Document from CIS Legislation database © 2003-2020 SojuzPravoInform LLC

LAW OF THE REPUBLIC OF KAZAKHSTAN

of July 7, 2004 No. 576-II

About investment and venture funds

(as amended on 03-07-2019)

This Law determines legal status, features of creation, activities, reorganization and liquidation of joint-stock investment fund, condition and procedure for creation, functioning and termination of existence of mutual investment fund, feature of legal status and activities of venture funds in the Republic of Kazakhstan, governs the relations connected with activities of professional participants of the security market for ensuring functioning of investment funds and also determines procedure for state regulation of investment funds.

Chapter 1. General provisions

Article 1. The basic concepts used in this Law

In this Law the following basic concepts are used:

1) joint-stock investment fund - joint-stock company which exclusive type of activity are accumulation and investment according to the requirements established by this Law and its investment declaration, the money placed by shareholders of this society in payment of its shares, other assets accepted as a result of transformation of the legal entity to joint-stock investment fund and also the assets received as a result of such investment;

2) diversification - placement of assets of investment fund in different financial instruments and other property for the purpose of decrease in risk of reduction of their cost;

3) managing company - the professional participant of the security market performing activities for management of investment portfolio based on the license granted by authorized body;

3-1) venture fund - the particular partnership or the legal entity in the form of joint-stock company or economic partnership performing attraction and accumulation of money and other property is exclusive for the purpose of venture funding;

4) real estate fund - joint-stock investment fund which exclusive type of activity are accumulation and investment according to the requirements established by this Law and its investment declaration, the money placed by shareholders of this society in payment of its shares, other assets accepted as a result of transformation of the legal entity to real estate fund and also the assets received as a result of such investment to the real estate and other property permitted by this Law;

5) the investment declaration - the document determining the list of investment objects, the purposes, strategy, conditions and restrictions of investing activities on assets of investment fund, condition of hedging and asset diversification of fund;

6) investment revenue - the increments of assets of investment fund in terms of money received as a result of their investment;

7) investment fund - joint-stock or the mutual investment fund created according to this Law;

8) assets of investment fund - set of the assets belonging to joint-stock investment fund or constituting mutual investment fund;

9) net assets value of investment fund - the monetary value of asset cost of investment fund determined as difference between the cost of all assets of investment fund and its obligations or accrued expenses which are subject to payment for the asset account of investment fund;

10) mutual investment fund - the set of the money received in payment of shares, and also other assets acquired as a result of their investment belonging on the right of common ownership to holders of shares and being in management of managing company;

11) rules of mutual investment fund - the document which determines the purposes, conditions, procedure for functioning and termination of existence of mutual investment fund;

12) the investment decision - the decision on transaction with assets of investment fund made in process of management of its assets;

13) share - the personalized issued security without documentary form of release confirming share of her owner in mutual investment fund, the right to the money received from realization of assets of mutual investment fund and (or) other property in the case established by this Law in case of the termination of its existence and also other rights connected with features of activities of the mutual investment funds determined by this Law;

14) the holder of share - the person having personal account in system of registers of holders of shares of mutual investment fund or system of accounting of nominal continence and having rights on shares of mutual investment fund;

15) the redemption of share - share conclusion from the address by means of payment by managing company to the holder of share of its cost determined according to this Law and rules of mutual investment fund;

16) estimated cost of share - the monetary value of cost of share determined by means of division of net assets value of mutual investment fund into quantity of its shares which are in circulation;

17) nominal value of share - monetary value of cost of share in case of initial placement of shares of mutual investment fund;

18) initial placement of shares - the period of placement of shares at par value for the purpose of forming of the minimum size of assets of mutual investment fund;

19) the trust management agreement - the agreement on management of the investment portfolio constituting assets of investment fund signed by managing company with joint-stock investment fund or with the investor of mutual investment fund about transfer to trust management of money according to the requirements established by this Law;

20) authorized body - the state body performing state regulation, control and supervision of the financial market and financial institutions.

Article 2. Legislation of the Republic of Kazakhstan on investment and venture funds

1. The legislation of the Republic of Kazakhstan on investment and venture funds is based on the Constitution of the Republic of Kazakhstan and consists of the Civil code of the Republic of Kazakhstan, 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 contain in this Law then are applied rules of the international treaty.

3. The legislation of the Republic of Kazakhstan on the security market and on joint-stock companies extends to investment funds if other is not established by this Law.

4. The legislation of the Republic of Kazakhstan on the security market, economic partnerships, partnerships with the limited and accessorial liability and about joint-stock companies extends to venture funds if other is not established by this Law.

Article 3. Subject of regulation of this Law

1. This Law regulates legal relationship:

1) connected with features of legal status and activities of joint-stock investment funds;

2) arising in the course of creation, functioning and the terminations of existence of mutual investment funds;

3) connected with activities of professional participants of the security market for investment asset management of investment funds, their accounting and storage, and also ensuring release, placement, the address, the redemption and repayment of securities of investment funds;

4) connected with features of legal status and activities of venture funds.

2. This Law does not extend to the relations on the property trust management performed by others except managing companies and venture managing directors, persons whose activities are regulated by other legal acts of the Republic of Kazakhstan.

3. This Law is not applied to the organizations which more than fifty percent of voting shares belong on the property right or trust management to national managing holding which list affirms the Government of the Republic of Kazakhstan, except as specified creations of venture funds by them.

Article 4. Types of investment funds

1. In the Republic of Kazakhstan the following types of investment funds are effective:

1) joint-stock investment fund;

2) mutual investment fund which can be created in the following forms - open, interval or closed.

1-1.  No. 166-VI ZRK is excluded according to the Law of the Republic of Kazakhstan of 02.07.2018.

2. The open mutual investment fund grants to the holder of its share the right to demand from managing company of the redemption of share in cases, on conditions and according to the procedure, established by this Law and rules of this investment fund, but at least once in two weeks.

3. The interval mutual investment fund grants to the holder of its share the right to demand from managing company of the redemption of share in cases, on conditions and according to the procedure, established by this Law and rules of this investment fund, but at least once a year.

4. The closed-end investment fund grants to the holder of its share the right of participation in general meeting of holders of shares of this fund, and also on receipt of dividends on share on conditions and according to the procedure, provided by rules of fund.

The legal entity, the financial instruments and (or) other assets issued (provided) to which are part of assets of closed-end investment fund and constitute five and more percent from the size of its assets, has no right to be the holder of shares of this investment fund.

The holder of shares of closed-end investment fund has no right to demand from managing company of the redemption of the shares belonging to it if other is not provided by this Law and rules of fund.

5. Investment fund, the investment declaration or rules of which provides possibility of investment of assets of fund without observance of the conditions of investment established by subitems 6) and 9) of Item 1 of article 41 of this Law is fund of risk investment.

6. Can only be investment funds of risk investment joint-stock or closed-end investment funds. Real estate funds cannot be funds of risk investment.

7.  No. 524-IV ZRK is excluded according to the Law of the Republic of Kazakhstan of 28.12.2011

Article 4-1. Islamic investment funds

1. Islamic investment fund is the joint-stock investment fund or closed-end investment fund performing investment of assets of fund with respect for the principles of Islamic financing.

2. Obligations of the representative of holders of Islamic securities of Islamic investment funds are performed by custodian.

3. The investment declaration of Islamic investment fund shall correspond to the principles of Islamic financing and be approved with council on the principles of Islamic financing.

Article 5. Names of investment and venture funds

1. The name of joint-stock investment fund shall contain the words "joint-stock investment fund".

1-1. The name of the joint-stock investment fund acting as real estate fund shall contain words real estate fund.

2. The name of investment fund of risk investment shall contain specifying in the name on the fact that this fund is fund of risk investment.

3. The name of mutual investment fund shall contain words "mutual investment fund", specifying on whether it is open, interval or closed.

3-1. The name of Islamic investment fund shall contain specifying in the name on the fact that this fund is Islamic fund.

3-2. The name of venture fund shall contain words "venture fund".

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