Redomiciliation to Kazakhstan (AIFC)

The relocation or redomiciliation of holding companies to favorable jurisdictions, such as the Astana International Financial Centre (AIFC) in Kazakhstan, is gaining increasing popularity.

We will provide more details about the center, as well as about:

• General relocation requirements
• Possible step-by-step plan
• Practical aspects of relocation
• Recommendations for Russian businesses

The Astana International Financial Centre (AIFC) is a financial institution and a leading financial center in the Central Asia and Eastern Europe region. It provides a platform for businesses to access capital through a specially created regime that features: regulation based on the best international standards, founded on the principles and legal norms of England and Wales, developed financial infrastructure, independent judicial system, innovation and expertise. The working language of the center is English.

The AIFC was established with the aim of developing:

(a) a capital market integrated with international capital markets;

(b) a market for insurance, banking services, green and social financing, Islamic finance, digital assets, financial technologies, and innovative projects;

(c) financial expertise and professional services in the financial sector of the economy.

Redomiciliation is the process of transferring the registration and operations of a legal entity from one jurisdiction to another, resulting in a change in the governing law. Herewith, this does not involve the liquidation of the legal entity.

The relocation process is governed by Part 13 of the AIFC Company Regulations.

A foreign company may, if permitted by the laws of the jurisdiction in which it is registered, apply to the AIFC Registrar of Companies for continuation as an AIFC company.

Key Benefits of Redomiciliation:

• Allows for seamless continuation of the business portfolio, maintaining credit ratings and company reputation.
• Ensures the preservation of all assets, liabilities, cash, and capital of the existing company.
• Smooth transfer of all legal rights and obligations to the AIFC entity without the need for assignment.
• Eliminates the need to create a new legal entity, streamlining the process.
• Offers a significantly faster process compared to company liquidation and subsequent establishment of a new entity.
• Grants residency status in Kazakhstan and AIFC Participant status, enabling access to AIFC privileges.

Based on GRATA's experience, a sample step-by-step plan for redomiciliation may include the following:

1. Collection of corporate documents of the foreign company, including information on the structure of the entire group of companies up to the beneficial owner, as well as the reasons for redomiciliation;

2. Preparation of a legal opinion by consultants of the country of incorporation of a foreign company that the company is authorized to continue its activities in accordance with the laws of another jurisdiction and that it has fulfilled all relevant requirements in accordance with its laws, as well as that the Company has obtained all necessary consents in the country of incorporation for redomiciliation from the relevant authorities;

3. Determination of the company's legal address and executive body;

4. Submission of a package of documents for pre-approval;

5. Interview with the Registrar of Companies;

6. Receipt of comments/questions from the Registrar of Companies;

7. Submission of the final package of documents to the Registrar of Companies;

8. Payment of the fee for reviewing the documents for pre-approval;

9. Coordination of the date of issuance of the Certificate of Continuation of Operations with the consultants;

10. Receipt of the Certificate of Continuation of Operations;

11. Payment of the redomiciliation fee.

Upon confirmation by the Registrar of Companies, the company receives a Certificate of Continuation of Existence (paragraph 152-153 of the AIFC Companies Act and clause 5.2 of the AIFC Companies Rules). 

From the date of continuation of existence specified in the Certificate of Continuation of Existence, the foreign company becomes a company to which AIFC law applies as if it had been incorporated in accordance with AIFC regulations. The Certificate of Continuation of Existence is considered a certificate of registration of the company. 

Practical Considerations of Relocation includes the following:

1. Not all countries allow for relocation to another jurisdiction. It is crucial to verify this possibility before making a decision. For instance, the Netherlands does not permit direct redomiciliation; an intermediary jurisdiction must be used.

2. Not all companies are ready to enter into lease agreements to establish a legal address before relocation. Obtaining a letter of guarantee from the landlord, concluding a preliminary memorandum or agreement, is recommended.

3. The company registrar has the right to request any documents deemed necessary for decision-making. In practice, there have been cases of requests for a three-year employee hiring plan and a company financial plan, including operating companies.

4. AIFC acts do not specify application review timelines, making the process unpredictable. However, in our experience, with a complete set of documents and no incorporation country complexities, the process can take up to 6-7 months.

5. The certificate issuance date coordination process can be time-consuming due to variations in procedures across foreign jurisdictions. In such cases, consultants from the country of incorporation and the company registrar discuss and submit the necessary documents.

A significant advantage of redomiciliation to the AIFC is the absence of the requirement to obtain permission from the Subcommission of the Government Commission on Foreign Investment Control in the Russian Federation. Additionally, it offers the flexibility to relocate to other countries in the future, if necessary. For instance, redomiciliation from the October or Russian Islands of the Russian Federation requires the consent of the Russian Government.

In conclusion, while the redomiciliation process is complex, it is still realisible. The AIFC is increasingly attracting major players not only from Russian businesses but also from countries further afield.