Comment to Article 224. Violations related to the illegal acquisition of shares in the authorized capitals of legal entities or shares by banks, insurance (reinsurance) organizations, bank holdings, insurance holdings  The Code of the Republic of Kazakhstan on Administrative Offences  

     1. Acquisition of shares in the authorized capitals of legal entities or shares by banks, insurance (reinsurance) organizations in violation of the requirements of the legislative acts of the Republic of Kazakhstan, with the exception of the acts provided for in part three of this Article, -

     entails a fine on legal entities in the amount of two thousand monthly calculation indices.

     2. Acquisition of shares in the authorized capitals of legal entities or shares by bank holding companies, insurance holding companies in violation of the requirements of the legislative acts of the Republic of Kazakhstan, with the exception of the acts provided for in part three of this Article, -

     entails a fine on legal entities in the amount of two thousand monthly calculation indices.

     3. Creation or acquisition by a bank, insurance (reinsurance) organization, bank holding company, insurance holding company of a subsidiary organization without prior permission of the National Bank of the Republic of Kazakhstan -

     entails a fine on legal entities in the amount of two thousand monthly calculation indices.

     The commented article establishes administrative liability for violations related to the unlawful acquisition of shares in the authorized capitals of legal entities or shares by banks, insurance (reinsurance) organizations, bank holding companies, and insurance holdings.

     The generic object of offenses provided for in Article 224 of the Administrative Code is the procedure established in the legislation of the Republic of Kazakhstan and protected by the state for conducting business in the field of finance.

     The direct object of administrative offenses provided for in the commented article is the procedure established by the legislation of the Republic of Kazakhstan for the acquisition of shares in the authorized capitals of legal entities or shares.

     224 of the Administrative Code, by virtue of the direct indication of this in the dispositions of the commented article, are legal entities: banks, insurance (reinsurance) organizations, bank holdings, insurance holdings.

     The subjective side of the acts provided for in Article 224 of the Administrative Code cannot be established due to the fact that the subjects of the offense under the commented article are legal entities.  

     Penalties under the commented article are imposed on offenders by the National Bank of the Republic of Kazakhstan or the court, in case the case is considered in court.

     Part 1 of the commented article establishes administrative responsibility for the acquisition of shares in the authorized capitals of legal entities or shares by banks, insurance (reinsurance) organizations in violation of the requirements of the legislative acts of the Republic of Kazakhstan, with the exception of acts provided for in part three of the commented article.

     The objective side of the offense provided for in Part 1 of Article 224 of the Administrative Code is that the offender commits illegal actions in the form of acquiring shares in the authorized capitals of legal entities or shares in violation of the requirements of the legislative acts of the Republic of Kazakhstan.

     As required by clause 1 of Article 8 of the Law of the Republic of Kazakhstan "On Banks and Banking Activities", banks are prohibited from acquiring shares in the authorized capital or shares of legal entities, establishing and participating 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 cases established by the cited Law.

     This prohibition does not apply to the following cases of creation, as well as acquisition by banks of shares or participation shares in the authorized capital: 1) financial organizations, as well as non-resident legal entities with the status of banks, insurance organizations, pension funds, and professional participants in the securities market, in the amount of ten percent or more of the outstanding (minus preferred and repurchased by the company) shares (stakes in the authorized capital) if it has a bank holding company. At the same time, the requirement for a bank holding company does not apply to banks with more than fifty percent of the voting shares owned by the state or a national management holding company; 2) 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) to the requirements of the regulatory legal act of the authorized body; 3) subsidiaries of special non-resident organizations of the Republic of Kazakhstan established for the purpose of issuing and placing securities under the guarantee of the bank; 4) subsidiaries of special financial companies established for securitization transactions in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization; 5) resident organizations of the Republic of Kazakhstan acquiring doubtful and hopeless assets, established (acquired) together with an organization specializing in improving the quality of second-tier banks' loan portfolios.; 6) subsidiaries of residents of the Republic of Kazakhstan acquiring doubtful and hopeless assets of the parent bank; 7) subsidiaries whose exclusive activity is the collection of banknotes, coins and valuables; 8) organizations providing services to the operator of the electronic money system; 9) subsidiaries engaged in leasing activities; 10) organizations providing security services information, telecommunication, and technological interaction between participants in banking settlements, including settlements on payment card transactions; 11) organizations engaged in activities to certify the compliance 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; 12) associations and unions of banks; 13) legal entities when shares or shares of participation in the authorized capitals of these organizations are transferred to the ownership of banks in accordance with with the civil legislation of the Republic of Kazakhstan and the legislation of a foreign state; 14) stock exchanges and the central depository operating in the territory of the Republic of Kazakhstan; 15) organizations that were previously subsidiaries of banks; 16) credit bureaus; 17) other legal entities - when an Islamic bank carries out banking activities provided for by the cited Law.

     At the request of paragraph 1 of Article 48 of the Law of the Republic of Kazakhstan "On Insurance Activities", insurance (reinsurance) organizations are prohibited from acquiring shares in the authorized capital or shares of legal entities, creating and participating 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 cases established by the cited Law.

     This prohibition does not apply to cases of creation, as well as acquisition by insurance (reinsurance) organizations of shares or participation shares in the authorized capital: 1) organizations for the formation and maintenance of a database; 2) legal entities engaged in the activities of an insurance agent as an exclusive type of activity; 3) organizations that guarantee insurance payments to policyholders (insured, beneficiaries) in the event of compulsory liquidation of insurance organizations; 4) 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; 5) financial organizations, as well as non-resident legal entities with the status of banks, insurance organizations, pension funds, and professional participants in the securities market, in the amount of ten percent or more of the outstanding (minus preferred and repurchased by the company) shares (stakes in the authorized capital) if it has an insurance holding company. At the same time, the requirement to have an insurance holding company does not apply to insurance (reinsurance) organizations, more than fifty percent of the voting shares of which belong to the state or the national managing holding company.

     Violation by obligated persons of the specified prohibition or the commission of transactions for the acquisition of shares in the authorized capital or shares of legal entities in permitted cases in violation of the procedure established for this by legislative acts of the Republic of Kazakhstan forms the final composition of the offense provided for in Part 1 of the commented article.

     The objective side of Part 1 of the commented article, by virtue of the direct indication of this in the disposition of the commented norm, does not include cases of creation or acquisition by banks or insurance organizations of participation shares or shares of subsidiaries without prior permission of the National Bank of the Republic of Kazakhstan. Such cases are singled out as an independent offense under Part 3 of the commented article.

     The composition of the offense provided for in Part 1 of the commented article is formal. In order to calculate and impose a fine on an offender in accordance with Part 1 of the commented article, it is not necessary to establish the fact and amount of damage caused by the commission of an offense.

     The offense provided for in Part 1 of the commented article is considered to have been committed at the moment when the offender actually acquired and registered his rights to shares in the authorized capitals of legal entities or shares in violation of the requirements of the legislative acts of the Republic of Kazakhstan (registered in the register of business identification numbers).

     For committing an offense provided for in Part 1 of the commented article, a legal entity is subject to punishment in the form of a fine.  

The fine for committing an offense under Part 1 of Article 224 of the Administrative Code is 2000 MCI.

     Part 2 of the commented article establishes administrative responsibility for the acquisition of shares in the authorized capitals of legal entities or shares by bank holdings, insurance holdings in violation of the requirements of the legislative acts of the Republic of Kazakhstan, with the exception of acts provided for in part three of the commented article.

     The objective side of the offense provided for in Part 2 of Article 224 of the Administrative Code is that the offender commits illegal actions in the form of acquiring shares in the authorized capitals of legal entities or shares in violation of the requirements of the legislative acts of the Republic of Kazakhstan.

     As required by paragraph 2 of Article 8 of the Law of the Republic of Kazakhstan "On Banks and Banking Activities", bank holding companies are prohibited from acquiring shares in the authorized capital or shares of legal entities, creating and participating 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 cases established by the cited Law.

     This prohibition does not apply to cases of creation, as well as the acquisition by bank holding companies of shares or equity interests.: 1) financial organizations; 2) resident organizations of the Republic of Kazakhstan that acquire questionable and hopeless claims of second-tier banks for their management and (or) subsequent sale, restructuring and (or) securitization; 3) 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; 4) special financial companies established for securitization transactions in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization; 5) organizations whose exclusive activity is the collection of banknotes, coins and valuables, leasing activities; 6) organizations providing services to ensure information, telecommunications and technological interaction between participants in banking settlements, including settlements on transactions with payment cards; 7) non-resident legal entities with the status of banks, insurance organizations, pension funds, and professional participants in the securities market; 8) organizations that were previously affiliated banks.

     As required by paragraph 2 of Article 48 of the Law of the Republic of Kazakhstan "On Insurance Activities", insurance holdings are prohibited from acquiring shares in the authorized capital or shares of legal entities, creating and participating 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 cases established by the cited Law.

     This prohibition does not apply to cases of creation, as well as acquisition by insurance holdings of shares or participation interests in the authorized capitals of financial organizations; non-resident legal entities with the status of banks, insurance organizations, pension funds, professional participants in the securities market.

     Violation by obligated persons of the specified prohibition or the commission of transactions for the acquisition of shares in the authorized capital or shares of legal entities in permitted cases in violation of the procedure established for this by legislative acts of the Republic of Kazakhstan forms the final composition of the offense provided for in Part 2 of the commented article.

     The objective side of Part 2 of the commented article, by virtue of the direct indication of this in the disposition of the commented norm, does not include cases of creation or acquisition by a bank holding company or an insurance holding company of shares or shares of subsidiaries without prior permission from the National Bank of the Republic of Kazakhstan. Such cases are singled out as an independent offense under Part 3 of the commented article.

     The composition of the offense provided for in Part 2 of the commented article is formal. In order to calculate and impose a fine on the offender under Part 2 of the commented article, it is not necessary to establish the fact and amount of damage caused by the acquisition of shares in the authorized capitals of legal entities or shares in violation of the requirements of the legislative acts of the Republic of Kazakhstan.

     The offense provided for in Part 2 of the commented article is considered to have been committed at the moment when the offender actually acquired and registered his rights to shares in the authorized capitals of legal entities or shares in violation of the requirements of the legislative acts of the Republic of Kazakhstan (registered in the register of business identification numbers).

     For committing an offense provided for in Part 2 of the commented article, a legal entity is subject to punishment in the form of a fine.  

     The fine for committing an offense under Part 2 of Article 224 of the Administrative Code is 2000 MCI.

     Part 3 of the commented article establishes administrative responsibility for the creation or acquisition by a bank, insurance (reinsurance) organization, bank holding company, insurance holding company of a subsidiary organization without the prior permission of the National Bank of the Republic of Kazakhstan.

     The objective side of the offense provided for in Part 3 of Article 224 of the Administrative Code is that the offender commits unlawful acts in the form of:  

     1) creation of a subsidiary organization without the prior permission of the National Bank of the Republic of Kazakhstan; or

     2) acquisition of a subsidiary organization without the prior permission of the National Bank of the Republic of Kazakhstan.

     A subsidiary is a legal entity over which another legal entity has control.

     Control is the ability to determine the decisions of a legal entity that arises in the presence of one of the following conditions: 1) direct or indirect ownership by one person alone or jointly with one or more persons of more than fifty percent of the shares in the authorized capital or outstanding (minus preferred and repurchased by the company) shares of a legal entity, or the ability to vote independently with more than fifty percent of the shares of a legal entity; 2) the ability of one person to independently elect at least half of the management body or executive body of a legal entity; 3) inclusion of the financial statements of a legal entity, with the exception of the financial statements of a special financial company established in accordance with the legislation of the Republic of Kazakhstan on project financing and securitization, in the financial statements of another legal entity in accordance with the audit report; 4) the possibility of one person independently or jointly with one or more persons to determine the decisions of a legal entity by virtue of a contract (supporting documents) or otherwise in cases provided for by a regulatory legal act of the authorized body.

     As required by clause 1 of Article 11-1 of the Law of the Republic of Kazakhstan "On Banks and Banking Activities", banks and bank holding companies may establish or have a subsidiary organization only with the prior permission of the authorized body.

     The requirement to obtain permission from an authorized body to establish or acquire a subsidiary does not apply to 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 or stakes in the authorized capital of this organization through ownership (having the ability to vote, determine decisions and (or) influence decisions made by virtue of an agreement or otherwise) by shares of a resident bank of the Republic of Kazakhstan, who directly owns (has the ability to vote, determine decisions and (or) influence decisions made by virtue of a contract or otherwise) shares or stakes in the authorized capital of the specified organization and has the appropriate permission from the authorized body.

     The requirement to obtain permission from an authorized body to establish or acquire a subsidiary does not apply to a bank in connection with its acquisition of control over another bank, which has been restructured in accordance with the cited Law.

     As required by paragraph 1 of Article 32 of the Law of the Republic of Kazakhstan "On Insurance Activities", an insurance (reinsurance) organization and an insurance holding company may establish or have a subsidiary organization in order to exercise their powers only with the prior permission of the authorized body.

     The requirement to obtain permission from an authorized body to establish or acquire a subsidiary does not apply to insurance holdings that indirectly own (have the ability to vote, determine decisions and (or) influence decisions made by virtue of a contract or otherwise) shares or stakes in the authorized capital of this organization through ownership (having the ability to vote, determine to make decisions and (or) influence decisions made by virtue of a contract or otherwise) by shares of an insurance (reinsurance) organization resident in the Republic of Kazakhstan, directly owning (having the ability to vote, determine decisions and (or) influence decisions made by virtue of an agreement or otherwise) shares or shares in the authorized capital of the specified organization and having the appropriate permission of the authorized body.

     The procedure for granting permission to establish or acquire a subsidiary is determined by a regulatory legal act of the authorized body.

     The composition of the offense provided for in Part 3 of the commented article is formal. In order to calculate and impose a fine on an offender under Part 3 of the commented article, it is not necessary to establish the fact and amount of damage caused by the commission of an offense.

The offense provided for in Part 3 of the commented article is considered to have been committed at the time of the acquisition or creation of a subsidiary by the offender without the prior permission of the National Bank of the Republic of Kazakhstan and registration of the relevant rights of the participant (shareholder) in the register of shareholders or in the national register of business identification numbers.

     For committing an offense provided for in the commented article, a person is punished with a fine.  

     The fine for committing an offense under Part 3 of Article 224 of the Administrative Code is 2000 MCI.

Scientific and practical commentary to the Code of the Republic of Kazakhstan on Administrative Offences (article-by-article) from the Author's team:

     Bachurin Sergey Nikolaevich, Candidate of Law, Associate Professor – chapter 48 (co-authored with E.M. Khakimov);

     Gabdualiev Mereke Trekovich, Candidate of Law – Chapters 11, 21, 22, 23;

     Zhusipbekova Ainur Maratovna, M.yu.n. – chapter 13 (co-authored with Karpekin A.V.); chapters 33, 39 (co-authored with Seitzhanov O.T.);  

     Alexander Vladimirovich Karpekin, Candidate of Law, Associate Professor – chapter 13 (in collaboration with A.M. Zhusipbekova);

     Korneychuk Sergey Vasilyevich – chapters 2; chapter 6 (co-authored with O.T. Seitzhanov, E.M. Khakimov); chapter 8; chapter 25 (co-authored with E.M. Khakimov); articles 457-470, 488, 488-1, 491-506; chapters 28, 30, 52;

     Ilya Petrovich Koryakin, Doctor of Law, Professor – Chapter 49;

     Kisykova Gulnara Bauyrzhanovna, Candidate of Law – chapter 20;

     Omarova Botagoz Akimgereevna, Candidate of Law – chapters 17; chapter 18 (co-authored with B.A. Parmankulova); chapters 26, 31; chapter 32 (co-authored with B.A. Parmankulova);

     Parmankulova Bayan Askhanbaevna – chapter 18 (co-authored with Omarova B.A.); chapters 19, 32 (co-authored with Omarova B.A.); chapter 43 (co-authored with Tukiev A.S.);  

     Podoprigora Roman Anatolyevich, Doctor of Law, Professor - Chapter 24, articles 489, 489-1, 490;

     Porokhov Evgeny Viktorovich, Doctor of Law – Chapters 14, 15, 16, 29, articles 471-475;

     Seitzhanov Olzhas Temirzhanovich, Candidate of Law, Associate Professor, – chapter 4; chapter 5 (co-authored with E. M. Khakimov); chapter 6 (co-authored with S.V. Korneychuk, E.M. Khakimov); chapter 9; chapter 10 (co-authored with B.E. Shaimerdenov, V.V. Filin); chapter 33 (co-authored with Zhusipbekova A.M.); chapter 36 (co-authored with Shaimerdenov B.E.); chapter 39 (co-authored with Zhusipbekova A.M.);

     Smyshlyaev Alexander Sergeevich, PhD. – chapters 38, 40, 42, 43-1 (co-authored with A.S. Tukiev); chapter 44;

     Aslan Sultanovich Tukiev - Candidate of Law, Associate Professor – chapters 1, 3, 35; chapters 38, 40, 42, (co-authored with A.S. Smyshlyaev); chapter 43 (co-authored with B.A. Parmankulova); chapter 43-1 (co-authored with A.S. Smyshlyaev); chapter 44-1 (co-authored with Shipp D.A.); chapter 45; 46 (co-authored with Shipp D.A.); chapter 47;  

     Filin Vladimir Vladimirovich, Candidate of Law, Associate Professor – Chapter 10 (in collaboration with O.T. Seitzhanov, B.E. Shaimerdenov);  

     Yerzhan Maratovich Khakimov, M.yu.n. – chapter 5 (co-authored with O.T. Seitzhanov); chapter 6 (co-authored with O.T. Seitzhanov, S.V. Korneychuk); chapter 7; chapter 25 (co-authored with S.V. Korneychuk); chapters 34, 41; chapter 48 (co-authored with S.N. Bachurin); chapter 53;

     Shaimerdenov Bolat Yerkenovich, M.yu.n., – chapter 10 (co-authored with O.T. Seitzhanov, V.V. Filin); chapter 12; articles 476-487, 507-509; chapter 36 (co-authored with O.T. Seitzhanov); chapters 37, 50, 51.  

     Shipp Denis Alekseevich – chapters 44-1, 46 (in collaboration with A.S. Tukiev).

Date of amendment of the act:  01.01.2020 Date of adoption of the act:  01.01.2020 Place of acceptance:  100050000000 Authority that adopted the act: 103001000000 Region of operation:  100000000000 NPA registration number assigned by the regulatory body:  5 Status of the act:  new Sphere of legal relations:  029000000000 / 028000000000 / 029002000000 / 028004000000 / 029001000000 / 026000000000 / 001000000000 / 001008000000 / 030000000000 The form of the act:  COMM / CODE Legal force:  1900 Language of the Act:  rus  

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