The assembling, construction and design works in Kazakhstan without license.

Admin
16 February 2016 Licensing

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The construction, assembling and design works in Kazakhstan are a subject to licensing. The absence of such licenses follows the responsibility under our laws.

  1. The persons responsible for implementation of assembling, construction and design works without license.

It should be realized that the implementation of assembling, construction and design works in Kazakhstan without license followed by the responsibility of certain persons. In this regard, we suggest considering the following situations:

  • Responsibility of the parties in relationship between the customer and the contractor;
  • Responsibility of the parties in relationship between the contractor and the subcontractor.

1.1. Responsibility of the customer and contractor.

According to article 616 of the Civil code of the Republic of Kazakhstan (hereinafter referred to as – CC of RK): under the contract, one party (the contractor) shall perform on the instructions of the other party (customer) some work and pass the result to the customer on time, and the customer undertakes to accept the result of work and pay for it (to pay the price of work). The work is performed for the risk of the contractor, unless another is provided by legislative acts or contract. Under the construction contract, the contractor undertakes to construct a certain object on the instructions of the customer or to perform other construction work.

Considering the above mentioned facts, it is possible to draw a conclusion that in assembling and construction works (hereinafter referred to as – ACW) and in design works the contractor bears the responsibility for work process. According to the article 1 of the Law of the Republic of Kazakhstan On permissions and notices – the license is granted to the natural or legal entity to execute the certain works, which are determined as licensed activity due to legislation. It means that the contractor bears full responsibility for execution of ACW and design works without license.

Prior to start the ACW the customer is obligated to notify the state bodies exercising the state architectural and construction control on the beginning of execution ACW. This actions should be done based on the Law of the Republic of Kazakhstan On permissions and notices (Art. 68.11 of the Law of the Republic of Kazakhstan On architectural, urban-planning and construction activity). According to the 66.10 of the above-mentioned Law the customer bears the responsibility provided by the Code of the Republic of Kazakhstan about administrative offenses and the Criminal Code of the Republic of Kazakhstan for non-execution of the duties.

1.2. Responsibility of the contractor and subcontractor.

Those provisions that work for the contractor, will work for the subcontractor as well according to the Art. 619.1 of CC of RK if other does not follow from state acts or the contract, the contractor has the right to hire other persons (subcontractors) for contract execution. In this case, the contractor becomes a general contractor for the customer, and becomes the customer for the subcontractor. That is the subcontractor directly carries out functions of the contractor at construction.

At this, Art. 66.11 of the Law of the Republic of Kazakhstan On architectural, urban-planning and construction activity establishes that types and amounts of works (services) which the contractor (general contractor) intends to submit for execution to subcontractors are without fail should be specified in the contract. Transfer on subcontracting in total more than two thirds costs of all contract works (the contract price) provided by the contract is not allowed. Follows from sense of this article that despite performance by the subcontractor of ACW and design works, the general contractor is obliged to execute part of work independently based on the license, otherwise he will also bear responsibility according to the legislation of the Republic of Kazakhstan.

2. Types of responsibility for implementation of installation and construction works and design works without license.

According to Art. 50 of the Law of the Republic of Kazakhstan On permissions and notices: the violation of the law of the Republic of Kazakhstan about permissions and notices follows the responsibility established by laws of the Republic of Kazakhstan. Art. 17.1 of the Law of the Republic of Kazakhstan On architectural, urban-planning and construction activity provides that implementation of the licensed kinds of activity in the sphere of architecture, urban planning and construction without license entail liability provided by laws of the Republic of Kazakhstan.

2.1. Administrative responsibility.

For the business or other activity, as well as implementation of actions (operations) without the corresponding registration, permission or the direction of the notice under article 463 of the Code of the Republic of Kazakhstan About administrative offenses provided the sanction in the form of a penalty on natural persons of fifteen, on officials, subjects of small business - of twenty five, on subjects of average business - of forty, on subjects of large business - of hundred fifty monthly calculation index, with confiscation of subjects or tools of commission of administrative offenses. The business or other activity without license in addition follows the confiscation of the income (dividends), money, the securities received by an administrative offense.

The same actions made repeatedly within a year after imposing of an administrative penalty followed a penalty on natural persons at a rate of thirty, on subjects of small business - at a rate of fifty, on subjects of average business - at a rate of eighty, on subjects of large business - at a rate of five hundred monthly calculation index, with confiscation of tools and any instruments involved in administrative offense. The business or other activity without license in addition follows the confiscation of the income (dividends), money, the securities received by an administrative offense.

2.2. Criminal responsibility.

According to Art. 214 of the Criminal Code of the Republic of Kazakhstan doing the business or bank activity (bank operations) without registration, as well as without the license, which is obligatory for such activity, or with a violation of the law about permissions and notices, and doing the forbidden types of business activity if these acts caused large damage to the citizen, organization or to the state or associated with deriving revenue in a large amount or production, storage, transportation or sale of excise goods in considerable sizes, are followed by a penalty at the rate of two thousand monthly calculation index or corrective works in the same size, or restriction of freedom for a period of up to two years, or imprisonment for the same term, with confiscation of property.

Analyzing corpus delicti under the above article, the subjective party is characterized by intention. The guilty party understands that it carries out activity without special permission (license) in cases when such permission (license) is obligated, or with violation of conditions of licensing, expects that as a result of its actions the large damage to citizens, the organizations or the state will be threatened or inevitably caused or they (actions) will be associated with deriving the revenue in a large amount.

The same acts made by criminal group; associated with deriving revenue in especially large scale; made repeatedly are punished by a penalty at the rate of five thousand monthly calculation index or corrective works in the same size, or restriction of freedom for a period of up to five years, or imprisonment for the same term, with confiscation of property.

For the correct qualification of the crime provided by the article 214 of the Criminal Code of the Republic of Kazakhstan it should be realized that is meant under a significant damage and the considerable size, especially large damage and especially large scale.

Proceeding from sense of Art. 3 of the Criminal Code of the Republic of Kazakhstan the significant damage and the considerable size in Art. 214 of the above-mentioned Code is a quantity of goods which cost exceeds one thousand monthly calculation index (around 1.98 million tenge); especially large damage and especially large amount is an income which sum exceeds twenty thousand monthly calculation index (around 39.64 million tenge).

It should be noted that in the Republic of Kazakhstan the institute of criminal liability of legal entities is not entered, respectively due to Art. 214 the subject are the persons holding senior positions in the companies.

2.3. Civil responsibility.

Feature of civil responsibility is that it can be applied jointly with other types of responsibility. According to the article 159.1 of CC RK, the transaction made without obtaining necessary permission or after the termination of period of validity of permission is invalid.

Besides, proceeding due to the Art. 49.2.4 of CC RK the execution of ACW and design works without license can lead to compulsory liquidation of legal entity under the court decision.

In context of civil responsibility of subjects between themselves, it is logical to suppose that activity without license finally can lead to execution default under the contract of the construction contract / subcontract. The contractor held the responsibility to the customer for proper performance of obligations under the contract in full as he guarantees achievement of the objectives, specified in the contract.

Same applied for the subcontractor as a general contractor, signing the contract of a subcontract, carries out a role of the customer as the subcontractor hands over it result of works and receives payment.

Regulatory framework:

  1. Civil Code of the Republic of Kazakhstan (Special part) of July, 1, 1999 № 409-1.
  2. Criminal Code of the Republic of Kazakhstan of July 3, 2014 № 226-V.
  3. Code of the Republic of Kazakhstan on Administrative Offences of July 5, 2014 №235-V.
  4. Law of the Republic of Kazakhstan On Permissions and Notifications of May16,2014 №202-V.
  5. Law of the Republic of Kazakhstan №242-II On Architectural, Urban planning and Construction Activity of July 16, 2001.

Prepared by Junior lawyer
Chagay Victoria
26.09.2015


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