April 13, 2023
Obtaining the prior consent of the antimonopoly authority when making a transaction for the acquisition of shares in the authorized capital of an LLP
- Legislative acts
- Criteria for qualifying a transaction as requiring prior consent
- By whom and where documents are submitted
- Application and document submission methods
- Required documents and their format
- Terms of consideration
- Grounds for termination of consideration of the application for consent to economic concentration
Before buying shares in the authorized capital of an LLP in the Republic of Kazakhstan, the parties to the transaction need to check whether this transaction meets the criteria for qualifying the transaction as requiring the prior consent of the Agency for the Protection and Development of Competition of the Republic of Kazakhstan (hereinafter – the Antimonopoly Authority).
This article describes a detailed procedure for obtaining the prior consent of the Antimonopoly Authority.
1. Legislative acts
- Code of the Republic of Kazakhstan dated October 29, 2015 No. 375-V “Entrepreneurial Code of the Republic of Kazakhstan” (Chapter 18, articles 200-210);
- Rules for the provision of public services “Consideration of applications for consent to economic concentration”, approved by Order of the Minister of National Economy of the Republic of Kazakhstan dated April 21, 2020 No. 29 (hereinafter referred to as the Rules)..
2. Criteria for qualifying a transaction as requiring prior consent
The criteria for qualifying a transaction for the acquisition of shares in the authorized capital of an LLP as requiring the prior consent of the antimonopoly authority are the following:
1) Criterion of the size of the acquired shares:
— if more than 50% of the shares are acquired;
2) The criterion of the total amount of (a) assets or (b) proceeds from the sale of goods for the last financial year, net of VAT, of the parties involved in the transaction — the buyer and seller of shares / shares:
— if it exceeds ten million times the monthly calculation index (1 MCI = 3,450 tenge * 10,000,000 = 34,500,000 000 tenge / approximately 76,600,000 US dollars) established on the date of filing a petition with the antimonopoly authority;
At the same time, preliminary approval is not required if such a transaction occurs within one group of persons.
According to paragraph 1 of Article 165 of the Entrepreneurial Code, a group of persons is a set of individuals and (or) legal entities corresponding to one or more of the following characteristics:
1) a market entity and an individual or a legal entity, if such an individual or such a legal entity has, by virtue of its participation in this market entity or in accordance with the powers obtained, including on the basis of a written agreement, from other persons, the right to dispose of more than fifty percent of the total number of votes attributable to voting shares (participation shares in the authorized capital, units) of this market entity;
2) a market entity and an individual or a legal entity, if such an individual or such a legal entity performs the functions of the sole executive body of this market entity;
3) a market entity and an individual or a legal entity, if such an individual or such a legal entity, on the basis of the constituent documents of this market entity or an agreement concluded with this market entity, has the right to give this market entity binding instructions;
4) legal entities in which more than fifty percent of the quantitative composition of the collegial executive body and (or) the board of directors (supervisory board, fund board) are the same individuals;
5) a market entity and an individual or a legal entity, if, at the suggestion of such an individual or such a legal entity, the sole executive body of this market entity is appointed or elected;
6) a market entity and an individual or a legal entity, if at the suggestion of such an individual or such a legal entity, more than fifty percent of the quantitative composition of the collegial executive body or the board of directors (supervisory board) of this market entity has been elected;
7) an individual, his spouse, parents (including adoptive parents), children (including adopted), full and half-siblings;
8) persons, each of whom, according to any of the sub-paragraphs specified in 1), 2), 3), 4), 5), 6) and 7) the item under consideration is not included in a group with the same person, as well as other persons included with any of such persons in a group on any of the items specified in the sub-paragraphs 1), 2), 3), 4), 5), 6) and 7) of the item under consideration.;
9) the subject of the market, individuals and (or) legal entities who, according to any of the specified in the subparagraphs 1), 2), 3), 4), 5), 6), 7) and 8) of the item under consideration are not included in the group of persons if such persons by virtue of their joint participation in this market entity or in accordance with the powers received from other persons, have the right to dispose of more than fifty percent of the voting shares (participation shares in the authorized capital, shares) of this market entity..
3. By whom and where documents are submitted
The applicant of the procedure is an economic entity buying shares in the company. At the same time, it can be the following persons:
Individuals and legal entities – residents of the Republic of Kazakhstan;
Individuals and legal entities – non-residents of the Republic of Kazakhstan.
4. Ways to submit an application and documents
For individuals and legal entities – residents of the Republic of Kazakhstan, it is possible to apply for prior consent both in an appearance form to the office, and with the help of an electronic digital signature (EDS) on the e-government web portal www.egov.kz .
When sending an application through the portal, documents for the provision of public services are uploaded by the service recipient in electronic form (in PDF format).
When submitting an application through the office, a note of acceptance is put on its copy with the date and surname of the employee of the office, when contacting through the portal, the status of acceptance of the request for the provision of public services is sent to the “personal account”.
5. Required documents and their format
The application for consent to economic concentration must comply with the form (Appendix 2 to the Rules).
Required documents:
1) an agreement or draft agreement or other document confirming the transaction;
2) for the acquirer and for each market entity that is part of the same group of persons with the acquirer, the following are indicated:
for an individual – the data of his identity document, information about citizenship, as well as place of residence and legal address;
- name, legal and actual addresses;
- the size of the authorized capital and the share of participation in the authorized capital;
- types of shares;
- the volume of production and sale, export and import to the Republic of Kazakhstan of goods similar to goods or interchangeable goods produced or sold by the market entity in respect of which actions are being taken to acquire shares;;
3) a list of members of the executive body, the board of directors (supervisory board), indicating the position, who are also members of the executive body, the board of directors (supervisory board) of other market entities;
4) the volume of production and sale, export and import of goods to the Republic of Kazakhstan of the market entity in respect of which actions are being taken to acquire shares;
5) the volume of production and sale, export and import to the Republic of Kazakhstan of the same or interchangeable goods produced or sold by market entities under the direct or indirect control of the market entity in respect of which actions are being taken to acquire shares.
All submitted documents must be numbered and stitched and an electronic carrier is attached.
If the petition and its appendices are submitted by an individual, the signature of the individual is notarized.
6. Terms of consideration
The antimonopoly authority is obliged to check the completeness of the submitted materials within ten calendar days from the date of receipt of the petition and notify the person who submitted the petition in writing about the acceptance or refusal to accept the petition for consideration.
The term of consideration of the application for consent to economic concentration should not exceed thirty calendar days from the date of acceptance of the application for consideration.
During the consideration of the petition, the antimonopoly authority has the right to request additional information and (or) documents necessary for making a decision from the market entity and (or) the state body within a period that cannot be less than five working days.
For the period of providing additional information and (or) documents, as well as during the analysis of the state of competition in the commodity markets, the term of consideration of the petition is suspended, about which the antimonopoly authority is obliged to notify the person who submitted the petition in writing within three working days from the moment of making such a decision.
7. Grounds for termination of consideration of the application for consent to economic concentration
Consideration of the application for consent to economic concentration is subject to termination in the following cases:
1) receipt of notifications from applicants about the withdrawal of the petition;
2) the applicant’s failure to provide information within the time period determined by the antimonopoly authority, if the absence of such information prevents the consideration of the petition;
3) provision by the applicant of false information affecting the objective consideration of the application.
The decision of the antimonopoly authority to terminate consideration of the petition is formalized by an act of the antimonopoly authority and within three working days from the date of such decision is sent to the person who filed the petition.
After termination of consideration of the petition, the applicant has the right to apply to the antimonopoly authority with a new application for consent to economic concentration.
