Article 54. Requirements for senior staff of the applicant (licensee) The Law on the Securities Market

Home / RLA / Article 54. Requirements for senior staff of the applicant (licensee) The Law on the Securities Market

 1. The senior employees of the applicant (licensee) are recognized as:

1) the head and members of the applicant's (licensee's) management body;

2) the head (the person solely exercising the functions of the executive body of the licensee established in the form of a limited liability partnership) and members of the executive body of the applicant (licensee);

3) the chief accountant, except for the chief accountant of the transfer agent;

4) other managers of the applicant (licensee), with the exception of the heads of its separate divisions and their chief accountants, who coordinate and (or) control the activities of one or more structural divisions of the applicant (licensee) engaged in professional activities in the securities market, and have the right to sign any contracts concluded with clients, information, provided to clients and/or to an authorized body, including various forms of reporting provided for in contracts concluded with clients, and regulatory legal acts of the authorized body, as well as documents confirming the reconciliation of the movement and balance of assets held in the accounts of clients of a professional participant in the securities market.

1-1. For the purposes of this article, a candidate for the position of a senior employee is an individual who intends to hold the position of a senior employee of the applicant (licensee), or a person elected to the position of head or member of the management body, who is an independent director.

2. A person cannot hold (cannot be appointed or elected to) the position of a senior employee of the applicant (licensee).:

1) has no higher education;

2) who does not have the length of service established by this article:

in international financial organizations, the list of which is established by the authorized body;

and (or) in the field of regulation, control and supervision of the financial market and financial organizations;

and (or) in the field of financial services;

and (or) conducting an audit of financial institutions;

and (or) in the field of regulation of audit services for financial institutions;

and (or) in the field of software development used to automate the activities of financial organizations;

and (or) in foreign legal entities operating in the areas listed in this subparagraph;

and (or) in the national management holding company or the Development Bank of Kazakhstan, or the special fund for the development of private entrepreneurship in the positions provided for in subparagraph 3) paragraph 4-1 of this article;

3) does not have an impeccable business reputation;

4) who has had his consent to be appointed (elected) to the position of a senior employee revoked and (or) who has been removed from his official duties in this and (or) in another financial organization, banking, insurance holding, this and (or) another branch of a non–resident bank of the Republic of Kazakhstan, a branch of an insurance (reinsurance) a non–resident organization of the Republic of Kazakhstan, a branch of a non–resident insurance broker of the Republic of Kazakhstan.

This requirement is applied during the last twelve consecutive months after the decision of the authorized body to revoke consent to the appointment (election) to the position of a senior employee.;

5) who has committed a corruption offense or has been subjected to administrative punishment for committing a corruption offense within three years prior to the date of filing an application for approval for a senior position.

Applicants (licensees), when appointing (electing) senior staff, independently verify their compliance with the requirements of this article, including taking into account information posted on the authorized body's Internet resource.

The assessment of business reputation for the presence or absence of an impeccable business reputation in relation to senior employees and candidates for senior positions is carried out by the authorized body, including using motivated judgment.

3. The number of members of the applicant's (licensee's) executive body, established and operating in the organizational and legal form of a joint-stock company, must be at least three persons.

4. To comply with the requirement provided for in subparagraph 2) in the first part of paragraph 2 of this article, it is necessary to have a work record for candidates for positions:

1) the head of the executive body (the person solely exercising the functions of the executive body of the licensee established in the form of a limited liability partnership) of the applicant (licensee) for at least five years, including at least three years in a senior position;

2) the head of the applicant's (licensee's) management body for at least five years, including at least two years in a senior position;

3) a member of the applicant's (licensee's) executive body for at least three years, including at least two years in a senior position;

4) a member of the applicant's (licensee's) management body for at least two years, including at least one year in a senior position;

5) the applicant's (licensee's) chief accountant for at least three years;

6) other managers of the applicant (licensee) for at least one year.

For candidates for the positions of members of the applicant's (licensee's) executive body who are responsible exclusively for security issues, administrative and business issues, information technology issues, and the length of service provided for in subparagraph 2) paragraph 2 of this article is not required.

The length of service defined in this paragraph does not include work in the departments of a financial institution related to ensuring its security, carrying out administrative and economic activities, developing information technology (with the exception of the head of the information technology and (or) information security development department), working in a mutual insurance company.

For a member of the Government of the Republic of Kazakhstan, deputy head of the central executive body of the Republic of Kazakhstan, who is a candidate for the position of head of the applicant's (licensee's) management body, more than fifty percent of whose outstanding shares are directly or indirectly owned by the state and (or) the national management holding, the length of service provided for in this article is not required.

4-1. For the purposes of subitems 1), 2), 3) and 4) of the first part of paragraph 4 of this article, a managerial position is a position:

1) a senior employee, a head who coordinates and (or) controls the activities of two or more structural divisions, the head, deputy head of a structural division, as well as a separate division of a financial organization, a branch of a non–resident insurance (reinsurance) organization of the Republic of Kazakhstan, a branch of a non–resident insurance broker of the Republic of Kazakhstan, a branch of a non–resident bank of the Republic of Kazakhstan;

2) the first head and his deputy, the head, the deputy head of the structural unit of the state body in the field of regulation of financial services and (or) regulation and state control in the field of auditing of financial organizations;

3) the head of the management body, the head of the executive body, as well as his deputy in charge of financial matters and (or) the activities of subsidiary financial organizations, the national management holding, the Development Bank of Kazakhstan and the special fund for the development of private entrepreneurship;

4) the first head and his deputy, the head or deputy head of an independent structural subdivision, as well as a separate subdivision in:

international financial organizations specified in the second paragraph of subparagraph 2) of the first part of paragraph 2 of this Article;

organizations conducting audits of financial institutions;

organizations engaged in activities in the field specified in the seventh paragraph of subparagraph 2) of the first paragraph of paragraph 2 of this Article;

foreign legal entities specified in the eighth paragraph of subparagraph 2) of the first paragraph of paragraph 2 of this Article.

4-2. Documents for obtaining consent to the appointment (election) of a senior employee of the applicant (licensee) may be provided by the candidate for the position of a senior employee or the applicant (licensee).

The consent of the authorized body for the appointment (election) of a senior employee of the applicant (licensee) may be issued for one or more positions, provided that the candidate for the position of a senior employee meets the requirements for these positions.

The consent of the authorized body to the appointment (election) of a senior employee of the applicant (licensee) entitles him to hold the position of a senior employee without re-approval and terminates in the following cases:

1) non-appointment (non-election) of an agreed candidate for the position of a senior employee of the applicant (licensee) within twelve months from the date of consent or dismissal (termination of powers) of the senior employee;

2) withdrawal by the authorized body of consent to the appointment (election) to the position of a senior employee of the applicant (licensee).

5. A candidate for the position of a senior employee may not perform the relevant functions without the approval of the authorized body.

The prohibition established by the first part of this paragraph does not apply to a person elected to the position of head or member of the management body, who is an independent director, who has the right to perform the relevant functions without the consent of the authorized body for no more than sixty calendar days from the date of his election.

The authorized body reviews the documents submitted for the approval of the appointment (election) of the applicant's (licensee's) senior staff within thirty working days from the date of submission of the full package of documents in accordance with the requirements of the regulatory legal act of the authorized body.

It is prohibited to perform the duties (replacement of a temporarily absent) senior employee of the applicant (licensee) by a person who does not have the consent of the authorized body to appoint (elect) a senior employee, except in cases where the duties of the head of the executive body are assigned to a member of the executive body, the chief accountant to the deputy chief accountant for a period not exceeding sixty calendar days.

It is not allowed to assign the duties (replacement of the temporarily absent) head of the executive body or chief accountant to the persons specified in part four of this paragraph due to the absence of a candidate agreed with the authorized body for a total of more than one hundred and eighty calendar days within twelve consecutive months.

5-1. A candidate for the position of head or member of the management body, who is an independent director, can be approved both before and after his election to the specified position.

When approving the head or a member of the management body who is an independent director, after his election, the documents for approval must be submitted to the authorized body within the time period established by the second part of paragraph 5 of this article.

Upon expiration of the period specified in this paragraph, and in case of failure to submit the full package of documents for approval to the authorized body or refusal by the authorized body to approve, the applicant (licensee) is obliged to take measures to terminate the powers of this senior employee.

5-2. When the authorized body uses a reasoned judgment regarding a candidate for the position of a senior employee in accordance with Article 13-5 of the Law of the Republic of Kazakhstan "On State Regulation, Control and Supervision of the Financial Market and Financial Organizations", the authorized body sends a notification to the person who submitted the documents for approval of a candidate for the position of a senior employee. motivated judgment.

The authorized body suspends the period of consideration of documents submitted for obtaining consent to the appointment (election) of candidates for senior positions of the applicant (licensee), when the authorized body forms a reasoned judgment regarding these candidates for senior positions. This period is suspended from the date of sending the draft reasoned judgment to the person who submitted the documents for approval of the candidate for the position of a senior employee, until the date of the decision of the authorized body using the reasoned judgment.

6. The procedure for issuing the consent of the authorized body for the appointment (election) of a senior employee of the applicant (licensee), including criteria for the absence of an impeccable business reputation, and documents necessary to obtain consent, are established by regulatory legal acts of the authorized body.

7. The authorized body refuses to grant consent to the appointment (election) of the applicant's (licensee's) senior staff on the following grounds:

1) non-compliance of candidates for senior management positions with the requirements established by this Article, paragraph 5 of Article 63 of this Law, subparagraph 20) of Article 1, paragraph 4 of Article 54, paragraph 2 of Article 59 of the Law of the Republic of Kazakhstan "On Joint Stock Companies" and Article 9 of the Law of the Republic of Kazakhstan "On Accounting and Financial Reporting" or regulatory by a legal act of the authorized body;

2) negative test result.

The negative test results are:

The test result of a candidate for the position of a senior employee is less than seventy percent of the correct answers.;

violation by a candidate for the position of a senior employee of the testing procedure determined by the authorized body;

failure to appear for testing at the appointed time during the period of approval of the candidate for the position of a senior employee by the authorized body;

3) failure to eliminate the comments of the authorized body or submission of documents modified taking into account the comments of the authorized body after the expiration of the period established by the regulatory legal act of the authorized body.;

4) violation of the procedure established by the legislation of the Republic of Kazakhstan for the election (appointment) of a candidate for the position of head or member of the management body who is an independent director;

5) submission of documents after the expiration of the period established by the second part of paragraph 5-1 of this article, during which a candidate for the position of head or member of the management body, who is an independent director, holds his position without the consent of the authorized body.;

6) the authorized body has information (facts) about the actions committed by the candidate for the position of a senior employee, recognized as committed for the purpose of manipulating the securities market and (or) causing damage to a third party(s).

This requirement applies for one year from the date of the earliest of the listed events.:

recognition by the authorized body of the actions of a candidate for the position of a senior employee as committed for the purpose of manipulation in the securities market;

receipt by the authorized body of facts confirming the damage caused to a third party (third parties) as a result of such actions;

7) the authorized body has information that the candidate for the position of a senior employee was an employee of a financial institution in respect of which the authorized body applied supervisory response measures and (or) imposed an administrative penalty for an administrative offense provided for in Article 259 of the Code of the Republic of Kazakhstan on Administrative Offenses, for committing acts recognized as committed for the purpose of manipulating the securities market, and (or) by an employee of a financial institution, whose actions caused damage to a financial institution and/or a third party(s) involved in the transaction.

This requirement applies for one year from the date of the earliest of the listed events.:

recognition by the authorized body of the actions of a financial organization as committed for the purpose of manipulation in the securities market;

receipt by the authorized body of facts confirming the damage caused by the actions of a candidate for the position of a senior employee to a financial institution and (or) a third party(s).

For the purposes of this subparagraph, an employee of a financial institution is understood to be a senior employee or a person who performed his duties and/or a stock exchange trader whose competence included making decisions on issues that led to the above violations.

The information specified in subitems 6) and 7) of part one of this paragraph includes information received by the authorized body from the financial supervisory authority of the state in which the non–resident financial institution of the Republic of Kazakhstan is a resident.

8. The licensee is obliged to notify the authorized body within five working days from the date of the decision of the relevant body of the licensee about all changes that have occurred in the composition of senior employees, including their appointment (election), transfer to another position, termination of the employment contract and (or) termination of powers, bringing the senior employee to administrative responsibility for committing a corruption offense., as well as about changes in the surname, first name, patronymic (if it is indicated in the document, identity document) of the supervisor with copies of supporting documents attached.

In the case of bringing a senior employee to criminal responsibility, the licensee notifies the authorized body within five working days from the day when this information became known to the licensee.

9. Excluded by the Law of the Republic of Kazakhstan dated 07/12/2022 No. 138-VII (effective sixty calendar days after the date of its first official publication).

10. The authorized body has the right to dismiss the persons specified in this article from their official duties on the basis of sufficient data to recognize the actions (inaction) of the specified senior employee (employees) of the applicant (licensee) as not complying with the requirements of the legislation of the Republic of Kazakhstan.

11. The authorized body revokes the consent granted for the appointment (election) to the position of a senior employee of the applicant (licensee) on the following grounds:

1) identification of false information on the basis of which the consent was given;

2) the application by the authorized body of the supervisory response measure specified in subparagraph 10) of paragraph 1 of Article 3-5 of this Law;

3) the presence of an outstanding or outstanding criminal record;

4) non-compliance of senior employees with the requirements established by this Article, paragraph 5 of Article 63 of this Law, subparagraph 20) of Article 1, paragraph 4 of Article 54 and paragraph 2 of Article 59 of the Law of the Republic of Kazakhstan "On Joint Stock Companies", and Article 9 of the Law of the Republic of Kazakhstan "On Accounting and Financial Reporting" or a regulatory legal act authorized body.

Revocation by the authorized body of consent to the appointment (election) of a licensee's executive officer is the basis for revocation of previously issued consent (consents) to this executive officer in other financial organizations, banking, insurance holdings, branches of insurance (reinsurance) organizations – non–residents of the Republic of Kazakhstan, branches of insurance brokers - non-residents of the Republic of Kazakhstan, branches of banks – non-residents of the Republic of Kazakhstan.

The applicant (licensee) is obliged to terminate the employment contract with the supervisor or, in the absence of an employment contract, take measures to terminate the authority of the supervisor in the following cases::

1) withdrawal by the authorized body of consent to the appointment (election) to the position of a senior employee;

2) violations of the procedure established by the legislation of the Republic of Kazakhstan for the election (appointment) of a candidate for the position of a senior employee.

12. With respect to the National Postal Operator, the requirements of this article apply to members of its executive body and (or) other managers specified in subparagraph 4) of paragraph 1 of this article, whose official duties include overseeing issues related to professional activities in the securities market.

13. The requirements of this article regarding the head and members of the management body apply to the head and members of the supervisory board of brokers and (or) dealers without the right to maintain customer accounts as a nominee holder, established in the organizational and legal form of a limited liability partnership.

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

 This Law regulates public relations arising in the process of issuing, placing, circulating and redeeming equity securities and other financial instruments, the specifics of the creation and operation of securities market entities, defines the procedure for regulating, controlling and supervising the securities market in order to ensure the safe, open and effective functioning of the securities market, and the protection of investors' rights. and holders of securities, fair competition of securities market participants.

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Republic of Kazakhstan

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