ORDER OF THE GOVERNMENT OF THE REPUBLIC OF KAZAKHSTAN

of May 4, 2014 No. 445

About approval of the list of legal entities whose core activity is implementation of loan transactions or the redemption of rights to claim and which hundred percent of voting shares (shares) belong to national managing holding, the assets having the right to expense amount deduction on creation of provisions (reserves) against doubtful and bad assets, contingent obligations, except for and the contingent obligations provided for benefit of the interconnected parties or to the third parties according to obligations of the interconnected parties (except assets and contingent obligations of credit partnerships), rules of its forming and rules of creation of provisions (reserves)

The government of the Republic of Kazakhstan DECIDES:

1. Approve enclosed:

1) the list of legal entities whose core activity is implementation of loan transactions or the redemption of rights to claim and which hundred percent of voting shares (shares) belong to national managing holding, the assets having the right to expense amount deduction on creation of provisions (reserves) against doubtful and bad assets, contingent obligations, except for and the contingent obligations provided for benefit of the interconnected parties or to the third parties according to obligations of the interconnected parties (except assets and contingent obligations of credit partnerships);

2) Rules of forming of the list of legal entities which core activity is implementation of loan transactions or the redemption of rights to claim and which hundred percent of voting shares (shares) belong to national managing holding, the assets having the right to expense amount deduction on creation of provisions (reserves) against doubtful and bad assets, contingent obligations, except for and the contingent obligations provided for benefit of the interconnected parties or to the third parties according to obligations of the interconnected parties (except assets and contingent obligations of credit partnerships) (further - Rules of forming of the list);

3) Rules of creation of provisions (reserves) (further - Rules).

3. This resolution becomes effective since January 1, 2013 and is subject to official publication.

Approved by the Order of the Government of the Republic of Kazakhstan of May 4, 2014, No. 445

The list of legal entities whose core activity is implementation of loan transactions or the redemption of rights to claim and which hundred percent of voting shares (shares) belong to national managing holding, the assets having the right to expense amount deduction on creation of provisions (reserves) against doubtful and bad assets, contingent obligations, except for and the contingent obligations provided for benefit of the interconnected parties or to the third parties according to obligations of the interconnected parties (except assets and contingent obligations of credit partnerships)

1. Joint-stock company "Fund of development of entrepreneurship "Lady".

2. Development Bank of Kazakhstan joint-stock company.

Approved by the Order of the Government of the Republic of Kazakhstan of May 4, 2014 No. 445

Rules of forming of the list of legal entities which core activity is implementation of loan transactions or the redemption of rights to claim and which hundred percent of voting shares (shares) belong to national managing holding, the assets having the right to expense amount deduction on creation of provisions (reserves) against doubtful and bad assets, contingent obligations, except for and the contingent obligations provided for benefit of the interconnected parties or to the third parties according to obligations of the interconnected parties (except assets and contingent obligations of credit partnerships)

These rules of forming of the list of legal entities which core activity is implementation of loan transactions or the redemption of rights to claim and which hundred percent of voting shares (shares) belong to national managing holding, the assets having the right to expense amount deduction on creation of provisions (reserves) against doubtful and bad assets, contingent obligations, except for and the contingent obligations provided for benefit of the interconnected parties or to the third parties according to obligations of the interconnected parties (except assets and contingent obligations of credit partnerships) (further - Rules of forming of the list) are developed according to item 4 of article 106 of the Code of the Republic of Kazakhstan of December 10, 2008 "About taxes and other obligatory payments in the budget" (Tax code) and establish procedure for forming of the list of legal entities, having the right to expense amount deduction on creation of provisions (reserves) against doubtful and bad assets, contingent obligations.

1. The list of legal entities whose core activity is implementation of loan transactions or the redemption of rights to claim and which hundred percent of voting shares (shares) belong to national managing holding, having the right to expense amount deduction on creation of provisions (reserves) against doubtful and bad assets (further - the list) is determined by the Government of the Republic of Kazakhstan.

2. The draft of the order of the Government of the Republic of Kazakhstan about approval of the list is introduced by authorized body in the sphere of tax policy according to the petition of national managing holding.

3. The petition of national managing holding goes to authorized body in the sphere of tax policy in any form with application of documents, confirming compliance of the legal entity to the requirements specified in Item 6 of these rules of forming of the list:

1) charter of the legal entity;

2) the statement from the shareholder register (participants) of the legal entity (if the register of participants of economic partnership is kept by the single registrar).

4. The authorized body in the sphere of tax policy considers the petition within 30 calendar days from the date of its receipt with removal of one of the following motivated decisions:

1) about possibility of inclusion of the legal entity in the list;

2) about refusal in inclusion of the legal entity in the list. The decision of authorized body in the sphere of tax policy goes in writing to national managing holding.

5. The basis for refusal in inclusion of the legal entity in the list is discrepancy of the legal entity to the requirements specified in Item 6 of these rules of forming of the list and/or not provision of the documents specified in Item 3 of these rules of forming of the list.

6. For inclusion in the list the legal entity shall conform to the following requirements:

1) hundred percent of voting shares (shares) of such legal entity belong to national managing holding;

2) core activity of the legal entity is implementation of loan transactions or the redemption of rights to claim;

3) the legal entity is not the taxpayer specified in Items 1, 2 and 3 articles 106 of the Tax Code.

Approved by the Order of the Government of the Republic of Kazakhstan of May 4, 2014 No. 445

Rules of creation of provisions (reserves)

1. General provisions

1. These rules of creation of provisions (reserves) (further - Rules) are developed according to the Code of the Republic of Kazakhstan of December 10, 2008 "About taxes and other obligatory payments in the budget" (Tax code) and determine procedure and conditions of classification of assets, contingent obligations and creation of provisions (reserves) against them.

2. The basic concepts used in these rules have the following values:

1) assets - requirements to all physical persons and legal entities, including to banks;

2) bank - the bank which is national institute of development;

3) gross carrying amount of asset - the amount on which the asset is recognized the balance sheet to deduction of provisions (reserves);

4) discount - difference (in the presence) between fair value and the amount of development at the time of issue of loan (credit), and also the commission (taking into account taxes and fees), carried on the account of discount for the subsequent depreciation on the income during effective period of the issued loan (credit);

5) discounting - reduction to current value by means of initial effective rate;

6) I will jam (credit) - implementation by the organization, bank of loan, leasing transactions;

7) investment loan (credit) - I will jam (credit), conforming to all following requirements: the term of loan (credit) constitutes five and more years; terms of the contract of loan (credit) establish prohibition on complete early repayment; in case of partial repayment of loan (credit), partial repayment can be performed in the terms and procedure provided by the business plan of the borrower; the loan (credit) is granted the legal entity according to its business plan providing realization of complex of the actions directed to creation, expansion and upgrade of production of goods, production and transport infrastructure;

8) individual assets - assets on which provisions (reserves) are calculated on each such asset;

9) credit risk - risk of emergence of expenses (losses) owing to non-execution or improper execution by the debtor (debtor) of obligations on asset and contingent obligation to the organization, in accordance with the terms of the agreement or existence of real threat of such non-execution (improper execution);

10) uniform assets - the group of assets with similar characteristics of credit risk estimated on collective basis;

11) the organization - national managing holding, and also the legal entity whose core activity is implementation of loan transactions or the redemption of rights to claim and which hundred percent of voting shares (shares) belong to national managing holding, except for Bank;

12) initial effective rate - the effective rate of percent calculated in case of initial asset recognition;

13) portfolio of uniform loans (credits) - group of uniform loans (credits) included in one group according to internal regulations of the organization about procedure and conditions of classification of uniform loans (credits);

14) cash flows - receipt and disposal of money and their equivalents;

15) provisions (reserves) - recognition of probability of losses of cost of specific asset, and in case of contingent obligation - recognition of probability of losses on possible execution by the organization, Bank of the obligations, or sets of assets (contingent obligations);

16) the project - complex of the actions financed by means of provision by Bank and directed to creation new, expansion and updating of the existing productions including on acquisition of assets, blocks of shares (shares), property complexes; and/or stimulation of export of works (services) performed (rendered) residents of the Republic of Kazakhstan, and also export of products which are turned out in the territory of the Republic of Kazakhstan;

17) reclassification of asset (contingent obligation) - classification of earlier classified asset (contingent obligation), with corresponding change of the amount of provisions (reserves) against it towards increase or reduction by difference amount between earlier created amount of provisions (reserve) and the necessary amount of provisions (reserve) after carrying out reclassification;

18) providing cost - market (fair) assessment of providing at the moment, taking into account possibility of its realization (sale) at the time of assessment;

19) impairment loss is the size of provisions (reserves) reflected in financial accounting on the corresponding accounts of provisions (reserves), representing the amount on which (gross) asset carrying amount (contingent obligation) exceeds the discounted cost of the expected cash flows which receipt is expected from asset (contingent obligation);

20) contingent obligation - the obligation assumed by the organization or Bank for the debtor (borrower) for benefit of the third parties and bearing the credit risks of the debtor (borrower) following from terms of the contract;

21) the effective rate of percent is rate which provides exact discounting of the expected amount of future money payments or receipts up to approach of repayment period on this asset (contingent obligation).

2. Features of classification of assets and contingent obligations and forming of provisions (reserves) against doubtful and bad assets and contingent obligations of the organization

3. Provisions (reserves) are created in case of asset impairment and contingent obligations - in case of loss by asset and contingent obligation of cost owing to realization of credit risk.

4. Classification of asset and contingent obligation, their reflection in financial accounting of the organization do not change terms of the contract between the organization and his debtor (debtor), including do not influence the right of receipt of the main amount by the organization of the requirement (debt) and remuneration on it in full, and also penalties, penalty fee for violation by the debtor (debtor) of terms of the contract.

5. Classifications are subject assets and contingent obligations, except for requirements to the Government of the Republic of Kazakhstan, National Bank of the Republic of Kazakhstan and requirements for taxes and other obligatory payments in the budget.

6. These rules are not applied if the borrower (the debtor, the co-borrower) is person registered in the state with the preferential taxation determined according to the tax legislation, either dependent or affiliated in relation to person registered in the state with the preferential taxation.

7. Classification (reclassification) of assets, contingent obligations and forming of provisions (reserves) is performed in case of: observance of requirements of these rules and internal regulating documents of the organization; availability of the complete and reliable information allowing carrying out the complex and objective analysis for the purpose of classification of assets, contingent obligations and forming of provisions (reserves) against them.

8. Classification (reclassification) of assets, contingent obligations and (or) forming of provisions (reserves) is based on the principle of timeliness of such classification and reliability of reflection of changes of the size of provisions (reserves) in accounting and the reporting of the organization.

9. Assets and contingent obligations are subdivided on standard and classified.

10. The classified asset represents asset on which the requirement of terms of the contract is not performed or reasons to believe are had that the requirement for it will be performed not in full or will not be performed in general.

11. The classified contingent obligation represents contingent obligation on which there is probability that execution by the organization of the obligations assumed for the debtor for benefit of the third parties and bearing the credit risks following from terms of the contract will come.

12. The assets and contingent obligations which are not relating to classified are standard.

13. The classified assets and contingent obligations are subdivided into the following categories: doubtful; hopeless.

14. The size of provisions (reserves) on the classified assets and contingent obligations of the organization is calculated from the amount of principal debt (requirement) reduced by the cost of highly liquid providing according to the list of highly liquid providing determined by the subitem 1) of Item 61 of these rules.

15. Classification (reclassification) of assets and contingent obligations is made by the organization for all assets and contingent obligations monthly and as of certain date of classification (reclassification), no more than in seven working days prior to the last working day of month.

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