On Banks and Banking Activity in the Republic of Kazakhstan (стр. 11 )

Article 52-10. Investment Activities on the Leasing Conditions

  1. Islamic banks shall have a right to carry out investment activities on the property leasing conditions.
  2. Relations of an Islamic bank, associated with the performance of investment activities on the leasing conditions are subject to the rules of financial leasing or property rent with the particular features, established by this Article.
  3. The provisions of a leasing agreement concluded with an Islamic bank may not stipulate the right of repurchase of the leased property. The right of property to the leased assets may transfer to a lessee (lease holder) on the basis of a separate agreement.
  4. If other is not stipulated by the charter or the internal rules of an Islamic bank, the transactions on leasing of property shall be concluded in accordance with the Rules of general provisions on the performance of operations of the Islamic bank, approved in accordance with the requirements of paragraph 3 Article 52-2 of this Law, and shall not require separate approval by the Council for Islamic Financing Principles.
  5. The agreement may stipulate the provision on the security of obligations on the leasing payments (leasing fees) through pledge of property.

Article 52-11. Agent Activities at the Performance of Banking Operations by an Islamic Bank

1. An Islamic bank at the performance of banking operations shall have a right to carry out agent activities, pursuant to which the Islamic bank acts as an agent of its client or appoints a third party as its agent.
  2. In accordance with the agency agreement, an agent on behalf and upon instruction of a client or on behalf of itself, but upon instruction and at expense of the client shall be obliged to pay a fee for the relevant legal actions, aimed at gaining profits, on the basis of its own experience and knowledge.
  3. The agency agreement of an Islamic bank shall be subject to the rules of a commission agreement or a trust deed depending on its provisions, with the particular features, indicated in this Article.
  4. A party of the agency agreement (client or agent), concluded with an Islamic bank, may be represented by individuals and legal entities, including banks and any other financial organizations.
  5. The provisions of an agency agreement shall fix the procedure for calculation and payment of the agency fee. The provisions of the agency agreement may not stipulate the guaranteed amount of a client’s income.
  6. An agent shall hold a right to obtain a fee irrespective of the results of execution of the agency agreement.
  7. A risk of losses aroused in the result of the agent activities shall be assigned to a client of the agency agreement, except for the cases, when losses arise due to the agent’s fault.

Chapter 5. Accounting and Reporting

Article 53. Financial (Operational) Year of a Bank
 
 Financial (operational) year of a bank shall begin on the 1st of January and end on the 31st of December. In the event when registration of a bank is carried out after the 1st of January, then the first financial (operational) year shall begin from the date of state registration of the bank and expire on the 31st of December of the same year.

Article 54. Accounting and Reporting at Banks
 
  1. The lists, the terms and the manner of submission of financial statements, including financial statements on a consolidated basis, shall be established by the National Bank upon approval of the authorized body.
 Banks shall account for transactions and events in compliance with the legislation of the Republic of Kazakhstan on accounting and financial reporting.
 The accounting policies of a bank shall be defined by its Board of Directors.
  1-1. The lists, the terms and the manner of submission of statements, including statements on a consolidated basis (except for financial and statistical statements) shall be established by the authorized body.
  2. Banks shall be obliged to submit to the authorized body and/or the National Bank under the requests any information concerning their assets, including those kept outside the Republic of Kazakhstan, the amounts accepted as deposits and granted loans, the bank operations performed and being performed, and any other information including information, which constitutes banking secrets.
  2-1. Banks shall be obliged to disclose any information, required by the authorized body with regard to direct and indirect participation in the charter capitals of legal entities, in which the banks are large participants, in accordance with the procedure, established by the authorized body.
  3. Employees of the authorized body and/or the National Bank for disclosure or transfer to third parties of information, received in the course of exercise of the rights, established by paragraphs 2 and 2-1 of this Article, shall be held responsible in accordance with the procedure, established by the legislative acts of the Republic of Kazakhstan, except for the cases of exchange of information, received within the competence, established by the legislative acts of the Republic of Kazakhstan, between the authorized body and the National Bank.
Reference. Article 54 is amended by the RK Laws dated 11th of July 1997 N 154; dated 16th of July 1999 N 436; dated 2nd of March 2001 N 162 (see art. 2); dated 16th of May 2003 N 416; dated 10th of July 2003 N  483 (effective since 1st of January 2004); dated 11th of June 2004 N 562; dated 23rd of December 2005 N 107 (enactment procedure, see art.2 of the Law N 107); dated 23.10.2008 N 72-IV (enactment procedure, see art.2).

  Article 54-1. Reports of the Large Participants of Banks and Bank Holdings

1. A large participant of a bank, being a legal entity, within 120 days after the end of financial year shall submit the statements, including information on income and property, as well as the following information to the authorized body:
  1) influence, made on a joint basis with any other entities, on a bank’s decisions by virtue of the agreement between them or otherwise, including description of the delegation of authorities, which define the possibility of such influence;
  2) occupied positions in the organizations with indicating own participation share in the charter capitals (shares);
  3) acquisition of participation shares in the charter capitals (shares) of organizations at the expense of obtained loans;
  4) close relatives, spouse and close relatives of a spouse.
  2. A large participant of a bank, being a legal entity, shall annually submit to the authorized body the financial statements and explanatory note attached within 120 days after the end of financial year.
  3. The submission procedure and the forms of reports shall be established by the normative legal acts of the authorized body.
  4. A bank holding shall submit to the authorized body the following documents:
  1) a quarterly consolidated financial statement with explanatory note attached within forty five days, following the reporting quarter;
  2) consolidated and non-consolidated annual financial statements with explanatory note attached, without certification of an auditing company, within 120 days after the end of financial year.
  5. AN explanatory note to the annual financial statement of a large participant in a bank, which is a legal entity, and an explanatory note to the quarterly and annual financial statement of a bank holding shall contain the following:
  1) the description of types of activities of a large participant (bank holding);
  2) the name of each organisation, in which a large participant (bank holding) is a participant (shareholder), size and participation share in its charter capital (participation share), the description of type or types of activities, financial statements of the organisations, in which the large participant (bank holding) is a participant (shareholder);
  3) the name of each organisation, which is a large participant (shareholder) of a bank’s (bank holding’s) large participant (shareholder), size and share of its participation in the charter capital (participation share), the description of type or types of activities and financial statements of a given organisation, as well as information on the affiliates and entities, exercising control over the large participant, information on the subsidiaries and associated organizations of the entity, exercising control over the large participant of the bank.
 If a bank has not a bank holding, a large participant of the bank shall submit the financial statement and information, indicated in paragraph 4 of this Article, on the quarterly basis within five working days following the reported quarter.
 In the case of changes in the content of executive officers of a bank’s large participant, being a legal entity or a bank holding, the large participant or the bank holding shall submit the information on fair business reputation of the executive officers with the confirmation documents attached.
  6. In the case if a bank’s large participant, a bank holding is a financial organization, being a resident of the Republic of Kazakhstan, then the bank’s large participant, the bank holding shall submit information, indicated in paragraphspart 1 paragraph 5 of this Article, in this case the financial accounts and explanatory note shall not be represented if the bank’s large participant, the bank holding have submitted to the authorized body these financial statements for the requested period.
  7. A bank holding, being a non-resident of the Republic of Kazakhstan, which is subject to the consolidated supervision in the country of its residence, shall submit to the authorized body the consolidated and non-consolidated annual financial statements and explanatory note, not certified by an auditing company, within 120 days after the end of financial year.
  The explanatory note to the annual financial statements of a bank holding, being a non-resident of the Republic of Kazakhstan, which is subject to the consolidated supervision in the country of its residence, shall contain the following information:
  1) the description of types of activities of a bank holding;
  2) the name of each organisation, in which a bank holding is a participant (shareholder), size and participation in its charter capital (participation share), the description of type or types of activities;
  3) the name of each organisation, which is a large participant (shareholder) of a bank holding’s large participant (shareholder), size and share of its participation in the charter capital (participation share), description of type or types of activities of a given organisation.
  8. A large participant of a bank, a bank holding, being non-residents of the Republic of Kazakhstan, shall submit to the authorized body the financial statements, the explanatory note attached and any other information, indicated in this Article, in Kazakh and Russian languages.
  Reference. Article 54-1 is stated in the wording of the RK Law dated 23.10.2008 N 72-IV (enactment procedure, see art.2).

Article 55. Publication of the Principal Indicators of Banking Activities

 
 Banks shall publish annual financial statements, including an annual balance sheet, profit and loss statements in accordance with the international financial accounting standards in the terms, established by the National Bank upon coordination with the authorized body, upon confirmation by an auditing company, compliant with the requirements of paragraph 4 Article 19 of this Law, on the reliability of information presented in such statements and after approval of the annual balance sheet and profit and loss statement by the bank’s annual meeting.
 Banks shall quarterly publish their balance sheets, profit and loss statements in accordance with the international financial accounting standards in the terms, established by the National Bank upon coordination with the authorized body, and without confirmation by an auditing company.
   Reference. Article 55 is amended by the RK Laws dated 11th of July 1997 N 154; dated 16th of July 1999 N 436; dated 10th of July 2003 N  483 (effective since 1st of January 2004); dated 11th of June 2004 N 562; dated 23rd of December 2005 N 107 (enactment procedure, see art.2 of the Law N 107); dated 5th of May 2006 N 139 (enactment procedure, see art.2 of the RK Law N 139); dated 28th of February 2007 N 235 (enactment procedure, see art. 2); dated 20.11.2008 N 88-IV (enactment procedure, see art.2).

Article 56. Registration and Storage of Documents

  1. Banks shall be obliged to ensure strict accounting and storage of documents, used for the accounting purposes and compilation of reports.
  2. The list of principal documents, subject to storage, and terms of storage shall be established by the authorized body.
  Reference. Article 56 with amendments, inserted by the Law of the Republic of Kazakhstan dated 10th of July 2003 N 483 (effective since 1st of January 2004).

Chapter 6. Audit of Banks and Their Affiliates

Reference. The title of the Chapter is stated in the wording of the RK Law dated 2nd of March 2001 N 162 (see art. 2).

Article 57. Audit of Banks and Their Affiliates
 
  1. Audit of a bank may be carried out by an auditing company, which has a right to conduct audits in accordance with the legislation concerning auditing, and which complies with the requirements of paragraph 4 Article 19 of this Law.
  1-1. Performance of audit upon the results of a financial year shall be obligatory for banks, bank holdings and organizations, where a bank and (or) a bank holding are large participants, copies of the report of which and recommendations of an auditing company shall be presented by the banks, the bank holdings and the organizations, where the given bank and (or) bank holding are large participants, or by the auditing companies to the authorized body within thirty days from the day of receipt of such documents or their presentation to the banks, bank holdings and organizations, where the bank and (or) the bank holding are large participants.
 Consolidated annual financial statements of a bank or a bank holding shall be certified by an auditing company, authorised to audit banks.
 Audit of the organizations, which are part of a bank conglomerate as a parent organization and its subsidiaries, being residents of the Republic of Kazakhstan, shall be made by the same auditing company. Audit of a parent organization and its subsidiaries, being non-residents, shall be made by the same auditing company in the cases, when performance of such audit does not contradict to the requirements of the legislation of their residence country.
  1-2. A bank holding, being a non-resident of the Republic of Kazakhstan, which is subject to the consolidated supervision in its residence country, shall submit to the authorized body a copy of the auditor’s report and recommendation of an auditing company within thirty days since receipt of such documents by a bank holding, non-resident of the Republic of Kazakhstan, which is subject to the consolidated supervision in its residence country.
  Consolidated annual financial statements of a bank holding, being non-resident of the Republic of Kazakhstan, which is subject to the consolidated supervision in its residence country, shall be certified by an auditing company, which has a right to carry out audit of the financial organizations in the country of residence of such non-resident bank holding.
  1-3. A bank holding, being non-resident of the Republic of Kazakhstan shall submit to the authorized body a copy of an auditor’s report and recommendations of an auditing company in Kazakh and Russian languages.
  2. (Excluded by the RK Law dated 5th of May 2006 N 139 (enactment procedure, see art.2 of the RK Law N 139).
  3. Bank audits shall be carried out for the purposes of establishing the following:
 timeliness, completeness and accuracy of reflection of the performed bank operations in accounts and reports;
 compliance of the performed bank operations with the requirements of this Law, current legislation and normative legal acts of the authorized body and the National Bank;
 compliance of the performed bank operations with general terms of performance, as well as compliance of the procedure for carrying out bank operations with the internal rules of a bank.
  4. The results of audit and its opinion shall be reflected by an auditing company in the report, presented to the Board of Directors and the Management Board of a bank, if necessary, as defined by the bank, to any other legal entities of a bank conglomerate.
 An auditor’s report on the financial accounts of a bank or any other legal entities of a bank conglomerate shall not constitute a commercial secret.
  5. A bank shall be obliged to submit to a copy of the auditor’s report within ten days after its receipt by any other legal entities of a bank conglomerate.
  6. In the case of non-elimination by a bank, a bank holding and an organization, where the bank and (or) the bank holding are large participants, of the violations, which influence on the financial status of the bank or the bank conglomerate, specified in the auditor’s report, within three months from the date of receipt of the mentioned report by the bank, the bank holding and the organization, where the bank and (or) the bank holding are large participants, the authorized body shall have a right to apply the following until elimination of the violations:
 with regard to banks, bank holdings and organisations, where a bank and (or) a bank holding are large participants — sanctions, specified in paragraph 2 Article 47-1 of this Law;
 in the case of failure to eliminate the violations within one year from the date of receipt of a given report, the authorized body shall have the following rights:
 with regard to a bank — to revoke a license of the bank on the basis of subparagraph n) paragraph 1 Article 48 of this Law;
 with regard to a bank holding — to apply measures, indicated in paragraph 3 Article 47-1 of this Law.
  Reference. Article 57 is amended by the RK Laws dated 11th of July 1997 N 154 and dated 29th of June 1998 N 236; dated 2nd of March 2001 N 162 (see art. 2); dated 10th of July 2003 N 483 (effective since 1st of January 2004); dated 23rd of December 2005 N 107 (enactment procedure, see art.2 of the Law N 107); dated 5th of May 2006 N 139 (enactment procedure, see art.2 of the RK Law N 139); dated 12th of January 2007 N 222 (effective upon expiry of 6 months since the date of official publication); dated 23.10.2008 N 72-IV (enactment procedure, see art.2); dated 20.02.2009 N 138-IV (enactment procedure, see art.2).