On Banks and Banking Activity in the Republic of Kazakhstan (стр. 12 )

Article 58. Licensing of Auditing Activities, Associated with Inspection of Banking Activities
  (Article is excluded by the RK Law dated 5th of May 2006 N 139
  (enactment procedure, see art.2 of the RK Law N 139)

  Article 59. Recognition of a Report on the Performance of Audit of Banking Activities by an Auditing Company (Auditor) as Invalid. Grounds for Revocation, Suspension of a License for the Performance of Audit of Banking Activities
 (Article is excluded by the RK Law dated 5th of May 2006 N 139
  (enactment procedure, see art.2 of the RK Law N 139)

Section II. Conditions of Changing a Legal Status and Special Considerations for Termination of Banks’ Activities

Chapter 7. Voluntary Reorganisation of Banks

Reference. The title of the Section and the Chapter is stated in the wording of the RK Law dated 11th of July 1997 N 154.

  Article 60. The General Terms of Voluntary Reorganisation of Banks
 
  1. Voluntary reorganisation (merger, acquisition, division, appropriation, transformation) of banks may be carried out upon the decision of the general meeting and permission of the authorized body.
  2. A decision of the general meeting of a bank’s shareholders shall be the basis for submitting the petition to obtain a permit to carry out voluntary reorganisation of the bank.
  3. The following documents shall be attached to the petition for obtaining a permit of the authorized body for carrying out voluntary reorganisation of a bank:
  а) a decision of the supreme authority of a bank concerning voluntary reorganisation;
  b) the documents, which describe the proposed terms, forms, procedure and deadlines for voluntary reorganisation of a bank;
  c) a financial forecast of the consequences of voluntary reorganisation, including the estimated balance sheet after its voluntary reorganisation or/and of the legal entities to be formed as a result of voluntary reorganisation of the bank.
  4. The petition for obtaining a permit to carry out voluntary reorganisation of a bank shall be processed by the authorized body within two months after the date of its acceptance.
  5. The reorganized bank within two weeks from the date of obtaining a permit from the authorized body for carrying out reorganisation shall be obliged to inform all its depositors, clients, correspondents and borrowers on the forthcoming changes through a direct notice and publication of appropriate announcement in at least two republican newspapers.
  6. State registration or re-registration of legal entities, established as a result of reorganisation, shall be carried out in accordance with current legislation.
  Reference. Article 60 is amended by the RK Law dated 11th of July 1997 N 154; dated 10th of July 2003 N 483 (effective since 1st of January 2004).

Article 61. Denial of Permit Issue for Voluntary Reorganization of a Bank
 
 Denial to issue a permit by the authorized body for voluntary reorganization of a bank shall take place in any of the following cases:
  а) absence of a relevant decision by the supreme authorities of the reorganized banks;
  b) violation of the depositors’ interests in the result of the proposed reorganization;
  c) violation of the prudential requirements and other norms and limits, obligatory for compliance in the result of the proposed reorganization;
  d) violation of the requirements of antimonopoly legislation in the result of the proposed reorganization.
Reference. Article 61 is amended by the RK Law dated 11th of July 1997 N 154; dated 10th of July 2003 N 483 (effective since 1st of January 2004).

Chapter 8. Temporary Closing of a Bank

Article 62. Definition of Temporary Closing of a Bank
 
  1. Temporary closing of a bank shall refer to the obligatory performance of a set of administrative, legal, financial, institutional, technical and other measures and procedures in relation to the bank for the purposes of improving its financial position and quality of its operation upon the authorized body's decision.
  2. A bank may be subject to temporary closing for any of the following reasons:
  а) failure to comply with the capital adequacy ratio and (or) the liquidity ratio;
  b) the reasons, indicated in Article 48 of this Law.
  3. Establishment of the temporary closing regime shall entail the appointment of the temporary administration for management of a bank or a temporary administrator of the bank by the authorized body for a limited period (up to one year).
  4. Temporary closing of a bank shall be carried out at the bank’s expense.
  5. A decision of the authorized body to carry out temporary closing may be appealed by a bank's shareholders within ten days in a judicial procedure, the appeal against such a decision shall not suspend temporary closing of the bank.
Reference. Article 62 with amendments, inserted by the RK Presidential Decree, having a legal force of the Law, dated 27.01.1996 N 2830; RK Laws dated 11.07.1997 N 154; dated 10.07.2003 N 483 (effective since 01.01.2004); dated 13.02.2009 N 135-IV (enactment procedure, see art. 3).

Article 63. Temporary Administration for Management of a Bank (Temporary Administrator of a Bank)
 
  1. The temporary administration (temporary administrator of a bank) shall be appointed by the authorized body among a bank’s employees, representatives of the organization for obligatory guaranteeing of deposits or any other persons, compliant with the minimum requirements, indicated in paragraph 2 Article 20 of this Law.
  2. Rights and obligations, as well as the provisions on remuneration of the chairman and members of the temporary administration (temporary administrator of a bank), shall be established in a separate agreement, concluded between the authorized body and the temporary administration (temporary administrator).
  3. The temporary administration (temporary administrator of a bank) in its activities shall be guided by this Law, the normative legal acts of the authorized body and any other legislation of the Republic of Kazakhstan.
  4. The authorized body shall have a right to replace members of the temporary administration (temporary administrator of a bank).
  5. The chairman and members of the temporary administration (temporary administrator) shall bear responsibility, established by current legislation, for damage caused to a bank. It shall be prohibited to delegate to the chairman and members of the temporary administration (temporary administrator of a bank) the responsibility for damage, referred to the category of normal business risk.
  Reference. Article 63 is amended by the RK Law dated 11th of July 1997 N 154; 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).

Article 64. Resolution on the Performance of Temporary Closing of a Bank
 
  1. Decision of the authorized body to carry out temporary closing of a bank shall be contain the following information:
  а) name of the bank and its address;
  b) substantiation of the decision on temporary closing of the bank;
  c) effective date and period of temporary closing;
  d) list of the restrictions of activities imposed on the bank;
  e) personnel content of the temporary administration or name, patronymic and surname of the temporary administrator;
  f) prescription to the executives of the bank, which is under the regime of temporary closing, on preparation of the report on their activities, declaration of income, information on existence and value of property and on submission of such documents to the temporary administration (temporary administrator of the bank);
  g) recommendations to the temporary administration (temporary administrator).
  2. Resolution of the authorized body on the performance of temporary closing of a bank shall be published by the authorized body in at least two periodical printed editions, distributed in the territory of the Republic of Kazakhstan.
Reference. Article 64 is amended by the RK Law dated 11th of July 1997 N 154; dated 10th of July 2003 N 483 (effective since 1st of January 2004).

  Article 65. Special Considerations in Management of a Bank during its Temporary Closing. Powers of the Temporary Administration (Temporary Administrator) in Respect to Management of the Bank (Temporary Manager of the Bank)

1. At the effective date of temporary closing and within the period of its validity:
  а) rights of a bank's shareholders to use and disposal of shares, issued by the bank, shall be suspended;
  b) authority of the bank's bodies shall be suspended and its executives shall be stood off;
  c) all powers associated with management of the bank, as well as rights of the bank's shareholders to use of shares, issued by the bank, shall be transferred to the temporary administration (temporary administrator);
  d) all transactions, committed on behalf and at the expense of the bank, without informing and without a written consent of the temporary administration (temporary administrator of the bank) shall be recognised as invalid.
  2. The temporary administration ( temporary administrator of a bank) shall have the following rights:
  а) to adopt independent decisions on any issues of the bank’s activities, taking into account the requirements of Article 66 of this Law;
  b) where necessary, to suspend obligations of the bank in respect to the accepted deposits fully or partially for the period of temporary closing;
  c) where necessary, to terminate agreements, concluded by the bank, which anticipate investment of the bank's funds, or introduce changes and amendments into such agreements in a unilateral manner, including changes in the rates, the tariffs and the validity periods;
  d) to sign any agreements and documents on behalf of the bank;
  e) to present claims on behalf and in the interests of the bank;
  f) to issue orders, including the orders on dismissal, demotion and temporary dismissal, distribution of duties between employees of the bank;
  g) to provide offset of claims due to the representation of a creditor and a debtor by one person;
  h) to transfer property and obligations of the bank under the deposits, guaranteed by the organization for obligatory guaranteeing of deposits, to any other bank (banks) in accordance with Article 73-1 of this Law.
  It shall be prohibited to provide offset of claims with a creditor, which requirements to the bank subject to temporary closing arise from the agreement (agreements) on assignment of the right of claim. 
Reference. Article 65 with amendments, inserted by the RK Laws dated 2nd of March 2001 N 162 (see art. 2); dated 23rd of December 2005 N 107 (enactment procedure, see art.2 of the Law N 107); dated 19th of February 2007 N 230 (enactment procedure, see art.2); dated 23.10.2008 N 72-IV (enactment procedure, see art.2).

  Article 66. Supervision of Activities of the Temporary Administration (Temporary Administrator) of a Bank in Relation to the Bank Management (Temporary Bank Manager)
 
  1. During the period of temporary closing of a bank, supervision of the activities of the temporary administration (temporary administrator of a bank) shall be carried out by the authorized body, which have the following rights:
  а) issue recommendations to the temporary administration (temporary administrator of a bank) concerning the main directions of activities during the period of temporary closing of the bank (propose a schedule of the main activities);
  b) issue the written instructions, obligatory for execution by the temporary administration (temporary administrator of the bank);
  c) require representation by the temporary administration (temporary administrator of the bank) of any information concerning its activities and activities of the bank;
  d) take the reports of the temporary administration (temporary administrator of the bank) concerning the performed work;
  e) extend the period of temporary closing;
  f) adopt a decision concerning completion of temporary closing of the bank.
  2. The detailed regulation of activities of the temporary administration (temporary administrator of a bank) and the principles of its relations with third parties shall be determined by the normative legal acts of the authorized body.
  Reference. Article 66 is amended by the RK Law dated 11th of July 1997 N 154; dated 10th of July 2003 N 483 (effective since 1st of January 2004).

  Article 67. Cessation of Temporary Closing
 
  1. Temporary closing of a bank shall cease on the following bases:
  а) expiry of the period of temporary closing, established by the decision of the authorized body;
  b) adoption of a decision by the authorized body on early cessation of the temporary closing.
  2. Cessation of temporary closing of a bank (including early cessation) due to the recovery of its financial status and improvement of the quality of operations shall lead to cancellation of all restrictions in relation to this bank, established by the authorized body or its temporary administration (temporary administrator of the bank). In this respect, changes and amendments to the charter documents, the management bodies and the staff list of the bank, introduced during the period of temporary closing, shall remain in force.
  3. In the event when temporary closing of a bank has not led to the recovery of its financial status and improvement of the quality of operations, the authorized body shall have a right to revoke a license, issued for the performance of bank operations, on the bases, established by the legislation concerning banking.
  Reference. Article 67 is amended by the RK Laws dated 11th of July 1997 N 154; dated 2nd of March 2001 N 162 (see art. 2); dated 10th of July 2003 N 483 (effective since 1st of January 2004); dated 12th of January 2007 N 222 (effective upon expiry of 6 months since the publication date).

Chapter 9. Liquidation and Voluntary Reorganisation of Banks

Reference. Chapter 9 is stated in the wording of the RK Law dated 11th of July 1997 N 154 .

  Article 68. Types and Grounds for Liquidation of Banks
 
  1. A bank may be liquidated as follows:
  а) pursuant to the decision of its shareholders, provided it has a permit from the authorized body (voluntary liquidation);
  b) pursuant to the decision of the court in the cases, provided by the legislative acts of the Republic of Kazakhstan (forced liquidation);
  c) (excluded by the Law N 162 dated 2.03.01)
  2. Termination of banking activities, in particular due to the bankruptcy, shall be carried out in accordance with the legislative acts of the Republic of Kazakhstan, subject to requirements of this Law.
Reference. Article 68 is amended by the RK Law dated 2nd of March 2001 N 162 (see art. 2); dated 10th of July 2003 N 483 (effective since 1st of January 2004).

Article 68-1. The Committee of Creditors of Voluntarily and Forcedly Liquidated Banks
 
  1. The committee of creditors shall be formed for the purposes of ensuring the interests of creditors and adoption of decisions with their participation in the procedures of voluntary and forced liquidation of banks.
 Content of the committee of creditors of a bank, liquidated through the voluntary or forced procedure, shall be approved by the authorized body pursuant to the proposal of the bank's liquidation commission.
  2. The special considerations in the establishment and activities of the committee of creditors shall be established by the normative legal acts of the authorized body.
Reference. Added with Article 68-1by the RK Law dated 2nd of March 2001 N 162 (see art. 2); with amendments, inserted by the Law of the Republic of Kazakhstan dated 10th of July 2003 N 483 (effective since 1st of January 2004).

Article 69. Voluntary Liquidation
 
  1. A bank after taking a decision by the general meeting on its voluntary liquidation shall be obliged to take measures for return of the deposits of individuals through direct payment or transfer to another bank, which is a participant in the system of obligatory guaranteeing of deposits.
  Procedure for return of the individuals’ deposits, as well as transfer to another bank shall be established by the normative legal act of the authorized body.
  1-1. After return of the individuals’ deposits a bank shall have a right to appeal to the authorized body with a petition for issue of a permit for its voluntary liquidation.
 The petition shall be attached with the list of measures on timelines and stages for preparation of the bank to termination of its activities, approved by the general meeting, the balance sheet, proving adequacy of the bank's funds for settlements, the list of candidates to be appointed as members of the liquidation committee, including its subdivisions, established in the branches or the representative offices, and other relevant information. The list of appropriate information shall be established by the normative legal acts of the authorized body.
  2. The petition for obtaining a permit for voluntary liquidation of a bank shall be examined by the authorized body within two months from the date of receipt of the properly formulated documents.
 In the event of denial to issue a permit for voluntary liquidation of a bank, the authorized body shall take a substantiated decision and bring it to the bank’s attention.
  3. (Paragraph is excluded by the Law of the Republic of Kazakhstan dated 10th of July 2003 N 483 (effective since 1st of January 2004).
  4. Upon obtaining of a permit for voluntary liquidation from the authorized body, a bank shall establish the liquidation committee, taking into account the branches and the representative offices of this bank, which shall acquire the powers, associated with management of the bank's property and business.
 Special considerations for operation of the liquidation committees of the voluntarily liquidated banks shall be defined by the normative legal acts of the authorized body.
  4-1. Supervision of activities of the liquidation committee of a bank to be liquidated through the voluntary procedure shall be carried out by the authorized body.
  5. After obtaining a permit for voluntary liquidation, a bank shall be obliged to publish information thereon in the official printed editions of the Central Justice Authority.
  6. The liquidation committee shall be obliged to submit the liquidation balance sheet and the report on liquidation of a bank to the Ministry of Justice and the authorized body within seven days after approval.
 After completion of liquidation of a bank, the liquidation committee shall hand over the documents into archive for storage in a prescribed manner and notify the authorized body about this action.
  7. In the event of inadequacy of funds for satisfaction of claims of all creditors, a bank shall be subject to forced liquidation due to its bankruptcy.
  7-1. In connection with the impossibility to complete the process of voluntary liquidation, the authorized body shall have a right to appeal to the court against forced termination of a bank’s activity (liquidation).
  Reference. Article 69 is amended by the RK Laws dated 16th of July 1999 N 436; dated 2nd of March 2001 N 162 (see art. 2); dated 10th of July 2003 N 483 (effective since 1st of January 2004); dated 23.10.2008 N 72-IV (enactment procedure, see art.2).