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EBRD Supports Kazakh Launch of New Financial Hub

Astana International Financial Centre to play important regional role

Monday 9 July 2018

LONDON (ERBD press service) – At the inauguration of Astana International Financial Centre (AIFC) the EBRD, a major partner in the initiative and longstanding investor in Kazakhstan, was represented by Natasha Khanjenkova, Managing Director, Central Asia, and Agris Preimanis, Director, Head of Kazakhstan. To date, the EBRD has invested over $8.7 bln in the economy of Kazakhstan.

In an attempt to bolster the country’s role as a major financial hub in Central Asia and along the route of the Belt and Road Initiative the government of Kazakhstan has officially inaugurated the Astana International Financial Centre (AIFC) in the capital today.

The AIFC development plays an important role in the overall reform agenda of the country: it will help channel domestic and foreign investment to Kazakhstan, stimulate growth, set new standards of corporate governance, and promote skills transfer and green innovation.

The Centre is expected to attract international investors to finance large-scale infrastructure projects and will play a vital role in the privatisation of large blue-chip companies – one the country’s key reform challenges. The AIFC will be governed by English law and subject to international arbitrage, a precedent both for the country and the region.

Following the signing of a Memorandum of Understanding between the AIFC and the EBRD in 2016, the Bank supported the introduction of green financing under the AIFC and helped review the exchange rules for the Astana International Exchange (AIX). In particular, these rules will govern the establishment and operation of the AIX, set the fundamental principles for market transactions and rules of trading on the exchange.

Natasha Khanjenkova said:

I am sure that the development of the AIFC will help create a competitive, efficient and transparent financial market in Kazakhstan, Central Asia and the wider region. We at the EBRD are particularly pleased with the level of understanding and partnership between the two institutions and the commitment of the AIFC management.

In 2017, the EBRD approved its new country strategy for Kazakhstan and signed a three-year Enhanced Partnership Framework Arrangement with the country aimed at the modernisation and diversification of the national economy.

About AIFC

The AIFC operates within a special legal regime based on Common Law, which regulates the legal relationships between AIFC participants and third parties and is aimed at the development of the financial market. Its six priorities are:

  1. Establish a transparent and understandable legal regime based on the best world practices.
  2. Creation of a Regulatory regime corresponding to the recognized world standards.
  3. The Exchange should correspond to the best world practices for the local capital market development.
  4. Creation of favourable environment conducive to the recognized professional managers’ arrival on the AIFC site.
  5. Supporting sustainable economic growth and Green finance development on the AIFC basis.
  6. AIFC should become a Centre for local expertise and contribute to the growth and development of the country’s human capital, creating a favourable environment for attracting leading world experts.

An AIFC Participant (also called a “Centre” Participant) is a firm that is registered and licensed to carry on one or more regulated or non-regulated business activities in the AIFC. This includes both the legal entities incorporated under Acting Law of the AIFC and firms established in other jurisdictions (including "mainland" Kazakhstan) that are granted recognised status (that is, branches).

The AIFC provides a number of privileges to create favourable conditions for the increase of foreign investment. A special legal regime based on the principles of English common law and standards of leading financial centres will operate in the AIFC.

A firm can become a Centre Participant and carry on business activities in the AIFC either via a legal entity established under Acting Law of the AIFC or via a “recognised” branch of a non-AIFC entity. Subject to limited exceptions, a Centre Participant must maintain a registered office in the AIFC and it must have a place of business activity there.

AIFC Participants are exempt from corporate income tax on income received from providing following services in the AIFC:

  1. financial services:
    • Islamic banking services;
    • reinsurance and insurance brokerage services;
    • investment management services for assets of investment funds, accounting and safekeeping services for investment funds, as well as services related to issuing, offering, trading, purchase and redemption of securities of investment funds;
    • brokerage, dealer or underwriting services;
    • any other financial services prescribed by AIFC Acts.
  2. ancillary services:
    • legal, audit, accounting and consulting services provided to AIFC Bodies as well as to AIFC Participants that provide financial services.

AIFC Court judgments are enforceable in Kazakhstan on the same terms and conditions as judgments of the Kazakhstan courts. Parties who wish to enforce an IAC arbitral award in Kazakhstan can apply to the AIFC Court for an execution order and subject to obtaining that execution order the arbitral award will be enforced in Kazakhstan on the same terms and conditions as judgments of the Kazakhstan courts.

AIFC Contract Regulations 2017 state that the Regulations govern contracts made between AIFC Participants, AIFC Bodies and AIFC Participants, and AIFC Bodies, unless otherwise expressly provided in a contract. If a party to a contract is not an AIFC Participant or AIFC Body, the Regulations do not apply to the contract unless expressly provided in the contract. Any contract governed by the Regulations is subject to the jurisdiction of the AIFC Court unless otherwise expressly provided in a contract.

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