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kazakstan law

  1. 181 Posts.
    A while back when the IGC/EP deal was announced I was doing some research and came across an article written by a lawyer specialsing in Kazak. energy & resouces law. In light of IPO's current situation, for those who may be interested I am posting these 2 exerts from the article as it was quite long. If you want some deeper reading on the issue you will find it on Michael Wilson & Partners website.

    IMHO it would appear that EP/IGC should have sought permission from the State prior to doing the deal & not after, and this is probably what is causing the delay.

    Oil & Gas Magazine Article - The States Pre-Emptive Right by Michael Wilson

    By Michael E. Wilson, Managing Partner

    The States pre-emptive right in the event of any alienation or proposed transfer of rights of subsoil use was first introduced by an amendment to the Subsoil Use Law of Kazakhstan in December 2004, and further expanded in October 2005. Although almost 1Ѕ year has passed since the first introduction this right, there are still many questions and uncertainties which arise in practice.

    In a nutshell, in addition to the consent of the Ministry of Energy and Mineral Resources (MEMR) as the authorised/licensing body and who operate and maintain the Register of Subsoil Users on behalf of the Government, itself on behalf of the Republic of Kazakhstan, these days when a subsoil user, or a company holding subsoil use rights, wishes to alienate or otherwise transfer the same, the State needs to decide whether or not it should exercise its pre-emptive right to acquire the same.
    Accordingly, as of today, the States pre-emptive right arises in the event of any sale or any purchase of:
    (a) a subsoil use right;
    (b) participatory interests (in an LLP) or shares (in a JSC) in a legal entity that has a subsoil use contract (referred to in the Kazakhstani legislation as a Subsoil user);
    (c) participatory interests in or shares in a legal entity, that has an opportunity to take decisions with regard to the Subsoil user or influence decisions of the Subsoil user directly and/ or indirectly, if such legal entitys main activity is connected with subsoil use in the Republic of Kazakhstan.

    This means that notice has to be given to the State of such proposed transactions, before they are implemented, and the State then has to decide whether or not to exercise its first and pre-emptive right, or to decline to do so.
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