October 1, 2020

Registration of LLP with foreign participation

  1. Legislation of the Republic of Kazakhstan on registration of a legal entity
  2. Preliminary actions of the founder
  3. The procedure for state registration

1.    Legislation of the Republic of Kazakhstan on registration of a legal entity

A limited liability partnership is the most common legal form for establishing a legal entity with foreign participation. One of the reasons for the attractiveness of this form for a foreign founder is that LLP is an analogue of the familiar LLP (Limited Liability Partnership).

The following laws regulate the state registration of a limited liability partnership on the territory of the Republic of Kazakhstan:

The Law of the Republic of Kazakhstan No. 220-1 dated 22 April, 1998 “On Limited and Additional Liability Partnerships”.

The Law of the Republic of Kazakhstan No. 2198 dated 17 April, 1995 “On State Registration of Legal Entities and Record Registration of Branches and Representatives”.

The Law of the Republic of Kazakhstan No. 477-IV dated 22 July, 2011 “On Human Migration”.

The Law of the Republic of Kazakhstan No. 527-IV dated 06 January, 2012 “On National Security of the Republic of Kazakhstan”.

2. Preliminary actions of the founder

Before establishing, a legal entity on the territory of the Republic of Kazakhstan foreign founder must complete the following steps:

Checking the proposed activity for compliance with the legislation of the Republic of Kazakhstan

The legislation of the Republic of Kazakhstan establishes some restrictions and prohibitions in relation to the types of activities of legal entities, complicated by a foreign element. Such restrictions and prohibitions are primarily connected with the protection of national security.

According to the Law “On The Security Activity” an activity of a security organization of a foreign country is prohibited in Kazakhstan. Also, a foreign legal entity, a legal entity with a foreign participation, foreigners, and stateless persons may not:

 1) conduct all types of security activities;

2) incorporate or to be a founder (participant) of a private security organization;

     3) have in trust management a private security company.

Direct prohibition is also noted in the Law “On Mass Media”. Clause 2 of Article 5 of the Law “On Mass Media” forbids for a foreign individual or a legal entity or a stateless person to directly and/or indirectly own, use, dispose of and/or control more than 20% of shares (participatory interest, stock) of a legal entity which owns any mass media in Kazakhstan or carries out any activity in this sphere. In accordance with the Law “On National Security of the Republic of Kazakhstan” a foreign legal entity and a foreigner are prohibited from:

– controlling or operating the main communication lines;

– directly and (or) indirectly in aggregate more than 49% of the voting shares or a participatory interest, stock of a legal entity which is carrying out an activity in the field of telecommunications as a operator of a long distance and (or) a international telecommunication, owning land (cable, including fiber-optical, radio relay) communication lines.

Receiving an entry visa as business immigrants

To carry out entrepreneurial activity, it is mandatory to receive an entry visa as a business immigrant. Entry visas into Republic of Kazakhstan shall be issued to business-immigrants by the Ministry of Foreign Affairs of the Republic of Kazakhstan and foreign establishments for the term up to two years.

The Law “On Human Migration” regulates the conditions for receiving a visa and staying business immigrants in the territory of the Republic of Kazakhstan.

 

Business immigrants for receipt of an entrance visa are obliged:

  1. to be of a legal age;
  2. to present a medical certificate confirming the absence of diseases, interfering a labour activity;
  3. to have a medical insurance covering primary health care, inpatient care;
  4. the lack of a criminal record and an injunction on doing business activity on the basis of a judgment;

 

Also, the legislator establishes the period during which a business immigrant is obliged to register a legal entity. Within two months term from the date of entry into the territory of the Republic of Kazakhstan business-immigrant shall be obliged to:

        1) register commercial organization in the Republic of Kazakhstan or join to composition of participants (shareholders) of commercial organizations carrying out activity in the territory of the Republic of Kazakhstan in accordance with civil legislation of the Republic of Kazakhstan;

      2) contribute sum of money to the second tier bank of the Republic of Kazakhstan no less than minimal amount established by the legislation of the Republic of Kazakhstan upon registration of legal entity for formation its charter capital.

Obtaining IIN / BIN

Despite the fact that the current legislation does not provide for an obligation for a non-resident individual to receive an IIN and a foreign legal entity-founder – BIN, practice proves the opposite. At the moment, the practice has developed when, at the stage of providing documents for state registration, an IIN / BIN is requested from non-residents.

Issuance of a power of attorney to an authorized representative

If a foreign individual or a foreign legal entity-founder does not have the opportunity to directly open a legal entity in the territory of the Republic of Kazakhstan, it is necessary to issue a power of attorney to the attorney.

The content of the power of attorney should clearly regulate that the attorney is endowed with the following rights:

– sign documents on behalf of the founder;

– make a decision on the creation of a legal entity (note – it is necessary to choose organizational legal form; name of the legal entity in three languages ​​in full and short forms; legal address);

– to appoint members of governing bodies (note – executive body, senior accountant);

– perform other actions related to the registration of a legal entity.

The power of attorney form also deserves special attention. If the founder is a foreign resident person:

– CIS countries: sufficiently notarial certification of the power of attorney on the territory of this state.

In accordance with Article 13 of the Minsk Convention, documents that are made or certified by an institution or a specially authorized person within their competence and in the prescribed form and are affixed with an official seal on the territory of one of the Contracting Parties are accepted in the territories of other Contracting Parties without any -or a special certificate. Documents that are considered official in the territory of one of the Contracting Parties;

– a member state of the Hague Convention, which abolishes the requirement of legalization of foreign official documents: the power of attorney must be apostilled by the competent authority of the state in which this document was executed and legalized by the Kazakh consulate.

Determination of the name of the LLP

When submitting an application to the registering authority, the founder must determine the name of the legal entity. The only requirement for the name is the absence of similarity, that is, a repetition of the already registered name of a legal entity. The automated system of the State Corporation “Government for Citizens” searches the database for matches with the names of existing legal entities. It is important to note that the applicant must determine the full and short name of the legal entity in three languages: Kazakh, Russian, English. Also, in accordance with the Law “On the Languages in the Republic of Kazakhstan”, in case of choosing the name of a limited liability partnership in a foreign language, name of joint, foreign organizations – with transliteration in state and Russian languages.

Determination of the head of the LLP

In the power of attorney issued for the state registration of a legal entity, the founder must clearly define the head of the registered legal entity.

If the founder expresses his intention to appoint a non-resident of the Republic of Kazakhstan as a director of a legal entity, then the attorney must appoint an interim director for a limited period: a) until the registered legal entity receives a permit for the employment of a foreign specialist; b) until the prospective non-resident director obtains a permit to work in the Republic of Kazakhstan.

Choosing a type of economic activity

The founder needs to determine the type of economic activity from the exhaustive list proposed by the registering authority. For this, it is important to be guided by the National Classifier of the Republic of Kazakhstan – General Classifier of Economic Activities.

Appointment of an accountant of the LLP

The founder is encouraged to designate the person or legal entity that is empowered to perform accounting functions and operations for that legal entity. The appointed accountant should be vested with a second signature. In the event that accounting functions are outsourced, it is recommended that the accounting firm appoint a specific manager (accountant) who will carry out activities on an individual basis.

Choosing the servicing bank

When applying for state registration of a legal entity, the founder is given the right to choose a bank from a limited list of banks. This list is due to the fact that when choosing a bank from the presented list, automatically, together with the submission of an application for registration of a legal entity, an application is submitted to the bank to open a bank account. Making a choice at the stage of filing an application with the registration authority is not a mandatory requirement of the law.

Choosing the insurance company

The Law “On Compulsory Insurance of Employee from Accidents upon Perfomance of Labour (Official) Duties by them” establishes a mandatory requirement for legal entities in relation to insurance of their employees. Similar to the choice of the servicing bank, the founder is given the right to choose one of the insurance companies presented in the list of the e-government web portal. When choosing a company from this list, simultaneously with filing an application for registration of a legal entity, an application is submitted to the insurance company. The legislator establishes a requirement regarding the period during which the policyholder (legal entity) is obliged to conclude a compulsory employee accident insurance contract. According to subparagraph 1-1) of paragraph 2 of Article 8 of the Law, conclude agreement of compulsory insurance of employee from accidents with insurer. 

3.    The procedure for state registration

The procedure for state registration of legal entities is regulated by the Law “On State Registration of Legal Entities and Record Registration of Branches and Representatives”. After the implementation of all the measures outlined above (see “Preliminary actions of the founder”), for the state registration of a legal entity, the following documents are submitted to the registering authority:

– an application in the form established by the Ministry of Justice of the Republic of Kazakhstan, with the attachment of constituent documents (note – charter / regulation approved by the owner), drawn up in the Kazakh and Russian languages and submitted in two copies;

It is important to note that constituent documents of legal entities related to commercial organizations, with the exception of constituent documents of joint-stock companies and state enterprises, are not submitted during state registration. It follows from this that the charters (regulations) of legal entities related to small businesses, their branches and representative offices are not submitted in the process of state registration.

Also, the legislator has simplified the procedure for registering a legal entity related to a small business by establishing a notification procedure for state registration. If earlier the state registration of a legal entity was accompanied by the direct submission of an application and other documents at various stages to the Ministry of Justice, now the founder (founders) submit to the registering body a notice of the start of entrepreneurial activity in the form established by the Ministry of Justice of the Republic of Kazakhstan. Submission of the notification can be carried out by means of an electronic notification, which is filled in on the web portal of “electronic government”.

Unless otherwise established by international treaties ratified by the Republic of Kazakhstan, during state registration of a legal entity related to small businesses with foreign participation, the following must additionally be submitted:

– legalized abbreviate from the trade register or other legalized document certifying that a founder – foreign legal entity is a legal entity under the legislation of foreign state, with notarial certified translation to Kazakh and Russian languages;

– a copy of the passport or other identity document of the foreign founder, with a notarized translation into the Kazakh and Russian languages.

Thus, when incorporating and registering of a limited liability partnership in Kazakhstan by a non-resident-founder all conditions and requirements given in this memorandum have to be complied