On 7 December 2015, Kazakh President Nursultan Nazarbayev signed the constitutional law “On the Astana International Financial Centre (AIFC)”. The law supports the establishment of the new financial centre, which aims to turn Astana into a regional financial hub by creating favourable and attractive conditions for investment and finance.
Kazakhstan has shown real commitment to bring its standards to international levels and to diversify of its economy. Its recent agreements with the WTO and the EU; its economic and geographical position within the Eurasian Economic Union and its ancient silk-road history offer great potential for Kazakhstan to become the hub of Central Asia once again.
Members of the AIFC will be exempt from corporate income tax, property and land taxes until 1 January 2066. The AIFC will follow English law and principles and the standards of the world’s leading financial centres.
Citizens of countries of the OECD, Malaysia, the UAE, Singapore and Monaco, as well as a few other countries will enjoy visa-free entry to Kazakhstan for a period of 30 days.
The law also outlines the goals, objectives and principles of AIFC activity as well as its regulatory principles and the definition of its governing bodies and their powers. Structural reforms will be supported by the European Bank of Reconstruction and Development (EBRD) and the London Stock Exchange (LSE).
The Centre will have its own legal system in certain areas, which will, according to the Bill, be based on the principles and rules of English law and the standards of leading global financial centres. It is expected that the system of laws - to be developed over the next two years - will bear some similarity to the system introduced in the Dubai International Financial Centre (DIFC), in which separate laws governing, inter alia, civil law relations with and between participants of the Centre, the formation, governance and registration of companies, financial services, employment relations, to name a few, provide a system separate from national law.
The Centre will have its own two-tier court system to apply these laws, again applying the procedural principles and norms of the justice system of England and Wales, and the standards of leading global financial centres. An agreement has been entered into with the DIFC Court in Dubai to advise and assist in the establishment of the new court system. An international arbitration centre will also be created within the AIFC. It is expected that foreign judges and arbitrators will be invited to sit in these courts and tribunals.
The operating language in the courts, and in the administration of the Centre itself, will be English. The AIFC’s laws are also to be developed in English.
Regarding capital market developments, large national companies such as oil & gas, railway, electricity and postal companies will be privatised – all based on the new stock exchange.
Regarding asset management, the Kazakh Central Bank worth USD 100bn will follow a less conservative model and a new single pension fund will also be set up.
There are clear plans to create a private investment climate and more private banking opportunities. Among the main goals are for the AIFC to become the centre of Islamic finance, green financial industries and FinTech expertise.
The EBRD and LSE will support the AIFC to develop a strong foundation of corporate governance and an even stronger regulator.
The new Centre will open in January 2018 with the view of becoming one of top10 Asian Financial Centres by 2025.
It is expected that eventually the Centre will be located on the site currently being developed to house Expo2017.
To coincide with the Kazakhstan Bar Association (KazBar) annual conference, the Law Society in partnership with KazBar will host a seminar on English Law on 27 May 2016. The seminar aims to promote the values and principles of the English legal system and the areas of law which will drive the Astana International Financial Centre. Read more.