Starting a business in Kazakhstan

Mr. Vladimir Furman is in co-authorship with Ms Yulia Petrenko

Since its independence in 1991 Kazakhstan has been rapidly developing to become a country with a market economy establishing and strengthening its economic and trade ties with foreign countries, encouraging foreign investment, and liberalizing trade. Since the economic life of Kazakhstan keeps changing rapidly, the law is changing, as well, in order to create a favorable climate for foreign investors and to be a good location for business.

Key legislative acts that regulate establishment of business structures in Kazakhstan are the Civil Code of the Republic of Kazakhstan (Civil Code), Law on Economic Partnerships, Law on Partnerships with Limited and Additional Liability (LLP Law), Law on Joint Stock Companies (JSC Law), Law on State Registration of Legal Entities and Record Registration of Branch Offices and Representative Offices, and Law on State Registration of Rights on Immovable Property and Transactions with It.

Legal presence of a foreign company in Kazakhstan may be established either through opening of a subdivision in Kazakhstan or incorporating a separate legal entity.

Branch/Representative Office

Legal presence in Kazakhstan can be established through opening a subdivision of a foreign company in the form of a representative office or a branch. Neither a representative office nor a branch is a legal entity under Kazakhstan law. They act on behalf of a parent company within the limits defined by the latter. A representative office merely represents and protects interests of its parent company and is not entitled to generate profit. A branch, in addition to representing the parent company's interests, may carry out all or a part of the parent company's activities, including those subject to licensing, and may generate profit.

The organizational legal forms of legal entities depend on what types of activities foreign investors and businessmen intend to carry out in Kazakhstan. Kazakhstan legislation provides for a number of forms for organizing business in Kazakhstan. The most common and effective forms of a legal entity are: (i) a limited liability partnership and (ii) a joint stock company.

Limited Liability Partnership (LLP) is a corporate entity established by one or several individuals or legal entities, whether foreign or local, vested with its separate property, rights and liability. Participants of an LLP are not liable for its obligations and bear the risk of losses associated with the activities of the partnership only to the extent of the amount of their contributions into the LLP's charter capital, except in certain cases.