Article 8. Activities prohibited or restricted for banks and bank holding companies by the Law on Banks and Banking Activities in the Republic of Kazakhstan

Home / RLA / Article 8. Activities prohibited or restricted for banks and bank holding companies by the Law on Banks and Banking Activities in the Republic of Kazakhstan

1. Banks are prohibited from carrying out operations and transactions as entrepreneurial activities that are not related to banking activities or are not provided for in paragraph 9 of this Article and paragraph 12 of Article 30 of this Law, as well as the acquisition of shares in the authorized capital or shares of legal entities, the creation and participation in the activities of non-profit organizations, with the exception of membership in the National Chamber of Entrepreneurs of the Republic of Kazakhstan, as well as the cases established by this Law, and the execution of transactions with securities in the following cases:, provided for in paragraph 8 of this Article.

2. Bank holding companies are prohibited from carrying out operations and transactions as entrepreneurial activities, as well as the acquisition of shares in the authorized capital or shares of legal entities, the creation and participation in the activities of non-profit organizations, with the exception of membership in the National Chamber of Entrepreneurs of the Republic of Kazakhstan, as well as the cases established by this Law, and transactions in securities in in the cases provided for in paragraph 8 of this Article.

3. The prohibition established by paragraphs 1 and 2 of this Article does not apply to the following cases of creation, as well as acquisition of shares or participation shares in the authorized capital:

1) banks:

financial organizations, as well as non-resident legal entities of the Republic of Kazakhstan with the status of banks, insurance organizations, pension funds, professional participants in the securities market, and payment organizations in the amount of ten percent or more of the outstanding (minus preferred and repurchased by the company) shares (stakes in the authorized capital);

legal entities in the amount of less than ten percent of the outstanding (minus preferred and repurchased by the company) shares (stakes in the authorized capital), provided that the acquired shares (stakes in the authorized capital) comply with the requirements of the regulatory legal act of the authorized body;

subsidiaries of special organizations-non-residents of the Republic of Kazakhstan, established for the purpose of issuing and placing securities under the guarantee of the bank;

subsidiaries of special financial companies established for securitization transactions in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization;

organizations that are residents of the Republic of Kazakhstan, acquiring doubtful and uncollectible assets, created (acquired) jointly with an organization specializing in improving the quality of credit portfolios of second-tier banks;

subsidiaries that are residents of the Republic of Kazakhstan, acquiring doubtful and uncollectible assets of the parent bank;

subsidiaries whose exclusive activity is the collection of banknotes, coins and valuables;

organizations that provide services to the operator of the electronic money system;

subsidiaries engaged in leasing activities;

organizations that provide services to ensure information, telecommunications, and technological interaction between participants in banking settlements, including settlements on payment card transactions;

organizations that carry out activities to certify the conformity of the public key of an electronic digital signature with the private key of an electronic digital signature, as well as to confirm the authenticity of the registration certificate;

legal entities specified in Article 10 of this Law;

legal entities, when shares or shares of participation in the authorized capitals of these organizations accepted as collateral become the property of banks in accordance with the civil legislation of the Republic of Kazakhstan and the legislation of a foreign state;

stock exchanges and the central depository operating in the territory of the Republic of Kazakhstan;

credit bureaus;

organizations specified in paragraph 8 of Article 61-4 of this Law;

organizations (residents and non-residents of the Republic of Kazakhstan) that provide services for the provision of financial and (or) payment services using artificial intelligence, blockchain and other innovative technologies;

organizations (residents and non-residents of the Republic of Kazakhstan) that provide services to enable transactions in the provision of financial services between financial organizations or issuers and consumers of financial services using an information system via the Internet;

organizations (residents and non-residents of the Republic of Kazakhstan) that develop, implement, and support software used in the activities of financial organizations, including for automating their activities;

other legal entities – when an Islamic bank carries out banking activities provided for in Chapter 4-1 of this Law.;

organizations (residents and non-residents of the Republic of Kazakhstan) engaged in offering and selling goods, works and services on an electronic trading platform and (or) an information and advertising trading platform, and (or) an Internet platform, as well as providing their sites and platforms for use by third parties for the above purposes;

organizations (residents and non-residents of the Republic of Kazakhstan) engaged in the development, implementation and maintenance of software, equipment and devices in the field of information and communication technologies and (or) systems for working with biometric identification;

organizations (residents and non-residents of the Republic of Kazakhstan) engaged in the development, maintenance and implementation of software tools in the field of information security and (or) fraud prevention;

organizations (residents and non-residents of the Republic of Kazakhstan) that develop and maintain software using cloud computing technologies;

organizations (residents and non-residents of the Republic of Kazakhstan) engaged in ensuring information, telecommunication and technological interaction between participants of the technology platform;

2) bank holdings:

financial organizations;

organizations that are residents of the Republic of Kazakhstan, acquiring dubious and hopeless claims of second-tier banks for their management and (or) their subsequent sale, restructuring and (or) securitization;

special non-resident organizations of the Republic of Kazakhstan established for the purpose of issuing and placing securities under the guarantee of a bank holding company;

special financial companies established for securitization transactions in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization;

organizations whose exclusive activity is the collection of banknotes, coins and valuables, the implementation of leasing activities;

non-resident legal entities of the Republic of Kazakhstan that have the status of banks, insurance organizations, pension funds, and professional participants in the securities market;

organizations specified in paragraph 8 of Article 61-4 of this Law.

The requirements established by paragraphs eighteen, nineteen and twentieth of subparagraph 1) and paragraphs ten, eleventh and twelfth of subparagraph 2) of part one of this paragraph apply to cases of creation, as well as acquisition by banks and bank holding companies of shares or participation interests in the authorized capitals of non–resident organizations of the Republic of Kazakhstan, subject to an agreement between the authorized body and the relevant supervisory authority. by an authority of a foreign state on the exchange of information.

The bank's subsidiaries, with the exception of the cases provided for in Article 11-2 of this Law, are entitled to acquire only shares or shares of participation in the authorized capital of legal entities that comply with the requirements established by the regulatory legal act of the authorized body. Subsidiary insurance (reinsurance) organizations of the bank, among other things, have the right to acquire shares of an organization that guarantees insurance payments to policyholders (insured, beneficiaries) in the event of compulsory liquidation of insurance organizations, and organizations for the formation and maintenance of a database.

Subsidiaries of a bank holding company have the right to acquire only shares or shares of participation in the authorized capital of legal entities that meet the requirements established by the regulatory legal act of the authorized body. Subsidiaries of insurance (reinsurance) organizations of a bank holding company, among other things, have the right to acquire shares of an organization that guarantees insurance payments to policyholders (insured, beneficiaries) in the event of compulsory liquidation of insurance organizations, and organizations that create and maintain a databa Subsidiaries of a bank holding company have the right to acquire only shares or shares of participation in the authorized capital of legal entities that meet the requirements established by the regulatory legal act of the authorized body. Subsidiaries of insurance (reinsurance) organizations of a bank holding company, among other things, have the right to acquire shares of an organization that guarantees insurance payments to policyholders (insured, beneficiaries) in the event of compulsory liquidation of insurance organizations, and organizations that create and maintain a database. This requirement does not apply to:

subsidiary banks-residents of the Republic of Kazakhstan;

legal entities in which a bank holding company is a parent organization through ownership (having the ability to vote, determine decisions and (or) influence decisions made by virtue of an agreement or otherwise) of shares of a bank resident in the Republic of Kazakhstan that directly owns (having the ability to vote, determine decisions and (or) influence decisions made by virtue of a contracl entities in which a bank holding company is a parent organization through ownership (having the ability to vote, determine decisions and (or) influence decisions made by virtue of an agreement or otherwisf shares of a bank resident in the Republic of Kazakhstan that directly owns (having the ability to vote, determine decisions and (or) influence decisions made by virtue of a contract or otherwise) shares or participation shares in the authorized capital of the specified legal entities;

non-residents of the Republiresidents of the Republic of Kazakhstan who are subsidiaries of non-residents of the Republic of Kazakhstan who are a bank holding company, provided that one of the following conditions is met:

The bank holding company has an individual credit rating of at least A rating from one of the rating agencies, the list of which is established by the authorized body, as well as written confirmation from the financial supervisory authority of the country of origin of these persons that they are subject to consolidated supervision.;

the existence of an agreement between the authorized body and the relevant supervisory authority of a foreign state on the exchange of information, as well as the minimum required rating of one of the rating agencies. The minimum rating and the list of rating agencies are established by a regulatory legal act of the authorized body.

organiizations (residents and non-residents of the Republic of Kazakhstan) engaged in offering and selling goods, works and services on an electronic trading platform and (or) an information and advertising trading platform, and (or) an Internet platform, as well as providing their sites and platforms for use by third parties for the above purposes;

organizations (residents and non-residents of the Republic of Kazakhstan) engaged in the development, implementation and maintenance of softwarorganizations (residents and non-residents of the Republic of Kazakhstan) engaged in the development, implementation and maintenance of software, equipment and devices in the field of information and communication technologies and (or) systems for working with biometric identification;

organizations (residents and non-residents of the Republic of Kazakhstan) that develop and maintain software using cloud computing technologies;

organizations (residents and non-residents of the Republic of Kazakhstan) that carry out activities to ensure information, telecommunications and technological interaction between the participants of the technology platform.

4. The acquisition by the bank of shares in the authorized capital or shares of legal entities specified in subparagraph 1) of paragraph 3 of this article shall not exceed ten percent of the bank's equity per legal entity. This restriction applies to the bank's ownership of shares in the authorized capital or shares of these legal entities, including in cases of their creation.

The total value of the bank's shares in the authorized capital or shares of legal entities specified in subparagraph 1) of paragraph 3 of this article should not exceed the amount determThe total value of the bank's shares in the authorized capital or shares of lel entities specified in subparagraph 1) of paragraph 3 of this article should not exceed the amount determined by the regulatory legal act of the authorized body.

The restriction set out in the first part of this paragraph does not apply to banks in connection with their acquisition of control over another bank.:

in respect of which the restructuring was carried out in accordance with this Law;

who performed the operation provided for in Article 61-4 of this Law.

5. Acquisition and ownership by the bank in the amount of ten percent or more of the ou

6. The total share of shares (stakes in the authorized capital) of the parent organization of a banking conglomerate, bank or bank holding company owned by subsidiaries of the bank or bank holding company, organizations in which the bank or bank holding company has a significant equity interest, should not exceed the limits determined by a regulatory legal act of the authorized body.

7. When banks acquire shares or participation interests in the authorized capitals of legal entities in cases when shares or participation interests in the authorized capitals of these organizations accepted as collateral become the property of banks in accordance with the civil legislation of the Republic of Kazakhstan and the legislation of a foreign state, the bank's participation in such legal entities should not exceed ten percent of the bank's equity.

The term of sale of shares or participation shares in the authorized capital should be no more than twelve months, except in the following cases::

transfer of shares accepted by the bank as collateral or participation shares in the authorized capitals of these organizations to a subsidiary of the bank established (acquired) under the conditions specified in Article 11-2 of this Law;

transfer to the ownership of the bank of shares accepted as collateral or shares of participation in the authorized capitals of the organizations specified in subparagraph 1) of paragraph 3 of this Article.

The restrictions established by this paragraph shall apply to subsidiaries of banks, with the exception of a subsidiary of a bank established (acquired) under the conditions specified in Article 11-2 of this Law.

 7-1. The Bank is obliged to sell the following assets by bidding on an electronic trading platform for the sale of banking and microfinance assets:

collateral that was previously collateral for the fulfillment of obligations under a bank loan agreement and became the property of the bank as a result of foreclosure.;

the property acquired by the bank as a result of the bank receiving compensation in return for fulfilling its obligations under the bank loan agreement.

The requirement established by the first part of this paragraph does not apply to housing leased by the bank in accordance with subparagraph 14) of paragraph 9 of this Article with the condition of its purchase.

The property specified in the first part of this paragraph must be sold by the bank within three years from the date of its transfer to the ownership of the bank, with the exception of:

a land plot, the term of which is determined taking into account the specifics provided for by the Land Code of the Republic of Kazakhstan;

a dwelling leased by the bank in accordance with subparagraph 14) of paragraph 9 of this Article without a condition for its purchase, the term of which is extended in proportion to the lease term.

The requirements set out in parts one, two and three of this paragraph apply to organizations engaged in certain types of banking operations and subsidiaries of banks acquiring doubtful and uncollectible assets of the parent bank.

The requirements of this paragraph do not apply to cases when shares or participation interests in the authorized capitals of legal entities provided for in paragraph 7 of this article become the property of banks.

The property specified in the first part of this paragraph, in case of recognition of the auction as invalid, may be sold through direct targeted sale in accordance with the rules of bidding on the electronic trading platform for the sale of banking and microfinance assets, approved by the regulatory legal act of the authorized body.

8. The prohibition established by paragraphs 1 and 2 of this Article does not apply to cases of acquisition of ownership.:

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

bonds that comply with the requirements established by the regulatory legal act of the authorized body;

bonds of a special financial company, which is a subsidiary of a bank or a bank holding company, established in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization, issued as part of a securitization transaction between a bank or a bank holding company and a special financial company;

own bonds issued by the bank or bank holding company and bonds issued by subsidiaries of the bank or bank holding company, the obligations of which are guaranteed by the bank or bank holding company. The procedure for making transactions with such bonds is determined by a regulatory legal act of the authorized body.

The restrictions established by this article do not apply to cases when a bank or a bank holding company purchases bonds to replace previously acquired organizations that are in the process of restructuring, provided that obligations under previously issued bonds are included in the list of restructured obligations of this organization.

9. In addition to the activities specified in paragraph 1 of this Article, banks may engage in the following types of activities::

1) development, implementation and support of specialized software used to automate the activities of banks and organizations engaged in certain types of banking operations, or other software used in the activities of financial organizations;

2) the implementation of special literature on banking issues on any type of media;

3) sale of own property;

4) issue, sale and distribution of payment cards and checkbooks;

5) implementation of interbank clearing;

6) the issuance, sale, acquisition and repayment of electronic money, as well as the provision of services for the collection and processing of information on transactions with electronic money;

7) the sale, in accordance with the procedure established by the legislative acts of the Republic of Kazakhstan, of property pledged by borrowers and property received in the form of compensation in return for fulfilling obligations under a bank loan agreement;

8) providing consulting services on issues related to financial activities;

9) representing the interests of other persons in matters related to banking activities, or as a representative of bondholders;

9-1) implementation of intermediary services between the payer and the supplier of goods, works and services by providing a service service, including the possibility of receiving and remotely paying for goods, works and services using the bank's systems, programs, and infrastructure, when payment can be made by wire transfer;

9-2) provision of services for the management of the depositor's account(s), opened in the central depository in the name of the depositor;

10) organization of professional development training for specialists in the field of banking and financial activities;

11) to certify the correspondence of the public key of the electronic digital signature to the private key of the electronic digital signature, as well as to confirm the authenticity of the registration certificate in respect of its customers using its banking services, if licensed by the authorized body in the field of informatization;

12) conclusion of insurance contracts on behalf of insurance organizations that are residents of the Republic of Kazakhstan, if there is an agreement between the bank and insurance organizations that are residents of the Republic of Kazakhstan to conclude insurance contracts on their behalf.;

13) lease their own property to subsidiaries in accordance with the property lease agreement;

14) to lease, on the basis of a property lease agreement, including with the condition of redemption, a dwelling that has become the property of the bank.

Tenants of the dwelling specified in part one of this subparagraph may be only individuals belonging to socially vulnerable segments of the population in accordance with the Law of the Republic of Kazakhstan "On Housing Relations", whose dwelling became the property of the bank as a result of foreclosure in connection with non-fulfillment or improper fulfillment of their obligations under the mortgage agreement. a housing loan (mortgage loan) or their provision of compensation in the form of a dwelling that acted as collateral under a mortgage housing loan (mortgage loan) agreement;

15) participate in syndicated financing and (or) perform the functions of an agent bank and (or) a collateral manager in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization.

10. In addition to the activities specified in paragraph 2 of this article, bank holding companies may engage in the following types of activities::

1) purchase of property from a person who has no special relationship with a bank holding company, acquired for his own needs;

2) providing consulting services on issues related to financial activities;

3) the sale of their own property.

11. Banks and bank holding companies are prohibited from issuing "golden shares".

12. Transactions with government securities and non-government securities on the secondary market, as well as with derivative financial instruments, are concluded by banks exclusively on the organized securities market, with the exception of cases established by a regulatory legal act of the authorized body.

13. The requirements of this article do not apply to:

1) bank holdings of Islamic banks;

2) bank holding companies that indirectly own (have the ability to vote, determine decisions and (or) influence decisions made by virtue of an agreement or otherwise) shares of the bank through ownership (having the ability to vote, determine decisions and (or) influence decisions made by virtue of an agreement or otherwise) shares or shares participation in the authorized capital of a resident bank holding company of the Republic of Kazakhstan, which directly owns (has the opportunity to vote, determine decisions and (or) influence decisions made by virtue of an agreement or otherwise) by shares of the specified bank;

3) non-residents of the Republic of Kazakhstan who are a bank holding company, a person who has the characteristics of a bank holding company, if one of the following conditions is met:

the presence of an individual credit rating not lower than the A rating of one of the rating agencies, the list of which is established by the authorized body, as well as written confirmation from the financial supervisory authority of the country of origin of the bank holding company, a person with the characteristics of a bank holding company, that these non-resident persons of the Republic of Kazakhstan are subject to consolidated supervision;

4) bank holding companies – residents of the Republic of Kazakhstan, which are financial organizations;

5) banks in connection with their acquisition of shares of another bank or other securities held by another bank, or shares in the authorized capitals of legal entities owned by another bank, when they reorganize in the form of incorporation in accordance with the procedure established by the legislation of the Republic of Kazakhstan, or operations provided for in Article 61-4 of this Law.

14. Branches of non-resident banks of the Republic of Kazakhstan are prohibited from carrying out operations and transactions as entrepreneurial activities not related to banking activities provided for in paragraph 2-1 of Article 30 and paragraph 4 of Article 52-5 of this Law, with the exception of activities provided for in paragraphs 1), 2), 3), 4), 7), 8), 9), 9-1), 10), 12) and 15) of paragraph 9 of this article.

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

President

Republic of Kazakhstan

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