Article 2. The basic concepts used in this Law of the Law on Banks and Banking Activities in the Republic of Kazakhstan

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The following basic concepts are used in this Law:

1) control - the ability to determine the decisions of a legal entity, arising in the presence of one of the following conditions:

direct or indirect ownership by one person alone or jointly with one or more persons of more than fifty percent of the shares in the authorized capital or outstanding (minus preferred and repurchased by the company) shares of a legal entity, or the ability to vote independently with more than fifty percent of the shares of a legal entity;

the ability of one person to independently elect at least half of the composition of the governing body or executive body of a legal entity;

inclusion of the financial statements of a legal entity, with the exception of the financial statements of a special financial company established in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization, in the financial statements of a legal entity in accordance with the audit report;

the possibility of one person independently or jointly with one or more persons to determine the decisions of a legal entity by virtue of a contract (supporting documents) or otherwise in cases provided for by a regulatory legal act of the authorized body;

1-1) an electronic trading platform for the sale of banking and microfinance assets is an online resource that provides an infrastructure for bidding participants, operating in accordance with the Law of the Republic of Kazakhstan "On State Regulation, Control and Supervision of the Financial Market and Financial Organizations";

2) indirect ownership (voting) of bank shares is the ability to determine the decisions of a bank, a major participant in a bank, a bank holding company, or persons who are jointly a major participant in a bank, a bank holding company, through ownership of shares (stakes in the authorized capital) of legal entities;

2-1) interbank clearing - assembling, reconciliation, sorting and confirmation of payments, as well as carrying out their offsetting and determining the net positions of clearing participants - banks and organizations engaged in certain types of banking operations;

3) banking conglomerate – a group of legal entities consisting of a bank holding company (if any) and a bank, as well as subsidiaries of the bank holding company and (or) subsidiaries of the bank, and (or) organizations in which the bank holding company and (or) its subsidiaries, and (or) the bank have significant participation in the capital;

The banking conglomerate does not include the national managing holding, the non-resident banking holding of the Republic of Kazakhstan, as well as subsidiaries and organizations in which the non-resident banking holding of the Republic of Kazakhstan has a significant equity interest that are non-residents of the Republic of Kazakhstan.;

3-1) subordinated debt of the bank is an unsecured obligation of the bank on issued bonds or a loan received that meets the conditions provided for in Article 16-1 of this Law.;

3-2) the information system of a bank or an organization performing certain types of banking operations (hereinafter referred to as the information system) is a system designed to store, process, search, distribute, transmit and provide information using a hardware and software package through which banking and other services are provided.;

4) bank holding company – a legal entity (except in cases where such an owner is the state or a national managing holding company, an organization specializing in improving the quality of credit portfolios of second-tier banks, subsidiaries of the National Bank of the Republic of Kazakhstan, as well as cases provided for by this Law), which, in accordance with the written consent of the authorized body, may own directly or indirectly twenty-five or more percent of the outstanding (minus preferred and repurchased by the bank) shares of the bank, or have the opportunity to:

to vote directly or indirectly with twenty-five percent or more of the bank's voting shares;

determine decisions made by the bank, by virtue of a contract or otherwise, or have control over;

5) regulatory equity (hereinafter referred to as equity) of the bank - the amount of capital less the bank's investments;

6) major bank participant – an individual or legal entity (except in cases where such an owner is the state or a national managing holding company, an organization specializing in improving the quality of credit portfolios of second-tier banks, subsidiaries of the National Bank of the Republic of Kazakhstan, as well as cases provided for by this Law), which, in accordance with the written consent of the authorized body, may own directly or indirectly ten or more percent of the outstanding (minus preferred and repurchased by the bank) shares of the bank or have the opportunity to:

to vote directly or indirectly with ten or more percent of the bank's voting shares;

to influence the decisions taken by the bank by virtue of an agreement or otherwise in accordance with the procedure determined by the regulatory legal act of the authorized body;

7) parent organization - a legal entity that has control over another legal entity;

8) deposit - money transferred by one person (depositor) to another person, a bank, including the National Bank of the Republic of Kazakhstan and the National Postal Operator, on the terms of their return in nominal terms (with the exception of an investment deposit in an Islamic bank), regardless of whether they should be returned on demand or through which-either on time, in whole or in parts, with or without a pre-agreed surcharge, directly to the depositor or transferred on behalf of third parties;

9) subsidiary organization - a legal entity in relation to which another legal entity has control;

10) indirect ownership of shares in the authorized capital or ownership (voting) of shares of a legal entity - the ability to determine the decisions of a legal entity, a major participant in a legal entity, or persons who are jointly a major participant in a legal entity through ownership (voting) of shares (shares in the authorized capital) of other legal entities;

11) a major participant in a legal entity is an individual or a legal entity (except in cases where such an owner is the state or a national managing holding) that owns directly or indirectly ten percent or more of the shares in the authorized capital or voting shares of the legal entity.;

12) significant equity participation is the ownership, directly or indirectly, independently or jointly with one or more persons, of twenty or more percent of the voting shares (stakes in the authorized capital) or the ability to vote with twenty or more percent of the shares;

12-1) specialized branch bank - a second-tier bank whose activities are regulated by a separate legislative act of the Republic of Kazakhstan;

12-2) perpetual financial instrument is an unsecured obligation of the bank for issued bonds or a loan received that meets the conditions provided for in Article 16-2 of this Law.;

13) impeccable business reputation – the presence of facts confirming professionalism and good faith, including the absence of facts of a person committing illegal actions (inaction) that led to insolvency, which led to the forced liquidation of a financial institution, or to classifying the bank as an insolvent bank, the absence of an outstanding or outstanding criminal record, including the absence of an effective judicial act on the application of criminal penalties in in the form of deprivation of the right to hold the position of a senior employee of a financial institution, a banking and (or) insurance holding company and be a major participant (major shareholder) of a financial institution for life;

13-1) a service company is a subsidiary of a bank that acquires doubtful and uncollectible assets of the parent bank, a collection agency that has rights (claims) under bank loan agreements and (or) microcredit agreements under a trust management agreement (hereinafter referred to as – a trust management agreement for rights (claims) concluded with the person specified in part one of paragraph 4 of Article 36-1 of this Law and (or) part one of paragraph 5 of Article 9-1 of the Law of the Republic of Kazakhstan "On Microfinance Activities", with the authority to trust management of rights (claims) under bank loan agreements and (or) loan agreements micro-credit, including by changing the terms of a bank loan agreement and (or) a micro-loan agreement, by representing the interests of a person, with whom the contract of trust management of rights (claims) has been concluded, in court, for receiving money and (or) other property from the debtor, and with other powers provided for by this Law, other laws of the Republic of Kazakhstan and the contract of trust management of rights (claims);

13-2) an insolvent bank is a bank classified by a decision of the authorized body as an insolvent bank in accordance with this Law.;

14) a stabilization bank is a second-tier bank established by a decision of an authorized body for the purpose of carrying out an operation to transfer assets and liabilities of a bank in conservation mode. The specifics of the establishment and operation of the stabilization bank are established by this Law.

15) consumer bank loan – a bank loan that is not a residential mortgage loan (mortgage loan) provided to an individual for the purchase of goods, works, services and (or) other purposes not related to the implementation of entrepreneurial activities.

The Law of the Republic of Kazakhstan dated August 31, 1995 No. 2444.

Republic of Kazakhstan

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