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The AIFC and associated institutions
While the geographic territory of the AIFC stretches across a large expanse of the City of Nur-Sultan’s newly developed “Left Bank’, the Centre is anchored in the ultramodern Expo 2017 site. The AIFC Bodies are headquartered here, including the Astana International Financial Centre Authority (AIFCA), the Astana Financial Services Authority (AFSA), the AIFC Court, the Astana International Arbitration Centre (AIAC) and AIFC Bodies’ Organisations (subsidiaries), such as the AIFC Expat Centre, the Bureau for Continuing Professional Development (BCPD), the Fintech Hub, the Astana International Exchange (AIX).
Additionally, the site is home to brand-new, state-of-the-art business, commercial and conference facilities in which AIFC Participants can maintain premises and carry on their business activities.
The AIFC has many facets. From a legal and regulatory perspective, it is a special regime that governs the activities of AIFC Participants, including the operation of financial markets and the provision of financial and other services. Geographically, it is a large defined zone within the City of Nur-Sultan wherein AIFC Participants may be located and carry on their business activities. Conceptually, the AIFC is a financial hub for Central Asia, the Caucasus, the Eurasian Economic Union (EAEU), the Middle East, West China, Mongolia and Europe.
Objectives of the AIFC are as follows:
• to attract investment into the economy of the Republic of Kazakhstan by creating an attractive environment for investment in the financial services sphere;
• to develop a securities market in the Republic of Kazakhstan and integrate it with international capital markets;
• to develop insurance markets, banking services, Islamic finance, financial technologies, electronic commerce and innovative projects in the Republic of Kazakhstan;
• to develop financial and professional services based on international best practice;
• to achieve international recognition as a financial centre.
The AIFC has been established in Kazakhstan as a cornerstone of the development of the national and regional financial sector. The major strategic objectives of the AIFC include development of the capital markets, asset management, financial technology (FinTech), Islamic finance, private banking and green finance sectors.
Our current regulatory framework provides for the conduct and regulation of several defined regulated financial services activities, including banking, insurance intermediation, dealing in securities, managing and advising on investments and managing collective investment schemes, providing and arranging custody services, providing trust and fund administration services and Islamic banking and financing, among several others.
Insurance intermediation is a current permitted activity, and the AFSA is now building out the framework for the conduct and regulation of insurance and reinsurance activities as well as the framework for conventional banking.
The current framework also provides for market infrastructure activities such as operating an exchange and operating a clearing house.
Additionally, a range of professional services ancillary to financial markets and services can be carried on, including legal, audit, accountancy, consulting and credit rating services.
The general legal framework of the AIFC also provides for the incorporation and registration of entities carrying on a wide range of other corporate and commercial activities, which can thereby also become AIFC Participants.
To adjudicate (a) claims arising out of disputes between AIFC Participants, AIFC Participants and AIFC Bodies and an AIFC Participant or AIFC Body and its expatriate Employees; (b) claims arising out of disputes relating to activities conducted in the AIFC and governed by the Acting Law of the AIFC; and (b) claims arising out of the disputes in which all parties to the dispute agree in writing to the jurisdiction of the AIFC Court.
To provide world class services for settling national and international commercial disputes through arbitration, mediation and other methods of alternative dispute resolution, in accordance with the IAC Arbitration and Mediation Rules 2018 or the rules agreed upon between the parties to a dispute submitted to the IAC.
AIX is a market institution in the AIFC providing domestic and international issuers (both private and government-controlled) and investors a modern well-regulated exchange platform to access the capital markets.
AIFC participation
An AIFC Participant is a legal entity (a company, partnership, etc.) that is registered under the Acting Law of the AIFC. This includes both legal entities formed under AIFC law and foreign legal entities that are “recognized” by the AIFC Registrar of Companies.
The AIFC provides a number of privileges to create favourable conditions for the increase of foreign investment. A special legal regime based on the principles of English common law and standards of leading financial centres operates in the AIFC. A distinctive feature of English common law is the use of a flexible and transparent approach to resolving disputes, as well as the primacy of protecting the rights and interests of investors. The AIFC has an independent regulatory regime that ensures fairness and efficiency of the financial market. One of the motivating factors for AIFC Participants is tax breaks for AIFC Participants from corporate income tax on income received from providing the following financial services in the AIFC:
1) Islamic banking services;
2) reinsurance and insurance brokerage services;
3) investment management services for assets of investment funds, accounting and
safekeeping services for investment funds, as well as services related to issuing,
offering, trading, purchase and redemption of securities of investment funds;
4) brokerage, dealer or underwriting services;
5) any other financial services prescribed by AIFC Acts.
In addition, simplified visa and labour regimes operates in the AIFC. Particularly, AIFC provides visa waiver up to 30 days for citizens of OECD countries, UAE, Malaysia, Singapore, and Monaco. Employees of the AIFC Participants and their family members may obtain visas for periods of up to 5 years with the possibility of a further extension. AIFC Participants may employ foreign nationals and stateless persons for the conduct of activities in the AIFC without obtaining work permits for them. AIFC Participants enjoy simplified visa procedures to obtain, extend, change a category or cancel visa without need to leave a country, and to obtain visa upon arrival. To facilitate the foreign employees’ and their family members’ access to an ample variety of government and non-government services, within the AIFC Authority a specialised centre - the AIFC Expat Centre (AEC) - operating on the principle of a “single window” has been created. Available at the AEC in English are Kazakhstan visa and migration related services, tax-revenue services (e.g. issue of Individual Identification Numbers), a wide range of Government for Citizens Corporation’s government services (such as the issue of digital signatures), notarial and translation services, document copying services, payment terminal services, a call centre, together with guidance on real estate agencies, schools search, information on must-see attractions in Nur-Sultan and other services required or useful for entry and stay by foreign nationals coming and working in the AIFC. Registration of vehicles and issuance of driver's licenses to foreign nationals will be available soon at AEC as well.
AIFC Business Development Office is the first point of contact for all establishments interested in having a presence in the AIFC. We have a dedicated team of Business Development Officers who are at hand to support and guide organisations through the registration process.
Office of the Registrar organised under the AFSA framework but acting independently of the AFSA’s regulatory and supervisory functions, the Office of the Registrar is responsible for the registration of a legal entity in the AIFC, either one established under Acting Law of the AIFC or a branch of a Foreign Company. If the applicant intends to carry on regulated financial services or ancillary activities in the AIFC, it must first obtain appropriate authorisation from the AFSA. However, the entire process is designed as a “single window” concept, to increase efficiency and reduce the burden on applicants to the extent possible. There is an opportunity to proceed the registration process via self-service portal: https://digitalresident.kz/.
A firm can become an AIFC Participant and carry on business activities in the AIFC either via a legal entity established under Acting Law of the AIFC or via a “recognised” branch of a non-AIFC entity.
Subject to limited exceptions, an AIFC Participant must maintain a registered office in the AIFC, which is a location to conduct its principal business activity.
Subject to limited exceptions, a Company/Partnership must at all times, have a registered office registered in the AIFC to which all communications and notices may be addressed. There is no requirement for a minimum number of persons to be employed in the AIFC.
Additionally, residency requirements may apply to persons carrying out certain key functions. For example, if your firm is required under Acting Law of the AIFC to appoint a Money Laundering Reporting Officer, that individual generally must be resident in Kazakhstan. As another example, if you are operating as a Representative Office, you must appoint a Principal Representative who is resident in the country.
However, AIFC law requires that an AIFC Participant must carry on its primary business activities in the Centre – to this extent, it would generally be necessary to have adequate resources, including personnel, located in the AIFC.
Appropriately licensed AIFC Participants can generally offer financial and other services to clients throughout Kazakhstan, however, to the extent that such activities are subject to regulation by an authority such as the National Bank of the Republic of Kazakhstan, we urge AIFC Participants to take independent legal advice as to whether they would additionally require a license or authorisation from that authority.
To the extent that business activities are permitted but not regulated under AIFC law, such activities carried on by an AIFC Participant in broader Kazakhstan may be subject to the general laws of Kazakhstan. For example, a company headquartered in the AIFC and conducting mining operations in Kazakhstan would be subject to regulation by the AIFC Registrar of Companies from a corporate law perspective, but its miningoperations would be subject to the general laws of Kazakhstan.
AIFC Participants may offer services from their AIFC premises into jurisdictions outside Kazakhstan, provided they do so in accordance with the applicable law of such jurisdictions.
Appropriately licensed AIFC Participants can generally offer financial and other services to clients throughout Kazakhstan, including but not limited to by means of branch, however, to the extent that such activities are subject to regulation by an authority such as the National Bank of the Republic of Kazakhstan, we urge AIFC Participants to take independent legal advice as to whether they would additionally require a license or authorisation from that authority.
Please note that AIFC Participant would be subject to applicable (non-AIFC) Republic of Kazakhstan laws and regulations in establishing a branch or office in Kazakhstan outside of the territory of the AIFC.
(a): Appropriately licensed AIFC Participants can generally offer financial and other services to clients throughout Kazakhstan, however, to the extent that such activities are subject to regulation by an authority such as the National Bank of the Republic of Kazakhstan, we urge AIFC Participants to take independent legal advice as to whether they would additionally require a license or authorisation from that authority.
(b): Currently, we consider that an AIFC Participant would be subject to applicable (non-AIFC) Republic of Kazakhstan laws and regulations in establishing a branch or office in Kazakhstan outside of the territory of the AIFC.
(c): Currently no, however, in the future the AFSA hopes to establish so called “passporting” arrangements with other jurisdictions in relation to the provision of financial services.
We recommend that contracts which you enter into, and your terms of business, with your clients make it clear that contracts with, and transactions for, your clients are governed by Acting Law of the AIFC and that this is confirmed in writing by your clients. If the counterparty to the contract is not an AIFC Participant or AIFC Body, the AIFC Contract Regulations will not govern the contract unless this is expressly provided for in the contract. However, provided that applicable law does not otherwise dictate what the governing law of the contract must be the parties can elect to have thecontract governed by the Acting Law of the AIFC, including the AIFC Contract Regulations, by specifying this in the contract.
An appropriately authorised AIFC Participant that qualifies as an Externally Regulated Prudential Investment Firm under AIFC Prudential Rules for Investment Firms can sell units of funds established outside the AIFC into Kazakhstan more broadly (that is, outside of the AIFC), however, such sales would be subject to both AIFC law and the general laws of Kazakhstan.
Generally, to deal in securities in the AIFC, whether as principal or agent, a firm must be a registered AIFC Participant (whether as a legal entity incorporated in the AIFC or as a recognised legal entity) and duly authorised by the AFSA. An AIX membership is required to trade on the AIX as a dealer or broker.
However, there is a pathway for non-AIFC brokers authorized to carry on trading in their respective home jurisdictions to obtain AIX membership through recognition by the AFSA and becoming a “Recognised Non-AIFC Member” or “RNAM”. An RNAM is not required to be incorporated in the AIFC to become an AIX member and trade on the exchange.
(For further information on these issues see Question 46)
The provision of legal services is a category of “ancillary services” which is provided for under the AIFC legal and regulatory framework. A partnership or other body corporate must be authorised by the AFSA in order to carry on this activity in the AIFC. A full description of this activity is set out in Schedule 2 to the AIFC General Rules.
From a legal entity perspective, the AIFC framework provides for the recognition of non-AIFC general partnerships, limited partnerships and limited liability partnerships. However, an applicant is required to provide a copy of the entity’s “current certificate of registration in its place of origin, or a document of similar effect, certified by the relevant authority in that jurisdiction”. As such, a threshold requirement is that the partnership must be legally recognised in its home state as such.
It is also worth noting here that, in relation to the AIFC Court, there are extremely wide rights of audience. All lawyers with a professional lawyer or advocate practising certificate from anywhere around the world are generally eligible to apply to the AIFC Court Registry to represent parties in cases at the AIFC Court. Furthermore, appearing before the AIFC Court does not, by itself, also require a lawyer or firm to be authorised by the AFSA.
Regulatory Questions
The legislation of the Republic of Kazakhstan on currency control is fully applicable subject to exemptions established by the Constitutional Statute of the Republic of Kazakhstan on AIFC. In particular, the currency regimes established by the Law of the Republic of Kazakhstan “On Currency Regulation and Currency Control” do not apply to currency operations conducted by AIFC Participants in its territory.
At the same time, currently a legal act on the conditions and the procedure for conducting foreign exchange operations related to the provision of financial and professional services in the AIFC is being developed.
AFSA has established the Fintech Lab in the AIFC as a space in which firms can Test and/or Develop the FinTech Activities without being immediately subject to the full set of regulatory requirements under the AIFC Financial Services Framework Regulations and Rules made thereunder.
FinTech Lab is designed to allow firms to deliver effective competition in the interests of consumers by reducing the time, and potentially the cost, of getting FinTech to market, enabling greater access to the market for innovative firms, including start-ups, AFSA collaborating with the firms to ensure that appropriate consumer protection safeguards are built into their FinTech Activities and also enabling FinTech Activities to be Tested and/or Developed.
Firms considering the FinTech Lab option should refer to the AIFC Financial Technology Rules, which is available on the AFSA website (www.afsa.kz).
The Astana International Financial Centre AML Rules, which are administered by the AFSA, require AIFC financial institutions and certain other AIFC Participants to maintain policies, procedures and controls to ensure that they are not unwittingly being used by the clients and counterparties to facilitate money laundering or other types of financial crime. These requirements, which the AFSA has authority to enforce through the imposition of fines and other disciplinary measures, are in line with and complement the broader Kazakhstan AML/CTF regime. Kazakhstan's criminal legislation, including the AML Law and the Criminal Code of the Republic of Kazakhstan, applies to all AIFC Participants.
Article 4 of the Constitutional Law of the Republic of Kazakhstan on the AIFC provides an exhaustive list of the areas of jurisdiction of the AIFC. Issues not included in this list are governed by the acting law of Kazakhstan, and the resulting contradictions and disputes are resolved within the framework of the judicial system of Kazakhstan. Tax disputes of the AIFC Participants are considered by the courts of the Republic of Kazakhstan.
AIFC Conduct of Business Rules (COB), AIFC Prudential Rules for Insurance Intermediaries and AIFC Prudential Rules for Investment Firms as well as AIFC Insolvency Regulations and Rules and AIFC Anti-Money Laundering, Counter – Terrorist Financing and Sanctions Rules ensure that the behaviour of firms operating in the AIFC contributes to fostering and maintaining the integrity of financial markets in the AIFC.
According to AIFC Companies Regulations 2017, Directors of a Company must ensure that, within 6 months after the end of each financial year of the Company, the accounts for that year are shall be prepared and approved by the Directors and examined and reported upon by an Auditor.
Unless otherwise provided in its Articles of Association, a Private Company and its Directors are not required to provide examined and reported upon by an Auditor accounts, if the Company, during the current year for which the accounts are being prepared and, if the Company has existed for more than 1 financial year, the year immediately before that financial year, has an annual turnover of not more than U.S. $5,000,000 and an average of not more than 20 Shareholders.
Employment
AIFC Employment Regulations 2017 provide minimum employment standards, and do not prevent the Employer from providing more favourable terms and conditions of employment when hiring an Employee than those required under these Regulations.
An AIFC Participant does not have to comply with the requirements of the Labour Code of the Republic of Kazakhstan since labour relations are governed by the AIFC Employment Regulations 2017. An AIFC Participant may comply with the LabourCode of the Republic of Kazakhstan as long as it does not contravene with these Regulations.
It must be noted that the AIFC Employment Regulations 2017 provide minimum employment standards and do not prevent the Employer from providing morefavourable terms and conditions of employment in the internal rules of the Employer.
Any dispute arising under these Regulations shall be subject to the jurisdiction of the AIFC Court.
In accordance with the paragraph 1 of Article 5 of the Constitutional Statute of the Republic of Kazakhstan on the AIFC “Monetary obligations of AIFC Participants shall be expressed and shall be performed in the currency envisaged by the contract”. Therefore, an AIFC Participant and its employees may choose Kazakhstani Tenge or any other currency for expressing and performing their obligations under the Contract of Employment.
Legal
Yes, it is possible. AIFC Contract Regulations 2017 state that the Regulations govern contracts made between AIFC Participants, AIFC Bodies and AIFC Participants, and AIFC Bodies, unless otherwise expressly provided in a contract. If a party to a contract is not an AIFC Participant or AIFC Body, the Regulations do not apply to the contract unless expressly provided in the contract. Any contract governed by the Regulations is subject to the jurisdiction of the AIFC Court unless otherwise expressly provided in a contract.
Yes. Parties who have no relation to the AIFC can agree or “opt-in” to bring a case to the AIFC Court or to the IAC provided all of the parties to that case agree to do so in writing. The agreement to do so can happen at any time of the contractual relationship, whether before or after the dispute arises.
A: Yes. AIFC Court judgments are enforceable in Kazakhstan on the same terms and conditions as judgments of the Kazakhstan courts. Parties who wish to enforce an IAC arbitral award in Kazakhstan can apply to the AIFC Court for an execution order and subject to obtaining that execution order the arbitral award will be enforced in Kazakhstan on the same terms and conditions as judgments of the Kazakhstan courts.
B: Enforcement of AIFC Court judgments in the Commonwealth of Independent States (‘CIS’) can currently happen in accordance with the provisions of the Minsk Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters (22 January 1993 as amended 28 March 1997), the Kishinev Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters (7 October 2002), and the Kiev Agreement between the CIS Countries on the Procedure for Settlement of Disputes Associated with Commercial Activities (20 March 1992).
AIFC Court judgments are also recognized and enforced in various other countries pursuant to bi-lateral treaties ratified by the Republic of Kazakhstan (including Azerbaijan, China, Georgia, India, the Kyrgyz Republic, Lithuania, Mongolia, North Korea, Pakistan, Turkey, Turkmenistan, United Arab Emirates, Uzbekistan).
Judgments of the AIFC Court may be enforced in foreign countries on the basis of reciprocity, without requiring Government or Court agreements, including in the UK, China and the US.
IAC arbitration awards are recognized and enforced internationally in accordance with the provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958 (‘the New York Convention’)) in 159 countries.
No. The requirements of the Kazakhstan national law on arbitration do not apply to arbitrations conducted under the AIFC Arbitration Regulations 2017. See section 7 (Exemption from Legislation) of the AIFC Arbitration Regulations 2017. However, parties should note when one of the parties to an arbitration is a Kazakh state party, the provision in the Kazakh Arbitration Law [Kazakh national law on Arbitration] requiring consent to be given by the Kazakhstan authorities will still be applicable to them.
The parties to a dispute at the IAC may agree in writing which procedural rules apply to an arbitration or mediation at the IAC. Arbitration or mediation procedural rules of Kazakhstan will only apply at the IAC if the parties to the dispute agree in writing that such shall apply in their proceedings at the IAC.
According to subparagraph 3) of paragraph 1 of Article 4 of the Constitutional Statute of the Republic of Kazakhstan On Astana International Financial Centre dated 7 December 2015 (the “Constitutional Statute”), the Acting of Law of the Republic of Kazakhstan applies in part to matters not governed by the Constitutional Statute and AIFC Acts. The abovementioned provision of the Constitutional Statute does not require development of a specific AIFC Act.
In addition, practical implementation of the Article 4 of the Constitutional Statute is sustained and supplemented by AIFC Regulations on AIFC Acts 2017 adopted by the Governor of the AIFC on 20 December 2017.
AIFC Regulations on AIFC Acts 2017 determine the hierarchy of the Acting Law of the AIFC, development, approval and adoption of the AIFC Acts. In particular, section 40 (Application) of AIFC Regulations on AIFC Acts 2017 determines descending levels of relevant jurisdiction to be ascertained to apply relevant law on civil or commercial matters, the rights and liabilities between Persons in any civil or commercial matter, including questions of application of the acting law of the Republic of Kazakhstan.
Tax
Corporate income tax: Until 1 January 2066, AIFC Participants are exempt from corporate income tax on income received from providing the following financial services in the AIFC:
1) Islamic banking services;
2) reinsurance and insurance brokerage services;
3) investment management services for assets of investment funds, accounting and
safekeeping services for investment funds, as well as services related to issuing,
offering, trading, purchase and redemption of securities of investment funds;
4) brokerage, dealer or underwriting services;
5) any other financial services prescribed by AIFC Acts.
It should be noted that the list of other financial services can be found in the following AIFC Acts: AIFC Financial Services Framework Regulations (Schedule 3: Market Activities) and AIFC General Rules (Schedule 1: Regulated Activities). The given Acts are posted on the AFSA website (http://afsa.kz/legislation).
Fund (LP, Investment company) is exempt from CIT and VAT by Tax Code, if registered according to AIFC regulations
In addition, until 1 January 2066, AIFC Participants are exempt from corporate income tax on income received from legal, audit, accounting and consulting services provided to AIFC Bodies as well as to AIFC Participants that provide financial services.
For the purposes of exemption from corporate income tax, AIFC Participants must keep separate accounting of incomes that are exempt from corporate income tax and those that are subject to taxation in accordance with “Regulations on keeping separate accounting of income subject to exemption of corporate income tax and subject to taxation, and expenses subject to allocation to deductions by the participants of Astana
International Financial Centre”. These Rules are posted on the AIFC website under “Tax Administration” section.
Personal income tax: In addition, until 1 January 2066, foreign nationals who are Employees of an AIFC Participant that provides financial services and auxiliary services, or of an AIFC Body, are exempt from personal income tax on income received under their employment contracts with the AIFC Participant or AIFC Body.
Property tax and land tax: AIFC Bodies, and AIFC Participants that provide financial services and auxiliary services, prescribed by AIFC tax regime, are exempt from property tax and land tax for facilities located in the AIFC.
Personal income tax, corporate income tax: Until 1 January 2066, natural and legal persons are exempt from individual and corporate income tax on income received from the following:
1) profits from the sale of securities listed, on the day of their sale, on the official list of the Stock Exchange;
2) profits from the sale of shares or stakes in the capital of AIFC Participants that are legal persons registered under the Acting Law of the AIFC;
3) dividends and interest from securities listed, on the day of their distribution, on the official list of the Stock Exchange;
4) dividends from shares or stakes in the capital of AIFC Participants that are legal persons registered under the Acting Law of the AIFC.
The AIFC tax regime is determined by the Tax Code with subject to exemptions, provided by Article 6 of the Constitutional Statute. Key exemptions are tax benefits for corporate income tax payment for AIFC Participants that provide financial and auxiliary services, list of which is stated in Article 6 of the Constitutional Statute. In addition, the Constitutional Statute provides benefits for natural and legal entities on corporate tax for investment income, received from activities in the AIFC. In particular, the following income in the form of interest, dividends, and capital gain from the sale of securities, listed on the official list of AIX. Also, income in the form of dividends and capital gain from the sale of shares or stakes in the capital of AIFC Participants that are legal entities registered under the Acting Law of the AIFC.
In other cases, taxation is carried out in accordance with requirements of the tax legislation of the Republic of Kazakhstan
Astana International Exchange (AIX)
AIX is a market institution in the AIFC providing domestic and international issuers (both private and government-controlled) and investors a modern well-regulated exchange platform to access the capital markets.
The main requirements for listing can be found in the AIX Business Rules published on AIX’s website. Key requirements include:
The Applicant must be duly incorporated and validly existing in Kazakhstan, AIFC or other jurisdiction;
Audited financial statements covering three years for equity issuers (at least one year should be in net profit), two years – for debt issuers, one year – for issuers in segment REMS; prepared in accordance with IFRS, US GAAP, Swiss GAAP or other standards acceptable to AFSA; if applicant has subsidiaries, the financial statements must be consolidated for the applicant and its subsidiary undertakings;
If the latest audited annual financial statements are older than 9 months as at the expected listing date, then the applicant must produce interim financial statements for at least first 6 months period;
Minimum public float of at least 25% for issuers of equity securities and 15% for REMS equity issuers (AIX may accept a lesser percentage if it considers that the market will operate properly with a lower percentage in view of additional factors);
A minimum market capitalization of the securities, sought to be admitted to listing on AIX, of at least $1M for issuers of equity securities and $500K for issuers of debt securities at the time of listing.
AIX Business Rules provide customized requirements for different categories of issuers (such as funds, mining companies, public sector issuers and companies eligible for pre-IPO listing), segments (listing on the Main Market, Regional Equity Market Segment, the Belt and Road Market of AIX), instruments (shares, depositary receipts, corporate bonds, green bonds, sukuk, exchange traded notes, units, etc.). Further information on these listing particulars is set out on the AIX website.
An issuer of debt securities (e.g, bonds) to be listed may be a legal entity in any form (e.g. a limited liability partnership) subject to its home jurisdiction.
An issuer of equity securities must be incorporated in a legal form allowing free transferability of its equity securities (e.g. a company limited by shares). In order to have equity securities listed on AIX, a Kazakhstan-incorporated limited liability partnership would need to convert into a Kazakhstan joint stock company or establish a corporate holding company (potentially incorporated in AIFC) whose securities would be listed.
For its securities to be eligible for listing on the AIX, the issuer does not need to be established in the AIFC nor otherwise to be an AIFC Participant. However (1) if the issuer is carrying on regulated activities in the AIFC it needs to be an AIFC Participant and (2) if the issuer is not an AIFC Participant (e.g., not incorporated or recognised in the AIFC) it will not be eligible for certain benefits available only to AIFC Participants.
An AIX listing (on a sole or dual basis) allows eligible Kazakhstani and international companies as well as state bodies and international financial organizations to raise funds via public or private placements by providing them access to local and international retail and institutional investors. The main benefits arising out from AIX listing include, but not limited to:
• The special legal/regulatory regime based on the principles of common law;
• Tax benefits for investors – no Kazakhstani tax on capital gains and/or
interest/dividend payments on AIX listed securities;
• Issue and settlement in any currency;
• Euroclear accessibility;
• Issuers must comply with disclosure requirements, which make company more transparent for investors, and with international-standard continuing obligations for investor protection and effective operation of the market.
The prospectus requirements are set out in the AIFC legislation (the AIFC Market Rules) and AIX Business Rules (Prospectus Rules).
Prior to listing on the AIX, applicants are recommended to consult with their financial adviser on issues pertaining to the investor education and potential demand for the proposed securities and their terms.
Each applicant for listing on AIX and each listing will be considered on a case-by-case basis. In the case of a newly established entity AIX may consider other material factors (e.g. history and performance of an underlying or parent business, nature of an applicant’s business). As such, as an example, newly established subsidiaries or newly established holding companies of existing business (e.g. a newly established company established in the AIFC as the parent company of a Kazakhstan based group of operating companies) may be able to be eligible for listing taking into account various other circumstances.
Audit companies engaged by an issuer to audit financial statements shall meet requirements as to independency, competence and qualification. AIX will accept auditors who are Ancillary Service Providers licensed by AFSA (list is available in the public register on AFSA’s website) or if such auditors meet AIX requirements for auditors (available upon request at listings@aix.kz)
Currently, private and institutional investors are able to participate in initial offerings and secondary trading of listed securities via AIX trading members. As at July 2021, there are 29 brokers participating in AIX’s trades, including almost all major Kazakhstani brokers and 12 international brokers (Chinese and European).
STEP 1: AFSA
Option 1 – AIFC Participant (entities incorporated in AIFC and operating in AIFC)
1) Registration:
a) incorporation of a new legal entity/subsidiary in the AIFC (e.g., as Private Company or Limited Liability Partnership); or
b) the establishment of a “branch” in the AIFC (e.g., a Recognised Company or a Recognised LLP).
2) Authorisation and Supervision:
In order to conduct Regulated Activities of Dealing in Investments as Principal and/or Agent, Arranging Deals and Advising on Investments, the applicant needs to obtain a licence from the AFSA.
Option 2 – Recognition (entities incorporated outside AIFC and operating in AIFC)
Recognized Non-AIFC Member (RNAM) whereby the AFSA will recognize the broker’s home jurisdiction licence without requiring a legal presence in the AIFC.
STEP 2: AIX
Contact the AIX Markets team as the first step at markets@aix.kz. The AIX Markets team will provide you with an overview of the application process, which consists of four main steps:
1) application
2) due diligence by AIX Regulation & Compliance
3) Technical connectivity testing
4) signing of a membership agreement and start of trading.
Please contact any of the AIX trading members to open a brokerage account and trade in any securities listed on AIX (contact details of AIX trading members are available on the AIX website). Kazakhstani investors may also download “Tabys” application at AppStore or PlayMarket to subscribe for Exchange Traded Notes admitted to trading on AIX directly from the ETN Issuers.
Yes. A Kazakhstani company which intends to be listed on a foreign exchange can satisfy dual listing requirements under Article 22-1 of the Kazakhstan Law on Securities Market by being listed and offered on AIX. In that case this company would be considered as compliant with this statutory requirement. In addition, if an issuer decides to choose AIX as a single venue for listing equity securities, it is possible to list on AIX both shares and GDRs.
Pre-Registration
Yes, a company with non-financial busines activity can incorporate a subsidiary or a branch in the AIFC
Only when registering a Public Company there is a requirement for share capital (100 000 USD), when registering other organisational-legal forms there is no requirement for share capital, but the share capital must be more than 0
No, an Applicant could proceed the registration process online via digitalresident.kz or if the Applicant intend to proceed the registration on paper based form the finilised application form could sent by e-mail
Yes, an Applicant could apply for a licence for several types of activity, however a company couldn’t obtain a licence with conflicting activites.
Yes, an Applicant must disclose Ultimate Beneficial Owners in accordance with AIFC Acts. Please see AFSA Guidebook on Ultimate Beneficial Owners.
There are no differences in the registration process of a resident and a non-resident of Kazakhstan.
Yes, there is no such restriction in the AIFC Acts. But you should consider Law of the Republic of Kazakhstan on state property, article 172.
No, AIFC Participants could provide their services throughout the territory of Kazakhstan and the world.
Registration
All application forms should be filled in by the applicant, but AIFC team can assist you. Another option is to apply to the ASP companies which can help you with filling application forms
Yes, but starting from September, 2020 registration can be done also through the self-service portal www.digitaresident.kz that is more convenient.
Yes, but you as a Shareholder will need to go through the process of verification using a link which will come to your e-mail. The same process for Directors and CEO.
Depositing money is not an obligatory procedure for Private companies. But when it comes to postregistration procedures such as liquidation there could be problems.
There is no strict obligation to have share capital for NPIO.
Ultimate Beneficial Owner is natural person who owns or controls (directly or indirectly) Shares in the share capital of the company or other Ownership Interests in the Relevant Person of at least 25%; owns or controls (directly or indirectly) voting rights in the Relevant Person of at least 25%; owns or controls (directly or indirectly) the right to appoint or remove the majority of the Directors of the Relevant Person; or has the legal right or through other ownership interests to exercise, or actually exercises, significant control or influence over the activities of the company; UBO Chart is a scheme which shows owners of a company to be registered in the AIFC, UBO Chart should reflect all individuals holding shares of that company.
Yes, one person can be a Director, CEO and Authorised person as well. Director and CEO have duties and rights to manage company after registration, Authorised person is responsible for any communication with AFSA.
This option is now not using. All applicants fill in application forms for coworking zone which is not free anymore. 3 options: 15 000 tg – legal address, 30 000 tg – non-fixed coworking allocation, 40 000 tg – fixed coworking allocation. ATTENTION: coworking options are subject to change that is why it is important to check with Property.
Private company is not obliged to issue shares (obligations), “share capital” is used to identify ownership of the company for each participant. For example a company decided to announce it’s share capital $100 and there are 100 shares, meaning that 1 share is for $1. Value of a share is share capital divided on amount of shares.
AIFC Companies Regulations and AIFC Companies Rules do not regulate the process of issuance of shares. There are no any specific procedures as well. Therefore, these processes are internal processes of a Company and may be defined and conducted in accordance with its Articles of Association or other internal document of a Company.
You should adopt bespoke Articles of Association on the Registration stage. If you want to edit Standard Articles of Association after registration you will need to fill in application forms: AIFC Notice of Amendment of Articles of Association. Be advised that the Articles of Association must not contain a provision that is inconsistent with AIFC Companies Regulations or AIFC Companies Rules.
Yes, all documents submitted to AFSA should be translated to English and notarized, or signed by Director/Authorised Person.
Registration as a VAT payer can be voluntary and mandatory. It is mandatory to register if you have reached the maximum turnover - 30,000 MCI (87,510,000 tenge in 2021).
A Representative Office must at all times have a Principal Representative who: (a) is resident in Kazakhstan; and (b) has satisfied the AFSA as to his/her fitness and propriety.
Not less than U.S. $100,000 at any time.
The resolution is duly adopted by the Board of Directors or the shareholders and signed by them, depending on the type of resolution. Resolution of BoD is signed when there is at least one shareholder body corporate and Resolution of Shareholders is signed when shareholders are natural persons.
You can become an AIFC member by opening a branch/representative office (recognized company) or registering a new legal entity (private company).
Since Recognized GP is a partnership formed outside of the AIFC and recognized by the AFSA to conduct business in the AIFC jurisdiction, the number of partners should be as many as there were at the time of incorporation of partnership.
If we are talking about the GP in AIFC, must include 2 or more Persons called general partners.
Offline payment can be made at any bank. Online payment should be made using any credit or debit card.
After completing and sending the forms, AFSA can send back your case for revision, also you can enter the Communication tab and write your request.
Post-Registration
1. Open a bank account. You need to provide notarized translation of the constituent documents including Articles of Association/charter/partnership depending on organisational-legal form of an entity;
2. Obtain EDS (ЭЦП) at Expat Center or Community Service Centres (ЦОН).
3. Obtain a stamp (optional). However some state bodies and banks might require it.
4. Ensure adequate staffing. In order to maintain viability of business, establish workforce capable of doing business in English and covering legal, tax matters.
5. Register on State Revenue Committee website and create taxpayer’s account. Requires EDS.
6. Get familiar with Guidance on Filing Obligations of AIFC Participants to the Registrar of Companies. Should be read together with the relevant legislation.
AIFC Participants must notify the Registrar regarding the changes in registered details. Follow the Guidance on Filing Obligations of AIFC Participants to the Registrar of C ompanies.
Director. Authorised signatory (unless expressly provided in constituent docs).
Chief Executive Officer must be a natural person who has an Individual Identification Number (IIN).
No, AFSA does not monitor the participant’s contract. It is only required to register Share Pledge Agreement to date.
No, the Contracts with third parties (clients, suppliers, partners) can be concluded in any language, but it must be provided in English or certified translated into English in case of litigation in AIFC Court.
No, the employee contracts are operational documents and mustn’t be registered in AFSA. It is recommended to register employee contracts in The Single Accounting System for Employment Agreements (ЕСУТД). Employee Contracts are drawn up in accordance with AIFC Employment Rules for all AIFC Participants. All other Civil Contracts must be compiled in accordance with AIFC Contract Regulations.
No, Rules and Regulations may change over time without notification. Participants is responsible to ensure its business is updated as to any changes. Information can be found on the website including but not limited to legal framework.
Website: afsa.aifc.kz (legal framework - public consultations - AFSA)
Yes, in this case, the participant sends all necessary documents at the same time, and the total price of all procedures will be 50 USD.
No, the original versions must be provided to the Office of the Registrar. (Because of coronavirus pandemic the Office of the Registrar temporarily accepts scan copies)
No, all supporting documents must be in English language or accompanied by an appropriate translation certified to the satisfaction of the Registrar of Companies.
Constitutional Statute of the RoK on the AIFC, Article 15.Language of the AIFC.
No. If AIFC Participant is engaged in regulated activities, it must contact its Relationship Manager (or send an email to supervision@afsa.kz) for making necessary arrangements in relation to the Post-registration application and obtaining a required approval (if necessary).
Yes, other legal entity may pay invoice for a participant, in this case, there is must be indicated BIN (or bank requisites for non-residents) of the payer in the request for invoice for post-registration procedure.
USD 50
Yes. A participant must pay an appropriate fee regardless of whether MoJ is notified. All prescribed fees payable to AFSA are set out in AIFC Fees Rules, where post-registration fees are listed in Schedule 5-1.
Term includes but not limited to:
1) Request for extract of shareholders’ registry;
2) Request for extract of directors’ registry;
3) Request for extract of Ultimate Beneficial Owners registry;
4) Request for extract from Public Register;
5) Certificate of a good standing.
Processing inquiries including issuance of certificates, extracts - 20 USD.
Schedule 1, Administrative services payable to the Registrar of Companies, AIFC Fees Rules
Yes. If a natural person is a resident of RoK, then IIN and copy of ID (both sides) must be provided. If a natural person is a non-resident of RoK, then passport copy must be provided.
Yes. If a body corporate is a resident of RoK (AIFC Participants are residents of RK), then BIN must be provided. If a body corporate is a non-resident of RoK, then bank requisites must be provided.
If a payer (natural person/body corporate) is a resident of RK (AIFC Participants are residents of RK), then the invoice must be paid in KZT only, non-Resident can pay in USD.
Provided that full application package is submitted, approximately 5 business days. For more information on the process of making post-registration application, refer to Guidance on Post-registration applications to the Office of the Registrar of Companies (https://afsa.aifc.kz/post-registration/ (Afsa.aifc.kz - registration – post registration)
Please find the list of Ancillary Service Providers (with their contacts) on the https://digitalresident.kz - Ancillary Service Providers
A concept of coworking zone has been established as a response to a market demand and helps to overcome operational challenges of our valuable participants. AIFC offers coworking zone as a legal address.
Upon registration process (once a company obtains BIN), a company has to sign a sublease agreement, which is put in place for contracting terms and conditions between the “Lessor” (AIFC Authority JSC) and the “Party” (a prospect). A process of obtaining of a legal address is issued in turn, as follows:
1. A company completes a form for allocation at a coworking zone and sends it along with a certificate of incorporation to us, ABC Participant Support Department;
2. ABC Participant Support Department signs it and passes it over to AIFC Property Department;
3. AIFC Property Department sends a commercial proposal to a representative of a company;
4. AIFC Property Department sends a signed and approved sublease agreement to a company;
5. Once both sides sign a sublease agreement, a company keeps one copy for their own relevant purposes.
It is a sole responsibility of a company to have a registered office within the AIFC territory upon expiration of a sublease agreement.
AIFC Companies Regulations, Section 24. Registered office.
A legal address is valid for duration of a sublease agreement and a company shall be solely responsible for allocation within the AIFC territory upon expiration of a sublease agreement and a legal address.
AIFC Companies Regulations, Section 24(1). Registered Address
A concept of coworking does not require a full-time presence of a company and therefore passing tax inspection, which is also convenient for VAT payers. The Tax Code RoK, Article 558: Tax Inspection, subparagraph 4, in the event of a tax inspection resulting in actual absence of taxpayers (tax agents) in places of their location specified in the registration details, the Tax Service Authority shall forward to such taxpayer a notice for the confirmation of location of the taxpayer (tax agent).
Yes. If a company changes its office location, then it must undergo post-registration procedure: change of registered address. A company may change the address of its registered office by giving notice to the Registrar. The change takes effect upon the notice being registered by the Registrar. There is an associated fee of 50 USD.
AIFC Companies Regulations, Section 24 (3-1).Registered office.
Fees Rules, Schedule 5-1: Administrative service fees payable to the Registrar of companies.
AIFC Participants are obliged to complete a specified number of filings to the Registrar of Companies on an annual basis depending on the level of turnover and organisational-legal form. Follow the part 2, Annual filings, Guidance on Filing Obligations of AIFC Participants to the Registrar of Companies.
If AIFC Participant is engaged in regulated activities, it has to submit annual filing to the (1) Registrar of Companies as per the mentioned above and to (2) Financial Conduct/Prudential Division/Capital Markets depending on license.
7000 KZT for 1 sq.m. (rent charge 5,500 KZT per sq. m., maintenance fee 1,500 KZT per sq. m.)
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You may contact AIFC Property (property@aifc.kz) to book viewings of coworking zones and offices.
AIFC Participants must file tax reports in accordance with Article 6 of the Constitutional law of the Republic of Kazakhstan on AIFC. To get more information on Tax Administration, Separate Accounting and other requirements please follow the link. Tax reports must be submitted to the Department of State Revenue of Yessil district.
Using electronic digital signature (ЭЦП) you register and create an account as a taxpayer on https://kgd.gov.kz/
Participants can obtain EDS (ЭЦП) by visiting any community service center (ЦОН) or Expat Center (visits by appointment).Only residents may apply for EDS via eGov portal.
AIFC participants may open a bank account in any bank. The requirements are defined by the selected bank.
AIFC Participants have to send share pledge agreement to the Security Registrar (b.khamitov@aifc.kz) and make payment of fees in accordance with AIFC Security Rules (Schedule 1)
You need to contact Expat Center via expat@aifc.kz.
AIFC Participants must notify only the Registrar by filing the applications. Changes in DoJ are handled by the Office of the Registrar.
Funds
Firstly, fund management companies at AIFC enjoy liberalized prudential norms, including:
- Lower base capital requirements
- Lower threshold for professional investors
- No risk-based capital requirements
- No professional indemnity insurance
In addition, costs of managing business are on average 60-100% lower as compared to other popular jurisdictions, e.g. Singapore or Luxembourg.
There are also lower staffing and competence requirements, such as experience of key management personnel and number of employees (directors, executive directors, representatives resigning in jurisdiction)
Yes, it is necessary to authorise a fund management company, because managing a CIS (collective investment scheme or fund) is a Regulated Activity. In order to conduct Regulated Activity at AIFC, if that activity is carried on by way of business, the management company must be authorised (receive a license).
However, the management company is not considered to be carrying out the Regulated Activity in respect of acting with or for a Group of affiliated companies, e.g. in respect of Single Family Offices. Therefore, if a fund management company is managing money of a group of related-party companies and they altogether belong to the single Group, fund management company is not obliged to receive a license for managing funds.
No, you do not need to obtain a license for a fund. You must obtain a license for a fund management company only.
There are two possible legal forms of the fund at AIFC: investment company (either open-ended or closed-ended) and limited partnership.
Investment companies can create new shares and redeem existing shares much more easily than traditional companies. An Investment Company must be formed, and is to operate, for the sole purpose of conducting the business of a fund.
A Limited Partnership is comprised of a General Partner and Limited Partners, where the Fund Manager is the General Partner and clients of the Fund are Limited Partners.
The Fund Management Company can be in any form: either in the form of a new legal entity (e.g. Private Company, General Partnership, Limited Liability Partnership) (or subsidiary), or in the form of a branch of an existing entity outside of AIFC jurisdiction, which is regulated by a financial regulator (e.g. Recognised Company, Recognised General Partnership, Recognised Limited Liability Partnership)
Non-Exempt Fund is any Collective Investment Scheme, the units of which are offered in the AIFC. It provides greater protection to retail investors through detailed regulation in line with IOSCO Standards.
Exempt Fund is a Collective Investment Scheme, the units of which are offered in the AIFC only by way of a private placement: first, to persons who are Professional Clients; and second, in minimum subscription amounts of US$50,000.
Exempt funds which are managed by Domestic fund managers are not required to be registered in accordance with CIS Rules, as the AFSA must only be notified by Fund Manager of its intention to manage an Exempt Fund. A Fund manager may also elect the arrangement to be not regulated as a fund if each unitholder / investor is a company in the same group as a Fund manager.
Self-managed Fund is a collective investment scheme in which an external fund manager is not appointed and in such case the board of directors assume the fund management functions, but the fund must be an Exempt Fund. It is also prohibited from managing other funds.
In case of a non-exempt fund, the base capital requirement for a fund manager is US$50,000.
In case of an exempt fund, the requirement value differs according to the fund management function: the requirement for a domestic fund manager is US$50,000, the requirement for the Self-managed Fund is US$300 000. It is also important to note that the Fund has an appointed Eligible Custodian unless the appointment of an Eligible Custodian is not required due to the nature of the Fund and the type of assets which it holds. Otherwise, the base capital requirement increases to US$500,000.
Approved individuals can take the following positions in the company:
- Senior Executive Officer (CEO)
- Finance Officer
- Compliance Officer
Designated individuals can take the positions below:
- MLR Officer (can be combined with compliance officer)
- Senior Manager
- Risk Manager
- Internal Auditor
If the complexity of the business requires, the designated individuals can take the following positions as well:
- Responsible Officer;
- Any other related positions.
Subject to limited exceptions, it is necessary to maintain a registered office in the AIFC, which is a location to conduct its principal business activities. It is also important to maintain communication via email.
An individual may perform more than one Controlled Function. However, there should be proper segregation between the business and control responsibilities.
Tax benefits for Regulated Activities
Fund Management Company (incorporated in the AIFC) is exempted from corporate income tax on income received from providing its management services in the AIFC (until 1 January 2066).
Fund (LP, Investment company) is exempt from CIT and VAT by Tax Code, if registered according to AIFC regulations.
Tax benefits for all activities
Until 1 January 2066 individuals and legal entities (incl. both Fund management company and Fund incorporated in the AIFC) are exempted from individual and corporate income tax on income received from:
• profits from the sale of securities listed, on the day of their sale, on the official list of Astana International Exchange;
• profits from the sale of shares or stakes in the capital of AIFC Participants that are legal persons registered under the Acting Law of the AIFC;
• dividends and interest from securities listed, on the day of their distribution, on the official list of the Astana International Exchange;
• dividends from shares or stakes in the capital of AIFC Participants that are legal persons registered under the Acting Law of the AIFC;
Yes, obtaining a license is necessary to become eligible for tax benefits at AIFC related to Regulated Activities. However, the company may enjoy tax benefits related to all activities at AIFC without obtaining a license.
Disclaimer
This information is designed to assist actual and potential AIFC Participants (‘Participants’) to be familiar with benefits provided to actual Participants. Neither this information nor any of the answers to the questions in this information constitutes legal advice and should not be acted upon as if advice had been given. If there is any inconsistency between any statement in this information and the relevant AIFC Regulations and Rules or associated Guidance, the AIFC Regulations, AIFC Rules and Guidance prevail. Participants should, where they consider it necessary, obtain their own legal advice in relation to their specific situations. This information does not cover each and every aspect of the AIFC Regulations and Rules. It selectively addresses frequently asked questions in relation to the AIFC. This information will be amended as we become aware of new or changing issues.
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