Issuance of permit for voluntary reorganization of a microfinance organization in the form of conversion into a bank

Required documents to be provided to the Service Provider

1. An application in the form of a paper document certified by the signature of an official of the service recipient or a person authorized by the service recipient to sign the application.
2. A copy of the decision of the general meeting of shareholders of the service recipient on voluntary reorganization in the form of conversion to a bank, containing information about the person authorized to submit the application.
3. Information about shareholders – natural persons and legal entities owning shares of the service recipient in the amount of less than 10 percent, in the form in accordance with Appendices 5 and 6 to this resolution.
4. Information about affiliated entities of the service recipient (in the absence of information on the Internet resource of the financial reporting depository).
5. An action plan for converting the service recipient into a bank that meets the requirements of Article 25-3 of the Law of the Republic of Kazakhstan “On Microfinance Activities”.
6. A bank’s business plan for the next three years after receiving a license to conduct banking and other operations, approved by general meeting of shareholders of the service recipient. Requirements for the content of the business plan are established by the Resolution of the Board of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market dated March 30, 2020 No. 36 “On approval of the Rules for issuing permit to open a bank, a branch of a non-resident bank of the Republic of Kazakhstan, the Rules for licensing banks, branches of non-resident banks of the Republic of Kazakhstan for conducting banking and other operations provided for by the banking legislation of the Republic of Kazakhstan, licensing for conducting banking and other operations carried out by Islamic banks, branches of non-resident Islamic banks of the Republic of Kazakhstan" (registered in the Register of State Registration of Normative Legal Acts under No. 20228), including disclosure of the detailed structure of the bank, strategy of activity, directions and scale of activity, financial prospects (budget, balance sheet, profit and loss account for the first three financial (operational) years, marketing plan (formation of the bank’s clientele), plan for attracting labor resources, organization of risk management.
7. A draft charter with amendments and additions made in order to bring it into compliance with the banking legislation of the Republic of Kazakhstan.
8. Documents and information submitted in accordance with Article 11-1 of the Law of the Republic of Kazakhstan “On Banks and Banking Activities in the Republic of Kazakhstan.
9. Documents and information in the manner submitted in accordance with Article 17-1 of the Banking Law, if it is necessary for the applicant to obtain the status of a major participant in a bank or bank holding company, with the exception of the application and business plan provided for in Article 17-1 of the Banking Law.

The service provider receives information about identity documents confirming that an individual resident of the Republic of Kazakhstan does not have an unexpunged or outstanding criminal record, about state registration (re-registration) of a legal entity from the relevant state information systems through the “electronic government” gateway.

1. The non-compliance of the bank name with the requirements of Article 15 of the Banking Law.
2. The instability of the financial position of the shareholders of the service recipient .
The instability of the financial situation is understood as the presence of the signs established by paragraph 10 of Article 17-1 of the Banking Law.
3. In cases where the shareholder is a natural person or the first head of the executive body or management body of the shareholder-legal entity:

• has an outstanding or unexpunged criminal record;
• held the position of the first head of the management body, the first head of the executive body or his deputy, the chief accountant of a financial organization, including a non-resident financial organization of the Republic of Kazakhstan, for a period no more than one year before the adoption by the authorized body or financial supervisory body of the state of which the resident is a financial organization - a non-resident of the Republic of Kazakhstan, a decision on classifying a bank as an insolvent bank or a forced repurchase of its shares, on depriving the license of a financial organization, including a financial organization - a non-resident of the Republic of Kazakhstan, which entailed their liquidation and (or) cessation of activities in the financial market, or the entry into force of a court decision on the forced liquidation of a financial organization, including a financial organization - a non-resident of the Republic of Kazakhstan, or declaring it bankrupt in the manner established by the legislation of the Republic of Kazakhstan or the legislation of the state of which the financial organization - a non-resident of the Republic of Kazakhstan is a resident.

This requirement applies within five years after the authorized body or financial supervisory body of the state, the resident of which is a financial organization - a non-resident of the Republic of Kazakhstan, makes a decision to classify the bank as an insolvent bank or to compulsorily buy out its shares, to deprive the license of a financial organization, including a financial institution. organizations - a non-resident of the Republic of Kazakhstan, which resulted in their liquidation and (or) termination of activities in the financial market, or the entry into force of a court decision on the forced liquidation of a financial organization, including a financial organization - a non-resident of the Republic of Kazakhstan, or declaring it bankrupt in accordance with the legislation of the Republic of Kazakhstan or the legislation of the state of which the financial organization is a resident - a non-resident of the Republic of Kazakhstan. For the purposes of this subclause, a financial organization also means a branch of a bank - a non-resident of the Republic of Kazakhstan, a branch of an insurance (reinsurance) organization - a non-resident of the Republic of Kazakhstan, a branch of an insurance broker - a non-resident of the Republic of Kazakhstan;

4. Failure to comply with the requirements established by Article 17 of the Banking Law.
5. Refusal to issue consent by the service provider to acquire the status of a major participant in a bank or bank holding company in accordance with Article 17-1 of the Banking Law.
6. Refusal to issue permit to create (acquire) a subsidiary of a bank holding company in accordance with Article 11-1 of the Banking Law.
7. The bank’s business plan and other documents submitted by the service recipient do not show that:

• after the first three financial (operational) years, the bank’s activities will be profitable;
• the bank intends to comply with risk limitation requirements and create an appropriate governance structure;
• the bank has an organizational, accounting and control structure that corresponds to its business plans;

8. Failure to eliminate the service provider’s comments on the submitted documents within the deadline established.
9. The non-compliance of the action plan for converting the service recipient into a bank with the requirements provided for in Article 25-3 of the Law on Microfinance Activities.
10. The financial forecast of the consequences of converting a service recipient into a bank assumes a deterioration in the financial condition of the service recipient as a result of converting the service recipient into a bank and (or) non-compliance with prudential standards by a banking conglomerate, which will include a bank and (or) a bank holding company.
11. Failure by the service recipient to comply with established prudential standards and (or) other mandatory norms and limits during the last three months preceding the date of filing an application for permit to convert a microfinance organization into a bank and (or) during the period of consideration of the application;
12. The service recipient has a valid limited enforcement measure provided for in subparagraph 1) of part one of paragraph 2 of Article 28 of the Law on Microfinance Activities, and (or) administrative penalties for administrative offenses provided for in parts one, 3-1, four of Article 211 and part three of Article 227 of the Code of the Republic of Kazakhstan on Administrative Offenses, on the date of filing the application and during the period of consideration of documents;
13. Failure to comply with the conditions of Article 25-1 of the Law on Microfinance Activities, Articles 18 and 21 of the Law on Banks.

• appeal;
• initiative of an administrative body or official.

 General requirements for the appeal

The appeal submitted in hard copy or electronic form shall indicate:

• Full name, IIN, postal address of a natural person, BIN of a legal entity;
• name of administrative body, official to whom the appeal is submitted;
• the essence of an appeal;
• date of filing an appeal;
• signature of the applicant or his representative;
• other information provided for by legislation of the Republic of Kazakhstan.

If the administrative procedure is on a paid basis, the applicant must submit a document confirming the payment.

Source: Administrative Procedural Code of Republic of Kazakhstan