The current Constitution was adopted by national referendum in August 1995. The Constitution establishes the division of power between the legislature, executive and judiciary.

Civil Code provides two basic types of ownership: governmental and private. In turn, governmental ownership has two sub-types: republican and municipal.

According to the Civil Code and subsequent laws, the Government guarantees the protection of ownership rights of individuals and any legal entities.

A new version of the Corporate Law, currently being considered by Parliament, provides key principles of protection of minority shareholder rights.

Moreover, basic investor rights are protected by the Civil Code, Foreign Investment Law, Securities Market Law, and the Law on Direct Investment. In short, the basic elements of the ownership rights protection mechanism are now in place.

The main idea of the laws on the protection of investors’ rights is one of equal treatment for both domestic and foreign investors, regardless of their country of origin. The 1994 Foreign Investment Law (amended May 1997) set forth guarantees for investors with respect to the repatriation of profits - no restrictions. The recently adopted law on Government Support for Direct Investment (1997) has established a preferential regime for direct investors, which includes a set of privileges such as tax and concession rights. Tax privileges include a significant reduction, 50-100%, in the rates of land, property and income tax.

The core element of banking legislation is the 1995 Banking Law (last amended 1997) which establishes a two-tier banking system, giving full regulatory authority over the banking sector to the National Bank of Kazakhstan (NBK). It also outlines the major objectives of the NBK i.e. maintaining the stability of the Tenge and formulating and implementing policies to promote macroeconomic stability.

The Law also distinguishes the following types of second-tier banks: joint stock (organised in the form of a corporation), state-owned, supra-national (established by several states), and banks with foreign participation (where over 30% of equity belongs to non-residents). Moreover, non-resident banks are permitted to establish representative offices in the first instance, for the first year, and after one year of profitable activity to transform it into a separate legal entity (banks).

The legal framework for the securities market is represented by the Securities Market Law, which introduced the National Securities Commission as the major regulatory authority on all aspects of issuance and circulation of securities. The Securities Law also introduced new concepts for the Central Asian securities markets, such as the principle of nominal shareholding and issuance of securities in electronic (paperless) form. Another major law, on Registration of Transactions with Securities, regulates all matters of transaction execution and registration, thus resolving a key problem. Institutional investment activity is regulated by the Investment Company Law, which introduces new types of institutional investors to Kazakhstan’s financial markets.

A core legal act on tax matters is the 1995 Tax Code (last amended December 1997) which introduced new concepts for Kazakhstan’s fiscal policy: the distinction between direct and indirect taxes. Indirect taxes currently consist of excises and a 20%-rated VAT. All other taxes are considered to be direct taxes. The major direct tax is an income tax, which is set at 15% for foreign companies. The Tax Code also establishes significant tax privileges for foreign investors. For example, if a company registers in the new capital, Akmola, and is engaged in construction as a core business, it is eligible for tax holidays for the first five years. Moreover, the Government, through its Investment Committee, has the discretion to grant further tax privileges for foreign investors.

The December 1997 amendment also abolished Securities Transactions and Capital Gains taxes. New issues of corporate securities are subject to 0.5% tax. Recent amendments also reduced tax on interest paid to securities holders (dividends, bond interest) by up to 15%.

Introduced in January 1997, the Bankruptcy Law reiterates the basic principle of a market economy – the rule of law. According to the Civil Code and this law, non-voluntary change of ownership rights is only possible by the court’s decision. Bankruptcy procedures can be initiated by the shareholders’ meeting and/or creditors and are subject to the court’s decision.