Download on registration of movable property pledge

REFORMS
TO IMPROVE POSITION OF
KAZAKHSTAN IN “DOING
BUSINESS” IN TERMS OF
“PROTECTING MINORITY
INVESTORS”
PROTECTING MINORITY INVESTORS IN KAZAKHSTAN.
DB - 2017
Protecting minority investors level index (0-10)
I. Extent of conflict of interest index (0-10)
1. Extent of disclosure index (10 of 10)
Score
Score description
2. Extent of director liability index (6 of 10)
Score
Score description
Can shareholders hold the other Directors liable for the damage the
caused to Buyer?
1 of 2
Liability for negligence
Can both penalties and imprisonment be applied to a Director / major
shareholder ?
0 of 1
No
Can a court void the transaction upon a successful claim by
shareholders?
0 of 2
3. Ease of shareholder suits index
(8 of 10)
Score
Score description
2 of 3
Documents that directly prove
specific facts in the plaintiff’s
claim
Can the plaintiff obtain any documents from the defendant and
witnesses at trial?
8.0
8.0
Only in the case of fraud or bad
faith of the Seller
2
PROTECTING MINORITY INVESTORS IN KAZAKHSTAN.
DB - 2017
II. Extent of shareholder governance index (0-10)
8.0
Score
Score
descriptio
n
0
No
Score
Score
description
Must the board of directors include a separate audit committee exclusively comprising board
members?
0
No
Must Buyer pay dividends within a maximum period set by law after the declaration date?
0
No
Assuming that Buyer is a limited company, is there a management deadlock breaking
mechanism?
0
No
Score
Score
description
1. Extent of shareholder rights index (9 of 10)
Must Buyer obtain it’s shareholders ' approval every time it issues new shares?
2. Extent of ownership and control index (7 of 10)
3. Extent of corporate transparency index (8 of 10)
Assuming that Buyer is a limited company, must Buyer's annual financial statements be
audited by an external auditor?
0
No
3
REFORMS FOR PROTECTING MINORITY INVESTORS IN
KAZAKHSTAN
“Doing Business”
2018
4
REFORMS FOR PROTECTING MINORITY INVESTORS IN
KAZAKHSTAN
Extent of director liability index
Can shareholders hold the other Directors liable for the damage the caused to Buyer? Can fines and imprisonment
be applied to Mr. James?
Reform
In order to establish the additional responsibility of Joint Stock Companies officials
The law of Kazakhstan “On Joint Stock Companies”
Article 63. Responsibility of Company’s officials
…
1-1. Company based on a decision of General meeting of shareholders or a shareholder (shareholders) owing (owing in
total) five and more percent of company’s voting shares, on their own behalf in the interests of the company may file a
lawsuit in court on bringing officials to responsibility for the harm caused to the company as a result of interested party
transaction made by the company and as a result of which the company acquired or disposed of property with value of ten
and more percent of total amount of carrying value of its assets in simultaneous presence of the following conditions:
if it is proved that at the time of making a decision on concluding the transaction, the value of such property appears to be
disproportionate to its market value specified by appraiser in compliance with the Law of the Republic of Kazakhstan “On
appraisal activities in the Republic of Kazakhstan”
court established the fact of intentional misrepresentation of the company's shareholders by its official person (s) for the
purpose to receive the profit (income) by himself / herself or his /her affiliated persons.
Reference: The Law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of
Kazakhstan on improvement of civil, banking laws and enhancement for entrepreneurial activity”.
http://adilet.zan.kz/rus/docs/Z1700000049 (Russian version)
5
REFORMS FOR PROTECTING MINORITY INVESTORS IN
KAZAKHSTAN
Extent of director liability index
Can a court void the transaction upon a successful claim by shareholders?
Reform
A possibility to declare a major transaction with conflict of interests as invalid through the court
The Law of the Republic of Kazakhstan “On Joint Stock Companies”
Article 74. After effects of the Company’s transactions fulfilled under the special conditions
1. Failure to comply with the requirements of this Law for a major transaction and the interested party transaction as well as
fulfillment of other transactions in violation of the requirements of the legislation of the Republic of Kazakhstan shall entail
the recognition of these transactions invalid in the court, at the suit of the person concerned in the manner and on the
grounds provided by the legislation of the Republic of Kazakhstan..
An interested party transaction as a result of which the company acquired or alienated property whose value is ten
percent or more of the total book value of its assets, and as a result of which the company is harmed, may be invalidated
by the a of the shareholder (shareholders) owning (in aggregate owning) five or more percent of the voting shares of the
company, with simultaneous fulfillment of the following conditions:
if it is proved that at the time of making a decision on concluding the transaction, the value of such property appears to
be disproportionate to its market value specified by appraiser in compliance with the Law of the Republic of Kazakhstan
“On appraisal activities in the Republic of Kazakhstan”
court established the fact of intentional misrepresentation of the company's shareholders by its official person (s) for
the purpose to receive himself / herself or his /her affiliated persons the profit (income).
Reference: The law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of Kazakhstan on
improvement of civil, banking laws and enhancement for entrepreneurial activity”. http://adilet.zan.kz/rus/docs/Z1700000049 (Russian version)
6
REFORMS FOR PROTECTING MINORITY INVESTORS IN
KAZAKHSTAN
Ease of shareholder suits index
Can a plaintiff obtain any documents from the defendant and witnesses at trial?
Reform
A possibility of obtaining documents relevant to the case from witnesses
The Civil Procedure Code of the Republic of Kazakhstan
Article 46. Rights and duties of persons participating in the case
3. Parties involved in a corporate dispute shall be entitled to request from each other and from witnesses any documents
relevant to the case without specifying each particular document.
Parties cannot request from each other and from witnesses any documents containing state secrets or other secrets
protected by the law.
Reference: The law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of
Kazakhstan on improvement of civil, banking laws and enhancement for entrepreneurial activity”.
http://adilet.zan.kz/rus/docs/Z1700000049 (Russian version)
7
REFORMS FOR PROTECTING MINORITY
INVESTORS IN KAZAKHSTAN
Shareholder rights index
Is it required for a Buyer to get shareholders ' approval every time it issues stock?
Reform
In order to provide a possibility for a buyer to obtain approvals of shareholders whenever it issues
stock
The Law of Kazakhstan “On Joint Stock Companies”
Article 18. Allotment of Company’s shares
1. A joint stock company may allot its shares after the state registration of their issuance through one or more placements
within the limits of the authorized shares.
The decision to allot the company's shares within the number of its authorized shares is taken by the board of directors
of the company, except for the cases when the charter of the company refers the matter to the competence of the
general meeting of the shareholders.
The decision to allot shares of a public company within the limits of the number of announced shares is taken by the
general meeting of shareholders of a public company.
The shares are allotted under the pre-emptive rights of the shareholders for the shares or other securities, convertible
into the ordinary shares of the company, subscription or a bid, conducted at the organized securities market or subscription
or a bid, conducted at the organized securities market, as well as through the conversion of securities and (or) financial
liabilities of the company into the shares of the company in the cases, provided in this Law and other legislative acts of the
Republic of Kazakhstan.
Reference: The law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of
Kazakhstan on improvement of civil, banking laws and enhancement for entrepreneurial activity”.
http://adilet.zan.kz/rus/docs/Z1700000049 (Russian version)
8
REFORMS FOR PROTECTING MINORITY INVESTORS IN
KAZAKHSTAN
Shareholder rights index
Is it required for a Buyer to get shareholders ' approval every time it issues stock?
Reform
In order to provide a possibility for a buyer to obtain approvals of shareholders whenever it issues
stock
The Law of the Republic of Kazakhstan “On Joint Stock Companies”
Article 53. The board of directors
2. Unless otherwise provided by this Law and (or) the charter of the company, the exclusive competence of the board of
directors include the followings:
…
3) decision making on placement (sales), including on the number of the allotted (offered) shares within the number of the
authorized shares, the method and the offering price (offer), except for the cases provided by the second part of paragraph
1 of Article 18 of this Law;
FOR REFERENCE :
The Law of Kazakhstan “On Joint Stock Companies”
Article 18. Allotment of Company’s shares
1. A joint stock company may allot its shares after the state registration of their issuance through one or more placements within the limits of the
authorized shares.
The decision to allot the company's shares within the number of its authorized shares is taken by the board of directors of the company, except for
the cases when the charter of the company refers the matter to the competence of the general meeting of the shareholders.
The decision to allot shares of a public company within the limits of the number of announced shares is taken by the general meeting of shareholders
of a public company.
Reference: The Law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of Kazakhstan on
improvement of civil, banking laws and enhancement for entrepreneurial activity”. http://adilet.zan.kz/rus/docs/Z1700000049 (Russian
version)
9
REFORMS FOR PROTECTING MINORITY
INVESTORS IN KAZAKHSTAN
Extent of ownership and control index
Must the board of directors to include a separate audit committee exclusively comprising board members?
Reform
In order to specify a procedure for establishing the internal audit committee in the company
The Law of Kazakhstan “On Joint Stock Companies”
Article 53-1. Committees of the board of directors
1. In order to consider the most important issues and to make recommendations to the board of directors, the committees
of the board of directors shall be established in the company.
2. Committees of the board of directors consider the following questions:
1) for strategic planning;
2) for resources and remuneration;
3) for internal audit function;
4) for social issues;
5) other matters provided by internal documents of the company.
Consideration of issues listed in part one of this paragraph may be attributed to the competence of one or several
committees of the board of directors, with the exception of internal audit issues considered by a separate committee of
the board of directors.
Reference: The Law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of
Kazakhstan on improvement of civil, banking laws and enhancement for entrepreneurial activity”.
http://adilet.zan.kz/rus/docs/Z1700000049 (Russian version)
10
REFORMS
FOR PROTECTING
MINORITY
REFORMS
ДЛЯ ЗАЩИТЫ
INVESTORS
IN KAZAKHSTAN
МИНОРИТАРНЫХ
ИНВЕСТОРОВ
В КАЗАХСТАНЕ
Extent of ownership and control index
Is there any maximum period fixed after the date of announcement when JSC must pay dividends?
Reform
Term of dividends payment on preferred shares of the Company is defined
The Law of Kazakhstan “On Joint Stock Companies”
Article 24. Dividends on the preferred shares
1. Payment of dividends on the preferred shares of a company shall not require a decision of the company’s body.
Frequency of payment of the dividends and the amount of the dividend per preferred share shall be established by the
company’s charter.
Dividends must be paid no later than ninety days from the date of drawing up the list of shareholders entitled to receive
dividends, if there is an information on the shareholder’s actual details in the system of registers of shareholders of the
company.
In case of information absence on the shareholder’s actual details, dividends on preferred shares must be paid within
ninety days from the date of the shareholder's application to the company with a document confirming the entrance of
necessary information about him in the system of shareholder registers of company.
The amount of dividends accrued on preferred shares may not be less than the amount of dividends accrued on common
shares for the same period.
Dividends on common shares of the company are not paid until the dividends on preferred shares are fully paid to
shareholders entitled to receive dividends, and for which there are actual details in the system of shareholder registers of
the company.
Reference: The Law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of
Kazakhstan on improvement of civil, banking laws and enhancement of entrepreneurial activity”.
http://adilet.zan.kz/rus/docs/Z1700000049 (Russian version)
11
REFORMS FOR PROTECTING MINORITY
INVESTORS IN KAZAKHSTAN
Extent of ownership and control index
Can shareholders remove members of the board of directors before the end of their term?
Reform
A possibility for shareholders to remove members of the board of directors of the company before the
end of their term
The Law of the Republic of Kazakhstan “On Partnerships with Limited and Additional Liability”
Article 43. Competence of the General meeting of participants of a Limited Liability Partnership
2.
…
The exclusive competence of the General meeting of participants of a Limited Liability Partnership includes:
2) Formation of the executive body of the company and early termination of its authority or the authority of
individual member of the executive body, as well as decision making to entrust the limited liability company or its
property and determining the conditions of such transfer;
Reference: The law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of
Kazakhstan on improvement of civil, banking laws and enhancement for entrepreneurial activity”.
http://adilet.zan.kz/rus/docs/Z1700000049 (Russian version)
12
REFORMS FOR PROTECTING MINORITY
INVESTORS IN KAZAKHSTAN
Extent of corporate transparency index
Must Buyer’s annual financial statements be audited by an external auditor?
Reform
In order to establish a compulsory annual audit for LLP – large businesses, as well as businesses with
participants (founders) owing less than 10% of shares in the share capital
The Law of RK “On Partnerships with Limited and Additional Liability”
Article 59. External audit of a Limited Liability Partnership
1. To verify and confirm accuracy of annual financial statements of a Limited Liability Partnership, as well as current
position of the company, the partnership has the right in cases and in manner stipulated by its charter to engage an
audit organization with no affiliation to property interests with partnership, members of its Executive body, Supervisory
Board or parties (external audit).
Audit of annual financial statement is mandatory for a Limited Liability Partnership if it simultaneously meets the
following conditions:
1) it consists of participants (founders) owing less than ten percent of shares in the share capital;
2) average number of employees is more than two hundred and fifty persons and (or) annual income is over 3 mln.
monthly calculation index established by the Law on republican budget and effective as of January 1st of the relevant
financial year.
Audit of annual financial statement for a Limited Liability Partnership relating to medium-sized businesses is held at the
request of the participant (founder) owning less than ten percent of participation shares in the share capital of a Limited
Liability Partnership.
Reference: The Law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of
Kazakhstan on improvement of civil, banking laws and enhancement for entrepreneurial activity”.
http://adilet.zan.kz/rus/docs/Z1700000049 (Russian version)
13
REFORMS FOR PROTECTING MINORITY
INVESTORS IN KAZAKHSTAN
Extent of corporate transparency index (cont.)
Must Buyer’s annual financial statements be audited by an external auditor?
Reform
In order to establish a compulsory annual audit for LLP – large businesses, as well as businesses with
participants (founders) owing less than 10% of shares in the share capital
The Law of Kazakhstan “On Audit Activities”
Article 5. Audit and its types
2. Audit is obligatory for:
…
a Limited Liability Partnership if it simultaneously meets the following conditions:
1) it consists of participants (founders) owing less than ten percent of shares in the share capital;
2) average number of employees is more than two hundred and fifty persons and (or) annual income of over 3 mln.
monthly calculation index established by the Law on republican budget and effective as of January 1 st of the relevant
financial year.
Audit of annual financial statements for a Limited Liability Partnership relating to medium-sized businesses is held at the
request of the participant (founder) owning less than ten percent of participation shares in the share capital of a Limited
Liability Partnership.
Organization for which audit is obligatory and which in compliance with the legislation of the Republic of Kazakhstan
publishes annual financial statements in periodicals must publish the auditor’s report along with annual financial
statements.
Reference: The Law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of
Kazakhstan on improvement of civil, banking laws and enhancement for entrepreneurial activity”.
http://adilet.zan.kz/rus/docs/Z1700000049 (Russian version)
14
REFORMS
TO IMPROVE POSITION OF
KAZAKHSTAN IN “DOING
BUSINESS” RANKING IN
TERMS OF “GETTING
CREDIT”
GETTING CREDITS INDEX IN KAZAKHSTAN
DB - 2017
N.
AMENDMENTS TO THE LAW “ON REGISTRATION OF MOVABLE PROPERTY PLEDGE”
4-1)
Article 1. The basic concepts used in this Law
The unified registry of movable property pledge is an information system representing a uniform window of access to information on pledge of movable property,
directing a declaration in electronic form for registration of movable property pledge and other actions of the registration authorities and (or) State –owned
corporation “Government for citizens” ensured in the manner stipulated by this Law and other legislative acts of the Republic of Kazakhstan;
1.
2.
3-1.
1.
1.
2-1.
5.
6.
Article 9. Application for registration of movable property pledge
For registration of movable property pledge, the applicant or his/her representative shall submit a completed application form or forward it in electronic form through
the unified registry of movable property pledge to the registration authority and (or) State –owned corporation.
The application shall be accompanied by a document confirming payment of fee to the budget for state registration of movable property pledge, with the exception of
payment through payment gateway of “electronic government” when application is forwarded in electronic form via the unified registry of movable property pledge.
When application is forwarded electronically through the unified registry of movable property pledge, the application signed by the Parties to a transaction shall be
served in a form of notification indicating information about conditions for pledge, as well as information under paragraph 2 of this Article without provision of pledge
agreement or other document containing pledge conditions.
Article 9-3. Procedure of electronic registration of movable property pledge through second –tier banks
Registration authority and (or) a State –owned corporation within one business day after receipt of application shall forward to informational system of pledge holder
and the unified registry of movable property pledge a registration certificate of movable property pledge in the form of electronic document or reasonable refusal in
registration in soft copy certified by electronic digital signature of the registration authority and (or) State –owned corporation.
Article 9-4. Procedure of electronic registration of movable property pledge through the unified registry of movable property pledge
Pledger and pledge holder are entitled to forward application for registration of movable property pledge in the form of electronic document certified by the
electronic digital signature of pledger and pledge holder through the unified registry of movable property pledge in a form of notification in compliance with the
requirements of Article 9 of this Law.
Article 10. Responsibilities of the registration authority, State-owned corporation and pledge holders
Electronic registration of movable property pledge shall be ensured within one business day from receipt into information system of the registration authority and (or)
State –owned corporation of payment fee confirmation for state registration of movable property pledge or exemption from payment fee.
Pledge holder after the pledger has fulfilled his/her obligation secured by pledge, no later than one business day after fulfillment of an obligation shall forward the
application for de- registration of movable property pledge to the registration authority and (or) State-owned corporation.
Application may be sent through the unified registry of movable property pledge.
Registration authority and (or) State –owned corporation within one business day following the date of filing an application of pledger shall ensure de-registration
of pledge and send through the unified registry of movable property pledge to pledge holder and pledger a notice of de- registration of movable property pledge in
the form of electronic document or reasonable refusal in de-registration in soft copy certified by electronic digital signature of the registration authority and (or) Stateowned corporation.
16
GETTING CREDITS INDEX IN KAZAKHSTAN
DB - 2017
DESCRIPTION OF FUNCTIONING OF THE UNIFIED REGISTRY OF MOVABLE PROPERTY PLEDGE
Pledge
agreement
Is signed
Applying to registration authority
MIA
with submission a hard copy
Motor transport
of pledge agreement
MID
Rolling stock
NB
securities
MJ
MAI
Electronic application
Is forwarded from
second-tier bank system
Movable property not
Subject to obligatory
registration
Agricultural
equipment
...or on web-portal
Egov.kz
Advantages:
 An opportunity to register pledge without
submission of a hard copy of agreement
 Registration result is given
visiting
registering authority or
electronically
 It is not required to run after pledge holder or apply to registering
authority for releasing from pledge
 Information of registered pledge is given
electronically
17
GETTING CREDIT INDEX IN KAZAKHSTAN
DB - 2017
Strength of legal rights index (4 of 12)
Index
score
Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity
and enforcement of functional equivalents to security interests in movable assets exist in the economy?
0
Does the law allow businesses to grant a non possessory security right in a single category of movable assets,
without requiring a specific description of collateral?
0
May a security right extend to future or after-acquired assets, and may it extend automatically to the products,
proceeds or replacements of the original assets?
0
Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and
obligations be secured between parties; and can the collateral agreement include a maximum amount for which
the assets are encumbered?
0
Does a notice-based collateral registry exist in which all functional equivalents can be registered?
0
Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be
performed online by any interested third party?
Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an
insolvency procedure?
0
Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated?
0
0
18
GETTING CREDIT INDEX IN KAZAKHSTAN
DB - 2017
Depth of credit information index (7 of 8) (cont.)
7,0
Are bureau or registry credit scores offered as a valueadded service to help banks and financial
institutions assess the creditworthiness of borrowers?
0
The provisions of the Law of the RK “On Credit Bureaus and Formation of Credit Histories in the Republic
of Kazakhstan” directly allow credit bureaus to provide statistical (scoring) services
The Law on credit bureau does not oblige consumers of credit bureau services (banks,
microfinancial organizations, other credit organizations) to use statistical (scoring) models of credit
bureaus
Banks and other credit organizations in the framework of credit risk assessment can apply their own
statistical (scoring) models of risk assessment
At present credit bureaus provide statistical (scoring) and other analytical services.
19
REFORMS
FOR GETTING CREDIT
“Doing Business”
2018
20
REFORMS
FOR GETTING CREDITS IN KAZAKHSTAN
Strength of legal rights index
Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of
functional equivalents to security interests in movable assets exist in the economy?
Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any
interested third party?
Reform
An opportunity to register pledge of securities through the web - portal of “electronic government”
The Law of the Republic Of Kazakhstan “On registration of pledge of movable property”
Article 6. Peculiarities of registration of pledge of certain types of movable property
1.
Registration of pledge of equity securities, including through the unified registry of movable property pledge shall be
in compliance with the legislative acts of the Republic of Kazakhstan on registration of transactions with securities.
Registration of securities performed in compliance with the legislative acts of the Republic of Kazakhstan shall be
subject to the rules of Article 8 of this Law.
The Law of the Republic Of Kazakhstan “On securities market”
Article 37. Registration of pledge of rights on issuance securities
1. …
Transfer of orders of the pledger and the pledge holder is allowed in respect of transactions related to encumbrance of
equity securities through a single pledge of movable property.
The procedure for the execution of orders of the pledger and the pledge holder in respect of transactions related to
encumbrance of equity securities through a single register of pledge of movable property is determined by the legislation
of the Republic of Kazakhstan and internal documents of the central depository (registrar).
Reference: The Law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of
Kazakhstan on improvement of civil, banking laws and better conditions for entrepreneurial activity”.
http://adilet.zan.kz/rus/docs/Z1700000049
21
REFORMS
FOR GETTING CREDITS IN KAZAKHSTAN
Strength of legal rights index
Does the law enable companies to use movable assets as pledge to certain categories of movable assets while keeping
possession of assets without requiring a specific description of pledge?
Is it acceptable to generally describe debts and obligations in pledge agreement and registration documents. Is it possible to
secure all types of debts and obligations between the parties. Is it possible for pledge agreement to include a maximum
amount for which the assets are encumbered?
Reform
In order to avoid mandatory indication of assessment in pledge agreement for movable property
The Civil Code of the Republic of Kazakhstan (General part)
Article 307. Content and form of pledge agreement
1. Pledge agreement shall indicate the pledged object, the subject matter, its evaluation or maximum amount and term of
execution of the obligation secured by pledge. If pledged item is an immovable property, pledge agreement shall specify its
valuation. Movable property and (or) certain categories of movable property (including machinery and inventory) that are
pledged may have general description of pledge item without requiring a specific description of pledge.
The pledge agreement should also contain an indication on pledged property possession by the parties and the
permissibility of its use.
Reference: The law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of
Kazakhstan on improvement of civil, banking laws and enhancement for entrepreneurial activity”.
http://adilet.zan.kz/rus/docs/Z1700000049
22
GETTING CREDITS INDEX IN KAZAKHSTAN.
DB - 2017
Strength of legal rights index
May a security right extend to future or after-acquired assets, and may it extend automatically to the products, proceeds or
replacements of the original assets?
Reform
In order to exclude the general condition prohibiting the reduction of the value of goods in circulation
The Civil Code of the Republic of Kazakhstan (General part)
Article 327. Pledge of goods in circulation
1.
Pledge of goods in circulation is a pledge of goods with their leaving with pledger, and with granting a right to pledger
to change composition and natural form of the pledged property (inventory, raw materials, semi-finished products,
finished products, etc.).
For reference:
The first part of paragraph 1 of Article 327 shall be read with exclusion of the words “if their total value does not become less than that
specified in pledge agreement”.
The second part of paragraph 1 of Article 327 is excluded:
“Reduction in value of pledged goods in circulation shall be allowed in proportion to executed part of the secured obligations, unless
otherwise provided by the agreement”.
Former reform:
Article 309. Assets that is subject to rights of the pledge holder
1. Unless otherwise stipulated in the agreement or legislative acts, the rights of the pledge holder (the right to pledge) in respect to the object that is a subject of
the pledge, shall apply to its accessories and inseparable goods.
In the cases stipulated by the agreement or legislative acts the right to pledge may apply to the separable goods, production as well as income received as a
result of the use of the pledged property.
Reference: The Law of February 27th 2017, No. 49-VI “On amendments and additions to some legislative acts of the Republic of
Kazakhstan on improvement of civil, banking laws and enhancement for entrepreneurial activity”.
http://adilet.zan.kz/rus/docs/Z1700000049 (Russian version)
23