New Shareholders’ Agreements In Kazakhstan

When a foreign investor wants to invest in Kazakhstan partner’s start-up project, a joint venture is created. The first thing to take care of in such case is the shareholders’ agreement.

The shareholders’ agreement is the main document that can protect the foreign investor from any possible risks and losses. Thus, we believe that the shareholders’ agreement should have the main focus and attention in the beginning of the cooperation.

Kazakhstan law does not have limitations regarding the structure and volume of the shareholders’ agreement and the shareholders’ agreement may include any provision that does not contradict the law.

Such standard shareholders’ agreements do not cover a lot of risks and matters. Therefore, at the time of a dispute, it could be very hard to resolve issues. In this article you may find general and brief information on the shareholders’ agreement possibilities in Kazakhstan.

Decision-making and voting rights

One of the key aspects in the shareholders’ agreement is the distribution of decision-making powers, i.e. the voting rights.

Despite the fact that most important decisions are usually made by the general meeting of shareholders, the shareholders’ agreement may specify that certain issues are resolved exclusively by one shareholder.

For example, we had a case where only an investor could decide who to hire as the company’s chief accountant.

Preliminary agreements

There could be cases when a foreign investor and Kazakh partner indicate main points and conditions at the beginning of their cooperation in framework documents, such as term-sheets. Or the preliminary conditions could be discussed orally during the negotiations.

All of these preliminary agreements can be incorporated in the shareholders’ agreement.

We had a case when the Kazakh company invested in the individual’s start-up project. The only document they had in the beginning of the cooperation was the term-sheet with general framework agreements.

We represented the investor’s interests and drafted shareholders’ agreement on the basis of the term-sheet, carefully reviewing and analysing any possible risks for the investor.


Often, the shareholders include particular restrictions and limitations in the shareholders’ agreements. For example, limits regarding the share transfer.

We had a case, where Shareholder-A was restricted from transferring or disposing his shares in any way during 5 years from the date of signing the agreement.

At the same time, the Shareholder-B did not have any such limitation. Thus, the limitations could only be applied to one shareholder, and not apply to others.

The most common limitation specified in the shareholders’ agreement is that a shareholder must obtain other shareholder’s consent to transfer the shares to third parties.

Approvals, consents and pre-emptive rights

Alternatively to the restrictions, the shareholders’ agreement may specify parties’ prior consents and approvals for any particular operation.

For example, Kazakh legislation provides pre-emptive rights to shareholders. If one shareholder wishes to sell his shares to a third party, the other shareholders have pre-emptive right to purchase such shares. In the shareholders’ agreement, a shareholder can waive such pre-emptive right in advance.

Intellectual property

The most valuable asset of a start-up could be its intellectual property. Thus, it is very important to outline in the beginning who will be the owner of the intellectual property rights.

This could be indicated in the shareholders’ agreement.

Mostly in practice the shareholders indicate that all intellectual property would belong to the joint-venture itself.

Deadlock situations

There is always a risk in business that something could go wrong. So there is always a risk of the deadlock situations when the two shareholders with equal 50% voting rights completely disagree on some particular issues.

The shareholders can outline ways of resolving such deadlock situations in the shareholders’ agreements.

These ways could include special clauses, like the repurchase of shares by other shareholder or the Russian roulette clause, exiting the partnership, the arbitral clause, the liquidation clause, and etc.


Usually the investors want to have the right to exit the project at any time they deem convenient. Such exiting right could be outlined in the shareholders’ agreement. There are no particular restrictions on this matter.

We note that, to avoid any potential disputes, it is important to precisely outline the procedure of exiting the partnership considering all the crucial aspects of the shareholders’ agreement.

Arbitral clause

Kazakhstan law does not provide any restrictions on arbitral clauses in shareholders’ agreements. Thus the arbitration clauses may be applied in the shareholder agreements.

In Kazakhstan there are two arbitrages: Kazakhstani International Arbitrage, which is more private, and the pro-governmental arbitrage financed by the government. We usually specify the arbitrage depending on the possible amounts of the claim.