Disputes over refusals to register or illegal registration of securities

    The circumstances related to the registration of securities – refusal of registration or illegal registration are based on the current Law of the Republic of Kazakhstan "On the Securities Market".

Article 1 of Chapter 1 of the said law contains some important definitions necessary for resolving cases of this category.

A security is a set of certain records and other designations certifying property rights.

Nominal holding of securities is the performance on behalf of and at the expense of holders of securities of certain legal actions in accordance with the contract of nominal holding or in accordance with this Law, as well as accounting and confirmation of rights under securities and registration of transactions with securities of such holders.

The secondary securities market is a legal relationship that develops between the subjects of the securities market in the process of circulation of placed securities.

The system of registers of securities holders is a set of information about the issuer, equity securities and their holders, providing identification of holders of rights under equity securities at a certain point in time, registration of transactions with securities, as well as the nature of registered restrictions on the circulation or exercise of rights under these securities, and other information in accordance with regulatory legal by an act of the authorized body.

A security holder is a person registered in the system of registers of securities holders or the system of accounting for nominal holdings, who has rights under securities, as well as a mutual investment fund, the holders of shares of which have rights under securities that are part of the assets of the mutual investment fund.

The Unified Registrar is a specialized non–profit organization established in the organizational and legal form of a joint-stock company, more than fifty percent of the voting shares of which belong to the National Bank of the Republic of Kazakhstan, which operates a system of registers of securities holders.

The unified system of personal accounts is a database formed by the central securities depository, reflecting the totality of information contained in the systems of registers of securities holders maintained by registrars.

A custodian is a professional participant in the securities market who records financial instruments and clients' money and confirms their rights, stores documentary financial instruments of clients with obligations for their safety and other activities in accordance with the legislative acts of the Republic of Kazakhstan.

Nominal holding accounting system is a system of accounting for a professional securities market participant providing nominal holding services, containing information about holders of securities and securities owned by them, ensuring their identification at a certain point in time, registration of transactions with securities, as well as the nature of registered restrictions on the circulation or exercise of rights under these securities, and other information in accordance with the regulatory legal act of the authorized body.

The Central Depository is a specialized non–profit organization, the only one in the territory of the Republic of Kazakhstan engaged in depository activities.

The central depository's accounting system is a set of information generated by the central depository in the course of its depository activities. A registrar is a professional participant in the securities market who forms, stores and maintains a system of registers of securities holders.

The State Register of Equity Securities is a set of information on issues of equity securities and their issuers, compiled by the authorized body.

When resolving disputes on securities related to refusal of registration or incorrect registration, the provisions of Chapter 12 of the Law of the Republic of Kazakhstan - Activities related to the maintenance of a system of registers of securities holders should be followed.

The activities of the unified registrar in maintaining the system of registers of securities holders are not subject to licensing by the authorized body.

The procedure of the unified registrar for maintaining the system of registers of securities holders is established in accordance with the requirement of Article 65 of the Law of the Republic of Kazakhstan "On the Securities Market". The founders and shareholders of the unified registrar may be only the authorized body, the stock exchange and the central securities depository.

The bodies of the unified registrar, their functions and powers, the procedure for their formation and decision-making are determined by this Law, the regulatory legal act of the authorized body, the charter and internal documents of the unified registrar.

A representative of the authorized body is a member of the Board of directors of the unified registrar on a permanent basis with voting rights.

The Unified Registrar is obliged to:

1) have technical and other facilities for the safe placement and operation of information systems and databases;

2) use certified equipment and software in their activities;

3) have a backup center for storing information that makes up the system of registers of securities holders that meets the requirements of the regulatory legal act of the authorized body;

4) conduct an annual audit of software and hardware, including information, communication systems and technologies used by the unified registrar in its activities.

A single registrar may not:

1) to carry out business activities that are not related to activities in the financial market;

2) participate in the creation and operation of legal entities, except in cases established by a regulatory legal act of the authorized body. The Unified Registrar is the only organization in the territory of the Republic of Kazakhstan engaged in maintaining a system of registers of securities holders.

This requirement does not apply to the central securities depository when carrying out activities provided for in paragraph 3-1 of Article 80 of the Law of the Republic of Kazakhstan "On the Securities Market".

Article 64-2 of the Law of the Republic of Kazakhstan "On the Securities Market" establishes a Set of Rules for the unified registrar, which is its internal document defining the relationship of the unified registrar with the subjects of the securities market.

Compliance with the set of rules of the unified registrar is mandatory for all entities using the services of the unified registrar.

The set of rules of the unified registrar is approved by the Board of Directors and coordinated with the authorized body. The set of rules of the unified registrar and amendments and additions to it come into force after their coordination with the authorized body and must contain:

1) rules for registration of transactions with equity securities, shares in the authorized capital of a limited liability partnership, as well as the rights of claim for the obligations of issuers of equity securities in cases established by this Law;

2) rules for accounting for equity securities, shares in the authorized capital of a limited liability partnership, as well as claims for obligations of issuers under equity securities in cases established by this Law;

3) rules for the storage and dematerialization of equity securities;

4) rules for reporting to clients of the unified registrar;

5) the procedure for interaction with the subjects of the securities market;

6) other provisions that do not contradict the legislation of the Republic of Kazakhstan.

The procedure for maintaining the system of registers of securities holders is provided for in Article 65 of the Law of the Republic of Kazakhstan "On the Securities Market".

The registrar shall maintain a system of registers of securities holders in accordance with this Law, regulatory legal acts of the authorized body, internal documents of the registrar, and an agreement for maintaining a system of registers of securities holders concluded with the issuer. Maintaining a system of registers of securities holders is mandatory in relation to equity securities.

Information about the issuer, securities issued by the issuer, holders of securities and transactions registered on their personal accounts, and other information are subject to entry into the system of registers of securities holders in accordance with the procedure established by regulatory legal acts of the authorized body, internal documents of the registrar.

The list of documents that make up the system of registers of securities holders, the procedure for forming, storing and maintaining the system of the register of securities holders, forms of statements from personal accounts and the list of information indicated in them are established by a regulatory legal act of the authorized body.

The functions of the registrar are:

1) formation, maintenance and storage of a system of registers of securities holders;

2) opening of a personal account in the system of registers of securities holders to a registered person;

3) registration of transactions with securities on the registered person's personal account;

4) confirmation of the securities rights of the registered person;

5) keeping the system of registers of securities holders up to date;

6) monitoring the compliance of the number of securities in circulation on the secondary securities market with the number registered by the authorized body;

7) informing the holders of securities regarding the holding of the general meeting of the issuer or the payment of income on equity securities by the issuer, as well as in relation to the issue of securities of the issuer in cases established by the legislation of the Republic of Kazakhstan, or on behalf of the issuer;

8) providing the issuer with information constituting the system of registers of securities holders based on its request;

9) providing information to government agencies that have the right, in accordance with the legislative acts of the Republic of Kazakhstan, to obtain information constituting the system of registers of securities holders in accordance with paragraph 3 of Article 43 of this Law;

10) other functions in accordance with this Law and other legislative acts of the Republic of Kazakhstan.

The system of registers of securities holders is maintained on the basis of an agreement concluded in accordance with art.67 of the Law.

The decision to conclude an agreement on maintaining a system of registers of securities holders with the registrar is made by the issuer's body in accordance with its competence established by the issuer's charter. This decision should contain an indication of the persons authorized on behalf of the issuer to participate in the conclusion of the agreement and sign it.

The Registrar is not entitled to maintain a system of registers of holders of its securities. The registrar does not have the right to delegate the maintenance of the system of registers of holders of securities of the issuer with whom he has concluded an agreement on the maintenance of the system of registers of holders of securities to another registrar.

When concluding an agreement on maintaining a system of registers of securities holders, the issuer is obliged to submit the following documents to the registrar:

1) the decision of the issuer's body on the choice of a registrar and the conclusion of an agreement on maintaining a system of registers of securities holders;

2) a copy of the charter;

3) a certificate of state registration (re-registration) of a legal entity;

4) copies of documents certifying the state registration of the issue of equity securities;

5) a card of signature samples of the issuer's representatives who have the right to receive information constituting the system of registers of securities holders and sign documents when fulfilling the terms of the agreement with the imprint of the issuer's seal (if any).

This card is subject to notarization.

The authorized body for these relations is the Securities Market Control Committee of the National Bank of the Republic of Kazakhstan.

Regulatory legal framework.

The general concept of securities is given in Article 129 of the Civil Code, according to paragraph 1 of which, a security is a set of certain records and other designations certifying property rights.

Other legally established requirements for the creation, modification, loss of rights to securities, their turnover, etc. are given in paragraph 2 of Chapter 3 of the Civil Code (Objects of civil rights).

Since shares are also securities, disputes over their turnover must be resolved in accordance with Section III (Joint Stock Company), paragraph 2, Chapter 2 of the Civil Code (Subjects of Civil Rights).

More precise and detailed requirements are given in the Law of the Republic of Kazakhstan "On Joint Stock Companies" dated May 13, 2003 No. 145.

Chapter 4 of this Law establishes general provisions on shares and other securities of the company.

The uniform application of legislation on joint-stock companies is the subject of the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan "On the application of Legislation on Joint-Stock Companies". Issues of acquisition, sale of shares, and receipt of dividends on them are resolved in paragraphs 6, 8-11 of this resolution.

The main regulatory act on this issue is the Law of the Republic of Kazakhstan "On the Securities Market" dated July 2, 2003.  No. 461, which regulates public relations arising in the process of issuance, placement, circulation and repayment of equity securities and other financial instruments, the specifics of the creation and operation of securities market entities, defines the procedure for regulation, control and supervision of the securities market in order to ensure the safe, open and effective functioning of the securities market, protection of the rights of investors and holders of securities, fair competition of securities market participants.

In addition to these regulations, there are a significant number of acts of the authorized body on the issue of securities circulation – resolutions of the Board of the National Bank of the Republic of Kazakhstan regulating various issues related to securities, their movement, registration, training of personnel to work with them and organization of activities in this area of second-tier banks.

 

 

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