State Pre-Emptive Right on Acquisition of a Subsoil Use Right

State Pre-Emptive Right on Acquisition of a Subsoil Use Right

According to the Law of the Republic of Kazakhstan on Subsoil and Subsoil Use dated 24 June 2010 (hereinafter – the ‘Subsoil Law’), in case of the transfer of the subsoil use right or objects associated with a subsoil use right, the state shall have a pre-emptive right against the other party of the contract (and equally against participants in a legal entity having the subsoil use right and other third parties) to acquire the transferred right or related objects. Thus, related objects are understood as participatory interests (shares) in an entity holding the subsoil use right as well as in the entity, which may directly or indirectly define or influence the subsoil users’ decisions, if the main activity of that entity is connected with subsoil in the Republic of Kazakhstan.

Based on our practice, issues relating to  a state pre-emptive right often arise in cases of transfer of participatory interests or shares in a subsoil user or in its founders to third parties. Officially, such a transfer requires a waiver of a pre-emptive right. A transfer committed without obtaining of such a waiver will be considered void.

Lawyers of our Firm have gained extensive experience in advising on transactions on the transfer of a subsoil use right (its part) and (or) related objects. Such experience allows us to consider and advice on specific features of any procedure of coordination depending on the scope of the transferred right.

In case an entity that holds a subsoil use right is intending to transfer it, the subsoil user should submit to the competent authority the transfer statement with certain requirements. Our lawyers will provide you with the professional legal assistance, starting from drafting the statement to providing legal support of the transfer transaction. Our branch office in Astana allows us to communicate with state authorities on a regular basis.

Experience:

• advising a foreign consortium having a subsoil use right in Kazakhstan, in connection with the sale of participatory interest in a company;
• advising a Kazakhstani subsoil user in connection with sale of its subsidiary;
• advising in connection with transfer of participatory interests of a foreign company indirectly holding the subsoil use right in Kazakhstan;
• advising a national company on the acquisition of the subsoil use right;
• advising a Kazakhstani subsoil user in connection with negotiations related to transfer of a subsoil use right with state authorities of the Republic of Kazakhstan.

Publications:

• The changes in the investment climate due to the adoption of the new law on subsoil and subsoil use