Kazakhstan takes measures to improve its business environment (Rahim Shimarov, Counsel)
Kazakhstan takes measures to improve its
The Decree of the President «On Cardinal Measures to Improve the Business Environment in the Republic of Kazakhstan» brings advances in creation of a favorable legal environment for the development of business in Kazakhstan.
The Decree, inter alia, brings an end, from January 2015, to scheduled inspections of businesses, and identifies the overarching objectives of the development of:
·the law concerning state authorizations and notifications and the procedure for the issue thereof;
·comprehensive amendments to the laws designed to fundamentally improve the business environment;
·the law concerning the activities of self-regulated organizations.
In addition, the Government has been asked to consolidate the legislative norms on the state regulation of business activity in a draft of the RK Business Code.«Implementation of the decree will provide for fundamental improvement of the conditions for business development in the Republic», said the President of Kazakhstan Nursultan Nazarbayev. - This is real help to every Kazakhstan citizen who conducts business. Caring for constant improvement of the working conditions of entrepreneurs will always be the primary focus of the State».
The Law On Authorizations and Notifications
On 16 May 2014, the Law On Authorizations and Notifications was adopted for implementation, inter alia, of the above-mentioned Decree. It is aimed at resolving a number of issues in the system of state authorizations for the conduct of business related activities in Kazakhstan, namely: to stem the steady increase in the number of authorizations required; to address the lack of a unified approach and to ensure that there is a clear and transparent rationale for the requirement for authorizations, as well as an understanding of what ‘authorization’ should mean. The document provides for a comprehensive list of authorizations, analysis of the regulatory impact of new authorizations, categorization of authorizations subject to the degree of hazard posed by the activity in question, with the establishment of standard approaches and a universal concept of authorization, including licenses and other authorizations.
The Law has introduced categories of authorizations, allowing for differing levels of rigor, depending on the hazard posed by the regulated activity in question. The first category includes licenses; the second - all other authorizations (subdivided into six classes, depending on the subject of regulation); the third - notifications. The law stipulates a procedure for the introduction and lifting of authorization or notification procedures. Now a new authorization requirement for business will only be introduced following the results of a regulatory impact assessment conducted by the state agency, through its inclusion in the list of authorizations.
Law on Amendments to Some Legislative Acts of the Republic of Kazakhstan on Issues of Cardinal Improvement of the Business Environment
Another step taken to implement the Presidential Decree of 29 December 2014 was the adoption of the Law on Improvement of the Business Environment. This measure introduces comprehensive amendments to 119 laws. The general purpose of these amendments is to create a more favorable environment for entrepreneurship, building partnership relations between the State and business, forming a favorable business climate with the transition from the policy of «identification and punishment» of transgressions to the policy of «prevention and promotion of good faith entrepreneurship».
Several key areas are addressed by the main changes in the laws: First, in the area of supervision and control, scheduled inspections have been replaced with inspections on the basis of risk assessment and also the possibility of insurance of liability of businesses in certain cases as an alternative of inspections has been introduced.
To this end, the entities (subjects) under inspection were divided into four groups.
1.The first group includes entities (subjects) in respect to which (as a primary method of control and supervision) special procedures for inspections will apply due to a high degree of hazard inherent in the activities of these subjects. The law has identified seven areas where periodic inspections will remain (e.g. inspections in the area of sanitary-and-epidemiological control in the event of high risk should not be more frequent than once in six months).
2.The second group includes entities (subjects) for which the primary method of control and supervision will be selective inspections. This applies to areas where there are sufficient sectorial statistics and reporting for the carrying out off-site control and selection of potential offenders for inspection.
3.The third group includes entities (subjects) in respect of which only unscheduled inspections based on specific instances of infringement may be carried out.
4.In respect to the fourth group only other forms of control will be carried out, without conducting inspections.
Secondly, the Law contains provisions aimed at simplifying the procedures and processes related to entrepreneurial activity, including in the context of relations with the state. In particular, for investors the «one window» principle for obtaining expert reviews of design and estimate documentation for construction has been introduced. To simplify the process of liquidation of a business, a simplified procedure for voluntary liquidation of a taxpayer on the basis of a report from its auditors in relation to taxes has been introduced. The customs procedures and registration of legal entities have been simplified. The timing for obtaining licenses and authorizations has been shortened. The number of activities that require obtaining an authorization has been reduced. The requirement to provide notarized documents has been abolished. Private entrepreneurs are no longer required to have a business stamp.
Thirdly, the law also seeks to put in place a framework to prevent future complexities developing in the regulatory environment for entrepreneurship. To this end, the role of the National Chamber of Entrepreneurs is strengthened, including through the introduction of the institute for protection of the rights of businessmen. The revised Law On Private Entrepreneurship stipulates that when regulatory bodies are planning to introduce a new regulatory tool or implement tighter regulation in respect of private business entities, they must first of all carry out a regulatory impact assessment according to a procedure determined by the authorized body on entrepreneurship.
Fourthly, the Law On Private Entrepreneurship has been amended to the effect that measures of State support, previously only available to small enterprises, are now extended to medium-sized businesses.
Fifthly, the law also introduces a number of amendments to sectorial laws regulating various aspects of particular relations. For example, in respect of decision-making at the general meeting of shareholders, disclosure of information in joint-stock companies, the legal regime governing pledges of movable property, the procedure for ensuring the safety and protection of employees, rehabilitation and bankruptcy procedures.
We have yet to evaluate the scale of those amendments and the relevant law enforcement practice, as the Law came into force only on 1 January 2015. However, today we can already observe an improvement in the transparency of state regulation of private entrepreneurship and the quality of rulemaking. The most important of those amendments are the introduction of mechanisms for the analysis of the expected impact and assessment of viability of, and the exploration of possible alternatives to new or current regulations.
Proposed Law On Self-Regulation and Business Code
Another step to implement the Decree was the draft Law On Self-Regulation proposed for consideration of the Majilis at the end of the last year.
When presenting the proposed Law, the Vice Minister of national economy Kairbek Uskenbaev noted that «the purpose of the document is to increase the effectiveness of State regulation of the economy by phased introduction of the institute of self-regulation in certain areas of activity». According to the draft Law, «self-regulation» is defined as «a set of measures provided for by this law aimed at independent regulation by individuals and legal entities of their entrepreneurial or professional activities based on voluntariness or obligation.»
It is planned that first of all self-regulation will be introduced based on voluntary membership (participation) in the relevant self-regulated entity, will operate alongside state regulation and set higher requirements for self-regulated entities. Self-regulation based on compulsory membership or participation in entities in the area of entrepreneurial or professional activities will be introduced gradually, based on the adoption of additional legislative acts of the Republic of Kazakhstan, in the areas associated with the performance of state functions or the need to delegate certain functions performed by state agencies.
The Government also proposed a draft of the Business Code for consideration by the Majilis. The legal community held an intense debate on its expediency. However, the position that it was necessary to adopt a document which lays down the basic principles of activity of Kazakhstan entrepreneurs and their interaction with the state prevailed. Given the importance of the code and its comprehensive nature, it is obvious that we can expect quite a long discussion thereof and its elaboration by the Majilis.
The enacted laws to improve the business environment and the current law-drafting activities show the commitment of the state to the creation of conditions favorable for the development of business, to building partnership relations with business, and to the creation of a favorable business climate with the transition from the policy of «identify and punish» to the policy of «prevention and promotion of good faith entrepreneurship».