Under Kazakhstan law, transactions constituting economic concentration require prior consent or notification of the antimonopoly authority when certain thresholds are met.

This requirement is also applied to transactions made outside of Kazakhstan when, as a result, one of the following conditions is satisfied:

-  main asset, intangible assets located in Kazakhstan or shares (participating interest in the charter capital) of market participants (including Kazakhstan and foreign legal entities, their branches and      representative offices, and non-profit organizations), property or non-property rights in relation to Kazakhstan legal entities are affected; or

-  competition in Kazakhstan is restricted.

As a matter of practice, the aforementioned conditions are widely interpreted by the antimonopoly authority and the former one often covers a long list of main assets, property and non-property rights and values.

For instance, there were cases when the antimonopoly authority required obtaining a prior consent in respect of M&A transaction made between two foreign legal entities based on mere fact that one of the parties held the right of claim (i.e. property right) under an agreement against a Kazakhstan company.

As such, when making transactions outside of Kazakhstan one should consider presents or absence of any link (direct or indirect) with Kazakhstan. In practice, obtaining a consent of the antimonopoly authority may take up to half a year or more, which substantially affects the transaction closing timing.

That said, according to the latest official annual report of Kazakhstan Ministry of National Economy on competition state at certain commodity markets and measures taken to restrict monopolistic activity, to incentivize the investment activities the antimonopoly authority currently works on improvement of procedures of consideration of the prior consent related filings.

One of the main and critical change mentioned in the report is obtaining of the antimonopoly authority’s consent in automatic regime in case, when one of the parties to a transaction has no assets in Kazakhstan. Although this does not exclude a filing to the antimonopoly authority, this regime contemplates immediate clearance of a transaction. Accordingly, this allows to significantly cut the timing for clearance of transactions, particularly those made outside of Kazakhstan.

It should be noted that the aforementioned change is not adopted yet. Nevertheless, having in mind the trend to ease the procedure of transaction clearance by the antimonopoly authority as well as wide interpretation of existing provision in the law, application of such automatic regime may be possible under certain arguments and accurate information (documents) submitted to the antimonopoly authority.

Akylbek Kussainov, Partner, akylbek.kussainov@zanhub.com

Ilmira Yuldasheva, Counsel, ilmira.yuldasheva@zanhub.com