Article 74-1. Restrictions on foreign participation (control) in an airline established in the form of a joint-stock company The Law on the Use of the Airspace of the Republic of Kazakhstan and Aviation Activities

     1. A foreign legal entity, a foreign organization that is not a legal entity, a foreigner and (or) a stateless person is prohibited independently or in conjunction with other foreign legal entities, foreign organizations that are not legal entities, foreigners and (or) stateless persons:

     1) directly and (or) indirectly own, use and (or) dispose of shares of an airline established in the form of a joint-stock company and (or) derivative securities issued in accordance with the legislation of the Republic of Kazakhstan or a foreign state, the underlying asset of which are shares of an airline established in the form of a joint-stock company, in the amount of, exceeding forty-nine percent or more of the total number of outstanding shares (minus those purchased by the airline itself) of the specified airline;

     2) to exercise effective control over an airline established in the form of a joint-stock company.

     2. A shareholder of an airline established in the form of a joint-stock company is obliged to disclose to such airline information about himself, as well as about persons exercising effective control over him, to the final owners exercising effective control.

      If a shareholder of an airline established in the form of a joint-stock company is a legal entity or a foreign organization that is not a legal entity, which is directly and (or) indirectly owned, used and (or) managed by several persons who are not affiliated with each other, each of whom does not exercise effective control over such shareholder, such shareholder is obliged to additionally disclose to the airline information on all cases in which the Republic of Kazakhstan or a citizen of the Republic of Kazakhstan directly and (or) indirectly owns, uses and (or) disposes of shares, shares of participation, shares or other forms of equity participation in such a shareholder.  

     The procedure, terms and other conditions for shareholders to disclose the information specified in this paragraph are defined in the articles of association of an airline established in the form of a joint-stock company.

     3. An airline established in the form of a joint-stock company is obliged to keep quarterly records of persons whose information is subject to disclosure by the shareholders of such an airline in accordance with paragraph 2 of this article.

     4. A shareholder of an airline established in the form of a joint-stock company who has partially or completely failed to provide information to an airline established in the form of a joint-stock company in accordance with the requirements of paragraph 2 of this Article.:

     1) is not taken into account when determining the quorum of the general meeting of shareholders of an airline established in the form of a joint-stock company;

     2) is not entitled to participate in voting and (or) discussion of issues considered at the general meeting of shareholders of an airline established in the form of a joint-stock company.

      5. In case of unreliability of information provided by a shareholder of an airline established in the form of a joint-stock company, in accordance with the requirements of paragraph 2 of this article, revealed after the decision of the general meeting of shareholders of the airline established in the form of a joint-stock company:  

     1) if the majority of the voting shares voted for such a decision (excluding the voting shares of the shareholder who provided false information), the decision of the general meeting of shareholders is considered adopted without taking into account the votes of the said shareholder, subject to the requirements for a quorum, in which the decision is considered adopted by the general meeting of shareholders of an airline established in the form of a joint-stock company, established by The Law of the Republic of Kazakhstan "On Joint-Stock Companies";

     2) if the vote of the shareholder who provided false information was decisive, this circumstance is the basis for invalidating the relevant decision of the general meeting of shareholders at the request of an airline established in the form of a joint-stock company or other interested parties in accordance with the procedure established by the legislation of the Republic of Kazakhstan.

     6. In case of violation of the restrictions established by paragraph 1 of this Article, the violating shareholder:

     1) is not entitled to vote with its shares in an airline established in the form of a joint-stock company until the violation has been completely eliminated.;

     2) is not entitled to receive dividends on shares of an airline established in the form of a joint-stock company until the violation is completely eliminated.;

     3) is obliged to eliminate the committed violation within ten working days from the date of receipt of the relevant request from the board of directors of the airline established in the form of a joint-stock company by reducing the number of shares owned by him in the airline established in the form of a joint-stock company to a level below the limits established by paragraph 1 of this article.

     7. The Board of Directors of an airline established in the form of a joint-stock company shall determine the offending shareholder and send him a request to eliminate violations of the restrictions established by paragraph 1 of this article in accordance with the procedure established by the rules on limiting foreign participation (control) in an airline established in the form of a joint-stock company and the charter of the airline established in the form of a joint-stock company.

     8. If the shares of an airline established in the form of a joint-stock company are held nominally, the provisions of this article shall apply to the owner of such shares, who is a client of the nominee shareholder.

     Note: for the purposes of this article, the following concepts apply:

     1) violating shareholder – a shareholder who violated the restrictions established by paragraph 1 of this Article, or a shareholder who is under the effective control of a person who violated the restrictions established by paragraph 1 of this Article.;

     2) effective control is the ability to determine the decisions of a legal entity or a foreign organization that is not a legal entity, arising in the presence of one of the following conditions:

     direct and (or) indirect ownership, use and (or) disposal of more than fifty percent of outstanding (minus preferred and repurchased by a legal entity) shares, equity interests, units or other forms of equity participation in a legal entity or a foreign organization that is not a legal entity;

     the ability to directly or indirectly elect at least half of the management body or executive body of a legal entity or a foreign organization that is not a legal entity;

     the possibility of one person independently or jointly with one or more persons to directly or indirectly determine the decisions of a legal entity or a foreign organization that is not a legal entity on the basis of a legislative act of the Republic of Kazakhstan, a court decision, by virtue of a contract (supporting documents) or otherwise in cases provided for by the rules on limiting foreign participation (control) in an airline created in the form of a joint-stock company.

The Law of the Republic of Kazakhstan dated July 15, 2010 No. 339-IV.

     This Law regulates public relations related to the use of the airspace of the Republic of Kazakhstan and aviation activities, and defines the procedure for the use of airspace and aviation activities in order to protect human life and health, the environment, the interests of the state, ensure the safety of aircraft flights and meet the needs of the economy of the Republic of Kazakhstan, individuals and legal entities in aviation services.

President    

Republic of Kazakhstan     

© 2012. RSE na PHB "Institute of Legislation and Legal Information of the Republic of Kazakhstan" of the Ministry of Justice of the Republic of Kazakhstan  

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