The Astana International Financial Centre (hereinafter referred to as “AIFC”) has been listed as a popular location for business in Kazakhstan for over three years. The Centre was established to modernise and develop the country, provide a more attractive business environment, attract investment flows, develop the securities market and provide companies with modern and efficient investment tools. It is a territory with a special legal regime in the financial sector established by the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre”.
It should be noted that all corporate procedures of legal entities registered with the Centre are governed by AIFC law. The applicable law of the AIFC is based on the Constitution of the Republic of Kazakhstan and consists of:
the Constitutional Law;
the acts of the AIFC not inconsistent with the Constitutional Law, which may be based on the principles, norms and precedents of the law of England and Wales and (or) the standards of the world's leading financial centers adopted by the AIFC bodies;
the current law of the Republic of Kazakhstan, which applies to the extent not regulated by the Constitutional Law and the acts of the MFCA.
In total, there have been adopted more than 70 acts of the AIFC to date. However, considering that the Centre is a new and developing institution, many procedural and practical issues still need to be finalized and regulated. In particular, AIFC did not regulate the procedure of voluntary winding-up of legal entities until recently. As a result, legal entities intending to terminate their activities voluntarily could not do that and many companies were left in a "frozen" state.
In December 2021 there was successfully completed the first project on voluntary winding-up of a Private Company under the acts of Astana International Financial Centre. RSP International LLP acted as the Kazakhstani legal counsel of one of the private companies (further – „the Company“) in connection with all aspects of its voluntary liquidation. Within the framework of realization of this project, there was established a dialogue between AIFC, the tax authority and the state justice authority.
Based on our own experience, in this article we will outline the basic procedural steps required for the voluntary winding-up of a Private Company under applicable AIFC legislation. Our notes are intended as a useful guide - they are not exhaustive and do not constitute legal advice.
Voluntary winding-up under AIFC law is the independent liquidation of the Company approved by a simple majority of its members (shareholders). Such a decision is taken as soon as the Board of Directors of the Company decides that the Company has no reason to continue its operations. Voluntary liquidation can only be carried out if the Company is solvent, i.e. the assets of the Company must be sufficient to pay all debts in full, together with interest at the statutory rate, within a period not exceeding 12 months from the commencement of liquidation.
In the case of voluntary winding-up, the Company must cease to operate from the commencement of the winding-up proceedings, unless the carrying on of the business may be required for its liquidation. However, the corporate legal personality and corporate powers of the Company shall continue until liquidation.
As part of the preliminary stages of voluntary liquidation, the directors of the Company must make a formal Declaration of Solvency, which is expressed approved by a simple majority of the board of directors.
The Declaration of Solvency must be made within 5 weeks immediately before the date of the liquidation resolution, or on the same day but before the resolution is approved.
On the voluntary winding-up of the Company, there must be appointed one or more liquidators at a general meeting of members for the purpose of liquidating the Company and distributing its assets. The Liquidator appointed for the voluntary winding-up of the Company must necessarily be registered with the AIFC Register of Insolvency Practitioners and Official Liquidators.
From the appointment of the Liquidator for the Company, all the powers of directors shall cease unless the Company in general meeting or the Liquidator approves their continuation.
All tax requirements under the Company's voluntary liquidation procedure are fulfilled in accordance with the tax legislation of the Republic of Kazakhstan, as the tax regime in the territory of the International Financial Centre is determined by the Tax Code of the Republic of Kazakhstan, except for certain exemptions.
The liquidation of the Company is considered completed when the company is dissolved after the final general meeting of the members conducted by the Liquidator. The voluntary liquidation procedure for a Private Company can last from 4 to 6 months. Once the liquidation process has been successfully completed, the legal entity ceases to exist.
If during the voluntary liquidation procedure it transpires that the Company is not solvent, the Liquidator shall convene a meeting of creditors and the liquidation shall become a voluntary liquidation of the creditors.