Article 3-5. Measures to improve financial condition and/or minimize risks The Law on the Securities Market

Home / RLA / Article 3-5. Measures to improve financial condition and/or minimize risks The Law on the Securities Market

1. In order to eliminate deficiencies, risks or violations, including those identified using reasoned judgment, the authorized body applies measures to improve the financial condition and (or) minimize the risks of a professional participant in the securities market, a major participant managing an investment portfolio, a person with the characteristics of a major participant managing an investment portfolio, by submitting requirements for:

1) maintaining the equity capital adequacy ratio and (or) the liquidity ratio above the minimum values established by the authorized body;

1-1) elimination of the factor(s) influencing the deterioration of the financial situation of an organization engaged in brokerage and (or) dealer activities in the securities market and (or) investment portfolio management activities;

2) suspension and (or) restriction of certain types of transactions, certain types of transactions, or the establishment of a special procedure for their implementation;

3) cost reduction, including through termination or restriction of additional hiring of employees, limitation of monetary remuneration and other types of financial incentives for senior employees;

4) suspension and (or) restriction of investments in certain types of assets and (or) reduction of their volume or establishment of a special procedure for their implementation;

5) elimination of the causes and (or) conditions that contributed to the violation of the requirements of the legislation of the Republic of Kazakhstan on issues within the competence of the authorized body, the rights and legitimate interests of clients of a professional participant in the securities market and (or) investors in the securities market;

6) the formation of provisions (reserves) according to international financial reporting standards;

7) restriction of transactions with an affiliated company;

8) termination of accrual and (or) payment of dividends on common and (or) preferred shares;

9) review of internal policies and procedures, limits on the acceptable amount of risk, procedures for evaluating the effectiveness of the risk management and internal control system;

10) removal from the performance of official duties of the persons specified in Article 54 of this Law, including in the case of suspension by a professional participant in the securities market of the persons specified in Article 54 of this Law from the performance of official duties until the authorized body applies this supervisory response measure. When applying this supervisory response measure to a senior employee, the authorized body revokes consent to the appointment (election) to the position of a senior employee.;

11) the removal of members of the investment committee of a professional participant in the securities market from their duties as part of the investment committee or a change in the composition of the investment committee;

12) fulfillment by an organization engaged in brokerage and (or) dealer activities (with the exception of a bank, a branch of a non-resident bank of the Republic of Kazakhstan) of obligations under transactions concluded at its own expense and at the expense of its clients;

13) conducting an assessment of the value of property owned by a major participant in the investment portfolio manager;

14) ensuring compliance of their activities with the legislation of the Republic of Kazakhstan.

2. The measures provided for in paragraph 1 of this article shall be applied in the form of a written order or written agreement.

3. A written instruction is an instruction to a professional participant in the securities market, a major participant in the investment portfolio manager, or a person with the characteristics of a major participant in the investment portfolio manager to take mandatory measures established by paragraph 1 of this article and (or) to submit an action plan for their implementation within the prescribed period (hereinafter referred to as the plan events).

The action plan contains a description of deficiencies, risks or violations, the reasons that led to their occurrence, a list of planned activities, the timing of their implementation, as well as responsible managers.

4. A written agreement is a written agreement concluded between the authorized body and a professional participant in the securities market and (or) a major participant in the investment portfolio manager and (or) a person with the characteristics of a major participant in the investment portfolio manager on the implementation of measures established by paragraph 1 of this Article, specifying the time frame for eliminating identified deficiencies, risks or violations. and (or) a list of restrictions that these persons assume until the identified deficiencies, risks or violations are eliminated.

A written agreement must be signed by a professional participant in the securities market and (or) a major participant in the investment portfolio manager and (or) a person with the characteristics of a major participant in the investment portfolio manager.

5. A professional participant in the securities market and (or) a major participant in the investment portfolio manager, and (or) a person with the characteristics of a major participant in the investment portfolio manager, are required to notify the authorized body of the implementation of the measures specified in the written instruction and written agreement, within the time limits provided for in these documents.

6. If it is not possible to eliminate the violation within the time limits set in the written instruction and (or) action plan, written agreement, for reasons beyond the control of a professional participant in the securities market, a major participant managing an investment portfolio, a person with the characteristics of a major participant managing an investment portfolio, the deadline for the execution of the written instruction and (or) plan The written agreement may be extended until the date set by the authorized body.

The Law of the Republic of Kazakhstan dated July 2, 2003 No. 461.

 This Law regulates public relations arising in the process of issuance, placement, circulation and repayment of equity securities and other financial instruments, the specifics of the creation and operation of securities market entities, defines the procedure for regulation, control and supervision of the securities market in order to ensure the safe, open and effective functioning of the securities market, protection of investors' rights. and holders of securities, fair competition of securities market participants.

President

Republic of Kazakhstan

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