Article 55-1. Audit of professional securities market participants and major participants managing the investment portfolio of the Securities Market Act

Home / RLA / Article 55-1. Audit of professional securities market participants and major participants managing the investment portfolio of the Securities Market Act

1. An audit of a professional participant in the securities market, a joint-stock company established in the organizational and legal form, a major participant managing an investment portfolio, which is a legal entity, is carried out by an audit organization authorized to conduct an audit in accordance with the legislation of the Republic of Kazakhstan on auditing and complying with the requirements of paragraph 2 of this article.

Conducting an audit based on the results of the financial year is mandatory for a professional participant in the securities market, a joint-stock company established in an organizational and legal form, or a major participant managing an investment portfolio that is a legal entity.

A copy of the audit report must be submitted to the authorized body within thirty calendar days from the date of receipt of the specified document.

2. The audit report is considered valid provided that the audit organization:

independent of the audited professional participant in the securities market, its shareholders and senior staff;

authorized to carry out auditing activities in accordance with the license and meets the minimum requirements for auditing organizations that conduct mandatory audits of financial organizations, developed by the authorized state body responsible for state regulation in the field of auditing and control over the activities of auditing and professional auditing organizations, in agreement with the authorized body, or authorized to carry out auditing activities in accordance with with a license from the competent authority of the state, of which he is a resident.

3. The annual financial statements, and in the case of a subsidiary (subsidiaries) organization (organizations), the consolidated annual financial statements of a professional participant in the securities market must be certified by an auditing organization.

4. The audit of the investment portfolio manager and the major participant of the investment portfolio manager, which is a legal entity resident in the Republic of Kazakhstan (if any), is carried out by the same auditing organization.

The consolidated annual financial statements of a major participant in the investment portfolio manager, which is a non–resident legal entity of the Republic of Kazakhstan, owning (having the opportunity to vote) directly or indirectly twenty-five percent of the voting shares of the investment portfolio manager, which is subject to consolidated supervision in its country of location, must be confirmed by an auditing organization authorized to audit financial organizations in the country of location this major participant is a non–resident of the Republic of Kazakhstan.

A major participant in the investment portfolio manager, which is a non–resident legal entity of the Republic of Kazakhstan, submits copies of the audit report and recommendations of the audit organization in Kazakh or Russian to the authorized body.

5. The audit report of a professional participant in the securities market, a joint-stock company created in an organizational and legal form, and a major participant managing an investment portfolio does not constitute a commercial secret.

6. If a professional participant in the securities market, established in the organizational and legal form of a joint-stock company, or a major participant in the investment portfolio manager fails to eliminate deficiencies that affect the financial condition of a professional participant in the securities market indicated in the audit report, within the period determined by the authorized body, the authorized body may apply:

to a professional participant in the securities market – measures to improve the financial condition and (or) minimize risks provided for in Articles 3-5 of this Law.;

A major participant in an investment portfolio manager is subject to compulsory supervisory response measures provided for in paragraph 2 of Article 72-3 of this Law.

If a major participant in the investment portfolio manager fails to eliminate deficiencies that affect the financial condition of the investment portfolio manager indicated in the audit report, the authorized body may, within one year from the date of receipt of this report by the specified persons, apply compulsory supervisory response measures to the major participant in the investment portfolio manager provided for in paragraph 3 of Article 72-3 of this Law..

7. If there is a deviation of the opinion and conclusions on the financial statements and (or) other information related to the financial statements regarding the recognition of assets and (or) liabilities of a professional participant in the securities market, a major participant in the investment portfolio manager, set out in the audit report from the results of the audit conducted by the authorized body, the authorized body has the right to require an explanation of the reasons for such a deviation from the audit organization.

8. In case of identification of risks and deficiencies in the activities of a professional participant in the securities market, the authorized body has the right to require it to audit other information regarding the assessment of the risk management and internal control system, including strategy and business model, assessment of the corporate governance system, assessment of the information technology risk management system, assessment of the effectiveness of the information technology system. security, as well as the effectiveness of the internal control system in the field of countering money laundering, criminally obtained funds, the financing of terrorism and the financing of the proliferation of weapons of mass destruction (hereinafter referred to as the audit of other information), indicating the list of issues to be reviewed, the audited period and the deadline for the audit organization to submit an audit report on the audit of other information to the authorized body.

An audit of other information at the request of an authorized body is mandatory for a professional participant in the securities market.

A professional participant in the securities market conducts an audit of other information no more than once a year, and an audit of other information on one issue is conducted no more than once every three years, with the exception of the case provided for in paragraph 10 of this article.

The list of issues to be reviewed as part of an audit of other information, the requirements for the content and timing of the audit organization's submission of an audit report on other information, and the requirements for auditors in the audit organization involved in the audit of other information are established by regulatory legal acts of the authorized body in coordination with the authorized state body responsible for state regulation in the field of auditing and control over the activities of auditing and professional auditing organizations.

The audit plan for the audit of other information with a description of the intended directions, scope, nature of the audit, and the specifics of the methods and standards used in the audit is subject to prior approval by the audit organization with the authorized body.

The audit report on the audit of other information is submitted to the authorized body by the auditing organization and is not subject to publication.

The results of the audit of other information may be taken into account by the authorized body when applying supervisory response measures.

9. To carry out an audit or audit of other information, a professional securities market participant engages an audit organization that meets the minimum requirements for audit organizations that conduct mandatory audits of financial organizations, developed by the authorized state body responsible for state regulation in the field of auditing and control over the activities of audit and professional audit organizations, in coordination with the authorized body.

A professional participant in the securities market, a major participant in the investment portfolio manager, no later than ten working days after the conclusion of an audit agreement or an audit of other information, notify the authorized body of the choice of an audit organization. In the case of an audit of other information, a professional participant in the securities market has the right to request an authorized body to conduct an audit of other information by a non-auditing organization in a manner other than an audit.

The application of a professional participant in the securities market is considered by the authorized body within five working days.

The requirements for the procedure for auditing other information established by this article apply to the procedure for verifying other information in a manner other than an audit.

The authorized body has the right, prior to the issuance by the audit organization of an audit report and (or) an audit opinion on the audit of other information, to provide the audit organization, taking into account confidentiality requirements, with information and comments on the results of inspections of persons specified in paragraph 1 of this article, as well as other information related to their activities, including based on a reasoned judgment of the authorized the body, including information constituting a commercial secret on the securities market, without the consent of the persons specified in paragraph 1 of this article.

The audit organization shall carry out a mandatory assessment and analysis of the information sent by the authorized body in accordance with part five of this paragraph. The results of the assessment and analysis are used by the audit organization when expressing opinions and conclusions contained in the audit report or audit report on other information.

10. If the court finds the audit report and (or) the audit report on the audit of other information invalid, a professional participant in the securities market or a major participant in the investment portfolio manager is required to conduct an audit and (or) audit of other information again.

11. The authorized body has the right to request information from the auditing organization, including information constituting a commercial secret on the securities market, including on the list of clients. Information on clients is provided with the consent of the clients of the auditing organization.

12. The requirements of paragraphs 8, 9, 10 and 11 of this article do not apply to the transfer agent and the single operator.

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.

President

Republic of Kazakhstan

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