The president of Kazakhstan signed a new law on 30 December 2021 introducing changes into several legislative acts. The most significant amendments in Law No. 95-VII concern regulation of state inspections and are apparently intended to better protect the legitimate interests of businesses.
Below is a summary of the key changes concerning the conduct of state inspections introduced into the Entrepreneurial Code and other laws by Law No. 95-VII, “On Amendments into Certain Legislative Acts of the Republic of Kazakhstan on Implementation of a New Regulatory Policy in the Sphere of Entrepreneurship and Redistribution of Functions of Law Enforcement Authorities” (Amendment Law).
REDUCED GROUNDS FOR UNSCHEDULED INSPECTIONS
Starting from 1 January 2022, the Amendment Law reduces the list of grounds for unscheduled inspections by state authorities by excluding:
- Notifications of third parties concerning specific facts of violations of the requirements of the law, failure to eliminate which will cause harm to human life and health.
- Notifications of third parties concerning specific cases of harm to life, human health, the environment, and legitimate interests of individuals, legal entities, or the state.
- Information (emergency notifications) about the occurrence of death in accordance with the law of Kazakhstan.
- Notifications from consumers whose rights have been violated.
- Cross-inspections of a third party that was in commercial relations with a person under control, in order to obtain information necessary for verification of facts.
- The examination of products in case of violation of the requirements of Kazakhstan law in the area of sanitary and epidemiological welfare.
- Information (emergency notifications) submitted by a state healthcare authority on the occurrence or threat of occurrence and spread of an epidemic or outbreaks.
Further, according to the Amendment Law, no complaint of a person alleging violation(s) of law will be sufficient in order to initiate an unscheduled inspection. Starting from 1 January 2023, state authorities will only be able to run unscheduled inspections in the presence of “compelling grounds” and supporting evidence enclosed to such complaint. These changes should reduce inefficient spending of state resources on one hand, and restrict the possibility for the state authorities to conduct unscheduled inspections on the other.
NEW TYPE OF PREVENTIVE CONTROL
The Amendment Law expands types of a so-called preventive control via introducing a new type of control: the purchase of goods for the purposes of subsequent testing thereof vis-à-vis compliance with applicable requirements.
BAN ON INSPECTIONS OF SMALL AND MICRO-BUSINESSES
Starting from 1 January 2023, a prohibition to conduct inspections of small and micro-businesses within the first three years of incorporation will apply to any inspections (except for unscheduled inspections). Currently this ban only applies to the inspections conducted on the basis of risk assessment/category of the entity concerned.
REGISTER OF LEGAL ACTS AS A DEFINITION OF SCOPE OF COMPLIANCE
The Amendment Law stipulates that starting from 1 January 2023 the scope of inspections—set of compliance requirements—will be limited by the Register of Mandatory Requirements for Businesses. The register will represent a list of legal acts. Authorities performing state inspections in accordance with the Entrepreneurial Code will not be able to bring entrepreneurs to liability for violation of legal acts not included in the register. Any acts issued as a result of inspection in violation of this restriction will have to be cancelled.
OTHER IMPORTANT CHANGES
Other significant changes introduced by the Amendment Law concern the following (all changes listed below entered into legal force on 11 January 2022):
- Changes to Law No. 480-V dated 6 April 2016 “On Legal Acts”: Previously, state authorities had a right, within their authorities, to provide clarifications of legal acts in relation to a particular situation (usually in response to the relevant request from any person). As per the changes introduced by the Amendment Law, state authorities are now obligated to provide such clarifications in response to relevant requests from individuals and/or legal entities. The clarifications must be full and disclosed on publicly available government websites. In addition, if a person acts in conformity with such clarification, the person cannot be considered to have violated the law, even when the clarification is later declared to be erroneous.
- Changes to Law No. 413-IV dated 1 March 2011 “On State Property”: Pursuant to the changes introduced by the Amendment Law, provisions of Law No. 413-IV applicable to joint stock companies and limited liability partnerships (e.g., procedure for acquisition and alienation of stake in a company; procedure for participation in the management of the company, including cases where a prior approval of competent authority is required for the purposes of voting at the management meetings; procedure of transfer of state property into the charter capital of the company) also apply to legal entities registered in accordance with the law of the Astana International Financial Centre (AIFC) where the state acts as a shareholder, unless AIFC acts provide for a different regulation among the shareholders of legal entities.
- Changes to the Health Code: There are special monitoring groups created in Kazakhstan. The purpose of the monitoring groups is to oversee compliance with sanitary, quarantine, and lockdown measures. The monitoring groups have vast authorities, including to gather photo and video evidence of violations (without interrupting activities of the entities concerned), and, subject to a representative of a relevant state authority accompanying the monitoring group, to suppress violations of lockdown measures (including immediate suspension of the activities of business entities).
Trainee associate Asset Nakupov contributed to this LawFlash.