On Development of Cotton Industry

The Law of the Republic of Kazakhstan dated 21 July, 2007 No.298

Unofficial translation

      The Law determines the legal, organizational and economic basis of development of cotton industry and regulates the social relations, arising in the process of production, consumption, storage and sales of cotton in the Republic of Kazakhstan.

Chapter 1. General provisions

Article 1. Basic definitions used in the Law

      The following basic definitions shall be used in the Law:
      1) holder of mortgage certificate – individual or legal entity, being a pledge holder of cotton in the obligation, certified by mortgage certificate;
      2) holder of warehouse certificate – owner of cotton, pawned, in the cases of commission of endorsement - endorser in the warehouse certificate;
      3) lint – fibrous cover of seeds, being after separation of lint cotton from cotton seeds;
      4) cotton - raw cotton, lint cotton, cotton seeds;
      5) owner of cotton – individual or legal entity, having a raw cotton and (or) lint cotton, and (or) cotton seeds of the right of ownership;
      6) cotton collection point – specialized construction, intended for the reception, storage and distribution of raw cotton;
      7) fund of guaranteeing of performance of obligations on cotton receipts – legal entity, carrying out its activity in order of ensuring of protection of rights and legal interests of holders of cotton receipts from nonperformance of obligations by the cotton processing organizations on cotton receipts, issued by them;
      8) activity on rendering of services on warehouse activity with issuance of cotton receipts – an activity, carrying out by the cotton processing organizations on storage of raw cotton, storage, distribution of lint cotton and cotton seeds and primary consumption of raw cotton and lint cotton;
      9) cotton receipt – double warehouse certificate, issued by the cotton processing organizations in support of acceptance of raw cotton for storage and (or) primary consumption; lint cotton and cotton seeds – for storage;
      10) holder of cotton receipt – owner of cotton, transferred a raw cotton for the storage and (or) primary consumption to the cotton processing organization; lint cotton and cotton seeds – for the storage, in the cases of commission of endorsement - endorser in the cotton receipt;
      11) participants of cotton market – individuals and legal entities, participating in production, primary consumption of raw cotton to the lint cotton and sales of cotton;
      12) monitoring of cotton market – a set of measures, directed to the collection, consumption and data analysis of cotton market, including production, consumption, storage and sales of cotton, carrying out by the participants of cotton market;
      13) quality of cotton – a set of consumer properties of cotton, determining compliance with the requirements of regulatory documents on standardization;
      14) cotton processing organization – a legal entity, having a cotton gin plant of the right of ownership, rendering services on warehouse activity with issuance of cotton receipt;
      15) an authorized body in the field of development of cotton industry (hereinafter – an authorized body) – central executive body, determined by the Government of the Republic of Kazakhstan, carrying out the state regulation of cotton industry;
      16) a cotton gin plant – specialized construction, intended for the primary consumption of raw cotton to the lint cotton;
      17) a lint cotton – basic product, obtained upon primary consumption of raw cotton;
      18) bale of lint cotton – defined volume of lint cotton, pressed by special method, obtained in the result of primary consumption of raw cotton and lint cotton, with compliance with the requirements of technical regulations and regulatory documents on standardization;
      19) expertize of quality of lint cotton - set of measures, directed to the establishment and approval of actual quality level of lint cotton, including selection and testing of the sample, drawing-up of the passport of quality of lint cotton;
      20) passport of quality of lint cotton – a document, certifying actual quality level of lint cotton and their compliance with the requirements of regulatory documents on standardization and (or) contracts;
      21) cotton seeds – fruit of cotton plant, received upon primary consumption of raw cotton;
      22) cotton planting – an industry of crop growing on production of cotton;
      23) specialized cotton crop rotation - scientifically based rotation of cotton plant with other agricultural plants, preventing to the accumulation of diseases and blasts, contributing to the conservation and improvement of ground-water fertility, increase in productivity and quality of raw cotton, wherein the share of cotton plant in the structure of planted area in the territory of land-utilization of one agricultural goods producers shall consist not more than seventy percent;
      24) an agreement of consumption – a standard contract on primary consumption of raw cotton to the lint cotton;
      25) storage agreement – a standard contract of storage of raw cotton;
      26) an expert organization – a legal entity, carrying out an expertize of quality of lint cotton and issuance of passport of quality of lint quality in accordance with the requirements, established by the legislation of the Republic of Kazakhstan;
      27) raw cotton – a lint with unseparated seeds;
      28) primary consumption of raw cotton to the lint cotton – a complex of technological operations on cleaning of raw cotton to the lint cotton, seeds, lint, fibrous waste (motes containing and fluff containing);
      29) examination of the quality of raw cotton – a set of measures, directed to the establishment and approval of actual quality level of raw cotton, including selection and testing of the sample, execution of certificate of the quality of raw cotton;
      30) offals of raw cotton – seeds, lint, fibrous waste (motes containing and fluff containing);
      31) storage of raw cotton – a complex of technological operations on reception, storage and distribution of raw cotton;
      32) production of raw cotton – a complex of agro technological measures, directed to the cultivation of raw cotton.
      Footnote. Article 1 is in the wording of the Law of the Republic of Kazakhstan dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012).

Article 2. The legislation of the Republic of Kazakhstan on development of cotton industry

      1. The legislation of the Republic of Kazakhstan on development of cotton industry is based on the Constitution of the Republic of Kazakhstan and consist of this Law and other regulatory legal acts of the Republic of Kazakhstan.
      2. If the international treaty, ratified by the Republic of Kazakhstan establishes the other rules, than those contained in this Law, the rules of international treaty shall be applied.

Chapter 2. The state regulation of cotton industry

Article 3. The purpose of the state regulation of cotton industry

      The purpose of the state regulation of cotton industry shall be development of cotton industry, competitive growth of cotton on the basis of introduction of scientifically based technologies, technical regulation and industrialization of cotton plant, its integration with textile and food industry.

Article 4. Forms of the state regulation of cotton industry

      The state regulation of cotton industry shall be carried out by:
      1) the state support of development of cotton industry;
      2) development of the system of guaranteeing of performance of obligations on cotton receipts;
      3) stimulation of integration of cotton industry and textile and food industry in recognition of principles of cluster development;
      4) licensing of activity on rendering of services on warehouse activity with issuance of cotton receipts and the state control of activity of cotton processing organizations;
      5) technical regulation;
      6) determination of expert organization, as well as control of observance by it the rules of execution of an examination of the quality of lint cotton;
      7) monitoring of cotton market;
      8) monitoring of compliance with agricultural goods producers of specialized cotton crop rotation in the zones of cultivation of cotton plant;
      9) issuance of regulatory legal acts in the field of development of cotton industry.
      Footnote. Article 4 as amended by the Law of the republic of Kazakhstan dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012).

Article 5. The state support of development of cotton industry

      The state support of development of cotton industry shall be carried out on the following directions:
      1) formation and implementation of stimulating investment, tax, fiscal and customs policy;
      2) organization at the expense of budget funds of the following measures:
      formation of the state resources of cotton seeds, used for the seed purposes;
      conducting of scientific researches and measures in the field of production, storage and consumption of cotton, selection and seed production, protection and quarantine of plants, improvement, conservation and increasing of soil fertility;
      introduction of scientifically based technologies of production of raw cotton;
      optimization of cropping pattern upon production of raw cotton and implementation of specialized cotton crop rotations;
      performance of reclamation and irrigative works;
      conducting of systematic observations and accounting of becoming, development and propagation of blasts, deceases and weeds, as well as conducting of management with extremely dangerous hazardous organisms in the zones of cultivation of cotton plant;
      preparation of specialists for the cotton industry and textile industry in accordance with the state educational order;
      subsidization of cost of services on water delivery to the agricultural goods producers;
      subsidization of cost of expertize of the quality of raw cotton;
      3) appropriation of funds to the specialized organizations for the supply of leasing activities of plant and equipment to the producers of cotton and cotton processing organizations;
      4) issue of seed loans to the producers of raw cotton from the state resources of cotton seeds;
      5) information support of participants of cotton market;
      6) development of seed production, as well as compensation for expenses of production of original cotton seeds, ensuring cheapening of the cost of elite seeds, seeds of first and second reproduction of cotton plant, implementing by domestic agricultural goods producers, determination of graded and sowing qualities of seeds of cotton plant;
      7) organization of the system of crediting of participants of cotton market;
      8) insurance of sowing of cotton plant in accordance with the legislation of the Republic of Kazakhstan on compulsory insurance in the plant production;
      9) contribution to the sustainable use of water resources, introduction of water-efficient process, creation and development of rural consumer cooperatives of water users and their associations (unions).
      Footnote. Article 5 as amended by the Law of the Republic of Kazakhstan dated 11.12.2009 No. 229-IV (the order of enforcement see Article 2).

Article 6. Competence of the Government of the Republic of Kazakhstan

      The competence of the Government of the Republic of Kazakhstan shall include:
      1) development of basic directions of the state policy in the field of development of cotton industry, strategic and tactical measures on its implementation;
      2) Is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);
      3) Is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);
      3-1) Is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);
      4) Is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);
      5) determination of expert organization;
      6) Is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);
      7) Is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);
      8) carrying of cooperation and interaction with international organizations on issues of development of cotton industry;
      9) Is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);
      10) performing other functions, imposed on it by the Constitution, the Laws of the Republic of Kazakhstan and acts of the President of the Republic of Kazakhstan.
      Footnote. Article 6 as amended by the Laws of the Republic of Kazakhstan dated 11.12.2009 No. 229-IV (the order of enforcement see Article 2); dated 05.07.2011 No. 452-IV (shall be enforced from 13.10.2011); dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012); dated 10.07.2012 No. 36-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);

Article 7. Competence of the authorized body

      Competence of the authorized body shall include:
      1) ensuring of formation and implementation of the state policy in the field of development of cotton industry;
      1-1) carrying out of coordination and methodological guideline of local executive bodies in the field of development of cotton industry;
      2) Is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);
      3) development of rules of conducting of monitoring of cotton market;
      4) development and approval of the form (sample) and description of cotton receipt;
      5) development of projects of qualifying requirement to:
      the activity on rendering of services on warehouse activity with issuance of cotton receipts;
      the expert organization;
      6) development of:
      procedure of conducting of expertize of quality of raw cotton and issuance of certificate on the quality of raw cotton;
            form (sample) of certificate on the quality of raw cotton;
      form (sample) of passport of the quality of lint cotton;
      7) Is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);
      8) Is excluded by the Law of the Republic of Kazakhstan dated 13.06.2013 No. 102-V (shall be enforced upon expiry of ten calendar days after its first official publication).
      9) Is excluded by the Law of the Republic of Kazakhstan dated 13.06.2013 No. 102-V (shall be enforced upon expiry of ten calendar days after its first official publication).
      10) Is excluded by the Law of the Republic of Kazakhstan dated 13.06.2013 No. 102-V (shall be enforced upon expiry of ten calendar days after its first official publication).
      11) Is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);
      12) Is excluded by the Law of the Republic of Kazakhstan dated 13.06.2013 No. 102-V (shall be enforced upon expiry of ten calendar days after its first official publication).
      13) Is excluded by the Law of the Republic of Kazakhstan dated 13.06.2013 No. 102-V (shall be enforced upon expiry of ten calendar days after its first official publication).
      14) preparation and making suggestions on development of technical regulations, actualization and unification of regulatory documents on standardization;
      15) development and approval of provision on the state inspector in the cotton industry;
      16) development of the list and forms of accounting documents, terms of presentation of accounts on issues of compliance with the qualifying requirements to the activity on rendering of services on warehouse activity with issuance of cotton receipts;
      17) development of standard forms of agreements of storage and consumption;
      18) development of projects of:
      rules of execution of an examination of quality of lint cotton and issuance of passport of quality of lint cotton;
      rules of activity and liquidation of funds of guarantee of performance of obligations on cotton receipts;
      rules of participation of cotton processing organizations in the system of guarantee of performance of obligations on cotton receipts;
      rules of receipt of guarantees of funds of guarantee of performance of obligations on cotton receipts;
      rules of liquidation of obligations by the funds of guarantee of performance of obligations on cotton receipts;
      rules of maintaining of quantitative and qualitative records of cotton;
      rules of formation, storage and use of the state resources of cotton seeds;
      rules of subsidization of expertize of quality of raw cotton upon reception to the cotton processing organization;
      rules of organization of technical process of primary consumption of raw cotton and lint cotton;
      rules of issuance, circulation, cancellation and maturity of cotton receipts;
      rules of conducting of temporary management of cotton processing organization;
      19) Is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);
      20) Is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);
      21) development and approval of the forms of compulsory departmental accountability, prompt sheets, risk assessment criteria, semi-annuals plans of conduct of verifications in accordance with the Law of the Republic of Kazakhstan “On the state control and supervision in the Republic of Kazakhstan”;
      22) exercise of other powers, provided by this Law, other Laws of the Republic of Kazakhstan, acts of the President of the Republic of Kazakhstan and the Government of the Republic of Kazakhstan.
      Footnote. Article 7 as amended by the Laws of the Republic of Kazakhstan dated 17.07.2009 No. 188 (the order of enforcement see Article 2); dated 11.12.2009 No. 229-IV (the order of enforcement see Article 2); dated 19.03.2010 No. 258-IV; dated 06.01.2011 No. 378-IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2011 No. 452-IV (shall be enforced from13.10.2011); dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012); dated 10.07.2012 No. 36-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 13.06.2013 No. 102-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);

Article 8. Competence of local executive bodies of regions, cities of republican significance and the capital

      Competence of local executive bodies of regions, cities of republican significance and the capital shall include:
      1) implementation of the state policy in the field of development of cotton industry;
      2) licensing of activity on rendering of services on warehouse activity with issuance of cotton receipts;
      3) participation in conducting of monitoring of cotton market in accordance with the rules, approved by the authorized body;
      4) monitoring of observance by the agricultural goods producers of specialized cotton crop rotations in the zones of cultivation of cotton plant;
      5) licensing supervision of cotton processing organizations, including:
      annual scheduled inspection of cotton processing organization in order of protection of interests of owners of cotton concerning compliance with the qualifying requirements and readiness for acceptance of raw cotton of new crop on the basis of predicated schedules;
      drawing up of acts of verification of cotton processing organizations;
      6) introduction of suggestions on improvement of regulatory documents on standardization, regulatory legal acts in the field of development of cotton industry into the authorized body;
      6-1) filing of application in a court on introduction and early termination of temporary management of cotton processing organization;
      7) suspension of a license for the right to carrying out of activity with issuance of cotton receipts as a whole or in a part of conducting of separate transactions according to the procedure, provided by the legislation of the Republic of Kazakhstan on administrative offences, as well as filing of a statement of claim in a court on termination of a license for the right to carrying out of activity on rendering of services on warehouse activity with issuance of cotton receipts;
      8) organization of execution of an examination of the quality of raw cotton;
      9) control of:
      security and quality of cotton;
      activity of accredited test laboratories (centers);
      activity of expert organization;
      observance of rules of execution of an examination of quality of lint cotton and issuance of passport of quality of lint cotton by the expert organization;
      10) carrying out of inspection (verification) of activity of cotton processing organizations;
      11) issuance of binding written prescriptions on elimination of detected violations of the legislation of the Republic of Kazakhstan on development of cotton industry according to the terms, established in the prescription;
      12) commencement of action in a court on compulsory liquidation of cotton processing organization;
      13) imposition of a temporary prohibition on sale of cotton upon availability of grounds, provided by paragraph 2 of Article 32 of this Law;
      14) control of observance of rules by the cotton processing organizations:
      maintenance of quantitative and qualitative records of cotton;
      formation, storage and use of the state resources of cotton seeds;
      issuance, application, cancellation and repayment of cotton receipts;
      14-1) approval of semi-annual plans of conduct of verifications;
      14-2) adoption decision on introduction of temporary management by the cotton processing organization;
      14-3) ensuring the formation and management of cotton seeds by the state resources and control of their quantitative and qualitative state;
      14-4) control of observance of rules of issuance, application, cancellation and repayment of cotton receipts by the cotton processing organizations;
      14-5) annual control of observance of rules of execution of an examination of quality of lint cotton and issuance of passport of quality of lint cotton by the expert organization;
      15) exercise of other powers, imposed on local executive bodies by the legislation of the Republic of Kazakhstan in the interests of local state management.
      Footnote. Article 8 is in the wording of the Law of the Republic of Kazakhstan dated 13.06.2013 No. 102-V (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);

Chapter 3. The state control in the field of security and quality of cotton

      Footnote. The title of chapter 3 is in the wording of the Law of the Republic of Kazakhstan dated 17.07.2009 No. 188 (the order of enforcement see Article 2).

Article 9. The state control in the field of security and quality of cotton

      1. The state control in the field of security and quality of cotton shall be carried out by the local executive bodies of regions, cities of republican significance and the capital within the competence and directed to the enforcement of requirements of the legislation of the Republic of Kazakhstan, presenting to the security and quality of the cotton.
      2. The state control in the field of security of cotton shall be carried out in order of non-admission of risk, related to the causing of harm to life, human health, environment, as well as plant and animal life.
      3. The state control in the field of quality of cotton shall include:
      1) control of determination of the quality level of cotton upon acceptance to the storage and consumption and sale in order of protection of interests of owners of cotton on the basis of official applications (complaints) of participants of cotton market;
      2) control of quantitative and qualitative state of stored and processed cotton in order of protection of interests of owners of cotton on the basis of official applications (complaints) of participants of cotton market.
      4. The state control in the field of security and quality of cotton shall be carried out in the form of verification and other forms.
      5. Verification shall be carried out in accordance with the Law of the Republic of Kazakhstan “On the state control and supervision in the Republic of Kazakhstan”. Other forms of the state control shall be carried out in accordance with this Law.
      Footnote. Article 9 is in the wording of the Law of the Republic of Kazakhstan dated 17.07.2009 No.188 (the order of enforcement see Article 2); as amended by the Laws of the Republic of Kazakhstan dated 19.03.2010 No. 258-IV; dated 06.01.2011 No. 378-IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2011 No. 452-IV (shall be enforced from 13.10.2011); dated 13.06.2013 No. 102-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);

Article 10. Examination of the quality of raw cotton

      1. Examination of the quality of raw cotton shall carry out testing laboratories (centers), accredited according to the procedure, established by the legislation of the Republic of Kazakhstan.
      2. Participant of cotton market shall have a right to apply to the accredited test laboratory (center) for execution of an examination of the quality of raw cotton on a contractual basis.
      3. In order of protection of interests of participants of cotton market, control of activity of accredited test laboratories (centers) on maintenance of order of examination of the quality of raw cotton and issuance of certificate of the quality of raw cotton shall be carried out by the authorized body jointly with the authorized state body on technical regulation and metrology.
      Footnote. Article 10 as amended by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);

Article 11. Examination of the quality of lint cotton

      1. Examination of the quality of lint cotton is compulsory and shall be carried out on each bale of lint cotton (bale).
      2. Examination of the quality of lint cotton shall be carried out at the expense of budget funds of expert organization, determining by the Government of the Republic of Kazakhstan in accordance with the qualifying requirements, approved according to the subparagraph 5) of Article 7 of this Law.
      If it is necessary, the owner of lint cotton shall have a right to execute repeated examination of the quality of lint cotton in other expert organization at the expense of own funds.
      3. An authorized body shall annually carry out control of observance of rules of execution of an examination of the quality of lint cotton and issuance of the passport of the quality of lint cotton by the expert organization.
      4. Sale of lint cotton shall not be allowed without passport of the quality of lint cotton.
      Footnote. Article 11 as amended by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication);

Chapter 4. Activity of agricultural goods producers, engaged in production of cotton, cotton processing organizations and service and procurement centers

      Footnote. The title of charter 4 is in the wording of the Law of the Republic of Kazakhstan dated 15.07.2011 № 461-IV (вводится в действие с 30.01.2012).

Article 12. Rights and obligations of agricultural goods producers, engaged in production of cotton

      1. Agricultural goods producers, engaged in production of cotton shall have a right to:
      1) cultivate a raw cotton on plots of land, provided in accordance with the land legislation of the Republic of Kazakhstan;
      2) possess, use and manage their cotton at their own convenience;
      3) obtain the state support of development of cotton industry;
      4) have other rights in accordance with the Laws of the Republic of Kazakhstan.
      2. Agricultural goods producers, engaged in production of cotton, shall be obliged to:
      1) carry out production of cotton by the methods, ensuring reproduction of fertility of lands of agricultural designation, as well as excluding or limiting of harmful effect of such activity to the environment;
      2) incur other obligations in accordance with the Laws of the Republic of Kazakhstan.

Article 13. Cotton processing organization

      1. Cotton processing organization shall render the service on warehouse activity with issuance of cotton receipts on the basis of license.
      A legal entity, not having a license for the right to carrying out of activity on rendering of services on warehouse activity with issuance of cotton receipts, shall not have a right to use the words “cotton processing organization”, “cotton gin plant”, “cotton collection point” or the words, derived from it, in their name, trademarks, documents, announcements or advertisements.
      2. Cotton processing organization shall be recognized as commodity warehouse of general use.
      3. Cotton processing organization shall have:
      1) on the cotton gin plant:
      at least one cotton collection point;
      equipment, intended to the carrying out of technological operations on a primary consumption of raw cotton to the lint cotton;
      weighing equipment;
      ventilation equipment;
      cargo handling equipment;
      firefighting equipment;
      engineering and manufacturing laboratory for determination of quality of cotton;
      specially designated space for the storage of cotton;
      2) on the cotton collection point, located outside of the location of the cotton gin plant:
      open (covered) area for warehousing and storage of raw cotton;
      weighing equipment;
      ventilation equipment;
      laboratory equipment for selection of tests and evaluation of quality of raw cotton;
      cargo handling equipment;
      firefighting equipment;
      Territory of cotton gin plant, as well as cotton collection point, located outside of the location of the cotton gin plant, shall be fenced.
      4. Cotton processing organization shall be obliged to:
      1) observe conditions of acceptance and storage of cotton and ensure activity on rendering of services on warehouse activity with issuance of cotton receipts in accordance with the requirements, established by the regulatory legal acts, technical regulations and regulatory documents on standardization;
      2) ensure quantitative and quality security of accepted for the storage and (or) consumption of cotton in accordance with issued of cotton receipts;
      3) sale the stored cotton at the request of holder of cotton receipt in exchange for cotton receipt in accordance with conditions of storage agreement and (or) consumption in the absence of debts for the rendering services;
      4) provide selection of tests of cotton for the verification of its quality at the request of holder of cotton;
      5) meet obligations before the holders of cotton, provided by the storage agreement and (or) agreement of consumption.
      Footnote. Article 13 as amended by the Law of the Republic of Kazakhstan dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012).

Article 14. Payment for services of cotton processing organization

      Payment for services of cotton processing organization shall be carried out in accordance with the storage agreement and (or) agreement of consumption by money or transfer of appropriate amount of cotton of cotton processing organization with commission of endorsement on a cotton receipt by the holder of cotton.

Article 15. Restriction of activity of cotton processing organization

      1. Cotton processing organizations shall be prohibited to carry out an entrepreneurial activity, not related to the activity on rendering of services on warehouse activity with issuance of cotton receipts, as well as to issue a guarantee and present their property in a pledge on obligations of third persons, except for:
      1) production and sale of products of consumption of lint cotton and offals of raw cotton, textile products;
      2) rendering of services of customs warehouse;
      3) provision of cotton processing organization in a pledge of property complex in a whole in accordance with the civil legislation of the Republic of Kazakhstan.
      Cotton processing organization shall be obliged to ensure separate record-keeping of operations of activity with issuance of cotton receipts and activity, not related with warehouse activity with issuance of cotton receipts.
      2. Alienation of basic assets by the cotton processing organization, without of which the carrying out of activity on rendering of services on warehouse activity with issuance of cotton receipts becomes completely impossible or significantly deteriorates, shall be prohibited.
      3. Cotton processing organizations shall be prohibited to dispose cotton, putting in storage and (or) consumption.
      Footnote. Article 15 as amended by the Laws of the Republic of Kazakhstan dated 30.06.2010 No. 297-IV (shall be enforced from 01.07.2010); dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012).

Article 16. Recording and accounting of cotton processing organization

      1. Cotton processing organization shall be obliged to ensure strict recording and storage of documents, reflecting operations with cotton, made by it.
      2. The list and forms of documents of recording, terms of presentation of accounts on issues of compliance with the requirements, presenting to the activity on rendering of services on warehouse activity with issuance of cotton receipts, maintenance of monitoring of cotton market, shall be approved by the Government of the Republic of Kazakhstan.
      2-1. Departmental statistical observations shall be conducted by the authorized body in accordance with the statistical methodology, approved by the authorized body in the field of the state statistics.
      3. The list of the documents, subject to the storage, the terms of their storage shall be established by the rules of maintenance of quantitative and quality recording of cotton.
      4. Cotton processing organization shall be obliged to provide information, related with its activity, necessary for conducting of monitoring of cotton market at the written request of the authorized body and local executive body of region.
      Footnote. Article 16 as amended by the Laws of the Republic of Kazakhstan dated 19.03.2010 No. 258-IV; dated 05.07.2011 No. 452-IV (shall be enforced from 13.10.2011); dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012).

Article 17. System of guaranteeing of performance of obligations on cotton receipts

      1. Cotton processing organization shall be obliged to ensure performance of their obligations before the holder of cotton receipts by participation in the system of guaranteeing of performance of obligations on cotton receipts.
      2. Participation of cotton processing organization in the system of guaranteeing of performance of obligations on cotton receipts shall be carried out on the basis of agreement of participation, concluded with the fund of guaranteeing of performance of obligations on cotton receipts.
      3. Funds of guaranteeing of performance of obligations on cotton receipts shall be held vicariously liable for the obligations of their participants in accordance with the civil legislation of the Republic of Kazakhstan.

Article 18. An audit of cotton processing organization

      1. Cotton processing organization shall be obliged to conduct an audit of annual financial accountability in accordance with the legislation of the Republic of Kazakhstan.
      2. If the cotton processing organization is avoided from conduct of an audit, an audit may be appointed by the decision of the court at the suit of any interested person.
      3. Implementation of an audit of internal audit service of cotton processing organization shall not release from their responsibility of conduct of an audit.

Article 19. Peculiarities of alienation (acquisition) of property of cotton processing organization

      1. Cotton gin plant shall be indivisible property and alienated (acquired) as indivisible property, except for the cases:
      1) alienation (acquisition) of cotton collection point, located outside of the location of the cotton gin plant;
      2) termination of activity on rendering of services on warehouse activity with issuance of cotton receipts and absence of outstanding obligations before the holders of cotton receipts, approved by the state inspector of cotton industry;
      3) realization of property upon liquidation of cotton organization.
      2. Cotton processing organization shall be obliged to inform in a written form the holders of cotton receipts, known to it, on alienation of property, not later than two months up to alienation of cotton gin plant or cotton collection point, located outside of the location of the cotton gin plant, as well as to place the relevant announcement in the republican periodical print publications on the state and Russian languages.
      3. Transactions on sale of cotton gin plant or cotton collection point, located outside of the location of the cotton gin plant, made by the cotton processing organization with violation of paragraphs 1 and 2 of this Article, may be recognized by court as invalid at the suit of holders of cotton receipts and other interested persons.
      4. Performance of obligations, subsequent upon the cotton receipts, issued by the former owner of cotton gin plant (cotton collection point, located outside of the location of the cotton gin plant), shall be imposed on the acquirer of cotton gin plant (cotton collection point, located outside of the location of the cotton gin plant) or person, received such property according to the procedure of enforcement of court decision or arbitration court, in the amount, established by the inventory report of the residues of cotton, drew up by the commission on receipt and transfer of property and approved by the state inspector of cotton industry.
      In the case, if the inventory report of residues of cotton is not drawn up, performance of obligations of all cotton receipts, issued by the cotton processing organization – former owner of property:
      1) shall be imposed on the new owner of this cotton gin plant upon alienation of cotton gin plant;
      2) shall be carried out by the former owner of this cotton collection point upon alienation of cotton collection point, located outside of the location of the cotton gin plant.
      5. New owner of cotton gin plant and (or) cotton collection point, located outside of the location of the cotton gin plant, shall carry out consumption and storage of cotton, received by the inventory report of residues of cotton, under conditions of consumption agreement, previously concluded between former owner and holder of cotton, before the expiry of the term of effect of such agreement.
      6. Alienation of property by the cotton processing organization, being a market entity, occupying a dominant position on the market, as well as property acquisition of cotton processing organization by person, occupying a dominant position on the market, shall be carried out in recognition of requirements, established by the antimonopoly legislation of the Republic of Kazakhstan.
      Footnote. Article 19 as amended by the Laws of the Republic of Kazakhstan dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012); dated 13.06.2013 No. 102-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Chapter 5. Cotton receipt

Article 20. Cotton receipt

      1. Cotton processing organization shall issue a cotton receipt on the basis of storage agreement and (or) consumption agreement.
      2. Cotton receipt shall consist of two parts: warehouse certificate from mortgage certificate, which if necessary may be separated from one another. Cotton receipt and each of its parts shall be the order non-emission securities.
      3. Each of the parts of cotton receipt shall contain the following compulsory requisites:
      1) code of cotton processing organization, assigned by the licensor;
      2) current number of cotton receipt on register of cotton receipts;
      3) series and number of blank cotton receipt;
      4) name, location and business identification number of cotton processing organization, received a cotton;
      5) shall be considered to have lost force by the Law of the Republic of Kazakhstan dated 24.12.2012 No. 60-V (shall be enforced from 01.01.2013);
      5-1) information about the owner of cotton: surname, name, patronymic (in its existence) of individual or name of legal entity, place of residence of individual or location of legal entity; identification number;
      6) requisites of documents, certifying graded and sowing qualities of seeds;
      7) qualitative and quantitative indices of cotton;
      8) storage area of cotton: location of cotton gin plant and (or) cotton collection point, located outside of the location of the cotton gin plant;
      9) period of storage and (or) consumption of raw cotton, period of storage of cotton seeds and lint cotton;
      10) requisites (number and date of compilation) of storage agreement and (or) agreement of consumption;
      11) a mark on participation of cotton processing organization in the fund of guaranteeing of performance of obligations on cotton receipts;
      12) the date of issue of cotton receipt;
      13) signature of authorized body and seal of cotton processing organization;
      14) name of relevant part of cotton receipt;
      15) a mark on payment for storage.
      4. A document, inconsistent with requirements, established by paragraph 3 of this Article, shall not be a cotton receipt.
      5. Upon separation of mortgage certificate from warehouse certificate, a mark, containing the following information, shall be made on the warehouse certificate:
      1) surname, name, patronymic (in its existence) and place of residence of endorser - in relation of individual; name and location of endorser - in relation of legal entity;
      2) a subject, amount of obligation, secured by pledge, including rate of remuneration on it, deadline for the fulfilment of the obligation;
      3) signature of endorser;
      4) the date of separation of mortgage certificate.
      6. Upon separation of mortgage certificate from warehouse certificate, a mark, containing the following information, shall be made on the mortgage certificate:
      1) surname, name, patronymic (in its existence) and place of residence of endorser - in relation of individual; name and location of endorser - in relation of legal entity;
      2) a subject, amount of obligation, secured by pledge, including rate of remuneration on it, deadline for the fulfilment of the obligation;
      3) signature of endorser;
      4) the date of separation of mortgage certificate.
      7. Cotton processing organization shall be obliged to present to the authorized body a card with surname, name, patronymic (in its existence) of individuals, authorized to sign the cotton receipts, samples of signatures, as well as a sample of seal impression, bringing on a cotton receipt.
      8. Inconsistency of signs, seal impression on a cotton receipt to the samples of signatures and seal impressions, specified in a card, presenting to the authorized body, shall be a ground for recognition of this cotton receipt as invalid.
      Footnote. Article 20 as amended by the Law of the Republic of Kazakhstan dated 24.12.2012 No. 60-V (the order of enforcement see Article 2); dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 21. Procedure of issuance of cotton receipt

      1. A cotton receipt shall be issued for each batch of homogeneous on the quality of cotton. Number of issued of cotton receipts for the total volume of delivered cotton shall be determined by the owner of cotton on its application.
      Cotton processing organization shall issue a cotton receipt after batching on term not later than three calendar days from the date of filing of an application.
      2. Cotton receipts shall be issued to the owner of cotton with registration and under its signature in the register of cotton receipts, which is maintained by the cotton organization in chronological order.
      3. New cotton receipts shall be issued at the request of holders of cotton receipts according to the procedure, established by the legislation of the Republic of Kazakhstan, in the cases of:
      1) absence of white space for endorsing on a cotton receipt;
      2) physical depreciation of cotton receipt;
      3) exchange of cotton receipt;
      4) loss of cotton receipt.
      4. An activity, carrying out in the service and preparation center, shall not subject to licensing. Persons, carrying out activity in the service and preparation center, shall have a right to issue the cotton receipts.
      Footnote. Article 21 as amended by the Law of the Republic of Kazakhstan dated 11.12.2009 No. 229-IV (the order of enforcement see Article 2).

Article 22. Transfer of rights on cotton receipt and its parts

      1. Rights on cotton receipts and its parts shall be transferred by commission on it indorsements – endorsement.
      2. Transfer of rights on unseparated cotton receipt shall be carried out by commission of endorsement only on a warehouse certificate.
      3. Separation of mortgage certificate from warehouse certificate shall be carried out upon pledge of cotton in accordance with paragraphs 5 and 6 of Article 20 of this Law.

Article 23. Rights of holders of cotton receipt and its parts

      1. Holder of cotton receipt shall have a right to disposition of cotton in a full volume, stored on cotton gin plant (cotton collection point) of cotton processing organization.
      2. Holder of warehouse certificate, containing details on pledge, shall have a right to dispose of cotton, specified in a cotton receipt, but not have a right of demand of issuance of cotton up to cancellation of debt on mortgage certificate according to the procedure, established by the legislation of the Republic of Kazakhstan.
      3. Holder of mortgage certificate shall have a right to:
      1) require from holder of warehouse certificate, separated a mortgage certificate from warehouse, performance of obligations, certified by the mortgage certificate;
      2) transfer a mortgage certificate and a right on it to the third persons;
      3) enforce a pledge in the case of non-performance of obligation, certified by the mortgage certificate in accordance with the legislation of the Republic of Kazakhstan.

Article 24. Sale of cotton

      1. Sale of cotton shall be carried out at the request of holder of cotton receipt in exchange for originals of warehouse and mortgage certificates, which are subject to cancelation.
      Sale of implemented cotton shall be carried out at the request of its acquirer in exchange for the document on the results of markets in accordance with Article 26 of this Law.
      2. Holder of cotton receipt shall have a right to require sale of cotton by parts. Upon that a new cotton receipt on a residuary volume of cotton shall be issued in exchange for the primary cotton receipt.
      3. For the demand of cotton, a holder of cotton receipt shall be obliged to arrive himself (herself) or send an authorized representative, acting by virtue of powers, based on a power of attorney, the legislation of the Republic of Kazakhstan, decision of a court or administrative act.
      4. Sale of cotton at the request of holder of warehouse certificate, containing details on pledge, shall be carried out according to the procedure, determined by the authorized body.

Article 25. Procedure of exercise of rights on mortgage certificate

      1. Holder of mortgage certificate shall have a right to levy execution upon cotton, specified in a mortgage certificate, only in the case of non-performance or improper performance of obligations, secured by pledge.
      2. In the case of early performance of obligations, secured by mortgage certificate, holder of mortgage certificate shall be obliged to return a mortgage certificate with a mark on termination of a pledge to the known holder of warehouse certificate or cotton processing organization for cancellation.
      3. If at the moment of levy of execution the cotton was in demand by holder of warehouse certificate, cotton processing organization shall represent a document, approving ensuring performance of obligation, specified in a mortgage certificate, to the holder of mortgage certificate.
      After satisfaction of requirements on a document, approving ensuring performance of obligation, specified in a mortgage certificate, holder of mortgage certificate shall return a mortgage certificate with a mark on termination of a pledge for cancellation.

Article 26. Sale of pledge cotton

      1. Sale of pledge cotton shall be carried out in the case of non-performance or improper performance of obligations, certified by the mortgage certificate, authorized person of holder of mortgage certificate.
      An authorized person of holder of mortgage certificate shall inform a pledger on nonperformance of obligations, certified by the mortgage certificate, in a written form, simultaneously publish an announcement on holding tenders in the mass media, including information on time, venue, subject of an auction, procedure for the conduct, formulation of participation in tenders and on basic price of pledge cotton.
      Tenders shall be held not earlier than fourteen calendar days from the date of publication of announcement on holding tenders in the mass media.
      2. The amount, realized from the sale of cotton, shall be distributed in the following sequence: in the first place the expenses, related with organization and holding tenders, are covered, then the compensations are paid to the cotton processing organization on warehouse activity with issuance of cotton receipt, hereinafter the requirements of holder of mortgage certificate are satisfied, remaining portion shall be returned to the holder of warehouse certificate in exchange for the original of warehouse certificate.
      3. Requirements of each turn shall be satisfied after complete satisfaction of requirements of previous order.
      Footnote. Article 26 as amended by the Law of the Republic of Kazakhstan dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012).

Article 27. Loss of cotton receipt or its parts

      1. In the case of loss of cotton receipt or its parts (warehouse or mortgage certificate), a person, lost a cotton receipt or appropriate certificate, shall be obliged to immediately inform on it a cotton processing organization in a written form.
      In the case of loss of warehouse certificate, containing details on pledge, a person, lost a warehouse certificate, shall be obliged to immediately inform on it a holder of mortgage certificate, specified in the warehouse certificate in a written form.
      2. Restoration of rights on lost cotton receipt or its parts (warehouse or mortgage certificate) shall be carried out by a court.

Chapter 6. The state control of activity of cotton processing organizations

Article 28. Inspection (verification) of activity of cotton processing organizations

      1. In order of regulation of cotton market and protection of interests of owners of cotton on the basis of official applications (complaints) of participants of cotton market, an authorized body shall independently and (or) with the assistance of relevant interested state bodies, as well as the state inspector of cotton industry shall conduct inspection (verification) of activity of cotton processing organizations in order to compliance with the requirements, established by the legislation of the Republic of Kazakhstan.
      2. Cotton processing organization shall be obliged to render assistance to the persons, listed in paragraph 1 of this Article, on issues, specified in the task on inspection (verification), ensure an access to all of industrial facilities in the territory of cotton gin plant and cotton collection points, as well as to all sources, containing information, necessary for conducting inspection (verification).
      3. Civil servants, carrying out inspection (verification) of activity of cotton processing organization, shall bear responsibility for disclosure of information, containing commercial and other legally protected secret, received in the course of inspection (verification) of activity of cotton processing organization, in accordance with the Laws of the Republic of Kazakhstan.
      Footnote. Article 28 as amended by the Law of the Republic of Kazakhstan dated 13.06.2013 No. 102-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 29.09.2014 No. 239-V(shall be enforced upon expiry of ten calendar days after its first official publication).

Article 29. The state inspector of cotton industry

      Footnote. The title of Article 29 is in the wording of the Law of the republic of Kazakhstan dated 13.06.2013 No. 102-V (shall be enforced upon expiry of ten calendar days after its first official publication).

      1. Upon exercise of their powers, the state inspector of cotton industry shall have a right to:
      1) carry out verification of security and quality of cotton in accordance with Article 9 of this Law;
      2) attend (on presentation of certificate of employment and act on appointment of verification with a mark on registration in the body on legal statistics) the working object, primary consumption of raw cotton to the lint cotton, storage of raw cotton without delay, as well as receive information, necessary for the carrying out of the state control and monitoring of cotton market;
      2) make proposals on suspension of action and (or) termination of a license for the right to carrying out of activity on rendering of services on warehouse activity with issuance of cotton receipts.
      2. Akims of regions, city of republican significance and the capital shall have a right to assign additional special name “the state inspector of cotton industry” to the relevant positions of administrative state services according to the procedure, established by the legislation of the Republic of Kazakhstan.
      Footnote. Article 29 as amended by the Laws of the Republic of Kazakhstan dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012); dated 13.06.2013 No. 102-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 30. Enforcement actions to the cotton processing organizations

      In the case of detection of violations in the activity of cotton processing organization on the results of verification, an authorized body shall have a right to apply the following enforcement actions to the cotton processing organization:
      1) issuance of binding written prescriptions on elimination of detected violations of the legislation of the Republic of Kazakhstan on development of cotton industry in the terms, established in the prescription;
      2) introduction of temporary management by the cotton processing organization on the grounds, provided by Article 32 of this Law;
      3) making proposals to the relevant local executive body in the field of termination of a license for the right to carrying out of activity on rendering of services on warehouse activity with issuance of cotton receipts.
      Cotton processing organization, to which a written prescription of authorized body is directed, shall have a right to appeal it according to the procedure, established by the legislation of the Republic of Kazakhstan.
      Footnote. Article 30 as amended by the Law of the Republic of Kazakhstan dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012).

Article 31. Suspension, termination of a license for the right to carrying out of activity on rendering of services on warehouse activity with issuance of cotton receipt

      Footnote. The title of Article 31 as amended by the Law of the Republic of Kazakhstan dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012).

      Suspension, termination of a license for the right to carrying out of activity on rendering of services on warehouse of activity with issuance of cotton receipts shall be carried out according to the procedure, provided by the legislation of the Republic of Kazakhstan on administrative infractions.
      Footnote. Article 31 as amended by the Law of the Republic of Kazakhstan dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012).

Chapter 7. Temporary management of cotton processing organization

Article 32. Temporary management of cotton processing organization

      1. Temporary management of cotton processing organization shall represent compulsory conducting of complex of administrative, juridical, financial, organizational and technical and other measures and procedures, directed to restoration of ability of cotton processing organization to meet obligations on cotton receipt.
      2. For making decision on introduction of temporary management is enough at least one of the following grounds:
      1) systematic (two or more times during the six subsequent calendar months) improper performance of contractual obligations on primary consumption of raw cotton to the lint cotton, expressed in the refusal to issue a cotton on the first request of holder of cotton receipt according to the procedure, provided by Article 24 of this Law;
      2) detection of facts of excess of the amount of cotton, ensured by the cotton receipts, over actual number of stored cotton.
      3. Condition of introduction of temporary management on the grounds, provided by paragraph 3 of this Article shall be the act of detected violations, composed in the result of inspection (verification) of activity of cotton processing organization, carrying out in accordance with this Law.
      Grounds for conducting of inspection (verification) of activity of cotton processing organization by the authorized body shall be:
      1) presentation of local executive body of region:
      2) check-out schedule;
      3) official application (complaints) of holders of cotton receipts on two and more facts of refusal in issuance of cotton.
      4. Temporary introduction shall not be maintained in the cases of implementation in relation of cotton processing organization, procedure of external observation.
      5. The term of temporary management by the cotton processing organization may not be more than six months.
      6. Temporary management by the cotton processing organization shall be carried out by the commission on temporary management and temporary administration.
      7. Temporary management by the cotton processing organization shall be carried out at the expense of the funds of cotton processing organization.
      8. For the damage, caused by the illegal actions to the cotton processing organization in the period of temporary management, members of commission on temporary management, members of temporary administration shall bear responsibility in accordance with the Laws of the Republic of Kazakhstan.
      Footnote. Article 32 as amended by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 33. Introduction of temporary management by the cotton processing organization

      Footnote. Article 33 is excluded by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 34. Commission on temporary management

      1. Commission on temporary management shall consist of representatives of the authorized body, its territorial subdivision and local executive body of region. The total number of members of commission on temporary management shall be an odd number and be at least three persons.
      2. The competence of commission on temporary management shall include:
      1) approval of composition of temporary administration;
      2) approval of the report of temporary administration on the results of activity;
      3) control of activity of temporary administration;
      4) exercise the functions of temporary administration in accordance with Article 35 of this Law until approval of its composition.
      3. Temporary commission shall direct a written notification to the address of service of cotton processing organization of bank on suspension of debit operations on the account of this cotton processing organization no later than two business days from the date of making decision on introduction of temporary management.
      4. Decision of commission on temporary management shall be adopted by the majority of votes and shall be compulsory for execution of temporary administration.
      5. Commission on temporary management shall have a right to:
      1) give recommendations of temporary administration on the basic directions of its activity in the period of temporary management by the cotton processing organization;
      2) require provision of information on its activity and activity of cotton processing organization from the temporary administration in accordance with the legislation of the Republic of Kazakhstan;
      3) contribute suggestions to the authorized body on early termination of temporary management of cotton processing organization or extension of term of temporary management by the cotton processing organization.
      Footnote. Article 34 as amended by the Law of the Republic of Kazakhstan da

      ted 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 35. Temporary administration

      1. Temporary organization shall form of representatives of holders of cotton receipts, issued by this cotton processing organization, authorized body, cotton processing organization, fund of guaranteeing of performance of obligations on cotton receipts, participant of which is the cotton processing organization.
      2. Commission on temporary management shall organize holding of meeting of holders of cotton receipts for election of representatives to the composition of temporary administration. Upon that, the holders of cotton receipts, having a maximum volume of cotton, stored in the cotton gin plant (cotton collection point) of this cotton processing organization shall possess a priority right to be elected to the composition of temporary administration.
      3. In the case of nonpresentation of candidates to the composition of temporary administration from the holders of cotton receipts and (or) cotton processing organization, commission on temporary management shall have a right to independently approve the composition of temporary administration, upon that a member of temporary administration from the holders of cotton receipts shall be determined one of the persons, having a maximum amount of cotton in storage.
      4. Upon making decisions, the votes of members of temporary administration shall be distributed in the following manner:
      1) holders of cotton receipts – twenty five percent;
      2) cotton processing organization - twenty five percent;
      3) an authorized body - twenty five percent;
      4) fund of guaranteeing of performance of obligations on cotton receipts - twenty five percent.
      5. In the period of operation of temporary management of cotton processing organization, management of cotton processing organization shall be carried out by the temporary organization.
      All of transactions, made on behalf of and at the expense of cotton processing organization after introduction of temporary management shall be recognized as invalid without written consent of temporary administration.
      In the period of operation of temporary management, execution of decisions of incorporators (shareholders, participants) and other management bodies of cotton processing organization, concerning increase of obligations of cotton processing organization, use or alienation of property of cotton processing organization, and other decisions, execution of which effect of may effect to the execution of obligations by the cotton processing organization on issued cotton receipts shall be suspended.
      6. Temporary administration shall have a right to:
      1) independently make decisions on all issues of activity of cotton processing organization, including adoption of relevant acts, within the competence, determined by this Law;
      2) suspend satisfaction of all requirements, subsequent from cotton receipts, in the amount up to fifty percent of the cotton volume, specified in it, for the period of temporary management;
      3) conclude agreements and sign the documents, directed to the restoration of obligations of cotton processing organization on received amount of cotton;
      4) carry out representation on behalf of and in the interests of cotton processing organization, as well as in a court;
      5) specified requirements to the fund of guaranteeing of performance of obligations on cotton receipts on behalf of holders of cotton receipts on extinguishment of debts on obligations, subsequent from the cotton receipts, issued by this cotton processing organization;
      6) engage independent experts for assessment of financial and economic activity of cotton processing organization.
      7. Temporary administration shall be obliged as a matter of priority to:
      1) carry out an analysis of financial status of cotton processing organization on the following directions: capital adequacy, asset analysis, analysis of incomes and expenditures;
      2) make an inventory of property of cotton processing organization and its obligations, as well as inventory of stored cotton of this cotton processing organization in the cotton gin plant (cotton collection point);
      3) determine the credit debts of cotton processing organization, including a debt to the holders of cotton receipts;
      4) take measures on collection of overdue accounts receivable, including preparation and bringing of actions in court;
      5) determine organizational structure and staff numbers of cotton processing organization;
      6) present a card with surnames, names and patronymics (in its existence) of persons, authorized to sign the cotton receipts, samples of their signatures to the authorized body;
      7) present a new card with the samples of signatures of civil servants, having right to sign the documents to the servicing bank, for commission of transactions on banking operations in a bank (upon that a card, presented before appointment of temporary administration, shall subject to cancellation);
      8) provide information on actual state of the cotton processing organization and contribute suggestions on improvement of economic activity of this cotton processing organization to the commission on temporary management.
      8. Making decisions on temporary administration on alienation of property of cotton processing organization, including transfer of property in a pledge, property lease shall not be allowed.
      Footnote. Article 35 as amended by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 36. Termination of temporary management of cotton processing organization

      1. Temporary management of cotton processing organization shall be terminated by decision of a court, entered into legal force.
      2. Temporary management shall be terminated early in the following cases:
      1) restoration of ability of cotton processing organization to meet their obligations on issued cotton receipts;
      2) satisfaction of all requirements, asserted in the period of temporary management of holders of cotton receipts in a full extent upon condition of absence of obligations, affected to the proper fulfillment of the requirements of other holders of cotton receipts.
      The reason for making decision on early termination of temporary management by the authorized body shall be suggestion of commission on temporary management, adopted on the basis of act of temporary administration on existence of grounds for early termination of temporary management.
      3. Termination of temporary management by the cotton processing organization (including early) in connection of elimination of reasons, entailed its introduction, shall involve cancellation of all restrictions in relation of this cotton processing organization.
      4. In the case, if the temporary management by the cotton processing organization did not lead to restoration of ability to meet obligations on cotton receipts, local executive body of oblast, city of republican significance and capital shall adopt decision on termination of a license for the right of carrying out of activity on rendering of services on warehouse activity with issuance of cotton receipts and initiate filing of a statement of claim in a court on compulsory liquidation of cotton processing organization.
      Footnote. Article 36 as amended by the Law of the Republic of Kazakhstan dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012).

Chapter 8. Liquidation and procedure of satisfaction of requirements of creditors of cotton processing organization, liquidated compulsorily

Article 37. The grounds for liquidation of cotton processing organization

      Cotton processing organization may be liquidated on the decision of:
      1) owner of its property or authorized owner of the body, as well as by the decision of the body of legal entity, authorized to it by the constitutional documents on any ground (voluntary liquidation), upon that a notification is directed to the authorized body;
      2) court (compulsory liquidation).
      Footnote. Article 37 as amended by the Law of the Republic of Kazakhstan dated 29.09.2014 No. 239-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 38. Grounds for compulsory liquidation of cotton processing organization

      Compulsory liquidation of cotton processing organization shall be conducted by the court in the cases of:
      1) bankruptcy;
      2) recognition of invalid registration of cotton processing organization in connection with violations of the legislation of the Republic of Kazakhstan, admitted in its creation, which bear a non-eliminated character;
      3) systematic carrying out of activity, contradicted to the charter purposes of cotton processing organization;
      4) carrying out of activity without a license for the right to carrying out of activity on rendering of services on warehouse activity with issuance of cotton receipts or carrying out of activity, prohibited by this Law, or carrying out of activity with recurring violations or a gross violation of the legislation of the Republic of Kazakhstan, as well as nonpresentation of declaration on corporate income tax (on total annual income and made deductions) or summary declaration upon expiration of one year after the date of presentation, established by the law, absence of cotton processing organization on location or actual address, as well as incorporators (participants) and civil servants, without which the cotton processing organization may not function during one year;
      5) if the temporary management by the cotton processing organization did not lead to restoration of ability to meet obligations on cotton receipts.
      Footnote. Article 38 as amended by the Law of the Republic of Kazakhstan dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012).

Article 39. Peculiarities of formation of property mass

      Upon bankruptcy, liquidation of cotton processing organization to the composition of property, at the expense of which satisfaction of requirements of creditors of cotton processing organization are conducted, as well as the cotton is included to the property mass of cotton processing organization, accepted for storage and (or) primary processing.
      Footnote. Article 39 is in the wording of the Law of the Republic of Kazakhstan dated 07.03.2014 No. 177-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 40. Priority of satisfaction of requirements of creditors of cotton processing organization, liquidated compulsorily

      1. Requirements of creditors, compulsory liquidated cotton processing organization, as well as in connection with its bankruptcy, recognized in accordance with the established procedure, shall be satisfied in the following priority order:
      1) principally requirements of citizens, prior to whom, the liquidated cotton processing organization bears responsibility for causing of harm to the life or health, by capitalization of relevant payments due over time shall be satisfied;
      2) secondarily the calculations on payment for labour with persons, worked on personal performance agreement, arrears of alimony payments and compulsory pension contributions, deducted from salary, as well as compensations on copyright agreements shall be made;
      3) on a third-priority basis the requirements of holders of cotton receipts, containing information on pledge; future requirements of the fund of guaranteeing of performance of obligations on cotton receipts on disbursed payments in connection with extinction of obligations on cotton receipts shall be satisfied;
      4) on a fourth-priority basis the requirements of holders of cotton receipts, not containing information on pledge shall be satisfied;
      5) on a fifth-priority basis the requirements of creditors on obligations, secured by pledge of property, liquidated cotton processing organization, within the amount of maintenance, shall be satisfied;
      6) on a sixth-priority basis the tax debt and other compulsory payments to the budget shall be paid;
      7) in a seventh-priority basis the calculations with other creditors shall be made in accordance with the Laws of the Republic of Kazakhstan.
      2. Expenditures, related with the liquidated production, as well as on ensuring of activity of liquidated commission of cotton processing organization, as well as the expenditures, subsequent upon necessity to ensure the basic functions of liquidated cotton processing organization, shall be incurred out of turn and permanently.
      Tax liabilities, arising in the period of liquidation of cotton processing organization, shall be satisfied from time to time according to the terms and procedure, which are established by the tax legislation of the Republic of Kazakhstan.

Chapter 9. Final provisions

Article 41. Responsibility for violation of the legislation of the Republic of Kazakhstan on development of cotton industry

      Violation of requirements of the legislation of the Republic of Kazakhstan on development of cotton industry shall entail responsibility, established by the Laws of the Republic of Kazakhstan.

Article 42. Procedure of enforcement of this Law

      This Law shall be enforced upon expiry of ten calendar days after its first official publication

      The President
      of the Republic of Kazakhstan