Joint Ventures in Kazakhstan

Entity selection — LLP or JSC

Most JVs in Kazakhstan are structured as an LLP — simpler governance, lower compliance burden, no mandatory audit for smaller entities. A JSC is needed where a sector law requires that form, as for banks and insurers, and is the usual form where the JV intends to offer shares publicly. Bond Stone advises on entity selection based on the JV's activity, size, governance requirements, and exit strategy.

Governing law — Kazakhstani law or AIFC

The JV agreement and shareholders agreement can be governed by Kazakhstani civil law or, where the holding entity is AIFC-incorporated, by AIFC Contract Regulations based on English common law. Bond Stone advises on governing law selection — Kazakhstani law for operational JVs with strong local elements; AIFC law for international holding structures where English law provides greater familiarity and enforceability.

Subsoil & sector-specific requirements

A transfer of subsoil use rights, or of interests in a subsoil user, generally needs a permit from the competent authority unless an exemption applies (Subsoil Code, Art. 44), and on strategic plots the state has a priority right (Art. 43). The authority is the Ministry of Industry and Construction for solid minerals and the Ministry of Energy for hydrocarbons.

Competition law notification

JV formations that meet the thresholds under Kazakhstani competition law need the prior consent of the Agency for Protection and Development of Competition (APDC). Bond Stone advises on competition law filing requirements and coordinates multi-jurisdictional filings where the JV involves parties from other EAEU member states.

Reserved matters & veto rights

Bond Stone drafts reserved matters lists requiring unanimous or supermajority approval — covering changes to the business plan, incurrence of significant debt, related party transactions, changes to constitutional documents, and appointment of senior management. These protect the minority foreign investor from being outvoted on fundamental decisions.

Deadlock resolution

Deadlock provisions matter most in 50/50 JVs. Bond Stone advises on and drafts Russian roulette, Texas shoot-out, and put/call option mechanisms — and on the appropriate triggering events, valuation methodology, and cooling-off periods before deadlock mechanisms activate.

Exit provisions

Pre-emption rights, drag-along rights, and tag-along rights must be drafted around Article 31 of the LLP Law, which gives participants a statutory pre-emptive right on a sale to a third party; the founding documents can vary only how the interest is shared among participants who exercise it. Bond Stone advises on structuring exit provisions that achieve commercial objectives within the constraints of Kazakhstani law.

Dispute resolution

Bond Stone recommends AIFC Court or international arbitration (IAC, LCIA, ICC) as the dispute resolution forum for JV agreements — rather than Kazakhstani courts. This provides international investors with a neutral, English-language forum and, in arbitration, awards enforceable under the New York Convention.