On 29 October 2015, the RK Entrepreneurial Code was passed. It will be effective (except for some provisions) as of 1 January 2016.
Consolidation
The #Entrepreneurial_Code consolidated the laws
regulating business activity as a whole. Industry types of business activities
(such as subsurface use, banking, insurance, etc.) will continue to be
regulated by special laws.
In view of the above, the Entrepreneurial Code
actually consolidated the provisions of the following six laws that will cease
to be in force as independent normative legal acts as of 1 January 2016:
Law "On Peasant or Farm Household"
Law "On Investments"
Law "On Private
Entrepreneurship"
Law "On Competition"
Law "On State Control and Supervision in the
Republic of Kazakhstan"
Law "On State Support of Industrial and
Innovation Activities"
It should be noted that the inclusion in the
Entrepreneurial Code of the Law "On State Control and Supervision in the
Republic of Kazakhstan," which applied not only to business entities, but
also to all legal entities and individuals, as well as state authorities, is
based on the principle of the prevalence of regulated public relations, as the
said Law extended its effect mainly on businesses. Therefore, such
consolidation within the Entrepreneurial Code of the provisions related to the
organization and conduct of state control and supervision of the inspected
entities does not narrow the scope of the state control and supervision.
Harmonization of legislation
Along with the enactment of the Entrepreneurial Code,
the Law on Amendments to Some Legislative Acts of Kazakhstan on Issues of
Entrepreneurship was also passed (the Law introduces amendments to 11 codes and
99 laws). In spite of the amendments to such an impressive number of laws, it
should be noted that a significant part of such amendments is of a technical
nature and is aimed at harmonizing the legislation in connection with the
enactment of the Entrepreneurial Code.
One of the big fears in connection with the enactment
of the Entrepreneurial Code—and the amendments to the legislation accompanying
it—was that a conflict between the provisions of the Entrepreneurial Code and,
above all, of the Civil Code will arise. However, the legislator has tried to
address this point and to minimize the risks of this kind. Paragraph 2 of
Article 1 of the Entrepreneurial Code provides that “Commodity-money and other
property relations based on equality of the participants, as well as personal
non-property relations related to property relations shall be governed by the
civil legislation of the Republic of Kazakhstan.”
Code structure
The Entrepreneurial Code consists of seven sections,
31 chapters and 324 articles.
The general provisions of the Code establish the legal
basis for interaction between business entities and the state.
Such important principles as, inter alia,
encouragement by the state of social responsibility of business, limiting state
involvement in business activities, development of self-regulation in the area
of entrepreneurship should be noted.
A separate section on the interaction of businesses
and the state has been included.
The interaction of business entities and the state
will be carried out through implementation of such institutions as
participation of businesses in rule-making, public-private partnership, social
responsibility, state regulation of business and government support of private
entrepreneurship.
The forms and means of state regulation of business
have been systematized.
In particular, those include economic competition,
permits and notifications, technical regulation, state regulation of prices,
mandatory insurance, state control and supervision.
The forms and methods of protection of the rights of
business entities have been systematized.
The Entrepreneurial Code reflects all possible ways of
out of court and pre-trial settlement of disputes, establishes the general
provisions of the investment ombudsman who is authorized to protect the rights
of entrepreneurs. It should be noted, among other things, that the
Entrepreneurial Code provides for strengthening of the institute of business
ombudsman to protect the interests of entrepreneurs. In particular, it
establishes the authority of the Head of the State to appoint the business
ombudsman for a term of four years.
As one of the forms of protection of the rights of
business entities, the Entrepreneurial Code provides for appeal by business
entities against actions and acts of state authorities.
The main directions of state support of small and
medium businesses, agribusiness and non-agricultural types of business
activities in rural areas, industrial innovation activity and investment
activity are set out in a consistent manner.
The Entrepreneurial Code contains a section on
liability for breach of legislation in the area of entrepreneurship. In
particular, it provides for liability of state bodies and their officers for
failure to perform or improper performance of their duties.
Some changes in the legislation in connection with the
enactment of the Entrepreneurial Code
In connection with the enactment of the
Entrepreneurial Code and the Law on Amendments to Some Legislative Acts of
Kazakhstan on Issues of Entrepreneurship, legal regulation of a number of
issues in various areas has changed. In particular, this concerns the following
issues.
Changes in the area of economic concentration
For example, the provisions concerning matters of
economic competition have undergone a number of fundamental changes. Please see the main changes set out below:
From 1 January 2016, the Registry of dominants will be
limited to the participants of the regulated market. Small businesses will most
likely be excluded from the Registry. At the same time, full cancellation of
the Registry from 1 January 2017 is expected.
Prohibitions on anti-competitive agreements extend to
agreements entered into verbally. The previous version of the Law "On
Competition" was equivocal.
The dominant position of a market entity will now be
set only when the established thresholds are exceeded, taking into account at
the same time the existence of facts supporting its decisive influence on the
market.
The institute of conciliation commission under the
antimonopoly authority has been introduced to review the files of the cases of
violations in the area of competition (i.e., before the final decision is made
by the antimonopoly authority).
Full abolition of price regulation and its replacement
with tools of antimonopoly regulation is expected from 1 January 2017.
As we can see, the provision on protection of
consumers’ rights has been excluded from the qualifying elements of violations
of antimonopoly legislation. In practice, it has been very long discussed that
infringement of individual interests of individuals unrelated to the
restriction of competition and entrepreneurial activities, should not be
classified among qualifying elements of violation of antimonopoly legislation.
More details about the changes in the area of
competition law can be found in our newsletter "What events await us in
the area of competition law in the near future" of 9 October 2015.
Inspections
Compared to the provisions of the Law on State Control
and Supervision, the Entrepreneurial Code provides for a new basis for an
unscheduled inspection - it is “the result of the sampling and sanitary-epidemiological
examination of products in cases of detection of violations of the requirements
of the legislation of the Republic of Kazakhstan."
Ban on advertising on foreign and radio channels
On 1 January 2016, a ban on the distribution of
advertising on foreign television and radio channels, rebroadcasted in the
territory of Kazakhstan will be introduced. The responsibility for the
violation of this ban is imposed on Kazakhstan broadcasting operators. There is
no provision for the liability of foreign TV and radio companies.
The consequence of the ban for foreign TV and radio
companies may only be giving up the rebroadcasting of their channels on the
territory of Kazakhstan by the RK TV and radio broadcasting operators.
On this topic, please see our newsletter about the
amendments to the Kazakhstan legislation on TV and radio broadcasting, which
can be found here.
Unfortunately, the format of this newsletter does not
allow us to reflect all changes in such a large number of laws. We will send
you the relevant newsletters with regard to the most relevant and interesting
changes in the legislation related to the enactment of the normative legal acts
under consideration – the Entrepreneurial Code and the Law on Amendments to
Some Legislative Acts of Kazakhstan on Issues of Entrepreneurship.
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