Corporate Governance in Kazakhstan

Corporate Governance in Kazakhstan: A Regulatory Overview

Corporate governance (CG) in Kazakhstan is a crucial mechanism for enhancing transparency and accountability among top management, boards of directors, and stakeholders. The Government of Kazakhstan plays a pivotal role as the main regulator, ensuring the adoption of CG measures. A significant milestone in this development was the establishment of the Agency of the Republic of Kazakhstan for Regulation and Supervision of Financial Market and Financial Institutions (the “Agency”) on January 1, 2004, under the National Bank of Kazakhstan.

Key Regulatory Frameworks:

  1. Corporate Governance Code: Kazakhstan’s CG Code, adopted in 2005, aligns with the OECD’s corporate governance principles, offering guidelines for transparency, fairness, and accountability in business organizations. The Code emphasizes protection of shareholders’ rights, transparency, legal ethics, effective dividend policy, environmental protection, and conflict regulation. These principles guide corporations, stock exchanges, investors, and stakeholders toward improved CG practices.
  2. Joint Stock Companies (JSC) Act of 2003: The JSC Act significantly enhances corporate governance practices. It mandates boards of directors to form committees overseeing strategic planning, internal audits, personnel management, and social responsibilities. Specific requirements include the exclusion of management members (except the Chair) from the Board of Directors and ensuring that one-third of the board comprises independent directors.
  3. Disclosure and Reporting Obligations: JSCs are legally obligated to follow strict reporting and disclosure practices, including publishing annual reports, disclosing major transactions, and submitting regular reports to the National Bank. This transparency is essential for protecting shareholders’ interests and attracting foreign investment.

International Influence and Recent Developments:

In 2008, Kazakhstan’s corporate governance gained a new impetus through the International Finance Corporation (IFC) Project, aimed at improving CG in Central Asia. The introduction of concepts such as minority stockholders, independent directors, and corporate secretaries were significant additions. As Kazakhstan’s JSCs increasingly hire qualified foreign independent directors, these companies—such as Kaspi.kz, HalykBank, and Kazatomprom—are now listed on prestigious global exchanges like the NYSE and LSE, reflecting the country’s well-established corporate governance system.

BOND STONE’s Expertise in Corporate Governance:

BOND STONE International Law Firm is a leading provider of corporate governance support in Kazakhstan, offering specialized services for joint-stock companies. Our services include:
  • Developing Corporate Governance Codes and internal control systems.
  • Conducting due diligence and offering recommendations for improved governance.
  • Protecting stockholders’ rights, ensuring compliance with corporate procedures, and overseeing independent director and corporate secretary appointments.
Our experts are active members of the Club of Corporate Secretaries and the National Council of Kazakhstan for Corporate Governance, ensuring that our clients benefit from cutting-edge governance practices.