Obtaining the permit to raise money for shared construction

Admin

hand draws construction site on paper background

On August 31, 2016 the Minister of National Economy of the Republic of Kazakhstan issued Order No. 14188 approving the Rules for the Issuance of a Permit to Raise Money of Potential Participants of Shared Construction (further the Rules). These Rules took effect on October 10, 2016, together with the Law of the Republic of Kazakhstan "On Participation is Shared Construction of a Residential Building" (further the "Law").

According to the Law, participation in shared construction of a residential building can be made in three ways:

  • Through the obtaining of a guarantee letter from the relevant Guarantee Fund,
  • Through the participation in a relevant project of a second-tier bank,
  • By raising money of the participants of shared construction after erecting the frame of the residential building.

Obtaining a permit to raise money of potential shared construction participants is not required only in case of obtaining the guarantee letter from the relevant Guarantee Fund. In all other cases, the developer and the authorized company are obliged to obtain the relevant permit from the local executive body.

To understand this we explain that the developer sets up an authorized company, a 100% stake in the share capital of which belongs to the developer. The company carries out activities to organize a shared construction of a residential building and is not entitled to engage in any other commercial activity, except for the activity in special economic zones. Moreover, the company has the right to simultaneously carry out activities only one constriction project.

The permit to raise money of potential shared construction participants is issued by the local executive body for the entire period of construction of the residential building before putting it into operation (see item 8 of Article 18 of the Law).

To obtain the permit to raise money of potential shared construction participants, the developer and the authorized company shall submit to the local executive body (Akimat) the following documents:

  • The application of the established form (the form of the application is approved by Appendix 1 to the Rules);
  • The copies of the documents confirming the compliance with the requirements set in the Law for the developer and the authorized company.

Requirements to the developer and the authorized company on each of the three above-mentioned ways of implementing activities on organization of shared construction are different.

For example, in a situation with shared construction by participating in a relevant project of a second-tier bank, the developer is required to have experience in implementation of construction projects of residential buildings (residential houses), including that as a customer, the contractor (the general contractor), to be not less than three years in aggregate, with a total area of not less than eighteen thousand square meters in the construction of these in the cities of the national level, in the capital, and not less than nine thousand square meters in the construction in other administrative and territorial units, while the authorized company shall have:

  • A plot of land used under the right of paid temporary land-use (lease), provided by the state, or under the right of ownership;
  • Design and estimate documentation on the project of construction of the residential building (residential house) with the attachment of a positive opinion from the panel of experts of comprehensive departmental examination.

To implement the activities on organization of shared construction of a residential building, after the erection of the frame of the residential building, the following requirements are set to the developer: for the past five years, including as a customer, the contractor (general contractor), to build and put into operation, in aggregate, in the Republic of Kazakhstan residential buildings (residential houses) with a total area of not less than sixty thousand square meters in the construction in the cities of the national level, in the capital, and not less than thirty thousand square meters in the construction in other administrative and territorial units. Moreover, the total experience of the developer’s subsidiaries is also taken into account. To add, the authorized company shall have:

  • A plot of land used under the right of paid temporary land-use (lease), provided by the state, or under the right of ownership;
  • Design and estimate documentation on the project of construction of the residential building (residential house) with the attachment of a positive opinion from the panel of experts of comprehensive departmental examination;
  • Completed construction of the frame of the residential building (residential house), confirmed by the report of the engineering company;
  • The contract with the engineering company.

The term of consideration of the documents by the Akimat is 10 days from the date of their submission. Upon consideration of the documents, the Akimat issues a permit to raise money of potential shared construction participants or a reasonable refusal to do that.

By Viktoria Chagai,
Artyushenko & Partners lawyer
07.10.2016


In Artyushenko & Partners online Store you can buy our fixed fee legal consultation: