On Banks and Banking Activity in the Republic of Kazakhstan (стр. 8 )

  Article 47. Sanctions
 
  1. The authorized body shall have a right to apply sanctions to a bank, irrespective of earlier imposed enforcement measures.
  2. The authorized body shall have a right to apply the following measures as sanctions:
  а) a fine on the bases, established by the legislative acts of the Republic of Kazakhstan;
  b) suspension or revocation of a license for the performance of all or certain bank operations, on the bases, established by Article 48 of this Law;
  c) temporary closing of a bank on the bases and in accordance with the procedure, established by Articles 62-67 of this Law;
  d) revocation of a bank establishment permit due to the reasons, established by Article 49 of this Law;
  e) in the case of negative amount of a bank’s own capital, to take a decision under approval of the Government of the Republic of Kazakhstan on forced repurchase of shares (participation interest) of a bank at a certain price, established by the authorized body, on the assumption of the value of the bank’s assets less the amount of its liabilities at the effective date of taking a decision of the authorized body on forced repurchase of shares, on the condition of its immediate sale to a new investor at the acquisition price, with simultaneous assignment (transfer) of all rights and obligations of the bank and its shareholders.
  f) dismissal from performance of service duties of the persons, indicated in Article 20 of this Law, due to the reasons, sufficient for recognition of the acts of indicated executive officer (executive officers) of a bank as incompliant with the requirements of current legislation, and with simultaneous revocation of the approval for appointment (election) to the position of executive officer of the bank;
  g) (excluded by the Law dated 23rd of December 2005 N 107 (enactment procedure, see art.2 of the Law N 107);
  h) in the case of decrease in the capital adequacy ratio of a bank and (or) a bank conglomerate to the level of less than fifty percent of the standards, established by the requirements of the normative legal acts of the authorized body, the bank shall be obliged to transform to a credit partnership in accordance with the procedure, established by Article 60 of this Law and the normative legal acts of the authorized body.
 In the case of a bank's rejection of the right, mentioned in the first clause of this subparagraph, or denial to issue a permit for transformation of the bank to a credit partnership on the grounds, indicated in Article 61 of this Law, the authorized body shall have a right to take a decision on conclusion of the agreement with shareholders of the bank on transfer of the bank's shares into trust management of the authorized body, with subsequent alienation of the bank's shares in accordance with paragraph 3 of Article 47-1 of this Law to a new investor (investors), provided he (they) comply with the requirements of this Law.
 In the case of refusal of shareholders to transfer shares into the trust management, the authorized body shall have a right to appeal to the court with a claim to enforce conclusion of the agreement.
  3. A decision to dismiss the employees, who were suspended from their positions, shall be adopted by the bodies, which appointed or elected those employees to the respective positions, in the case of application of sanctions by the authorized body, established by subparagraph e) paragraph 2 of this Article.
  4. (Item is excluded by the RK Law dated 10th of July 2003 N 483 (effective since 1st of January 2004).
  5. A decision of the authorized body on revocation of licenses (a license) of a bank for the performance of bank operations shall enter in force at the date of its adoption.
  6. After a license (licenses) for the performance of bank operations by a bank is revoked, the authorized body shall appoint the temporary administration (temporary administrator) of the bank, and such administration (administrator) shall acquire the powers of the bank’s management bodies.
 The powers of the bank’s management bodies effective prior to such event shall be suspended.
  6-1. Irrespective of the earlier imposed enforcement measures, the National Bank shall have a right to impose sanctions to a bank or an organization, carrying out certain types of bank operations. As the sanctions the National Bank shall have a right to impose the measures, indicated in subparagraph a) paragraph 2 of this Article, to a bank or an organization, carrying out certain types of bank operations, as well as measures, indicated in subparagraph 6) paragraph 2 of this Article, to the organization, which carries out certain types of bank operations under the license, issued by the National Bank.
  7. Within ten working days after revocation of licences for the performance of bank operations, the authorized body shall apply to the court with an application on forced termination of activities (liquidation) of a bank in accordance with the procedure, established by the legislation.
 Information on the decision, taken by the authorized body, shall be published by the authorized body in two periodical printed editions, distributed in the territory of the Republic of Kazakhstan.
  8. Only the bank shareholders may on behalf of their bank appeal a decision of the authorized body on revocation of licenses for the performance of bank operations. The mentioned decision may be appealed in a judicial procedure within 10 days.
  Reference. Article 47 is added with paragraph 3 by the RK Presidential Decree, having a legal force of the Law, dated 27th of January 1996 N 2830. Paragraph 2 is added with subparagraph "e" by the RK Law dated 7th of December 1996 N 50. Inserted amendments 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 8th of July 2005 N 69; dated 23rd of December 2005 N 107 (enactment procedure, see art.2 of the Law N 107); dated 12th of January 2007 N 222 (effective upon expiry of 6 months since the date of official publication); dated 19th of February 2007 N 230 (enactment procedure, see art.2).

  Article 47-1. Enforcement Measures Applicable to Large Participants of a Bank, a Bank Holding and Legal Entities of a Bank Conglomerate

   1. The authorized body shall have a right to apply the enforcement measures to a large participants of a bank and a bank holding, or legal entities of a bank conglomerate in the following cases:
  1) non-receipt of an approval of the authorized body for acquisition of the status of a large participant and a bank holding;
  2) occurrence of the circumstances, specified in paragraph 9 of Article 17-1 of this Law, after acquisition of the status of a large participant and a bank holding;
  3) non-compliance with the written prescriptions of the authorized body in accordance with Article 46 of this Law;
  4) execution of acts by an entity, which has the features of a large participant in a bank (including organizations, where such a large participant has the control), a bank holding or legal entities of a bank conglomerate, which resulted in damage or possible damage to the bank;
  5) unstable financial position of an entity, which has the features of a large participant in a bank (including organizations, where such a large participant has the control), a bank holding or legal entities of a bank conglomerate, which resulted in damage or possible damage to the bank.
 The authorized body shall have a right to apply the enforcement measures to bank holdings and large participants of a bank, being individuals, which own directly or indirectly twenty five percent and more of voting shares and (or) placed shares (less preference and repurchased shares) of the bank, for their acts or omission of acts, resulted in non-compliance with the requirements of paragraph 5 of Article 42 of this Law.
  2. In the cases, mentioned in paragraph 1 of this Article, the authorized body shall have the following rights:
  1) to require from an entity, which has the features of a large participant, as well as from the large participant, to reduce its share of direct or indirect ownership in a bank to the level less than ten percent of voting shares;
  2) to require from an entity, which has the features of a bank holding, as well as from the bank holding, to reduce the share of its direct or indirect ownership in a bank to the level less than twenty five percent of voting shares, and to suspend the performance of operations (direct and indirect), which expose the bank to a risk;
  3) to require from a bank with regard to the organisation, in which the bank or a bank holding is a participant, and organizations of a bank conglomerate, to suspend the performance of operations (direct and indirect), which expose the bank to a risk;
  4) to require from a bank or an entity, which has the features of a bank holding, as well as from the bank holding, to alienate its participation share or control over the subsidiary or the organizations, where they have large participation in the charter capital.
  3. Based on the decision of the authorized body, in the case of non-compliance by a large participant in a bank, a bank holding or an entity, which has the features of a bank or a bank holding, with the requirements, established by paragraph 2 of this Article, as well as paragraph 6 of Article 57 of this Law, there shall be established trust management of shares of this large participant of the bank, the bank holding or the entity, which has the features of a bank or a bank holding. These shares shall be transferred to the trust management of the authorized body for the period up to three months.
During the period of trust management of shares, performed by the authorized body, an owner of the shares shall not have a right to commit any actions in relation to such shares, which are subject to trust management.
  Large participant of a bank, a bank holding or an entity, which has the features of a bank or a bank holding, shall have a right to appeal to the authorized body with a claim to sell all shares of the bank, which belong to this entity to the entities, mentioned in the petition.
 A petition shall be satisfied by the authorized body in case of fulfillment of the requirements of the legislation of the Republic of Kazakhstan, indicated in the petition, by the share buyers.
  At failure to eliminate the grounds for transfer of shares to the trust management within two months after the date of transfer of shares to the trust management of the authorized body, the authorized body shall alienate the shares, which are in trust management, through its sale in the organized securities market. Funds from sale of the mentioned shares shall be transferred to the entities, whose shares were transferred to the trust management of the authorized body.
  The measures on sale of shares of a large participant of a bank, a bank holding or an entity, which has the features of a bank or a bank holding, shall be made at the bank’s expense.
  4. The procedure for application of the enforcement measures shall be defined by the normative legal acts of the authorized body.
  Reference. Article 47-1 is stated in the wording of the RK Law dated 23.10.2008 N 72-IV (enactment procedure, see art.2).

  Article 48. Grounds for Suspension or Revocation of Licenses for the Performance of All or Certain Bank Operations
 
  1. Suspension or revocation of licenses for the performance of all or certain bank operations shall be carried on one of the following bases:
  а) non-compliance with the requirements of Article 20, sub-paragraphs 2) and 6) of Article 26 of this Law in the course of banking activities;
  b) carrying out bank operations with systematic (three and more times within twelve consecutive calendar months) violation of the provisions of current banking legislation;
  c) systematic (three and more times within twelve consecutive calendar months) violation of the contractual obligations on payment and transfer operations;
  d) systematic (three and more times within twelve consecutive calendar months) violation of the prudential requirements and (or) other standards and limits, which are obligatory for compliance;
  e) non-compliance with the obligation to disclose the general terms for the performance bank operations, established by Article 32 of this Law;
  f) violation of the prohibition, established by Article 40 of this Law, in respect to granting privileges to the entities, bound to a bank through the special relations;
  g) non-representation or presentation of deliberately misleading reports and information to the authorized body and (or) the National Bank;
  h) systematic (three and more times within twelve consecutive calendar months) violation of the normative legal acts, or systematic (three and more times within twelve consecutive calendar months) failure to execute the written prescriptions of the authorized body and the National Bank;
  h-1) non-observance of the requirements, established by the authorized body in terms of availability of the systems of risk management and internal control;
  h-2) non-fulfilment of the requirements of the authorized body on increase of a bank’s own capital by a bank holding, large participant of a bank, being individual, which directly or indirectly hold twenty five percent and more of voting and (or) placed shares (less preference and repurchased shares) of the bank, as well as the requirements, established by paragraph 2 Article 47-1 of this Law;
  i) performance of the activities, prohibited or restricted for banks in accordance with the provisions of Article 8 of this Law;
  j) performance of transactions by a bank, which are beyond its legal capacity, established by this Law, the bank's charter or the licenses (a licence) for the performance of bank operations;
  j-1) non-performance of activities by banks and organizations, carrying out certain types of bank operations, in accordance with the issued license within twelve consequent calendar months after the date of issue of such a license;
  k) adoption of a decision by the court on termination of a bank’s activities;
  k-1) adoption of a decision by a bank on voluntary termination of its activity through reorganisation or liquidation;
  l) non-submission or submission of false information on the entities, affiliated to a bank, as well as any other information, required by the authorized body, which served as an impediment for exercise of supervision over the bank activities by the authorized body, including on the consolidated basis;
  m) multiple (two and more times in the course of inspection) impediment of the performance of inspection a the bank, that caused impossibility of its accomplishment within the established timeline;
  n) deliberate non-elimination of violations, indicated in the report of an auditing organisation on the performed audit, within the timeline, indicated in paragraph 6 of Article 57 of this Law.
  1-1. A bank (except for an Islamic bank), which is not a participant of the system of obligatory guaranteeing of deposits, is subject to revocation of a license for acceptance of deposits, opening and maintenance of accounts of individuals.
  2. The National Bank or the authorized body shall suspend or revoke licenses for the performance of all or certain bank operations depending on the nature of a violation.
 The appeal against a decision of the National Bank or the authorized body for suspension of actions or revocation of a license for certain types of bank operations shall not suspend execution of such decisions.
  Reference. Article 48 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 08.12.1997 N 200; dated 16.07.1999 N 436; dated 02.03.2001 N 162 (see art. 2); dated 10.07.2003 N 483 (effective since 01.01.2004); dated 08.07.2005 N 69; dated 23.12.2005 N 107 (enactment procedure, see art. 2 of the Law N 107); dated 31.01.2006 N 125; dated 12.01.2007 N 222 (effective upon expiry of 6 months since the date of official publication); dated 19.02.2007 N 230 (enactment procedure, see art. 2); dated 23.10.2008 N 72-IV(enactment procedure, see art. 2); dated 12.02.2009 N 133-IV (enactment procedure, see art. 2).

  Article 48-1. Transfer of Documents and Property of a Bank
 
  1. A bank, which license for the performance of all bank operations have been revoked, shall have no right to carry out banking or any other activities, and obliged to terminate all existing transactions on the bank accounts, except for the cases, associated with current expenses, established by the normative legal acts of the authorized body, and accrual of funds received by the bank.
  2. The procedure for operation of a bank, appointment of its temporary administration (temporary administrator), as well as the powers of the temporary administration (temporary administrator) shall be defined by the normative legal acts of the authorized body.
  3. The temporary administration (temporary administrator) of a bank shall carry out its activities within the period until appointment of the bank’s liquidation commission by the authorized body.
 Control over activity of the temporary administration (temporary administrator) of a bank before appointment of the liquidation commission of the bank shall be made by the authorized body.
  4. A report of the temporary administration (temporary administrator) of a bank shall be submitted to the authorized body and to the court, which have adopted a decision on the bank liquidation.
  5. (Paragraph is excluded by the Law of the Republic of Kazakhstan dated 10th of July 2003 N 483 (effective since 1st of January 2004).
  6. The temporary administration (temporary administrator) of a bank shall terminate its powers and transfer the bank's documents and property to the chairman of the liquidation commission of the bank within 10 days.
  7. Transfer and receipt of the documents and property of a bank from its temporary administration (temporary administrator) to the chairman of the liquidation commission shall be registered through the act, compiled in 4 copies and approved by the authorized body. One copy of the act shall be forwarded to the court.
  8. During the period of activities, the temporary administration (temporary administrator) of a bank shall have no right to carry out expenditure transactions, except for the cases, established by paragraph 1 of this Article, and alter any terms of the agreements, concluded by the bank earlier.
  9. It shall be prohibited to the authorized body to finance expenses, associated with forced reorganisation and liquidation of banks, except the expenses, associated with payment of salaries to the staff of the authorized body, which are members of the temporary administration (temporary administrator) and the liquidation commission of the bank, and expenses for publication of information on the court’s decision on forced liquidation of the bank in the periodical printed media of the Justice Ministry of the Republic of Kazakhstan in the state and Russian languages, and expenses, associated with state registration of termination of the bank’s activities due to forced liquidation in the bodies of Justice, and transfer of documents to the archive after completion of the bank liquidation in the cases, when absence of the bank’s property or its value is not sufficient for payment of such expenses.
  Reference. Added with Article 48-1 by the RK Law dated 11th of July 1997 N 154. Inserted amendments by the RK Laws dated 2nd of March 2001 N 162 (see art. 2); dated 10th of July 2003 N 483 (effective since 1st of January 2004); dated 7th of July 2004 N 577; dated 23rd of December 2005 N 107 (enactment procedure, see art.2 of the Law N 107); dated 12th of January 2007 N 222 (effective upon expiry of 6 months since the date of official publication).