Article 53. A Bank’s Fiscal (Operating) Year
A bank’s fiscal (operating) year shall start on January 1 and end on December 31. In the event that a bank is registered after January 1, the first fiscal (operating) year shall start on the day of the bank’s state registration, and it shall end on December 31 of the same year.
Article 54. Accounting and Reporting at Banks
1. The list, forms consistent with international standards, and deadlines for the submission of accounting, banking, and other reports, including reporting on a consolidated basis, shall be established by the authorized agency in conjunction with the National Bank.
Banks shall maintain records of their operations and events in accordance with the legislation of the Republic of Kazakhstan on accounting and financial reporting.
The accounting policy of a bank shall be determined by its board of directors.
2. In response to requests from the authorized agency and (or) the National Bank, banks shall be required to provide any information about their funds, including those held outside the Republic of Kazakhstan, about the amounts of deposits accepted and credits granted, and about past and present banking operations, and other information, including information falling under the definition of a bank secret.
2-1. Banks shall be required to provide any information requested by the authorized agency on their direct and indirect participation in the authorized capital of juridical persons in which the banks are principal partners, following the procedure established by the authorized agency.
3. Employees of the authorized agency and (or) the National Bank shall bear liability in accordance with the procedure provided for by legislative acts of the Republic of Kazakhstan for the disclosure or transmission to third parties of information obtained in the course of exercising rights established under items 2 and 2-1 of this article.
Article 54-1. Reporting by a Bank’s Affiliates
A principal partner of a bank must provide information on an annual basis to the authorized agency regarding its financial condition and operation, within 90 days of the end of the fiscal year.
A bank holding company must provide the authorized agency with quarterly financial statements within 45 days of the reporting quarter and consolidated and unconsolidated annual financial statements not certified by an auditor within 90 days of the end of the fiscal year, as well as explanatory notes regarding these statements which include but are not limited to the following:
a description of the type or types of business of the bank holding company;
the name of each organization in which the bank holding company is a partner, the amount and share of its interest in the authorized capital, a description of the type or types of business and financial statements of organizations in which the banking holding company is a principal partner;
the name of each organization that is a principal partner of the bank holding company, the amount and share of its interest in the authorized capital, and a description of the type or types of business and financial statements of the given organization.
Article 55. Release of the Main Indicators of a Bank’s Operation
Banks shall release an annual report, including an annual balance sheet and an income and expense statement, following the format and within the deadlines established by the authorized agency and (or) the National Bank, following confirmation of the accuracy of information contained therein by an auditing firm (auditor) meeting the requirements of item 4, Article 19 of this Law, and following approval of the annual balance sheet and the income and expense statement by the bank’s annual meeting of stockholders.
The balance sheet and the income and expense statement shall be released quarterly by banks following the format and within the deadlines established by the authorized agency and (or) the National Bank without their confirmation by an auditor.
Article 56. Recording and Storage of Documents
1. Banks shall be required to maintain strict records of and keep on file documents used in accounting and in the compilation of reports.
2. The list of the main documents subject to storage and the storage periods shall be established by the authorized agency.
Chapter 6. Audits of Banks and Their Affiliates
Article 57. Audits of Banks and Their Affiliates
1. Audits of accounting and reporting materials, of primary documents, and of other information on a bank’s operation may be performed by an auditing firm (auditor) that is authorized to perform audits in accordance with auditing legislation and meets the requirements of item 4, Article 19 of this Law.
1-1. An audit of the results for the fiscal year shall be mandatory for banks, bank holding companies, and organizations of which a bank and (or) bank holding company is a principal partner, and copies of the auditor’s report and recommendations of the auditing firm must be submitted by banks, bank holding companies, and organizations in which a bank and (or) bank holding company is a principal partner, or by the auditing firms to the authorized agency within 30 days of the receipt of the given documents or their presentation to banks, bank holding companies, and organizations in which a bank and (or) bank holding company is a principal partner.
Consolidated annual financial statements of a bank and bank holding company must be certified by an auditing firm that is authorized to perform bank audits.
2. Bank auditing licenses shall be issued by the authorized agency.
3. Bank audits shall be conducted for the purpose of establishing:
the timeliness, completeness, and accuracy with which banking operations are reflected in accounting and reporting;
the compliance of banking operations with the requirements of this Law, current legislation, and regulatory legal acts of the authorized agency and the National Bank;
the compliance of banking operations with the general conditions for the performance of these operations, as well as adherence of the procedure for the performance of banking operations to the bank’s internal regulations.
4. The auditing firm (auditor) shall present the results of the audit and its (his) findings in a report presented to the bank’s board of directors and supervisory board.
The report of the auditing firm (auditor) on the financial position of a bank or institution performing certain types of banking operations shall be prepared in the form of a separate document, and it shall not fall under the definition of a commercial secret.
The requirements regarding the procedure for the preparation of an auditing firm’s (auditor’s) report shall be specified in regulatory legal acts of the authorized agency.
5. An auditing firm (auditor) shall be required to present a copy of its (his) audit findings to the authorized agency at its request.
6. In the event that a bank, bank holding company, or organization of which a bank and (or) bank holding company is a principal partner fails to correct violations that are affecting the financial condition of the bank or banking group as detailed in an auditing firm’s audit report, within three months of the day the bank, bank holding company, or organization of which a bank and (or) bank holding is a principal partner receives the given report, the authorized agency shall have the right to apply the following until such time as the violations are corrected:
with respect to a bank – sanctions provided for under subitem g), item 2, Article 47 of this Law;
with respect to a bank holding company or organization of which a bank and (or) bank holding company is a principal partner – measures provided for under item 2, Article 47-1 of this Law;
in the event that the violations are not corrected within one year of the day the given report is received, the authorized agency shall have the right:
with respect to a bank – to revoke the bank’s license on the basis of subitem n), item 1, Article 48 of this Law;
with respect to a bank holding company – to apply measures provided for under item 3, Article 47-1 of this Law.
Article 58. Licensing of Bank Auditing
1. Any juridical or natural person authorized to perform audits in accordance with the legislation of the Republic of Kazakhstan shall have the right to apply to the authorized agency for a bank auditing license.
2. The procedure and conditions for issuing a bank auditing license, for the suspension and revocation of a bank auditing license, and the requirements to be met by the applicant shall be determined by regulatory legal acts of the authorized agency, taking into account the requirements established by this Law.
3. Omitted.
Article 59. Invalidation of a Bank Audit Report of an Auditing Firm (Auditor).
Grounds for Revocation and Suspension of a Bank Auditing License
1. An audit report of an auditing firm (auditor) shall be invalidated in all cases in which:
a) the auditing firm (auditor) is a direct or indirect partner of the bank being audited or of a founder of the bank;
b) the auditor or any executive or employee of the auditing firm who is performing the audit has a close relative or a close relative of the spouse of an executive of the bank being audited;
c) the auditing firm (auditor) has financial obligations to the bank being audited.
d) the auditing firm (auditor) does not have a bank auditing license from the authorized agency;
e) the report does not meet the standards or requirements established by the authorized agency regarding the procedure for documenting bank auditing results, and also in other cases provided for by current legislation.
2. A bank auditing license shall be revoked or suspended by the authorized agency on any of the following grounds:
a) the authorized agency has invalidated the audit reports of an auditing firm (auditors) on two or more occasions;
b) disclosure or transmission to third parties (with the exception of the authorized agency) of information obtained during an audit and falling under the definition of a banking or commercial secret;
c) failure to present a copy of the audit report (the auditor’s confirmation) when so requested by the authorized agency;
d) an auditing firm (auditor) presents a report (a confirmation) regarding issues concerned with auditing activity which it (he) knows to be untruthful;
e) absence of an auditor within the auditing firm who has a valid bank auditing license from the authorized agency;
f) a decision to revoke an auditing license;
g) discovery, within one year of the day a bank auditing license was issued, that information on the basis of which it was issued was untruthful.
Section II. Conditions for Changing the Legal Status of Banks and the Particulars of Terminating Their Operation
Chapter 7. Voluntary Reorganization Of Banks
Article 60. General Conditions for the Voluntary Reorganization of Banks
1. Banks may be reorganized (consolidated, merged, split, spun off, converted) by a decision of the general meeting of stockholders, with the permission of the authorized agency.
2. The decision of a bank’s general meeting of stockholders shall be grounds for filing a petition for permission for the bank’s voluntary reorganization.
3. The following documents must be appended to the petition for the authorized agency’s permission for a bank’s voluntary reorganization:
a) the decision of the bank’s top administrative body regarding voluntary reorganization;
b) documents describing the proposed conditions, forms, procedure, and timetable for the bank’s voluntary reorganization;
c) a financial forecast of the consequences of voluntary reorganization, including the bank’s balance of claims and liabilities after its voluntary reorganization and (or) that of the juridical persons formed as a result of the bank’s voluntary reorganization.
4. A petition for permission for a bank’s reorganization must be considered by the authorized agency within two months of the day of its receipt.
5. Within two weeks of receiving the authorized agency’s permission to reorganize, the bank to be reorganized shall be required to inform all of its depositors, customers, correspondents, and borrowers of the forthcoming changes by means of direct notification and by publication of a relevant announcement in at least two republican newspapers.
6. Juridical persons formed as a result of reorganization shall be registered or reregistered with the state in accordance with current legislation.
Article 61. Denial of Permission for Voluntary Reorganization of a Bank
The authorized agency shall deny permission for voluntary reorganization a bank on any of the following grounds:
a) the appropriate decisions have not been made by the top administrative bodies of the banks to be reorganized;
b) the interests of depositors would be violated as a result of the proposed reorganization;
c) prudential standards and other binding norms and limits would be violated as a result of the proposed reorganization;
d) the requirements of anti-monopoly legislation would be violated as a result of the proposed reorganization.
Chapter 8. Temporary Closure of a Bank
Article 62. The Concept of the Temporary Closure of a Bank
1. The temporary closure of a bank shall mean compulsory implementation of a package of administrative, legal, financial, organizational, technical, and other measures and procedures in relation to the bank by a decision of the authorized agency with the aim of rehabilitating its financial position and improving its performance.
2. A bank may be closed temporarily on any of the following grounds:
a) systematic failure to meet the capital adequacy ratio (for three successive months);
b) on grounds set forth in Article 48 of this Law.
3. Establishment of a temporary closure regime entails the appointment of an interim administration to manage the bank or an interim bank manager by the authorized agency for a limited time (up to one year).
4. The temporary closure of a bank shall be carried out at the bank’s own expense.
5. A decision by the authorized agency to close a bank temporarily may be appealed in court by the bank’s stockholders within 10 days. An appeal of this decision shall not be grounds for suspending the bank’s temporary closure.
Article 63. Interim Bank Administration (Interim Bank Manager)
1. An interim administration (interim bank manager) shall be appointed by the authorized agency from among its employees, or from among persons who are not its employees and who meet the minimum requirements established under items 3–5, Article 20 of this Law.
2. The rights, responsibilities, and conditions for the labor compensation of the director and members of the interim administration (the interim bank manager) shall be established by a separate agreement concluded between the authorized agency and the interim administration (interim bank manager).
3. The interim administration (interim bank manager) shall be governed in its (his) operations by this Law, regulatory legal acts of the authorized agency, and other legislation of the Republic of Kazakhstan.
4. The authorized agency shall have the right to replace members of the interim administration (the interim bank manager) at any time.
5. The director and members of the interim administration (the interim manager) shall bear liability established under the current legislation for damages caused to the bank. The director and members of the interim administration (the interim bank manager) may not be held liable for damages falling under the definition of ordinary business risk.
Article 64. Resolution on the Temporary Closure of a Bank
1. A decision by the authorized agency to close a bank temporarily must contain the following:
a) the bank’s name and location;
b) the grounds for the decision to temporarily close the bank;
c) the starting date and duration of the temporary closure;
d) a list of restrictions imposed on the bank’s operation;
e) the personnel of the interim administration, or the last name, first name, and patronymic of the interim manager;
f) instructions to the executive officers of the bank under a temporary closure regime regarding the preparation of a report on their work, an income statement, and information on the amount of property, and regarding the presentation of these documents to the interim administration (interim bank manager).
g) recommendations to the interim administration (interim manager).
2. The authorized agency shall publish a decision regarding the temporary closure of a bank in at least two periodicals that are distributed throughout the entire territory of the Republic of Kazakhstan.
Article 65. Particulars of Managing a Bank During Temporary Closure.
Powers of the Interim Bank Administration (Interim Bank Manager)
1. From the start of a temporary closure and for its duration:
a) the rights of the bank’s stockholders to manage the bank shall be suspended;
b) the powers of the bank’s administrative bodies and its executive officers shall be suspended;
c) all powers of bank management shall transfer to the interim administration (interim manager);
d) all transactions effected in the bank’s name and on its account without the knowledge and written consent of the interim administration (interim bank manager) shall be invalid.
2. The interim administration (interim bank manager) shall have the right:
a) to make decisions independently on all issues concerning the bank’s operation, taking into account the requirements of Article 66 of this Law;
b) if necessary, to suspend the bank’s obligations under accepted deposits in full or in part for the duration of the temporary closure;
c) if necessary, to abrogate agreements concluded by the bank providing for the investment of the bank’s resources, or to make amendments and additions to them unilaterally, including changes in rates, tariffs, and effective periods;
d) to sign any agreements and documents in the bank’s name;
e) to lodge claims in the bank’s name and in its interests;
f) to publish orders, including orders to dismiss, demote, or suspend bank employees, and to assign responsibilities among them.
Article 66. Supervision of the Operation of a Bank’s Interim Administration
(Interim Bank Manager)
1. During the period of a bank’s temporary closure, the authorized agency shall supervise the operation of the interim administration (interim bank manager), and it shall have the right:
a) to make recommendations to the interim administration (interim bank manager) on the basic orientation of measures to be carried out during the period of the bank’s temporary closure (or to propose a basic action plan);
b) to issue written directives that are binding upon the interim administration (interim bank manager);
c) to require the interim administration (interim bank manager) to provide any information on its (his) operation and the bank’s operation;
d) to hear the report of the interim administration (interim bank manager) on work that has been done;
e) to extend the period of temporary closure;
f) to adopt the decision to conclude the bank’s temporary closure.
2. Detailed regulations governing the operation of an interim administration (interim bank manager) and the principles of its (his) relationships with third parties shall be determined by regulatory legal acts of the authorized agency.
Article 67. Termination of a Temporary Closure
1. A bank’s temporary closure shall be terminated on the following grounds:
a) expiration of the temporary closure period established by a decision of the authorized agency;
b) adoption of a decision by the authorized agency to end the temporary closure ahead of schedule.
2. Termination of a bank’s temporary closure (including early termination) in connection with the rehabilitation of its financial position and improvement of its performance shall result in the lifting of all restrictions on this bank that were imposed by the authorized agency or the interim administration (interim bank manager). In this case amendments and additions to charter documents and changes made in administrative bodies and bank personnel during the temporary closure period shall remain in force.
3. If a bank’s temporary closure does not result in rehabilitation of its financial position and improvement in its performance, the authorized agency shall have the right to revoke its banking license on grounds provided for by the banking legislation.
Chapter 9. Liquidation and Involuntary Reorganization of Banks
Article 68. Forms of and Grounds for Liquidation of Banks
1. A bank may be liquidated:
a) by a decision of its stockholders with the permission of the authorized agency (voluntary liquidation);
b) by a court decision in cases provided for by legislative acts of the Republic of Kazakhstan (involuntary liquidation);
2. The operation of banks shall be terminated, including as a result of bankruptcy, in accordance with legislative acts of the Republic of Kazakhstan, taking into account the requirements of this Law.
Article 68-1. Creditors’ Committee of Banks Undergoing Voluntary and
Involuntary Liquidation
1. With the aim of protecting the interests of creditors and ensuring the adoption of decisions with their participation, a creditors’ committee shall be established as part of the voluntary and involuntary liquidation of banks.
The makeup of a creditors’ committee of a bank undergoing voluntary or involuntary liquidation shall be approved by the authorized agency on the basis of a representation by the bank’s liquidation commission.
2. The particulars involved in the formation and operation of a creditors’ committee shall be established by regulatory legal acts of the authorized agency.
Article 69. Voluntary Liquidation
1. On the basis of a decision of a general meeting of stockholders, a bank shall have the right to petition the authorized agency for permission to undergo voluntary liquidation.
A list of measures pertaining to the timetable and phases of the bank’s preparation for termination of its operation, approved by the general meeting of stockholders, a balance sheet showing that the bank has sufficient resources to settle its obligations, a list of candidates for membership on the liquidation commission, including subdivisions of the liquidation commission established at branches or representative offices, and other required information must be appended to the petition. The list of required information shall be established by regulatory legal acts of the authorized agency.
2. A petition for permission for voluntary liquidation of a bank must be considered by the authorized agency within two months of the day properly prepared documents are received.
Should the authorized agency deny permission for voluntary liquidation of a bank, it shall issue a decision to this effect together with the reasons, and it shall inform the bank of this decision.
3. Omitted.
4. Upon receiving permission for voluntary liquidation, a bank shall establish a liquidation commission, taking into account the bank’s branches and representative offices, to which the powers of managing the bank’s property and affairs shall transfer.
The particulars of the operation of liquidation commissions of banks undergoing voluntary liquidation shall be determined by regulatory legal acts of the authorized agency.
4-1. The authorized agency shall monitor the operation of a liquidation commission of a bank undergoing voluntary liquidation.
5. After receiving permission for voluntary liquidation, a bank shall be required to publish information to this effect in official publications of the central judicial authority.
6. A liquidation commission shall be required to present the bank’s liquidation balance sheet and liquidation report to the Ministry of Justice and the authorized agency within seven days after their approval.
Upon completion of a bank’s liquidation, the liquidation commission shall be required to submit documents to the archives for safekeeping, and it must notify the authorized agency to this effect.
7. If there are insufficient funds to satisfy the claims of all creditors, a bank shall be subject to involuntary liquidation due to bankruptcy.
7-1. In the event that it is not possible to complete the voluntary liquidation process, the authorized agency shall have the right to file a petition in court for involuntary termination of the bank’s operation (liquidation).
Article 70. Forms of Involuntary Liquidation of Banks
Involuntary liquidation of a bank shall be effected by a court in connection with:
a) the bank’s bankruptcy;
b) revocation of the bank’s banking licenses on grounds provided for by the banking legislation;
c) a petition (suit) filed by authorized government agencies, juridical persons, or natural persons calling for termination of the bank’s operation on other grounds provided for by legislative acts.
Article 71. Declaration of a Bank as Bankrupt
1. Insolvency and failure of a bank shall be established by a finding of the authorized agency filed with the court and prepared with regard for the procedure for calculating prudential standards (and other binding norms and limits) and the amount of the bank’s capital.
2. A bank may be declared bankrupt only by a court decision following the established procedure. Out-of-court liquidation of an insolvent bank by a decision of its creditors and the bank itself shall not be allowed.
3. The possibility of reaching an amicable settlement among parties to a bank bankruptcy case shall be excluded.
4. A court shall forward a decision to declare a bank bankrupt and pursue its involuntary liquidation to the authorized agency.
Article 72. Liquidation of a Bank on Other Grounds
1. When a court initiates proceedings in response to a petition (suit) filed by an authorized government agency or by juridical persons or natural persons (in the absence of a decision to revoke the bank’s banking licenses), the bank shall be subject to involuntary liquidation in accordance with this Law.
2. A court shall forward its decision on the involuntary liquidation of a bank to the authorized agency.
The bank’s banking licenses shall be revoked as of the date the court makes its decision on involuntary liquidation of the bank in a case initiated on grounds set forth in subitem c), Article 70 of this Law.
Article 73. Conditions and Procedure for Involuntary Liquidation
1. As of the date that a court initiates proceedings for the involuntary liquidation of a bank:
1) the founders (partners) and administrative bodies of the bank shall no longer have the right to determine the disposition of the bank’s property;
2) the execution of previous court decisions regarding the bank undergoing liquidation shall be suspended;
3) creditors’ claims against the bank may be presented only as part of the liquidation proceedings, with the exception of claims related to current expenses for the bank’s maintenance;
4) funds may not be collected from the bank’s bank accounts in response to claims by creditors and tax authorities, including those subject to satisfaction without recourse (without acceptance), nor may collection action be taken against the bank’s property;
5) bank officials shall be prohibited from the alienation of bank stocks belonging to them.
1-1. The liquidation of banks due to bankruptcy shall be carried out in accordance with this Law as well as the legislation of the Republic of Kazakhstan.
2. All costs associated with the liquidation of a bank shall be paid only at the expense of the bank’s own funds, with the exception of those cases provided for under item 9, Article 48-1 of this Law.
3. The bank's property shall be appraised by the liquidation commission in accordance with the current legislation.
4. The interim liquidation balance sheet and register of claims of creditors of a bank in liquidation shall be approved by the authorized agency.
5. The property of a bank in liquidation shall be sold by the bank’s liquidation commission following the procedure provided for by the legislation of the Republic of Kazakhstan.
6. The authorized agency shall monitor the operation of a bank’s liquidation commission, including in the case of a bank that is being liquidated due to bankruptcy.
6-1. The court that made the decision to liquidate a bank shall have the right to request from the authorized agency any information related to the operation of the bank’s liquidation commission.
7. The liquidation commission shall submit to the court a liquidation report and liquidation balance sheet approved by the authorized agency.
The court shall approve the liquidation report and liquidation balance sheet and shall issue a ruling on completion of the liquidation proceedings.
The liquidation commission shall forward a copy of the court ruling to the judicial authority responsible for the state registration of juridical persons and to the authorized agency.
Upon completion of a bank’s liquidation, the liquidation commission shall be required to submit documents to the archives for safekeeping, and it must notify the authorized agency to this effect.
Article 74. Liquidation Commission of a Bank in Involuntary Liquidation
1. After adoption of the decision to liquidate a bank, including on the grounds of bankruptcy, the court shall initiate liquidation proceedings and charge the authorized agency with appointing a liquidation commission, taking into account its branches and representative offices.
The bank liquidation commission shall take steps to wrap up the bank’s affairs and make settlements with its creditors.
The procedure for the appointment of liquidation commissions for banks undergoing involuntary liquidation, the requirements imposed on the chairman and members of a liquidation commission, as well as the procedure for the implementation of liquidation and requirements for the operation of liquidation commissions, shall be determined by regulatory legal acts of the authorized agency.
The monthly salary to be paid to the chairman and members of a bank’s liquidation commission and to other hired employees must not exceed for each of them 10 times the minimum wage established by the law on the republican budget for the respective fiscal year.
2. Omitted.
3. Omitted.
Article 74-1. Particulars of Determining the Property of Banks in Liquidation
1. The property of a bank in liquidation shall be determined according to the procedure specified in the current legislation, taking into account the particulars established under this Law.
1-1. The property of a bank in liquidation shall not include mortgaged property that serves as the following security for mortgage bonds: rights of claim under home mortgage loan contracts (including mortgage certificates), as well as government securities of the Republic of Kazakhstan in cases in which the holders of said bonds gained ownership of them through transactions or on other grounds provided for by legislative acts of the Republic of Kazakhstan. Said property shall be transferred by the liquidation commission to a representative of the holders of mortgage bonds for settlements with creditors who are holders of mortgage bonds in accordance with the legislation of the Republic of Kazakhstan on the securities market.
2. When a custodian bank is liquidated, securities belonging to third parties entrusted to it for safekeeping and accounting and the pension assets of private pension savings funds, with the exception of the equity capital of private pension savings funds, shall not be included in the property of the bank in liquidation, and they shall be transferred to another bank at the request of private pension savings funds.
Article 74-2. Order of Priority for the Satisfaction of Claims of Creditors of a
Bank in Liquidation
1. The claims of creditors of a bank in liquidation, including liquidation in connection with its bankruptcy, shall be satisfied in the order of priority set forth under this article.
2. Expenses associated with liquidation proceedings, including with supporting the operation of the bank’s liquidation commission, and expenses arising from the need to support the main functions of the bank in liquidation, shall be made ahead of all other priorities, and whenever they arise.
3. Duly recognized claims of creditors must be satisfied in the following order of priority:
a) claims of citizens to whom the bank in liquidation is liable for damages to life or health shall be given first priority and shall be satisfied through the capitalization of the corresponding periodic payments;
b) settlements for labor compensation payable to persons working under a labor agreement and for payment of remuneration under authors’ agreements shall be given second priority;
c) claims of natural persons on deposits and money transfers, future claims of the mandatory group deposit guarantee (insurance) organization related to the fulfillment of obligations to pay compensation in the amount indicated in a statement submitted by a bank undergoing involuntary liquidation, as well as claims on deposits effected at the expense of pension assets of pension savings funds, shall be given third priority;
d) settlements with nonprofit organizations engaged exclusively in charitable activities, organizations of veterans of the Great Patriotic War and organizations of persons with equivalent status, the Voluntary Society for Disabled Persons of the Republic of Kazakhstan, the Kazakh Society for the Blind, the Kazakh Society for the Deaf, production organizations under the ownership of these juridical persons and established at the expense of their funds, and other organizations for the disabled insofar as concerns their funds on bank accounts and deposited funds, shall be given fourth priority;
d-1) settlements with insurance organizations for funds held by them on bank accounts opened at the bank in liquidation shall be given fifth priority
e) claims of creditors under obligations secured by property of the bank in liquidation shall be given sixth priority;
f) the repayment of debts on taxes, fees, and other mandatory payments to the budget and also the repayment of credits from the republican budget shall be given seventh priority;
g) claims of juridical persons on funds held on bank accounts opened at the bank in liquidation shall be given eighth priority;
h) settlements with banks on interbank credits and with juridical persons on deposits not secured by property of the bank in liquidation shall be given ninth priority;
i) settlements with other creditors shall be given tenth priority in accordance with legislative acts.
4. The claims under each order of priority shall be satisfied after the claims under the preceding order of priority have been satisfied in full.
With the creditor’s consent, a claim may be satisfied by means that are not in conflict with the legislation, including in monetary form and (or) through the transfer of property in kind.
When the claims of creditors assigned the same order of priority are satisfied, the money and (or) property of the bank in liquidation shall be distributed among the creditors in this group in proportion to the amount of claims to be satisfied.
Article 74-3. Involuntary Reorganization of a Bank. Rehabilitation Procedures
1. A bank shall be subject to involuntary reorganization on the basis of a court decision in accordance with the current legislation and with regard for the particulars provided for under this Law.
Rehabilitation procedures for a bank shall be carried out on the basis of a court decision as part of the measures involved in the bank’s involuntary reorganization, with the aim of restoring its solvency and (or) ensuring that the bank has the ability to meet the conditions and requirements provided for by the legislation of the Republic of Kazakhstan.
2. A court shall have the right to resolve the question of a bank’s involuntary reorganization or its rehabilitation only on the basis of the appropriate findings of the authorized agency.
The bank’s refund of all of its deposits to interested persons within one year of the date of the decision on involuntary reorganization shall be a mandatory prerequisite for a bank’s involuntary reorganization and its rehabilitation.
Failure to fulfill this condition shall result in the involuntary liquidation of the bank.
2-1. If it is possible for a bank to restore its solvency and (or) to correct deficiencies that have been identified, the bank shall have the right to file a petition with a court requesting that rehabilitation procedures be carried out in connection with the court’s review of the question of the bank’s involuntary reorganization. A plan for the bank’s rehabilitation must be attached to the bank’s petition.
One copy of the bank’s petition, accompanied by the attached documents, shall be submitted to the authorized agency.
2-2. A bank’s rehabilitation plan shall be subject to the preliminary approval of the authorized agency and shall be approved by the court within 10 days of its submission. Changes may be made in a bank’s rehabilitation plan with the consent of the authorized agency on the basis of a court decision.
2-3. The duration of a bank’s rehabilitation period must not exceed six months. The timetable for the initiation and completion of rehabilitation procedures shall be determined by the court. A rehabilitation plan for a bank that has been approved by the court shall be a binding document for the bank and its officials.
2-4. Rehabilitation procedures shall be carried out by a bank under the supervision of the authorized agency. The bank shall operate normally during the rehabilitation period, taking into account the requirements of this article.
3. In the event that a court decides on the involuntary reorganization of a bank (regardless of the grounds on which proceedings are initiated), implementation of the involuntary reorganization shall be assigned to a special bank manager (management commissioners) approved by the court, except in those cases provided for under items 2-1–
2-4 of this article.
The special bank manager (management commissioners) shall be required to inform the court and the bank’s creditors of his (their) activities on a monthly basis.
4. A third party participating in a bank’s reorganization in connection with the bank’s merger with another commercial institution or its absorption by another institution shall be required to supply the necessary documents (data) to the special manager (management commissioners) substantiating his (their) financial solvency and the advisability of the bank’s reorganization.
5. The involuntary reorganization of a bank shall be carried out according to the procedure specified by the court and in accordance with a timetable and action plan approved by it.
6. The report of the special bank manager (management commissioners) regarding completion of the bank’s involuntary reorganization shall be approved by the court.
7. Within five days of the entry into force of the official document confirming that the bank has been reorganized within the framework of the stated court proceedings, the organization that is the legal successor to the bank shall be required to provide for publication of the necessary information in two republican newspapers.
8. Costs associated with the involuntary reorganization of a bank shall be paid at the expense of the bank’s funds.
9. Other issues related to the involuntary reorganization of a bank and the implementation of bank rehabilitation procedures shall be governed by regulatory legal acts of the authorized agency.
Article 74-4. Supervisory Authorities of the Authorized Agency in the Bank
Liquidation Process
1. With the aim of monitoring the activities of liquidation commission of banks undergoing voluntary and involuntary liquidation, including due to bankruptcy, the authorized agency shall have the right:
1) to obtain from liquidation commissions reports on the work that has been done, as well as additional information if necessary;
2) to establish the format, deadlines, and periodicity for the submission of reports and additional information by liquidation commissions;
3) to perform audits of the activities of liquidation commissions;
4) when violations of the requirements of the legislation of the Republic of Kazakhstan and of the rights and lawful interests of creditors are discovered in the activities of liquidation commissions, to issue written instructions calling for the correction of violations that are binding upon the liquidation commissions and to set a deadline for compliance with an instruction;
5) in the event that a liquidation commission fails to comply with a written instruction within the established deadline, to refer the matter to the courts or to prosecutor’s offices to protect the rights and legally protected interests of creditors.
2. The authorized agency shall have the right to obtain necessary information from a bank in relation to which the court is considering involuntary termination of its operation.
3. In the event that a liquidation commission violates the legislation of the Republic of Kazakhstan, the chairman of the liquidation commission shall bear liability in accordance with the laws of the Republic of Kazakhstan.
Section III. Final Provisions
Chapter 9-1.
Articles 74-5–74.9
Chapter 10. Final Provisions
Article 75. Scope of Application of This Law
1. The standards set forth in this Law shall apply to all banks operating in accordance with legislation of the Republic of Kazakhstan, including those established through special procedures on the basis of certain legislative and regulatory acts governing the initial phase of their organization, and also to persons who are direct and indirect partners of banks.
2. The legal status, procedure of establishment, licensing, and regulation and termination of the operation of institutions performing certain types of banking operations, including the list of types of banking operations permitted for each of them, the grounds for issuing banking licenses to them, and possible restrictions on their activity shall be established by this Law and other legislative acts of the Republic of Kazakhstan and by regulatory legal acts of the authorized agency and (or) the National Bank within the scope of their authority.
3. The provisions of this Law shall apply to the National Bank only in those cases explicitly specified by this Law.
Article 76.
Article 77. Appeal of Actions of the National Bank
Actions of the authorized agency and the National Bank of the Republic of Kazakhstan concerned with banking regulation may be appealed through legal channels.
Article 78. Entry into Force of This Law
1. This Law shall enter into force the day of its publication.
2. From the day this Law enters into force, sanctions provided for under this Law shall be applied against banks discovered to have violated the procedure for forming the authorized capital of banks during the period that the Law of the Republic of Kazakhstan “On Banks in the Republic of Kazakhstan” of April 14, 1993 was in force.
President of the Republic of Kazakhstan N. Nazarbayev
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