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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

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 defined by the state registration of a legal entity as a bank in the registration bodies (hereinafter - the judicial bodies) and the availability of the license of the National Bank of the Republic of Kazakhstan, permitting 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).

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, a bank and a bank holding’s subsidiaries and (or) the subsidiaries of the bank and (or) the organizations in which the bank holding company and (or) its subsidiaries have a significant share in the equity 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;

      4) a bank holding company – a legal entity (except for the cases where such holder is the state or the national holding company, as well as otherwise provided by this Law), which, in accordance with the written consent of the authorized body may own directly or indirectly twenty-five or more percent of the allotted (net of the preferred shares and those, repurchased by the bank) shares of the bank or be able:

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

      to determine the decisions, taken by the bank, under the contract or otherwise, or control it;

      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 where such owner is a state or a national holding company, as well as otherwise provided by this Law), which, in accordance with the written consent of the authorized body may own directly or indirectly ten or more percent of the allotted shares (net of the preferred shares and those, repurchased by the bank) of the bank or be able:

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

      to influence the decisions, taken by the bank under the contract or otherwise in the order, defined 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;

      13) impeccable business reputation – the existence of the facts, confirming professionalism, reliability, absence of an unexpunged or unspent criminal record;

      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).

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 for in this Article, the affiliates of the bank, whose major shareholder is the national managing holding company, shall not be the national management holding company or legal entities, one hundred percent of the voting shares (interests) of which are owned by the national management holding company under the list, approved by the Government of the Republic of Kazakhstan and the officials of the national management holding company and the above-mentioned legal entities.

      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).

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 deposit insurance system and the deposits in the Islamic bank shall not be guaranteed by the system of obligatory deposit guarantee.

      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.)

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).

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

      An organization, engaged in certain types of banking operations, shall be a legal entity that is not a bank, which, under the license of the authorized body or in accordance with the Laws of the Republic of Kazakhstan shall be authorized to perform certain types of banking operations, stipulated in 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).

5-1. An organization, involved in improving the quality of loan portfolios of the second-tier banks

      1. An organization, involved in improving the quality of loan portfolios of the second-tier banks, shall be established by the authorized body, owning one hundred percent of the voting shares of such an organization.

      2. The organization, involved in improving the quality of loan portfolios of second-tier banks, shall be entitled to perform the following types of activities:

      1) to issue shares to form the equity capital, and to issue bonds to finance its activities;

      2) to repurchase its own outstanding shares and bonds;

      3) to assess doubtful and bad assets, including doubtful and bad claims to legal entities and other claims against them;

      4) to acquire doubtful and bad assets from the banks and sell them;

      5) to assess the shares and (or) the ownership interests in the equity capital of legal entities, the claims to which are purchased from the banks by the organization, involved in improving the quality of loan portfolios of second-tier banks;

      6) to acquire the shares and (or) the ownership interests in the equity capital of legal entities, the claims to which are purchased from the banks by the organization, involved in improving the quality of loan portfolios of the second-tier banks;

      7) to sell shares and (or) the ownership interest in the equity capital of legal entities, the claims to which are purchased from the banks by the organization, involved in improving the quality of loan portfolios of the second tier banks;

      8) to assess the shares and (or) the bonds, issued and allotted by the banks from which the doubtful and bad assets were acquired;

      9) to acquire shares and (or) bonds, issued and allotted by the banks from which the doubtful and bad assets were purchased by the organization, involved in improving the quality of loan portfolios of the second tier banks;

      10) to sell the shares and (or) bonds, issued and allotted by the banks from which the doubtful and bad assets were purchased by the organization, involved in improving the quality of loan portfolios of the second tier banks;

      11) to lease the property received under the claims to the legal entities, by the organization, involved in improving the quality of loan portfolios of the second tier banks, or to use another form of paid temporary use of such property;

      12) to place the money in securities, as well as in the second-tier banks and the authorized body under the contract of bank account and bank deposit;

      13) to perform operations on securitization of claims and other doubtful and loss assets, acquired by the organization, involved in improving the quality of loan portfolios of the second tier banks;

      14) to acquire services of the banks, other financial institutions, professional experts and international auditors and audit organizations for assessment, trust management, restructuring and rehabilitation (increase) of the cost of the acquired claims to the legal entities and other doubtful and loss assets.

      The order of performing the types of activities, provided by this paragraph, by the organization, involved in improving the quality of loan portfolios of the second-tier banks, as well as the claims to the doubtful and bad assets, acquired (purchased) by it, shall be established by the regulatory legal act of the authorized body.

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

      Footnote. Chapter 1 is supplemented by Article 5-1 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); 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).

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 the word "bank" or its derivative words (expressions) in its name, documents, announcements or advertisements, giving the impression that it performs banking operations. This prohibition does not apply to the authorized body, branches and representative offices of the banks, subsidiaries of the banks, international financial institutions.

      2. Banking operations, performed without the license of the authorized body, shall be void and null, except for the activities (operations), performed by the state body, the credit partnerships, the National Post Office, the operator of the payment gateway of the "electronic government", as well as the Development Bank of Kazakhstan within the powers, established by the 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).

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.

      In order to protect the interests of the banks’ creditors and to ensure stability of the banking system of the Republic, the authorized body in coordination with the Government of the Republic of Kazakhstan and in accordance with the requirements of the banking legislation of the Republic of Kazakhstan, shall be entitled to take a decision on involuntary restriction of the rights and obligations of the shareholders of the banks with a negative capital stock, through applying the sanctions, established by the legislation.

      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).

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

      1. Banks shall be prohibited to conduct transactions and operations, including as a business activity, not related to the banking activities or not provided for in paragraph 9 of this Article, paragraph 12 of Article 30 of this Law, as well as to acquire ownership interest in the equity capitals or the shares of legal entities, establish and participate in the activities of non-profit organizations, except for the cases, provided by this Law, and transactions with securities in the cases, provided for in paragraph 8 of this Article.

      2. Banking holding companies shall be prohibited to perform operations and transactions including as the business activity, and acquisition of ownership interest in the equity capital or the shares of legal entities, establishment and participation in the activities of non-profit organizations, except for the cases, provided by this Law, and transactions with securities in the cases, provided for in 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) banks:

      financial institutions, as well as non-resident legal entities of the Republic of Kazakhstan, having the status of banks, insurance companies, pension funds, professional participants of the securities market, in the amount of ten or more percent of the allotted (net of the preferred shares and those, repurchased by a joint stock company) shares (ownership interest in the equity capital) if it has a banking holding company. In this case, a requirement for presence of a bank holding company shall not apply to the banks, over fifty percent of the voting shares of which are owned by the state or national managing holding company;

      the legal entities in the amount of less than ten percent of the allotted (net of the preferred and those, repurchased by a joint stock company) shares (ownership interest in the equity capital), subject to the compliance of the acquired shares (the ownership interest in the equity capital) with the requirements of the regulatory legal act of the authorized body;

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

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

      subsidiaries -residents of the Republic of Kazakhstan, acquiring doubtful and bad assets of the parent bank;

      the subsidiaries, the exclusive activity of which is the collection of banknotes, coins and valuables, conduction of leasing activities;

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

      the organizations, performing certification of compliance of a public key of a digital signature with a private key of the digital signature, as well as the validation of reliability of a registration certificate;

      the legal entities, referred to in Article 10 of this Law;

      the legal entities, when the shares taken as a pledge or ownership interest in the equity capital of these organizations become the property of the banks in accordance with the Civil legislation of the Republic of Kazakhstan and the legislation of a foreign country;

      stock exchanges and central depository, operating on the territory of the Republic of Kazakhstan;

      credit bureaus;

      other legal entities –when performing banking activities by the Islamic bank, specified in Section 4-1 of this Law;

      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.

      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.

      Restriction, established in the part one of this paragraph shall not apply to the banks in connection with their acquisition of control of other bank, in relation of which the restructurisation was conducted in accordance with 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.

      Duration of selling the shares and the ownership interest in the equity capital shall not exceed twelve months, except for the cases of transfer of the shares or ownership interest, received by the bank as collateral in the equity capital of these organizations to the subsidiary of the bank, established (acquired) under the conditions, specified in Article 11-2 of this Law.

      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;

      the bonds with a minimum required rating. The minimum required rating and the list of the rating agencies are 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) to verify compliance of a public key of an electronic digital signature to a private key of an electronic digital signature, as well as to validate the reliability of the registration certificate in respect of its clients, using its banking services, if a license of the authorized state body, engaged in information area, is provided;

      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.

      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) to sell own property to the person, not bounded with the bank holding by special relationships.

      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 of their acquisition of shares of other bank or other securities, a holder of which is the other bank, or shares of participation in charter capitals of legal entities, belonging to the other bank, upon their conduct of reorganization in the form of affiliation in the manner, determined by the legislation of the Republic of Kazakhstan, in case if one of reorganized banks is the bank, in relation of which the restructurisation was conducted in accordance with 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).

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).

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).

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.

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.

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).

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 shall not apply to the banks, in relation of which the restructurisation was conducted in accordance with 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.

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

      1) the constituent documents of the subsidiary, the decision on approval of the charter;

      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) the documents, confirming presence of the risk management systems and internal control, including for the risks, associated with the activities of the subsidiary organization;

      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;

      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 to issue a permit for establishment, acquisition of a subsidiary organization shall be as follows:

      1) failure to provide the documents, required to obtain a permit;

      2) non-compliance of the legislation on consolidated supervision over the financial institutions of the country of location of the acquired or established subsidiary organization with the requirements for a consolidated supervision, established by the legislative acts of the Republic of Kazakhstan;

      3) non-compliance of the heads of the subsidiary organization (or candidates, recommended for appointment or election to the post of senior officials) with the requirements of paragraph 3), 4) and 5) of paragraph 2 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 the submitted documents, confirming presence of the risk management systems and internal control, including for the risks, associated with the activities of the subsidiary organization, with the requirements of the authorized body to the systems of risk management and internal control;

      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) presence of the acting limited measure and (or) the sanction, applied by the authorized body against a bank and (or) a bank holding company and (or) a subsidiary, planned for acquisition, as of the date of submitting an application and during consideration of the documents;

      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 purchase by the bank and (or) the bank holding company of the signs of control over another legal entity in the absence of permission of the authorized body, the authorized body shall apply sanctions, provided for by the Laws of the Republic of Kazakhstan to the bank and (or) the bank holding company. In this case, within six months from the date of occurrence of the signs of control or revelation of the above violation by the authorized body, the bank and (or) the bank holding company shall be obliged to alienate their shares (ownership interest in the authorized capital) of the legal entity to the persons, who are not bounded by special relationships with them, and submit the supporting 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 to obtain permission of the authorized body for a significant shareholding in the capital of the organization, shall not apply to the bank holding companies, indirectly possessing (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 the ownership (the ability 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, directly 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 authorized capital of this organization and having the relevant permission of the authorized body.

      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.

      If the bank and (or) the bank holding company purchases a significant shareholding in the capital of the organization without preliminary approval of the authorized body, the authorized body shall apply sanctions, provided for by the Laws of the Republic of Kazakhstan to the bank and (or) the bank holding company. In this case, the bank and (or) the bank holding company shall alienate their shares (ownership interest in the authorized capital) of the organization, in the capital of which they have a significant shareholding, 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. An application for a permit for a substantial shareholding in the capital shall be attached with the documents, referred to in subparagraphs 2) and 3), 5), 6), 7), 10) and 11) of paragraph 4 of this Article.

      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) in case of bank’s acquisition of shares of another bank or shares and participation shares in charter capitals of legal entities, belonging to another bank, upon conduct of restructurisation 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.

      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).

11-2. Subsidiaries of banks that acquire doubtful and loss assets of the parent bank

      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.

      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. Subsidiary of the bank, acquiring doubtful and loss assets of the parent bank shall have the right to:

      1) acquire doubtful and loss claims of the parent bank;

      2) acquire immovable property and (or) the ownership right to the objects of the uncompleted construction, which have passed to the ownership of the parent bank as a result of foreclosure of the mortgaged property under the acquired doubtful and loss claims;

      3) acquire the shares and (or) the ownership interest in the authorized capital of legal entities in the cases of accepting them as collateral (compensation or security) for the acquired doubtful and loss claims;

      4) to lease immovable property, passed to its property as a result of foreclosure on the property, which served as collateral, other security or obtained in the form of compensation for doubtful and bad claims, acquired from the parent bank, as well as the property, referred to in subparagraph 2) of this paragraph, or to use another form of the paid temporary use of such property;

      5) carry out other types of activities to improve the purchased doubtful and loss claims or other assets, established by the regulatory legal act of the authorized body.

      5. An application for permission to establish, acquire a subsidiary, purchasing the doubtful and loss assets of the parent bank, shall be attached with the documents and the information, specified in subparagraphs 1), 2), 3), 4), 7), 9), 10), 11) and 14) of paragraph 4 of Article 11-1 of this Law, as well as:

      1) the information on doubtful and loss assets to be transferred (submitted) to the subsidiary organization;

      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.

      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. The subsidiaries of banks that acquire doubtful and loss assets for the claims, assigned by the parent banks under the bank loan contracts, shall be accepted by the creditors (lenders) for the banking loan operation and have all the rights and obligations of the parent bank, established by the bank loan contract, the claims on which were assigned by the parent bank in favor of the subsidiary organization.

      8. A subsidiary organization, purchasing the doubtful and loss assets of the parent bank shall be obliged to sell these assets before termination of the management of the doubtful and loss assets, transferred by the parent bank. In case of non-selling of these assets, they shall have to be re-submitted to the parent bank in the order, specified by the regulatory legal act of the authorized body.

      9. Within three months after expiration of the management of doubtful and loss assets by subsidiary, the authorized body shall revoke the issued permission.

      In case of revocation of permission, the consequences, specified in the part two paragraph 13 of Article 11-1 of this Law shall apply.

      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).

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).

12. The legal structure of banks

      Footnote. Article 12 as amended by the Laws of the Republic of Kazakhstan, dated 11 July, 1997 No 154; dated 10 July, 1998 No 282; dated 16 July, 1999 No 436; dated 2 March, 2001 No 162 (see Art. 2); dated 16 May, 2003 No 416; the Article is excluded by the Law of the Republic of Kazakhstan dated 10 July, 2003 No 483 (shall be enforced from 1 January 2004).

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).

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;

      the information about the types and the order of use of the funds (capital reserves) 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).

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.

      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).

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 sale of shares, except for the cases, specified in 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;

      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;

      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.

      3. In the case of conversion of securities into the shares of the bank as part of its restructuring, the pre-emption right is not available to the shareholders of the bank while allotting its shares through conversion of securities and (or) the monetary liabilities of the bank into its shares.

      4. The authorized capital of the newly established bank shall be paid by its shareholders by fifty percent by the time of its registration and by a hundred percent –within one calendar year after the date of its registration.

      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. In assessing the negative amount of the equity capital of the bank, the authorized body in consultation with the Government of the Republic of Kazakhstan shall be entitled to take a decision on compulsory redemption of the shares of its shareholders and sell them immediately to their new investor at the purchase price, under the conditions, guaranteeing an increase in the bank's capital and its normal functioning, taking into account the investor’s commitments.

      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).

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 a shareholder of a bank and represented by the Government of the Republic of Kazakhstan, except for the cases, provided in this Article. State enterprises and organizations, more than fifty percent of the shares in the authorized capital or the allotted shares of which are owned by the state, may not be the founders and shareholders of the bank, with the exception of the national management holding company.

      In order to transfer the assets and liabilities of the bank, which is in a conservation regime, the authorized body may be the sole founder of a stabilization bank.

      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) after a single violation of the equity capital adequacy ratio and (or) the liquidity ratio by the bank, or violation of other prudential standards and (or) other mandatory standards and limits two or more times within twelve consecutive calendar months, in coordination with the authorized body, the Government of the Republic of Kazakhstan may take a decision to acquire the authorized shares of the bank by the Government of the Republic of Kazakhstan or by the national management holding, in the amount, necessary to improve the financial condition and fulfillment of prudential standards and (or) other mandatory standards and limits by the bank, according to procedure, provided for by Article 17-2 this Law;

      2) if a bank has a negative equity capital, the authorized body, in coordination with the Government of the Republic of Kazakhstan, shall be entitled to acquire compulsorily the shares of the bank with their compulsory consecutive immediate selling to a new investor at the purchase price, guaranteeing the necessary improvement of the financial condition 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.

      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).

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

      1. No person alone or jointly with the other person (persons) may directly or indirectly possess, use and (or) dispose ten or more percent of the allotted shares (net of the preferred shares and those, repurchased by the bank ) of the bank, as well as control or influence the decisions, taken by the bank, in the amount of ten or more percent of the allotted shares (net of the preferred and those, repurchased by the bank) of the bank without a preliminary written consent of the authorized body. This requirement shall not apply to the state or the national management holding company, as well as for 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.

      The major participants of the bank - individuals shall pay for the shares in the amount not exceeding the value of the property, belonging to them under the ownership right. At that, the value of the property shall not be less than the aggregate value of the previously purchased shares of the bank and those, which are being acquired.

      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.

      3. In order to obtain the consent, the entity, wishing to become a major participant of the bank shall submit an application to the authorized body on acquisition of the status of a major participant of the bank, attached with the documents and information, specified in paragraphs 4, 5, 6, 7, 7-1 of this Article.

      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.

      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 supreme body of the applicant to acquire the shares of the bank;

      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) the information and documents, referred to in subparagraphs 1), 2), 3) and 3-1) 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) the information and documents, referred to in subparagraphs 1), 2), 3) and 3-1) of paragraph 4 and subparagraphs 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.

      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 to issue consent by the authorized body to the persons wishing to become a major participant of a bank or a bank holding company shall be:

      the failure to comply with the requirements of subparagraphs 3) -5) of paragraph 2 of Article 20 of this Law (in relation to the individual or senior officials of the applicant - legal entity);

      unstable financial condition of the applicant;

      failure to submit the documents, specified in this Article;

      violation of the requirements of the antimonopoly legislation as a result of acquiring the status of a major participant of a bank or bank holding company by the applicant;

      the cases where in the acquiring the status of a major participant of a bank or bank holding company, the acquirer is a legal entity (its major participant (major shareholder), registered in the offshore zones, the list of which shall be established by the authorized body;

      the applicant’s failure to perform other requirements, established by the legislative acts of the Republic of Kazakhstan, to the major participants of the bank and bank holding companies;

      the analysis of the financial implications of the applicant’s acquisition of the status of a major participant of a bank or bank holding company forecasts worsening of the financial condition of the bank; when the applicant - financial institution-non-resident of the Republic of Kazakhstan has no powers to carry out financial activities in the frames of the legislation of the country of origin;

      when the applicant - nonresident legal entity of the Republic of Kazakhstan has no a minimum required rating of one of the international rating agencies, the list of which is defined by the authorized body, except for the cases, provided for in paragraph 1 of this Article;

      inefficiency of the submitted plan for the bank’s recapitalization in case of a possible worsening of the financial condition of the bank;

      when the applicant –individual, the executive employee of the applicant - legal entity has no impeccable business reputation;

      the cases where a person was previously or is a major participant –an individual or the first head of a major participant - legal entity and (or) the executive employee of a financial institution within a period not exceeding one year before the authorized body makes a decision on conservation of a financial institution, compulsory redemption of its shares and revocation of the license of the financial institution, as well as the forced liquidation of the financial institution or recognition of its bankruptcy in the order, established by the legislation of the Republic of Kazakhstan. The above requirement shall apply within five years after making a decision by the authorized body on conservation of a financial institution, the forced redemption of its shares, the revocation of the license of the financial institution, as well as the forced liquidation of the financial institution or recognition of its bankruptcy in the order, established by the legislation of the Republic of Kazakhstan;

      non-compliance of the legislation on the consolidated supervision of financial institutions of the country of location of the applicant - legal entity with the requirements for the consolidated supervision, established by the legislative acts of the Republic of Kazakhstan;

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

      10. A sign of the unstable financial condition of the applicant - legal entity shall be the presence of one of the following conditions:

      the legal entity - applicant was established less than two years prior to the date of the application submission;

      the obligations of the applicant exceed its assets net of the amount of the assets, invested in the shares and ownership interest in the authorized capital of other legal entities and the bank’s shares planned for acquiring;

      the losses upon the results of each of the two financial years;

      the liabilities of the applicant pose a significant risk to the financial condition of the bank;

      presence of the applicant's past due debt and (or) the debt related to the bank’s balance to the bank;

      the analysis of the financial implications of acquitting the status of a major participant of the bank by the applicant forecasts worsening of the financial condition of the applicant;

      other grounds, indicating the possibility of causing damage to the bank and (or) its depositors.

      11. When a person purchases the signs of a major participant of the bank or the bank holding company without the written consent of the authorized body, the authorized body shall be entitled to apply sanctions to the individual, provided for by the Laws of the Republic of Kazakhstan, as well as the coercive measures, specified by Article 47-1 of this Law, in the part of the requirements for selling the bank's shares within the 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, specified in paragraphs 5-7 of this Article shall submit the documents proving the existence of the risk management and internal control systems, including for the risks associated with the activities of a subsidiary organization.

      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.

      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.

      15. The authorized body shall be entitled to revoke consent, issued in accordance with this Article, and make a decision on its cancellation within two months from the date of revelation of the fact that is the ground for revocation of the consent, in case of revelation of false information on the basis of which the consent was issued, or as a result of violation of the antimonopoly legislation of the Republic of Kazakhstan during acquisition of a status of a major participant or a bank holding company by the applicant, or non-compliance of the major participants or the bank holding company with the requirements of the Laws of the Republic of Kazakhstan. In this case, the person to whom the measure applied, within six months, shall reduce the number of its bank’s shares to the level which is below the level, specified 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.

      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, within thirty calendar days from the date of the decision making, shall notify the authorized body of changing the percentage of the number of its own shares to the amount of the allotted shares (net of the preferred and those, repurchased by the bank) and (or) to the number of the voting shares of the bank that it owns directly or indirectly, or shall be entitled to vote directly or indirectly, submitting the supporting documents.

      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.

      If the percentage of the number of the shares has changed to the amount less than ten or twenty-five percent, 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 the voting shares of the bank, the authorized body, at the request of a major participant of the bank, bank holding company or in the case of self- revelation of this fact, shall make a decision on cancellation of the previously issued written consent within two months from the date of its revelation, in the order, provided for the issuance of the consent to purchase the status of a major participant of the bank or bank holding company.

      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. Failure to submit, as well as the repeated late submission or submission of false information by the banks, major participants of the bank, bank holding companies, as well as the individual and legal entities, meeting the characteristics of the bank holding company or major participant of the bank, as well as the information, required in accordance with paragraphs 16-20 of this Article within the specified time limits, shall entail liability, provided for by the Laws of the Republic of Kazakhstan.

      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.)

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

      1. In the case, provided for in subparagraph 1) of paragraph 4 of Article 17 of this Law, the Government of the Republic of Kazakhstan shall have the right to make a decision on acquisition of the bank’s allotted shares by the Government of the Republic of Kazakhstan or by the national management holding in the amount of not less than ten percent of the total number of the allotted shares, including those, acquired by the Government or by the national management holding company.

      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 a certificate of the state registration of the shares to the bank and notify the registrar and the central depository of the increase of the number of the authorized shares.

      Within five calendar days from the date of receipt of the certificate of the state registration of the shares, the bank shall return the original of the previously issued certificate of the state registration of the shares.

      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).

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.)

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) the information about the founders (on the list, determined by the authorized body), the financial statements, including the consolidated one for the last two completed financial years, the audit report on the financial condition of the founders;

      b-1) the documents and the information, specified in Article 17-1 of this Law, if the entity becomes a major participant of the bank or the 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:

      does not depend on the founders 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).

20. Requirements to the executives of the 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.)

      1. The executive officials of the bank shall be the first head and the members of the board of directors, the CEO and the board members, and other executives of the bank, coordinating and (or) controlling the activity of the structural departments of the bank and authorized to sign documents, on the basis of which the banking operations are conducted, with the exception of the first heads of the separate bank’s departments and their chief accountants, and the chief accountant of the bank.

      The persons, having the right to sign the documents on which the banking operations are conducted, and exercising control over the activities of only one structural department, shall not be the executives of the bank.

      1-1. Within one hundred and twenty calendar days after the end of the financial year, the bank shall submit the financial statements to the authorized body, including the information about the income, paid by the bank to all executives of the bank during the financial year, in the form, established by the regulatory legal act of the authorized body.

      Requirements to the internal bank policy for salary payment, the accrual of money bonuses, as well as other kinds of material incentives of the bank’s executives shall be determined by the regulatory legal act of the authorized body.

      2. The following persons may not be appointed (elected) the executive employee of the bank:

      1) the person that does not have higher education;

      2) the person, that has no the work experience in international financial institutions, specified by this Article, the list of which shall be established by the authorized body and (or) the work experience in provision and (or) regulation of financial services and (or) audit services for financial institutions;

      3) the persons, that have not impeccable business reputation;

      4) the person that previously was the first head of the board of directors, the chief executive of the board and his deputy, the chief accountant, the major participant – individual, the first head of a major participant (a bank holding company) - legal entity of a financial institution in a period not more than one year before the authorized body makes a decision on conservation of the financial institution, the forced redemption of its shares, on revocation of the license of the financial institution, as well as the forced liquidation of the financial institution or recognizing it bankrupt in the order, established by the legislation of the Republic of Kazakhstan. The above requirement shall apply within five years after the authorized body’s decision on conservation of a financial institution, the forced redemption of its shares, on the revocation of the license of a financial institution, as well as the forced liquidation of a financial institution or on recognizing it bankrupt in the order, established by the legislation of the Republic of Kazakhstan;

      5) the persons, from whom the consent for appointment (election) of the executive official was revoked during the period of the person’s functioning as an executive employee in another financial institution. The above requirement applies for the last twelve consecutive months after the authorized body’s decision to revoke the consent for appointment (election) of the executive employee.

      3. A major participant of the bank may not be appointed (elected) as the first head of the bank.

      The number of members of the board shall be at least three people.

      The number of members of the executive body of the bank, included on the management body of the subsidiary bank or organization, in which the bank has a significant ownership interest in the capital, may not exceed one third of the total number of the members of the management body of the subsidiary organization of the bank or an organization in which it has a significant ownership interest in the equity capital, with the exception of the members of the executive body of the bank, whose parent organization is the national holding company.

      4. In order to meet the requirement, specified by subparagraph 2) of paragraph 2 of this Article, it shall be necessary to have the following work experience:

      1) at least three years - for candidates for the position of a director or a member of the board of directors, who is a member of the executive body of the parent bank, the first head of the management board, the chief accountant of the bank;

      2) at least two years - for candidates for the position of the first head of the board of directors, members of the executive board of the bank;

      3) at least one year - for the candidates for the positions of other bank executives, coordinating and (or) controlling the activity of the structural departments of the bank and authorized to sign the documents on which the banking operations are conducted.

      Presence of the work experience, specified by subparagraph 2) of paragraph 2 of this Article shall not be required for the candidates for the positions of the members of the board of directors and the members of the executive board, involved in security issues of the bank, administrative and economic issues.

      The length of employment, defined in this paragraph, shall not include the work in the sub-departments of the financial institution, associated with economic activities.

      5. The executive employee shall have the right to hold office without the coordination with the authorized body for not more than sixty calendar days from the date of his appointment (election).

      In the end of the period, specified in this paragraph, and in the event of failure to submit a full package of documents for approval to the authorized body or in case of refusal of the authorized body to coordinate it, the bank shall be obliged to terminate the employment contract with the person, or in the absence of an employment contract to take measures to terminate the powers of the executive employee.

      It shall be prohibited to perform the duties (replacing of the temporarily absent person) of the executive employee of the bank without the consent of the authorized body beyond the period, specified in this paragraph.

      The authorized body shall consider the documents, submitted for the issuance of the consent for appointment (election) of the employees of the bank within thirty calendar days from the date of their submission.

      6. The order of issuance of the consent of the authorized body for appointment (election) of the executive employee of the bank, the documents, required to obtain the consent, shall be specified by the regulatory legal acts of the authorized body.

      7. If the authorized body rejects to issue the consent for appointment (election) of an executive employee of the bank or his dismissal from the position of an executive employee of the bank or his transition to another position in the bank, the person may be re-appointed (elected) to the position of the executive employee of the bank not earlier than ninety calendar days after the receipt of the refusal to issue the permit for his appointment (election) or dismissal or transition to another position, but not more than twice during any twelve consecutive months.

      8. In case of two consecutive rejections of the authorized body to issue the consent to the appointment (election) of the executive employee of the bank, he shall be appointed (elected) by the manager of the bank upon expiry of twelve consecutive months from the date of the authorized body’s decision on the second refusal for issuance of the consent to his appointment (election) in this bank.

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

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

      2) systematic (three or more times within the last twelve consecutive months) appliance of sanctions by the authorized body against the executive employee;

      3) suspension of the persons, referred to in this Article, from performance of their official duties, by the authorized body, which is based on sufficient data to recognize that the actions of this executive employee (employees) of the bank do not comply with the requirements of the legislation of the Republic of Kazakhstan;

      4) presence of the unexpunged or outstanding conviction.

      Revocation of the consent for appointment (election) of an executive employee of the bank by the authorized body shall be the ground for revocation of the previously issued (granted) permission (consent) for this employee in other financial institutions.

      In case of revocation of the consent by the authorized body for appointment (election) of the executive employee of the bank, 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 the executive employee.

      10. If the authorized body makes a decision on the bank’s conservation or a forced redemption of its shares in the order, prescribed by this Law, the bank shall be obliged to terminate the employment contract with the executives, that are the first head of the board of directors, chief executive of the board and his deputy, chief accountant, or in the case of the absence of an employment contract to take measures to terminate the powers of the executive employee.

      11. The first head of the organization, implementing separate types of banking operations, shall comply with the requirements, established by this Article for the first heads of the bank’s board of directors, and be appointed (elected) to the position without the consent of the authorized body. The organization, conducting certain types of banking operations, at the request of the authorized body, shall suspend the first head in case of his non-compliance with the requirements of this Article.

      12. The executive employees of the bank holding company shall be the first director and members of the executive body, chief accountant, and other heads of the bank holding company, coordinating and (or) controlling the activities of subsidiaries and organizations, in which the bank holding company has a substantial shareholding in the capital.

      13. The requirements of this Article shall apply to the executives of bank holding companies, except for the executives of bank holdings - non-residents of the Republic of Kazakhstan, under one of the following conditions:

      if a bank holding 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, and a written confirmation from the financial supervisory body of the country of origin of the bank holding company that it is 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 shall be defined by the regulatory legal act of the authorized body.

      Footnote. Article 20 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 Laws of the Republic of Kazakhstan dated 12.01.2007 No 222 (shall be enforced upon expiry of 6 months after its official publication); dated 19.02.2007 No 230 (the order of enforcement see Article 2); dated 20.11.2008 No 88 -IV (the order of enforcement see Article 2); dated 23.10.2008 No 72 -IV (shall be enforced from 01.01.2009); dated 28.12.2011 No 524 -IV (the order of enforcement see Art. 2); dated 27.04.2012 No 15 -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).

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).

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).

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).

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;

      served as the first head of the board of directors, the first head of executive body or his deputy, chief accountant of the financial institution during the period of not more than one year before the authorized body makes a decision on conservation of the financial institution, on compulsory redemption of its shares, on the revocation of the license of a financial institution, as well as the compulsory liquidation of a financial institution or recognizing it bankrupt in the order, established by the legislation of the Republic of Kazakhstan. The above requirement shall apply within five years after the authorized body’s decision on conservation of a financial institution, the forced redemption of its shares, on the revocation of the license of a financial institution, as well as the forced liquidation of a financial institution or recognizing it bankrupt in the order, established by 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.)

25. The state registration of a bank

      The state registration of the bank shall be performed by the judicial bodies on the basis of permission of the authorized body to open a bank and the information, confirming coordination of its constituent documents with the authorized body.

      The founders shall apply to the judicial bodies for the state registration of the bank within one month from the date of receipt of the permission to open the bank from the authorized body.

      Footnote. Article 25 is 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 23.10.2008 No 72 -IV (the order of enforcement see Article 2).

26. Licensing of banking operations

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

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

      When issuing the permission, the authorized body shall be entitled to specify the names of the permitted banking operations in accordance with the legislation of the Republic of Kazakhstan.

      For the license a fee shall be charged, the amount and the order of payment of which shall be determined by the legislation of the Republic of Kazakhstan.

      2. In order to obtain a license to conduct banking operations within one year from the date of the state registration, the applicant shall implement all the organizational and technical actions, including preparation of premises, equipment and software to automate accounting and a general book of account, meeting the requirements of the regulatory legal acts of the authorized body, hire appropriate specialists, and then submit the following documents to the relevant authorized body:

      1) an application;

      2) 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);

      3) a certificate of the state registration of a legal entity and a notarized copy of the charter of the applicant;

      4) a copy of the taxpayer certificate;

      5) a document, confirming payment of the fee for obtaining a license for the right to perform certain types of activities;

      6) the documents of the persons, recommended for the positions of the executives of the bank in accordance with the requirements of Article 20 of this Law;

      7) the provisions on the internal audit service, approved by the board of directors of the bank;

      8) the provision on a credit committee, approved by the board of directors of the bank;

      9) staffing (with full names, surnames and patronymic if any);

      10) the documents, confirming compliance of the bank’s software with the requirements of the authorized body and the legislation of the Republic of Kazakhstan on credit bureaus;

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

      2-1. In order to obtain a license to conduct banking operations, the acting bank shall have to:

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

      2) ensure compliance with the requirements, established by the authorized body, in part of availability of the systems of the risk management and internal control;

      3) provide rules on general terms for performing additional banking operations.

      3. Together with the application for a license to conduct banking operations, the licensee shall have to submit the documents, confirming compliance with the requirements of paragraph 2 of this Article, in the order, established by the regulatory legal acts of the authorized body.

      4. Application for a license to conduct banking operations shall be considered by the authorized body within thirty working days from the date of submission of the documents, meeting the requirements of the legislation of the Republic of Kazakhstan.

      5. A license to conduct banking transactions in the national and (or) the foreign currency shall be issued for an unlimited period.

      6. A license to conduct banking transactions may not be transferred to the third parties.

      7. All kinds of banking transactions may be performed only if there is a direct instruction for their performance in the license.

      8. The decision to issue a license to conduct banking transactions shall be published in the official periodicals of the authorized body.

      9. A duly certified copy of a license to conduct banking transactions shall be in the place that is accessible for the bank’s customers.

      Footnote. Article 26 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 16 May, 2003 No 416; 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 23.10.2008 No 72 -IV ( 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 19.03.2010 No 258 -IV; 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).

27. Grounds for refusal to issue a license to conduct banking transactions

      The refusal to issue a license to conduct banking transactions shall be made in the following cases:

      1) non-compliance with any of the requirements, established by paragraphs 2 and 2-1 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).

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 the changes and (or) supplements, made to the constituent documents, requiring re-registration in the judicial bodies, within fourteen calendar days from the date of re-registration, the bank shall submit a notarized copy of the changes and (or) supplements to the constituent documents to the authorized body with the marking and seal of the judicial body that registered them.

      In case of making changes and (or) supplements to the constituent documents that do not require re-registration, within fourteen calendar days from the date of the marking of the judicial body on admission of the bank’s letter, the bank shall submit a copy of this bank’s letter to the authorized body, as well as a notarized copy of the changes and (or) supplements, made 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).

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. Within thirty working days from the date of the registration of its branch and representative office in the judicial bodies, the bank shall notify the authorized body of their opening and attach:

      1) the certificate of the registration of the branch (representative office);

      2) a notarized copy of the provision about the branch or representative office with the marking and seal of the judicial body that registered it;

      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. The essential requirements for opening branches by the bank, increase of the number of additional acting offices, including those located in several addresses, shall be the following:

      1) break-even operations of the bank for the last completed financial year;

      2) the bank’s compliance with the prudential norms within the three months preceding the date of registration of the branch in the judicial bodies or the date of marking of the judicial body for acceptance of the bank’s letter on making amendments to the regulations on the branch in the part of increasing the number of additional acting offices of the bank, including those, located in several places (addresses);

      3) non-appliance of the sanctions, provided in subparagraphs b) - h) of paragraph 2 of Article 47 of this Law, as well as the sanctions in the form of administrative punishment for an administrative offense, specified in paragraphs 2, 3, 5, 7 and 8 of Article 168-2 and Article 356 of the Code of the Republic of Kazakhstan on Administrative Offences, by the authorized body to the bank within three months, preceding the date of registration of the branch in the judiciary or the date of marking of the judicial body for acceptance of the bank’s letter on making amendments to the regulations on the branch in the part of increasing the number of additional acting offices of the bank, including those, located in several addresses;

      4) 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.)

      The requirement, referred to in subparagraph 1) of paragraph 6 of this Article shall not apply to the newly established bank within three years from the date of its establishment if the requirements for the minimum amount of equity capital are observed.

      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) amendments to the provision on a branch, a representative office, requiring re-registration in the judicial bodies, within thirty working days from the date of re-registration in the judicial bodies, the resident bank of the Republic of Kazakhstan shall submit the following documents to the authorized body:

      1) a notarized copy of the changes and (or) amendments, made to the provision on a branch or a representative office;

      2) a certificate of re-registration of the branch (representative office).

      When making changes and (or) amendments to the regulations on a branch, a representative office, not requiring re-registration in the judiciary, within thirty working days from the date of the marking of the judicial body on acceptance of the bank’s letter, the resident bank of the Republic of Kazakhstan shall submit a copy of the bank’s letter, the notarized copies of the changes and (or) amendments, made to the provision on the branch or representative office.

      If the address of the bank’s branch is changed, the bank shall submit to the authorized body the notarized copy of the conclusion and the protocol, confirming that the premises of the branch meet the requirements, established by the regulatory legal act of the authorized body.

      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. Within thirty working days from the date of registration in the judicial bodies, a representation office of non-resident bank of the Republic of Kazakhstan shall notify the authorized body of its opening and attach the following documents:

      1) the certificate of registration of the representative offices of non-resident of the Republic of Kazakhstan;

      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.

      12. Opening of branches of non-resident banks in the Republic of Kazakhstan shall be prohibited.

      13. Representative office of non-resident bank of the Republic of Kazakhstan, within thirty working days from the date of registration (re-registration) in the judiciary, shall inform the authorized body about the changes and (or) supplements, made to the provision on the representative office, attached with the notarized copies of these documents.

      In case of making changes and (or) supplements to the provision on representative office, not requiring re-registration, the representative office of non-resident bank of the Republic of Kazakhstan, within thirty working days from the date of the mark of the judicial body on acceptance of the office’s letter of the non-resident bank of the Republic of Kazakhstan, shall submit to the authorized body the copy of the letter of the representative office of non-resident bank of the Republic of Kazakhstan, and the notarized copies of the changes and (or) additions to the provision on a representative office.

      14. Within thirty working days from the date of de-registration of its branch and (or) the representative office in the judicial body (corresponding registering body of the state - at the termination of the branch or representative office’ activity outside the Republic of Kazakhstan), in a written form, shall notify the authorized body on termination of their activity and attach a notarized copy of the document of the judicial body, confirming de-registration of the branch and (or) the representative office of the bank.

      15. The authorized body shall require closure of the branch, and (or) the representative office of the resident bank and representative office of non-resident bank of the Republic of Kazakhstan in case of failure to comply with paragraphs 2, 6 - 9, 11 and 13 of this Article.

      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.)

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).

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) banking borrowing operations: a bank, a mortgage company or subsidiaries of the national holding company provide the loans for agricultural sector in cash on the terms of payment, priority and repayment;

      9) organization of exchange transactions in foreign currencies;

      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.

      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.

      6-1. A banking operation, specified by subparagraph 6) of paragraph 2 of this Article, shall be performed by the stock exchange, the central depository if these legal entities have a license, issued by the authorized body to conduct banking transactions, specified in subparagraphs 1) and (or) 3) of paragraph 2 of this Article, as well as by the operator of 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.

      7. A banking operation, provided by subparagraph 6) of paragraph 2 of this Article shall be performed without a license of the authorized body by the state bodies, credit partnerships, the National Post, the operator of the payment gateway of the "electronic government", as well as by 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.

      The banks (excluding the banks, more than fifty percent of the allotted shares of which are directly or indirectly owned by the state and (or) the national holding company), that have no parent bank or a bank holding company, that have a minimum required rating of one of the rating agencies, the list of which shall be established by the regulatory legal act of the authorized body, or a major participant – individual, shall not be entitled to conduct banking operations, stipulated in 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).

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.

      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) the rates and tariffs for 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. The order of keeping of loan documentation by the banks and the list of the required documents shall be defined by the regulatory legal act of the authorized body.

      5. The bank shall bear responsibility for the wrongful acts (inaction) of the entity, rendering services to the bank on the basis of an contract (agreement) on attraction of clients, on assessment of the compliance with the bank’s requirements, and on submission of the clients' documents to the banks under the terms of the contract (agreement) of the bank with the said person.

      The contract (agreement) between the bank and the person, providing services to the bank on attracting the clients, on assessment of the compliance with the bank’s requirements, and on submission of the clients’ documents to the bank shall be submitted to the client for review and shall contain the bank's responsibilities to the client for the wrongful acts of the person, who provides services to the bank, mentioned in the part 1 of this paragraph.

      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.)

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).

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.

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.

      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.

      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.

      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;

      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.

      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 standards, established in paragraphs 4, 5, 8 - 11 of this Article shall apply to the banking operation on issuance of guarantees and warranties, as well as the operations of Islamic banks, specified in subparagraphs 3), 4) 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.

      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.)

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 amount of the forfeit (fine, penalty) for a breach of the obligation to recover the loan, and (or) payment of interest on the bank loan agreement, concluded with an individual entity, including a mortgage loan contract, may not exceed 0.5 percent of the overdue payment for each day of delay, but not more than ten percent of the allocated loan for each year of the bank loan agreement.

      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 the cases, provided for by the pledge agreement, as well as the legislative acts of the Republic of Kazakhstan, the bank is free to sell the pledged property under the compulsory extrajudicial procedure through an auction (bids).

      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).

36. Measures applied to an insolvent borrower

      Upon occurrence of delay in fulfilling obligations under the bank loan contract, the bank (the organization, engaged in certain types of banking operations) shall notify the borrower of the necessity of making payments under the bank loan contract and the consequences of the failure to perform his obligations in the order, provided in the bank loan contract.

      If the requirements of the notification, specified in part 1 of this Article, are not fulfilled, the bank (the organization, performing certain types of banking operations) may apply the following measures to the borrower:

      1) raise the issue on appliance of measures against the borrower to the bank's authorized body, the organization, engaged in certain types of banking operations. The decision on appliance of the measures is made in accordance with the Rules of internal credit policy of the bank, the organization, engaged in certain types of banking operations;

      2) in the uncontested (acceptance free) procedure to forfeit the money, available in any bank account of the borrower (if the forfeit is stipulated in the bank loan agreement), with the exception of the money, received by the borrower in the form of allowances and social benefits, paid from the state budget and the state social insurance fund, that is in the bank accounts, opened at the request of the borrower, in accordance with the regulatory legal act of the authorized body;

      3) apply any measures, provided by the legislation of the Republic of Kazakhstan and (or) the bank loan agreement, including to apply to the court for recovery of the debt under the bank loan agreement, and to forfeit the mortgaged property in the out-of-court procedure (except for the cases, specified by the legislative act of the Republic of Kazakhstan on mortgage of immovable property) or in a judicial proceeding;

      4) apply to the court for recognizing the borrower - legal entity bankrupt in accordance with the legislation of the Republic of Kazakhstan.

      Footnote. Article 36 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 05.07.2012 No 30 -V (shall be enforced upon expiry of ten calendar days after its first official publication).

37. The time frames of claims and limitations

      The time frames of claims and limitations shall not apply to the banks’ claims to the borrowers for improper performance of credit terms.

      Footnote. Article 37 is in the wording by the Law of the Republic of Kazakhstan dated 11 July 1997 No 154.

38. Making payments and money transfers

      1. Banks shall make payments and money transfers in the territory of the Republic of Kazakhstan in the order, established by the legislation.

      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 made ??by the banks in the forms, methods and procedures, applied in the international banking practice and shall not contravene the acting legislation of the Republic of Kazakhstan.

      4. The bank shall have the right to withdraw money from the clients’ (depositors’) accounts without their consent if there are documents, confirming falsification of payment instruments as well as the revelation of the fact of the falsity of the money crediting.

      Footnote. Article 38 as amended by the Laws of the Republic of Kazakhstan, dated 11 July, 1997 No 154; dated 16 July, 1999 No 436.

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 the bank loan agreements, concluded with individuals, including the mortgage loan contracts, the banks and organizations, engaged in certain types of banking operations shall establish the fixed or floating interest rate and define the method of repayment of the loan on the borrower's choice among those, proposed by the bank on the date of the loan agreement conclusion.

      Prior to the signing of the mortgage loan contract, and in the cases, provided by the regulatory legal act of the authorized body, the bank, the organization, performing certain types of banking operations, shall be obliged to provide an individual with the loan repayment schedule to select the method of repayment of the loan, calculated in different ways. The borrower shall be provided with the loan repayment schedules, calculated with the intervals, specified in the bank loan contract, by the following methods of repayment:

      the method of differentiated payments, when repayment of the bank loan is made by the decreasing payments, which include equal amounts of payments on the principal debt and the interest, accrued during the period for the principal debt;

      annuity method, when the repayment of the bank loan is made in equal-sized payments during the entire period of the bank loan, which includes the increasing principal payments and decreasing payments for interest, accrued during the period for the remainder of the principal debt. The amount of the first and the last payments may differ from others.

      Bank, organization, performing certain types of banking operations, shall have the right to offer the borrower the additional methods of the loan repayment, calculated in accordance with their internal regulations.

      A fixed interest rate may not be changed unilaterally.

      Under the parties’ agreement, the fixed interest rate may be changed downward or at a floating rate during the term of the contract.

      Under the parties’ agreement, the fixed interest rate may be changed upwards in the end of its term, defined by the contract, but not earlier than three years from the date of the loan agreements conclusion. Each subsequent change in the upward direction of the fixed interest rate shall be possible under the mutual agreement after the expiration of the fixed rate, but not earlier than three years from the date of the previous change of the fixed interest rate.

      The order of calculation and conditions of the floating interest rate shall be defined by the regulatory legal act of the authorized body.

      Banks, organizations, performing certain types of banking operations, have no right to unilaterally increase the amount and change the order of tariff calculation, fees and other costs for servicing the loan, established on the date of concluding the bank loan contract.

      3. In the bank loan agreements, the banks, organizations, performing certain types of banking operations, shall be required to specify the complete list of fees and their amounts, subject to be paid due to the issuance of the loan and shall not be entitled to unilaterally introduce new fees under the concluded contract.

      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, performing certain types of banking transactions, shall not be entitled to charge a penalty or other kinds of penalties for early repayment of loans, except for the cases of partial prepayment or full early repayment of the principal debt up to one year from the date of the loan receiving.

      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, engaged in certain types of banking operations, the restricted measures and (or) the sanctions, provided for in 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).

40. The ban on provision of concessionary terms for the entities, having special relations with the bank

      1. The banks shall be prohibited to provide concessionary terms to the entities, enjoying special relations with the bank.

      2. Concessional terms shall mean:

      entry into a transaction with the entity, having special relations with the bank or for its benefit, in which the bank would not have entered for its nature, purpose, characteristics and risk with the entities, which have not the special relations with the bank;

      collection of remuneration and fees for performance of a banking operations or taking of a security which is lower than that, required from other entities.

      The bank shall not be entitled to allocate loans without collateral (unsecured loans) to the entities, having special relationships with it.

      3. The entities, having special relationships with the bank insiders, shall be recognized as follows:

      a) any official or executive employee, the first head and chief accountant of the branch of the bank, as well as their spouses and close relatives;

      b) an individual or legal entity that is a major participant of the bank, or an official of a major participant of the bank, as well as their spouses and close relatives;

      c) a legal entity in which the persons, referred to in subparagraphs a) and b) of this paragraph are the major participants or officials;

      d) a legal entity, in relation to which the bank is a major participant, the officials of the legal entity, their spouses and close relatives;

      e) the affiliates of the bank.

      For the purpose of this Article the national managing holding company, which is a shareholder of the bank, and legal entities, ten or more per cent of the shares (ownership interest) of which are owned by such national management holding entities, shall not be the entities, having special relationships with the bank.

      3-1. The bank shall not be entitled to enter into a transaction with any person, which entails:

      payment of obligations to the person, having special relationships with the bank;

      purchase of any property from a person, having special relations with the bank;

      acquisition of the securities, issued by the person, having special relationships with the bank;

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

      5. The person, having special relationships with one of the group of the inter-related legal entities, shall be the person, having special relationships with each of them.

      6. Two or more legal persons shall be the group of the inter-related legal entities, if at least one of them is a major participant in the other.

      6-1. For the purposes of this Article, the national management holding company, that is a shareholder of the bank and the legal entities, ten or more per cent of the shares (ownership interest) are owned by this national management holding company, shall not be recognized the group of the inter-related legal entities.

      7. A transaction with the entity, having special relationships with the bank, may only be made under the decision of the board of directors of the bank, taking into account the requirements of paragraph 1 of this Article. The waiver of the rights to claims for the assets, provided (allocated) to the entities, having special relationships with the bank, shall be made with the subsequent notification of the general meeting of the shareholders.

      An executive employee, the first director and the chief accountant of the branch of the bank shall not take part in consideration and decision making on any transaction between the bank and:

      himself;

      any of his close relatives or his spouse (wife);

      any legal entity in which he or any of his close relatives, his spouse (wife) is an official or a major participant.

      The decision of the board of directors on any transaction between the bank and the entity, having special relationships with the bank, may be taken only after consideration of all of its terms by the board of directors.

      8. The bank shall be required to submit information to the authorized body about all the transactions with the entities, having special relationship with it, in the forms, prescribed by the regulatory legal acts of the authorized body.

      9. The board of directors shall consider a business plan, submitted by 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 or the bank holding company, through the receipt of the relevant status, specified in Article 17-1 of this Law.

      The bank shall be obliged to inform the authorized body of the results of considering by the bank's board of directors of the business plan of a major participant of the bank (the bank holding company) within five working days from the date of the relevant decision making on inclusion or not inclusion of the business plan of the major participant of the bank (the bank holding company) into the development strategy (the development plan) of the bank.

      The board of directors shall ensure observance of the development strategy (the development plan) of the bank.

      10. The requirements of this Article shall apply to the bank holding companies and organizations, engaged in certain types of banking operations.

      The list of the entities, having special relationship with the banking conglomerate, shall be established by the regulatory legal act of the authorized body.

      Paragraph 11 shall be enforced from 01.01.2011.

      11. Requirements of paragraphs 1, 2 and 3-1 of this Article shall not apply to the transactions made between a subsidiary organization, established (acquired) under the conditions, specified by Article 11-2 of this Law, and the parent bank.

      12. The requirements of this Article shall not apply to 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 rated 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 mentioned 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 40 as amended by the Laws of the Republic of Kazakhstan dated 11.07.1977 No 154; dated 16.07.1999 No 436; dated 02.03.2001 No 162 (see Art. 2); dated 16.05.2003 No 416; dated 10.07.2003 No 483 (shall be enforced from 01.01.2004); dated23.12.2005 No 107 (the order of enforcement see Art. 2 of the Law No 107); dated 13.02.2009 No 135 -IV (the order of enforcement see Art. 3); dated 30.12.2009 No 234 -IV (shall be enforced from 21.02.2009); dated 28.12.2011 No 524 -IV (the order of enforcement see Art. 2); dated 26.12.2012 No 61 -V (shall be enforced from 04.02.2012).

40-1. Banking Ombudsman, his status and the procedure of electing

      1. Banking Ombudsman shall be an independent in his activities individual person, settling the disputes arising from a mortgage loan contract, concluded between the bank, the organization, engaged in certain types of banking operations and the borrower –individual under his application in order to reach agreement on satisfaction of the protected by the Law rights and interests of the borrower and the bank, the organization, engaged in certain types of banking operations.

      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.

      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.)

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) the person that earlier was a head of a financial organization in a period not exceeding one year before the authorized body’s decision on its conservation, the forced redemption of its shares, on revocation of the license, as well as the forced liquidation or recognizing it bankrupt in the order, established by the legislation of the Republic of Kazakhstan. This requirement shall be effective for three years after the authorized body’s decision on conservation of the financial institution, the forced redemption of its shares, on revocation of the license of the financial institution, as well as the forced liquidation of the financial institution or recognizing 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).

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.

      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. Upon the requests of the borrowers – individuals, related to the changes of terms for fulfilling the obligations on mortgage loan contract, the banking ombudsman shall assist the parties to find a mutually acceptable solution through the meetings and make recommendations without making the decision, specified by this Article.

      The results of considering the requests shall be recorded in a protocol, signed by the interested parties or their representatives with its further submission to the borrower and the bank.

      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).

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.)

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.

      Footnote. Chapter 3 is supplemented by Article 40-5 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 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).

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 early response measures;

      application of the restricted measures to the banks;

      imposing sanctions on the banks or their officials.

      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).

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.

      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.)

Article 43. Provisions (reserves)

      1. A dynamic reserve shall be a statutory reserve, formed by the banks to cover losses, related to implementation of banking activities.

      The banks shall be required to form a dynamic reserve in the order and under the conditions, established by the authorized body in consultation with the authorized state body, managing the tax payment area and other obligatory payments to the budget.

      The dynamic reserve shall be established prior to the payment of dividends on ordinary shares. The banks shall not be entitled to charge (pay) dividends on ordinary shares, if the actual amount of the dynamic reserve is less than the minimum amount, established by the authorized body in consultation with the authorized state body, managing the tax payment area and other obligatory payments to the budget.

      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.

      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).

44. Verification of banks, bank holding companies and members of banking conglomerates

      1. Verification of banks, bank holding companies and members of banking conglomerates shall be carried out ??by the authorized body independently or with involvement of other state bodies and (or) organizations.

      When carrying out the verification of banks, the authorized body shall be entitled to inspect the activities of the banks’ affiliates in order to define the extent and nature of their impact on the banks' activities.

      2. The banks, bank holding companies, members of the banking conglomerates and their affiliates shall assist the inspection body on the issues, specified in the task of the authorized body for inspection, and allow the body to interview any officials and employees, and provide access to any information, necessary for inspection.

      3. Employees of the authorized body shall be prohibited to disclose or transfer the information to the third parties, obtained during the verification of the banks, the bank holding companies and the members of banking conglomerates.

      4. The persons performing the inspection shall be liable for the disclosure of information, obtained during the inspection of the banks, the bank holding companies, the members of banking conglomerates and being a bank 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, that are the bank holding company, the entity with the characteristics of the bank holding company, if any of the following conditions is fulfilled:

      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 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 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).

45. Early response measures

      1. In order to protect the legitimate interests of depositors and creditors of banks, to ensure financial stability of the bank, to prevent worsening of its financial situation and risks, associated with the banking activities, the authorized body shall analyze the banks’ activities to reveal the following factors, worsening the financial condition of the bank:

      1) reduction of the equity capital adequacy ratios;

      2) reduction in liquidity ratios;

      3)reduction of the share of the attracted deposits of individual and legal entities in the amount of the bank's liabilities;

      4) an increase of loans in the total loan portfolio of the bank, for which the deadline for delay on the basic principal and interest is more than ninety days;

      5) other factors, worsening the financial condition of the bank, established by the regulatory legal act of the authorized body.

      2. In order to ensure 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 authorized body shall analyze the activities of the banking conglomerate to reveal the following factors, worsening the financial condition of the banking conglomerate:

      1) reduction of the equity capital adequacy ratio of the banking conglomerate;

      2) growth of the maximum risk ratio of per borrower;

      3) appliance of the early response measures for the financial institutions that are the members of the banking conglomerate;

      4) other factors, worsening the financial condition of the banking conglomerate, 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.

      Within five working days from the date of receipt of the claim, the bank and (or) its shareholders shall be obliged to elaborate and submit the action plan to the authorized body, indicating the time frames for execution of each item and the responsible officials.

      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.

      If the action plan is disapproved, the authorized body shall apply to the bank and (or) to the shareholders one or more following measures of early response through specifying the requirements to:

      1) the change of the organizational structure and (or) the regular staffing of the bank;

      2) the limits of acceptance of deposits;

      3) suspension of accrual and (or) payment of dividends for the period, specified by the authorized body;

      4) the increase of the bank’s provision;

      5) the dismissal of management or other employees of the bank from office;

      6) suspension or limitation of certain types of banking operations with the high risks;

      7) an increase of the equity capital of the bank in the amount sufficient to ensure the financial stability of the bank, including through an increase of its authorized capital;

      8) the restructuring of assets and (or) the obligations of the bank;

      9) reduction of administrative costs, including through termination or limitation of hiring of additional workers, closure of some of its branches and representative offices, subsidiaries.

      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.

      Within five working days from the day of receipt of the claim, the bank holding company and (or) its major participants shall be required to elaborate and submit the action plan to the authorized body, indicating the timeframes for execution of each item and the responsible officials.

      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.

      If the action plan is disapproved, the authorized body shall apply to the bank holding company and (or) its major participants one or more of the following measures of early response through specifying the requirements to:

      1) the termination of accrual and (or) payment of dividends on ordinary shares (distribution of net income) by the participants of the banking conglomerate among their shareholders (participants), respectively, for the period, specified by the authorized body;

      2) dismissal from office of the management or other employees;

      3) growth of the equity capital of the banking conglomerate in the amount sufficient to ensure its financial stability, including through increasing the authorized capital of the participants of the banking conglomerate;

      4) restructuring of the assets of the banking conglomerate;

      5) reduction of administrative costs, including through termination or limitation of hiring additional workers, as well as the reduction of ownership interest in the authorized capital of subsidiary and affiliated organizations on the territory of the Republic of Kazakhstan and abroad;

      6) suspension of operations (direct and indirect), exposing risks to the bank holding company and the participants of the banking conglomerate.

      5. In case of failure to submit an action plan within the time frames, specified by paragraphs 3 and 4 of this Article, aimed at improving the financial stability of the bank (banking conglomerate) or untimely fulfillment of the action plan, as well as the failure to perform or untimely fulfillment of the early response measures, in compliance with the authorized body’s requirement, the restricted measures and (or) sanctions shall be applied to the bank (the bank holding company), and (or) to its shareholders (major participants), and the coercive measures, provided by the Laws of the Republic of Kazakhstan.

      6. The order of appliance of the early response measures and the methods of defining the factors, worsening the financial condition of the bank (the 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).

46. The restricted measures

      1. In the cases when the authorized body reveals violations of prudential standards and other mandatory standards and limits, violations of the legislation of the Republic of Kazakhstan, the wrongful action or inaction of officials and employees of the bank, which could threaten its financial security and stability, as well as the interests of its depositors, clients and correspondents, as well as the failure to comply with other requirements of the authorized body, specified by this Law, the authorized body shall be entitled to apply to the bank one of the following restricted measures:

      a) to request a letter of commitment;

      b) to draw up a written agreement with the bank;

      c) to issue a written warning;

      g) to give a binding written instruction.

      2. The bank’s letter of commitment shall contain the recognition of existing violations of the legislation of the Republic of Kazakhstan, as well as the guarantee of the bank's management to address them in a well-defined period with the list of the planned measures.

      3. A written agreement shall be the agreement between the bank and the authorized body on the need to eliminate the revealed violations of the legislation of the Republic of Kazakhstan and on approval of the priority measures to eliminate these violations.

      4. A written instruction shall be the instruction given to the bank on adoption of binding corrective measures to eliminate the revealed deficiencies within the prescribed period.

      The appeal of the written instruction of the authorized body in the court shall not suspend its execution.

      5. The bank shall notify the authorized body of the letter of commitment, the written agreement or the written instruction within the timeframes, specified in this document.

      6. A written warning shall be a notification of the authorized body of the possibility of applying sanctions to the bank, provided for in Article 47 of this Law, in the case of revealing by the authorized body of the violations of the legislation of the Republic of Kazakhstan, or if the deficiencies are not eliminated within the timeframes, prescribed by the authorized body.

      7. The order of appliance of the restricted measures shall be established by the regulatory legal acts of the authorized body.

      8. The measures, provided for in this Article, may apply to the bank holding company, the organizations, included in the banking conglomerate, the major bank participants in the cases of violating the legislation of the Republic of Kazakhstan, including appearance of the characteristics of unstable financial condition after acquiring the status of the bank holding company, the major participant of the bank, and in the case when the authorized body reveals that the violations, unlawful actions or inaction of these entities, their officials or employees had worsened the financial condition of the bank or the banking conglomerate.

      9. 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.)

      Footnote. Article 46 is supplemented by paragraph 7 by the Decree of the President of the Republic of Kazakhstan having the force of the law; dated 27 January, 1996 No 2830; as amended by the Laws of the Republic of Kazakhstan, dated11 July, 1997 No 154; dated 2 March, 2001 No 162 (see Art. 2); dated10 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); 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 (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.)

Article 47. The sanctions

      1. The authorized body shall be entitled to impose sanctions against the bank, the bank holding company, the organization, included in the banking conglomerate, the major participants of the bank, regardless of previous measures, applied to them.

      2. The following measures - sanctions may be applied by the authorized body:

      a) imposition and collection of fines on the grounds, established by the legislative acts of the Republic of Kazakhstan;

      b) suspension or revocation of a license to perform all or several banking transactions on the grounds, specified in Article 48 of this Law;

      c) conservation of the bank on the grounds and in the order, established by Articles 62-67 of this Law;

      d) revocation of the permission to open a bank on the grounds, specified in Article 49 of this Law;

      e) in the case of a negative equity capital of the bank, the decision making in consultation with the Government of the Republic of Kazakhstan on compulsory redemption of the shares (ownership interest) of the bank at a certain price by the authorized body on the basis of the value of the bank's assets minus the amount of its liabilities on the date of decision made by the authorized body on the compulsory repurchase of the shares under the condition of their mandatory and immediate selling to the new investor at the purchase price, with the simultaneous assignment (transfer) of all the rights and obligations of the bank and its shareholders.

      f) dismissal from duties of the persons, referred to in Article 20 of this Law on the basis of the sufficient evidence for recognizing the actions of the leading employee (employees) non-complying with the current legislation with the simultaneous revocation of the consent for appointment (election) of the executive officer;

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

      h) in the case of reduction of the equity capital adequacy ratios of the bank and (or) the banking conglomerate down to the level lesser than fifty percent of the standards, established by the regulatory legal acts of the authorized body, the bank shall transform into a credit partnership in the order, established by Article 60 of this Law and regulatory legal acts of the authorized body.

      In case of the bank’s refusal from the right, specified in the first paragraph of this subparagraph, or refusal to issue permission to transform the bank into a credit partnership on the grounds, specified in Article 61 of this Law, the authorized body shall be entitled to make a decision on conclusion of a contract with the bank's shareholders to transfer the bank’s shares in trust management to the authorized body followed by the alienation of the bank’s shares in accordance with paragraph 3 of Article 47-1 of this Law to a new investor (investors) if they comply with the requirements of this Law.

      If the shareholders refuse to transfer the shares to the trust management, the authorized body shall be entitled to apply to the court to compel the contract.

      3. If the authorized body applies sanctions, provided for in subparagraph e) of paragraph 2 of this Article, the decisions on dismissal of workers, relieved from duties, shall be taken by the bodies that appointed or elected them to their respective positions.

      4. (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).

      5. A decision on revocation of the bank’s license for performance of banking transactions shall enter into force on the date of its adoption.

      6. After the revocation of the licenses (the license) of the bank to conduct banking transactions, the authorized body shall appoint a temporary administration (temporary administrator) of the bank to whom the powers of all its bodies are delegated.

      The powers of the previously acting bank's management bodies shall be suspended.

      6-1. 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.)

      7. Within ten working days from the date of revoking the bank’s license, the temporary administration (temporary administrator) of the bank shall make a decision on performing an operation, specified in Article 61-2 of this Law, and apply to the authorized body to coordinate the operation’s performance.

      Within about ten working days, the authorized body shall coordinate performance of the transaction by the temporary administration (temporary administrator) of the bank, which is specified in Article 61-2 of this Law.

      After the performance of this transaction by the temporary administration (temporary administrator) of the bank, within ten working days, the authorized body shall apply to the court to terminate compulsorily the activity (liquidation) of the bank in the order, established by the legislation of the Republic of Kazakhstan.

      If the temporary administration (temporary administrator) of the bank does not make a decision on performing the transaction, provided in the Article 61-2 of this Law, within the timeframes, specified in the first part of this Article, the authorized body shall apply to the court for compulsory termination of the activity (liquidation) of the bank in the order, established by the legislation of the Republic of Kazakhstan.

      Information on the taken decision on revocation of the license shall be published by the authorized body in two periodicals that are being distributed throughout the Republic of Kazakhstan.

      8. The decision on revocation of the license to conduct banking operations may be appealed on behalf of the bank by its shareholders only. The decision may be appealed to the court within 10 days.

      Footnote. Article 47as 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 07.12.1996 No 50; dated 11.07.1997 No 154; 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; dated23.12.2005 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 19.02.2007 No 230 (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).

47-1. The coercive measures taken against the entities, having the characteristics of a major participant or a bank holding company, as well as the major participants of the bank, bank holding companies and legal entities, incorporated in the banking conglomerate

      1. The authorized body shall be entitled to apply coercive measures to the entities, having the characteristics of a major participant or a bank holding company, as well as to the major participants of the bank and bank holding companies or the legal entities, incorporated into the banking conglomerate, in the following cases:

      1) non-receipt of the consent of the authorized body for acquisition of the status of a major participant and a bank holding company;

      2) occurrence of the circumstances, specified in paragraph 9 of Article 17-1 of this Law after the obtaining of the status of a major participant of the bank and the bank holding company;

      3) failure to fulfill the restricted measures, applied in accordance with Article 46 of this Law;

      4) the actions, committed by an entity, having the characteristics of a major participant or a bank holding company, and a major participant of the bank (including by the organizations over which the major participant has control), a bank holding company or the legal entities that are the members of the banking conglomerate, which resulted in the damage, caused or could be caused to the bank;

      5) unstable financial condition of the entities, having the characteristics of a major participant or a bank holding company, as well as the major participants of the bank (including the organizations, controlled by the major participant), a bank holding company or entities, incorporated in the banking conglomerate, in the result of which the damage is caused or may be caused to the bank;

      6) worsening of the financial condition of the bank or the banking conglomerate due to revelations of the factors, specified in Article 45 of this Law;

      7) systematical (two or more times during the year) non-fulfillment of prudential standards by the banking conglomerate.

      The authorized body shall be entitled to apply coercive measures to the bank holding companies and major bank participants for their action or inaction that resulted in non-fulfillment of the requirements of paragraph 5 of Article 42 of this Law.

      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. The order of appliance of the coercive measures shall be defined by the regulatory legal acts of the authorized body.

      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).

48. The grounds for suspension, termination or revocation of licenses for making all or some of the banking transactions

      Footnote. The title of Article 48 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.)

      1. Suspension or revocation of the licenses to perform all or some of the banking transactions shall be carried out under any of the following grounds:

      a) non-compliance with the requirements of Article 20, paragraphs 2 and 6 of Article 26 of this Law during performing the activities by the bank and the organization, conducting certain types of banking transactions;

      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;

      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) systematic (three or more times within twelve consecutive calendar months) improper performance of contractual obligations on payment and transfer operations;

      d) systematic (three or more times within twelve consecutive calendar months) violation of prudential standards and (or) other mandatory standards and limits;

      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) non-submission or submission of the deliberately false statements and information to the authorized body;

      h) systematic (three or more times within twelve consecutive calendar months) violation of the regulatory legal acts or systematic (three or more times within twelve consecutive calendar months) failure to comply with the written instructions of the authorized body;

      h-1) failure to comply with the requirements, established by the authorized body in terms of the availability of risk management and internal control systems;

      i-1) failure to fulfill the requirements of the authorized body to increase the bank's equity capital, and the requirements, established in accordance with paragraph 2 of Article 47-1 of this Law by the bank holding company, the major participant of the bank –individual, owning directly or indirectly more than twenty-five percent of the voting and (or) the allotted (net of the preferred and those, repurchased by the bank) shares of the bank;

      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) within twelve consecutive calendar months from the date of issuance, the failure to perform the activity by the bank, the organization, carrying out certain types of banking operations in accordance with the license issued thereto;

      l) the court's decision to terminate the bank’s activities;

      l-1) the bank's decision on voluntary termination of its activities through reorganization or liquidation;

      m) non-submission or submission of false information about the entities, affiliated with the bank, as well as other information, required by the authorized body, which became the obstacle to the authorized body’s supervision of banks including on the consolidated basis;

      n) the repeated (two or more times during the inspection) impeding of the audit by the bank that caused inability of its conduction in time;

      o) the bank’s deliberate failure to eliminate violations, referred to in the audit report of the audit organization, within the timeframes, specified in paragraph 6 of Article 57 of 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. If there are cases of systematic (three or more times within twelve consecutive calendar months) violation of the requirements, stipulated by the Law of the Republic of Kazakhstan "On countering legalization (laundering) of incomes received from crime and financing of terrorism", ??the license for performance of all or some banking operations shall be suspended.

      1-3. The grounds for revocation of the license in violation of the Law of the Republic of Kazakhstan "On countering legalization (laundering) of incomes, received from crime and financing of terrorism" shall be:

      1) failure to eliminate the violations within the set period, for which the license is suspended in accordance with paragraph 1-2 of this Article;

      2) the repeated violation of the requirements stipulated by the Law of the Republic of Kazakhstan "On countering legalization (laundering) of incomes, received from crime and financing of terrorism", for which the sanction was applied in the form of suspension of the license on the grounds, provided for in paragraph 1-2 of this Article;

      3) the bank's participation in the transactions, related to money laundering or terrorist financing.

      1-4. Termination of the license for performance of all or certain banking operations shall be made on the grounds, stipulated by the Law of the Republic of Kazakhstan "On Licensing" and the exclusion of the licensee out of the list of the persons, entitled to carry out all or certain banking operations and subject to licensing in accordance with the Laws of the Republic of Kazakhstan.

      2. The authorized body shall suspend or revoke the license to carry out all or certain banking operations, depending on the nature of the violation.

      Appeals against the decisions of the authorized body on suspension or revocation of the license to carry out all or some banking operations shall not suspend execution of these decisions.

      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.)

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 the bank accounts of clients and the bank itself shall be terminated, with the exception of the cases, involving the expenditures, provided under the regulatory legal acts of the authorized body, and the crediting of money, incoming to the bank;

      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 the bank accounts of the bank shall not be allowed at the requests of the creditors, tax bodies, including those to be satisfied in the uncontested (acceptance-free) procedure, as well as the foreclosure on the property of the bank;

      6) the bank officials shall be prohibited to alienate the bank’s shares owned by them;

      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.

      2. The order of the bank’s activity, appointment of its temporary administration (temporary administrator), and the powers of the temporary administration (temporary administrator) shall be defined by the regulatory legal acts of the authorized body.

      3. The temporary administration (temporary administrator) of the bank shall carry out its functions within the period before the appointment of the bank’s liquidation committee by the authorized body.

      The authorized body shall control the activities of the temporary administration (temporary administrator) of the bank before the appointment of the liquidation commission of the bank.

      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 its activity the temporary administration (temporary administrator) of the bank shall not be entitled to make payment operations, except for the cases, provided for in paragraph 1 of this Article, and to change the terms of the earlier concluded contracts with the bank.

      8. The authorized body shall be prohibited to cover the costs, associated with the forced reorganization and termination of the bank’s activity under the forced liquidation, except for the costs, related to the payments of wages of the authorized body’s employees, included in the temporary administration (temporary administrator) of the bank and the liquidation committee, and the costs, spent on publishing of the information in the official periodicals of the Ministry of Justice of the Republic of Kazakhstan in the Kazakh and Russian languages about the court's decision on compulsory liquidation of the bank and the costs, associated with the state registration of the termination of the bank’s activity under the forced liquidation by the judicial body and submission of the documents to the archive after the completion of the bank’s liquidation procedure in case of absence of the bank's 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.)

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).

50. Bank secrecy

      1. Banking secrecy shall include the information on availability, owners and numbers of bank accounts of depositors, customers and correspondents of the bank, on the balance and movement of the money in these accounts and the accounts of the bank itself, on the operations of the bank (except for the general terms of bank operations), as well as the information on availability, owners, the nature and value of the clients’ assets, kept in the safe boxes, strong rooms and bank’s premises.

      Information on the credits, issued by the bank, that are under the liquidation process, shall not be related to the banking secrecy.

      2. Banks shall guarantee secrecy of transactions and deposits of its depositors, customers and correspondents, as well as the secrecy of the property, kept in the safe boxes, strong rooms and premises of the bank.

      3. The officials, employees of banks, bank holding companies - residents of the Republic of Kazakhstan, legal entities, referred to in subparagraph 8) of paragraph 4 of this Article and any other persons, who by virtue of their official duties, have access to the information constituting the bank’s secrecy, shall bear criminal liability for disclosure of the information, except for the cases, provided in paragraphs 4-8 of this Article.

      4. Bank secrecy may be disclosed only to the account (property) holder, to any third party upon a written consent of the account (property) holder at the moment of his personal presence at the bank, to the credit bureau on bank borrowing, leasing, factoring and forfeiting operations, accounting of bills and the guarantees, letters of credit, issued by the bank in accordance with the legislative acts of the Republic of Kazakhstan, as well as to the persons, referred to in paragraphs 5-8 of this Article, on the basis and within the limits, provided in this Article.

      The following shall not be a disclosure of the banking secrecy:

      1) mandatory notification of tax bodies by the banks about the opening of bank accounts to an individual, which is registered as an individual entrepreneur, private notary, private bailiff, a lawyer, a foreigner and a stateless person, legal entity, including a non-resident, its structural sub-departments;

      1-1) mandatory notification of the authorized body by the bank about the financial monitoring of transactions, subject to financial monitoring in accordance with the Law of the Republic of Kazakhstan "On countering legalization (laundering) of income received from crime and financing of terrorism";

      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;

      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;

      4) submission of the information to other banks that is required for performance of the transactions, provided in Articles 61-2, 61-3 of this Law;

      5) submission of information by the second tier banks, the claims of which are purchased or received in the management by the legal entity, established by the state to purchase the classified assets of the second tier banks to the specified legal entity;

      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) submission of information by the banks to the legal entity about the credit (loan), classified as doubtful and loss assets and for which there is negative information in case of assignment of claims under the credit (loan) to the specified entity;

      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).

      5. Information about the presence and numbers of bank accounts shall be submitted to the bank in respect of which the owner of the account (s) is the borrower, guarantor, lessee or mortgagor, upon a written request, signed by the chairman of the board of directors of the bank, or his deputies, if the documents are provided, confirming allocation of credit, the list and the order of issuance of which are established by the regulatory legal acts of the authorized body.

      6. Information about the presence and numbers of bank accounts of legal entity and (or) its structural units, as well as the current accounts of an individual, engaged in entrepreneurial activities without formation of a legal entity, private notary, private bailiff, lawyer about the balance and flow of money in these accounts shall be issued to:

      a) the bodies of inquiry and preliminary investigation: for the criminal cases that are under their proceedings, with the approval of a prosecutor;

      b) the courts: for the cases that under their proceedings, on the basis of the court decision;

      c) the public prosecutor: on the basis of the decision on examination, within his competence, for the case that is under his consideration;

      d) the customs bodies for the export and (or) import operations of the clients with the approval of the prosecutor;

      e) to the tax bodies in respect of:

      the audited legal entity, and (or) its structural department on the issues, related to the taxation;

      the audited individual entity, which is registered as an individual entrepreneur, private notary, lawyer, private bailiff, on the issues, related to taxation;

      legal entity, individual entrepreneur, for whom the specific tax liabilities are applied upon termination of activities in accordance with the tax legislation of the Republic of Kazakhstan;

      legal entity and (or) its structural department, individual entrepreneur, private notary, private bailiff, a lawyer, the actual absence of whom at the location is confirmed in the order, established by the tax legislation of the Republic of Kazakhstan, and who did not submit the tax reporting before expiry of six months after the due deadline, established by the tax legislation of the Republic of Kazakhstan for its submission, except for the period of extension of such term in the cases, provided for by the tax legislation of the Republic of Kazakhstan;

      inactive legal entity, individual entrepreneur, private notary, a lawyer;

      e-1) the bodies of executive proceedings: for the cases that are under their proceedings on the basis of the decision of a bailiff, stamped by the executive body and sanctioned by the court, or its copy, certified by the seal of the territorial department of the body of executive proceedings;

      e-2) the private enforcement agents: for the cases that are under their proceeding on the basis of the decision of the private bailiff, certified by the personal stamp and authorized by the court, or its copy, certified by the personal seal.

      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. Information about the presence and numbers of bank accounts of an individual, the balance and flow of money in these accounts shall be issued to the tax bodies in respect of:

      the person, registered in accordance with the Law as a candidate for President of the Republic of Kazakhstan, deputies of the Parliament of the Republic of Kazakhstan and maslikhat, as well as the members of local self-government, and his (her) wife (husband);

      the person that is a candidate for a public office or position, associated with the performance of public or equivalent functions, and his (her) wife (husband);

      the person, holding a public office during performance of its powers and his (her) wife (husband) in the same period;

      the person, paroled from serving a sentence.

      The information, provided for in this paragraph and subparagraph e) of paragraph 6 of this Article shall be submitted upon the request of the tax body in the form, established by the authorized state body, managing the payment of ??taxes and other obligatory payments to the budget, in consultation 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) the bodies of inquiry and preliminary investigation: for the criminal cases that are under their proceeding 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 on the basis of a written request, signed by the first head or investigator, stamped by the body of inquiry or preliminary investigation and sanctioned by the prosecutor;

      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 decision on examination, within his competence, for the case that is under his consideration.

      7-1. Unless otherwise provided in paragraph 6-1 of this Article, the information about the movement of money in the bank accounts of a client, specified in paragraphs 6 and 7 of this Article shall be submitted in the form of a statement of cash flows in the bank accounts of the client. The information that shall be contained in the statement of cash flows in the client’s bank account shall be established by the regulatory legal act of the authorized body.

      7-2. Banking secrecy may be disclosed to the banking ombudsman on the basis of the appeals of the borrowers - individuals to resolve the disputes, arising from the contracts of mortgage loans.

      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.

      9. Is excluded by the Law of the Republic of Kazakhstan dated 29.06.1998 No 236.

      10. The information containing the banking secrecy shall be provided on the basis of the international treaties of the Republic of Kazakhstan, providing for the information exchange.

      The authorized body shall provide the information, received in accordance with the international treaties of the Republic of Kazakhstan to the other state bodies of the Republic of Kazakhstan with the consent of the party that submitted such information.

      11. The requirements of this Article shall also apply to the organizations engaged in 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).

51. Seizure and foreclosure on the money and property, kept in the bank

      1. The money and other property of an individual or legal entity (except for the banks, insurance (reinsurance) companies, whose licenses were revoked by the authorized body and (or) those under the forced liquidation process, as well as the voluntary pension funds, whose licenses for management of the investment portfolio with the right to attract the voluntary pension contributions were revoked), kept in the bank, may be seized only on the basis of the resolutions of the bodies of inquiry and preliminary investigation and decisions of the bodies of executive proceedings and private bailiffs, sanctioned by the court, as well as the orders, resolutions, the court decisions and verdicts. If the arrest is imposed to secure the claims, the amount of money for which the arrest is imposed shall not exceed the amount of the claim and the amount of the state fees and costs, associated with implementation of the decisions, judgments, rulings and court decisions.

      When the arrest is imposed by the private bailiff in order to secure fulfillment of the executive document, the amount of money and the value of the property on which the arrest is imposed shall not exceed the amount, required to repay the amount, imposed to the claimant, as well as the fines, imposed on the debtor during performance of the executive document, the wages of the private bailiff and the expenses, required for fulfillment of the executive document.

      All debit transactions in the bank accounts (except for the correspondent accounts) of a legal entity, its business sub-departments, an individual entrepreneur, a private notary and a lawyer may be suspended by the tax and (or) customs bodies in the cases, established by the legislative acts of the Republic of Kazakhstan, and may be foreclosed under the grounds, stipulated by the legislative acts of the Republic of Kazakhstan.

      Operations in the bank accounts of individual and legal entities may be suspended by the authorized body on financial monitoring in the cases, provided by the Law of the Republic of Kazakhstan "On countering legalization (laundering) of income, received from crime and financing of terrorism".

      In this case, the instructions of the tax and (or) customs bodies may be sent to the banks or organizations, performing certain types of banking transactions, in paper or in electronic form through submission via the information-communication network.

      An instruction, sent in paper shall be signed by the first head and certified by the seal of the tax and (or) customs bodies.

      An instruction, sent in electronic form, shall be made in accordance with the formats, established by the state body, managing the payment of ??taxes and other obligatory payments to the budget in consultation with the authorized body.

      2. Confiscation of money and other property of an individual and legal entity, kept in the bank, with the exception of the pension assets, may be performed on the basis of the enforced judgment (sentence).

      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).

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).

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.

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.

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.

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 entrepreneurial activity in the form of:

      financing of the trading activities as a commercial agent with allocation of a commercial credit;

      financing of production and trading activities through participation in the authorized capitals of legal entities and (or) in partnership;

      5) investment activities under leasing agreements (renting);

      6) the agency activity in the banking operations of an Islamic bank.

      2. Banking transactions, specified in subparagraphs 4) and 5) of paragraph 1 of this Article shall be made by an Islamic bank at the expense of its own money and (or) the money, raised for investment deposits. At that, the Islamic bank and (or) the clients of the investment deposit shall acquire the right for the common ownership of property, purchased on their money, and the Islamic bank shall act as the co-owner of the property and (or) a trustee, manage the assets, relating to the common property. The Islamic Bank as a trustee shall have the right to provide the state registration of rights to the immovable property, registration of vehicles and other movable property in accordance with the legislative acts of the Republic of Kazakhstan. The Islamic bank shall register the co-owners of 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.)

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. Remuneration of an Islamic bank shall be defined as a part of the income, received from the use of the money attracted on the investment deposit, provided that the remuneration is paid only at the expense of the income from the use of money on the investment deposit. The Islamic bank shall lose the right to receive compensation for the unprofitability of the investment deposit (in the absence of income from the use of money attracted for the investment deposits). Terms and conditions of the investment deposit agreement may not provide a guaranteed amount of income on the investment deposit or remuneration of an Islamic bank.

      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.

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.

52-8. Financing of trading activity as a commercial agent with allocation of a commercial credit

      1. Islamic banks shall be entitled to participate in the trading activities as a commercial agent through providing a trade credit to the buyer or seller of the goods on the basis of a contract on the commercial credit of the Islamic Bank (hereinafter - the commercial credit agreement).

      2. The commercial credit agreement shall be based on the proposal of the buyer of goods to conclude a commercial credit (offer) agreement, which shall include the timeframes for its acceptance by the Islamic Bank (acceptance). During the validity of the offer, the Islamic bank shall be entitled to enter into a sale agreement with the seller of the goods.

      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 a product is purchased on the basis of the buyer's offer, in the purchase agreement with the seller, the Islamic bank shall indicate that the product is purchased for conclusion of a commercial credit agreement.

      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.

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.

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.

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.

Chapter 5. Financial Accounting and Reporting

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.

54. Accounting and reporting in banks

      1. The list, forms or requirements, the timing and submission of financial and other reports, including financial statements and other reporting on a consolidated basis, shall be established by 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.)

54-1. Reporting of major participants of a bank and bank holding companies

      1. A major participant of the bank, that is an individual, within one hundred and twenty calendar days after the end of the fiscal year, shall submit a financial reporting to the authorized body, including the information on income and assets, as well as the following information:

      1) about his and other persons co-influence on the decisions, taken by the bank due to an agreement between them or otherwise, including the information, containing a description of delegating the powers, determining the possibility of such an influence;

      2) about his positions in the organizations and his ownership interests in the authorized capital (the shares);

      3) about his ownership interests in the authorized capitals (shares) of the organizations, as well as the sources of their acquisition;

      4) about the close relatives, spouse and close relatives of husband (wife), as well as the organizations, controlled by these persons;

      5) information about the income and property, a copy of the personal income tax declaration, submitted to the tax bodies by a major participant of the bank, if any.

      2. A major participant of the bank that is a legal entity shall submit annually the financial statements and its explanatory note to the authorized body within one hundred twenty calendar days after expiry of the fiscal year, and a report on transactions with the affiliates.

      3. The order of submission and the reporting forms shall be established by the regulatory legal acts of the authorized body.

      4. A bank holding company shall have to submit to the authorized body the following information:

      1) the quarterly consolidated financial statements and the explanatory note to it within ninety calendar days following the reporting quarter, and the quarterly non-consolidated financial statements and the explanatory note to it within thirty calendar days following the reporting quarter;

      2) the consolidated and non-consolidated annual financial statements and its explanatory note, that are not certified by the audit organization, within one hundred and twenty calendar days after expiry of the financial year;

      3) a quarterly report on transactions with the affiliates.

      5. The explanatory note to the annual financial statements of a major participant of the bank, that is a legal entity, and in the explanatory notes to the quarterly and annual financial statements of a bank holding company shall contain the following information:

      1) a description of the types of activities of a major participant (a bank holding company);

      2) the name of each organization in which a major participant (a bank holding company) is a member (shareholder), the amount of its ownership interest in the authorized capital (the number of the shares owned), a description of the type or the types of transactions, the financial statements of organizations in which a major participant (a bank holding company) is a major contributor (a major shareholder), a report on the structure of the banking conglomerate;

      3) the name of each organization that is a major participant (shareholder) of a major participant of a bank (a bank holding company), the size of its ownership interest in the authorized capital (the number of its shares), a description of the type or the types of transactions, and financial statements of the organization, as well as the information on the affiliated persons, the persons, controlling a major participant, about the subsidiaries and affiliated organizations of the person, controlling a major participant of the bank;

      4) a report about all liabilities of the banking conglomerate to the third parties (the group of persons) that make up ten or more percent of the equity capital of the banking conglomerate.

      If a bank has no a bank holding, a major participant of the bank shall submit the financial statements and the information, referred to in this paragraph on a quarterly basis not later than forty- five calendar days following the reporting quarter.

      If the composition of executives of a major participant of the bank - legal entity or a bank holding is changed, the major participant of the bank - legal entity or the bank holding company, within thirty calendar days from the date of such changes, shall submit the information about the impeccable business reputation of executives, attached with the supporting documents to the authorized body.

      6. In the event if a major participant of a bank, a bank holding company is a financial institution - resident of the Republic of Kazakhstan, the major participant of the bank, the bank holding company shall submit the information, specified by subparagraphs 1) - 3) of part one of paragraph 5 of this Article, at that, the financial statements and the explanatory note thereto shall not be submitted if the major participant of the bank, the bank holding company has submitted this financial statement to the authorized body for the required period.

      7. A bank holding- non-resident of the Republic of Kazakhstan within one hundred and eighty calendar days after expiry of the fiscal year shall submit the annual financial statements to the authorized body in accordance with the requirements of the regulatory legal act of the authorized body.

      The requirements of paragraph 1 of this Article shall be applied to the major participant of the bank that is a non-resident individual of the Republic of Kazakhstan.

      The requirements, provided for the bank holding - non-resident of the Republic of Kazakhstan shall be applied to the major participant of the bank that is the legal entity – non-resident of the Republic of Kazakhstan in accordance with this paragraph.

      8. 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.)

      Footnote. Article 54-1 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).

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).

      The banks shall publish the annual consolidated financial statements and in the absence of a subsidiary (an affiliate) organization (s) –the non-consolidated financial statements and the audit report in the order and the timeframes, specified by the authorized body, after the audit organization, meeting the requirements of paragraph 4 of Article 19 of this Law, confirm the reliability of the information provided and approve the financial statements by the annual meeting of the shareholders of the bank.

      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).

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).

57. An audit of banks and their affiliates

      1. An audit of a bank may be performed by an auditing organization, entitled to conduct audit in accordance with the legislation on the auditing activity and meeting the requirements of paragraph 4 of Article 19 of this Law.

      1-1. An audit upon the results of a financial year shall be mandatory for banks, bank holding companies and organizations in which the bank and (or) the bank holding company are the major participants, the copies of which and the recommendations of the audit organization shall be submitted by the banks, bank holding companies and organizations in which the bank and (or) the bank holding company are the major participants, or by the 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) the bank holding company are the 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 - non-resident of the Republic of Kazakhstan shall submit a copy of the audit report and recommendations of the audit organization to the authorized body in the Kazakh and 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 the failure of the bank, bank holding company and organization, in which the bank and (or) the bank holding company are the major participants, to eliminate the violations, influencing the financial condition of the bank or banking conglomerate, specified in the audit report, within three months from the date of receipt by the bank, bank holding company and organization in which the bank and (or) the bank holding company are the major participants of this report, the authorized body shall be entitled to take the following measures to eliminate violations:

      in respect of a bank holding company, an organization in which the bank and (or) the bank holding company are the major participants,- the measures, provided in paragraph 2 of Article 47-1 of this Law;

      in case of failure to eliminate the violations within a year from the date of receipt of this report, the authorized body is entitled:

      in respect of the bank - to revoke the bank’s license on the ground of subparagraph o) of paragraph 1 of Article 48 of this Law;

      in respect of the bank holding company –to take the measures, specified in paragraph 3 of Article 47-1 of this Law.

      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).

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)

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).

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).

59-2. The grounds for restructuring of a bank

      The restructuring of the bank may be conducted in view of the bank’s failure to perform the requirements of individual creditors for the obligations within the time limits, exceeding seven calendar days from the due date of their execution, due to the lack or insufficiency of money of the bank.

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 the event of termination of the bank’s restructuring in relation to the implementation of the measures, specified under the restructuring plan, the bank's liabilities, included in the restructuring plan, shall be deemed fulfilled, and the enforcement proceedings in the court decisions and arbitration courts for such obligations are 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 be entitled to apply to the bank and (or) its shareholders the restricted measures and (or) the sanctions, provided for by the Laws of the Republic of Kazakhstan.

      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).

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).

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) of banks (bank holding companies) may be carried out upon the decision of the general meeting of shareholders (participants) with the permission of the authorized body.

      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).

60-1. Special aspects of voluntary reorganization of banks, if one of the reorganized banks is the bank, in relation of which the restructurisation was conducted in accordance with this Law

      1. Upon affiliation of a bank to the other bank, if one of reorganized banks is the bank in relation of which the restructurisation was conducted in accordance with this Law, the shares of affiliated bank shall be acquired to the bank, to which the affiliation is carried out by placement (implementation) of own shares among stockholders of affiliated bank in amount, determined on the basis of the rate of exchange of shares, confirmed at the joint general meeting of stockholders of reorganized banks after its preliminary approval by board of directors of each bank. By this, the provision of Article 83 of the Law of the Republic of Kazakhstan “On joint stock companies”, that is relative to the selling price of shares of affiliated company and price for placement (implementation) of shares of company, to which the affiliation is carried out (as well as the provision on determination, consideration and confirmation of these prices by the bodies of companies) 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.

      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).

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 of antimonopoly legislation due to the proposed reorganization.

      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.)

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).

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.

61-2. A 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 of simultaneous transfer of assets and liabilities of the bank shall be permitted fully or partially in coordination with the authorized body to the individual and (or) legal entities to another (other) bank (banks).

      2. The transaction, defined in paragraph 1 of this Article, may be held by the bank, temporary administration for management of the bank (the temporary administrator of the bank) during the conservation process, by the temporary administration (temporary administrator) of the bank prior to the enforcement of a court decision on the forced liquidation of the bank.

      3. The order of transactions provided for in paragraph 1 of this Article, as well as the types of assets and liabilities to be transferred during this operation shall be defined by the regulatory legal acts of the authorized body.

      4. Transfer of bank’s liabilities in the order, provided in this Article, shall be conducted under the consent of depositors and (or) the bank's creditors. In order to obtain the consent of the depositors and creditors of the bank, the temporary administration (temporary administrator, temporary manager) of the bank shall publish the announcement on the transfer of assets and (or) the obligations of the bank fully or partially. The announcement shall be published in the periodicals, circulating throughout the Republic of Kazakhstan, in the Kazakh and Russian languages.

      The 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 operation on the simultaneous transfer of assets and liabilities of the bank to another bank (banks) or within five calendar days from the date of publication of the announcement - during the operation for simultaneous transfer of assets and liabilities of the temporary administration (temporary administrator, temporary manager) of the bank to the other (s) bank (banks), including the stabilization bank, shall be considered as the consent of the depositor and (or) the lender to transfer obligations.

      5. The transfer of assets and liabilities of the bank, which is under the restructuring, shall be carried out in the frames of the restructuring plan in accordance with the provisions of Chapter 6-1 of this Law.

61-3. Particularities of the transfer of assets and liabilities of a bank that is under the conservation regime, to the stabilization bank

      1. In order to protect the rights of depositors and creditors, the temporary administration of the bank that is under the conservation regime, shall make an offer to the authorized body on a transaction for the transfer of assets and liabilities of the bank to the stabilization bank.

      The authorized body, in order to implement the measures for the transfer of assets and liabilities of the bank that is under the conservation regime to the stabilization bank, shall take a decision on establishment of a stabilization bank and instruct the temporary administration to perform the transaction for the transfer of these assets and liabilities to the stabilization bank.

      Conditions and procedure for the operation on the transfer of assets and liabilities of the bank that is under the conservation process, to the stabilization bank, as well as the types of assets and liabilities to be transferred, shall be defined by the regulatory legal act of the authorized body.

      2. The requirements, set up for establishment and regulation of the banks’ activity, specified in Articles 13, 14, 16, 17-1, 19, 20, 23 - 25, 27, 28, paragraphs 5 and 13 of Article 30, Articles 31, 32, 42 and paragraph 1 Article 43 of this Law and 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 order of establishment, the minimum amount and formation of the equity and authorized capitals of the stabilization bank, the order of management of the stabilization bank, the order of transactions, performed under the specific conditions, the rules for registration of issuance of the shares and cancellation of the authorized shares of the stabilization bank, as well as the order of obtaining a license by the stabilization bank to perform banking and other operations, provided by this Law, shall be established by the regulatory legal acts of the authorized body.

      3. Stabilization bank shall be entitled to perform banking and other transactions, provided by this Law, in accordance with the license of the authorized body.

      Stabilization bank shall not be entitled to perform activities, permitted for the banks by Article 8 of this Law, except for the purchase of the shares or ownership interest in the authorized capitals of legal entities, when the shares and ownership interest in the authorized capitals of these entities, taken as a pledge, are transferred to 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 the assets and liabilities to the stabilization bank, the fulfillment of obligations to the individual and legal entities, except for the obligations on the accrual of interest, shall be suspended for twelve months. The obligations for which the period of performance has come, including the obligations on time deposits of individual and legal entities, the obligations to the Government of the Republic of Kazakhstan and the authorized body, as well as the obligations to the second tier banks, secured by the assets, transferred to the stabilization bank, shall be executed by the stabilization bank. The stabilization bank shall perform the obligations on the current accounts of individual and legal entities.

      5. Prior to the transfer of assets and liabilities of the bank – acquirer, in consultation with the authorized body, the stabilization bank shall have the right to exchange the previously transferred asset to another asset of the bank that is under the conservation regime.

      6. The stabilization bank shall transfer the assets and liabilities to the bank- acquirer, defined by the authorized body. The procedure and conditions for the transfer of the assets and liabilities by the stabilization bank to the bank-acquirer shall be established by the regulatory legal act of the authorized body.

      Transfer of liabilities of the stabilization bank in the order, provided in this Article, shall be carried out under the consent of depositors and (or) the creditors of the stabilization bank. In order to obtain the consent of the depositors and creditors, the stabilization bank shall publish the announcement on transfer of assets and (or) the obligations of the stabilization bank to the bank -acquirer. The announcement shall be published in periodicals, circulating throughout the Republic of Kazakhstan, in the Kazakh and Russian languages.

      The absence of a written objection from the depositors and (or) creditors of the stabilization bank within five calendar days from the date of publication of the announcement shall be considered as the consent of the depositor and (or) the lender to transfer the obligations.

      For the purposes of this Law, the bank-acquirer shall be the bank with which a contract is concluded for the simultaneous transfer of assets and liabilities of the stabilization bank.

      7. The assets, transferred to the bank (banks) during the operation of simultaneous transfer of assets and liabilities of the bank to the other bank (banks) in the order, provided by this Article and Article 61-2 of this Law, shall not be taken into account when the banks comply with the requirements of Article 42 of and paragraph 1 of Article 43 of this Law within two years.

      8. According to the decision of the authorized body, the stabilization bank shall terminate its activities after the complete transfer of the received assets and liabilities to the bank- acquirer in the manner and under the conditions, provided by the authorized body.

      9. According to the decision of the authorized body all the shares of the stabilization bank may be sold to the investor under conditions that guarantee the capital increase of the stabilization bank and its functioning in accordance with the legislation of the Republic of Kazakhstan.

      Acquisition of the shares of the stabilization bank by the investor shall be carried out in the order and under the conditions, stipulated by the legislation of the Republic of Kazakhstan.

      Since the acquisition of the shares of the stabilization bank by the investor, the bank shall lose the status of the stabilization bank and operate in compliance with the legislation of the Republic of Kazakhstan. Regulation, control and supervision of the activities of the bank shall be carried out in accordance with the requirements of this Law and other Laws of the Republic of Kazakhstan.

      Footnote. Article 61-3 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).

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.)

62. The definition of bank conservation

      1. Bank conservation 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 the bank to restore its financial condition and improve the quality of the work.

      2. A bank shall be subject to conservation under any of the following grounds:

      a) the failure to comply with the equity capital adequacy ratio and (or) the liquidity ratio;

      b) under the grounds, specified in Article 48 of this Law.

      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. The decision of the authorized body on conservation may be appealed by the bank's shareholders, within ten days in court procedures, and the appeal of the decision does not suspend the bank conservation.

      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.)

63. Temporary administration for a bank management (temporary bank administrator)

      1. The temporary administration (temporary bank administrator) shall be appointed by the authorized body from the number of its employees, representatives of the organization, performing a mandatory deposit guarantee, or other entities, meeting the minimum requirements, established in paragraph 2 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).

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).

65. Particularities of the bank management during conservation. The powers of the temporary administration on bank management (temporary bank administrator)

      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 the powers to manage the bank, as well as the rights of the bank’s shareholders for the use of the shares, issued by a given bank, shall be delegated to the temporary administration (temporary bank administrator);

      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, to suspend fully or partially the bank's liabilities on the accepted deposits 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) to transfer assets and liabilities of the bank to another bank (banks) or the stabilization bank in accordance with Articles 61-2 and 61-3 of this Law;

      i) to perform activities provided for in Article 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.)

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).

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).

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.

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).

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).

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.)

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).

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).

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.)

73. The conditions and procedure of compulsory liquidation

      1. From the date of enforcement of the court’s decision on the compulsory liquidation of the bank, the consequences provided for in subparagraphs 1), 2), 4) - 8) of part 2 of paragraph 1 of Article 48-1 of this Law shall occur.

      From the date of enforcement of the court’s decision on the compulsory liquidation of the bank, the powers of the previously acting bank’s bodies shall be terminated, and the executive, and if necessary, other employees shall be dismissed in the order, established by the labor legislation of the Republic of Kazakhstan.

      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).

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).

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).

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. During formation of the liquidation bankruptcy assets, they shall not include the securities, owned by the third parties and entrusted to the bank-custodian for keeping and recording, as well as the pension assets, the assets of the investment funds, the allocated assets of the special financial companies, entrusted to the bank-custodian for recording and keeping. The pension assets, the assets of the investment fund, the allocated assets of the special financial company, entrusted to the bank-custodian for recording and keeping, shall be transferred to another bank at the request of the voluntary pension saving fund, the joint stock investment fund, the special financial company or the management company of a 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).

74-2. Priority of satisfying the claims of creditors of the liquidated bank

      1. The claims of the creditors of the liquidated bank, including in connection with its bankruptcy, shall be satisfied in the order, established in 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. The creditors’ claims, recognized in the due course, shall be satisfied in the following order:

      1) the claims of individual entities are satisfied first to which the liquidated bank is liable for damage, caused to life or health, through the capitalization of the corresponding payment due over time;

      2) the settlements on wages and compensation are satisfied second to the persons who worked under an employment contract, on payment of the debts on social contributions to the State Social Insurance Fund, on payment of child support and mandatory pension contributions, withheld from the wages and the benefits under the copyright agreement;

      3) the claims of the organization, performing the obligatory deposit insurance, are satisfied third, on the amount of the reimbursement, paid by it, on the insured deposits in accordance with the calculations, submitted by the compulsorily liquidated bank;

      4 ) the claims of individuals on deposits are satisfied fourth, including the non-interest on-demand deposits, placed in the liquidated Islamic bank, and the money transfers, as well as the claims on the deposits, implemented at the expense of the pension assets, on the deposits of insurance organizations, implemented at the expense of the funds, raised for "life insurance";

      5) the settlements with non-profit organizations are satisfied fifth, engaged exclusively in charity activities, organizations of veterans of the Great Patriotic War and the organizations of the persons, equated to them, the Voluntary Association of the Disabled of the Republic of Kazakhstan, the Kazakh association of the blind, the Kazakh society of the deaf and the industrial organizations that are owned by these legal entities and established at their own expense, other organizations of the people with disabilities on their funds, available at the bank accounts and placed on deposit;

      6) the claims of legal entities are satisfied sixth for the obligations, secured by a pledge of property of the liquidated bank;

      7) the liabilities for taxes, duties and other obligatory payments to the budget, as well as to repay of loans, allocated from the republican budget are satisfied seventh;

      8) the settlements with other creditors are satisfied eighth in accordance with the legislative acts of the Republic of Kazakhstan.

      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.)

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).

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) when revealing violations in the activities of the liquidation commission of the requirements of the legislation of the Republic of Kazakhstan, the rights and legitimate interests of creditors to issue the written instructions on elimination of the violations by the liquidation commissions, to determine the period of execution of the instructions;

      5) in case of the failure of perform the written instruction by the liquidation commission in the specified timeframes, to take measures, provided for by the legislation of the Republic of Kazakhstan, as well as to apply to the court or the prosecutor's office for protection of the rights and the interests of creditors, protected by the law;

      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.)

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).

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.

      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.)

      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.)

76. (Article 76 is excluded by the Law of the Republic of Kazakhstan dated 29June, 1998 No 236)

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).

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.

      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)

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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