A brief overview of the process of construction in Kazakhstan

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Extracts from the series of articles "Construction in Kazakhstan from A to Z".
Prepared by Andrey Artyushenko, Managing Partner, and Andrey Reshetnikov, Artyushenko & Partners Lawyer

A brief overview of the process of construction in Kazakhstan 

Introduction

In the series of articles entitled "Construction in Kazakhstan from A to Z", this article will be one of the largest, since its purpose is to describe in brief a complicated and overregulated process of construction in Kazakhstan step by step.

According to the World Bank Group, as of June 2014 Kazakhstan ranked 77th out of 189 countries in terms of doing business. This ranking shows the extent of easiness of doing business by countries and is made up of several indexes.
Kazakhstan ranks 55th in starting a business (15th in the region), 154th in dealing with construction permits (19th in the region), 97th in getting electricity, 14th in registering property, 71st in obtaining loans, 25th in protecting investors, 17th in paying taxes, 185th in trading across borders, 30th in enforcing contracts, and 63rd in resolving insolvency.

The above statistics is in the public domain. Coupled with an active advertising campaign of the Republic of Kazakhstan in 2014 to show the investment attractiveness of Kazakhstan, these factors make it possible for the world’s major construction companies to expand their businesses to Kazakhstan.

Further on, we will cover the main issues which foreign companies, who want to work in Kazakhstan in the field of construction, face, starting with the registering of business and ending with the final acceptance and commissioning of the facility, taking into account the features of regulation of this process with the participation of foreign companies as the entities engaged in construction activities.

This article describes the general requirements to the construction, without taking into account the features of construction of specific projects and facilities, implemented for example, in the framework of the state procurement or in adverse conditions of the sea.

It requires a lot of time, costs, and passing through numerous bureaucratic procedures in order to build a facility in the Republic of Kazakhstan. We recommend you to thoroughly plan your projects.

In the introduction section, we will pay a little more attention to the planning stage, since it uncovers the interweaving of various processes and stages of construction, which are outlined in detail.

Sharing the common driveways and utilities in the construction of a few buildings on the same plot of land is a quite clear synergy and cost saving. However, for some reason, the issues of shared use of the property by a few owners as a result of such cost saving, are solved, as a rule, at the stage of selling of the constructed and commissioned facility.

It is important to determine in advance the order of parceling the land in the future. Some limitations can appear due to the neighboring urban utilities network/facilities or water protection zones. The status of the land will determine the order of its sharing in the future, especially when it comes to the construction of a few office and trading facilities (as well as multifunction buildings) in close proximity to the public utilities network, which later, according to the investor’s plan, should be able to become the property of third parties (in whole or in part).

As early as at the planning stage, the investor should think about the goals it follows (whether it will sell the facilities separately or not, whether all the facilities will have a single management company or not, whether it is necessary to think about the image of the project for decades ahead or no, etc.), so that to dispose the asset in the future in the most efficient way.

With regard to the use of the common property, lack of the relationship regulation tool, which is organized in advance and signed by all the owners of the properties, can become a cause of protracted litigation and/or difficulties in the current management of the constructed facilities (for example, failure to raise money for the current/capital repairs of the common property - roads, common utilities, yards and other surrounding areas; failure to make effective use of the common property, and etc.).

Our company recommends you to do the following at the planning stage:

  • To determine the time and procedure for parceling the land for the purpose of timely receipt of construction permits and completion of all necessary paperwork for the sale of the facility entirely or in parts;
  • To make proposals beforehand, and discuss and adopt management options jointly with the supposed management company, taking into account the features of the project and its supposed implementation;
  • For the preparation and timely implementation "under control" of the process (plan) of transfer of the rights to the property, common property and other assets, including those under control of the management company;
  • To clearly define what property and under what conditions to give to the municipality or leave in shared use, what property to give in own use together with the building (premise), and etc.;
  • To solve the issue of the possible usage of an easement;
  • To develop a package of documents necessary for the implementation of decisions adopted by the investor in terms of implementation, management and sharing both of the entire project and its parts (sale contract, easement agreement, the protocol on the establishment of a condominium, the Charter of the cooperative, the report on management of the condominium, and so on).

In view of the above, we recommend you to attract local professionals with relevant experience and recommendations to solve these complicated and overregulated issues.


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1. Entities engaged in construction activities

Local construction companies usually work in the form of LLP (the same analog in Russia) or in the form of joint-stock company (JSC). You should take into account that the newly-created (just registered) companies cannot immediately proceed to the construction of technically complex buildings; due to the lack of experience they will not be able to obtain a relevant license.

1.1. Branch/representative office of a foreign company

A foreign company may operate in the Republic of Kazakhstan through its branch or have a representative office to protect its interests. Only this way they can engage in construction activities in Kazakhstan, using their previous experience in this field gained in other countries. Owing to the latest amendments to the laws of the Republic of Kazakhstan, foreign companies now have the opportunity to get a license without the need to set up a branch here. To meet the formalities on obtaining the necessary permits for the construction activities it is sufficient for the company in some cases just to get a business identification number (BIN) and open an account at one of the local banks.

The procedure for the setting up and registration of a branch of a foreign company (meaning any foreign company registered in the CIS or outside of the CIS) does not differ much from the registration of branches of local legal entities. The difference is in the necessity to make an apostille of the constituent documents of the company, as well as to translate them into the Kazakh and Russian languages. After registering with the tax authorities and upon receipt of the certificate of the state registration, further it is necessary to order the manufacturing of the company’s seal, to open a bank account, and to hire an accountant.

Branch director is appointed the top manager of the branch main office and acts under the general power of attorney. If the director is a foreign citizen, there is no need to obtain a relevant work permit for him/her. However, if the company wishes to hire other foreign staff to work in the branch, it is required to obtain relevant work permits for them in accordance with the regulations on attracting foreign labor force and taking into account the quota set by the authorized body regulating the labor market (it should be noted that the size of the quota varies from year to year).

Permit to attract foreign labor force is issued by four categories of employees: 1st category - managerial staff of the company; 2nd - specialists with higher and secondary vocational education; 3rd - skilled workers and workers hired for seasonal agricultural work. The employer shall comply with the ratio of local staffers and foreign staffers: for the 1st and 2nd categories, the ratio of local staff shall not be less than 70% of the total number of employees, and for the 3rd and 4th categories - not less than 90%.

It is not required with regard to some foreign employees to obtain work permits. Apart from the director of the branch or representative office of a foreign company, such foreign staffers include:

  • Those permanently residing in the Republic of Kazakhstan;
  • Those on a business trip, for business purposes, the term of which does not exceed a total of one hundred and twenty calendar days in any one calendar year;
  • Citizens of the Russian Federation or the Republic of Belarus;
  • The top managers of the companies who have signed with the Government of the Republic of Kazakhstan contracts of investment in the amount exceeding US$ 50 million in money terms;
  • The top managers of Kazakhstani companies who carry out investment activities in the priority sectors of the economy and signed a contract with the local authorized body on investment.

1.2. Licenses and permits

To engage in construction activities or design in Kazakhstan, the foreign or local company shall obtain a relevant permit from the Kazakh state authorities. Such permit is the license. It should necessarily be obtained, if the type of activity the company is going to engage in, is specified in the applicable laws, regardless of whether the company is going to operate in Kazakhstan or implements any short-term project.

Laws of the Republic of Kazakhstan provide for a detailed list of licensed activities, including construction operations, design and survey. License and (or) annex to the license can be issued either in paper or electronic form.
It should be noted that on November 20, 2014 the new Law on "Permits and Notices" took effect, providing details on some licensing issues and unifying legislation in the field of permits.

Below is the exhaustive list of activities in the construction sector, for which the license is needed:

  • Surveying operations;
  • Design;
  • Construction and assembling operations;
  • Activities on the organization of construction of residential buildings for the money of shared construction participants.

With this, each of the above-listed licensed activities is divided into many more items. For example, the licensed construction and assembling operations are divided into more than 25 items.

Licenses are issued by the authorized body in the field of architecture, construction and urban development. Documents for obtaining the license are submitted to public service centers (PSC) or State Administration "Administration of State Architectural and Construction Control of Local Administrations (Akimats) of the Regions and cities of Astana and Almaty."

Licenses which are issued for the implementation of design and construction and assembling operations, are divided into the following categories:

  • 1st category (high level of complexity) involves unique buildings (over 9 floors), industrial facilities of the national importance (factories, plants, motorways and railways);
  • 2nd category (medium level of complexity), where the involvement of a general contractor is possible, involves any construction operations that are not included in the 1st category; operations are possible in a seismic area;
  • 3rd category (low level of complexity) does not allow the involvement of a general contractor or construction of permanent buildings and structures; this category involves the capital repairs of private houses and apartments, and the implementation of other smaller works.

In the selection of a category, you should be aware that the newly created company (usually in the form of a limited liability company) can be issued a license only for the third category.

To apply for a license for the second and the first categories, the potential recipient of the license must have relevant experience in completed projects. Even if the founder of a newly established company is a well-known design or construction company, which already has its own portfolio and a list of completed projects, its previous experience will not be recognized as adequate experience of the newly created company. The only exception is the companies whose founders have relevant experience (in any countries) for more than thirty (30) years.

The only way for the founder (it does not matter whether it is resident or not) to use its previous experience (both in Kazakhstan and outside of Kazakhstan) for obtaining of the license is to set up a branch in Kazakhstan. This option is most suitable for foreign construction and design companies who have decided to extend its activities to the Kazakhstan market. The branch will be able to obtain a license for the parent company, submitting necessary documents on its behalf in Kazakhstan.

The legislation provides for a clear list of requirements for any category of license. In particular, Resolution of the Government No.89 of February 5, 2013 approved "Qualification Requirements and a List of Documents Confirming the Compliance with Them for Carrying out Activities in the Field of Architecture, Urban Planning, and Construction".
The most important requirements of those specified in the list are: requirements to the personnel, production base, logistics, internal rules and regulations (health and safety, quality control, etc.), work experience and completed projects (with the exception of the 3rd category).


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1.3. Access to electronic services

At the moment, many services in the field of real estate are presented in electronic format on the website of the "electronic government". The use of the given services allows to save time on administrative procedures at all stages of the registering and doing business in Kazakhstan in the field of construction and design.

In order to have access to electronic services, the company has to get a digital signature, which is issued by the National State Company "State Technical Service" within 2 business days. The application is filed directly to the Service Provider or through a public service center.

Recognition of foreign electronic signature shall be in accordance with international agreements ratified by the Republic of Kazakhstan. At the moment, such agreements are available only with the Customs Union members.

In the absence of the international agreement, a foreign company is issued a digital signature in accordance with the laws of the Republic of Kazakhstan. For this, it is necessary to file an application with the enclosure of a document containing the personal identification number (PIN) of a representative of the non-resident legal entity (for example, the certificate of registration), as well as the document containing the business identification number (BIN) of the legal entity. To get a BIN, the legal entity shall obtain a certificate of registration on the grounds set forth in the tax code of the Republic of Kazakhstan (eg. open a current account at a local bank).

2. Getting a land plot

2.1. Ways to be provided a land plot. A plot of land may be obtained in two ways:

1. To buy it from the state. For this, it is necessary to obtain from the local executive bodies of the district (city) a decision on the relevant granting of appropriate rights to the land;
2. To find a plot of land in the secondary market for the rental or purchase of it in private ownership.

Each of the options has its advantages and disadvantages. If the project owner wants to get land from the state, it should be ready for a long bureaucratic procedure, which consists of several stages; at each of them delays are possible. On the other hand, acquiring from the state, the project owner pays the cost of the land plot, which is moderate, comparing with the market prices.

In its turn, the purchase of land plot from an individual entails certain risks associated with the previous owners. It can be so that land might be pledged or be in the arrest, third parties may claim the land, or there might be any other encumbrance, which the seller has not disclosed. The advantage of buying the land plot in the secondary market is that the buyer is on a par with the seller at the conclusion of the contract – the parties are free in their actions and can negotiate a contract in a fairly short period of time.

If the project owner already has land, it needs to make sure that it has the right to perform construction on it.

It should be noted that the rights of foreigners to certain types of land are limited:

  • Non-residents cannot have in ownership the land designated for agricultural production and afforestation;
  • It is not allowed to provide land, located in the border zone and border strip of the Republic of Kazakhstan, in private ownership to non-residents;
  • Non-residents and companies, in the authorized capital of which the ratio of non-residents is more than fifty percent, can dispose of the land plot designated for agricultural purpose only under the right of temporary use of land under lease for a period of up to ten years.

2.2. The procedure for granting a land plot by the state

To get a land plot from the state, the project owner will have to go through a procedure consisting of the following steps:

  • Applying for the granting of the land plot;
  • Deciding whether it is possible to satisfy the application (pre-selection of land plot);
  • Findings of the commission on the granting of the land plot;
  • Development and approval of land project;
  • Making decision by the Regional/City Governor (Akim)/Governor’s office (Akimat), based on the Commission's decisions and the land project;
  • Entering into a contract of sale or temporary/short-term/long-term land use for a fee/at no charge;
  • Marking delimitations of the land plot on the ground;
  • Preparation and issuance of the documents certifying the right to land.

In the receipt of the land from the state, it is necessary to pay attention to the following:

  • The purpose of the land use, specified in the relevant document, shall match the objective of the future project, according to the Classification by Designated Purpose (for example, for Almaty, it is necessary to refer to the Appendix to Resolution No.1/85 of the Akim of Almaty of February 13, 2013).
  • Possibility to divide the land.
  • Registered encumbrances to the land.
  • Setting the fenced off area or sanitary protection zone of the land (is executed in the form of certificate of selection of the land with local executive bodies, according to the Land Code of the Republic of Kazakhstan).
  • The general plan of the inhabited locality. It is prohibited to grant a land for construction, if no detailed layout and/or design made on the basis of the general plan of the inhabited locality, have been provided.

2.2.1. Filing an application for getting the land plot

To get the land plot, the applicant has to file an application to the local executive bodies at the location of the land plot. The term of consideration of an application is up to two months from the date of its receipt. The application shall contain:

  • The purpose the land will be used for (in our case, for construction purpose);
  • The alleged size of the plot of land (to be determined in accordance with the norms of land allocation as per the procedure established by the laws of the Republic of Kazakhstan for these types of activities, or in accordance with the architectural and urban planning and/or construction documents;
  • Location (the approximate location of the land);
  • Requested right to use the land (private ownership of land, the right of permanent use of the land, the right of temporary (long-term, short-term) use of the land for a fee, the right of temporary use of land at no charge);
  • The availability or the lack of another plot of land (in case of the plots of land for a private farm in rural areas).

2.2.2. Preliminary selection of the land.

A necessary step in the procedure of getting the land for construction is preliminary selection of the land. After the land is selected, the relevant statement is issued by the structural subdivision of respective local executive bodies in the field of architecture and urban planning.

The statement on the selection of the land plot is issued with the annex showing the boundaries of each plot of land in accordance with possible options of their selection. The statement on the land plot selection shall be executed within ten business days, with the subsequent submission of the land plot selection statement to the commission for consideration and opinion.

2.2.3. The decision to grant the land plot

The decision to grant the land plot is issued by local executive bodies on the basis of the commission's opinion and land project.

The Commission is established by the local executive bodies of the region, the city of national status, the capital, district, the city of regional status. The commission is comprised of deputies (legislators) of the local representative bodies, the representatives of the authorized body of the region, the city of national status, the capital, district, the city of regional status, the structural subdivisions of relevant local executive bodies in the field of architecture and urban planning, the National Chamber of Entrepreneurs of Kazakhstan, as well as local governments (if any). If the commission has been established at the level of regions, the cities of national status, and/or the capital, then it shall also comprise representatives of relevant territorial subdivisions of the authorized bodies in the field of environmental protection, agriculture and forestry, use and protection of water resources, land management, as well as other persons at the discretion of the local executive body.

Endorsement of the committee is handed over to the applicant within five business days for preparation of the land project. The land project specifies the area of land plot granted, its boundaries and location, the adjacent land owners and land users, as well as encumbrances and easements of the land granted.

A copy of the decision of the local executive body on granting the right to the land plot is handed over (sent) to the applicant within five business days since the decision.

2.3. Registering the right to the land

Registering the right to the land is carried out as per the same procedure as the registration of construction facility. The rate of fee for land registration is 0.5 MCI that is at the current exchange rate is about US. The rate of fee for expedited registration of land is 15 MCI that is equal to about US$ 150 at the current exchange rate.

Without registration of the land, it will be impossible in the future to register the construction facility. If the project owner has failed to make such registration, the law permits the simultaneous registration of the land and the constructed facility. If the right to land has emerged before the introduction of the system of state registration, the registration of the construction facility is allowed, subject to the simultaneous registration of the right to the land.

3. Project documentation

Basic rules for the development, coordination and approval of project documentation, its structure and content (at a one-stage and two-stage design) are established in the Construction Rules and Regulations (SNiP) of the Republic of Kazakhstan 1.02-03-2011, which are developed for all entities engaged in construction activities. Developed and approved project documentation is valid for three years from the date of its approval.

Upon expiry of the given period, the project documentation is considered invalid. In this case, it shall be brought into a line with the applicable government regulations and re-approved. This is carried out in the same manner in which it was approved before, but taking into account the amended technical standards.

3.1. The procedure for preparation of project documentation.

Design can be made in several stages. Stages are defined in the design assignment. The first stage is the preparation of the project, which is developed on the basis of pre design documentation. The second stage is the preparation of working documentation. A two-stage design applies when it comes to construction of large facilities for civil purpose or industrial facilities, or the construction of critical facilities, affecting the state or public interests, and implemented with the participation of public investment.

Designing facilities with the term of construction of up to 24 months is carried out in one stage, without the development of working documentation. Projects of construction facilities built as per the model projects are also developed in one stage, when the previously developed individual project is executed; the same concerns the renovation of facilities.

The beginning of the design shall be the date of entry into force of the contract for the development of design estimates, signed between the customer and contractor (contractor, general designer). The contract for the development of design estimates includes the types and scope of work, terms of carrying out designer’s supervision when necessary (otherwise, it is indicated that there is no need for designer’s supervision). With this, it is not permitted to subcontract the work on the design, which value is more than two-thirds of the total cost of the work.

At the stage of preparation of project documentation, those solutions which refer to the area of general planning and 3D solutions that have been adopted and approved by the general plan of the settlements, are outlined in detail. Project documentation shall contain solutions and indicators of the general plan (including zoning area).

If the prepared design documentation reasonably goes beyond or differs from the government regulations including the general plan, it will be necessary to get written approvals from the authority which approved the government regulations (in case of the general plan it is the local representative bodies). Prior to submission for the approval, it will be necessary to obtain to approve any differences (deviations) from the mandatory requirements of state standards from the relevant authorities.

3.1.1. The design assignment/ source materials for the preparation of project documentation

The customer (or the project owner) draws up and approves the design assignment, which can also be prepared by the general designer, or other contractor. Design assignment is an integral part of the contract for the development of design estimates.

Together with the design assignment, the customer provides the contracting engineering company (the general designer) source materials/data for the development of project documentation, which include:

  • The decision of the local executive bodies of districts (cities) on the granting of the relevant right to land, including regulations on the use of the territory within its borders and designated purpose;
  • Data on engineering survey of the construction site (within the boundaries of the land and the routing of communications), including data on surveying, geological and hydrogeological surveys required for the design and construction;
  • Technical conditions for connection to the public utilities and engineering networks, provided on request of local executive bodies by service providers in the field of public utilities and engineering networks in the area of the supposed construction;
  • Architectural and planning assignment, issued by the local (city, district) body for architecture and urban planning, including land development conditions, and landscaping.

3.2. Coordination of the project documentation

Developed in accordance with the design assignment, the architectural and planning assignment, and other source materials, the project documentation/ design estimates shall pass through coordination and approval in accordance with the requirements established by state regulations.

Project documentation shall include a record of the chief engineer or the chief architect of the project as to the compliance of the project documentation with the state regulations.

In some cases it is necessary to make additional coordination of project documentation with government agencies, such as the Committee for Construction and the Committee for Industrial Development and Industrial Safety. These cases are related to the construction of special purpose facilities, such as hazardous production facilities, if this is expressly provided by the legislation.

Additional coordination is also required for retraction of additional land (reduction in the land), in the change of transport or communication routes, in the deterioration of initially set architectural-aesthetic, engineering, fire-fighting, anti-explosion, and sanitary qualities of the environment.

3.3. Examination of the project documentation

Examination is one of the final stages of development of project documentation, preceding its approval. The goals of examination are the analysis of documentation, the determining of effectiveness of investment, and the provision of design solutions for sustainable operation of the facilities after their commissioning.

Examination is carried out by an individual or a company, which has a relevant license in this field of works. Examination is performed within 45 calendar days. At the request of the customer, in some cases, examination may not be performed. For example, whilst designing technically simple structures (houses, temporary structures, household structures, and so on), examination is optional.

In some cases performance of the state examination at the National State-Run Company "State Expertize Agency" is mandatory. State examination is necessary, in particular, in the construction of potentially hazardous and technically complex facilities, such as nuclear facilities, trunk railway lines, subway etc. State examination is performed within 45 calendar days. For the technically complex facilities (building complexes), the term of state examination may be extended to 60 calendar days. The term of state examination for projects of construction of technically simple facilities cannot exceed 15 calendar days. Regarding facilities and complexes, the design and construction of which is provided for in stages, the state examination can be performed at an appropriate project stage (expert support).

Project documentation for the facilities that have an impact on the environment, is subject to mandatory environmental examination.

3.4. Approval of the project documentation

Approval of the project documentation shall be made through the decision of the customer with the indication of the main technical and economic performance indicators under approval.

The law provides for the procedure for approval of project documentation on projects whose construction is invested by the state. In this case, the project documentation/design estimates for the facilities shall be submitted for approval not later than three months after receiving the approval from the commission on state examination.

The approval is made by the relevant public authority or other authorized legal entity by issuing a relevant order, with the indication of the main technical and economic performance indicators in accordance with the legislation of the Republic of Kazakhstan and the budget/estimated cost of construction on the base price level of 2001 and the price level as of the time of approval in the national and/or foreign currency.

4. Construction of the object

Basic requirements to, and standards on, construction are contained in the Law "On Architectural, Urban Planning and Construction Activities" and the Construction Rules and Regulations (SNiP) of the Republic of Kazakhstan 1.03-00-2011 "Construction Process, Organization of Construction of Plants, Buildings and Structures."

The construction process can be divided into several stages:
1) Notice of the beginning of construction;
2) Preparation for construction operations;
3) Construction: construction of the building/structure;
4) Completion of construction: acceptance of the facility and its commissioning.


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4.1. Notice of the beginning of construction

The customer (or project owner) shall make a notice to the State Architectural and Construction Supervision Body, not less than 10 ten business days prior to the beginning of construction, of the beginning of construction and assembling operations. PSC, at the location of the construction site, receive the notice, which can be submitted in both electronic and paper form.

The notice is submitted to the Chief State Inspector on Construction, the inspector of the region or city of national status. The notice shall contain the name of the customer or project owner, the name and location of the proposed facility for construction, the construction start date, the date of commissioning, and the source of financing. The notice shall also include data, such as right to land, the approval of design estimates, the examination (if necessary), the data about the contractor’s company, the persons in charge of the customer and the contractor, data on designer’s and technical supervision.

The notice of the beginning of construction and assembling operations shall contain the attached copies of the endorsement on examination (if it was carried out), as well as the statement of the selected land.

In the filing of the application, the applicant is issued a ticket that the application is accepted for consideration, or a copy of the notice with a note on the reception, or a ticket in the electronic form. Upon receipt of such document, the applicant is entitled to start the work. In this case, the State Architectural and Construction Inspectorate (inspector) is entitled not later than five business days since the date of receipt of the notice to attend the construction site.

4.2. Requirements to the construction

Throughout the entire period of construction (conservation) and lifetime of the facility, the owner of the facility (customer, project owner, leasee, leasor) shall ensure the following:

  • Quality of construction (compliance with the requirements established in the construction projects);
  • Quality of construction materials (compliance with the technical standards of the Republic of Kazakhstan);
  • Safety during the construction and operation of the facility, including carrying out of works and maintenance;
  • Compliance with occupational safety and health (compliance with the fire safety requirements, prevention of exposure of workers to occupational hazards);
  • Stability and reliability of operation;
  • Compliance with environmental requirements (land reclamation, preventing loss of natural resources, prevention or cleanup of harmful emissions into the soil, water and atmosphere).

4.3. Architectural and construction control and supervision

The construction process is accompanied by architectural and construction control and supervision as per the list of activities of private businesses that are subject to state control and supervision.

Architectural control and supervision over the quality of construction of facilities is performed by the State Architectural and Construction Inspectorate, which is a structural subdivision of the Committee for Construction of the Ministry of Economy and Trade of the Republic of Kazakhstan; it involves the national level body and its territorial structural subdivisions in the regions and cities of national status.

The State Architectural and Construction Inspectorate checks the customer (the project owner) for the availability of documentation required for the carrying out of construction. The inspectorate also monitors the quality of building materials, compliance of construction and assembling operations with the project and state regulations, as well as it monitors the implementation by the contractor of its own control of the construction quality, and the designer’s and technical supervision.
Whilst carrying out its activities the State Architectural and Construction Inspectorate has the right to request information about the facilities proposed for construction and those under construction, as well as to request project documentation and visit and inspect the construction sites.

Following the results of the inspection, a relevant statement and record sheet of the facilities is made. If any deviations from the government regulations or project documentation have been revealed, ythe State Architectural and Construction Inspectorate issues an instruction to remedy violations with indication of the deadlines.

4.4. Designer’s supervision

Author of architectural work (authors of the project and/or the developers of project documentation) are vested with an exclusive property right to use the design and implement it, the right to perform or authorize to perform the reproduction, distribution and treatment of the project, as well as the right to delegate these rights to others.

Powers to exercise designer’s supervision may be delegated to an expert who has a certificate to deliver engineering services in the field of architecture, urban planning and construction, or to the customer for its selection on its own of a supplier of engineering services for conducting designer’s supervision that has the appropriate certificate.

In addition to these exclusive rights, the author of the architectural work has the right to exercise control both over the development of construction documents, as well as their implementation, including designer’s supervision over the progress of construction and the photography (film or video). These powers are not absolute and may be limited by the design assignment or by the contractual provisions on the development of the design estimate documentation.

Designer’s supervision is carried out, based on the contract on the development of the design estimate documentation.. In the construction of facilities that are subject to the commissioning by the state acceptance commissions and acceptance commissions, it is necessary to make a contract for designer’s supervision. Designer’s supervision shall be implemented throughout the entire period of construction (renovation, restoration, expansion, technical re-equipping, modernization, capital repairs) of the facility or preservation of unfinished projects.

The contract for the designer’s supervision may include the following works, but not limited to:

  • Control over actual performance of construction and assembling operations for their conformity to the working documents, as well as the designer’s supervision of the progress of construction;
  • Control over executed documentation for its conformity to the adopted standards of the Republic of Kazakhstan;
  • Keeping during the construction and assembling operations of a designer’s supervision log and its submission to the customer upon completion of work under the designer’s supervision.
  • Overseeing the development of the construction project, implemented by the author(s) of the architectural and urban work; implementation of the construction project, carried out by its developers, including the author(s) or urban architectural works.

A designer’s supervision log is kept separately. It contains the instructions, identified deviations from the design estimates, violation of construction rules, regulations and specifications for the carrying out of construction and assembling operations, as well as instructions on elimination of revealed deviations and relevant time limits.

4.5. Technical supervision

Technical supervision is one of the forms of supervision over the construction. It is implemented either by the customer, or by an expert who has a relevant certificate to provide engineering services. The mark on the technical supervision, as well as data on the persons performing technical supervision, are entered in the log of the works.

Technical supervision is mandatory, only providing that the facility is subject to acceptance into operation by the state acceptance commission, as well as when it comes to repairing of roads.

Technical supervision is carried out at all stages of the project, from the start of the construction and assembling operations to the acceptance and putting of the facility into operation. Technical supervision covers the quality of work, terms of their performance, and the value of work.

Terms of conducting technical supervision are not specifically regulated by the law. The state regulations provide for particular cases where technical supervision is mandatory, and the procedure for its conduct. For example, to conduct checkup tests for the reliability of a brickwork or masonry on the construction site, a representative of the technical supervision is selected by relevant instruction. Carrying out of works to embed floor slabs shall also be carried out under strict technical control with the mandatory execution of a statement of acceptance of the quality of work performed.
Technical supervision is important in the identification and examination of the hidden works, the result of which will not be visible at the end of construction. Acceptance of such work is carried out by a representative of technical supervision with the preparation of the relevant statement of examination of the hidden works.

If technical supervision is carried out by an expert, the terms of its conducting may be specified in the contract for engineering services. After signing the contract, the contracted company shall provide to the customer for approval an organizational structure, created by it for the technical and designer’s supervision and project management, as well as the candidacy of a project manager from the company.

5. Completion of construction

5.1. Acceptance of the facility in operation

Almost any built (renovated) facility in Kazakhstan is subject to acceptance into operation. Without this procedure, the facility cannot be registered as completed, and cannot be included in the relevant databases as a real estate. Prior to that, the facility is considered as a set of building materials.

Acceptance of a facility involves its examination, which is carried out in order to determine the suitability of the facility for operation, to reveal and record any faults. Acceptance of the facility is ended by signing a statement of acceptance.
Acceptance of a facility gives rise to certain rights and obligations of the customer, thus, in the acceptance of the facility, it is important to notify the contractor of any shortcomings the facility has. Shortcomings are subsequently specified in the statement of acceptance of the facility. If the shortcomings are irremediable and prevent the use of the constructed facility for the designated purpose, the customer is entitled to refuse to accept the result of the work.

Construction contracts usually provide guarantee periods, during which the customer can make a claim to the contractor with respect to the shortcomings, including hidden ones. The law provides a guaranty period of 10 years, however, the contract can provide for a different term.

Acceptance of the facility is carried out by the acceptance commission, the state acceptance commission, or on its own by the customer. Appointment of the working commission is only necessary, if the acceptance of the facility is made by the state acceptance commission.

The statement of acceptance of the constructed facility in operation is signed by all members of the appointed commission, and is issued by the Administration for Architecture and Urban Planning at the location of the constructed facility.

The parties to delivery and acceptance of the constructed facilities, including the customers (investors, project owners), contracted companies responsible for the implementation of the contract development, design, construction and assembling operations, the manufacturers and suppliers of building materials, products, structures and equipment, as well as the services performing operational overseeing of the progress of construction and installation of equipment, members of the state acceptance commissions or acceptance and working commissions, other participants of the process bear liability, established by the laws of the Republic of Kazakhstan, for any threat to life or health, as well as damage (loss) to the state, public or private interests, caused as a result of violation of, or deviations from, the mandatory regulatory requirements (terms, restrictions).

5.1.1. Acceptance of a facility by a state acceptance commission

Any facilities that are constructed with the participation of state investment, as well as facilities affecting the state or public interests (the given condition is specified in the architectural and planning assignment) shall be accepted by the state acceptance commission.

In addition to the above conditions, the following facilities are subject to acceptance by the state acceptance commission:

  • Freestanding facilities for civil or communal purpose, related to technically complex facilities. Freestanding technically simple facilities, financed without the participation of state investment, are accepted in operation in accordance with the procedure established by Article 76 of the Law;
  • Industrial facilities, except for the facilities belonging to small businesses (sole entrepreneurs);
  • Residential buildings;
  • Roads and railways;
  • Bridges, overpasses, tunnels, product lines and power lines with engineering structures;
  • Space communications facilities;
  • Power generation facilities, including nuclear plants;
  • Water infrastructure, irrigation and/or hydraulic facilities;
  • Housing (living area and utility rooms) on railway and road junctions, in conservation areas, wildlife refuges, hatcheries, forestry, hunting and other lands.

Procedure for acceptance of a facility by the state acceptance commission.

In order for the facility to be accepted by the state acceptance commission it is necessary to achieve two factors: the full readiness of the facility for operation and a positive opinion of the working commission.

The working commission makes a comprehensive assessment of complete readiness of the facility introduced into operation, conducts a checkup test of the process equipment, provides remarks to the customer on incomplete readiness of the facility, and makes proposals as to the bringing of persons who have committed the violations to liability.

The result of the activity of the working commission is its written statement about the readiness or unreadiness of the facility for operation.

The State Acceptance Commission is a temporary or permanent collegial body, whose members are appointed by the appointing authority.

Depending on the importance or value of construction of the facility, the state acceptance commission may be appointed by the Government of the Republic of Kazakhstan, or central executive bodies, or local executive bodies (or by Akimats, or Akims).

The state acceptance commission is appointed not later than three months before the scheduled start date for the work of the acceptance commission on accepting production facilities in operation, and no later than thirty days before the scheduled start date for the work of the acceptance commission on accepting facilities (housing) for civil purpose and communal facilities into operation.

The State Acceptance Commission:

  • Determines the progress of elimination of defects, shortcomings and deviations from the project, construction rules and regulations, revealed by the working commission;
  • Determines the progress of architectural/construction and engineering and technological solutions, as well as the facility in general;
  • Determines whether the project capacity of the facility introduced into operation meets that set in the project;
  • Carries out, where appropriate, the test launch and testing of the process equipment and engineering systems.

According to the results, the State Acceptance Commission signs a statement of acceptance of the facility in operation, or produces to the body, which appointed the Commission, grounded opinion about the unsuitability of the facility for operation.
The statement of acceptance, signed by the state acceptance commission, is not subject to approval.

Composition of the state acceptance commission.

The composition of the state acceptance commission differs, depending on the type of the facility introduced into operation.

In the acceptance of an industrial facility in operation, the commission shall be composed of representatives of:

  • The body that appointed the Commission;
  • The general design company, the representatives of operators of the customer (enterprises, institutions), the general contractor;
  • Local executive bodies;
  • State Architecture and Building Inspection;
  • State Sanitary and Epidemiological Surveillance;
  • State Fire Service;
  • Authorized state body in the field of environmental protection.

In the acceptance of a facility for civil purpose or communal facility into operation, the state acceptance commission shall include representatives of:

  • Local executive bodies;
  • State Building Inspector;
  • Customer (investor, project owner);
  • Operators (enterprises, institutions);
  • General contractor;
  • General design organization (including the authors of the project).

5.1.2. Acceptance of a facility by the customer.

The legislation provides certain cases where a facility is accepted by the customer. It is possible, provided that the customer has on hand the decision of structural subdivisions of the relevant local executive bodies in the field of architecture and urban planning.

Such acceptance is related to the technically simple construction and installation works, such as the renovation of premises or temporary structures, household structures, parking lots or houses.

However, even such facilities cannot be accepted by the customer, if in the construction and operation of these facilities the rights of other citizens are violated, and there is a collision of state and public interests. Such facilities are also not subject to the acceptance by the customer, if their construction is funded by the state, or if they are located in earthquake-prone areas.

5.1.3. Acceptance of a facility by an acceptance commission

Facilities that are not subject to acceptance by the state commission, as well as the facilities that are not accepted by the customer, shall be accepted by the acceptance commission.

The facilities that are accepted by the acceptance commission are as follows:

  • Facilities where residential and non-residential premises in the residential building have got their function changed (change in the function);
  • Facilities where premises (parts of the building) undergo renovation (alterations, re-equipping), requiring a change of supporting structures and/or building envelopes, and engineering systems, and equipment;
  • If in the construction and/or operation of the building, the interests of other owners are affected;
  • If facilities are constructed (built) in an earthquake-prone area or in an area having specific geological (hydrogeological) or geotechnical conditions, as well as in other areas that are subject to specific regulation;
  • If the construction is associated with the production processes that have a potential hazard on the people and the environment.

Procedure for acceptance of the facility by the acceptance commission:

The Acceptance Commission is established not later than five days after receipt of a written notice from the general contractor as to the readiness of the facility for the procedure of acceptance into operation.

The Acceptance Commission determines and confirms in a documentary form the readiness of the accomplished facility, determines whether the actions of the project owner meet the requirements set in the approved project, or there are any deviations from them, and further actions how to eliminate them, determines whether the project capacity of the facility introduced into operation meets the parameters set in the project, and returns the documents received from the customer.

Following the results of the acceptance commission, a statement of acceptance is signed, or a statement of unsuitability of the facility for operation is produced for the correction of inconsistencies.

Composition of the acceptance commission

The acceptance commission shall be mandatorily composed of:

  • The customer (investor, project owner), or a responsible representative of the customer (investor, project owner);
  • A representative of the body of state architectural and construction control and supervision;
  • Representatives of the general contractor, subcontractors, general designer or developer of the project documentation (design estimates), sub-designers (developers of sections of the project);
  • Representatives of the local executive bodies of architecture and urban planning;
  • Representatives of the State Fire Service;
  • Representatives of the State Sanitary and Epidemiological Surveillance;
  • Representatives of operators (enterprises, institutions);
  • Representatives of other involved government agencies depending on the profile (designated purpose) of the facility introduced into operation.

5.2. Registering a constructed facility.

After signing a statement of acceptance of the facility into operation, it is necessary within 6 months to apply for registration of rights to the facility. In case of failure to meet this time limit, a fine will be charged in the amount of 20 MCI that is equal to about US$ 200 at the current exchange rate (the USD to tenge exchange rate of the National Bank as of 16.10.2014 was used for the calculation).

Registration of a construction facility is made within 15 business days since the receipt of the application. The fee for state registration of rights to the constructed facility for legal entities is from 0.5 MCI to 20 MCI, depending on the type of the constructed facility as per the rates established by Article 456 of the Tax Code of the Republic of Kazakhstan that at the current exchange rate is about US$ 5 to US$ 200.

With this, an expedited procedure for registration of real estate transactions is provided in Kazakhstan. In this case, the registration is made on the next day following the date of submission of the application. The registration fee for expedited state registration is 15 MCI to 45 MCI, depending on the type of the constructed facility, which at the current exchange rate is approximately US$ 150 to US$ 460.

5.2.1. Documents required for registration of the building.

Documents are filed to the PSC at the location of the constructed facility. The registering body is territorial bodies of Justice.

Documents required for registration of rights to constructed facility:

  • An identity document of an individual (the applicant) or the constituent documents of the company (authorized representative of the applicant);
  • Application for state registration of a standard form;
  • Documents confirming the rights to, and other documents confirming, the registered facility with the attachment of a technical data sheet of the real estate and/or the document identifying the land;
  • A document confirming payment of a fee for the state registration of rights to immovable property;
  • Constituent documents, minutes of meetings (extracts from them) of the founders (participants, board of directors, board of shareholders) as to the acquisition or alienation of real estate, in cases provided for by the laws of the Republic of Kazakhstan or the constituent documents;
  • Foreign companies produce legalized extract from the trade register or other legalized document, certifying that the foreign company is a legal entity registered under the laws of the foreign country, with a notarized translation into the state (Kazakh) and Russian languages;
  • Prior written consent of the antimonopoly body, if the application for registration contains data that the aggregate book value of assets acquired or sold exceeds the amount set by the antimonopoly laws.

A record of the state registration of rights (title encumbrance) to the real estate is entered by the registering authority in the information system of the legal cadastre.

5.2.2. Technical inspection of a constructed facility.

A mandatory provision for the state registration of a commissioned constructed facility is undergoing state technical inspection. The bodies that implement technical inspection of buildings and structures are the subdivisions of the National State-Run Budgetary Company "Center for Real Estate" of the regions and the cities of Almaty and Astana. Subsequent inspections are carried out in cases of changes in the of identity characteristics of the facility due to works on its renovation, alterations or re-equipping.

Based on the results of the inspection, the constructed facility is assigned a cadastral number, and is issued a technical passport. To be issued the technical passport, the following documents shall be provided:

  • A written application;
  • Document confirming the right to the real property;
  • Technical passport (if any);
  • Certificate for the land;
  • Document proving the payment of a fee for the issuance of technical passport.

To get a technical passport, the applicant should apply to a relevant subdivision of the National State-Run Budgetary Company "Center for Real Estate" or to the local PSC. We should note that in the city of Almaty, starting from April 5, 2014, a person should apply for a technical passport only to the relevant PSC. The term of issue of technical passport is up to 20 business days, depending on the complexity of the facility. The procedure for expedited issue of technical passport takes up to 10 business days. The cost of this service is specified in the price list of state technical inspection services for immovable property and varies from about 5,000 tenge and over that amount, in the dollar equivalent the costs vary from about $ 25 and over. Payment for the manufacture of technical passport shall be made in two parts.

Whilst submitting the documents, the applicant first pays the basic cost of the service, and later pays the rest of the sum , depending on the type and the actual area of the facility, following the results of the technical inspection.
In the carrying out of technical inspection, the facility is assigned a cadastre number. If this building is in an inhabited locality, its cadastral number will be the cadastral number of the land and the address number of the building.

When submitting documents for the manufacture of technical passport, the applicant shall make sure that the data on the facility is contained in the "Address Registry", otherwise the assigning of the number is required. This procedure is free of charge and takes 7 business days.


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6. Applied law

  1. The Land Code of the Republic of Kazakhstan #442-II of June 20, 2003 (as amended as of 12.06.2014);
  2. The Code of the Republic of Kazakhstan "On Taxes and Other Mandatory Payments to the Budget" #99-IV of December 10, 2008 (as amended as of 09.29.2014);
  3. The Law of the Republic of Kazakhstan #310-III «On State Registration of Rights to Immovable Property" of July 26, 2007 (as amended as of 10.06.2014);
  4. The Law of the Republic of Kazakhstan #242 "On Architectural, Urban Planning and Construction Activities in the Republic of Kazakhstan" of July 16, 2001 (as amended as of 29.29.2014);
  5. The Law of the Republic of Kazakhstan #202-V ZRK "On Permits and Notices" of May 16, 2014 (to be put into effect on November 20, 2014);
  6. The Law of the Republic of Kazakhstan #214-III «On Licensing" of January 11, 2007 (as amended as of 04.07.2013);
  7. The Law of the Republic of Kazakhstan #149-II «On Employment" of January 23, 2001 (as amended as of 06.12.2014);
  8. The Law of the Republic of Kazakhstan #107-II «On Administrative Procedures" of November 27, 2000 (as amended as of 29.09.2014);
  9. The Law of the Republic of Kazakhstan on State Control and Supervision in the Republic of Kazakhstan (as amended as of 27.06.2014);
  10. The Law of the Republic of Kazakhstan #370-II «On Electronic Document and Digital Signature" of January 7, 2003 (as amended as of 09.29.2014);
  11. Resolution of the Government of the Republic of Kazakhstan #428 "On Approval of the Fee for State Registration of Rights to Immovable Property in an Expedited Manner" of March 30, 2009 (as amended as of 18.07.2011);
  12. Resolution of the Government of the Republic of Kazakhstan dated #836 "On Measures to Implement the Law of the Republic of Kazakhstan "On Employment" of January 23, 2001, dated June 19, 2001 (as amended as of 08.11.2013);
  13. Resolution of the Government of the Republic of Kazakhstan #425 "On Certain Measures to Simplify the Procedure for Registration and Issue of Basic Data and Permits for the Construction of Facilities" of May 6, 2008 (as amended as of 16.11.2012);
  14. Resolution of the Government of the Republic of Kazakhstan #45 "On Approval of Rules Establishing Quotas for the Attraction of Foreign Labor Force in the Republic of Kazakhstan, Rules and Conditions for Issuing Permits to a Foreign Employer for Employment and to Employers to Hire Foreign Labor dated January 13, 2012, and to Amend the Resolution of the Government of the Republic of Kazakhstan #836 "On Measures to Implement the Law of the Republic of Kazakhstan "On employment "of January 23, 2001, dated June 19, 2001 (as amended as of 8/10/14);
  15. Resolution of the Government of the Republic of Kazakhstan #89 "On Certain Issues of Licensing in the Field of Architecture, Urban Planning and Construction" of February 5, 2013 (as amended as of 02.28.2014);
  16. Resolution of the Government of the Republic of Kazakhstan #1655 "On Certain Issues of Licensing and Notification Procedures" of December 21, 2012;
  17. Resolution of the Government of the Republic of Kazakhstan #918 "On the Rules of Carrying out Examination of Pre-Project Documentation (Feasibility Studies) and Project Documentation (Design Estimates) for Construction, Regardless of Funding Source, as well as the Approval of Projects Constructed at the Expense of State Investment" of August 19, 2002 (as amended as of 30/04/2014);
  18. Resolution of the Government of the Republic of Kazakhstan #1328 "On Certain Issues of Implementation of the Law of the Republic of Kazakhstan "On Architectural, Urban Planning and Construction Activities in the Republic of Kazakhstan", dated October 15, 2001 (as amended as of 29.06.2012);
  19. Order of the Chairman of the Republic of Kazakhstan Agency for Construction, Housing and Communal Services #603 "On Approval of the Rules of Development of Territorial Building Rules" of December 10, 2012 (as amended as of 10.01.2014);
  20. Order of the Chairman of the Republic of Kazakhstan Agency for Construction, Housing and Communal Services #356 "On Approval of the Rules of Carrying out State Examination of Construction Projects in the Manner of Expert Support" of July 23, 2012 (as amended as of 04.14.2014);
  21. Order of the Minister of Environment of the Republic of Kazakhstan #207-п "On Approval of the Rules of Carrying out State Environmental Examination" of June 28, 2007 (as amended as of 03.09.2013);
  22. Order of the Minister of Justice of the Republic of Kazakhstan #156 "On approval of the Rules of Carrying out State Technical Inspection of Immovable Property and the Rules of Assigning Cadastral Number to Primary and Secondary Real Estate Facilities" of May 6, 2013;
  23. Order of the Minister of Justice of the Republic of Kazakhstan #57 "On Approval of the Instruction on the Primary and Subsequent State Technical Inspection of Real Estate" of February 13, 2014;
  24. Resolution of the Government of the Republic of Kazakhstan #1586 "On Approval of Standards of Public Services in Registration of Rights to Immovable Property and Registration of Mortgage of Movable Property that is not Subject to Mandatory State Registration" of December 31, 2013;
  25. Resolution of the Government of the Republic of Kazakhstan #136 "On the Issues of Provision by the Ministry of Transport and Communications of the Republic of Kazakhstan of Public Services in the Field of Information" of February 24, 2014;
  26. Construction Rules and Regulations of the Republic of Kazakhstan 1.02-03-2011 "Procedure for the Development, Coordination, Approval and Composition of Project Documentation for Construction" (as amended as of 05.12.2014);
  27. Construction Rules and Regulations 1.03-00-2011 "Construction. Organization of Construction of Enterprises, Buildings and Structures "(as amended as of 01.07.2013).

First posted in Russian on 11/25/2014

Please read the renew version of this article, entered in force as from January 2016 here