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LAW OF THE REPUBLIC OF KAZAKHSTAN

of July 4, 2003 No. 474-II

About state regulation, control and supervision of the financial market and the financial organizations

(as amended on 19-06-2024)

This Law governs the public relations connected with implementation of state regulation, control and supervision of the financial market and the financial organizations and is directed to increase in stability of financial system of the Republic of Kazakhstan and creation of conditions on non-admission of violations of the rights and legitimate interests of consumers of financial services.

Chapter 1. General provisions

Article 1. The basic concepts used in this Law

In this Law the following basic concepts are used:

1) the consumer of financial services - the physical person or legal entity using services of the financial organization, bank branch - the nonresident of the Republic of Kazakhstan, branch of the insurance (reinsurance) organization - the nonresident of the Republic of Kazakhstan, branch of insurance broker - the nonresident of the Republic of Kazakhstan, and also investing the means in financial instruments;

2) professional activity in the financial market - business activity on provision of financial services;

3) authorized body on regulation, control and supervision of the financial market and the financial organizations (further - authorized body) - the state body performing state regulation, control and supervision of the financial market and the financial organizations;

4) the financial organization - the legal entity performing business activity on provision of financial services;

5) the financial market - set of the relations connected with rendering and consumption of financial services, and also release and the address of financial instruments;

6) financial services - activities of professional participants of the insurance market (except for actuaries), professional participants of the security market, Voluntary accumulation pension fund, the banking activity, organization activity on carrying out separate types of banking activities, the organizations performing microfinancial activities performed based on the licenses obtained according to the legislation of the Republic of Kazakhstan and also the activities which are not subject to licensing:

single accumulation pension fund; central depositary;

the single operator in the sphere of accounting of state-owned property regarding implementation of functions of nominal continence of the securities belonging to the state, subjects of the quasi-public sector which list affirms authorized body on management of state-owned property, or concerning which the state, the specified subjects of the quasi-public sector have property rights;

societies of mutual insurance;

the organization guaranteeing implementation of insurance payments to insurers (insured, to beneficiaries) in case of liquidation of insurance companies;

7) financial product - the service offered by the financial organization, bank branch - the nonresident of the Republic of Kazakhstan and branch of the insurance (reinsurance) organization - the nonresident of the Republic of Kazakhstan to consumers of financial services within implementation of professional activity in the financial market.

Article 2. Legislation of the Republic of Kazakhstan on state regulation, control and supervision of the financial market and financial organizations

1. The legislation of the Republic of Kazakhstan on state regulation, control and supervision of the financial market and the financial organizations is based on the Constitution of the Republic of Kazakhstan, consists of this Law and other regulatory legal acts of the Republic of Kazakhstan.

2. If the international treaty ratified by the Republic of Kazakhstan establishes other rules, than those which are provided by this Law then are applied rules of the international treaty.

3. No. 97-VIII ZRK is excluded according to the Law of the Republic of Kazakhstan of 19.06.2024

Article 3. Purposes, principles and tasks of state regulation, control and supervision of the financial market and financial organizations

1. The purposes of state regulation, control and supervision of the financial market and the financial organizations are:

1) assistance to ensuring financial stability of the financial market and the financial organizations and maintenance of trust to financial system in general;

2) No. 30-V ZRK is excluded according to the Law of the Republic of Kazakhstan of 05.07.2012

3) creation of equal conditions for activities of the financial organizations, branches of nonresident banks of the Republic of Kazakhstan, branches of the insurance (reinsurance) nonresident organizations of the Republic of Kazakhstan, branches of the insurance nonresident brokers of the Republic of Kazakhstan directed to maintenance of fair competition in the financial market.

2. The principles of state regulation, control and supervision of the financial market and the financial organizations are:

1) effective use of resources and instruments of regulation;

2) transparency of activities of the financial organizations, branches of nonresident banks of the Republic of Kazakhstan, branches of the insurance (reinsurance) nonresident organizations of the Republic of Kazakhstan, branches of insurance nonresident brokers of the Republic of Kazakhstan and financial supervision;

3) responsibility of the financial organizations, branches of nonresident banks of the Republic of Kazakhstan, branches of the insurance (reinsurance) nonresident organizations of the Republic of Kazakhstan, branches of insurance nonresident brokers of the Republic of Kazakhstan.

3. Tasks of state regulation, control and supervision of the financial market and the financial organizations are:

1) establishment of standards of activities of the financial organizations, branches of nonresident banks of the Republic of Kazakhstan, branches of the insurance (reinsurance) nonresident organizations of the Republic of Kazakhstan, branches of insurance nonresident brokers of the Republic of Kazakhstan, creation of incentives for improvement of corporate management of the financial organizations;

2) monitoring of the financial market and the financial organizations, branches of nonresident banks of the Republic of Kazakhstan, branches of the insurance (reinsurance) nonresident organizations of the Republic of Kazakhstan, branches of insurance nonresident brokers of the Republic of Kazakhstan for the purpose of preserving stability of financial system;

3) concentration of resources of supervision on areas of the financial market, the most subject to risks, for the purpose of maintenance of financial stability;

4) ensuring proper level of protection of consumer interests of financial services, and also completeness and availability of information to consumers on activities of the financial organizations, branches of nonresident banks of the Republic of Kazakhstan, branches of the insurance (reinsurance) nonresident organizations of the Republic of Kazakhstan, branches of insurance nonresident brokers of the Republic of Kazakhstan and the financial services rendered by them.

Article 4. Prohibition on unauthorized activities in the financial market

1. Implementation of professional activity in the financial market is not allowed by persons which do not have the corresponding license granted according to the legislation of the Republic of Kazakhstan.

2. The transactions on rendering financial services made without the corresponding license are invalid.

Article 5. Prudential standard rates and other regulations, obligatory to observance, and limits

Prudential standard rates are the economic restrictions set by authorized body for the financial organizations, branches of nonresident banks of the Republic of Kazakhstan, branches of the insurance (reinsurance) nonresident organizations of the Republic of Kazakhstan, branches of insurance nonresident brokers of the Republic of Kazakhstan for the purpose of ensuring their financial stability and protection of consumer interests of financial services.

In the cases provided by legal acts of the Republic of Kazakhstan, the authorized body has the right to establish prudential standard rates and other regulations, obligatory to observance, and limits on the consolidated basis.

Article 6.

It is excluded

Chapter 1-1. Status, structure and bodies of authorized body

Article 6-1. Status and legal basis of activities of authorized body

The authorized body is state body, directly subordinate and accountable to the President of the Republic of Kazakhstan, performing state regulation, control and supervision of the financial market and the financial organizations.

The authorized body acts on the basis of the Regulations on it approved by the President of the Republic of Kazakhstan.

The authorized body in the activities is guided by the Constitution of the Republic of Kazakhstan, this Law, other laws of the Republic of Kazakhstan, acts of the President of the Republic of Kazakhstan and international treaties of the Republic of Kazakhstan.

The authorized body is legal entity in form of business of the republican public institution financed from the budget (expense budget) of National Bank of the Republic of Kazakhstan.

The authorized body develops the strategic plan for the five-year period in which it determines strategic directions, the purposes and target indicators of activities of authorized body.

The strategic plan affirms the Chairman of authorized body in coordination with the President of the Republic of Kazakhstan or according to its authorization the Head of Administration of the President of the Republic of Kazakhstan.

Article 6-2. Structure and general number of staff of authorized body

The structure and the general number of staff of authorized body affirm the President of the Republic of Kazakhstan.

Article 6-3. Chairman of authorized body

The chairman of authorized body is appointed to position by the President of the Republic of Kazakhstan for a period of six years.

The chairman of authorized body acts on behalf of authorized body and represents it without power of attorney in the relations with state bodies, the organizations and other persons.

The chairman of authorized body is given authority to make operational and executive decisions concerning activities of authorized body, except for the powers stipulated by this Law for Board of authorized body, to sign contracts on behalf of authorized body.

The chairman of authorized body is responsible for activities of authorized body.

The chairman of authorized body has the right to resign, having submitted the President of the Republic of Kazakhstan the written application in two months prior to resignation.

The chairman of authorized body is dismissed by the President of the Republic of Kazakhstan.

Article 6-4. Vice-chairmen of authorized body

Vice-chairmen of authorized body are appointed to position by the President of the Republic of Kazakhstan on representation of the Chairman of authorized body for a period of six years irrespective of terms of appointment of the Chairman of authorized body.

Vice-chairmen of authorized body represent authorized body without power of attorney, sign documents within the competence.

Vice-chairmen of authorized body are dismissed by the President of the Republic of Kazakhstan on representation of the Chairman of authorized body.

Vice-chairmen of authorized body can resign, having submitted the written application to the President of the Republic of Kazakhstan through the Chairman of authorized body in two months prior to resignation.

Article 6-5. Board of authorized body and its power

The supreme body of authorized body is the Board.

Board of authorized body:

1) determines priorities in the field of forming and development of the financial market;

2) adopts the regulatory legal acts regulating activities of the financial market and the financial organizations, and also other persons according to this Law, other laws of the Republic of Kazakhstan and acts of the President of the Republic of Kazakhstan;

3) is determined by procedure for application to the financial organizations and other persons of limited corrective actions, the measures of supervising reaction provided by the laws of the Republic of Kazakhstan for the questions entering its competence;

4) makes the decision on introduction of specific mode of regulation;

5) No. 138-VII ZRK is excluded according to the Law of the Republic of Kazakhstan of 12.07.2022

6) together with National Bank of the Republic of Kazakhstan approves the programs directed to protection of consumer interests of financial services;

7) makes decisions on participation of authorized body in the international and other organizations;

8) makes the decision on creation of advisory advisory bodies of authorized body;

Considers 9), approves and submits for approval to the President of the Republic of Kazakhstan structure, the general number of staff of authorized body and Regulations on authorized body, and also changes and amendments in them;

9-1) approves wages system of employees of authorized body in coordination with the President of the Republic of Kazakhstan;

10) approves payment terms of work and social providing employees of authorized body;

Considers 11), accepts and submits for approval of the President of the Republic of Kazakhstan the annual statement about work of authorized body;

12) approves rules of position assignment and the termination of the employment contract with employees of authorized body;

13) is approved by regulations of authorized body;

14) approves rules of the publication of the financial reporting by joint-stock companies and the financial organizations by which are determined procedure for its publication, including the list of the financial reporting which is subject for publication and terms of its publication;

15) approves rules of creation of provisions (reserves) according to International Financial Reporting Standards and requirements of the legislation of the Republic of Kazakhstan about financial accounting and the financial reporting;

16) approves rules of release and the circulation of bank deposit certificates;

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