Credit Partnerships
Micro-credit Organizations
Compensation for Deposits
The Kazakhstan Parliament recently passed a number of laws which will be of interest to players in the banking sector.
The Law on Credit Partnerships (400/2003) regulates the legal status, activities, creation, reorganization and liquidation of credit partnerships. A credit partnership may be created in the form of a limited liability partnership by individuals and/or legal entities, for the purpose of satisfying the credit and other financial service needs of its participants through accumulation of their funds and other assets not prohibited by Kazakhstan legislation. There must be at least three participants in a credit partnership. The participants are not responsible for the credit partnership's obligations, and bear the risk of losses connected with its activities to the extent of their individual contributions.
In order to coordinate their activities, protect and represent common interests, implement joint projects and resolve other general matters, credit partnerships may create associations with other credit partnerships, as well as consortiums on the basis of joint operation agreements. This allows credit partnerships to pursue their interests on the widest possible scale.
The development and support of small businesses is one of the current priorities of the Kazakhstan government. The new Law on Micro-Credit Organizations (392/2003) is another step towards this aim. Micro-credit organizations may provide micro-credit in amounts of up to 1,000 times the monthly specified rate established by the annual Budget (Kt872,000 ($5,737) for 2003) for one borrower, although the total amount of credit provided must not exceed 25% of the equity of the micro-credit organization. A micro-credit organization may provide secured or unsecured micro-credit, and take property as a pledge for micro-credit it has granted. Commercial micro-credit organizations may be created as business partnerships, while non-profit micro-credit organizations may be created as public funds.
Presidential Edict 1006 of December 28 2002 authorized the government to provide compensation for deposits held by Kazakhstan citizens in the former Kazakh Republic Savings Bank of the Soviet Union, which are now kept in OJSC Halyk Savings Bank Kazakhstan accounts. The compensation will be awarded by converting the state internal deficit in deposit balances in the Kazakh Republic Savings Bank into state special compensation treasury notes. These notes are to be issued in non-documentary form in three issues of one, two and three-year maturity. The par value of one note is one tenge. The interest rate for each issue is fixed at the rate for short-term and medium-term state treasury bonds, with the respective maturities established at the latest auction preceding the date on which the notes are issued.
Kazakhstan is the only former Soviet state that has begun to provide compensation for the deposits of citizens who kept their savings in the Savings Bank of the Soviet Union.
For further information on this topic please contact Yuriy Maltsev at White & Case by telephone (+7 3272 50 74 91) or by fax (+7 3272 50 74 93) or by email ([email protected]).