The Law on Securities Markets 2007 sets forth the dual listing requirements for legal entities that wish to place their securities on a foreign stock exchange. Under the law, resident entities may issue shares outside Kazakhstan subject to, among other things:

  • the consent of the National Bank of Kazakhstan; and
  • the listing of at least 20% of such new shares on the Kazakhstan Stock Exchange.

A 'resident entity' is defined as:

  • an entity established in Kazakhstan;
  • a foreign entity that holds at least two-thirds of its assets in Kazakhstan; or
  • an entity whose effective management(1) is located in Kazakhstan.

Arguments have been made that only direct ownership of assets in Kazakhstan should be taken into account in order to be deemed a resident entity. However, in practice, government authorities take a broader view and, for the purposes of the dual listing requirement, consider entities with indirect ownership of assets in Kazakhstan as resident.

Generally, the dual listing requirement applies to new issuances of securities. Without discussion of the practicalities, it appears that in exceptional cases the requirement may apply to previously issued shares. Under Article 22-1(1)(1) of the law, the requirement to list previously issued shares on the Kazakhstan Stock Exchange may apply to the Kazakh entity if:

  • it owns 50% or more of a foreign subsidiary; and
  • the foreign subsidiary's effective management is located in Kazakhstan.

The Kazakh entity's obligation to list previously issued shares is triggered only when its foreign subsidiary issues new shares outside Kazakhstan.

Under Article 22-1(2) of the law, securities of a resident entity may be listed or "continue being listed" on the foreign stock exchange subject to certain conditions, including the consent of the National Bank of Kazakhstan and the dual listing requirements.

The meaning of the phrase "continue being listed" is quite loose and subject to various interpretations. Under a rigid interpretation, the dual listing and the National Bank consent requirements may be viewed as applicable to a resident entity's securities that have already been listed outside Kazakhstan (although it would be difficult, if not possible, to enforce this).

Previously, a failure to comply with these requirements resulted in a minimal administrative fine of approximately $4,000 for the officer of the foreign entity who completed the relevant listing. As such, in practice, foreign legal entities tended not to comply with this requirement.

On December 28 2011 the president signed Law 524-IV on Amendments and Additions to Certain Legal Acts Regulating Banking and Financial Institutions' Activities as to Risk Minimisation, which came into effect on February 1 2012. Law 524-IV amended 29 acts, including the Administrative Code 2001.

The amendments to the Administrative Code impose severe penalties for non-compliance with the securities law requirements. In particular, the code states that failure to comply with the requirements on offering securities outside Kazakhstan may entail an administrative fine of an amount equal to 50% of the revenue received from the offering.

The code does not have extra-territorial effect. Consequently, if a violator of the dual listing requirement is a foreign issuer, it will be difficult (if not impossible) to impose fines on it.

In light of the recent amendments, companies with assets in Kazakhstan should carefully consider the application of the securities law requirements with respect to any proposed offerings in foreign markets.

For further information on this topic please contact Yerzhan Kumarov or Sevil Gassanova at Norton Rose LLP by telephone (+7 727 311 24 80 88), fax (+7 727 311 24 89) or email ( or


(1) Defined as the place of principal management and strategic decision making.

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