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Legal Focus
JULY 2013
The Legal Compliance Challenges in
M&A Transactions in A recent report by the Economist Intelligence Unit shows that compliance and governance standards in takeover targets are a major concern for dealmakers as cross-border M&A activity picks up. To find out more, Lawyer Monthly speaks to Madina Sypatayeva, the managing partner and founder of Linkage & Mind LLP, heading the corporate and finance practices. She is one of the most recognized lawyers of Kazakhstan, being awarded as Kazakhstan woman in business law by IFLR, Euromoney in London in 2011 and 2012.
Please introduce yourself, your role and your firm.
Being established in 2005, today Linkage & Mind’s portfolio includes major investment projects involving the public, private equity and international financial institutions that work to support multi-million dollar deals in mineral resources, defense, transportation and logistics. According to Legal 500, Linkage & Mind LLP ‘knows the local laws and business environment very well, and provides comprehensive advice in a timely manner. Its core strengths lie in corporate and tax law, as well as litigation, and it is building a solid record in infrastructure construction matters and mining’.
What are the potential risks and limitations facing investments expanding into the Kazakhstan market?
Due to a stable political situation, economic growth and rich mineral deposits, Kazakhstan is an attractive place for investment. World Bank ranked the republic 49 out of 185 countries in the Doing business rating, with outstanding 1 for investor protection and taxation.
The investor protection is guaranteed by the Constitution, major international conventions like ICSID and bilateral agreements on mutual protection of investment with a number of
countries. The legislation recognizes priority of international treaties ratified by the Republic of Kazakhstan over its national legislation.
The main legal act governing investment relations in the Republic of Kazakhstan is the Law of the Republic of Kazakhstan On Investment dated 8 January 2003, which states the legal and economic basis for encouraging investment, provides guarantees of investors’ rights and determines measures for government support and the procedure for resolution of disputes involving investors.
Still, there are limitations that an investor can face entering the Kazakhstan market. First of all, the market is quite small itself. Then, the administrative procedures are very bureaucratic regardless introduction of e-government services and simplification of processes. It leads to tax, customs, license, permissions and other regulatory problems and delays. Also, there is a specific problem of the country when many top managers of the state agencies and national companies are relocated very quickly. Therefore, it is often the case when investors reach certain agreements with them, but in half a year or a year, by the time when the final paper work should be signed and the project is to start, these people are dismissed and the process has to start all over again from the negotiation stage.