Kazakhstan - The Procedure For Registering A Crypto Company In The AIFC.
Legal News & Analysis - Asia Pacific - Kazakhstan - Regulatory & Compliance - Banking & Finance
11 October, 2021
The electricity price, legislation and location of Kazakhstan makes the country a potential world leader in crypto mining. The government is actively involved in adapting existing laws to improve the possibilities for the existence of various types of crypto companies in the country.
However, at the moment, the legislation of Kazakhstan prohibits the circulation of cryptocurrencies, but crypto mining is not prohibited by law. In June 25, 2020, the President of Kazakhstan signed the Law of the Republic of Kazakhstan "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on the Regulation of Digital Technologies", which officially legalises crypto mining in Kazakhstan. A fee for miners has been established in the amount of one tenge per 1 kWh of the consumption amount of electricity, will come into force on January 1, 2022.
Recently, the foreign crypto companies are actively registering their subsidiaries. One of the ways is to create a legal entity in the Astana International Financial Center (hereinafter - the “AIFC”). The rules of the AIFC allow the registration of crypto companies and other regulated activities based on digital assets.
Moreover, it has a special legal regime in the financial sector, with different types of tax incentives, depending on the financial services provided, and an independent judicial system to consider possible disputes between companies. In this article, we will review the process of registering crypto companies in the AIFC.
There are 16 types of legal structures available, crypto companies may choose one out of 10 types of legal structure. Let us review the example of registering a Private Company.
The procedure for registering
In order to operate on the territory of the AIFC, crypto mining companies (Private company) need:
- authorisation / In-Principal Approval;
- register legal entity;
- obtain a license to provide financial services.
Stage 1: Authorisation / In-Principal Approval
The Astana Financial Services Authority (AFSA) issues three types of licenses: Regulated activities, Market Activities and Ancillary services. Licenses determine the type and scope of financial services that a firm is allowed to provide. In our case, the crypto mining companies fall under Market Activities type.
The authorisation process helps the AFSA in identifying, preventing serious misconduct or harm, and ensure that firms and individuals meet threshold conditions.
During this stage the applicant submits the application forms and supporting documents listed in the Documentation Checklist section of the applications. The AFSA considers the application and provide preliminary comments.
The purpose of this stage is the preliminary approval of the possibility of obtaining a license by the applicant. To save time and recourses for all parties, the AFSA reviews all applicant documentation for compliance with the AIFC requirement before starting the licensing process. If there are any remarks or comments on the applicant's documentation, the AFSA gives time to eliminate the inconsistencies and resubmit the documents.
If the application is successful, the AFSA will notify the applicant of the status of the application and issue a letter of In-Principal Approval.
Stage 2: Company registration
To apply for registration of a crypto mining company with the legal structure of a Private Company, the applicant provides the following information:
- Application for legal name reservation – must be accompanied by the prescribed fee set out in the AIFC Legal Acts from time to time.
- Articles of Association – one of the constitutional documents of a company, which sets out the basic management, administrative structure and corporate governance of the company.
- Partnership Agreement – written agreement that records the matters agreed between the partners in relation to the internal workings of the partnership.
- Registered office address – physical location to which all communications and notices may be addressed. Registered address must be located in the AIFC territory in Nur-Sultan city.
- Authorised signatory – a person authorised to act on behalf of the legal entity in matters related to its operation. This authority may be granted by issuing a resolution or a power of attorney, a copy of which must be submitted to the Registrar of Companies along with the application to register a legal entity.
- Directors – the first directors of a Company must be elected by the Incorporators. A Private Company must have at least one director.
- Chief Executive Officer – natural person and has an Individual Identification Number, appointed by the Shareholders or Directors. The Chief Executive Officer shall have the broadest powers to act in all circumstances in the name of the Company.
- Company Secretary – an officer appointed by the directors of a Company as responsible for ensuring that Company’s corporate administration obligations under the AIFC Legal Acts are complied with.
- Beneficial Owner – body corporate - shareholder/partner are required to provide details of its beneficial owner who holds more than 25% of shares /ownership.
- Resolution – the registration application must be accompanied by a copy of the resolution signed by each of the shareholders / partners of the proposed legal entity.
- Anti‐Money Laundering – complete the questionnaires in relation to Anti‐Money Laundering section.
To register a legal entity with the AIFC, it has to pay the fee in the amount of USD 300.
After checking the submitted documents, the applicant receives a Certificate of Registration.
Stage 3: License
Issuance of a license is the final stage for establishing a crypto company in the AIFC. Before applying for a license, the company must pay the fee in the amount of – USD 5,000 - 125,000.
After reviewing all comments, making the appropriate changes and receiving the Certificate of Registration, In-Principal Approval, the applicant submits whole set of documents. On this basis, the final decision on the issuance of a license is made. After obtaining a license, the applicant has the right to carry out his activity.
For further information, please contact:
Saniya Perzadayeva, Managing Partner, Unicase Law Firm