Commentary on Article 204. Submission of Knowingly False Information by Professional Participants in the Securities Market of the Criminal Code of the Republic of Kazakhstan
Submission by professional participants in the securities market to state bodies and holders of securities of knowingly false information concerning the quantity and types of securities and transactions involving securities for the purpose of obtaining property benefits, where such submission causes major damage, —
shall be punishable by a fine in the amount of three hundred to five hundred monthly calculation indices or in the amount of the salary or other income of the convicted person for a period of three to five months, or by correctional labour for a period of up to two years, or by deprivation of the right to hold certain positions or engage in certain activities for a period of up to five years, or by arrest for a period of up to six months, or by imprisonment for a period of up to one year, with deprivation of the right to hold certain positions or engage in certain activities for a period of up to three years or without such deprivation.
This corpus delicti is provided for the purpose of ensuring proper and effective state regulation of the activities of professional participants in the securities market, as well as protecting the rights and legitimate interests of investors. This is implemented through the exercise of state control over the activities of securities issuers and professional market participants and, in cases where they violate the law, through the adoption of measures to hold such persons liable (Article 113 of the Law of the Republic of Kazakhstan “On the Securities Market” dated July 2, 2003).
The social danger of submitting knowingly false information by professional participants in the securities market is expressed in the fact that, as a result of its commission, significant damage is caused to the economy of our state.
The object of the crime under consideration is public relations arising in the sphere of the securities market and regulating transactions involving securities.
The subject of the crime is a security. In accordance with Part 1 of Article 129 of the Civil Code of the Republic of Kazakhstan, a security is a document certifying property rights in compliance with the established form and mandatory details, the exercise of which is possible only upon its presentation. According to Article 130 of the Civil Code of the Republic of Kazakhstan, securities include bonds, shares and other documents classified as securities by legislative acts or in accordance with the procedure established by them.
The objective side of this crime consists in the submission by professional participants in the securities market to state bodies and holders of securities of knowingly false information concerning the quantity and types of securities held in the personal accounts of securities holders, as well as transactions involving securities, for the purpose of obtaining property benefits, which causes major damage.
Transactions involving securities should be understood as civil-law transactions (purchase and sale, exchange, donation, safekeeping, transfer into pledge or trust management, etc.), as well as the performance of other actions in relation to securities, including those of a technical nature.
Holders of securities are recognised as their owners and nominal holders. The latter are professional participants in the securities market who, in accordance with an agreement and in the interests of the owners of securities, carry out transactions involving securities in their own name or at the expense of such owner (brokers-dealers).
Professional participants in the securities market are obliged to provide authorised state bodies with certain information concerning activities involving securities. Such cases include: submission of documents on the issuance of securities; notifications of changes relating to the financial and economic activities of the issuer; submission of reports on the actual placement of securities and on the results of the issue and placement of securities, etc.
There are several types of professional activities in the securities market.
Brokerage activity – the execution of civil-law transactions involving securities in the capacity of an attorney or commission agent acting on the basis of an agency agreement, an assignment agreement or a commission agreement, as well as a power of attorney for the execution of such transactions where the agreement does not contain provisions specifying the powers of the attorney or commission agent.
Dealer activity – the execution of purchase and sale transactions involving securities in one's own name and at one's own expense by publicly announcing the purchase and (or) sale prices of such securities at the prices announced by the person carrying out such activity.
Activities involving the management of securities – the performance by a legal entity or an individual entrepreneur, in its own name and for remuneration, within a specified period, of trust management of securities and monetary funds transferred into its possession and belonging to another person, in the interests of that person or third parties designated by that person, which are intended for investment in securities or received in the course of managing securities.
Depository activity – the provision of services for the safekeeping of securities certificates and (or) the recording and transfer of rights to securities.
Activities involving the maintenance of the register of securities holders – the collection, recording, processing, storage and provision of data constituting the system for maintaining the register of securities holders.
Activities involving the organisation of trading in the securities market – the provision of services that directly facilitate the conclusion of civil-law transactions involving securities between participants in the securities market.
The purpose of submitting knowingly false information to authorised state bodies concerning transactions involving securities is to conceal income from taxation or to pursue other mercenary objectives.
As a result of professional participants submitting knowingly false information concerning the quantity and types of securities held in the personal accounts of securities holders and transactions involving securities for the purpose of obtaining property benefits, major damage generally occurs, since the relevant state bodies, having been misled, are unable to respond adequately to possible violations and prevent the unlawful actions of the relevant entities. In this case, it appears logical to also regard knowingly incomplete and inaccurate information as knowingly false information if such information does not allow an accurate picture to be obtained of the quantity and types of securities held in the personal accounts of securities holders and of transactions involving securities.
A mandatory condition for the imposition of criminal liability for this crime is the causing of major damage as a result of submitting knowingly false information concerning the quantity and types of securities held in the personal accounts of securities holders and transactions involving securities. The concept of major damage is defined by the legislator in the note to Article 189 of the Criminal Code of the Republic of Kazakhstan.
The subject of the crime is professional participants in the securities market who perform management functions in issuer organisations and whose competence includes the provision of information concerning transactions involving securities.
The subjective side of the crime under analysis is characterised by the presence of only direct intent. The person is aware that they are submitting knowingly false information concerning the quantity and types of securities held in the personal accounts of securities holders and transactions involving securities, foresees the occurrence of major damage and desires such consequences. The purpose is to obtain property benefits.
Commentary of 2007 on the Criminal Code of the Republic of Kazakhstan by BORCHASHVILI I.Sh., Honoured Worker of Kazakhstan, Doctor of Law, Professor, Academician of the Kazakhstan National Academy of Natural Sciences.
Date of amendment of the act: 02.08.2007
Date of adoption of the act: 02.08.2007
Place of adoption: NONE
Body that adopted the act: 180000000000
Territorial scope of the act: 100000000000
Registration number of the regulatory legal act assigned by the rule-making body: 167
Status of the act: new
Sphere of legal relations: 028000000000
Form of the act: COMMENTARY
Legal force: 1900
Language of the act: Russian
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