"Agent", "Security Agent" and "Syndicated Financing" – new (old) concepts in Kazakh law

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January 2021 has been full of changes to Kazakh legislation regulating financial markets. We previously drew your attention to the changes related to operations of branches of foreign banks, and private placement of non-government bonds. Another important change that came into effect this month is the establishment of a legal framework for “syndicated financing” in Kazakhstan.

A syndicated loan (i.e. a loan provided to a borrower by several lenders), as a separate type of financing, has been used in the Kazakh market for a long time.

However, until January 16, 2021, this type of financing was not expressly regulated by the legislative acts. It was therefore not completely clear if a Kazakh court would properly qualify the contractual obligations of agent and, especially, security agent.

In particular – in a cross-border transaction with a Kazakh law governed pledge – if a security agent, which was de facto not a lender, acted as a pledgee, it was necessary to incorporate into the transaction documents the English law "parallel debt" arrangements, or other similar mechanisms. At the same time, there was a risk that a Kazakh court could consider such mechanisms as fictitious or sham transactions.

The situation has now changed. The Law on Project Financing and Securitization1 was supplemented with a new chapter on "syndicated financing" under which "members of the syndicate of lenders", "agent" and "security agent" received not only specific definitions but also a wide range of rights and obligations.

It is worth mentioning, amongst other things, that the syndicate of lenders exercises its rights by votes of the lenders that provide at least 2/3 of the total financing. In addition, the agent is now responsible for representing the interests of the syndicate in rehabilitation and bankruptcy proceedings.

The decision of the legislator to add syndicated financing to the scope of the Law on Project Financing and Securitization seems questionable. In our view, it would have been more appropriate to use the Civil Code2 or the Banking Law3 for these purposes. However, this seems to be more a matter of legal drafting and, in general, we consider the aforementioned changes in the law as being positive.


  1. The Law of the Republic of Kazakhstan No. 126-III "On Project Financing and Securitization" dated 20 February 2006 (the "Kazakhstan Law on Project Financing and Securitisation").
  2. The Civil Code of the Republic of Kazakhstan (General Part) dated 27 December 1994 and the Civil Code of the Republic of Kazakhstan (Special Part) No. 409-I dated 1 July 1999 (together, the "Civil Code").
  3. The Law of the Republic of Kazakhstan No. 2444 "On Banks and Banking Activity in the Republic of Kazakhstan" dated 31 August 1995 (the "Banking Law").

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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