COMMERCIAL LAW

Control over the activity of subjects of control and supervision is exercised in the form of preventive control, which is precautionary in nature, inspection, and investigation. Preventive control is divided into three types: control without a visit to the subject, control with a visit to the subject, and a control purchase.

Legal basisArt. 137 of the Entrepreneurial Code of the RK

Preventive control with a visit is carried out at the subject's premises, and where breaches are found an order to remedy them is issued without opening administrative proceedings; in the cases provided for by law, prompt response measures are applied. Such control may be carried out only if, in the year preceding it, preventive control without a visit was carried out in respect of that subject.

Legal basisArt. 144-2 of the Entrepreneurial Code of the RK

A control purchase is a separate type of preventive control under which the control body buys products in the form of goods in order to establish whether products not meeting the established requirements are being sold. The procedure covers the grounds for deciding on a purchase, the decision of the head of the control body with notice to the legal statistics authority, identification of the products concerned and the timeframes, the procedure for examining the products purchased, and the recording of the results.

Legal basisArt. 144-3 of the Entrepreneurial Code of the RK

Inspections for compliance with requirements are carried out using risk assessment criteria and with the frequency established by the Code. The basis for scheduling one is the plan, formed automatically each year in the digital risk assessment and management system, which must name the subjects in respect of which an inspection is scheduled. Where the control body draws up an inspection plan and half-yearly lists of preventive control with a visit in respect of the same subjects, single periods for carrying them out are established.

Legal basisArt. 144 of the Entrepreneurial Code of the RK

The periods are set having regard to the volume of work and the tasks involved. For micro-business entities — no more than five working days, extendable by up to five working days. For small, medium and large business entities, and for subjects that are not private business entities: for preventive control with a visit and for inspections for compliance with requirements — no more than fifteen working days, extendable by no more than fifteen working days; for unscheduled inspections — no more than ten working days, extendable by up to ten working days.

Legal basisPara. 1 of Art. 148 of the Entrepreneurial Code of the RK

Officials may not check compliance with requirements that are not set out in the checklists of their own control body, or that fall outside its competence; demand documents, information, product samples or environmental and workplace samples that do not relate to the object and subject matter of the control; or take samples for testing otherwise than in the prescribed manner. The full list of restrictions is set out in Article 151 of the Code.

Legal basisArt. 151 of the Entrepreneurial Code of the RK

A subject of control may refuse to admit officials to control or inspection, in particular where the frequency of control established by regulatory legal acts has not been observed, and in the other cases expressly listed in Article 155 of the Code. That article also sets out the full list of the subject's rights and obligations during control.

Legal basisPara. 1 of Art. 155 of the Entrepreneurial Code of the RK

Preventive control with a visit and inspections are declared invalid where they were carried out by the control body in gross breach of the requirements for their organisation and conduct laid down by the Code. The report and the order to remedy the breaches issued following an invalid control cannot serve as evidence that the subject breached the established requirements.

Legal basisPara. 1 of Art. 156 of the Entrepreneurial Code of the RK

The procedure for challenging decisions, acts and omissions of control and supervision bodies is set out in Article 157 of the Code. Business entities also protect their rights through the courts and through the out-of-court forms of protection provided for by the Code.

Legal basisArts. 157, 300, 301 and 303 of the Entrepreneurial Code of the RK

Unlawful acts of officials of state bodies during inspections entail the liability established by law. Harm caused to a business entity by a state body or its official in the course of control and supervision is compensated under civil law. The recoverable losses include the remuneration paid to employees for preparing materials for the inspection, wages for the period of forced suspension of production, and the profit the business would have made from goods, works and services not produced because of that suspension.

Legal basisArt. 322 of the Entrepreneurial Code of the RK

Horizontal agreements between market entities are treated as cartels and prohibited where they lead or may lead to the setting or maintaining of prices, discounts, mark-ups or surcharges; to raising, lowering or maintaining prices at tenders and distorting their outcome, including by dividing them into lots; to dividing the commodity market by territory, by volume of sale or purchase, by product range or by the composition of sellers or buyers; to reducing or ceasing production; or to refusing to conclude contracts with particular sellers or buyers.

Legal basisPara. 1 of Art. 169 of the Entrepreneurial Code of the RK

Besides the cartel prohibitions, Article 169 of the Code establishes prohibitions for other types of anti-competitive agreements. The types of anti-competitive agreements and concerted actions are listed in Article 168, and concerted actions of market entities in Article 170. How a particular contractual term is classified depends on the structure of the market and the content of the agreement.

Legal basisArts. 168, 169 and 170 of the Entrepreneurial Code of the RK

A dominant or monopoly position is the position of one or more market entities on the relevant commodity market that enables them to control that market, including by exerting significant influence on the general conditions of circulation of the goods. The position is established under the Methodology for analysing the state of competition approved by the antimonopoly body. A position is dominant where the entity's share of the relevant commodity market is thirty-five per cent or more and the circumstances listed in Article 172 are present together, including the ability to determine the price level of the goods unilaterally.

Legal basisParas. 1, 2 and 3 of Art. 172 of the Entrepreneurial Code of the RK

Acts and omissions of dominant entities are prohibited where they have led or lead to restricted access to the relevant commodity market, to the prevention, restriction or elimination of competition, or where they infringe the lawful rights of market entities or of an indefinite group of consumers. These include setting and maintaining monopolistically high, monopolistically low or monopsonistically low prices, and applying different prices or different conditions to equivalent agreements without objectively justified reasons — except where the difference is due to different costs of production, sale and delivery or to the non-discriminatory application of a discount system reflecting sales volumes, payment terms and the duration of the contract.

Legal basisArt. 174 of the Entrepreneurial Code of the RK

Unfair competition means any acts of a market entity aimed at gaining advantages in business that are contrary to the legislation of Kazakhstan, business customs and the requirements of good faith, reasonableness and fairness, and that have caused or may cause damage to competitors or harm to their business reputation. It includes the improper use of means of individualising goods, works and services and of copyright works; the improper use of another producer's goods; copying the external appearance of an article; discrediting a market entity; and knowingly false, unfair and inaccurate advertising.

Legal basisArt. 177 of the Entrepreneurial Code of the RK

Knowingly false, unfair and inaccurate advertising is expressly classified by the Code as unfair competition. In parallel, the Law on Advertising treats as unfair any advertising that compares the goods with those of other persons or damages their business reputation, or copies another's business name, trade mark, packaging or product design; and as inaccurate any advertising giving untrue information about composition, date of manufacture, purpose, consumer properties, the existence of a certificate of conformity, origin, availability on the market or price.

Legal basisArts. 177 and 182 of the Entrepreneurial Code of the RK; Art. 7 of the Law of the RK on Advertising

The Code sets out a separate offence — selling goods while providing the consumer with inaccurate information. It sits within the system of rules on unfair competition, alongside the improper use of information constituting a commercial secret.

Legal basisArts. 189 and 190 of the Entrepreneurial Code of the RK

The concepts of state monopoly and special rights, and the conditions on which they are introduced, are defined in Article 193 of the Code. Anti-competitive acts, omissions and agreements of state bodies are dealt with separately in Article 194.

Legal basisArts. 193 and 194 of the Entrepreneurial Code of the RK

The Code provides for two regimes: filing an application for consent to economic concentration, and notification of a completed transaction. The procedure for filing the application is set out in Article 203, the procedure for notifying a completed concentration in Article 206, the list of accompanying documents in Article 207, and the taking of a decision on the notification in Article 209.

Legal basisArts. 203, 206, 207 and 209 of the Entrepreneurial Code of the RK

The powers of officials of the antimonopoly body during an investigation are set out in Article 221 of the Code. Following the investigation the body takes decisions under Article 224, determines monopoly income under Article 225 and applies antimonopoly response measures under Article 226; the requirements for drawing up an order are in Article 227 and the procedure for reviewing orders in Article 228.

Legal basisArts. 221, 224, 225, 226, 227 and 228 of the Entrepreneurial Code of the RK

The concept of antimonopoly compliance and the requirements for it are set out in Article 195-1 of the Code. Monitoring of the activity of market entities holding a dominant position is provided for separately.

Legal basisArts. 195-1 and 197 of the Entrepreneurial Code of the RK

The Law on Permits and Notifications establishes a permit regime and a notification regime. The governing principles are: a balance between the interests of consumers, businesses and the state; justification and effectiveness in introducing the regime; transparency of state bodies and accessibility of information; mutual responsibility; freedom from corruption; and legality. No one may require individuals or legal entities to hold permits or file notifications that are not provided for by that Law.

Legal basisArt. 4 and para. 3 of Art. 9 of the Law of the RK on Permits and Notifications

In licensing or in carrying out permit procedures, the permit body must check within two working days of receiving the applicant's documents whether the set of documents is complete. Where an incomplete set is submitted, the body must within the same period give a reasoned refusal to consider the application further. This rule does not apply to the issue of a permit that constitutes a public service.

Legal basisPara. 1 of Art. 25 of the Law of the RK on Permits and Notifications

If the permit body fails within the prescribed periods either to issue the permit or to give a reasoned refusal, the permit is deemed issued from the date the period expires and is at the same time entered by the permit body in the state digital register of permits and notifications. No later than five working days after the period expires, the body must issue the applicant with the corresponding permit.

Legal basisParas. 1 and 2 of Art. 26 of the Law of the RK on Permits and Notifications

A refusal is possible where the activity is prohibited by law for that category of persons; the licence fee has not been paid; the applicant does not meet the qualification requirements; the licensor has received a reply from the coordinating state body that the applicant does not meet the requirements; there is a court decision or judgment in force suspending or prohibiting the applicant's activity or particular licensed activities; and in the other cases expressly listed in Article 32 of the Law.

Legal basisPara. 1 of Art. 32 of the Law of the RK on Permits and Notifications

Where a licensee is reorganised by merger, the licence and its annex are reissued to the newly formed legal entity. Where several licensees holding licences for the same licensed activity or sub-type merge, only one such licence is reissued to the new entity, at the applicant's choice, and the licences of the reorganised entities cease to have effect from the date the new entity's licence is reissued.

Legal basisPara. 1 of Art. 34 of the Law of the RK on Permits and Notifications

The procedure, periods and conditions for issuing, reissuing, refusing, suspending and terminating licences for activity in the financial sphere and activity involving the concentration of financial resources are established by the National Bank and by the authorised body for the regulation, control and supervision of the financial market. The conditions and procedure for issuing licences in the gambling business are determined by the relevant sectoral law.

Legal basisParas. 1 and 2 of Art. 36 of the Law of the RK on Permits and Notifications

Incoterms are a set of rules of the International Chamber of Commerce for the use of trade terms in contracts for the international and domestic sale of goods. They allocate between seller and buyer the obligations for carriage, insurance and export and import clearance, fix the point of delivery and the point at which the risk of loss or damage passes, and allocate the related costs. Incoterms do not replace the contract of sale and do not govern the transfer of title, the payment of the price, the consequences of breach or the applicable law — these are matters for the contract and the applicable law. In Kazakhstan the rules apply only where the contract expressly refers to them: they are not a regulatory legal act, and their binding force flows from freedom of contract.

Legal basisIncoterms rules of the International Chamber of Commerce; Arts. 2 and 380 of the Civil Code of the RK

The current edition is Incoterms 2020 and the previous one is Incoterms 2010. The new edition does not repeal the earlier one: the parties may refer to either, and the edition expressly named in the contract applies. That is why the term is written with the edition and the specific place — for example, "CIF Hamburg (Incoterms 2020)": wording without the edition invites a dispute about which rules govern. Incoterms 2020 contains eleven terms in two groups: seven for any mode of transport — EXW, FCA, CPT, CIP, DAP, DPU and DDP — and four for sea and inland waterway transport only — FAS, FOB, CFR and CIF.

Legal basisIncoterms 2020 and Incoterms 2010 rules of the International Chamber of Commerce

There are several main changes. DAT (Delivered at Terminal) was renamed DPU (Delivered at Place Unloaded), since unloading may take place at any agreed location and not only at a terminal; DPU remains the only term requiring the seller to unload the goods. Insurance levels were separated: CIP now requires cover under Institute Cargo Clauses (A), while CIF retains the minimum cover under Clauses (C). FCA gained the option of agreeing that the buyer will instruct the carrier to issue the seller a transport document with an on-board notation, which resolves the difficulty with letters of credit in container shipments. The rules expressly recognise carriage using the seller's or buyer's own means of transport under DAP, DPU and DDP, and the security-related obligations and allocation of costs are set out in more detail.

Legal basisIncoterms 2020 rules of the International Chamber of Commerce (introduction and explanatory notes)

The exclusive competence of the general meeting of participants covers amending the charter, including changing the charter capital, the location and the business name, or approving the charter in a new version; forming the executive body and terminating its powers early, or those of an individual member, and deciding to transfer the partnership or its property into trust management and setting the terms of that transfer; electing and removing the supervisory board and the audit commission and approving their reports and opinions; approving the financial statements and distributing net income; appointing the audit organisation for a mandatory audit; approving internal rules and other documents governing the partnership's internal activity; and deciding on the partnership's participation in other business partnerships. The full list is in paragraph 2 of Article 43; the competence of the general meeting is set by the charter in accordance with that Law.

Legal basisParas. 1 and 2 of Art. 43 of the Law of the RK on Limited and Additional Liability Partnerships

The registration number is an identification number assigned to a currency contract or to an account with a foreign bank or international financial organisation by the National Bank or an authorised bank, and it serves to ensure the recording of and reporting on currency transactions. As part of monitoring currency transactions, the National Bank assigns registration numbers to currency contracts under or pursuant to which capital movement transactions and equivalent transactions are carried out, and receives information on the transactions conducted under them and on the related claims against and obligations towards non-residents.

Legal basisSub-para. 5) of Art. 1 and para. 1 of Art. 13 of the Law of the RK on Currency Regulation and Currency Control

Repatriation means crediting to bank accounts with authorised banks the proceeds in national or foreign currency from exports, and the currency transferred by a resident to a non-resident for import settlements where the non-resident has failed to perform or has performed only in part. A resident, other than a branch or representative office of a foreign organisation, must ensure repatriation within the periods provided for by the currency contract for the export or import. The repatriation period is determined by reference to the terms on which the parties perform their obligations, in the manner set by the rules on export and import currency control, and the terms of a contract subject to the requirement must specify the periods for performance by the non-resident. The servicing bank may require the resident to clarify the repatriation period.

Legal basisParas. 1 and 2 of Art. 9 of the Law of the RK on Currency Regulation and Currency Control

Currency control bodies exercise control over subjects of currency control in the form of inspections and other forms of control provided for by law. In respect of financial institutions, risk-based inspections, unscheduled and documentary inspections by the currency control body and other forms of control are carried out. In respect of other residents carrying out currency transactions, and non-residents carrying out such transactions in Kazakhstan, currency control procedures are applied when they make payments and money transfers under currency transactions, together with inspections by the currency control body and other forms of control.

Legal basisParas. 1 and 2 of Art. 20 of the Law of the RK on Currency Regulation and Currency Control

Incoterms fix the point of delivery, the point at which the risk of loss or damage passes, and the allocation of costs and obligations for carriage, insurance and customs clearance between seller and buyer. They replace neither the contract of sale nor the contract of carriage: the seller's obligation to deliver and the buyer's to pay, liability for breach, the transfer of title and the applicable law are governed by the contract and the applicable law, while relations with the carrier are governed by a separate contract of carriage. The most common mistake is choosing a term that does not match the actual mode of carriage: for container shipments the International Chamber of Commerce recommends the terms applicable to any mode of transport, because in such carriage the passing of risk does not coincide with loading on board a vessel. The term should always be stated with the edition of the rules and the specific named place.

Legal basisIncoterms 2020 rules of the International Chamber of Commerce; Arts. 2 and 380 of the Civil Code of the RK