecy, or their copies shall be made on the basis of resolutions on seizure, sanctioned by the court in accordance with the norms of the Criminal procedure code of the Republic of Kazakhstan, or on the basis of a court ruling in the manner determined by the Civil procedure code of the Republic of Kazakhstan.

      13. The requirements of this Article shall also be applied to the organizations carrying out certain types of banking operations.

      Footnote. Article 50as amended by the Laws of the Republic of Kazakhstan dated 27.09.1996 No 37; dated 11.07.1997 No 154; dated 29.06.1998 No 236; dated 29.03.2000 No 42; dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 06.07.2004 No 572; dated 13.12.2004 No 11 (shall be enforced from 01.01.2005 ); dated08.07.2005 No 69; dated 23.12.2005 No 107 (the order of enforcement see Art. 2 of the Law No 107); dated 22.06.2006 No 147; dated 19.02.2007 No 230 (the order of enforcement See Art. 2); dated 23.10.2008 No 72 -IV (the order of enforcement See Art. 2); dated 10.12.2008 No 101 -IV (shall be enforced from 01.01.2009); dated 13.02.2009 No 135 -IV (the order of enforcement see Art. 3); dated11.07.2009 No 185 -IV (shall be enforced from 30.08.2009); dated 28.08.2009 No 192 -IV (shall be enforced from 08.03.2010); dated 30.12.2009 No 234 -IV; dated 02.04.2010 No 262 -IV (shall be enforced from 21.10.2010); dated 10.02.2011 No. 406 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 21.07.2011 No 467 -IV (shall be enforced from 01.07.2011); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 21.06.2012 No 19 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 26.12.2012 No 61 -V (shall be enforced from 01.01.2013); dated 07.03.2014 No 177 -V (shall be enforced upon expiry of ten calendar days after its first official publication); of 10.06.2014 № 206-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2014 No. 225-IV (the order of enforcement see article 2); dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 07.11.2014 No. 248-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 28.11.2014 No. 257 (the order of enforcement see PP. 12). V. 10); as of 29.12.2014 No. 269-V (shall be enforced from 01.01.2015); from 27.04.2015 No. 311-V (the order of introduction in action see Art. 2); from 02.08.2015 No. 343-V (comes into effect after ten calendar days after the date of its first official publication); from 29.10.2015 № 376-V (effective from 01.01.2016); from 31.10.2015 № 378-V (effective after ten calendar days after the day of its first official publication); from 13.11.2015 № 400-V (effective after ten calendar days after the day of its first official publication); from 24.11.2015 № 419-V (effective from 01.01.2016); from 24.11.2015 № 422-V (effective from 01.01.2016); from 26.07.2016 № 12-VI (effective thirty calendar days after the date of its first official publication); from 30.11.2016 No. 26-VI (effective from 01.01.2017); from 28.12.2016 No. 36-VI (effective two months after the date of its first official publication); from 06.05.2017 No. 63-VI (effective twenty-one calendar days after the date of its first official publication); from 25.12.2017 No. 122-VI (effective from 01.01.2018); from 26.12.2017 No. 124-VI (effective from 01.01.2018); from 28.12.2017 No. 128-VI (effective upon expiry of ten calendar days after the date of its first official publication); from 24.05.2018 No. 156-VI (effective upon expiry of ten calendar days after the date of its first official publication); from 02.07.2018 No. 168-VI (procedure for 21.01.2019 No. 217-VI (effective three months after its first official publication).

Article 51. Seizure and foreclosure on the money and property, kept in the bank

      1. Money and other property of an individual or a legal entity on bank accounts may be seized by the courts on the basis of judicial acts and by bailiffs on the basis of bailiffs' resolutions, sanctioned by the Prosecutor. Money and other property of an individual or legal entity held on bank accounts may be subject to temporary restrictions on the disposal of property, restrictions on transactions and other operations with property on the grounds and in the manner prescribed by the criminal procedure legislation of the Republic of Kazakhstan.

      Establishment of temporary restrictions on the disposal of property, restrictions on transactions and other operations with property, seizure shall not be allowed:

      1) on the money held on bank accounts intended for transfer of benefits and the social payments paid from the state budget and (or) the State social insurance fund;

      2) on the money held on bank accounts intended for transfer of housing payments;

      2-1) on the money held on bank accounts in housing construction savings banks in the form of housing construction savings accumulated through the use of housing payments;

      3) on the money deposited on the terms of the notary deposit;

      4) on the money held on bank accounts under the contract on educational accumulative contribution concluded in accordance with the Law of the Republic of Kazakhstan "On State educational accumulative system";

      5) on the assets of the social health insurance fund held on bank accounts;

      6) on the money of banks, insurance (reinsurance) organizations, voluntary accumulative pension funds deprived by authorized body of the license and (or) being in the process of compulsory liquidation;

      7) on the money held on bank accounts intended for crediting compensation of investment costs, in accordance with the legislation of the Republic of Kazakhstan in the field of public-private partnership and on concessions.

      The provision of subparagraph 7) of part two of this paragraph shall not apply to restrictions imposed by state revenue bodies, as well as the courts on the basis of judicial acts and the bailiffs on the basis of the bailiffs’ resolutions, sanctioned by the Prosecutor, for which there are requirements relating to the first, second and third stages in accordance with the priority provided by paragraph 2 of Article 742 of the Civil code of the Republic of Kazakhstan.

      In the case of seizure in support of claims, the amount of money on which the arrest is imposed shall not exceed the amount of the claim and the amount of the state fee and costs associated with execution of decisions, sentences, rulings and resolutions of the court. In the case of seizure by a bailiff to ensure execution of a writ of execution, the amount of money and value of the property on which the arrest is imposed shall not exceed the amount required to repay the awarded amount to the claimant, as well as fines imposed on the debtor in the process of execution of the writ of execution, the amounts of payment for activity of a private bailiff and execution costs.

      In this case, the resolutions of bailiffs, sanctioned by the Prosecutor may be sent on paper or in electronic form through the state automated information system of enforcement proceedings.

      To seize the money of individuals and legal entities, the courts, bodies of inquiry and preliminary investigation, bailiffs shall send documents in accordance with the requirements of the legislation of the Republic of Kazakhstan to the banks or organizations carrying out certain types of banking operations.

      All expense operations on bank (except for correspondent) accounts of legal entities, its structural subdivisions, non-resident, carrying out activity in Kazakhstan through a permanent institution, an individual, registered as individual entrepreneur, private notary, private bailiff, lawyer and professional mediator, in the cases, established by the laws of the Republic of Kazakhstan may be suspended upon the orders of the state revenue bodies, and collection may be levied only on the grounds, provided by the laws of the Republic of Kazakhstan.

      Operations on bank accounts of individuals and legal entities shall be suspended in cases and in the manner prescribed by the Law of the Republic of Kazakhstan "On Counteraction of Legitimization (Laundering) of Incomes Received by Illegal Means and Financing of Terrorism".

      At the same time, the orders of the state revenue bodies may be sent to the banks or organizations carrying out certain types of banking operations on paper or in electronic form by means of transmission over the telecommunications network.

      The order sent on paper must be signed by the first head and certified by the seal of state revenue bodies.

      The order sent in electronic form shall be formed in accordance with the formats established by the state revenue body in coordination with the authorized body.

      1-1. Banks shall refuse to execute acts on temporary restriction on the disposal of property held in the bank, in case of absence of the consent of the Prosecutor in accordance with the requirements of the criminal procedure legislation of the Republic of Kazakhstan.

      Banks shall refuse to execute acts of seizure in case of absence of the amount to be seized and (or) absence of approvals or sanctions provided by the criminal procedure legislation of the Republic of Kazakhstan and the legislation of the Republic of Kazakhstan on enforcement proceedings and the status of bailiffs.

      2. Confiscation of money and other property of an individual and a legal entity held in bank, with the exception of pension assets, assets of the social health insurance fund, may be made only on the basis of a court decision (sentence) that has entered into force.

      Footnote. Article 51 as amended by the Laws of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 29.03.2000 No 42; dated 09.08.2002 No 346; dated 22.06.2006 No 147; dated 10.12.2008 No 101 -IV (shall be enforced from 01.01.2009); dated 28.08.2009 No 192 -IV (shall be enforced from 08.03.2010); dated 02.04.2010 No 262 -IV (shall be enforced from 21.10.2010); dated 10.02.2011 No 406 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 21.07.2011 No 467 -IV (shall be enforced from 01.01.2012); dated 21.06.2012 No 19 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 21.06.2013 No 106 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 15.01.2014 No 164 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 10.06.2014 № 206-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 28.11.2014 № 257 ( the procedure for enforcement see subparagraph . 12) of Article 10); dated 29.10.2015 № 376-V (shall be enforced from 01.01.2016); dated 12.11.2015 № 393-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 16.11.2015 № 406-V (shall be enforced from 01.07.2017); dated 24.11.2015 № 419-V (shall be enforced from 01.01.2016); dated 26.07.2016 No. 12-VI (shall be enforced upon expiry of thirty calendar days after its first official publication); dated 30.06.2017 No. 80-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 12.12.2017 No. 114-VI (shall be enforced from 01.01.2018); dated 04.07.2018 No. 171-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 21.01.2019 No. 217-VI (shall be enforced upon expiry of three months from the dated of its first official publication).

Article 52. Mandatory deposit insurance

      Footnote. Article 52 is excluded by the Law of the Republic of Kazakhstan dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009).

Chapter 4-1. Particularities of establishment and operation of the Islamic banks

      Footnote. The Law is supplemented by Chapter 4-1 in accordance with the Law of the Republic of Kazakhstan dated 12.02.2009 No 133 -IV (the order of enforcement See Art. 2).

Article 52-1. Requirements to the activity of an Islamic bank

      An Islamic bank shall not be entitled to charge fees in the forms of percent, to guarantee the return of the investment deposit or income thereon, to finance (lend) the activities, related to the production and (or) trade of tobacco, alcoholic products, weapons and ammunition, gambling, as well as other types of business activities, the financing (lending) of which is prohibited by the council for the principles of the Islamic financing.

      The council for Islamic financing shall be entitled to define other requirements to the activities of an Islamic bank, obligatory for fulfillment by the Islamic bank.

Article 52-2. Activity of the council for Islamic financing

      1. In order to define compliance of the activities and transactions of the Islamic bank with the requirements, specified in Article 52-1 of this Law, the council shall be obligatorily established in the Islamic bank under the principles of Islamic financing.

      2. The council for the Islamic financing shall be an independent body, appointed by the general meeting of the shareholders of the Islamic Bank on the recommendation of the board of directors.

      3. The rules of the general terms of transactions of an Islamic bank, the Rules of internal credit policy of the Islamic bank shall have to be approved by the board of directors of the Islamic bank under a positive resolution of the council for Islamic financing.

      4. Unless otherwise provided by this Law, the charter or internal rules of the Islamic bank, the decisions of the credit committee of the Islamic bank, taken in accordance with the Rules of the internal credit policy of the Islamic bank, and the transactions, performed in accordance with the Rules of the general terms of transactions of the Islamic bank, shall not require the separate approval of the council of Islamic financing. At that, the council for Islamic financing shall have the right to check any transaction in its discretion for its compliance with the requirements, specified in Article 52-1 of this Law.

Article 52-3. Consequences of recognizing the transactions and operations of an Islamic bank non-complying with the requirements to the activities of the Islamic bank

      1. In case if the council for Islamic financing recognizes the transactions, that are under conclusion, not complying with the requirements, specified in Article 52-1 of this Law, such transaction may not be concluded and executed.

      2. In case if the council for Islamic financing recognizes the transaction that was concluded but not executed or partially executed not complying with the requirements, specified in Article 52-1 of this Law, such transaction shall be prematurely terminated at the request of an Islamic bank in the order, established by the civil legislation of the Republic of Kazakhstan.

      3. In case if the council for Islamic financing recognizes the transaction that is executed or partially executed not complying with the requirements, specified in Article 52-1 of this Law, the income of an Islamic bank on such a transaction shall be spent on charity.

Article 52-4. Additional requirements for the charter of an Islamic bank

      In addition to the information, specified in Article 14 of this Law, the charter of an Islamic bank shall contain the following information:

      1) the goals of an Islamic bank;

      2) the objectives, functions and powers of a regular body of an Islamic bank - council for Islamic financing, as well as the order of its establishment and requirements to the members of the council for Islamic financing.

52-5. Banking and other operations of an Islamic bank

      1. The banking operations of an Islamic bank shall be as follows:

      1) acceptance of non-interest withdrawable on demand deposits of individual and legal entities, opening and maintaining of the bank accounts of individual and legal entities;

      2) acceptance of investment deposits of individual and legal entities;

      3) bank borrowing transactions: allocation of cash loans by an Islamic bank under the terms of maturity, repayment and without charging a fee;

      4) financing of individuals and legal entities as a trade intermediary by providing commercial credit:

      without conditions on the subsequent sale of goods to a third party;

      on the conditions of the subsequent sale of goods to a third party;

      4-1) financing of production and trade activities through participation in the authorized capital of legal entities and (or) on the conditions of partnership;

      5) investment activities under leasing agreements (renting);

      6) the agency activity in the banking operations of an Islamic bank.

      2. Banking operations provided by subparagraphs 4), 4-1) and 5) of paragraph 1 of this Article shall be carried out by the Islamic bank at the expense of its own money and (or) money attracted for investment deposits. In this case the Islamic bank and (or) clients on the investment deposit shall acquire the right of common ownership to the property acquired at the expense of their money and the Islamic bank shall act as a participant in common share ownership and (or) trust manager, carrying out management of property, related to common share ownership. Islamic bank as a trust manager shall have the right to ensure state registration of rights to real estate, registration of vehicles and other movable property in accordance with the requirements of legislative acts of the Republic of Kazakhstan. The Islamic bank shall keep records of the participants of the common share ownership to the acquired property.

      3. The Islamic bank shall be entitled, if it is provided for by the charter, to perform certain types of banking and other transactions, specified in Article 30 of this Law, in compliance with the requirements, specified in Article 52-1 of this Law, except for the following transactions:

      1) factoring transactions: acquisition of rights to demand payment from the buyer of goods (works, services) with the assumption of the non-payment risk;

      2) forfeiting transactions (forfeiting): payment of the debt obligations of the buyer of the goods (works, services) through the purchase of the bill without a recourse to the seller.

      The council for Islamic financing shall be entitled to recognize certain banking and other transactions, specified in Article 30 of this Law, as not complying with the requirements, specified in Article 52-1 of this Law.

      Footnote. Article 52-5 as amended by the Law of the Republic of Kazakhstan dated 25.03.2011 No 421 -IV (shall be enforced upon expiry of ten calendar days after its first official publication.); dated 27.04.2015 No. 311-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 52-6. Deposits of an Islamic bank

      1. Under the contract of the interest-free withdrawable on demand deposit, the Islamic bank shall agree to accept the client's money into a bank withdrawable on demand deposit, without payment or guarantee of payment of remuneration in the form of interest, and to return the deposit or part of it at the request of the client. The rules of the contract on bank deposit shall be applied to the contract of the interest-free deposit of the Islamic bank, except for the conditions on payment of interest on it.

      2. Under the contract on investment deposit, the Islamic bank shall agree to accept the client’s money for a certain period without a guarantee of the money return in nominal terms, to pay the income on the money, depending on the results of the use of the money, transferred in the order, defined by the investment deposit agreement. The rules of the contract on trust management of the property with the specifications, provided for in this Article on the order of use and repayment of money, rights and obligations of the client and the Islamic Bank, the order of defining and accrual of remuneration of the trustee - Islamic bank shall be applied to the investment deposit agreement of the Islamic bank.

      When concluding an investment deposit agreement, a current bank account may be opened.

      3. Terms and conditions of the investment deposit agreement shall define the remuneration of the trustee - Islamic Bank for the management of the client’s money - trustor, the terms and the order of the money return, the risks of loss from the money use and other conditions.

      4. The remuneration of the Islamic bank shall be determined as a part of the income received from the use of money attracted to the investment deposit, provided that the remuneration can be paid only at the expense of income from the use of money on the investment deposit. The Islamic bank shall lose the right to remuneration if the investment deposit is unprofitable (if there is no income as a result of using the money attracted on the investment deposit).

      4-1. The conditions of the investment deposit contract may not provide for a guaranteed amount of income on the investment deposit and (or) remuneration of the Islamic bank, except for the case providing for the placement of the attracted money by the Islamic bank in assets on which a yield can be obtained at the level determined in the investment deposit contract.

      5. A client shall lose the right to receive income for the early repayment of the investment deposit, upon his request, unless otherwise provided by the investment deposit agreement.

      6. Investment deposit agreement may include conditions to allow the client to define the ways how to use the money, the list of assets or facilities for investing money or conditions for the use of client’s money separately from the money of other clients without the right of association.

      7. The Islamic bank shall be obliged to keep records of the use of money on individual investment deposits to define the order and the results of the use of money, including determination of the ways of the money use, the list of assets or facilities for investing money, the amount of revenue or loss of such use, the amount of remuneration of the Islamic bank.

      8. At the request of the client, the Islamic bank shall submit a report on the use of money on the investment deposit.

      9. Unless otherwise provided by the agreement, the client, that transferred money to the investment deposit, shall not be liable for the obligations of the Islamic bank, arising in connection with the placement of money, but shall cover the risk of losses, associated with the decrease of the assets value in which the money was invested, within the amount of money, placed on the investment deposit.

      10. The Islamic bank shall not be liable for the losses, resulting from the decrease in the value of the assets in which the money of the investment deposit was invested, except for the cases where such losses were incurred by its fault.

      If the losses, associated with the decrease in the value of assets in which the money of the investment deposit was invested, arose due to the fault of the Islamic bank, the Islamic Bank shall be obliged to inform the client about the origin of such losses.

      Footnote. Article 52-6 as amended by the Law of the Republic of Kazakhstan dated 27.04.2015 311-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 52-7. Particularities of issuance of securities by an Islamic bank

      The Islamic bank shall be entitled to issue shares or other securities, except for the preferred shares, bonds or other debt securities, providing a debt, a guaranteed remuneration or remuneration in the form of a percent from the cost.

      Article 52-8. Financing of individuals and legal entities as a trade intermediary by providing commercial credit without conditions for the subsequent sale of goods to a third party

      Footnote. The title of Article 52-8 as amended by the Law of the Republic of Kazakhstan dated 27.04.2015 No. 311-V (shall be enforced upon expiry of ten calendar days of its first official publication).

      1. Islamic banks shall have the right to finance individuals and legal entities as a trade intermediary by providing a commercial credit to the buyer or seller of goods on the basis a contract on commercial credit of the Islamic bank (hereinafter- the commercial credit contract).

      2. Is excluded by the Law of the Republic of Kazakhstan dated 27.04.2015 No. 311-V (shall be enforced upon expiry of ten calendar days after its first official publication)..

      Acceptance of the Islamic bank shall be given after the acquisition of the property right to the goods by the bank. Upon receipt of the Islamic bank’s acceptance by the buyer during the validity of the offer, execution of the commercial credit agreement shall be mandatory for the buyer. In case if the buyer fails to perform the commercial credit agreement, the buyer shall reimburse the real damage, caused to the Islamic bank by such failure, and the Islamic bank shall sell the goods to the third person or return it to the seller.

      3. The rules of the agreement of sale and purchase of goods on credit (deferral of payments or payment by installments) with the particularities, specified in this Article and the requirements, specified in Article 52-1 of this Law, shall be applied to the commercial credit agreement.

      4. The commercial credit agreement shall contain the conditions about the name and quantity of the goods, the price at which the buyer purchases the goods from the Islamic bank, indicating the amount of the markup on the goods, and the terms of the commercial credit (deferral of payments or payment by installments).

      5. Unless otherwise provided by the commercial credit agreement, the price of the sale of goods to the buyer by the Islamic Bank shall be composed of the sum of the purchase price of the goods from the seller and the mark-up on goods. The markup may be set as a fixed amount or a percentage of the purchase price of the goods from the seller.

      6. When purchasing goods, the Islamic bank shall be obliged to specify in the contract of sale with the seller that the goods are purchased for the conclusion of a commercial credit contract.

      7. Acquisition of the goods shall not be allowed from the seller, acting as the buyer at the same time under the commercial credit agreement. The sale or purchase agreement of an Islamic bank with the seller of goods may include the conditions regarding the advance purchase of goods, the possibility of returning the goods, purchased in a specified period of time and refund of the purchase price of the goods.

      8. The commercial credit agreement may provide the conditions for fulfillment of the buyer's obligations to pay for goods through pledge of money or property.

      9. If the subject of a commercial credit agreement is the purchase of goods to be manufactured (processed products, new movable thing, a newly established real estate), the products, received from the use of the property, or the performance of the service (in the form of separable fruits when using property, the produced agricultural, livestock or other similar products), the conclusion of the council for Islamic financing shall be required confirming compliance of the agreement with the requirements, established in Article 52-1 of this Law.

      10. The commercial credit agreement, concluded ??between the Islamic bank and the seller, that is the manufacturer (producer) of the goods, specified in paragraph 9 of this Article, the immediate partial or full pre-payment of the purchased goods (commercial credit in the form of an advance payment) may be provided under the condition of the goods supply within the timeframes, defined by the parties' agreement (delay of delivery). When providing a commercial credit to the producer (manufacturer) of goods, the sale and purchase agreement of the Islamic bank with a direct buyer of goods may include conditions for the immediate partial or full pre- payment of the goods under the condition of delivery of the goods within the period, determined by the agreement of the parties (delay of delivery).

      11. In case of concluding the commercial credit agreement, provided for in paragraph 9 of this Article, the rules for the order, supply, contracting, paid services or other rules for the obligations, specified by the civil legislation of the Republic Kazakhstan shall be applied to the relationship between the bank and the producer (manufacturer) of goods.

      Footnote. Article 52-8 as amended by the Law of the Republic of Kazakhstan dated 27.04.2015 No. 311-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 52-9. Funding of production and trading activities through the ownership interest in the authorized capitals of legal entities and (or) under the partnership conditions

      1. An Islamic Bank shall be entitled to fund the manufacturing and trading activities on the basis of the partnership agreement in order to obtain income or achieve another purpose not contradicting the legislation of the Republic of Kazakhstan. The partnership agreement may provide for the condition on establishment of a legal entity (partnership agreement with establishment of a legal entity).

      2. The partnership agreement may be signed after receiving of an approval from the council for Islamic financing. Violation of the requirements, established in Article 52-1 of this Law, shall be the ground for early termination of the partnership agreement, and (or) liquidation of a legal entity, established under the partnership agreement or for the alienation of the shares of an Islamic bank, including the stocks and ownership interests in the authorized capitals of the legal entities, and spending of the revenues to the charities.

      3. The rules of the joint activity agreement with the specifications, provided in this Article shall be applied to the partnership agreement without the condition of establishing a legal entity (a co-partnership agreement with the Islamic Bank).

      4. A co-partnership agreement with the Islamic bank shall contain the purpose of the joint activity, the validity of the contract or the conditions under which the contract is terminated, the order and frequency of distributions of income, coming from joint activity, the party’s liability for breach of contract, information about the list, types and value of the property, contributed by each participant to perform the joint activities. Unless otherwise provided by the contract, the size of the share of each of the participants in the common property shall be proportional to the value of the property, contributed to the joint activities. Agreement may stipulate conditions on the use of the income, received from the joint activity, for charities.

      5. The income, coming from the joint activities, the general expenses and losses of the participants of the co- partnership agreement with the Islamic bank shall be distributed proportionally to the share in the common property, unless otherwise provided by the agreement. The income of the co-partnership with participation of the Islamic Bank shall be distributed by the actual results excluding the expected income. The income of a participant of the co-partnership may not be set as a fixed amount of money.

      6. In case of insufficiency of the common property of the co-partnership, the participants shall be liable for the obligations associated with the partnership agreement, in proportion to the shares in the common property.

      7. The rules of the foundation agreement of a legal entity of a relevant organizational and legal form shall be applied to the partnership agreement with establishment of a legal entity, unless otherwise provided by the agreement.

      8. In addition to the information, provided by the legislation of the Republic of Kazakhstan to the foundation agreement of a legal entity of a certain organizational and legal form, a partnership agreement with the establishment of a legal entity shall contain the information about the purposes and terms of partnership, the condition on the distribution of income of the legal entity in proportion to the invested share of each participant.

      9. The rules of the partnership agreement with the establishment of a legal entity shall also apply to the cases of partnership, the terms of which are the acquisition of shares (the ownership interest) of the legal entity, under a special condition that the purpose of the partnership is to finance industrial or commercial activities of this legal entity.

Article 52-10. Investment activities under leasing (rental) agreements

      1. Islamic banks shall be entitled to perform investment activities under the property leasing (rental) agreements.

      2. The rules on financial leasing or renting of the property with the specifications, provided in this Article shall be applied to the relations of the Islamic bank on investment activities under the agreements of leasing (renting) of property.

      3. The terms of the leasing (renting) agreement with an Islamic bank may not provide the right to purchase the rented property. The ownership right to the rented property may go to the lessee (tenant) on the basis of a separate agreement.

      4. Unless otherwise provided by the charter or the internal rules of an Islamic bank, the transactions in leasing or renting of property shall be made in accordance with the Rules of the general conditions for transactions of an Islamic bank, approved in accordance with the requirements of paragraph 3 of Article 52-2 of this Law and shall not require a separate approval of the council for Islamic financing.

      5. The agreement may specify the condition of ensuring the obligations to pay the lease payments (or rent) as a pledge of property.

Article 52-11. Agent activity when performing the banking transactions of an Islamic bank

      1. An Islamic bank, when performing the banking operations of an Islamic bank, shall be entitled to perform the agent activities, in accordance with which the Islamic bank acts as the agent of its client or appoints a third party as its agent.

      2. In accordance with the agent agreement the agent on behalf of and under the instruction of a client, or on its own behalf, but under the instruction and at the expense of the client, on the basis of his experience and knowledge, for a fee, shall agree to perform certain legal actions aimed at income generating.

      3. The rules on the agency contract or commission with the specifications, provided in this Article shall be applied to the agent agreement of an Islamic bank depending on the conditions.

      4. Individual and legal entities, including banks and other financial institutions may be the party of the agency agreement (the client or agent), concluded with the Islamic bank.

      5. The terms of the agent agreement shall establish the procedure for determining and paying of the agent’s remuneration. The terms of the agent agreement may not provide for a guaranteed amount of the client’s income.

      6. Agent shall reserve the right to receive compensation regardless of the performance of the agent agreement.

      7. The risk of loss as a result of the agent’s activity shall be covered by the client of the agent agreement, except for the cases of damages, caused by the agent.

      Article 52-12. Islamic financing of individuals and legal entities with the participation of the Islamic bank as a trade intermediary by providing a commercial credit on the conditions of the subsequent sale of goods to a third party

      1. The provisions of Article 52-8 of this Law shall apply to Islamic financing of individuals and legal entities as a trade intermediary by providing commercial credit on the conditions of subsequent sale of goods to a third party, taking into account the features provided by this Article.

      For the purposes of this Article, an individual or a legal entity, who purchases goods from an Islamic bank and subsequently sells them to a third party shall be referred to as a client of the bank.

      2. Islamic financing of individuals and legal entities as a trade intermediary through the provision of commercial credit on the terms of the subsequent sale of goods to a third party shall be recognized a transaction, carried out under a commercial credit contract agreement subject to the following conditions:

      1) the parties on the commercial credit contract shall be the Islamic bank and the client of the bank. The commercial credit contract shall specify the third party to whom the subsequent sale of goods by the client of the bank shall be carried out (for the purposes of this Article – the third party);

      2) purchase of goods by the client of the bank under the commercial credit contract, as well as subsequent sale of goods by the client of the bank to a third party shall be made with the participation of the Islamic bank;

      3) commercial credit shall be provided on the terms of sale by the client of the bank to a third party of the goods, purchased by the client of the bank from the Islamic bank. However, the right of ownership for the goods, sold under the contract on commercial credit shall be transferred to a third party immediately after the conclusion of the contract on commercial credit, payment shall be made by a third party without delay after transfer of goods and documents on this item at the purchase price of such goods by the Islamic bank from the supplier of the goods;

      4) goods sold on international commodity exchanges and purchased by the Islamic bank on international commodity exchanges or over-the-counter market outside the Republic of Kazakhstan shall be determined as goods in the commercial loan contract. The Islamic bank and the client of the bank shall not be entitled to sell the same goods simultaneously under several commercial loan contracts;

      5) the client of the bank shall carry out the subsequent sale to a third party of the goods specified in the commercial credit contract in the quantity and price, specified in such contract, without taking into account the mark-up of the Islamic bank;

      6) a seller of goods, carrying our sale of goods to an Islamic bank may not be a third party to whom the subsequent sale of goods is made;

      7) the Islamic bank, the client of the bank and a third party shall not be related parties in accordance with the Code of the Republic of Kazakhstan "On taxes and Other Mandatory Payments to the Budget" (Tax Code).

      3. For the purposes of this Article, an international commodity exchange shall be recognized a commodity exchange that meets the following requirements:

      the commodity exchange shall carry out activity on the territory of the state having a sovereign rating not lower than the rating A of one of the rating agencies, the list of which shall be established by the authorized body;

      information on the volume and number of exchange transactions concluded on the commodity exchange shall be published in statistical reports posted on the Internet resource of the World federation of exchanges.

      The list of international commodity exchanges, where the purchase and sale of goods are made within the framework of financing of individuals and legal entities as a trade intermediary by providing commercial credit on the conditions of subsequent sale of goods to a third party, shall be established by the Government of the Republic of Kazakhstan.

      4. In case of violation of the requirements established by this Article, such banking operation shall not be recognized as Islamic financing of individuals and legal entities with participation of the Islamic bank as a trade intermediary with registration of a commercial credit contract and with participation of a third party.

      Footnote. Chapter 4-1 is supplemented by Article 52-12 in accordance with the Law of the Republic of Kazakhstan dated 27.04.2015 No. 311-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Chapter 4-2. Voluntary reorganization of the bank in the form of conversion into an Islamic bank

      Footnote. The Law is supplemented by chapter 4-2 in accordance with the Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016).

      Article 52-13. The concept of voluntary reorganization of the bank in the form of conversion into an Islamic bank

      Voluntary reorganization of the bank in the form of conversion into an Islamic bank (hereinafter – conversion of the bank into an Islamic bank) shall be understood as a set of measures aimed at transforming the activity of the bank in order to obtain the status of an Islamic bank and carry out activity in accordance with the requirements specified in Article 52-1 of this Law.

      Article 52-14. Permission of the authorized body to convert the bank into an Islamic bank

      1. Conversion of the bank into an Islamic bank shall be carried out by the decision of general meeting of shareholders of the bank with the permission of the authorized body.

      The procedure for issuing a permit of the authorized body to convert a bank into an Islamic bank and refuse to issue a permit shall be determined by this Law and the regulatory legal act of the authorized body.

      2. The following documents shall be attached to the application for permission of the authorized body to convert the bank into an Islamic bank:

      1) the decision of general meeting of shareholders of the bank, which adopted a decision on voluntary reorganization of the bank in the form of conversion into an Islamic bank;

      2) an action plan for conversion of the bank into an Islamic bank, meeting the requirements of Article 52-15 of this Law;

      3) financial forecast of the consequences of conversion of the bank into an Islamic bank (forecast balance sheet and statement on profits and losses of the bank, calculation of prudential standards of the bank, including on a consolidated basis, after completion of conversion of the bank into an Islamic bank);

      4) business plan for the period of conversion of the bank into an Islamic bank and the next three years after obtaining a license to conduct banking and other operations of the Islamic bank, which should contain the following information:

      description of the purpose and objectives of the bank and types of banking and other operations of the Islamic bank;

      analysis of the bank's activity (analysis of external and internal environment);

      development strategy and scope of the bank's activity for the period of conversion of the bank into an Islamic bank and three subsequent financial (operational) years after conversion of the bank into an Islamic bank;

      detailed annual financial plan of the bank for the period of conversion of the bank into an Islamic bank and three subsequent financial (operational) years after conversion of the bank into an Islamic bank;

      risk management plan (description of risks associated with carrying out of activity of the Islamic bank, and ways of management them for the period of conversion of the bank and three subsequent financial (operational) years after conversion of the bank into an Islamic bank).

      3. The application shall be considered by the authorized body within two months from the date of submission by the applicant of the documents specified in paragraph 2 of this Article.

      If the bank submits an incomplete package of documents specified in paragraph 2 of this Article, the authorized body shall give a reasoned refusal to further consideration of the application within fifteen calendar days from the date of receipt of the documents.

      4. The bank shall have the right to withdraw the application for permission of the authorized body to convert the bank into an Islamic bank before the authorized body decides to issue or refuse to issue a permit to convert the bank into an Islamic bank by submitting a written application in any form.

      5. The grounds for refusal to issue a permit to convert a bank into an Islamic bank shall be:

      1) non-elimination of the comments of the authorized body on the submitted documents within the term established by it;

      2) non-compliance of the action plan for conversion a bank into an Islamic bank with the requirements provided by Article 52-15 of this Law;

      3) non-compliance of the business plan with the requirements provided by subparagraph 4) of paragraph 2 of this Article;

      4) financial forecast of consequences of conversion of the bank into an Islamic bank involves deterioration of financial condition of the bank as a result of conversion of the bank into an Islamic bank;

      5) violation by the bank and (or) banking conglomerate of prudential standards and (or) other mandatory norms and limits and (or) availability of administrative sanction for an administrative offense provided by parts six, eight of Article 213, Article 227 of the code of the Republic of Kazakhstan on administrative offenses, within three consecutive calendar months preceding the date of filing an application for the issuance of permission to convert the bank into an Islamic bank;

      6) violation of interests of the depositors of the bank as a result of the alleged conversion of the bank into an Islamic bank.

      6. The authorized body shall be obliged to issue a permit to convert the bank into an Islamic bank or to give a reasoned refusal to issue this permit within the period, established by part one of paragraph 3 of this Article.

      7. The authorized body revokes the issued permission to convert the bank into an Islamic bank in the following cases:

      1) identification of false information on the basis of which the permit was issued;

      2) the bank makes a decision on voluntary termination of its activities through reorganization in other forms or liquidation or taking a decision on termination of the bank's activity by the court;

      3) non-fulfillment by the bank of requirements or violation of the deadlines for fulfilling the requirements provided by Article 52-17 of this Law;

      4) refusal to issue a license to the bank to conduct banking and other operations of the Islamic bank.

      The bank shall have the right to voluntarily return the permission to convert the bank into an Islamic bank issued to it before the expiration of the conversion period, specified in the permission of the authorized body to convert the bank into an Islamic bank.

      When revoking permission for conversion of the bank into an Islamic bank or a voluntary return by the bank of this permit, the authorized body shall takes the decision to cancel a previously issued permit within two months from the date of discovery of the fact that is the ground for revocation of the permit, or for filing by the bank of the application on voluntary return of the permit.

      Footnote. Article 52-14 as amended by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      Article 52-15. Actions plan for conversion of the bank into an Islamic bank

      1. The actions plans for conversion of the bank into an Islamic bank shall be approved by the board of directors of the bank.

      2. The actions plan for conversion of the bank into an Islamic bank should contain a detailed description of the following activities, including the terms of their implementation:

      1) creation of the council on Islamic finance principles;

      2) development of standard conditions of contracts on carrying out banking operations of the Islamic bank, provided by paragraph 1 of Article 52-5 of this Law;

      3) determination of the list of banking and other operations:

      subject to conversion into banking operations of the Islamic bank provided by paragraph 1 of Article 52-5 of this Law;

      not requiring conversion, the implementation of which is permitted to an Islamic bank in accordance with paragraph 3 of Article 52-5 of this Law;

      not requiring conversion on the ground of expiration of the contracts before the end of the conversion period, specified in the actions plan for conversion of the bank into an Islamic bank,

      not subject to conversion on the ground of non-compliance with the requirements of Article 52-1 of this Law;

      4) determination of the potential volume of assets and liabilities of the bank for banking and other operations, specified in subparagraph 3) of this paragraph;

      5) publication of the announcement on conversion in periodicals, distributed throughout the Republic of Kazakhstan, in the Kazakh and Russian languages, and placement on the Internet resource of the bank;

      6) a written notification of the bank's clients on conversion of the bank into an Islamic bank, indicating the list of banking and other operations provided by subparagraph 3) of this paragraph, the deadline for submitting a written refusal or consent provided by paragraph 4 of Article 52-16 of this Law, and the address at which they are accepted;

      7) review and change of corporate management and internal policies and procedures, other internal documents of the bank taking into account new types of activity;

      8) determination of executives employees of the bank, responsible for implementation of the actions plan for conversion of the bank into an Islamic bank;

      9) carrying out work with clients on contracts for conducting banking and other operations;

      10) rework of the software for conducting banking and other operations of the Islamic bank;

      11) submission to the authorized body of the report on implementation of actions provided by the actions plan for conversion of the bank into an Islamic bank;

      12) appeal to the Corporation for state re-registration of the bank into an Islamic bank;

      13) appeal to the authorized body with an application for issuance a license to conduct banking and other operations of the Islamic bank;

      14) planned term by the bank for conversion of the bank into an Islamic bank, which shall not exceed the term specified in paragraph 7 of Article 52-16 of this Law;

      15) other actions necessary to convert the bank into an Islamic bank.

      Footnote. Article 52-15 as amended by the Law of the Republic of Kazakhstan dated 02.04.2019 No. 241-VI (shall be enforced from 01.07.2019).

      Article 52-16. Activity of the bank during its conversion into an Islamic bank

      1. During the conversion period, the bank shall be obliged to carry out actions provided by the actions plan for conversion of the bank into an Islamic bank.

      2. After obtaining the permission of the authorized body to convert the bank into an Islamic bank, the general meeting of shareholders of the bank, on the recommendation of the board of directors, shall appoint the council on the principles of Islamic financing.

      3. The bank within ten working days after obtaining the permission of the authorized body to convert the bank into an Islamic bank shall:

      1) publish the announcement on conversion in periodicals, distributed throughout the Republic of Kazakhstan, in the Kazakh and Russian languages, and place on the Internet resource of the Bank;

      2) send a written notification to the clients of the bank about the conversion of the bank into an Islamic bank, indicating the list of banking and other operations provided by subparagraph 3) of paragraph 2 of Article 52-15 of this Law, the deadline for submitting a written refusal or consent provided by paragraph 4 of this Article, and the address at which they are accepted.

      4. Clients of the bank within thirty calendar days from the date of receipt of the written notification, specified in paragraph 3 of this Article shall be obliged to submit a written refusal or consent to the bank:

      1) for the change of conditions of the contract on banking and other operations subject to conversion into banking operations of the Islamic bank provided by paragraph 1 of Article 52-5 of this Law;

      2) for the change of conditions of the contract on banking and other operations not requiring conversion, the implementation of which is permitted to an Islamic bank in accordance with paragraph 3 of Article 52-5 of this Law, in part of changing the name of the bank, associated with the conversion of the bank into an Islamic bank;

      3) for assignment of the right (claim) or transfer of the debt under the contracts on banking and other operations not requiring conversion on the ground of expiration of the contracts before the end of the conversion period, specified in the permission of the authorized body to convert the bank into an Islamic bank, or not subject to conversion on the ground of non-compliance with the requirements of Article 52-1 of this Law.

      Non-provision of the response within the specified period in accordance with subparagraphs 1) and 2) of part one of this paragraph shall be considered as a refusal of the client, in accordance with subparagraph 3) of part one of this paragraph shall be considered as consent of the client.

      If the client provides a written refusal under the contracts, specified in subparagraphs 1), 2) and 3) of part one of this paragraph, the validity of these contracts shall be subject to termination before the bank submits to the authorized body the report, specified in paragraph 1 of Article 52-17 of this Law.

      Implementation of actions, provided in subparagraphs 1) and 2) of part one of this paragraph shall be carried out by concluding an additional agreement to the contract containing the conditions of conducting banking operations of the Islamic bank or providing for changes in the name of the bank, associated with conversion of the bank into an Islamic bank, subject to its entry into force after the bank receives a license to conduct banking and other operations of the Islamic bank.

      If there are unfulfilled requirements to the bank accounts of the clients of the bank (including the orders of authorized state bodies having the right to suspend expenditure operations on the bank account, as well as decisions (resolutions) of authorized bodies or officials having the right to seize the client's money) and insufficiency or lack of money (including absence of money movement for less than a year), the bank shall have the right to refund such claims and close bank accounts.

      5. Permission to convert a bank into an Islamic bank shall be subject to return by the bank to the authorized body when issuing a license to the bank to conduct banking and other operations of the Islamic bank or when a court takes decision to terminate the activity of the bank, as well as in case of revocation of permission by the authorized body.

      6. During the period of its conversion into an Islamic bank, the bank shall be prohibited to extend the validity of contracts or conclude new contracts for conducting banking and other operations, as well as to carry out types of professional activity in the securities market, provided in paragraphs 2, 11 and 12 of Article 30 of this Law.

      7. The term of conversion of the bank into an Islamic bank may not exceed five years. This term shall be extended by the authorized body at the request of the bank for a period not exceeding one year.

      8. The decision to use the income received by the bank during the conversion period from transactions that not complying with the requirements, specified in Article 52-1 of this Law shall be made by the council on the principles of Islamic financing of the bank.

      Article 52-17. State re-registration of the bank in the corporation and issuance of a license to conduct banking and other operations of the Islamic bank

      Footnote. The title of Article 52-17 as amended by the Law of the Republic of Kazakhstan dated 02.04.2019 No. 241-VI (shall be enforced from 01.07.2019).

      1. Not later than six months before the expiration of the conversion, specified in the permission of the authorized body, the bank shall submit to the authorized body a report on implementation of actions provided by the actions plan to convert the bank into an Islamic bank with attachment of confirming documents.

      2. If there are comments to the report, specified in paragraph 1 of this Article, the authorized body shall have the right to require the bank to perform additional actions and (or) provide additional information and documents. The bank shall be obliged to take into consideration the comments of the authorized body (to perform the required additional actions and (or) to provide additional information and documents) and re-submit to the authorized body a report on implementation of actions, provided by the actions plan to convert the bank into an Islamic bank with attachment of confirming documents within the established by the authorized body term.

      3. The authorized body shall approve or refuse to approve the report on implementation of the actions, provided by the actions plan for conversion bank into an Islamic bank within two months from the date of its submission to the authorized body.

      4. After approval by the authorized body of the report, specified in paragraph 1 of this Article, the bank shall, within thirty calendar days, apply to the Corporation for state re-registration of the bank.

      The Charter of the Islamic bank shall contain the information provided by paragraph 3 of Article 14 and Article 52-4 of this Law.

      5. The bank shall be obliged, within thirty calendar days from the date of state re-registration with the Corporation, but not later than thirty working days before the end of the conversion period, specified in the permission of the authorized body, apply to the authorized body with an application:

      1) on the issuance of a license to conduct banking and other operations of the Islamic bank with attachment of the following documents:

      a notarized copy of the charter of the Islamic bank;

      a document, confirming the payment of the license fee to the budget for the right to engage in certain types of activity;

      provisions on the council on the principles of Islamic financing of the bank;

      rules on general conditions of conducting operations of the Islamic bank;

      rules on the internal credit policy of the Islamic bank;

      2) on renewal of the license to carry out activity in the securities market (if available) in the manner prescribed by the Law of the Republic of Kazakhstan "On Permits and Notifications".

      6. The liquidation commission shall be obliged, within seven days after the approval of liquidation balance sheet and the report on liquidation of the bank, to submit them to the Corporation and the authorized body.

      The procedure for licensing banking and other operations of the Islamic bank shall be determined by Article 26 of this Law.

      7. From the moment of issuance of a license to the bank to conduct banking and other operations of the Islamic Bank:

      1) the previously issued license to conduct banking and other operations shall cease its validity;

      2) conversion of a bank to an Islamic bank shall be considered completed.

      The bank shall be obliged to return to the authorized body the original of the previously issued license within ten working days after receiving the license to conduct banking and other operations of the Islamic bank, to carry out activity in the securities market.

      Footnote. Article 52-17 as amended by the Law of the Republic of Kazakhstan dated 02.04.2019 No. 241-VI (shall be enforced from 01.07.2019).

Chapter 5. Financial Accounting and Reporting

Article 53. Financial (operational) year of the bank

      A financial (operational) year of the bank shall begin on 1 January and shall end on 31 December. If the registration of the bank is made ??after 1 January, the first financial (operational) year shall start from the date of the state registration of the bank and shall end on 31 December of the same year.

Article 54. Accounting and reporting in banks

      1. The list, forms or requirements to the forms, as well as the terms and procedure for submission of financial and other reporting, including financial and other reporting on a consolidated basis, shall be established by the regulatory legal acts of the authorized body.

      The banks shall register accounting transactions and events in accordance with the legislation of the Republic of Kazakhstan on accounting and financial reporting and international accounting standards.

      2. At the request of the authorized bodies, the banks shall be required to provide any information about the assets, including those located outside of the Republic of Kazakhstan, the amount of the accepted deposits and loans, made and conducted banking transactions and other information, including the data, constituting the banking secrecy.

      3. The banks shall be required to provide any information, requested by the authorized body, about the direct or indirect participation in the authorized capitals of legal entities in which the banks are the major participants, in the order, established by the authorized body.

      4. In accordance with the Laws of the Republic of Kazakhstan, the officials of the authorized body shall be liable for the disclosure or transfer to the third parties of the information, obtained during the realization of the rights, established in paragraphs 2 and 3 of this Article.

      Footnote. Article 54 is in the wording by the Law of the Republic of Kazakhstan dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication.); as amended by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

      Article 54-1. Reporting of major participants of the bank and bank holding companies

      1. The list, forms, as well as the terms and procedure for submission of financial and other reporting to the authorized body by major participants of banks and bank holding companies shall be established by the regulatory legal act of the authorized body.

      2. Major participant of the bank who is an individual, in addition to reporting under paragraph 1 of this Article shall, within one hundred and twenty calendar days after the end of the financial year, to submit to the authorized body a copy of the declaration for individual income tax with the notification of the tax body, confirming the acceptance of the tax declaration.

      Footnote. Article 54-1 is in the wording of the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

Article 55. Publication of the key performance indicators of a bank and a bank holding company

      Footnote. The title as amended by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication).

      Banks shall publish annual consolidated financial reporting, and in case of absence of a subsidiary (subsidiaries)- unconsolidated financial reporting and the audit report in the manner and terms, established by the authorized body, after confirmation by the audit organization, complying with the requirements of paragraph 4 of Article 19 of this Law, the accuracy of submitted information and approval of financial reporting by the annual meeting of the bank’s shareholders and at the request of the authorized body shall place on the corporate Internet-resource of the bank other reporting in accordance with the list and terms, established by the regulatory legal act of the authorized body.

      The banks shall publish the quarterly balance sheet, profit and loss report, meeting the international financial reporting standards, in the order and within the timeframes, established by the authorized body, without the audit confirmation.

      Bank holding companies shall publish their annual consolidated financial statements and, in the absence of a subsidiary (an affiliated) organization (s) –the non-consolidated financial statements and the audit report in the order and within the timeframes, established by the authorized body.

      The requirements of this Article shall not apply to non-residents of the Republic of Kazakhstan that are a bank holding company.

      Footnote. Article 55 as amended by the Laws of the Republic of Kazakhstan, dated 11 July, 1997 No 154; dated 16 July, 1999 No 436; dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004); dated 11 June, 2004 No 562; dated 23 December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107); dated 5 May, 2006 No 139 (the order of enforcement see Article 2 of the Law No 139); dated 28 February 2007 No 235 (the order of enforcement see Art. 2); dated 20.11.2008 No 88 -IV (the order of enforcement see Article 2); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 56. Recording and keeping of documents

      1. Banks shall be required to ensure strict control and recording of the documents used in preparing the accounting statements.

      2. The list of the basic documents shall be kept, and the document retention period shall be defined by the authorized body.

      Footnote. Article 56 is amended by the Law of the Republic of Kazakhstan dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004).

Chapter 6. An audit of banks and their affiliates

      Footnote. The title of the chapter is in the wording by the Law of the Republic of Kazakhstan dated 2 March, 2001 No 162 (see Art. 2).

Article 57. An audit of banks and their affiliates

      1. The audit of the bank shall be conducted by an audit organization authorized to conduct an audit in accordance with the legislation on audit activity and complying with the requirements of paragraph 4 of Article 19 of this Law.

      1-1. Conducting audit following the results of financial year shall be obligatory for the banks (except for the bank deprived of the license for conducting all banking operations or being in the process of compulsory liquidation), bank holdings companies and organizations in which the bank and (or) a bank holding company are major participants, copies of the report on which and recommendations of the auditing organization must be submitted by banks, bank holding companies and organizations in which the bank and (or) a bank holding company are major participants, or audit organizations to the authorized body within thirty calendar days from the date of receipt of these documents or their submission to the banks, bank holding companies and organizations in which the bank and (or) a bank holding company are major participants.

      The consolidated annual financial statements of the bank and bank holding company shall be certified by an audit organization eligible to audit banks.

      An audit of the organizations, included in the banking conglomerate as a parent company and its subsidiaries, that are the residents of the Republic of Kazakhstan, shall be carried out by one and the same audit organization. An audit of the parent company and its subsidiaries - non-residents shall be conducted by one and the same audit organization in the cases where performance of such audit does not contradict the requirements of the legislation of the country of their residence.

      1-2. Is excluded by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication).

      1-3. A bank holding company that is a non-resident of the Republic of Kazakhstan shall submit to the authorized body a copy of the audit report and recommendations of the audit organization in the Kazakh or Russian languages.

      2. (Is excluded by the Law of the Republic of Kazakhstan dated 5 May, 2006 No 139 (the order of enforcement see Article 2 of the Law No 139).

      3. Audit of banks shall be carried out in order to establish:

      timeliness, completeness and accuracy of the accounting and reporting, reflecting the performed banking transactions;

      compliance of the conducted banking transactions with the requirements of this Law and the legislation of the Republic of Kazakhstan;

      compliance of the conducted banking transactions with the general conditions of their execution, and compliance of the order of the banking transactions with the internal rules of the bank.

      4. The results of the audit and its findings shall be recorded in the report of the audit organization and submitted to the board of directors and the board of the bank, if necessary (the bank’s decision), to other legal entities, incorporated in the banking conglomerate.

      An audit report of financial statements of a bank or other legal entities that are part of a banking conglomerate shall not constitute a commercial secret.

      5. The bank shall be required to submit a copy of the audit report within ten days after its receiving by other legal entities, incorporated in the banking conglomerate.

      6. In case of non-elimination by the bank, a bank holding company, organization in which the bank and (or) a bank holding company are major participants of deficiencies that affect the financial situation of the bank or a banking conglomerate, specified in the audit report within the period determined by the authorized body, the authorized body until elimination of deficiencies shall have the right to apply:

      to the bank- the measures on improving financial situation and (or) minimizing the risks provided by Article 46 of this Law;

      to the bank holding company, the organization in which the bank and (or) a bank holding company are major participants, – the compulsory measures of supervisory response provided by paragraph 2 of Article 47-1 of this Law.

      In case of non-elimination by the bank holding company of deficiencies that affect the financial situation of the bank or a banking conglomerate, specified in the audit report, within one year from the date of receipt of this report by these persons, the authorized body until elimination of deficiencies shall have the right to apply to the bank holding the compulsory measures of supervisory response provided by paragraph 3 of Article 47-1 of this Law.

      7. If there is a deviation in opinions and conclusions on the financial reporting and (or) other information related to the financial reporting in terms of recognition of assets, liabilities and contingent liabilities of banks, bank holding companies and organizations in which the bank and (or) a bank holding company are major participants set forth in the audit report from the results of the audit conducted by the authorized body, the authorized body shall have the right to require from the audit organization explanations of the reasons for such deviation.

      8. The authorized body in case of detection of risks and deficiencies in the bank's activity may require from it conducting audit of other information in relation to assessment of the risk management and internal control system, including in relation to strategy and business model, assessment of the corporate management system, assessment of the risks management system of information technology, assessment of effectiveness of information security system and the effectiveness of internal control system in the sphere of combating legalization (laundering) of incomes obtained in a criminal way and financing of terrorism (hereinafter – audit of other information) with indication of the list of issues which are subject to check, audited period and term of submission by the audit organization of the audit opinion on the audit of other information to the authorized body.

      Conducting audit of other information at the request of the authorized body shall be obligatory for banks.

      The bank shall conduct audit of other information not more than once a year, on one issue the audit of other information shall be conducted not more often than once in three years, except for the case provided by paragraph 10 of this Article.

      The list of issues subject to check in the framework of audit of other information, requirements to the contents, terms of submission by an audit organization of an audit opinion for the audit of other information, requirements for the auditors in the composition of an audit organization, attracted to the audit of other information, shall be established by regulatory legal acts of the authorized body in agreement with the authorized state body, carrying out regulation in the field of audit activity and control over the activity of audit and professional audit organizations.

      The check plan for the audit of other information with description of the expected directions, scope, nature of the audit, features of the methods and standards used in the audit shall be subject to prior approval by the audit organization with the authorized body.

      The audit opinion on the audit of other information shall be submitted to the authorized body by the audit organization and shall not be subject to publication.

      The results of the audit of other information may be taken into account by the authorized body when applying supervisory response measures.

      9. For carrying out an audit or audit of other information the bank, bank holding company, the organization, in which the bank and (or) bank holding company are major participants, shall attract an audit organization, complying with the minimum requirements to auditing organizations that conduct mandatory audit of financial organizations, developed by the authorized state body, carrying out state regulation in the field of audit activity and control over the activity of audit and professional audit organizations, in agreement with the authorized body.

      A bank, a bank holding company, an organization in which the bank and (or) a bank holding company are major participants shall notify the authorized body of the choice of an audit organization not later than ten working days after the conclusion of contract for conducting an audit or an audit of other information. In case of an audit of other information, the bank shall have the right to petition the authorized body to conduct an audit of other information by a non-audit organization in a different way than the audit.

      The petition of the bank shall be considered by the authorized body within five working days.

      The requirements for the procedure of conducting an audit of other information, established by this Article, shall apply to the procedure for conducting an audit of other information in a different way than the audit.

      The authorized body shall have the right to provide the audit organization taking into account the requirements on confidentiality with information and comments on the results of inspections of the persons, specified in the part one of paragraph 1-1 of this Article, as well as other information related to the activity of the bank, a bank holding company, an organization in which the bank and (or) a bank holding company are major participants, including based on the reasoned judgment of the authorized body, including information, constituting banking and (or) commercial secret, without the consent of the persons, specified in the part one of paragraph 1-1 of this Article before the audit organization issues an audit report and (or) an audit opinion on the audit of other information.

      The audit organization shall conduct a mandatory assessment and analysis of information sent by the authorized body in accordance with part five of this paragraph. The results of the conducted assessment and analysis shall be used by the audit organization in expressing opinions and conclusions contained in the audit report or audit opinion on the audit of other information.

      10. In case of recognition by the court of an audit report and (or) audit conclusion on the audit of other information as invalid, the bank, a bank holding company, organization in which the bank and (or) a bank holding company are major participants, shall be obliged to conduct audit and (or) audit of other information repeatedly.

      11. The authorized body shall have the right to request from the audit organization information, including data, constituting commercial secret, including on the list of clients. Information on the clients shall be provided with the consent of the clients of the audit organization.

      Footnote. Article 57 as amended by the Laws of the Republic of Kazakhstan dated 11 July, 1997 No 154 and dated 29 June, 1998 No 236; dated 2 March, 2001 No 162 (see Art. 2); dated 10 July 2003 No 483 (shall be enforced from 1 January 2004); dated 23 December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107); dated 5 May, 2006 No 139 (the order of enforcement see Article 2 of the Law of the Republic of Kazakhstan No 139); dated 12 January, 2007 No 222 (shall be enforced upon expiry of six months after the date of its official publication); dated 23.10.2008 No 72 -IV (the order of enforcement see Article 2); dated 20.02. 2009 No 138 -IV (the order of enforcement see Article 2); dated28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (introduction into force see Article 2).

Article 58. Licensing of audit activities related to examination of banking activity

      (Article is excluded by the Law of the Republic of Kazakhstan dated 5 May, 2006 No 139(the order of enforcement see Article 2 of the Law No 139)

Article 59. Recognition of a report on auditing the banking activity invalid by an audit organization (auditor). Grounds for revocation, suspension of a license to conduct the audit of the banking activities

      (Article is excluded by the Law of the Republic of Kazakhstan dated 5 May, 2006 No 139 (the order of enforcement see Article 2 of the Law No 139)

Chapter 6-1. Restructuring of a bank

      Footnote. The Law is supplemented by Chapter 6-1 in accordance with the Law of the Republic of Kazakhstan dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009).

Article 59-1. The definition of bank restructuring

      The restructuring of the bank shall mean a range of administrative, legal, financial, organizational, technical and other measures and procedures to be implemented by the bank based on the bank's restructuring plan (hereinafter - the restructuring plan) for recovery of its financial condition and improvement of its work.

      The provisions of this Chapter shall apply to the restructuring of the organization, included in the banking conglomerate as a parent organization and which is not a bank.

      The provisions of this chapter shall not apply to the restructuring of the bank’s assets and (or) the obligations at the request of the authorized body.

      Footnote. Article 59-1 as amended by the Law of the Republic of Kazakhstan dated 01.03.2011 No 414 -IV (shall be enforced from 01.01.2010).

      Article 59-2. The grounds and principles for restructuring of a bank

      Footnote. The title of Article 59-2 as amended by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      Restructuring of the bank may be carried out in connection with inability of the bank to fulfill the requirements of individual creditors for obligations due to the lack or insufficiency of the money of the bank.

      Restructuring of the bank shall be based on the following principles:

      1) observance of the rights and interests of depositors and creditors of the bank in accordance with the reverse order of satisfaction of claims provided by Article 74-2 of this Law;

      2) equal observance of the rights and interests of depositors and creditors, being in the same queue of satisfaction of claims provided by Article 74-2 of this Law.

      Footnote. Article 59-2 as amended by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 59-3. General terms and conditions of the bank's restructuring

      1. After arising of the grounds for the restructuring, referred to in Article 59-2 of this Law, the bank shall have the right to hold a meeting of the board of directors to take a decision on the restructuring of the bank.

      2. No later than the next working day from the date of the decision made by the board of directors, specified in paragraph 1 of this Article, the bank shall send the board's decision on the restructuring of the bank to the authorized body.

      3. Within seven calendar days after the receipt of the decision of the board of directors about the bank’s restructuring, the authorized body shall conclude a written agreement with the bank on the restructuring of the bank.

      4. The bank shall submit the draft restructuring plan to the authorized body. If there are comments and suggestions, the authorized body shall be entitled to require the bank to finalize the draft restructuring plan. The bank shall be obliged to take into account the comments and suggestions of the authorized body and re-submit the revised draft restructuring plan to the authorized body.

      5. A bank shall apply to the court for restructuring in the order, prescribed by the civil procedure legislation of the Republic of Kazakhstan. Since the entry into force of the court decision on the bank’s restructuring and its period, the restrictions provided by the civil procedural legislation of the Republic of Kazakhstan shall be applied.

      6. Within seven calendar days from the date of enforcement of the court decision on the restructuring, the bank shall inform depositors, creditors and other clients about the restructuring through publishing the appropriate announcement in at least two periodicals that are circulating throughout the territory of the Republic of Kazakhstan, in the Kazakh and Russian languages.

      The bank shall send the copies of the enforced court decision on restructuring to the banks - correspondents not later than the day following the date of its receipt.

      7. From the moment of enforcement of the court decision on the bank’s restructuring the bank shall have the right:

      1) to suspend the execution of sale and purchase contracts, exchange, gift or other transactions on alienation of the bank’s property, conclusion of loan agreements and other financing, entailing credit risks;

      2) to suspend wholly or partially fulfillment of the bank’s obligations.

      8. Within the timeframes, stipulated by a court decision on the restructuring, the bank shall convene a meeting of creditors of the bank, to which the obligations to be restructured in order to conduct negotiations with them and obtain the approval of the restructuring plan.

      In order to obtain the approval of the restructuring plan, the consent of the creditors shall be required, possessing not less than two -thirds of the volume of the bank's liabilities to creditors, to whom the obligations shall be restructured.

      The restructuring of the bank shall be carried out in respect of all the bank's liabilities to creditors that are to be restructured in accordance with the restructuring plan, if the restructuring plan is approved by the bank's creditors in the order, provided in this paragraph.

      9. Not later than the next working day from the date of the creditors’ approval of the restructuring plan, the bank shall send the restructuring plan, approved by the creditors to the authorized body or notify the authorized body of the impossibility of the bank’s restructuring if the approval of the bank's creditors is not obtained in the order, established by paragraph 8 of this Article.

      The authorized body shall be entitled to require finalization of the restructuring plan if the conditions of the restructuring plan differ from the conditions of the draft restructuring plan that was previously submitted by the bank to the authorized body.

      The bank shall be obliged to take into account the comments and suggestions of the authorized body and re-submit the revised restructuring plan, approved by the bank's creditors, to the authorized body in the order, established by paragraph 8 of this Article.

      10. After fulfillment of the requirements, established in paragraph 9 of this Article, the bank shall submit the restructuring plan to the court for approval.

      11. The restructuring plan shall have to contain the following information:

      the order and duration of the restructuring;

      the list of the restructured assets and liabilities;

      the actions, carried out in the framework of the restructuring;

      the expected financial results of the restructuring of assets and liabilities;

      the undertaken restrictions on the activities.

      The restructuring plan of the bank that is a participant of the banking conglomerate, in addition to the said information, shall contain the expected results of the effect on other members of the banking conglomerate, entailed by the restructuring of the bank.

      12. Restructuring shall be terminated in the order and under the conditions, provided by the civil procedural legislation of the Republic of Kazakhstan.

      13. In case of termination of restructuring of the bank in connection with implementation of measures, provided by the restructuring plan, the obligations of the bank included in the restructuring plan, shall be considered executed, enforcement proceedings by court decisions, arbitration on such obligations shall be terminated.

      13-1. A copy of an enforced court decision to terminate the restructuring shall be sent by the banks to the banks- correspondents not later than the day following the date of its receipt.

      14. In accordance with the restructuring plan and a written agreement, the bank shall submit information on the restructuring of the bank to the authorized body, including about the implementation of the activities, provided by the restructuring plan.

      15. The authorized body shall control the implementation of measures on the bank's restructuring plan.

      During the restructuring of the bank, the authorized body shall have the right to apply to the bank and (or) its major participants, a bank holding company, the persons possessing the characteristics of a major participant of the bank or a bank holding company, the supervisory response measures provided by this Law.

      16. During the restructuring, the bank may not increase the amount of participation (in absolute terms) in the organizations, except for the cases, provided in the bank's restructuring plan, approved by the court.

      Footnote. Article 59-3 as amended by the Laws of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 03.07.2013 No. 125-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 08.04.2016 No. 489-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Section II. The terms of changing of the legal status and particularities of termination of the bank’s activities and bank holding companies
Chapter 7. Voluntary reorganization of banks and bank holding companies

      Footnote. The titles of the section and chapter are in the wording by the Law of the Republic of Kazakhstan, dated 11.07.1997 No 154, as amended by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 60. General terms and conditions of a voluntary reorganization of banks (bank holding companies)

      Footnote. The title as amended by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication).

      1. Voluntary reorganization (merger, accession, division, separation, transformation, conversion) of banks (bank holding companies) may be carried out by the decision of general meeting of shareholders (participants) with the permission of the authorized body.

      The procedure for issuance of a permit for voluntary reorganization of a bank (bank holding company) or refusal to issue such a permit shall be determined by a regulatory legal act of the authorized body.

      1-1. The procedure for reorganization of the bank in the form of conversion into an Islamic bank shall be established by Chapter 4-2 of this Law.

      2. The grounds for filing a petition for permission to conduct a voluntary reorganization of the bank (bank holding company) shall be the presence of the decision of the general meeting of the shareholders (participants) of the bank ( bank holding company).

      3. An application for a permit of the authorized body to conduct a voluntary reorganization of the bank (bank holding company) shall be attached with the following documents:

      a) the decision of the supreme body of the bank (bank holding company) about its voluntary reorganization;

      b) the documents that describe the expected conditions, forms, terms and timing of the voluntary reorganization of the bank ( bank holding company);

      c) the financial forecast of the consequences of the voluntary reorganization, including the balance of payments of the bank (the bank holding company) after its voluntary reorganization and/or legal entities, established after the voluntary reorganization of the bank (the bank holding company).

      The agreement on affiliation, signed by the chief executive officers of executive bodies or reorganized banks shall be attached to the application on receipt of permission of the authorized body to conduct voluntary reorganization in the form of affiliation, except the documents, mentioned in the first part of this Article.

      4. An application for permission to conduct the voluntary reorganization of the bank (the bank holding company) shall be considered by the authorized body within two months from the date of its acceptance.

      5. The being reorganized bank (bank holding company ) within two weeks from the date of receipt of the permission of the authorized body to conduct the reorganization shall inform its depositors, clients, correspondents and lenders through publication of the corresponding announcement in the mass media, including on the website of the bank.

      6. The state registration or re-registration of the legal entities, formed after reorganization shall be carried out in accordance with the legislative act of the Republic of Kazakhstan.

      7. The requirements of this Article shall not apply to the non-residents of the Republic of Kazakhstan that are the bank holding company, the entity, having the characteristics of a bank holding company, if any of the following conditions are observed:

      the presence of an individual credit rating not lower than A rating of one of the rating agencies, the list of which shall be established by the authorized body, as well as a written confirmation from the Financial Supervisory Authority of the country of origin of the bank holding company, the entity, having the characteristics of a bank holding company, about the fact that the entities–non-residents of the Republic of Kazakhstan shall be subject to the consolidated supervision;

      existence of an agreement between the authorized body and the relevant supervisory body of a foreign state for the information exchange, as well as the minimum required rating of one of the rating agencies. Minimum rating and the list of the rating agencies are established by the regulatory legal act of the authorized body.

      Footnote. Article 60 as amended by the Laws of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 26.12.2012 No 61 -V (shall be enforced from 04.02.2012); dated 19.03.2014 No. 179-V (shall be enforced from the date of its first official publication); dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016).

      Article 60-1. Features of voluntary reorganization of banks

      Footnote. The title of Article 60-1 is in the wording of the Law of the Republic of Kazakhstan dated 27.02.2017 No. 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication).

      1. Upon affiliation of a bank to another bank, the shares of the affiliated bank shall be purchased by the bank to which the affiliation is carried out by placing (sale) among the shareholders of the affiliated bank its shares in the amount, determined on the basis of the ratio of exchange of shares, approved at the joint general meeting of shareholders of the reorganized banks after its prior approval by the board of directors of each bank. At the same time the provisions of Article 83 of the Law of the Republic of Kazakhstan "On Joint-Stock Companies" relating to the sale price of shares of affiliated companies and price of placement (sale) of shares to which the affiliation is carried out (including provisions for determination, consideration and approval of these prices by the bodies of the company) shall not be applied.

      2. The agreement on affiliation, signed by the chief executive officers of executive bodies on the basis of decision, adopted at joint general meeting of shareholders of the reorganized banks shall be attached to the application on receipt of permission of the authorized body to conduct voluntary reorganization in the form of affiliation, except the documents, mentioned in paragraph 3 of Article 60 of this Article.

      3. After the transfer of obligations of the affiliated bank before the creditors and (or) depositors to the bank, to which the affiliation is carried out, the fulfillment of obligations before such creditors and (or) depositors, including maintenance of the transferred bank accounts of depositors, shall be carried out by the bank, to which the affiliation is carried out.

      4. The affiliated bank shall have the right to transfer the bank, to which the affiliation is carried out, the obligations before the depositors with their bank accounts opened in the affiliated bank (saving individual identification codes) without the conclusion of additional agreements to the contracts for banking services, the history of movement of money on them, the dossier, generated when opening and maintaining bank accounts, outstanding requirements, including the orders of authorized state bodies entitled to suspension of expenditure transactions on bank account, as well as decisions (resolutions) of the authorized bodies or officials having the right to seize the client's money, and encumbrances on the depositors ' bank accounts available in the affiliated bank at the moment of transfer of obligations.

      5. The bank to which the affiliation is carried out, at the required time within the duration of the reorganization procedures in order to ensure the preservation of details of bank accounts of the depositors (including individual identification codes, assigned by the affiliated bank) shall have the right to follow the instructions on bank accounts of the depositors, transferred to the bank, to which affiliation is carried out, with individual identification codes of depositors, indicated in them, assigned by the affiliated bank, as well as with the relevant details of the affiliated bank, used in making payments and money transfers. Execution of such instructions shall be conducted using the correspondent account of the affiliated bank. The bank to which the affiliation is carried out, shall have the right to use the banking information system of the affiliated bank.

      6. Collection and processing of personal data of the clients of the bank, rights (claims) and obligations under which are transferred within the framework of the reorganization procedure, shall be carried out by the bank to which the affiliation is carried out, without the consent of the personal data subjects or their legal representatives.

      7. Within the required period in the framework of conducting reorganization procedures of the bank, the bank to which the affiliation is carried out, shall assign individual identification codes to the bank accounts of the depositors in compliance with the requirements of the legislation of the Republic of Kazakhstan and shall notify in the order, provided by sub-paragraph 1) of Article 24 of the Code of the Republic of Kazakhstan "On Taxes and Other Obligatory Payments to the Budget" (Tax Code), the authorized state body, carrying out management in the field of ensuring tax revenues and other obligatory payments to the budget, on changing of individual identification codes on bank accounts of the taxpayers, provided by subparagraph 1) of part one of Article 24 of the Code of the Republic of Kazakhstan "About Taxes and Other Obligatory Payments to the Budget" (Tax Code).

      After changing the individual identification codes of bank accounts of the depositors, to which there are outstanding claims, including accepted orders of the authorized state bodies entitled to suspension of expenditure transactions on bank account, as well as the decisions (resolutions) of the authorized bodies or officials entitled to seizure the client's money, encumbrance on the bank accounts of the depositors:

      the bank, to which affiliation is carried out, shall notify the person (body), sent to the bank account of the depositor the claims (including regulations of the authorized state bodies entitled to suspension expenditure transactions on bank account, as well as the decisions (resolutions) of the authorized bodies or officials entitled to seize the client's money) or imposed (imposed) encumbrances on the depositors’ bank accounts, on changing the details of the depositor’s bank account, including the individual identification code;

      previously charged to the bank account of the depositor, transferred to the bank, to which the affiliation is carried out, the outstanding claims shall be executed by the bank, to which the affiliation is carried out, from the bank accounts of the depositors, opened by such bank, with correction of details of the affiliated bank (name, bank identification code, business identification number) for the relevant details of the bank to which the affiliation is carried out, as well as an individual identification code of the depositor on the relevant individual identification code of the depositor, assigned to a bank account in accordance with part one of this paragraph;

      previously charged to the bank account of the depositor, transferred to the bank, to which the affiliation is carried out, the outstanding orders of the authorized state bodies entitled to suspension of expenditure transactions on the bank account, as well as the decisions (resolutions) of the authorized bodies or officials entitled to seize the client's money, shall be executed by the bank to which the affiliation is carried out, from bank accounts of the depositors, opened by the bank, to which the affiliation is carried out, with preservation of calendar sequence of their receipt in the affiliated bank and in the order provided by the Civil code of the Republic of Kazakhstan.

      Servicing of bank accounts of the depositors shall be performed by the bank to which the affiliation is carried out, in accordance with the requirements of the legislation of the Republic of Kazakhstan and the conditions of banking service contracts, obligations under which have been transferred to this bank.

      Footnote. The Law is supplemented by Article 60-1 in accordance with the Law of the Republic of Kazakhstan dated 19.03.2014 No. 179-V (shall be enforced from the date of its first official publication); as amended by the laws of the Republic of Kazakhstan dated 27.04.2015 No. 311-V (shall be enforced from 01.09.2014); dated 27.02.2017 No. 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 25.12.2017 No. 122-VI (shall be enforced from 01.01.2018); dated 02.07.2018 No. 168-VI (shall be enforced from 01.06.2018).

Article 61. Refusal to issue a permit for a voluntary reorganization of a bank and a bank holding company

      Footnote. Article 61 as amended by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication).

      Refusal to issue a permit of the authorized body for voluntary reorganization of the bank (the bank holding company) shall be carried out under one of the following grounds:

      a) absence of the relevant decisions of the supreme bodies of the being reorganized banks (bank holding companies );

      b) violation of interests of depositors due to the proposed reorganization;

      c) violation of prudential standards and other mandatory standards and limits due to the proposed reorganization;

      d) violation as a result of the proposed reorganization of the requirements of the legislation of the Republic of Kazakhstan in the field of competition protection.

      Footnote. Article 61 as amended by the Law of the Republic of Kazakhstan dated 11 July, 1997 No 154; dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication.); dated 29.10.2015 № 376-V (shall be enforced from 01.01.2016).

Chapter 7-1. Measures aimed at protection of the consumers of banking services

      Footnote. The Law is supplemented by Chapter 7-1 in accordance with the Law of the Republic of Kazakhstan dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009).

Article 61-1. Mandatory deposit guarantee

      1. In order to protect the interests of depositors of the second tier banks of the Republic of Kazakhstan, a system of mandatory deposit guarantee shall be established.

      Mandatory deposit guarantee shall be carried out by a specially created non-profit organization.

      The legal grounds of functioning of the mandatory deposit guarantee system, the rights and duties of its participants shall be defined by the legislation of the Republic of Kazakhstan.

      2. Participation in the system of mandatory deposit guarantee shall be compulsory for all second tier banks, licensed to take deposits, open and maintain the bank accounts of individuals, except for the Islamic banks.

      Article Article 61-2. Transaction on simultaneous transfer of assets and liabilities of the bank to another (other) bank (banks)

      1. In order to protect the rights of creditors and depositors of the bank, a transaction on simultaneous transfer of assets and obligations of the bank in part or in full to another (other) bank (banks) (hereinafter – the bank-acquirer) shall be allowed in agreement with the authorized body.

      2. The procedure for conducting operation, provided by this Article, types of assets and liabilities subject to transfer when conducting the specified operation, as well as the procedure for approval by the authorized body of this transaction shall be determined by the regulatory legal act of the authorized body.

      The transaction on simultaneous transfer of assets and liabilities between the parent bank and the subsidiary bank shall be carried out in accordance with this Article, taking into account the features provided by Article 61-4 of this Law.

      3. The bank shall publish an announcement on the transfer of assets and (or) liabilities of the bank in part or in full. The announcement shall be published in periodicals distributed throughout the Republic of Kazakhstan, on the Internet-resource of the bank in the Kazakh and Russian languages after approval by the authorized body of the transaction specified in paragraph 1 of this Article.

      4. Transfer of liabilities of the bank in the manner provided by this Article shall be carried out with the consent of the depositors and (or) creditors of the bank, except for the cases provided by part four of this paragraph.

      Absence of a written objection from the depositors and (or) creditors of the bank within ten calendar days from the date of publication of the announcement during the transaction on simultaneous transfer of assets and liabilities by the bank to the bank-acquirer shall be considered as the consent of the depositor and (or) the creditor to transfer liabilities.

      If there are objections of depositors against the transfer of liabilities upon conducting a transaction, provided by Article 61-4 of this Law, such depositor shall be obliged, not later than ten calendar days, to apply to the bank with a written refusal to transfer liabilities by the bank, except for the cases provided by part four of this paragraph. The depositor shall attach to the refusal an instruction on the issuance of a deposit in cash or on the transfer of its amount to another bank, issued in accordance with the requirements of the legislation of the Republic of Kazakhstan and the conditions of the banking service contract.

      Upon conducting a transaction provided by Article 61-4 of this Law, the liabilities of the bank to the depositors, whose bank accounts have outstanding requirements, including the orders of authorized state bodies entitled to suspend expenditure transactions on bank account, and the decisions (resolutions) of the authorized bodies or officials entitled to seize the client's money, encumbrance on bank accounts of the depositors, shall be transferred to the bank-acquirer, regardless of the objections of the depositors for the transfer of liabilities.

      5. After the transfer of the bank's liabilities to the creditors and (or) depositors to the bank- acquirer, execution of liabilities to such creditors and (or) depositors, including the maintenance of the transferred current and savings accounts of depositors, shall be carried out by the Bank- acquirer.

      6. The bank shall have the right to transfer to the bank-acquirer the liabilities to the depositors with their bank accounts in the bank (with preservation of individual identification codes) without conclusion of additional agreements to the bank service contracts, history of money movement on them, dossier, formed at opening and maintaining bank accounts, unfulfilled requirements, including orders of the authorized state bodies having the right of suspension expenditure operations on the bank account, as well as decisions (resolutions) of authorized bodies or officials, having the right to seize the client's money, and encumbrances on bank accounts of the depositors available in the bank at the time of transfer of liabilities.

      7. During the transition period, established by the regulatory legal act of the authorized body, in order to ensure preservation of details of the depositors' bank accounts (including individual identification codes assigned by the bank), the bank-acquirer shall have the right to execute instructions on bank accounts of the depositors, transferred to the bank-acquirer, with specified therein individual identification codes of the depositors, assigned by the bank, as well as the relevant details of the bank, used in carrying out payments and money transfers. The features of execution of such instructions using the correspondent account of the bank shall be determined by agreement of the bank and the bank- acquirer.

      8. During the transition period, the bank-acquirer shall assign individual identification codes to the depositors' bank accounts in compliance with the requirements of the legislation of the Republic of Kazakhstan and shall notify in the manner provided by subparagraph 1) of part one of Article 24 of the Code of the Republic of Kazakhstan "On Taxes and Other Obligatory Payments to the Budget" (Tax Code), the authorized state body, carrying out management in the sphere of ensuring the receipt of taxes and other obligatory payments to the budget, about the change of individual identification codes on bank accounts of the taxpayers provided by subparagraph 1) of part one of Article 24 of the Code of the Republic of Kazakhstan "On Taxes and Other Obligatory Payments to the Budget" (Tax Code).

      After changing the personal identification codes of bank accounts of the depositors, to which there are outstanding requirements, including accepted to execution orders of authorized state bodies entitled to suspension of expenditure transactions on bank account, as well as the decisions (resolutions) of the authorized bodies or officials, having the right to seize the client's money or imposed encumbrances on the depositors' bank accounts:

      the bank-acquirer shall notify the person (body) that has sent (directed) claims to the depositor's bank account (including the orders of the authorized state bodies having the right to suspend expenditure operations on the bank account, as well as decisions (resolutions) of the authorized bodies or officials having the right to seize the client's money) or imposed (imposed) encumbrances on the depositors' bank accounts, on changes in the details of the depositor's bank account, including the individual identification code;

      previously submitted to the depositor's bank account transferred to the bank-acquirer, the unfulfilled requirements shall be executed by the bank- acquirer from the depositors' bank accounts opened by the bank-acquirer, with correction of bank details (name, bank identification code, business identification number) to the relevant details of the bank-acquirer, as well as the individual identification code of the depositor to the relevant individual identification code of the depositor assigned to the bank account in accordance with part one of this paragraph;

      previously submitted to the bank account of the depositor, transferred to the bank-acquirer, the unfulfilled orders of authorized state bodies, having the right to suspend expenditure operations on the bank account, as well as decisions (resolutions) of the authorized bodies or officials, having the right to seize the client's money, shall be executed by the bank-acquirer from bank accounts of the depositors, opened by the bank- acquirer, preserving the calendar priority for their receipt to the bank and in the manner, provided by the Civil code of the Republic of Kazakhstan.

      Servicing of depositors' bank accounts shall be carried out by the bank-acquirer in accordance with the requirements of the legislation of the Republic of Kazakhstan and the conditions of banking service contracts, liabilities under which have been transferred to this Bank.

      9. is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      10. Transfer of the assets of the bank in the form of rights (claims) does not require the consent of the debtor (debtors), unless otherwise provided by the agreement.

      In order to notify the debtor (debtors), the bank shall publish an announcement on the transfer of the rights (claims) of the bank in part or in full, specified in paragraph 3 of this Article. If the debtor fulfills his/her obligations in part or in full to the bank, that transferred the rights (claims), this performance shall be deemed fulfilled to the appropriate creditor.

      11. Transfer of assets and liabilities of the bank shall be carried out by concluding a contract on simultaneous transfer of assets and liabilities with attachment of the transfer act to the contract.

      The transfer act must contain information about the transferred assets, rights, ensuring the performance of obligations under the transferred assets, and liabilities.

      The provisions of the Civil code of the Republic of Kazakhstan on the change of persons in the obligation shall apply to the contract on simultaneous transfer of assets and liabilities.

      12. Transfer of the assets of the bank in the form of shares or participation stakes in the authorized capital of legal entities, branches and representative offices to the bank-acquirer shall be conducted in accordance with the requirements of this Law and other legislative acts of the Republic of Kazakhstan, except for the case provided in Article 61-4 of this Law.

      13. The bank-acquirer shall have the right to use banking information system of the bank, that transferred assets and liabilities.

      14. Collection and processing of personal data of the bank's clients, rights (claims) and liabilities under which are transferred during the transaction, specified in paragraph 1 of this Article, shall be carried out by the bank-acquirer without the consent of the subjects of personal data or their legal representatives.

      15. Transfer of assets and liabilities of the bank, being in the process of restructuring shall be carried out within the framework of the restructuring plan in accordance with the provisions of Chapter 6-1 of this Law.

      Footnote. Article 61-2 as amended by the Law of the Republic of Kazakhstan dated 27.04.2015 No. 311-V (shall be enforced from 01.01.2015); as amended by the laws of the Republic of Kazakhstan dated 27.02.2017 No. 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication); dated 25.12.2017 No. 122-VI (shall be enforced from 01.01.2018); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      Article 61-3. Peculiarities of transfer of assets and liabilities of the bank being in the conservation mode to the stabilization bank

      Footnote. Article 61-3 is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      Article 61-4. Peculiarities of simultaneous transfer of assets and liabilities between a parent bank and a subsidiary bank

      Footnote. The title of Article 61-4 is in the wording of the Law of the Republic of Kazakhstan dated 27.02.2017 No. 49-VI (shall be enforced upon expiry of ten calendar days after its first official publication).

      1. Transaction on simultaneous transfer from a subsidiary bank to a parent bank of assets in part or in full and liabilities in full, except for liabilities related to placement of deposits and received loans of the national managing holding, and transfer from the parent bank to the subsidiary bank of dubious and hopeless assets in part or in full shall be carried out in agreement with the authorized body within the framework of one contract.

      2. For the purposes of this Article, a subsidiary bank means a subsidiary bank in respect of which a restructuring has been carried out in accordance with this Law, transferring to the parent bank the assets in part or in full and liabilities in full, except for liabilities related to placement of deposits and received loans of the national managing holding, and accepting from the parent bank dubious and hopeless assets in part or in full.

      3. Assignment of rights (claims) on the grounds and in the manner, determined by this Article does not require amendments and additions to the contracts concluded by the parent or subsidiary bank with individuals and legal entities, in terms of specifying a new creditor, pledge holder.

      At assignment of rights (claims) on the grounds and in the manner, determined by this Article, the consent of the borrower, the pledge holder, the guarantor and other persons on assignment shall not be required. In this case, the identity of a new creditor is recognized as not having significant significance for the debtor.

      4. Contract on simultaneous transfer of assets and liabilities (with attachment of the transfer act) shall be provided to the authorized registering body (organization) by the bank-acquirer in order to enter in the legal cadastre, as well as the registry of pledge of movable property, the system of registers of securities holders the information about a new creditor, who is at the same time a pledge holder, to whom the rights ensuring fulfillment of obligations under the transferred assets have been transferred.

      Assignment of rights (claims) on the grounds and in the manner, determined in this Article is also the ground for transfer to a new creditor, who is at the same time a pledge holder, of rights to property in respect of which there are encumbrances, arrests, other restrictions in the disposal of property, registered by third parties or state bodies.

      5. The bank- acquirer shall be recognized as a creditor (lender) for banking and other operations and types of activity, provided by Article 30 of this Law and shall have all the rights and obligations of the Bank to which the rights (claims) have been assigned from the date of conclusion of the contract on simultaneous transfer of assets and liabilities.

      6. Transfer of assets of a subsidiary bank to a parent bank in the form of shares or participation stakes in the authorized capital of legal entities, branches and representative offices does not require the parent bank to obtain additional permits, consents or notifications of the authorized body, which are provided by this Law and other laws of the Republic of Kazakhstan, except for the approval, specified in paragraph 1 of this Article.

      7. After carrying out an operation, specified in paragraph 1 of this Article, the license for conducting banking and other operations and activity on the securities market shall terminate in connection with voluntary application of the subsidiary bank to the authorized body on termination of the license.

      8. After the termination of the license for banking and other operations and activities on the securities market, a legal entity that was previously a subsidiary bank shall:

      have the right to retain the word "bank" in its name;

      have the right to collect and process personal data of clients of the parent bank, the rights (claims) and liabilities under which have been transferred during the operation, specified in this Article, without the consent of the subjects of personal data or their legal representatives;

      be recognized by the creditor (lender) on the transferred rights (claims) and retains the rights and obligations of the creditor (of the bank, lender) on the remaining rights (claims), established by the bank loan contracts;

      not be an organization, carrying out certain types of banking operations, and have the right to carry out banking operations in the order provided by point 9 of this Article.

      9. During the transition period after termination of the license, a legal entity that was previously a subsidiary bank shall have the right to carry out the following types of banking operations without a license of the authorized body:

      1) transfer operations related to payments and money transfers made by the parent bank, including the use of the correspondent account of a subsidiary bank, on depositors' bank accounts, transferred to the parent bank;

      2) opening and maintaining a correspondent account of the parent bank;

      3) accepting deposits, opening and maintaining bank accounts of the national management holding, an organization specializing in improving the quality of credit portfolios of second-tier banks;

      4) borrowing operations on the rights (claims), transferred to it and remained at it, established by contracts of a bank loan according to paragraph 8 of this Article.

      10. The provisions of paragraphs 1, 3, 4, 5 and 6 of this Article shall apply to transaction on simultaneous transfer of assets and liabilities by a subsidiary bank that has previously performed the transaction, provided by this Article to a parent bank.

      Footnote. Chapter 7-1 is supplemented by Article 61-4 in accordance with the Law of the Republic of Kazakhstan 27.04.2015 No. 311-V (shall be enforced from 01.01.2015); as amended by the Law of the Republic of Kazakhstan dated 27.02.2017 No. 49-IV (shall be enforced upon expiry of ten calendar days after its first official publication).

      Article 61-5. Ensuring continuity of banking services

      1. The bank or organization carrying out certain types of banking operations, shall ensure the work of a reserve center for information systems of the bank or organization carrying out certain types of banking operations, reserve communication channels to restore the activity of information system.

      2. The bank or organization carrying out certain types of banking operations shall inform the clients about the planned introduction into operation of changes (updates) made to the hardware, software and other means that ensure operation of information system and affect availability of banking services to the clients in the manner and terms, established by internal rules of the bank or organization carrying out certain types of banking operations, or by a contract.

      3. The bank or organization carrying out certain types of banking operations shall ensure a guaranteed level of continuity of services to the clients, which is established by internal rules of the bank or organization carrying out certain types of banking operations, and shall be subject to mandatory placement on the Internet resource of the bank or organization carrying out certain types of banking operations.

      4. The requirements for security and continuity of information systems of banks and organizations carrying out certain types of banking operations shall be established by the authorized body.

      5. In order to counteract the threats to information security, implement preventive measures and prevent threats to information security, a bank or an organization carrying out certain types of banking operations shall ensure availability of information security management system, which provides:

      1) monitoring of information security activities and measures to identify and analyze threats, counteract attacks and investigate information security incidents;

      2) collection, consolidation and storage of information about information security incidents, including information about violations, failures in information systems;

      3) analysis of information about information security incidents, including information about violations, failures in information systems;

      4) other requirements for information security, established by the regulatory legal act of the authorized body.

      6. Banks shall provide information on availability of information security management systems and on compliance with the requirements for ensuring information security to the National coordination center for information security in the manner and terms determined by the regulatory legal act of the authorized body in agreement with the authorized body in the sphere of information security.

      7. Banks and organizations carrying out certain types of banking operations shall ensure information security and provide information about information security incidents, including information about violations, failures in information system to the authorized body.

      The requirements for ensuring information security of banks and organizations carrying out certain types of banking operations, the procedure and terms of providing information about information security incidents, including information about violations, failures in information systems, shall be determined by the regulatory legal act of the authorized body.

      8. The authorized body in case of taking decision on the materiality of an information security incident, including information about violations, failures in information systems, in the presence of a threat to the stability of financial and (or) payment system of the Republic of Kazakhstan shall have the right to send information, including bank secrecy, to the National coordination center for information security.

      Footnote. Chapter 7-1 is supplemented by Article 61-5 in accordance with the Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V(shall be enforced from 01.01.2016); as amended by the Law of the Republic of Kazakhstan dated 28.12.2017 No. 128-VI (shall be enforced upon expiry of ten calendar days after its first official publication).

      Chapter 7-2. Measures for ensuring financial stability and settlement of insolvent banks

      Footnote. It is supplemented by chapter 7-2 in accordance with the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 61-6. Classification of the bank into the category of banks with unstable financial situation, creating a threat to the interests of its depositors and creditors and (or) a threat to the stability of the financial system

      1. The authorized body shall classify the bank as a bank with unstable financial situation, creating a threat to the interests of its depositors and creditors and (or) a threat to the stability of the financial system (hereinafter – the bank with an unstable financial situation), in the presence of any of the following signs:

      1) a decrease in the values of the adequacy ratios of equity capital and its size to the level below the minimum values established by the authorized body;

      2) non-performance by the bank of monetary obligations and other claims of creditors of monetary character on obligations in connection with absence or insufficiency of money at the bank;

      3) identification by the authorized body of facts (transactions), the reliable reflection of which in financial and other reporting of the bank will lead to violation by the bank of its own capital adequacy ratios and (or) non-performance of monetary obligations and other claims of creditors of monetary nature;

      4) identification by the authorized body within the framework of carrying out functions on control and supervision of deficiencies and (or) risks in the activities of the bank, which may lead to creation of situation that threatens the stable functioning of the bank, and (or) interests of its depositors and (or) creditors, and (or) stability of the financial system.

      2. The decision of the authorized body to classify the bank to the category of banks with an unstable financial situation shall be notified to the bank within five working days from the date of its adoption and shall not be subject to dissemination.

      3. The authorized body in case of classifying the bank to the category of banks with an unstable financial situation, in addition to the supervisory response measures, provided by Article 45-1 of this Law, shall have the right to conduct an assessment (analysis) of financial and property status of the bank with its visit, including with involvement of appraisers, audit and other organizations.

      From the date, specified in the decision of the authorized body to classify the bank to the category of banks with an unstable financial situation, the bank shall not have the right to make decisions on distribution of profits, payment of dividends, fulfillment of any financial obligations to major participants and (or) bank holding companies, as well as on payment of remuneration to the executive employees of the bank, except for salaries and cases, established by the legislation of the Republic of Kazakhstan.

      4. A bank classified to the category of banks with an unstable financial situation, and its major participants, a bank holding company shall be obliged to take measures on improving financial status of the bank, minimizing risks by bringing its activities in accordance with the legislation of the Republic of Kazakhstan and the requirements of the authorized body.

      The measures, specified in part one of this paragraph, and the terms of their implementation for each paragraph, as well as responsible officials shall be determined in the plan of measures on improving financial situation, developed and submitted by the bank to the authorized body for approval.

      Terms of implementation of measures, specified in part one of this paragraph, and being of the bank in the category of banks with unstable financial situation shall not exceed twelve months and may be extended once by the authorized body for a period of not more than twelve months if there are facts of improvement in financial status of the bank after classifying it to the category of banks with an unstable financial situation.

      If the authorized body approves the plan of measures on improving financial situation, the persons, specified in part one of this paragraph shall start its implementation, notifying the authorized body of the results of its execution within the terms, established by the plan.

      In case of non-submission of the plan of measures on improving financial situation within the established term, its disapproval by the authorized body or non-execution, the authorized body shall apply to the bank with an unstable financial situation, its major participants, a bank holding one or more supervisory response measures provided by Article 45-1 of this Law.

      The procedure and terms of submission of the plan of measures on improving financial situation and its approval by the authorized body, as well as the requirements for its content shall be established by the regulatory legal act of the authorized body.

      5. The authorized body shall, within the term, established in paragraph 4 of this Article, exclude the bank from the category of banks with unstable financial situation in case of elimination of the signs, specified in paragraph 1 of this Article.

Article 61-7. Classification of the bank to the category of insolvent banks

      1. The authorized body shall classify the bank to the category of insolvent banks in case of non-elimination by the bank of signs of unstable financial situation of the bank after expiration of the term, specified in paragraph 4 of Article 61-6 of this Law.

      2. The authorized body shall have the right to make a decision to classify a bank to the category of insolvent banks before the term, established by paragraph 4 of Article 61-6 of this Law on the following grounds:

      1) performance by the bank, after classifying it to the category of banks with an unstable financial situation, of operations (transactions) that lead to further deterioration of financial status of the bank, including:

      conclusion of transactions by the bank, as a result of which there is a significant deterioration in the quality of the bank's assets, including sale, replacement of assets, collateral for the worse for the bank and if the consequences of the replacement led (will lead) to losses of the bank;

      conclusion by the bank of transactions on non-market conditions the list of which is established by the regulatory legal act of the authorized body, in which the bank incurs losses, as well as transactions with the persons, related with the bank by special relations, in violation of the requirements of Article 40 of this Law and (or) the restrictions, established by the authorized body, by applying supervisory response measures;

      acceptance by the bank of obligations, which have entailed impossibility of performance by the bank of monetary obligations to other depositors and (or) other creditors in full or in part;

      transfer of property (including for temporary use) free of charge or at a price significantly different for the worse for the bank from the price of similar property under comparable economic conditions, or without any reasons to the detriment of the interests of creditors;

      2) violation of the bank's equity capital adequacy ratios in the form of their reduction to a level below one-third of the regulatory values, established by the regulatory legal act of the authorized body;

      3) non-fulfillment by the bank within ten working days of monetary obligations and other claims of monetary nature to the depositors and creditors in connection of absence or insufficiency of money;

      4) systematic (three or more times within twelve consecutive calendar months) improper performance of contractual obligations on payment and transfer operations;

      5) non-performance by the bank of measures on improvement of financial status and (or) minimizing risks, provided by Article 46 of this Law.

      3. The authorized body shall exclude the bank from the category of insolvent banks if, as a result of the taken measures on settlement, provided by Article 61-8 of this Law, the bank has eliminated the grounds for classifying it to the category of insolvent banks, specified in paragraph 2 of this Article and the equity capital adequacy ratios are observed.

Article 61-8. Measures for settlement of an insolvent bank

      1. The settlement of an insolvent bank means adoption of measures, provided by this Article and aimed at improving the financial situation and (or) termination of the bank's activities.

      The authorized body shall apply one or more measures on settlement of an insolvent bank, provided by this Article.

      2. The measures on settlement of an insolvent bank, provided by paragraph 4 of this Article shall be applied in order to:

      1) ensuring continuity of carrying out banking operations;

      2) preventing occurrence and spread of systemic risks of the financial system;

      3) minimization of expenses of the state budget for settlement of insolvent bank;

      4) ensuring protection of rights and interests of depositors and creditors.

      3. Application of measures on settlement of an insolvent bank shall be based on the following principles:

      1) observance of the rights and interests of depositors and creditors of an insolvent bank in accordance with the priority of satisfaction of claims, provided by Article 74-2 of this Law;

      2) equal observance of the rights and interests of depositors and creditors, being in the same queue of satisfaction of claims provided by Article 74-2 of this Law;

      3) inadmissibility of deterioration of position of depositors and creditors of an insolvent bank in connection with application to it of measures on settlement of insolvent bank in comparison with position in case of compulsory liquidation of an insolvent bank;

      4) choice of the least costly measure on settlement of an insolvent bank, provided by paragraph 4 of this Article.

      4. The authorized body shall apply in case of classification of the bank to the category of insolvent banks one or more of the following measures to an insolvent bank:

      1) forced restructuring of liabilities of an insolvent bank;

      2) transfer of all or part of the assets and liabilities of an insolvent bank to another bank (other banks);

      3) creation of a stabilization bank and transfer of all or part of the assets and liabilities of an insolvent bank to this stabilization bank;

      4) deprivation of the license for carrying out all banking and other operations with the subsequent forced y liquidation of an insolvent bank.

      5. State participation in the settlement of an insolvent bank shall be carried out provided that:

      1) an insolvent bank is a bank which forced liquidation carries systemic risks of the financial system;

      2) provision of state support to an insolvent bank will allow to effectively apply the measures on settlement of an insolvent bank, provided by subparagraphs 1), 2) and 3) of paragraph 4 of this Article.

      6. State participation in the settlement of an insolvent bank shall be carried out after covering losses at the expense of:

      1) equity capital of an insolvent bank;

      2) liabilities of an insolvent bank to creditors, who are the persons related with the insolvent bank by special relations, by forced restructuring of liabilities of the insolvent bank.

      7. Application of measures on settlement of an insolvent bank should be preceded by an assessment (analysis) of the financial and property status of the bank with its visit, including with involvement of appraisers, audit and other organizations.

      8. The authorized body shall take measures on settlement of an insolvent bank without obtaining the consent of shareholders, depositors and creditors, debtors of the insolvent bank and other interested persons.

      In order to notify the depositors and creditors, debtors of an insolvent bank, as well as other interested parties, the announcement on application of measures on settlement of an insolvent bank shall be published in the Kazakh and Russian languages in periodicals, distributed throughout the territory of the Republic of Kazakhstan, as well as by the authorized body and insolvent bank - on their Internet resources.

Article 61-9. Consequences of classifying a bank to the category of an insolvent banks and applying measures on settlement of an insolvent bank

      1. In order to implement the measures on settlement of an insolvent bank, the authorized body shall have the right to introduce a conservation regime of a bank and appoint a temporary administration for management of the bank (temporary bank manager) in the manner, provided by Articles 62-67 of this Law.

      2. During the conservation period, the authorized body shall have the right to impose a moratorium on satisfaction of claims of depositors and creditors, during the validity period of which:

      1) the accrual of a forfeit (fines, penalties) on all obligations of an insolvent bank shall be terminated and other measures of liability for non-performance or improper performance of monetary obligations and other monetary requirements on the obligations of an insolvent bank shall not be applied;

      2) all operations on bank accounts of clients and the insolvent bank itself shall be terminated, except for cases related to:

      expenses, provided by regulatory legal acts of the authorized body;

      by crediting money, received in favor of an insolvent bank;

      return of money, received on closed accounts of persons who were previously the clients of an insolvent bank;

      payments to individuals to whom the insolvent bank is liable for causing harm to life or health;

      calculation of wages and compensation to the persons, who worked under an employment contract, arrears on social contributions to the State social insurance fund, payment of alimony withheld from wages and mandatory pension contributions, payment of mandatory professional pension contributions, as well as remuneration under author's contracts;

      payment by clients of insolvent bank of taxes, fees and other obligatory payments to the budget;

      conducting operation provided by Articles 61-11 and 61-12 of this Law;

      expenses in connection with recognition of transactions of an insolvent bank invalid in accordance with Article 61-13 of this Law;

      3) execution of claims for recovery of money from bank accounts of an insolvent bank shall be suspended according to requirements of creditors, including those subject to satisfaction in an indisputable manner, as well as foreclosure on the property of an insolvent bank;

      4) execution of executive documents on recovery of debts from an insolvent bank shall be suspended, except for executive documents issued before the date of introduction of the moratorium.

      3. Application of measures on settlement of an insolvent bank, provided by this Law may not be the basis for:

      1) early execution or termination of obligations of an insolvent bank;

      2) implementation of contracts conditions and (or) prospectus of securities for early execution by the insolvent bank of obligations to the depositors and creditors in case of bankruptcy of this bank or upon occurrence of another event that might be qualified as an event equivalent to bankruptcy of the bank;

      3) recovery by creditors of the mortgaged property of an insolvent bank on the obligations secured by the pledge.

Article 61-10. Forced restructuring of liabilities of an insolvent bank

      1. The authorized body shall make a decision on forced restructuring of liabilities of an insolvent bank.

      Forced restructuring of liabilities of an insolvent bank shall be a set of measures on improvement of financial situation of an insolvent bank by applying to it of one or more measures on:

      1) writing-off in full or in part of the liabilities of the insolvent bank;

      2) conversion of securities and other monetary liabilities of an insolvent bank into its ordinary shares, including an increase in the number of declared ordinary shares of an insolvent bank in the amount, determined by the authorized body, to eliminate the grounds for classifying the bank to the category of insolvent banks, specified in paragraph 2 of Article 61-7 of this Law, and compliance with equity capital adequacy ratios;

      3) change of terms and (or) interest rates on obligations of an insolvent bank, including temporary suspension of execution of payments on the service of obligation.

      2. Forced restructuring of obligations of an insolvent bank shall be carried out in the order of the reverse priority of satisfaction of creditors' claims, established by Article 74-2 of this Law.

      3. Forced restructuring shall not be subject to:

      1) liabilities of an insolvent bank to the persons, whose claims are not included in the liquidation bankruptcy estate in accordance with Article 74-1оf this Law;

      2) liabilities of an insolvent bank, which are subject to satisfaction in case of forced liquidation in the first, second, third, fourth, fifth, and seventh stages in accordance with Article 74-2 of this Law, as well as the liabilities of an insolvent bank to individuals on deposits in the amount of the guarantee compensation subject to payment by the organization, carrying out obligatory guaranteeing of deposits in case of its forced liquidation.

      4. When converting securities and other monetary liabilities of an insolvent bank into its common shares:

      1) a resolution of the general meeting of shareholders of an insolvent bank on an additional issue of shares of an insolvent bank shall not be required;

      2) the shareholders of an insolvent bank shall not have the right to pre-emptive purchase of shares of an insolvent bank;

      3) the requirements of paragraph 2 of Article 16, paragraphs 2 and 5 of Article 17 and Article 17-1 of this Law shall not be applied.

      5. The procedure for compulsory restructuring of liabilities of an insolvent bank shall be determined by a regulatory legal act of the authorized body.

Article 61-11. Operation on simultaneous transfer of assets and liabilities of an insolvent bank to another bank (other banks)

      1. According to the decision of the authorized body, an operation on simultaneous transfer of assets and liabilities of an insolvent bank to another bank (other banks) (hereinafter – the bank-acquirer) provided in this Article, shall be carried out by temporary administration for managing a bank (temporary manager of the bank) at the stage of conservation.

      2. In conducting an operation, specified in paragraph 1 of this Article, the liabilities of an insolvent bank shall be transferred to the bank- acquirer in compliance with the priority of satisfaction of creditors' claims provided by Article 74-2 of this Law.

      3. In conducting operation, specified in paragraph 1 of this Article, the bank-acquirer may be transferred all or part of the assets and all or part of liabilities of an insolvent bank, except for the case, specified in part two of this paragraph.

      In case of insufficiency of assets of an insolvent bank at transfer to bank-acquirer of liabilities to the creditors of one priority, these liabilities shall be transferred in proportion to the sums of claims of the creditors which are subject to satisfaction.

      The liabilities of an insolvent bank on the guaranteed deposits of individuals must be transferred to the bank-acquirer in full.

      If the size of the liabilities on the guaranteed deposits, transferred to the bank-acquirer exceeds the size of the property of an insolvent bank, the organization carrying out obligatory guarantee of deposits shall be obliged to make up the difference at the expense of the special reserve.

      The amount of funds, transferred by the organization carrying out obligatory guarantee of deposits, in accordance with part four of this paragraph, shall not exceed the amount subject to payment as a guarantee compensation, determined in accordance with the legislation of the Republic of Kazakhstan on obligatory guarantee of deposits.

      4. The procedure for carrying out by the temporary administration for the management of the bank (temporary manager of the bank) of transfer of assets and liabilities of an insolvent bank to the bank-acquirer shall be determined by the regulatory legal act of the authorized body.

      5. Conducting of operation, specified in paragraph 1 of this Article does not require:

      1) the consent of shareholders, depositors and creditors, debtors of an insolvent bank, as well as other interested persons (including pledgors, guarantors, sureties). Thus the identity of a new creditor shall be recognized not having essential value for the debtor;

      2) introduction of amendments to the contracts, concluded by an insolvent bank with the depositors and creditors, debtors of an insolvent bank, as well as other persons (including pledgors, guarantors, sureties), in terms of specifying a new party to the contract;

      3) conclusion of new bank account contracts by the bank-acquirer with the depositors of an insolvent bank. In this case, the bank-acquirer shall be obliged to notify the depositors about changes in individual identification codes.

      6. Collection and processing of personal data of clients of an insolvent bank, rights (claims) and liabilities under which are transferred during the operation, specified in paragraph 1 of this Article, shall be carried out by the bank-acquirer without the consent of the subjects of personal data or their legal representatives.

      7. In order to notify the depositors and creditors, debtors of an insolvent bank, as well as other interested parties, the temporary administration for management of the bank (temporary bank manager) shall publish an announcement on the transfer of assets and liabilities of an insolvent bank to the bank-acquirer in the Kazakh and Russian languages in periodicals, distributed throughout the territory of the Republic of Kazakhstan, as well as by the authorized body, an insolvent bank and the bank-acquirer - on their Internet-resources.

      8. Transfer to the bank-acquirer of assets in the form of shares or participation stakes in the authorized capital of legal entities, branches and representative offices does not require the bank- acquirer to obtain additional permits, consents or notifications of the authorized body, which are provided by this Law and other laws of the Republic of Kazakhstan.

      9. Transfer of liabilities of an insolvent bank to the depositors by the temporary administration for the management of the bank (temporary manager of the bank) to the bank-acquirer shall be carried out in accordance with paragraphs 6, 7 and 8 of Article 61-2 of this Law.

      10. Transfer of assets and liabilities of an insolvent bank shall be carried out by concluding a contract on simultaneous transfer of assets and liabilities with attachment of a transfer act to the contract.

      The transfer act must contain information about the transferred assets, rights, ensuring the performance of obligations under the transferred assets, and liabilities.

      The provisions of the Civil code of the Republic of Kazakhstan on the change of persons in the obligation shall apply to the contract on simultaneous transfer of assets and liabilities.

      11. Contract on simultaneous transfer of assets and liabilities (with attachment of the transfer act) shall be provided to the authorized registering body (organization) by the bank-acquirer in order to enter in the legal cadastre, and registry of pledge of movable property, the system of registers of holders of securities of information about a new creditor, being at the same time a pledge holder, to whom the rights ensuring fulfillment of obligations under the transferred assets have been transferred.

      The assignment of rights (claims) on the grounds and in the manner, determined by this Article shall also be the basis for the transfer to a new creditor, who is at the same time the pledge holder, of rights to property, in respect of which there are encumbrances, arrests, other restrictions registered by third parties or state bodies in the disposal of property.

      12. After the transfer of liabilities of an insolvent bank before the depositors and creditors to the bank-acquirer, the liabilities before such depositors and creditors shall be carried out by the bank-acquirer.

      13. After conclusion of the contract on simultaneous transfer of assets and liabilities of an insolvent bank to the bank-acquirer:

      1) shareholders, depositors and creditors of an insolvent bank whose assets and liabilities have been transferred shall not have the right to demand from the bank-acquirer compensation for any losses incurred as a result of the transfer of its assets and liabilities in favor of the bank-acquirer;

      2) the assets and liabilities transferred to the bank-acquirer may not be claimed in favor of the insolvent bank.

      14. Temporary administration for bank management (temporary bank manager) after the completion of the transfer of assets and liabilities of an insolvent bank to the bank-acquirer shall submit to the authorized body the proposal on deprivation of license of the insolvent bank to conduct all banking and other operations and compulsory liquidation of the insolvent bank.

      15. The features of conducting operation on simultaneous transfer of assets and liabilities of an insolvent bank to a stabilization Bank shall be established by Article 61-12 of this Law.

      16. The provisions of paragraphs 2-8, 10-13 of this Article shall apply to the cases of simultaneous transfer of assets and liabilities of a bank deprived of a license to conduct all banking and other operations by the temporary administration (temporary administrator) of the bank prior to the entry into force of the court decision on forced liquidation.

      When the temporary administration (temporary administrator) of the bank conducts an operation on simultaneous transfer of assets and liabilities of a bank, deprived of a license to conduct all banking and other operations before entry into force of the court decision on compulsory liquidation of the bank, the bank-acquirer shall assign individual identification codes to the depositors' bank accounts without concluding a new bank account contract with notification of depositors and shall perform the requirements, provided by paragraph 8 of Article 61-2 of this Law, including the orders of the authorized state bodies, having the right to suspend expenditure operations on the bank account, decisions (resolutions) of the authorized bodies or officials having the right to seize the client's money presented to the bank accounts of the depositors, in the manner provided by paragraph 8 of Article 61-2 of this Law.

Article 61-12. Features of conducting operation on simultaneous transfer of assets and liabilities of an insolvent bank to the stabilization bank

      1. The temporary administration for management of the bank (temporary bank manager) shall submit to the authorized body a proposal on conducting an operation on the transfer of assets and liabilities of an insolvent bank to the stabilization bank.

      The authorized body for the purpose of conducting operation on simultaneous transfer of assets and liabilities of an insolvent bank to the stabilization bank shall make the decision on creation of stabilization bank and instruct temporary administration of the bank (temporary manager of the bank) carrying out operation on transfer of the specified assets and liabilities to the stabilization bank.

      The conditions and procedure of conducting operation for the transfer of assets and liabilities of an insolvent bank to the stabilization bank shall be determined by a regulatory legal act of the authorized body.

      2. The requirements for creation and regulation of activity of the banks, provided by Articles 13, 14, 16, 17-1, 19, 20, 23, 24, 25, 27, 28, paragraphs 6 and 7 of Article 29, paragraphs 5 and 13 of Article 30, Articles 31, 32 and 42 of this Law, as well as the provisions of Articles 33-74 of the Law of the Republic of Kazakhstan "On Joint Stock Companies" shall not apply to the stabilization bank.

      The procedure for creation, the minimum size and procedure for formation of the authorized and equity capital of the stabilization bank, the procedure for management of stabilization bank, the procedure for conclusion of transactions in respect of commission of which special conditions has been established, the procedure for registration of issuance of announced shares and annulment of announced shares of the stabilization bank, as well as the procedure for obtaining by the stabilization bank of a license to conduct banking and other operations provided by this Law, shall be established by regulatory legal acts of the authorized body.

      3. The stabilization bank shall have the right to carry out banking and other operations provided by this Law on the basis of the license of the authorized body.

      The stabilization bank shall not have the right to carry out the activity, permitted for the banks by Article 8 of this Law, except for acquisition of shares or stakes in the authorized capital оf legal entities, when the shares or stakes in the authorized capital of these organizations taken as collateral become the property of the bank in accordance with the civil legislation of the Republic of Kazakhstan and the legislation of a foreign state.

      4. After the transfer of assets and liabilities to the stabilization bank, the performance of obligations before individuals and legal entities, except for obligations to charge remuneration, shall be suspended for a period of twelve months.

      Obligations, for which the term of fulfillment has come, including obligations on time deposits of individuals and legal entities, obligations before the Government of the Republic of Kazakhstan and the authorized body, as well as obligations before second-tier banks, secured by assets transferred to the stabilization bank, shall be subject to execution by the stabilization bank. The stabilization bank shall fulfill obligations on current accounts of individuals and legal entities.

      5. Prior to the entry into force of the court decision on forced liquidation of an insolvent bank, the stabilization bank, in agreement with the authorized body, shall have the right to exchange the asset previously transferred to it for another asset of the insolvent bank.

      6. The stabilization bank shall transfer the assets and liabilities to another bank, determined by the authorized body in accordance with the procedure established by the regulatory legal act of the authorized body.

      The transfer of obligations of the stabilization bank in the manner, provided by this Article shall be carried out without the consent of depositors and creditors of the stabilization bank. In order to notify the depositors and creditors, the stabilization bank shall publish an announcement on the transfer of assets and liabilities of the stabilization bank to the bank-acquirer in periodicals distributed throughout the Republic of Kazakhstan, in the Kazakh and Russian languages.

      7. By the decision of the authorized body, the stabilization bank shall cease its activity after the full transfer of the assets and liabilities to the bank- acquirer in the manner and under the conditions, provided by the authorized body.

      8. By the decision of the authorized body, all shares of the stabilization bank can be sold to the investor on the conditions, guaranteeing an increase in the capital of the stabilization bank and its functioning in accordance with the requirements of the legislation of the Republic of Kazakhstan.

      The acquisition of shares of the stabilization bank by the investor shall be carried out in the procedure and conditions, provided by the legislation of the Republic of Kazakhstan.

      Since the acquisition by the investor of shares of the stabilization bank, the bank shall lose the status of the stabilization bank and carry out its activity in compliance with the requirements of the legislation of the Republic of Kazakhstan. Regulation, control and supervision of activity of this bank shall be carried out in accordance with the requirements of this Law and other laws of the Republic of Kazakhstan.

      9. The provisions of paragraphs 2, 3, 5-16 of Article 61-11 of this Law shall apply to the cases of conducting simultaneous transfer of assets and liabilities of an insolvent bank to a stabilization bank.

Article 61-13. Recognition of transactions of the insolvent bank as invalid and return of property

      1. The authorized body, the temporary administration for bank management (temporary bank manager) (in case of its appointment by the authorized body) and (or) the bank, including at the request of creditors, on transactions made by an insolvent bank or a person authorized by it within three years prior to the date of classification of the bank to the category of insolvent banks, shall have the right to apply to the court for recognition of transactions as invalid if there are grounds for invalidity of transactions provided by the civil legislation of the Republic of Kazakhstan and this Article.

      2. The grounds for invalidity of transactions, except as provided by the Civil code of the Republic of Kazakhstan, shall be:

      1) the conditions of transaction differ significantly to the worse for the insolvent bank from the conditions under which the similar transactions are made in comparable circumstances, if the consequences of transaction led (will lead) to losses of an insolvent bank;

      2) the transaction is made in violation of the requirements and (or) restrictions established by the legislation of the Republic of Kazakhstan and (or) supervisory response measures applied by the authorized body, if the consequences of transaction led (will lead) to losses of an insolvent bank;

      3) the property is transferred (including for temporary use) free of charge or alienated on the conditions significantly different to the worse for the insolvent bank from the conditions of transfer (alienation) of similar property under comparable economic conditions, or without the grounds to detriment of the interests of creditors;

      4) a transaction made within six months prior to the classification of the bank to the category of insolvent banks resulted in the preferred satisfaction of the claims of some creditors of the insolvent bank before others;

      5) the conditions of the pledge contract have been amended, providing the change of the collateral subject to the worst side for the insolvent bank, if the consequences of the entered changes have led (will lead) to losses of the insolvent bank.

      3. If the transaction is declared invalid, the defendant shall be obliged to return all received under the transaction, if it is impossible to return in kind - to reimburse the cost of the property to be returned, works performed or services rendered.

      In case of impossibility to return the property or at gratuitous transfer of property in connection with its loss, damage or its subsequent bona fide acquisition by the third parties initial purchasers of the claimed property shall bear responsibility on compensation of the losses which have arisen in connection with it within cost of the lost, spoiled or bona fide acquired by the third parties of property.

      If it is impossible to recover the cost of the property by the initial purchasers, the person who made the decision to alienate the property of the insolvent bank shall be brought to subsidiary liability in the court.

      4. In a case initiated at the request of the authorized body or temporary administration for management of the bank (temporary manager of the bank), after exclusion of the bank from the category of insolvent banks, the bank or temporary administration (temporary administrator) of the bank shall be recognized as the plaintiff, until the court decision on forced liquidation of the bank comes into force.

Chapter 8. Conservation of a bank and bank holding company

      Footnote. The title as amended by the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication.)

Article 62. The definition of bank conservation

      1. A bank may be subject to conservation if it is classified to the category of insolvent banks and application to it of the settlement measures provided by Article 61-8 of this Law.

      Conservation shall represent a special regime of management and activity of an insolvent bank, forcibly introduced by the authorized body to establish control over the insolvent bank in implementation of measures for settlement of the insolvent bank.

      2. is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019)..

      3. Imposition of the conservation regime shall entail the appointment of a temporary administration of a bank or a temporary administrator of a bank by the authorized body for a limited (up to one year) term.

      4. Conservation of a bank shall be performed at the expense of the bank itself.

      5. is excluded by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      6. The order of appliance (imposition) of the conservation regime of the second tier banks shall be defined by the regulatory legal act of the authorized body.

      Footnote. Article 62 as amended by the Decree of the President of the Republic of Kazakhstan having the force of the Law dated 27.01.1996 No 2830, the Laws of the Republic of Kazakhstan dated 11.07.1997 No 154; dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 13.02.2009 No 135 -IV (the order of enforcement see Art. 3); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication.) dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 63. Temporary administration for a bank management (temporary bank administrator)

      1. The temporary administration (temporary manager of the bank) shall be appointed by the authorized body from among its employees, representatives of the organization, carrying out obligatory guarantee of deposits, or other persons complying with the minimum requirements, established by paragraph 3 of Article 20 of this Law.

      2. The rights and obligations, and the terms of remuneration of the head and members of the temporary administration (temporary bank administrator) shall be established by a separate agreement, concluded between the authorized body and the temporary administration (temporary bank administrator).

      3. The temporary administration (temporary bank administrator) shall be governed by this Law, the regulatory legal acts of the authorized body and other Laws of the Republic of Kazakhstan.

      4. The authorized body shall be entitled at any time to replace the members of the temporary administration (temporary bank administrator).

      5. For the damage caused to the bank, the head and members of the temporary administration (temporary administrator) shall bear responsibility, established by the acting legislation. Imposition of responsibility to the head and members of the temporary administration (temporary bank administrator) for any damage that may be classified as normal business risks shall not be permitted.

      Footnote. Article 63 as amended by the Law of the Republic of Kazakhstan dated 11 July, 1997 No 154; dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004); dated 23 December, 2005 No 107 (the order of enforcement See Art.2 of the Law No 107); dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016).

Article 64. A decision on bank conservation

      1. The decision of the authorized body on the bank conservation shall contain:

      a) the name of the bank and its location;

      b) the ground for the decision on the bank’s conservation;

      c) the commence and duration of the conservation;

      d) the list of restrictions imposed on the bank’s activities;

      e) the members of the temporary administration or the surname, name and patronymic of the temporary administrator;

      f) the instructions for the executives of the bank, that is under the conservation, on drawing up of a report on their activities, the income statement, the information about the presence and the amount of the property and submission of these documents to the temporary administration (temporary bank administrator);

      g) recommendations to the temporary administration (temporary bank administrator).

      2. The decision on conducting bank conservation shall be published by the authorized body in two periodicals that are circulating throughout the Republic of Kazakhstan.

      Footnote. Article 64 as amended by the Law of the Republic of Kazakhstan dated 11 July, 1997 No 154; dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004).

Article 65. Consequences of introduction of the bank conservation regime. Powers of temporary administration for management the bank (temporary bank manager)

      Footnote. The title of Article 65 is in the wording of the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      1. From the commencement of conservation and for its duration:

      a) the rights of the shareholders of the bank for the use and disposal of the shares issued by a given bank shall be suspended;

      b) the powers of the bank’s bodies shall be suspended and its executives shall be suspended from work;

      c) all powers of bodies of the bank, and also the rights of shareholders of the bank on the use of shares, which issuer is this bank, shall be transferred to temporary administration (temporary manager);

      d) all of the transactions, made on behalf of and at the expense of the bank without the knowledge and a written consent of the temporary administration (temporary bank administrator) shall be recognized invalid.

      2. The temporary administration (temporary bank administrator) shall have the right:

      a) to make decisions on the bank’s activities in accordance with the requirements of Article 66 of this Law;

      b) if necessary, completely or partially suspend the obligations of the bank before the depositors and other creditors for the period of conservation;

      c) if necessary to terminate the contracts, concluded with the bank, providing investment of the bank’s funds or amend them unilaterally, including the changing of rates, fees and the duration;

      d) to sign all agreements and documents on behalf of the bank;

      e) to make the claims on behalf of and in the interests of the bank;

      f) to issue orders, including the orders of dismissal, down-grading or suspension from office, distribution of responsibilities among the employees of the bank;

      g) to perform the offset of mutual claims due to the confusion of debts;

      h) transfer the assets and liabilities of the bank to another (other) bank (s) or the stabilization bank in accordance with Articles 61-11 and 61-12 of this Law;

      i) to perform activities provided for in Article 8 of this Law;

      j) carry out other activity related to implementation of measures on settlement of an insolvent bank, specified in Article 61-8 of this Law.

      It shall be prohibited to offset the mutual claims with the creditors whose claims against the bank, which is under the conservation, shall arise from the claim assignment agreement (contracts).

      Footnote. Article 65as amended by the Laws of the Republic of Kazakhstan dated 2 March, 2001 No 162 (see Art. 2); dated 23 December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107); dated 19 February, 2007, No 230 (the order of enforcement see Article 2); dated 23.10.2008 No 72 -IV (the order of enforcement see Article 2); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08. 2009); dated 28.12.2011 No 524 -IV (the order of enforcement upon expiry of ten calendar days after its first official publication.); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 66. Monitoring the activity of the temporary bank administration (temporary bank administrator)

      1. During the bank conservation, the activities of the temporary administration (temporary bank administrator) shall be controlled by the authorized body which is entitled:

      a) to make recommendations to the temporary administration (temporary bank administrator) on the main directions of activities during the conservation of the bank (to offer an action plan);

      b) to submit written instructions which shall be performed by the temporary administration ( temporary bank administrator);

      c) to require submission of any information about its activities and the activities of the bank to the temporary administration (temporary bank administrator);

      d) to hear a report of the temporary administration (temporary bank administrator) on the work accomplished;

      e) to extend the term of conservation;

      f) to make a decision on termination of the bank conservation.

      2. The detailed regulation of the activities of the temporary administration (temporary bank administrator) and the principles of its relationship with the third parties shall be determined by the regulatory legal acts of the authorized body.

      Footnote. Article 66 as amended by the Law of the Republic of Kazakhstan dated 11 July, 1997 No 154; dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004).

Article 67. Termination of conservation

      1. A bank’s conservation shall be terminated for the following reasons:

      a) expiry of the conservation period, specified by the decision of the authorized body;

      b) taking of a decision by the authorized body on the early termination of conservation.

      2. Termination of the bank’s conservation (including the early termination) in connection with the improvement of its financial condition and the quality of work shall entail abolition of all restrictions, imposed to the bank, established by the authorized body or temporary administration (temporary bank administrator). The amendments and additions, made during the conservation period to the constituent documents, the administration bodies and the composition of the bank’s employees, shall remain in force.

      3. If the bank conservation does not lead to improvement of the financial condition and the quality of the work, the authorized body shall be entitled to revoke the license to conduct banking transactions on the grounds, established by the banking legislation of the Republic of Kazakhstan.

      Footnote. Article 67 as amended by the Laws of the Republic of Kazakhstan, dated 11 July, 1997 No 154; dated 2 March, 2001 No 162 (see Art. 2); dated 10 July 2003 No 483 (shall be enforced from 1 January, 2004); dated 12 January, 2007 No 222 (shall be enforced upon expiry of six months from the date of its official publication); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009).

Article 67-1. Conservation of a bank holding company which is a parent organization of the bank

      1. Conservation of a bank holding company shall be a forced implementation, upon the decision of the authorized body, of a range of administrative, legal, financial, organizational, technical and other measures and procedures in respect of a bank holding company in order to restore its financial condition and improve the quality of the work.

      2. A bank holding company that is a resident of the Republic of Kazakhstan may be subjected to the conservation.

      A bank holding company may be subjected to the conservation under any of the following reasons:

      1) failure to comply with the equity capital adequacy ratio of the banking conglomerate;

      2) presence of a negative equity capital for two or more consecutive quarters.

      3. Imposition of a conservation regime shall entail the appointment of a temporary administration or a temporary administrator of a bank holding company by the authorized body for a limited (up to one year) term.

      4. Conservation of a bank holding company shall be carried out at the expense of the bank holding company itself.

      5. The decision of the authorized body on conservation may be appealed by the shareholders (participants) of a bank holding company within ten calendar days. The appeal of this decision shall not suspend the conservation of the bank holding company.

      6. Requirements of Articles 63, 64, 65, 66 and 67 of this Law shall apply to the bank holding companies to the extent not contradicting the legislation of the Republic of Kazakhstan.

      Footnote. Chapter 8 is supplemented by Article 67-1 in accordance with the Law of the Republic of Kazakhstan dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication.)

Chapter 9. A liquidation and forced reorganization of banks

      Footnote. Chapter 9 is in the wording by the Law of the Republic of Kazakhstan dated 11 July 1997 No 154.

Article 68. The types and grounds for liquidation of banks

      1. A bank may be liquidated:

      a) under the decision of its shareholders with the permission of the authorized body (voluntary liquidation);

      b) under a court decision in the cases, provided by the legislative acts of the Republic of Kazakhstan (compulsory liquidation);

      c) (Is excluded - No 162 dated 2.03.01)

      2. Termination of the banks’ activities, including for the bankruptcy, shall be performed in accordance with the legislative acts of the Republic of Kazakhstan, taking into account the requirements of this Law.

      Footnote. Article 68 is amended by the Law of the Republic of Kazakhstan dated 2 March, 2001 No 162 (see Art. 2); dated 10 July 2003 No 483 (shall be enforced from 1 January 2004); dated 07.03.2014 No. 177-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 68-1. The creditors' committee of the voluntarily and compulsorily liquidated banks

      1. In order to ensure the interests of creditors and decision-making with their participation in the procedures of voluntary and compulsory liquidation of banks, a committee of creditors shall be established.

      The structure of the committee of creditors of the voluntarily or compulsorily liquidated bank shall be approved by the authorized body under the recommendation of the liquidation commission of the bank.

      2. Particularities of formation and activities of the creditors' committee shall be established by the regulatory legal acts of the authorized body.

      Footnote. Is supplemented by Article 68-1 of the Law of the Republic of Kazakhstan dated 2 March, 2001 No 162 (see Art. 2); as amended by the Law of the Republic of Kazakhstan dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004).

Article 69. Voluntary liquidation

      1. After the decision making of the general meeting of the shareholders on its voluntary liquidation, the bank shall be obliged to take measures to return the deposits of individuals through their direct payment or transfer to another bank that is a member of the obligatory deposit guaranteeing.

      The procedure for issuing the permits for voluntary liquidation of banks, as well as the procedure for return of deposits of individuals, their transfer to another bank shall be defined by the regulatory legal act of the authorized body.

      1-1. After the return of the deposits of the individuals, the bank shall have the right to appeal to the authorized body with a request for obtaining a permit for its voluntary liquidation.

      To request shall be attached with the list of actions on the timing and phases of the bank’s preparing for a liquidation, approved by the general meeting of the shareholders, a balance sheet, indicating the adequacy of the bank’s funds for settlement of its liabilities, the list of candidates for the liquidation committee, including its sub-departments, established in the branches or representative offices, and other necessary information. The list of the required information shall be defined by the regulatory legal acts of the authorized body.

      2. An application for a permit for a voluntary liquidation of the bank shall be considered by the authorized body within two months from the date of receipt of the duly completed documents.

      In case of refusal of issuing a permit for a voluntary liquidation of the bank, the authorized body shall render a reasoned decision and submit it to the bank.

      2-1. A refusal to grant permission for voluntary liquidation of the bank shall be made by the authorized body for one of the following reasons:

      1) incomplete or improper execution of the submitted documents;

      2) insufficient funds of the bank to settle its obligations;

      3) failure to return deposits of the individuals through their direct payment or transfer to another bank that is a member of the obligatory deposit insurance system.

      3. (The paragraph is excluded by the Law of the Republic of Kazakhstan dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004).

      4. Upon the receipt of a permit for a voluntary liquidation, the bank shall establish a liquidation committee including the branches and representative offices of the bank to which the powers to manage the property and affairs of the bank are delegated.

      Particularities of the activity of the liquidation committees of the voluntarily liquidated banks shall be determined by the regulatory legal acts of the authorized body.

      4-1. Monitoring of the activities of the liquidation commission of the voluntarily liquidated bank shall be carried out by the authorized body.

      5. After receiving permission for a voluntary liquidation, the bank shall be obliged to publish this information in the official periodicals of the central justice body.

      6. Within seven days after the approval of the liquidation balance sheet and the report on the bank’s liquidation, the liquidation committee shall submit them to the Ministry of Justice and the authorized body.

      When completing the bank’s liquidation, the liquidation committee shall deposit the documents in the archives and notify the authorized body about it.

      7. If the bank’s funds are insufficient to cover the claims of all creditors, the bank shall be subject to compulsory liquidation by the reason of bankruptcy.

      7-1. Due to the inability to complete the process of a voluntary liquidation, the authorized body shall be entitled to apply to the court for a voluntary liquidation of the bank.

      Footnote. Article 69 is amended by the Laws of the Republic of Kazakhstan dated 16 July, 1999 No 436; dated 2 March, 2001 No 162 (see Art. 2); dated 10 July 2003 No 483 (shall be enforced from 1 January, 2004); dated 23.10.2008 No 72 -IV (the order of enforcement see Art. 2); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication.)

Article 70. The types of a compulsory liquidation of banks

      A compulsory liquidation of the bank shall be carried out by the court in connection with:

      a) the bankruptcy of the bank;.

      b) revocation of the bank’s license to conduct banking transactions on the grounds provided by the banking legislation of the Republic of Kazakhstan;

      c) the application (claim ) of the authorized state bodies, legal entities and individuals on termination of the bank’s activities for the other grounds, stipulated by legislative acts.

      Footnote. Article 70 as amended by the Laws of the Republic of Kazakhstan dated 2 March, 2001 No 162 (see Art. 2); dated 12 January, 2007 No 222 (shall be enforced upon expiry of six months from the date of its official publication); dated 11.07.2009 No 185 -IV (shall be enforced from 30.08.2009).

Article 71. Recognizing the bank bankrupt

      1. Insolvency of a bank shall be established by the conclusion of the authorized body, submitted to the court, and drawn up in recognition of the methodology of calculation of prudential standards and other mandatory standards and limits, the size of the bank's capital, as well as existence of pecuniary obligations of a bank and other requirements of monetary nature, not fulfilled by the bank within three and more months from the moment of maturity of their fulfillment.

      Bank shall be considered as insolvent upon its inability to fulfill pecuniary obligations and other requirements of monetary nature within three months from the moment of maturity of their fulfillment.

      2. A bank may be recognized bankrupt only by the court decision in the due order. Out-of-court liquidation procedure of the insolvent bank under the decision of its creditors and the bank itself is not permitted.

      3. The possibility to conclude an amicable settlement agreement by the parties in the case on the bank’s bankruptcy shall be excluded.

      4. The decision on recognizing the bank bankrupt and its compulsory liquidation shall be sent by the court to the authorized body.

      Footnote. Article 4 as amended by the Law of the Republic of Kazakhstan dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004); dated 07.03.2014 No 177 -V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 72. Liquidation of a bank for other grounds

      1. A compulsory liquidation of the bank in the cases when the court initiates a case under an application (claim) of the authorized state body, legal or individual entities (in the absence of a decision on revocation of the bank’s licenses to conduct banking operations) shall be performed in accordance with this Law.

      2. The decision on a compulsory liquidation of the bank shall be sent by the court to the authorized body.

      From the date of the court's decision on compulsory liquidation of a bank in a case, initiated on the grounds, specified in subparagraph c) of Article 70 of this Law, the bank’s license to conduct banking operations shall be revoked.

      Footnote. Article 72 as amended by the Laws of the Republic of Kazakhstan dated 2 March, 2001 No 162 (see Art. 2); dated 10 July 2003 No 483 (shall be enforced from 1 January 2004); dated 12 January, 2007 No 222 (shall be enforced upon expiry of six months from the date of its first official publication.)

Article 73. The conditions and procedure of compulsory liquidation

      1. From the date of entry into force of the court decision on forced liquidation of the bank, the consequences provided by subparagraphs 1), 2), 4) - 9) of part two of paragraph 1 of Article 48-1 of this Law shall come.

      The liquidation commission shall send a copy of the court ruling to the Corporation and the authorized body.

      The liquidation commission shall be obliged within thirty calendar days after the approval of the liquidation balance sheet and the liquidation report, to submit them to the Corporation and the copies of these documents to the authorized body.

      1-1. Is excluded by the Law of the Republic of Kazakhstan dated 07.03.2014 No 177 -V (shall be enforced upon expiry of ten calendar days after its first official publication).

      2. All costs, associated with the liquidation of the bank, shall be covered by the bank’s funds, except for the cases provided for in paragraph 8 of Article 48-1 of this Law.

      3. Valuation of the bank’s property shall be made by the liquidation commission in accordance with the acting legislation.

      4. The interim liquidation balance sheet and the register of the creditors’ claims of the liquidated bank shall be approved by the authorized body.

      4-1. Prior to approval of the interim liquidation balance sheet, the offset of the mutual claims shall be permitted due to the confusion of debts.

      After the approval of the interim liquidation balance sheet, the offset of mutual claims shall be made ??only upon the occurrence of the appropriate phase of satisfying the claims of the creditor.

      It shall be prohibited to offset the mutual claims with the creditor whose claims to the liquidated bank emerge from the claim assignment agreement (agreements).

      5. Selling of the property of the liquidated bank shall be carried out ??by the liquidation committee of the bank in the order, established by the regulatory legal acts of the authorized body.

      6. Monitoring the activities of the liquidation commission of the bank, including the bank, liquidated by reason of bankruptcy, shall be carried out by the authorized body.

      6-1. The court that made a decision on liquidation of the bank shall be entitled to request any information related to the activities of the liquidation committee of the bank from the authorized body.

      7. The liquidation committee shall submit to the court the report on liquidation and the liquidation balance sheet, coordinated with the authorized body.

      The court shall approve the report on liquidation and the liquidation balance sheet and make a determination on completion of the liquidation proceedings.

      The liquidation committee shall send a copy of the court’s decision to the justice body, involved in the state registration of legal entities, and to the authorized body.

      Within thirty calendar days after the approval of the liquidation balance sheet and the liquidation report, the liquidation committee shall submit them to the justice body, involved in the state registration of legal entities, and the copies of these documents - to the authorized body.

      When terminating the bank’s liquidation, the liquidation committee shall deposit the documents in the archives and notify the authorized body about it in the prescribed manner.

      8. After the registration of the termination of the bank’s liquidation, within five working days, the liquidation committee shall submit a copy of the order on registration of the termination of the bank’s activity to the authorized body.

      Footnote. Article 73 as amended by the Laws of the Republic of Kazakhstan dated 16.07.1999 No 436; dated 02.03.2001 No 162; dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated 23.12.2005 No 107 (the order of enforcement see Article 2 of the Law No 107); dated 10.02.2011 No 406 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication), dated 07.03.2014 No 177 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication); dated 02.04.2019 No. 241-VI (shall be enforced from 01.07.2019).

Article 73-1. An operation on a simultaneous transfer of liabilities and assets of the bank to another bank (bank)

      Footnote. Article 73-1 is excluded by the Law of the Republic of Kazakhstan dated11.07.2009 No 185 -IV (shall be enforced from 30.08.2009).

Article 74. A liquidation commission of the compulsorily liquidated bank

      1. After the decision making on liquidation of a bank, including for the reason of bankruptcy, the court shall initiate the liquidation proceedings and instruct the authorized body to establish a liquidation commission of the bank taking into account its branches and representative offices.

      The liquidation commission of the bank shall take steps to complete the bank’s affairs and provide settlements with its creditors.

      The procedure for appointment and dismissal of the liquidation commissions of the compulsorily liquidated banks, the requirements for the chairman and the members of the liquidation commission and the procedure of liquidation and requirements for the work of the liquidation commissions shall be determined by the regulatory legal acts of the authorized body.

      The rights and duties of the chairman and a member of the liquidation commission, including the right to compensation, the powers to manage the affairs and property of the compulsorily liquidated bank shall be regulated by the regulatory legal acts of the authorized body and the agreement, concluded by them and the creditors' committee taking into account the requirements established by the legislation of the Republic of Kazakhstan.

      The monthly remuneration paid to the chairman and the members of the liquidation commission of the bank and other attracted employees shall not exceed for each of them ten-fold minimum official wage, defined by the Law on the national budget for the relevant financial year.

      2. (Is excluded - No 162 dated 2.03.01)

      3. (The paragraph is excluded by the Law of the Republic of Kazakhstan dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004).

      Footnote. Article 74as amended by the Laws of the Republic of Kazakhstan dated 2 March, 2001 No 162 (see Art. 2); dated 10 July 2003 No 483 (shall be enforced from 1 January 2004); dated 23 December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 74-1. Particularities of formation of the liquidation, bankruptcy assets during the banks’ liquidation

      1. Liquidation, bankruptcy assets of the bank shall be formed in the order, specified by the acting legislation, taking into account the particularities, provided in this Law.

      1-1. The liquidation bankruptcy assets of the bank shall not include the allocated assets that are the collateral for the bonds, issued in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization and the collateral, which is the following collateral for the mortgage bonds: the rights of claims on the mortgage loans ( including the mortgage certificates), and the state securities of the Republic of Kazakhstan in the cases where the ownership right to the said bonds passed to the holders or was transferred to them after the transactions or for other grounds, stipulated by the legislative acts of the Republic of Kazakhstan. The said property and the allocated assets shall be transferred by the liquidation commission to the representative of holders of mortgage bonds, the representative of the bondholders, defined in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization, in order to meet the creditors’ claims.

      2. When forming the liquidation bankruptcy estate, it does not include securities owned by third parties and entrusted to the custodian-bank for storage and accounting, as well as pension assets, assets of the social health insurance fund, assets of investment funds, allocated assets of special financial companies entrusted to the custodian-bank for accounting and storage. Pension assets, assets of the social health insurance fund, assets of investment funds, allocated assets of special financial companies entrusted to the custodian-bank for storage and accounting shall be transferred to another bank upon application of the social health insurance fund, voluntary accumulated pension fund, joint-stock investment fund, special financial company or management company of the mutual investment fund.

      3. The liquidation bankruptcy assets of the Islamic bank shall not include the property, acquired for the money, raised under the Investment Deposit Agreement of the Islamic bank. The said assets and the obligations on investment deposits shall be transferred by the liquidation commission to another Islamic bank.

      The procedure for selecting the Islamic bank and transfer of the property, acquired for the money, raised under the investment deposit agreement, and the obligations on investment deposits of the liquidated Islamic bank shall be established by the regulatory legal act of the authorized body.

      Footnote. Article 74-1 as amended by the Laws of the Republic of Kazakhstan dated 29.06.1998 No 236; dated 03.06.2003 No 427; dated 07.07.2004 No 577; dated 20.02.2006 No 127 (the order of enforcement See Art. 2); dated 20.11.2008 No 88 -IV (the order of enforcement see Art. 2); dated 12.02.2009 No 133 -IV (the order of enforcement see Art. 2); dated 12.01.2012 No 539 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 21.06.2013 No 106 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 16.11.2015 No. 406-V (shall be enforced from 01.07.2017).

Article 74-2. Priority of satisfaction of creditors' claims of a forcibly liquidated bank

      Footnote. The title of Article 74-2 as amended by the Law of the Republic of Kazakhstan dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

      1. The claims of creditors of a forced liquidated bank, including in connection with its bankruptcy, shall be satisfied in accordance with the procedure established by this Article.

      2. The costs, associated with the liquidation procedures, including for ensuring the activities of the liquidation commission of the bank shall be covered in priority.

      3. Claims of creditors recognized in accordance with the established procedure shall be satisfied in the following order:

      1) first of all the requirements are satisfied:

      of individuals to whom the forced liquidated bank is liable for causing harm to life or health, by capitalizing the relevant time-based payments for the payment of alimony withheld from wages and (or) other income;

      on remuneration and compensation to the persons who worked under an employment contract, except for the executive employees of the bank being forcibly liquidated, debts on social contributions to the State social insurance fund, on payment of obligatory pension contributions withheld from wages, on payment of obligatory professional pension contributions, as well as remuneration under author's contracts;

      2) secondly, the requirements of the organization performing obligatory guaranteeing of deposits, on the amount paid (payable) by it of compensation under guaranteed deposits according to the calculation presented by the compulsory liquidated bank, in the sum made up for the difference between the size of the bank's property and the size of liabilities for the guaranteed deposits that are transferred to another (other) bank (banks) in the framework of conducting operations on simultaneous transfer of assets and liabilities of the forcibly liquidated bank;

      3) in the third place the requirements under the obligations secured by the pledge of property of the compulsory liquidated bank shall be satisfied, in the amount not exceeding the value of the collateral and the requirements of the clearing organization, carrying out the functions of a central counterparty, resulting from previously concluded and outstanding by the forced liquidated bank which is a clearing participant of the clearing organization of transactions involving a central counterparty. In case of receipt of insurance payment for loss or damage of the pledged property, the claims of the collateral creditors shall not be satisfied in the part covered by the insurance payment. In case of loss of the pledged property the outstanding part of these claims shall be repaid within the eighth stage;

      4) in the fourth place, the requirements for deposits of individuals who are not the persons connected with the forcibly liquidated bank by special relations, including interest-free demand deposits placed in the forcibly liquidated Islamic bank, and money transfers, as well as requirements for the deposits made at the expense of pension assets, for the deposits of insurance organizations made at the expense of funds raised in the "life insurance" industry;

      5) in the fifth place calculations shall be carried out with non-commercial organizations engaged exclusively to charity, organizations of great Patriotic war veterans and organizations of persons, equated to them, Voluntary society of invalids of the Republic of Kazakhstan, Kazakh society of the blind, Kazakh society of the deaf, and production organizations, being the property of these legal entities and created at the expense of their funds, other organizations of persons with disabilities according to their funds available on bank accounts and placed on deposit;

      6) in the sixth place, the requirements of the depositors – legal entities that are not persons related with the forcibly liquidated bank by special relations shall be satisfied;

      7) in the seventh place, the debt on taxes, fees and other mandatory payments to the budget, as well as on the return of loans issued at the expense of the Republican budget and the National Fund of the Republic of Kazakhstan shall be repaid;

      8) in the eighth turn, settlements with other creditors shall be made in accordance with the laws of the Republic of Kazakhstan, including the claims of creditors on obligations secured by the pledge of the property of the forcibly liquidated bank, in the part exceeding the amount of the insurance payment made to it in accordance with the third turn;

      9) in the ninth turn, the claims of creditors-individuals and legal entities that are persons related with the forcibly liquidated bank by special relations shall be satisfied, in part of the amount not covered by the organization, carrying out obligatory guarantee of deposits, due to compensation for the guaranteed deposits;

      10) in the tenth turn, settlements shall be made on the subordinated debt and perpetual financial instruments of forcibly liquidated bank.

      4. The claims of each priority shall be satisfied after the full satisfaction of the claims of the previous turn.

      The creditor's claim with its consent may be settled by the means that do not contradict the legislation of the Republic of Kazakhstan, including in the monetary form and (or) through the transfer of property in kind.

      When satisfying the claims of the creditors of one line, the money and (or) other property of the liquidated bank shall be distributed among the creditors of this line proportionally to the amounts of claims, subject to satisfaction.

      Footnote. Article 74-2 is in the wording in the Law of the Republic of Kazakhstan dated 23.12.2005 No 107 (the order of enforcement See Art. 2 of the Law No 107); as amended by the Laws of the Republic of Kazakhstan dated 12.02.2009 No 133 -IV ( the order of enforcement see Art. 2); dated 21.06.2013 No 106 -V (shall be enforced upon expiry of ten calendar days after its first official publication.); dated 16.11.2015 No. 403-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 16.11.2015 No. 406-V (shall be enforced from 01.07.2017); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 74-3. Compulsory reorganization of a bank. Rehabilitation procedures

      1. A compulsory reorganization of a bank shall be carried out ??under the court’s decision in accordance with the acting legislation, taking into account the particularities, provided by this Law.

      The rehabilitation procedure against the bank shall be carried out ??under the court’s decision as part of the measures for the compulsory reorganization of the bank in order to restore its solvency and (or) enable the bank to implement the conditions and requirements, stipulated by the legislation of the Republic of Kazakhstan.

      2. The court shall be entitled to make a decision on the compulsory reorganization of the bank or conduction of the rehabilitation procedures for the bank only on the basis of the relevant determination of the authorized body.

      The main condition for the compulsory reorganization of the bank, the rehabilitation procedures shall be the return by the bank of all the deposits to the interested persons, within one year from the date of the decision making on the compulsory reorganization.

      Failure to perform this condition shall entail compulsory liquidation of the bank.

      2-1. If it is possible to restore its solvency and (or) eliminate the revealed shortcomings, the bank shall have the right to file a petition to the court for the rehabilitation procedure in connection with considering an issue on the compulsory reorganization of the bank. The petition of the bank shall be attached with the bank’s rehabilitation plan.

      One copy of the petition with the attached documents shall be submitted to the authorized body.

      2-2. A rehabilitation plan of the bank shall be subject to the prior coordination with the authorized body and be approved by the court within ten days from the date of its submission. The changes in the bank rehabilitation plan shall be permitted with the consent of the authorized body under the court decision.

      2-3. The duration of the rehabilitation procedure in respect of the bank shall not exceed six months. The date of commencement and completion of the rehabilitation procedure shall be defined by the court. The bank rehabilitation plan, approved by the court shall be the document mandatory for execution by the bank and its officials.

      2-4. The rehabilitation procedure shall be carried out by the bank under the control of the authorized body. The bank's activities during the rehabilitation procedure shall be carried out in the usual manner taking into account the requirements of this Article.

      3. If the court makes a decision on the compulsory reorganization of the bank (irrespective of the reasons for initiation of proceedings), the reorganization shall be carried out by the special administrator (authorized to manage) of the bank, except for the cases, provided in paragraphs 2-1 – 2-4 of this Article.

      The special administrator (authorized to manage) of the bank shall be obliged to inform monthly the court and the bank creditors about his activities.

      4. A third person, involved in the bank’s reorganization in connection with the merger of the bank with another commercial entity or affiliation, shall submit the required documents (data) to the special administrator (appointed to manage), reasoning his (their) financial viability and feasibility of the bank’s reorganization.

      5. The compulsory reorganization of the bank shall be carried out ??in the order, specified by the court and in accordance with the schedule and the action plan, approved by it.

      6. A report of the special administrator (authorized to manage) of the bank on completion of the compulsory reorganization of the bank shall be approved by the court.

      7. Within five days after the enforcement of the official document, confirming the performed bank’s reorganization within the named court procedures, the organization that is the successor of the bank shall be obliged to ensure the publication of the relevant information in two national newspapers.

      8. The costs, associated with the compulsory reorganization of the bank, shall be covered by its funds.

      9. Other issues of the compulsory reorganization of the bank and rehabilitation procedures against it shall be defined by the regulatory legal acts of the authorized body.

      Footnote. Article 74-3 as amended by the Law of the Republic of Kazakhstan dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004).

Article 74-4. Supervisory powers of the authorized body in the process of the banks’ liquidation

      1. In order to supervise the activities of the liquidation commission of the voluntarily and compulsorily liquidated banks, including for the reason of bankruptcy, the authorized body shall be entitled:

      1) to receive the reports on the work accomplished from the liquidation commissions, and if necessary the additional information;

      2) to establish the form, timing and periodicity of submission of the reports and additional information by the liquidation commissions;

      3) to conduct inspections of the liquidation commissions in the order, established by the Laws of the Republic of Kazakhstan;

      4) upon identification in the activity of liquidation commissions of deficiencies and (or) risks that may lead to a situation threatening the interests of depositors and (or) the creditors, of violations of requirements of the legislation of the Republic of Kazakhstan, rights and legitimate interests of creditors to issue obligatory for execution by liquidation commissions of written orders on elimination of the identified deficiencies and (or) risks in the activity of liquidation commissions, violations and (or) causes and the conditions, promoting to commit them in the established term, and (or) submission of the action plan in established term.

      The action plan, submitted within the term, established by a written instruction, shall specify the descriptions of violations, causes that led to their occurrence, a list of planned activities, their terms of implementation, and the responsible officials.

      Appeal against the written instruction of the authorized body in the court does not suspend its execution;

      5) in case of non-execution by the liquidation commission within the established term of the instruction to replace the members of the liquidation commission or to require their replacement in case of voluntary liquidation of the bank, to apply the measures, provided by the legislation of the Republic of Kazakhstan, as well as to apply to the court or the prosecution bodies for protection of rights and legitimate interests of creditors;

      6) to establish particularities and the order of formation and approval of the cost estimates of the liquidation expenses;

      7) to define the requirements for implementation of the rules by the liquidation commissions for keeping the money in cash-desks, making of incoming and outgoing cash transactions, cash records, expenditure of cash, cash balance limit, as well as the timing of delivery of cash to the current account of the liquidation commission.

      2. The authorized body shall be entitled to receive the necessary information from banks, in respect of which the court is considering a case on mandatory termination of their activities.

      3. In the event if the liquidation commission violates the legislation of the Republic of Kazakhstan, the chairman, the head of the liquidation commission’s department shall be liable in accordance with the Laws of the Republic of Kazakhstan.

      Footnote. Article 74-4 as amended by the Law of the Republic of Kazakhstan dated 2 March, 2001 No 162 (see Art. 2); in the new edition – by the Law of the Republic of Kazakhstan dated 10 July, 2003 No 483 (shall be enforced from 1 January, 2004); dated 23 December, 2005 No 107 (the order of enforcement see Article 2 of the Law No 107);the Law of the Republic of Kazakhstan dated 31January, 2006 No 125; dated 28.12.2011 No 524 -IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication.); dated 24.11.2015 No. 422-V (shall be enforced from 01.01.2016); dated 02.07.2018 No. 168-VI (shall be enforced 01.01.2019).

Section III. Final provisions

Chapter 9-1. Responsibility for violations, related to the banking activities

      Footnote. Chapter 9-1 is introduced by the Law of the Republic of Kazakhstan dated 29 June, 1998 No 236; Is excluded by the Law of the Republic of Kazakhstan dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004).

Chapter 10. Final and transitional provisions

      Footnote. The title of Chapter 10 is in the wording by the Law of the Republic of Kazakhstan dated 19 February, 2007 No 230 (the order of enforcement see Article 2).

Article 75. The scope of this Law

      1. The provisions of this Law shall apply to all banks, operating in accordance with the legislation of the Republic of Kazakhstan, including those, established under a special order - on the basis of the separate legislative and normative acts, governing the initial phase of their establishment, as well as the entities that are the direct and indirect participants of the banks.

      2. The legal status, the order of establishment, licensing, regulation and termination of organizations, engaged in certain types of banking operations, including the list of transactions, permitted for each of them, the grounds for issuance of the licenses to conduct banking transactions and possible limitations of their activities shall be established by this Law and other Laws of the Republic of Kazakhstan, and in the cases, provided for by the Laws of the Republic of Kazakhstan, the regulatory legal acts of the authorized body.

      The organizations that are the subdivisions of the state bodies shall be entitled to conduct banking transactions exclusively to and at the expense of the state budget, without the right to delegate their implementation to the third parties, in accordance with the regulatory legal acts of the Government of the Republic of Kazakhstan, defining the order of establishment, operation, management and termination of the activities of the above-mentioned organizations.

      2-1. Banks and other legal entities, carrying out activity within the special regulatory regime introduced in accordance with the Law of the Republic of Kazakhstan "On the National Bank of the Republic of Kazakhstan", the norms of this Law and regulatory legal acts of the authorized body, adopted in accordance with this Law shall be subject to the limits, provided by the conditions of the special regulatory regime.

      3. Is excluded by the Law of the Republic of Kazakhstan dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication.)

      Note of the RCLI!
      Article 75 is provided to supplement by paragraph 4 in accordance with the Law of the Republic of Kazakhstan dated 24.11.2015 No. 422-V (shall be enforced from 16.12.2020).
      Footnote. Article 75 is amended by the Laws of the Republic of Kazakhstan, dated 11 July, 1997 No 154; dated 2 March, 2001 No 162 (see Art. 2); dated 10 July 2003 No 483 (shall be enforced from 1 January, 2004); dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication.); dated 02.07.2018 No. 168-VI (shall be enforced upon expiry of ten calendar days from the date of its first official publication).

Article 76. (Article 76 is excluded by the Law of the Republic of Kazakhstan dated 29June, 1998 No 236)

Article 76-1. Transitional provisions

      The requirements of the part three of paragraph 1-1 of Article of this Law shall not apply during the audit of the participants of the banking conglomerate upon the results of 2005 and 2006.

      Footnote. Chapter 10 is supplemented by Article 76-1 by the Law of the Republic of Kazakhstan dated 19 February, 2007 No 230 (the order of enforcement see Article 2).

Article 77. Appeal against actions (inaction) of the authorized body

      The actions (inaction) of the authorized body for regulation of the banking activities may be appealed in the court.

      Appeal of the decision of the authorized body on application of supervisory response measures (except for recommendatory measures of supervisory response) and (or) the sanctions, about classifying the bank to category of banks with unstable financial situation, creating threat to the interests of its depositors and creditors and (or) a threat to the stability of the financial system, about classifying of the bank to the category of insolvent banks, on application to it of measures for settlement and actions of temporary administration for management the bank (temporary bank manager) at the stage of conservation, temporary administration (temporary administrator) of the bank shall not suspend the execution of the appealed decision or actions (inaction) until the court decision on forced liquidation of the bank enters into force.

      Footnote. Article 77 is in the wording by the Law of the Republic of Kazakhstan dated 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 02.07.2018 No. 168-VI (shall be enforced from 01.01.2019).

Article 78. The enforcement of this Law

      1. This Law enters into force from the date of its publication.

      2. From the date of enforcement of this Law in case of violation of the order of formation of the authorized capital of the banks, made ??during the period of validity of the Law of the Republic of Kazakhstan dated 14 April 1993 "On banks in the Republic of Kazakhstan", the sanctions, provided for in this Law, shall be applied to the banks.

      Footnote. Article 78 as amended by the Law of the Republic of Kazakhstan dated 11 July, 1997 No 154.

The President

of the Republic of Kazakhstan



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