Following the decree of the President of Kazakhstan issued in May of this year, a draft constitutional law (the Bill) has been presented for consideration to the lower house of parliament, taking the creation of the Astana International Financial Center (AIFC) a step closer to reality.
The Bill sets out the objectives of the AIFC, which will be to promote investment, develop the markets in banking, insurance and Islamic finance, develop the securities market in Kazakhstan and to develop financial and professional services in accordance with best international practice, leading to the recognition of Astana as an international financial center.
The AIFC will constitute a financial 'free zone' within a physical area to be delineated in future. It is expected that eventually the Center will be located on the site currently being developed to house Expo2017. Participants in the Center will be entitled to benefit from exemptions from corporate and individual income tax, and from a relaxed visa and work permitting regime for their senior employees.
The Center will have its own legal system in certain areas, which will, according to the Bill, be based on the principles and rules of English law and/or the standards of leading global financial centers. It is expected that the system of laws which are to be developed over the next two years will bear quite some similarity to the system introduced in the Dubai International Financial Center, in which separate laws governing, among others, civil law relations with and between participants of the Center, the formation, governance and registration of companies, financial services, employment relations, to name a few, provide a system separate from national law.
The Center will have its own two-tier court system to apply these laws, again applying the procedural principles and norms of the justice system of England and Wales, or the standards of leading global financial centers. An agreement has been entered into with the DIFC Court in Dubai to advise and assist in the establishment of the new court system. An international arbitration center will also be created within the AIFC. It is expected that foreign judges and arbitrators will be invited to sit in these courts and tribunals.
The operating language in the courts, and in the administration of the Center itself, will be English. The AIFC's laws are also to be developed in English.
The Center will be overseen by an Administration to be created under the auspices of the National Bank, which shall be responsible for the development and operation of the Center, including the development of its laws for approval by the governing body of the AIFC - the Center Governance Council - to be chaired by the President of Kazakhstan.
The Bill, when passed, will create a constitutional law which makes the creation of the Center possible and permits the derogation from national laws. The detailed establishment of the Center's institutions, their rules, and the laws which will be adopted in the Center will follow in the two years following the passing of this law.
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