On Sovereign Wealth Fund

The Law of the Republic of Kazakhstan dated 1 February, 2012 No. 550-IV

Unofficial translation

      This law defines the legal status, procedure of activity, goals, tasks and powers of the sovereign welfare Fund, the procedure of interaction of the sovereign welfare Fund and state bodies, as well as individual particularities of legal status of legal entities, the shares (equity stake) of which belong to the sovereign welfare Fund, and other organizations, included into the group of sovereign welfare Fund.

Chapter1. General provisions

Article 1. Basic definitions, used in this Law

      The following basic definitions shall be used in this Law:
      1) indirect ownership - ownership of each subsequent organization of the shares of the Fund (equity stake in charter capital) of another organization on the right of ownership or entrusted management;
      2) the company - the national development institutions, national companies and other legal entities, more than fifty percent of voting shares (equity stakes) of which belong to the Fund of the right of ownership or entrusted management;
      3) The development strategy of the Fund - a document specifying and justifying the mission, vision, goals and objectives of the Fund on management of companies, aimed at increasing long-term denomination (value) of the organizations, included into the group of the Fund, effective management of assets,included into the group of the Fund;
      4) the group of the Fund - the Fund, companies, their subsidiaries, more than fifty percent of voting shares (equity stakes) of which are owned by the companies, as well as legal entities, more than fifty percent of voting shares (equity stakes) of which is owned by the specified subsidiaries of companies in respect of which this Law establishes a special legal status.
      The group of the Fund shall not include:
      legal entity shares (equity stakes) which has gone into the property of the bank, included in the group of the Fund, upon the announcement of the auction sale of the pledged shares (equity shares) failed in accordance with the civil legislation of the Republic of Kazakhstan;
      banks, shares of which has entered in the property of the Fund by the decision of the Government of the Republic of Kazakhstan in accordance with legislation of the Republic of Kazakhstan in order to protect the interests of creditors of the bank and to ensure the stability of the banking system of the Republic of Kazakhstan;
      5) the sovereign welfare Fund (hereinafter – the Fund) - a national managing holding.

Article 2. The legislation of the Republic of Kazakhstan on the Fund

      1. The legislation of the Republic of Kazakhstan on the Fund shall be based on the Constitution of the Republic of Kazakhstan, shall consist of this Law and other regulatory legal acts.
      2. If an international treaty ratified by the Republic of Kazakhstan establishes different rules than those contained in this Law, the rules of an indicated treaty shall be applied.
      3. The legislation of the Republic of Kazakhstan on joint stock companies and the legislation of the Republic of Kazakhstan on state property shall be applied to the group of the Fund, unless otherwise provided by this Law.
      4. The legislation of the Republic of Kazakhstan on investment funds shall not be applied to the companies, included in the list approved by the Government of the Republic of Kazakhstan.

Article 3. Issues on the property of shares of the Fund

      The shares of the Fund shall be owned inclusively by the state and shall not be subjected to alienation.

Article 4. Purpose and tasks of the Fund

      1. The purpose of the Fund shall be to increase the national wealth of the Republic of Kazakhstan by increasing long-term denomination (value) of the organizations, included into the group of the Fund, effective management of assets, belonging to the group of the Fund.
      2. The tasks of the Fund shall be:
      1) increase of competitiveness, market value and profitability of the organizations, included in the group of the Fund;
      2) the introduction in the group of the Fund of the best practices of corporate governance;
      3) encouraging the development and introduction into the group of the Fund of innovative processes and technologies;
      4) participation in attraction of investments to the Republic of Kazakhstan, creation of conditions for investment activity of the organizations, included in the group of the Fund, as well as improving the investment climate in the Republic of Kazakhstan taking into account the main directions of state policy;
      5) ndevelopment and implementation of strategic investment projects of national, sectoral and regional levels, participation in development and realization of programs of modernization and diversification of economy of Kazakhstan;
      6) participation in realization of programs aimed at development of entrepreneurship;
      7) participation in realization of socially important, industrial-innovative projects that promote sustainable development of the economy of the Republic of Kazakhstan, taking into account the peculiarities of their implementation by the Fund, established by this Law.

Article 5. The principles of activity of the Fund

      The activity of the Fund shall be based on the following principles:
      1) observance of interests of the state as the sole shareholder of the Fund;
      2) the earning capacity, efficiency, transparency and accountability of the Fund, and other organizations, included into the group of the Fund;
      3) consistency and efficiency in decision making and their realization;
      4) social responsibility of the Fund;
      5) legality.

Chapter 2. Particularities of management of the Fund

Article 6. Bodies of the Fund

      Bodies of the Fund shall be:
      1) the highest body - the sole shareholder;
      2) the managing body - board of directors;
      3) the executive body – administrative board;
      4) other bodies in accordance with the charter of the Fund.

Article 7. The only founder and shareholder of the Fund

      1. The only founder and shareholder of the Fund shall be the Government of the Republic of Kazakhstan.
      2. The exclusive competence of the sole shareholder of the Fund shall include the following issues:
      1) making changes and additions in the charter of the Fund or approval of its new version;
      2) approval of the annual financial statements of the Fund;
      3) approval of the development strategy of the Fund and making changes and additions to it;
      4) voluntary reorganization or liquidation of the Fund;
      5) the decision about increase of amount of announced shares of the Fund or change of the type of unplaced announced shares of the Fund;
      6) determination of the term of office of the board of directors, election of its members and early termination of their powers;
      7) the alienation of shares of the companies on the list, defined by the sole shareholder of the Fund, as well as the transfer of such shares into entrusted management;
      8) making decisions on liquidation, reorganization of companies according to the list, defined by the sole shareholder of the Fund;
      9) appointment and early dismissal of the chairman of the board of the Fund;
      10) approval of the procedure of distribution of net income of the Fund for the reporting financial year, taking decision about dividends payment on common shares and approval of dividend rate per ordinary share of the Fund;
      11) taking decision on non-payment dividends on common shares upon the occurrence of events provided by the Law of the Republic of Kazakhstan "On joint stock companies";
      12) determination of the dividend policy of the Fund;
      13) approval of the decision of the board of directors of the Fund, adopted in accordance with subparagraph 19) of paragraph 3 of Article 8 of this Law;
      14) the acquisition and alienation of shares of banks, and also transfer of specified shares into entrusted management;
      15) approval of the corporate governance code, as well as changes and additions to it;
      16) other issues in accordance with this Law and (or) the charter of the Fund.
      3. Decisions on issues, specified in subparagraph 8) of paragraph 2 of this Article, in respect of companies in which the Fund the sole shareholder (participant) shall be adopted by the sole shareholder of the Fund to determine the position of the Fund as a shareholder (participant) in order to vote by authorized representatives of the Fund at general meetings of shareholders (participants) of companies.
      4. Decisions on issues assigned by this Law, other laws of the Republic of Kazakhstan and (or) by the charter of the Fund to the competence of the sole shareholder shall be made by the Government of the Republic of Kazakhstan in the form of individual decisions.
      The order of adoption of decisions of the sole shareholder of the Fund shall be determined by the Government of the Republic of Kazakhstan.

Article 8. Board of directors of the Fund

      1. The board of directors of the Fund shall consist of the chairman and members elected by the sole shareholder.
      2. Chairman of the board of directors of the Fund shall be the Prime Minister of the Republic of Kazakhstan for the post.
      The composition of the board of directors shall consist of members of the Government of the Republic of Kazakhstan, chairman of the board, independent directors and other persons.
      The quantitative composition of the board of directors shall be determined by the Fund, while the number of independent directors shall be not less than two-fifths of the quantitative composition of the board of directors.
      3. To the exclusive competence of the board of directors of the Fund shall include the following issues:
      1) approval of the development plan of the Fund;
      2) determination of the order of development, approval, monitoring, evaluation, implementation, reporting on implementation of development plan and requirements to its content;
      3) carrying out monitoring and analysis of implementation, evaluation of the implementation of the development plan of the Fund;
      4) determination of the key performance indicators of the Fund in the framework of the development plan of the Fund;
      5) approval of procedure of development, approval, execution and monitoring of the annual budget of the Fund;
      6) approval of the annual budget of the Fund;
      7) decision-making on liquidation, reorganization of companies, with the exception of companies, the decision on liquidation, reorganization of which is assigned by this Law to the competence of the sole shareholder of the Fund;
      8) the decision making on the placement (realization), including on the number of being placed (realized) shares within the number of declared shares, the method and price of their placement (realization);
      9) making a decision on redemption of the Fund's outstanding securities, except for shares, and the price of their redemption;
      10) approval policies of the Fund: on risk management, sponsorship and charity, social responsibility, and disclosure of information, credit, industrial, innovative and other policies;
      11) determination of audit organization, carrying out the audit of the Fund, and limits on the amount of payment for its services through the approval of the annual budget;
      12) the decision about submission of issues for consideration by the sole shareholder;
      13) determination of the amount and terms of remuneration of independent directors;
      14) approval of staff numbers of the Fund;
      15) making decisions on creation of committees under the board of directors of the Fund;
      16) determination of quantitative composition, term of office of the board, election of board members and early termination of their powers, with the exception of the chairman of the board of directors;
      17) definition of salary amounts and conditions of remuneration and bonuses of the chairman and members of the management board;
      18) determination of quantitative composition, term of office of the internal audit service, the appointment of its director, and early termination of their powers, determination of the order of work of the internal audit service, the amount and conditions of remuneration and bonuses of employees of the internal audit service;
      19) decision-making on price, quantity, structure of placement of shares of the companies, included in the group of the Fund, placed on organized securities market in order to implement the decisions of the Government of the Republic of Kazakhstan;
      20) approval of documents regulating internal activities of the Fund. The list of documents, subjected to approval by the board of directors shall be determined by them independently;
      21) determination of the order of conclusion of deals between the organizations, includedthe group of the fund, in respect of the commitment of which by the Law of the Republic of Kazakhstan “On joint stock companies set” are set special conditions;
      22) approval of the procedure of assessment of corporate governance of the Fund;
      23) participation of the Fund in creation or activities of other legal entities by transfer of part or several parts of assets, in the amount of twenty five and more percent from the all-owned by the Fund assets;
      24) the increase of the liabilities of the Fund on the size making ten and more percent of the size of its own capital;
      25) the acquisition by the Fund of ten and more percent of shares (stakes of participation in the charter capital) of the other legal entities;
      26) the determination of the conditions of issue of bonds, derivative securities of the Fund and attract Fund other borrowings amounting to one percent or more of the size of own capital of the Fund;
      27) approval of certain types of standards and limits of administrative expenses of the Fund on suggestions made by the Government of the Republic of Kazakhstan;
      28) perform an annual evaluation of the activities of the board of directors of the Fund in accordance with the methodology approved by the sole shareholder of the Fund;
      29) adoption of the decisions, provided by internal documents approved by the board of directors, except decisions relating in accordance with this Law to the exclusive competence of the sole shareholder, the management board or the chairman of the board of the Fund;
      30) other issues in accordance with this Law and (or) the Charter of the Fund.
      4. Decisions on issues specified in subparagraph 7) and 19) of paragraph 3 of this Article, in respect of companies in which the Fund is not the sole shareholder (participant) shall be adopted by the board of directors of the Fund to determine the position of the Fund as a shareholder (participant) in order to vote by authorized representatives of the Fund at general meetings of shareholders (participants) of companies.
      5. The activities of the board of directors of the Fund shall be provided by the corporate secretary, including shaping the agenda of the meeting of the board of directors and shall guide a notice to members of the board of directors of the Fund about holding a meeting, and the Fund.
      Footnote. Article 8 as amended by the Law of the Republic of Kazakhstan dated 02.07.2014 No. 225-V (shall be enforced upon expiry of ten calendar days after the date of its first official publication).

Article 9. Committees of the board of directors

      1. To consider the most important issues and preparation of recommendations to the board of directors of the Fund may be createdconstant committees under the board of directors of the Fund.
      If the issue, submitted for consideration of the board of directors of the Fund, shall be the responsibility of a committee, it shall in anobligatory manner preliminary discuss the relevant issue and shall prepare according to its conclusion.
      A specialized committee, provided by Article 14 of this Law, shall be created on a mandatory basis.
      2. Committees of the board of directors of the Fund shall consist of members of the board of directors and experts having necessary professional knowledge for work in a particular committee.
      Chairman of the board of the Fund may not be a chairman of the committee of the board of directors of the Fund.
      3. In order to improve the quality of decision making by the board of directors of the Fund in the framework of the annual budget of the Fund shall be allocated funds for consultants, including international, on matters considered by the board of directors or its committees.
      4. The procedure of formation and work of committees of the board of directors of the Fund, their powers, the quantitative composition shall be established by internal documents, approved by the board of directors of the Fund.

Article 10. Administrative board of the Fund

      1. The administrative board shall consist of a chairman, his deputies and other persons.
      2. To the exclusive competence of the board of directors shall be included the following issues:
      1) determination of the conditions and procedure for conversion of securities of the Fund, as well as their change;
      2) determination of the size of payment of services for the appraiser on market valuation of the property transferred in payment of shares of the Fund or that is subject of major deal;
      3) determination of the list of issues of the activities of companies related in accordance with the legislation of the Republic of Kazakhstan and the statutes of the companies to the competence of general meetings of shareholders (participants) of companies, decisions on which shall be taken by the administrative board or the chairman of the administrative board of the Fund (with the exception of the decisions on the activities of companies taken by the board of directors of the Fund in accordance with this Law), as well as procedure of taking such decisions;
      4) approval of the appointment issues and early termination of powers of heads of executive bodies of companies, all of the voting shares (stakes of participation) of which are owned by the Fund in the ownership and (or) entrusted management;
      5) taking appropriate measures regarding companies to prevent disruption to the completeness and terms of realization of investment decisions and investment projects;
      6) the formation of a unified (including by branches of activity of companies) financial, investment, production-economic, scientific-technical, cash management, personnel, social and other policies in respect of companies;
      7) approval of methodological recommendations and standards in respect of legal entities, more than fifty percent of voting shares (stakes of participation) of which directly or indirectly are owned by the Fund;
      8) approval of the rules for the development, coordination, approval, adjustment, implementation and monitoring of the execution of development plans of the companies;
      9) approval of the dividend policy and standards dividends for companies;
      10) approval of certain types of standards and limits of administrative expenses of the companies, all of the voting shares (stakes of participation) of which are owned by the Fund;
      11) approval of the staffing and organizational structure of the Fund;
      12) making decisions on establishing branches and representative offices;
      13) making decisions on creation of committees under the board of the Fund, consisting of employees of companies and other persons in order to make proposals to the board of the Fund;
      14) information about the Fund or its activities, constituting official, commercial or other secret protected by the Law;
      15) determine the conditions of issue of bonds, derivative securities of the Fund and attract Fund other borrowing in the amount of not more than one percent of the size of own capital of the Fund;
      16) approval of documents regulating internal activities of the Fund, except as provided by subparagraph 20) of paragraph 3 of Article 8 of this Law;
      17) establishment of centralized services in accordance with paragraph 1 of Article 24 of this Law;
      18) hearing on an annual basis the performance of companies and presentation of reports on the results of the companies to the board of directors of the Fund;
      19) other issues, not attributed by this Law and (or) by the Charter of the Fund to the competence of other bodies of the Fund.
      3. The decisions specified to in subparagraphs 3) and 9) of paragraph 2 of this Article, on the issues of activities of companies in which the Fund is the sole shareholder (participant)shall be adopted by the board or the chairman of the board of the Fund in order to determine the position of the Fund as a shareholder (participant) for subsequent voting by authorized representatives of the Fund at general meetings of shareholders (participants) of the company.
      4. Along with the issues provided by the Law of the Republic of Kazakhstan "On joint stock companies" to the competence of the chairman of the board of the Fund shall be related:
      1) taking decisions on appointment of inspections (revision) in companies and other legal entities, more than fifty percent of voting shares (stakes of participation) directly or indirectly owned by the company;
      2) giving direct (operational) orders for the execution by companies, all voting shares (stakes of participation) which belong to the Fund on their activities;
      3) bringing to disciplinary liability of heads of executive bodies of companies, all voting shares (stakes of participation) of which are owned by the Fund under the right of ownership and (or) entrustedadministration;
      4) making decisions on other issues in accordance with this Law and (or) the Charter of the Fund.
      5) Decisions, specified in subparagraphs 4)-6) of paragraph 2 and subparagraphs 1)-3) of paragraph 4 of this Article, shall be taken into account with the level of corporate governance in the company in the procedure provided by the board of directors of the Fund.
      6) In case of transfer by the Fund on the basis of the decision of the Government of the Republic of Kazakhstan of shares (stakes of participation) of companies under entrustedadministration the powers provided by subparagraph 4) and 5) of paragraph 2 and paragraph 4 of thisArticle shall not be implemented by the Fund (by its bodies and officials) and the trustees.

Article 11. The internal audit service of the Fund

      1. The internal audit service of the Fund shall be created by the board of directors of the Fund for exercising control over financial and economic activity of the Fund, the assessment of internal control, risk management system, execution of documents in the field of corporate management and advisory services in order to improve the activities of the Fund.
      2. The internal audit service of the Fund shall report directly to the board of directors of the Fund and shall report to it on its work.

Chapter 3. PARTICULARITIES OF MANAGEMENT IN THE GROUP OF THE FUND.

Article 12. Interaction between the Government of the Republic of Kazakhstan and the Fund

      1. Interaction between the Government of the Republic of Kazakhstan and the Fund shall be in accordance with this Law, other laws of the Republic of Kazakhstan and the agreement on cooperation between the Government of the Republic of Kazakhstan and the Fund.
      The agreement on cooperation between the Government of the Republic of Kazakhstan and the Fund shall contain:
      1) the main principles of interaction between the Government of the Republic of Kazakhstan and the Fund;
      2) issues of cooperation between the Government of the Republic of Kazakhstan and the Fund, including the requirements of the Government of the Republic of Kazakhstan to the Fund on issues of its activity;
      3) the issues of interaction between state bodies, both in the structure of the Government of the Republic of Kazakhstan, and the Fund.
      The corporate secretary of the Fund shall organize the proper execution of the provisions of the agreement on cooperation between the Government of the Republic of Kazakhstan and the Fund.
      2. The Government of the Republic of Kazakhstan, as the owner of shares of the Fund, shall contribute to the Fund aims at increasing national wealth of the Republic of Kazakhstan by ensuring conditions for the effective management by the Foundation of its bodies.
      3. The Government of the Republic of Kazakhstan, as a collective body, head the system of executive authorities, shall not interfere into operational (current) activity of the Fund, except for cases provided by laws and acts of the President of the Republic of Kazakhstan.
      4. The Government of the Republic of Kazakhstan shall carry out managementof the Fund exclusively through the implementation of powers of the sole shareholder as stipulated in this Law and (or) the Charter of Fund, and also of representative office of the Government of the Republic of Kazakhstan in the board of directors of the Fund.
      General management and the management of current activity of the Fund shall be carried out, accordingly, by the board of directors and the administrativeboard, who make decisions on issues within their competence.

Article 13. Interaction of state bodies with the Fund and member organizations of the group of the Fund

      1. The interaction between state bodies and the Fund, the member organizations of the group of the Fund that are not related to the interaction in the framework of the activity of the sole shareholder of the Fund, membership of the heads of state bodies in the board of directors of the Fund shall be governed by the laws of the Republic of Kazakhstan, acts of the President of the Republic of Kazakhstan, the Government of the Republic of Kazakhstan.
      2. Intervention of state bodies in the operational (current) activity of the Fund organizations that are members of the Fund, except for cases provided by laws of the Republic of Kazakhstan shall not be allowed.
      3. Provision of accounting by the Fund and member organizations of the group of the Fund, the state bodies, except for reporting, provision of which is directly provided for by laws of the Republic of Kazakhstan, acts of the President of the Republic of Kazakhstan, the Government of the Republic of Kazakhstan shall be carried out by means of placement of relevant information on the Internet resource of the Fund.
      Rules for submitting reports required to state bodies, on the Internet-resource of the Fund, and also the list, forms and periodicity of placement reports shall be approved by the Government of the Republic of Kazakhstan.

Article 14. The procedure of analysis of influence of activity of the organizations, included in the group of the Fund for the development of the economy or particular sector of economy

      1. Comprehensive and objective analysis of the impact of the activities of the organizations, included in the group of the Fund for the development of the economy or particular sectors of the economy (hereinafter - analysis), except for issues related the use of the National Fund of the Republic of Kazakhstan, the Republican budget, and also guarantees and assets of the state, shall be carried out within the scope of the activities of specialized committee under board of directors of the Fund.
      2. Permanent member of the special committee under the board of directors of the Fund –by the expert with a voting right shall berepresentative of the accounts committee for control over execution of the Republican budget, which triggers a mandatory external audit of the organizations, included in the group of the Fund, within budgeted Fund of funds, as well as analysis with the questions defined by the accounts committee for control over execution of the Republican budget.
      The results of the conducted external audit of the organizations, included in the group of the Fund, shall be provided in the accounts committee for control over execution of the Republican budget.
      3. The board of directors shall be entitled to give instructions to the chairman of the board to form an audit team to undertake the analysis, which includes the representative of the accounts committee for control over execution of the Republican budget, or the external audit of the organizations, included in the group of the Fund.
      4. The results of the analysis of the organization, a member of the group of the Fund, shall be documented in an act, which shall be submitted to the board if directors of the Fund and account committee on control over execution of the Republican budget.
      5. Upon revealing of cases of inefficient activities of the organization, a member of the group of the Fund, the bodies of the Fund shall adopt the measures necessary to improve the efficiency of the activities of such organization.
      6. The accounts committee for control over execution of the Republican budget shall be entitled to use the received during the work of the special committee under the board of directors of the Fund in its activities, taking into account the observance of secrecy, official, commercial or other secrets protected by the Law.

Article 15. Particularities of the implementation of the Fund of social and industrial-innovative projects

      1. The Fund and the organizations belonging to the group of the Fund may participate in realization of socially significant and innovative industrial projects taking into account the main directions of the state policy in the innovative industrial, socio-economic and other spheres, the activities of the Fund.
      2. Implementation by the Fund or by the organizations of the Fund, of socially significant and (or) industrial-innovative projects initiated by the Government of the Republic of Kazakhstan, which is low-profitable, may be carried out with the full or partial budget financing and (or) in state guarantees on non-state loans in accordance with the procedure and on conditions, provided by budget legislation of the Republic of Kazakhstan.
      The rules for referring of socially important and (or) industrial-innovative projects implemented by the Fund or organization that is a member of the Fund, to low-profitable shall be approved by the Government of the Republic of Kazakhstan.
      3. Upon carrying out by the Fund or organization that is a member of the group of the Fund, industrial-innovative activity they shall be provided with measures of state support of industrial-innovative activity in accordance with legislation of the Republic of Kazakhstan in the sphere of state support of industrial-innovative activity.

Article 16. Development strategies and development plans of the Fund and national companies included in the group of the Fund

      1. The development strategy of the Fund shall be designed for ten years with the main directions of state policy in the innovative industrial, socio-economic and other spheres in the activities of the Fund.
      2. In order to implement the development strategy shall be developed the development plan for five years. Requirements to the contents of the development plan of the Fund shall be determined by the board of directors of the Fund on the basis of minimum requirements to its content, approved by the authorized body on state planning. Companies shall be involved in the development strategy of the Fund, within its spheres of activity.
      3. In companies on the basis of the development strategy of the Fund shall be developed strategy of development of the companies for a period of ten years. The development strategy of the company shall be approved by the board of directors.
      By the board of directors of companies in order to implement their development strategies shall be approved the development plans for the period of five years.

Article 17. Principles of management in the group of the Fund

      Management in the group of the Fund shall be carried out in accordance with best practice of corporate governance and on the basis of the following principles:
      1) increase in market value of the assets of companies;
      2) the effectiveness of the system of corporate governance;
      3) the effectiveness of the dividend policy;
      4) disclosure of information and transparency.

Chapter 4. PARTICULARITIES OF LEGAL REGULATION OF THE ACTIVITY OF THE GROUP OF THE FUND

Article 18. Special powers of the Fund to ensure national welfare

      1. In order to enhance competitiveness and sustainability of the national economy, providing national welfare Fund shall have the following special powers:
      1) priority right to acquire by decision of the Government of the Republic of Kazakhstan strategic objects in cases of intention of individuals or private legal entity to make a transaction on the alienation of a strategic object, and repossession of strategic object or alienation of the strategic object of the rehabilitation or bankruptcy manager or implementation of the sale of mortgaged property (strategic object) by a pledgee without legal proceedings or foreclosure on the strategic object on the basis of a judicial act;
      2) priority right to acquire by decision of the Government of the Republic of Kazakhstan of the estate in bankruptcy of organizations, packages of shares (stakes of participation in authorized capital, shares) of which are attributed to strategic objects in accordance with the legislation of the Republic of Kazakhstan, or organizations having the important strategic value for the economy of the Republic;
      3) the right to purchase shares of banks in the order provided by the legislation of the Republic of Kazakhstan.
      2. In accordance with the procedure and on conditions, provided by the Law of the Republic of Kazakhstan "On subsoil and subsoil use", in case of intention of the person, having the right to subsoil use and (or) object, associated with the subsoil use right, to dispose of the right to subsoil use (its part) and (or) object, associated with the subsoil use right, the state through the Fund, the national company or an authorized state body has the priority right of acquiring the right to subsoil use (its part) and (or) object, associated with the subsoil use right.
      Footnote. Article 18 as amended by 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 19. Procurement of goods, works and services

      1. Special procedure for the procurement of goods, works and services, provided by other legislative acts of the Republic of Kazakhstan, shall not apply to the procurement of goods, works and services undertaken by the Fund and the organizations, fifty and more percent of voting shares (stakes of participation) of which is directly or indirectly owned by the Fund.
      2. Procurement of goods, works and services by legal entities, specified in paragraph 1 of this Article, shall be made on the basis of regulations approved by the board of directors of the Fund.
      3. Legal entities, specified in paragraph 1 of this Article shall be obliged to have a structural unit responsible for implementation of procedures of organization and to conduct of procurement in accordance with the rules approved by the board of directors of the Fund.
      4. The Fund shall carry out the procedural supervision, guidance, monitoring and analysis on procurement of goods, works and services by legal entities, specified in paragraph 1 of this Article.
      Control shall mean the activities of the Fund in verifying and monitoring observance of the legal entities, specified in paragraph 1 of this Article, the requirements established in the rules of procurement of goods, works and services. The control of the Fund against legal entities, specified in paragraph 1 of this Article shall be carried out taking into account their level of corporate governance in accordance with the procedure provided by the board of directors of the Fund.
      5. Upon carrying out procurement of goods, works and services the persons,specified in paragraph 1 of this Article, shall be obliged to:
      1) be provided in the solicitation documents submitted to the participants of the tender, the requirements for conditional reduction of prices of the tender participants - domestic producers and suppliers of works and services;
      2) apply conditional reduction of prices for review of domestic producers and suppliers of works and services and the selection of the winner of the tender;
      3) in case of equality of price proposals of tenderers to give preference to domestic producers and domestic suppliers of works and services.
      6. Local content shall be defined by a single method of calculation of organizations of local content in the procurement of goods, works and services, approved by the Government of the Republic of Kazakhstan.
      7. Information on local content in procurements of goods, works and services shall be consolidated in the face of national managing holding into the authorized body in the field of state aid of industrial-innovative activity in the form and within the time provided by it.
      8. The provisions of this Article, with the exception of paragraph 1 shall not apply to second tier banks (excluding the Development Bank of Kazakhstan and the Housing construction savings Bank of Kazakhstan) and their subsidiaries.

Article 20.Money management

      1. The Fund shall implement a common policy on management of funds of the Fund and legal entities, all of the voting shares (stakes of participation) of which belong to the Fund, approved by the board of directors of the Fund.
      2. Organizations belonging to the group of the Fund shall be entitled to provide to other organizations, included in a member of the group of the Fund credits (loans) in monetary form on the terms of payment, urgency and refundability.
      3. The procedure and conditions of granting of credits (loans), specified in paragraph 2 of this Article shall be determined by the internal credit policy approved by the board of directors of the Fund.
      4. The Fund and the organizations belonging to the group of the Fund may provide sponsorship and charitable assistance in accordance with the policy for sponsorship and charitable assistance approved by the board of directors of the Fund, in which it provided limit for amounts of providing sponsorship and charitable assistance.

Article 21. The transaction for the commitment of which the Law of the Republic of Kazakhstan “On joint stock companies” set special conditions

      Transactions between organizations, included into the group of the Fund, in respect of the commitment of which the Law of the Republic of Kazakhstan “On joint stock companies” is established special conditions, shall be concluded without applying them in the accordance with the procedure, determined by the board of directors of the Fund.

Article 22. Acquiring organizations, included in the group of the Fund, shares (stakes of participation) of other legal entities

      Procedure of purchase on the secondary securities market thirty and more percent of voting shares of joint stock companies, established by the Law of the Republic of Kazakhstan "On joint stock companies", shall not be applied in respect of the Fund or legal entities, more than fifty percent of the voting shares of which are directly or indirectly owned by the Fund.

Article 23. Termination of state ownership of the property by making it in payment of placed shares of the Fund

      1. Property that is in state ownership, by decision of the Government of the Republic of Kazakhstan may be transferred in payment of placed shares of the Fund.
      2. Property that is in state ownership, by decision of the Government of the Republic of Kazakhstan may be transferred into the ownership of the Fund in exchange for other property owned by the Fund in accordance with the civil legislation of the Republic of Kazakhstan.

Article 24. Management of organizations, included in the group of the Fund

      1. In the group of the Fund may be created on a single centralized internal audit service, as well as a centralized security service of the Fund which carries out activities in respect of the Fund and legal entities, fifty and more percent of shares (stakes of participation) of which is directly or indirectly owned by the Fund.The decision on creation of centralized internal audit service, a centralized security service may be taken by the administrative board of the Fund.
      2. In the Charter of the company, all of the voting shares of which are in the property of the Fund, the issues falling within the exclusive competence of the general meeting of shareholders in accordance with the Law of the Republic of Kazakhstan "On joint stock companies", may be attributed to the competence of the board of directors of such company, except for issues:
      1) making amendments and additions to the Charter or approval of the Charter in new edition;
      2) voluntary reorganization or liquidation;
      3) definition of quantitative composition, term of office of the board of directors, election of its members and early termination of their powers;
      4) determination of the amount and terms of remuneration of members of the board of directors;
      5) introduction and annulment of the “golden share”.
      3. In the Charter of the company, all of the voting shares of which are in the property of the Fund, the issues falling within the exclusive competence of the board of directors in accordance with the Law of the Republic of Kazakhstan "On joint stock companies", may be attributed to the competence of the executive body of the company, except for issues:
      1) Determination of priority areas of business;
      2) the decision on the placement (sale), including on the number of being placed (being sold) shares within the number of declared shares, the method and price of their placement (sale);
      3) the decision to repurchase by the company of placed shares or other securities and their repurchase price;
      4) determination of quantitative composition, term of office of the executive body, election of its head and members (a person individually exercising functions of executive body), as well as early termination of their powers;
      5) determining the size of the official salary and conditions of remuneration and bonuses of the head and members of the executive body (a person individually exercising functions of executive body);
      6) determination of quantitative composition, term of office of the internal audit service, the appointment of its director, and early termination of his powers, determination of the order of work of the internal audit service, the amount and conditions of remuneration and bonuses of employees of the internal audit service;
      7) appointment, determination of the term of office of the corporate secretary, early termination of his powers, as well as determination o the amount of official salary and conditions of remuneration of the secretary.

Chapter 5. Final provisions

Article 25. Responsibility of the Fund and its officials

      The Fund, other organizations, included into the group of the Fund, and their officials shall bear responsibility in accordance with the procedure and on the grounds provided by the laws of the Republic of Kazakhstan.

Article 26. The order of the entry into force of this Law

      1. This Law enters into force upon expiry of ten calendar days after its first official publication.
      2. Shall be declare to be no longer in force the Law of the Republic of Kazakhstan dated 13 February 2009 “On sovereign wealth Fund” (The Bulletin of the Parliament of the Republic of Kazakhstan, 2009, No. 2-3, Article 17; No. 24, Article 133; 2011, No. 5, Article 43).

      The President
      of the Republic of Kazakhstan N.           Nazarbayev