Licensing Regulations in Kazakhstan

Licensing Regulations in Kazakhstan

A licence is issued by the licensing authority to a physical or legal person, as well as to a branch of a foreign legal entity. “Entrepreneurs’ rights to conduct activities not prohibited by legislation are protected by the possibility of conducting business without obtaining any permits or notifications, except for permits and notifications provided for by the Law of the Republic of Kazakhstan ‘On Permits and Notifications.” There is certain activity that can be hazardous and poses a threat to the life and health of people, the environment, property, national security, and law and order. Such activities in Kazakhstan are subject to regulation and licensing. This activity is regulated by the Law of the Republic of Kazakhstan dated May 16, 2014, No. 202-V “On Permits and Notifications” (hereinafter referred to as the “Law on Permits and Notifications”). Types of Activities Licensable Activity – an activity that requires a licence according to the Law on Permits and Notifications, and it applies to specific types of activities or actions (operations) in the following areas:

1. Broadcasting
2. Protection and use of historical and cultural heritage objects
3. Education
4. Architecture, urban planning, and construction
5. Hydrocarbons
6. Industry
7. Informatisation and communication
8. Handling narcotic drugs, psychotropic substances, precursors
9. Healthcare
10. Use of nuclear energy
11. Ensuring information security
12. Special technical means for conducting investigative activities
13. Handling armaments, military equipment, and certain types of weapons, explosives, and items using them
14. Handling poisonous substances
15. Production of state symbols of Kazakhstan
16. Production and circulation of ethyl alcohol and alcoholic products, production of tobacco products
17. Commodity exchanges
18. Export and import
19. Financial sphere and activities related to the concentration of financial resources
20. Use of outer space
21. Gambling business
22. Veterinary medicine
23. Agriculture
24. Transport
25. Forensic activities, including forensic medical, forensic narcological, and forensic psychiatric examinations
26. Services to individuals and legal entities
27. Digital assets

Construction Licence

One of the most common licences is for construction. This licence is regulated by the following legal acts:

• The Law of the Republic of Kazakhstan dated May 16, 2014, No. 202-V “On Permits and Notifications”
• The Order of the Acting Minister of National Economy of the Republic of Kazakhstan dated December 9, 2014, No. 136 “On Approving Unified Qualification Requirements for Licensing Architectural, Urban Planning, and Construction Activities”
• The Law of the Republic of Kazakhstan dated July 16, 2001, No. 242 “On Architectural, Urban Planning, and Construction Activities in the Republic of Kazakhstan”

The construction licence is categorised into three levels:

Category III:

1) Presence of at least one certified engineering and technical worker with a corresponding certificate for the requested type of work, employed on a permanent basis with the applicant, in one of the following positions:

• Chief Engineer
• Head of Production and Technical Department
• Site Manager
• Work Supervisor
• Foreman

2) Presence of a production base owned (under economic management or operational control) or rented for at least one year (registered in the legal cadastre), equipped with:

• Administrative and production buildings or premises necessary for carrying out the stated types of work. Administrative, production, and other buildings or premises can be combined if it does not contradict labour safety and working conditions.
• Workplaces organised according to labour conditions

3) Availability of minimal technical equipment, including a set of equipment, measuring instruments, machines, and mechanisms, according to technical requirements for carrying out construction work.

Category II:

• Same as Category III with additional requirements:
• Experience of the licensee for at least five years. Experience is counted from the date of obtaining the licence or equivalent permit for foreign entities, or at least five years as a Category III licensee. Experience is annulled if the licence expires.
• Presence of at least five completed projects of the second technical complexity level as a general contractor with documentary confirmation (copies of signed commissioning acts), or at least ten projects of the first and/or second responsibility levels as a subcontractor with documentary confirmation. For foreign entities, equivalent documents are accepted.

Category I:

• Same as Category II with additional requirements:
• Experience of the licensee for at least ten years, or at least seven years for marine oil and gas projects in Kazakhstan, or at least five years as a Category II licensee. Experience is counted from the date of obtaining the licence, and is annulled if the licence expires.
• Presence of at least ten completed projects of the first and/or second responsibility levels as a general contractor with documentary confirmation (copies of signed commissioning acts), or at least twenty projects of the first and/or second responsibility levels as a subcontractor with documentary confirmation. For foreign entities, equivalent documents are accepted.

Main Documents Required from Foreign Companies

1. Application – A completed application form with information about the company, its activities, and the type of licence required.
2. Founding Documents – A copy of the founding documents of the foreign company, such as the charter and founding agreement. These documents must be translated into Kazakh or Russian and notarised.
3. Registration Document – A copy of the document confirming the registration of the foreign company in its country of origin (e.g., registration certificate).
4. Documents Confirming Authority – A copy of the power of attorney or other documents confirming the authority of the person signing the application and submitted documents on behalf of the company.
5. Documents Confirming Qualified Personnel and Equivalent Licence – Documents confirming the presence of qualified personnel with relevant certificates or diplomas, such as employment contracts and certificates. Also, the equivalent licence in the country of registration of the foreign company.
6. Documents on Material and Technical Base – Documents confirming the presence of a material and technical base (e.g., lease agreements or ownership rights for objects used for construction work).
7. Documents Confirming Compliance with Safety Requirements – Documents confirming compliance with occupational health and safety requirements at the production base.
8. Document Confirming Payment of Licensing Fee – A copy of the document confirming payment of the licensing fee for construction activity.
9. Presence of Production Base – In Kazakhstan and in the country of registration of the foreign company.
10. Documents Confirming Experience in Similar Construction Projects – Documentation confirming experience in similar projects.

Processing Times

After submitting all documents, the request for a licence is reviewed within five business days according to the law. However, in practice, obtaining a licence may take up to two to three months, especially for foreign companies as they need to provide documents from their country of registration, which must be apostilled or legalised. Licence Termination A licence and/or its appendices cease to be valid in cases such as:

1. Revocation of the licence and/or its appendices
2. Termination of the activity of a physical person, liquidation of a legal entity, or cessation of activity of a branch of a foreign legal entity engaged in financial services
3. Voluntary request by the licensee to terminate the licence and/or its appendices
4. Exclusion of the licence or specific type of activity or action from the appendix to the Law
5. Exclusion of the licensee from the list of entities subject to licensing
6. Violation of legislation in the area for which the licence was issued
7. Other cases provided by the laws of Kazakhstan

Responsibility – Administrative Responsibility

Code of Administrative Offences of Kazakhstan (CAO RK)

1) Fines: Conducting activities without a licence results in administrative fines for legal entities and individual entrepreneurs. The fine amounts vary depending on the type of activity and violations:

• Legal Entities: Fines can be substantial, often ranging from 500 to 2,000 MCI (monthly calculation indicators,) approx. US$3,816 to US$15,265 respectively.
• Individual Entrepreneurs: Fines are also significant, typically ranging from 100 to 500 MCI, or US$763 to US$3,816.

2) Suspension of Activities: Activities may be suspended until the violations are corrected and the necessary permits are obtained. 3) Confiscation: In some cases, equipment and other assets used in unlawful activities may be confiscated. 4) Warnings and Recommendations: In some cases, warnings and recommendations may be issued before imposing fines or other measures.

Criminal Responsibility – Criminal Code of Kazakhstan

1) Serious Violations: If operating without a licence poses a significant threat to public interests, safety, or health, it may be classified as a criminal offense.

• Fines: Large fines may be imposed.
• Imprisonment: In severe cases, imprisonment may be imposed for up to several years.

2) Economic Crimes: Conducting activities without a licence can be classified as an economic crime if it involves large sums of money, significant damage, or systematic violations. Consequences

1. Financial Losses: Fines and possible confiscations can result in significant financial losses for the company or entrepreneur.
2. Reputational Risks: Violating legislation can negatively impact the company’s reputation, leading to loss of trust from partners, clients, and investors.
3. Operational Restrictions: Suspension of activities and the need to obtain a licence can cause business interruptions, adversely affecting operations and income.
4. Legal Consequences: In case of criminal prosecution, there may be long-term legal consequences, including a criminal record for managers and business owners.

Unicase is a leading Central Asian law firm operating locally and internationally, with a strong presence in Kazakhstan, Uzbekistan, Kyrgyz Republic, Tajikistan, and Turkmenistan. Unicase has one of the strongest Expert Teams, well known for regulatory and law drafting capabilities, who, alongside a strong transactional background and expertise, have allowed the firm to win major development projects and continue to be the first-choice advisers for legislation development issues.