Commentary on Article 225. Failure to Provide Information or Submission of Knowingly False Information by an Official of an Issuer of Securities of the Criminal Code of the Republic of Kazakhstan
1. Failure to provide information or submission of knowingly false information to state authorities and holders of securities by officials of an issuer of securities for the purpose of obtaining property benefits, which caused substantial damage to holders of securities or the issuer, -
shall be punishable by a fine in the amount of up to two hundred monthly calculation indices, or corrective labor in the same amount, or community service for a period of up to one hundred and twenty hours, or arrest for a period of up to forty days, 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.
The public danger of failure to provide information or submission of knowingly false information by an official of an issuer of securities is expressed in the fact that, as a result, significant damage is caused to the economy of our state.
The object of the criminal misdemeanor is the public relations arising in the sphere of the securities market in the course of the professional activities of an official of an issuer of securities, such as the provision of certain information or data to state authorities and holders of securities.
The additional object is the property interests of holders of securities or the issuer.
The subject matter of the criminal misdemeanor is the information or data provided by an official of an issuer of securities.
The objective side of the criminal misdemeanor under consideration is expressed in three elements:
the act in the form of an action or omission – failure to provide information (omission) or submission of knowingly false information to state authorities and holders of securities (action);
the occurrence of consequences in the form of substantial damage to holders of securities or the issuer;
the causal relationship between the act and the consequences.
According to Article 102 of the Law of the Republic of Kazakhstan “On the Securities Market”:
“1. Disclosure of information in the securities market means ensuring its accessibility to all persons interested in such information, regardless of the purposes for obtaining this information, in accordance with the legislative acts of the Republic of Kazakhstan.
2. During the period of circulation of issue securities, the issuer shall, in accordance with the procedure and within the time limits established by this Law and regulatory legal acts of the authorized body, disclose the following information on the Internet resource of the financial statements depository:
information on corporate events of the issuer;
information on the total amount of remuneration paid to members of the executive body of a joint-stock company based on the results of the year;
information on affiliated persons of the joint-stock company;
the composition of shareholders (participants) holding ten or more percent of the issuer's voting shares (participation interests);
a list of organizations in which the issuer owns ten or more percent of the shares (interests, units) of each such organization;
the issuer's annual financial statements and the issuer's audit reports (disclosure of audit reports is carried out by issuers subject to mandatory audit in accordance with the Law of the Republic of Kazakhstan “On Auditing Activities”);
the prospectus for the issue of the issuer's issue securities, taking into account the amendments and (or) additions made thereto;
the report on the results of placement of shares;
the methodology for determining the value of shares when they are issued by a joint-stock company on an unorganized market.
The requirements provided for in subparagraphs 1) and 3) of this paragraph shall not apply to information and data related to the management of the gold and foreign exchange assets of the National Bank of the Republic of Kazakhstan and (or) the assets of the National Fund of the Republic of Kazakhstan.
The issuer shall disclose information on the cancellation by the authorized body of an issue of issue securities and (or) the redemption of the issuer's issue securities on the Internet resource of the financial statements depository.
An issuer whose securities are included in the official list of a stock exchange shall, in addition to the information specified in the first and third parts of this paragraph, disclose quarterly financial statements on the Internet resource of the financial statements depository.
3. An issuer whose securities are included in the official list of a stock exchange shall additionally ensure the disclosure on the Internet resource of the stock exchange of the information specified in paragraph 2 of this Article, as well as other information determined by the internal documents of the stock exchange...”.
The concept of “corporate events” is defined in subparagraph 55-2) of Article 1 of the said Law.
Where the legislation of the Republic of Kazakhstan does not provide for other time limits for the publication (bringing to the attention of holders of securities) of information on corporate events, such information shall be disclosed within three working days following the date of its occurrence.
The issuer shall ensure the disclosure of information on the Internet resource of the financial statements depository and on the Internet resource of the stock exchange in accordance with the requirements of Article 102 of the Law in the Kazakh and Russian languages.
The procedure for disclosure of information by the issuer, requirements for the content of information subject to disclosure, as well as the time limits for disclosure of information on the Internet resource of the financial statements depository shall be established by a regulatory legal act of the authorized body.
The procedure for disclosure of information by the issuer, requirements for the content of information subject to disclosure by the issuer, as well as the time limits for disclosure of information by the issuer on the Internet resource of the stock exchange shall be established by the internal documents of the stock exchange.
Failure to provide the above-mentioned information or submission of knowingly false information constitutes the elements of the criminal offense provided for in Article 225 of the Criminal Code.
By its legal construction, the composition of the criminal misdemeanor is material. The act shall be deemed completed from the moment substantial damage is caused to holders of securities or the issuer. Substantial damage shall mean damage caused to an individual in an amount exceeding two hundred times the monthly calculation index, or damage caused to an organization or the state in an amount exceeding two thousand times the monthly calculation index (subparagraph 38) of Article 3 of the Criminal Code of the Republic of Kazakhstan).
The subjective side of the criminal misdemeanor is characterized by an intentional form of guilt, whereby the perpetrator realizes that they are failing to provide information or submitting knowingly false information to state authorities and holders of securities for the purpose of obtaining property benefits, foresees the possibility or inevitability of consequences resulting from such actions and desires their occurrence, or, although not desiring them, consciously allows such consequences to occur or treats them with indifference.
The purpose is to obtain property benefits both for oneself and for other persons or organizations.
The subject of the criminal misdemeanor is special – officials of an issuer of securities who have the authority to provide the relevant information or data in the securities market.
The act provided for in Article 225 of the Criminal Code belongs to criminal misdemeanors.
Commentary of 2021 to the Criminal Code of the Republic of Kazakhstan by Isidor Shamilovich Borchashvili, Honored Figure of Kazakhstan, Doctor of Law, Professor, Academician of the National Academy of Natural Sciences of Kazakhstan, Member of the Scientific Advisory Councils under the Constitutional Council of the Republic of Kazakhstan and the Supreme Court of the Republic of Kazakhstan, Member of the Working Group on the Reform of the Law Enforcement System under the Security Council of the Republic of Kazakhstan, Honored Employee of the Ministry of Internal Affairs of the Republic of Kazakhstan.
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