The Cabinet of Ministers of the Kazakh SSR decrees to:
1. Approve the attached regulation on financial papers;
2. Provide the necessary clarification concerning the application of the
regulation on financial papers by the Ministry of Finance of the Kazakh
SSR and the State Bank of the Kazakh SSR.
(Seal)
Approved by the Resolution of the Cabinet of Ministers of the Kazakh SSR on November 13, 1991 (number 701)
1. Financial papers are monetary documents which evidence a right of possession or debt relations and define the relationship between the entity which issued the documents and their holders and which, as a general rule, provide for the payment of income in the form of dividends or interest, as well as the possibility of transferring monetary or other rights represented by these documents to other persons.
2. Financial papers include shares of stocks, bonds, state treasury bonds, certificates of deposit and promissory notes.
3. A bond is a financial paper which evidences a contribution of monetary funds by its holder (a legal or a physical entity) and which represents an obligation to the holder to repay the nominal value of the financial paper within a specified period, plus a fixed rate of interest (unless established otherwise in the terms of the issue). The minimal nominal denomination of a bond is not limited, however, it is issued divisible in ten rubles.
4. The following types of bonds can be issued:
- bonds representing internal state and local indebtedness;
- bonds of enterprises.
5. Bonds may be issued either in nominative form or to interest-bearing or noninterest-bearing (denominated in kind), and be with restricted or unrestricted circulation.
6. Funds received from placement of bonds are appropriated to targets set by the issuer prior to the issue of these bonds.
7. Bonds of all types, as a rule, shall be paid for in rubles; however, where specifically provided for in the terms of the issue and in the charter of a joint-stock company, payment may be made in foreign currency. Regardless of the type of currency used to pay for bonds, their value shall be expressed in rubles.
Bonds of all types may be acquired by enterprises out of funds which remain at the disposal of their labor collectives; by individuals, out of their personal funds.
8. Bonds representing internal state and local indebtedness are issued to bearer. The distribution of these bonds is carried out by banking establishments.
9. Income or interest-bearing bonds representing internal state and local indebtedness which are subject to a free sale and a free distribution are paid by means of coupons (with the exception of bonds representing denominated-in-kind indebtedness).
10. The terms and the order of issuance and distribution of bonds representing indebtedness of an economic association are defined by the inter-state economic committee in agreement with the states- members of the economic association.
11. The terms and the order of issuance and distribution of bonds representing state, republican and local indebtedness shall be determined by a resolution approved by the Supreme Council (Soviet) of the Kazakh SSR. The terms and the order of issuance and distribution of bonds representing legal entities (enterprises) shall be determined by the Cabinet of Ministers of the Kazakh SSR.
12. Bonds of enterprises are issued by state enterprises and associations, leasehold enterprises, collective enterprises, joint- stock societies, social organizations, cooperatives and enterprises belonging to social organizations and cooperatives.
13. Bonds of enterprises must include the following information: designation of the type of the financial paper - "bond", the name of the issuing enterprises (organization) and its location, the nominal value of the bond, the name of the holder (for registered bonds), the period of maturity, the rate and times of the payment of interest (for interest bearing bonds), the signature of the head of the enterprise or organization (chairperson of the board of a joint-stock society) or other authorized person.
Bonds denominated in kind must include information with regard to the goods (services) for which they are registered.
14. A coupon sheet may be attached to the bond with a purpose of interest payment.
A coupon for interest payment must contain the following basic elements: the coupon number, the number of the bond according to which the interest is paid, the name of the issuer, the year of the interest payment and the signature of the official parties is the issue of the bond(s).
15. Bonds of enterprises do not confer upon their holder the right to participate in the management of those enterprises.
16. The decision concerning the issue of bonds of enterprises is made by the enterprise (by the union or other association of the enterprise) based on the order indicated in its charter and is set in a protocol.
17. The general volume of the issue of bonds of an enterprise may not exceed the property value of the issuer.
18. Interest payments on bonds of enterprises are paid once a year from the funds remaining after the settlement of accounts from the budget and upon meeting other payment liabilities.
19. In case of default or untimely fulfillment by the enterprise of the obligation to pay interest and to repay the amount stated in the bond, collection of such amounts shall be made on the basis of a notarial endorsement executed in the manner established by the active legislation of the Kazakh SSR.
20. The responsibility for the repayment of instruments of indebtedness and for payment of interest thereon is imposed upon the state agencies and enterprises (organizations) which issue such bonds.
21. Shares of stock are financial papers which certifies the investment of a certain investment in the statutory capital of a joint-stock society made by a legal or physical entity and confers on their holder the right to receive a share of income of the enterprise in the form of a dividend.
22. Shares shall be paid for in rubles. However, where the charter of the joint-stock society so provides, they may also be paid in foreign currency or by contribution of other property.
Regardless of the form of contribution, the value of shares shall be expressed in rubles. Shares may be transferred to shareholders only after payment of their price in full.
23. Shareholders may issue a stock certificate based on the total nominal value of stocks; this stock certificate confers the ownership of these stocks.
The minimal value of a stock may not be less than 100 rubles.
Stocks are issued of different denomination with the minimal nominal value set at ten rubles; it provides one vote.
24. The following categories of stock are issued:
a) Shares of a labor collective
The right to issue such stock is granted to state enterprises and associations, leaseholding or collective enterprises, cooperatives, and enterprises belonging to social organizations or cooperatives.
Shares of stock of a labor collective are distributed only among the employees of a given enterprise and can not be transferred to persons who are not members of the given labor collective.
b) Enterprise shares
Such shares are issued by enterprises and associations listed in Subsection "a" of this Section, as well as by associations of cooperatives, commercial banks, business companies and partnerships or business associations.
Enterprise shares are distributed among other enterprises and organizations, voluntary societies, banks, as well as cooperatives.
c) Shares of joint-stock societies, which be distributed by open subscription or by allocation of all the shares among the founders
25. Joint-stock societies may issue preferred share of stock, which give shareholders preferential rights to receive dividends, as well as a priority with respect to participation in the distribution of the assets of the joint-stock society in case of its liquidation.
The owner of a preferred stock has no right to participate in the management of the joint-stock society unless it is specified in the chapter differently.
Shares of a labor collective and enterprise shares do not confer upon their shareholders the right to participate in the management of the enterprise. Shares of a labor collective and enterprise shares represent means of attracting additional financial resources, and they do not change the legal status or form of ownership of the enterprise or organization which issues such shares.
Joint-stock societies may not issue shares of labor collectives and of enterprises.
26. The order of implementation of the right of holders of preferred shares including the priority in distribution of property of a joint-stock society is case of its liquidation is set by its chapter.
Fixed dividends are paid on preferred shares expressed either in rubles or in percentage of the nominal value os these shares. The payment of dividends is carried out following the announcement of the board of directors stating the dividend amount based on the amount of profits received by the society during the corresponding or past year. In cases of insufficient profits, the payment of interest earned on preferred shares is made out of the reserve. In cases when the size of dividends payable to shareholders of general shares exceeds the size of the revenue from preferred shares, the holders of preferred shares may be paid a dividend up to the size of the dividend paid on general shares.
Preferred shares may not be issued in the amount which exceeds 10 percent of the charter capital of a joint-stock society.
27. Shares may be issued in nominative form*** or to bearer. A nominative share may be transferred through endorsement (that is the other party receiving the share signs the for the receipt), if the share does not carry a note prohibiting such transfer.
*** The Russian term "imennoi", means "named" - i.e., to a specifically named shareholder. I prefer to use the "nominative" equivalent term in English. - Transl. MN
Shares issued to bearer are subject to a free distribution. The circulation
of nominative shares is monitored in a register of shares, a book which
is kept by a joint-stock society. The following information must be kept
in this register:
- data concerning each nominative share, the date the share was obtained
as well as the number of shares obtained by each shareholder.
In the case of a bearer only the general number of shares is kept on record in the register of shares.
A reimbursement for a lost share is issued to its bearer according to the order set by the legislation of civil procedures of the republic so the ownership right of the bearer of a lost share is reinstated.
Joint-stock society may not set the limit on the number of shares owned by a participant.
Citizens have the right to own nominative shares only.
28. A share of stock can not be subdivided. In cases where one share (except for shares of a labor collective) belongs to several persons, all of them are considered as one shareholder, and they can exercise their rights through any one of them or through a common representative.
29. Shares must contain the following information: the name of the enterprise (organization) issuing the stock, its location, a designation of the type of the financial paper - "stock" - and its registration number, the date of issuance, the class of stock, its nominal price, the name of its holder (for nominative shares), the size of the charter capital and the number of shares issued (for joint-stock societies, as of the date of the issuance of shares); the period of time for the payment of dividends; the signature of the head of the enterprise or organization (chairman of the board of a joint-stock society) or other authorized person.
30. Shares of a joint-stock society are issued in the amount of the charter capital or in the amount of the total value of the assets of a state enterprise (in the case of a reorganization into a joint-stock society). Shares of a labor collective and enterprise shares are issued in an amount determined by the enterprise and its labor collective.
An additional issue of stock by a joint-stock is possible in cases when all shares of previously issued stock have been fully paid for at price not less than their nominative value.
Issuance of stock to cover losses connected with the commercial activities of enterprises is prohibited.
31. Shares of a labor collective and shares of joint-stock societies are purchased by individuals at their personal expense.
Enterprises, organizations and agencies may purchase enterprise shares and shares of joint-stock societies with the funds remaining at the disposal of their labor collectives, after payments to the budget of taxes and other dues imposed by legislation.
32. Enterprises which issue shares of a labor collective may buy them back from their employees, thereby effectuating a corresponding decrease of the total amount of raised capital.
The decision as to whether shares of a labor collective may be retained by employees after termination of their employment is made by the labor collective of the enterprise.
33. With regard of a labor collective, dividends are paid from funds reserved for consumption, and with regard to enterprise shares, out of the profits remaining at the disposal of their labor collectives.
With regard to shares of joint-stock societies, dividends are paid, according to the annual results of operations, out of the profits remaining at the disposal of the joint-stock society after the allocation, if necessary, of the portions of such profits for general expenditures of the society.
34. Shares issued by enterprises and joint-stock societies are secured by all their property.
In cases of reorganization of an enterprise or a joint-stock society, all obligations with respect to the issued shares are assumed by their legal successors.
35. A treasury bond of the state (pls. read "treasury bonds" hereafter - transl.) is a type of financial paper placed voluntarily with the population, which represents the investment of monetary funds into the budget by its holder, and which provides the right to receive fixed income during the entire term of these financial papers. Included here are treasury bonds of the USSR, treasury bonds of an economic association as well as treasury bonds and promissory notes of the Kazakh SSR.
36. The conditions and the order of issuance and distribution of treasury bonds of an economic association are determined the inter- state economic committee on coordination between states-members of the economic association.
37. Long-term treasury bonds are issued by the state, as a rule, to bearer, for terms from five to twenty five years based on the decision of the Supreme Council (Soviet) of the Kazakh SSR. Nominative bonds may also be issued if specified by the regulation.
The manner of determining the sale price of treasury bonds is established by the Ministry of Finance of the Kazakh SSR, depending on the time of their purchase. Legal entities may purchase treasury bonds only on a non-cash basis.
38. Treasury bonds of the Kazakh SSR are sold among physical and legal entities: commercial and cooperative banks, joint-stock societies, public organizations, enterprises and cooperatives. Commercial banks may purchase only treasury bonds which are issued up to ten years.
39. Payment of income from treasury bonds begin in the year following the year of purchase.
Payment of income due under treasury bonds is made annually by means of coupons or, in the absence of annual payments, satisfying the obligation by including the amount of interest in the face amount.
40. With regard to treasury bonds designated for retirement, their face amount and unpaid coupons of past years shall be paid out, including the coupon for the year in which the bonds are called for redemption. In cases where the holder of a treasury bond called from circulation by the retirement schedules does not present it for payment, he/she reserves the right to receive income under the coupons until maturity. Upon the expiration of such term, treasury bonds lose their validity and are not entitled to payment.
41. The state shall redeem treasury bonds of holders within not less than twelve months from the date of issue or sale. The holder shall be paid the face value of the treasury bond plus the the interest for the actual full years of owning the bond calculated according to a decreased rate.
42. Retirement of treasury bonds as well as their premature redemption shall be carried out with funds (cash or transfer to the bank account of the holder), or used in payment of taxes.
43. Medium-term treasury bonds of the Kazakh SSR are issued by the Ministry of Finance of the Kazakh SSR for terms of one to five years, and do not include coupons. The issuance of medium-term treasury bonds is effected in the same manner as the issuance of long-term treasury bonds.
44. A premature retirement of medium-term treasury bonds shall be conducted on the basis of published retirement schedule defined by the Ministry of Finance of the Kazakh SSR after six months following the purchase (at face amount).
45. Treasury promissory notes of the Kazakh SSR are issued to bearer by the Ministry of Finance of the Kazakh SSR for terms of three, six and twelve months. These notes do not include coupons.
Treasury promissory notes are sold on an auction basis and per anonymous subscription at a discount; they are redeemed at face amount.
46. The distribution of treasury promissory notes shall be carried out by the National State Bank of the Kazakh SSR upon authorization of the Ministry of Finance of the Kazakh SSR; conditions of auction shall be announced one month prior to the issuance of treasury promissory notes. The announcement includes the nominal (face) amount of the treasury promissory notes, the minimal amount concerning subscription, and the minimal size of the interest rate (discount).
47. Buyers announce the volume of purchase and the acceptable by them
discount rate.
With regard to competitive sales the most favorable applications shall
be satisfied. The total volume of applications determines the volume of
the issuance.
48. The Ministry of Finance of the Kazakh SSR shall determine the special conditions of the issuance and retirement of treasury bonds of the Kazakh SSR.
49. A certificate of deposit is a written instrument issued by a financial institution evidencing a deposit of monetary funds, which establishes the right of the holder to receive the deposited amount with interest upon the expiration of a fixed period of time.
50. Certificates of deposit are issued in nominative form, as well as to bearer. Certificates issued in registered form are not subject to circulation and their sale (or other disposition) is considered invalid.
51. Certificates of deposit must contain the following information: a designation of the type of the financial paper - "certificate", the name of the lending institution issuing the certificate, its location, the registration number, the date of issuance, the amount of deposit, the time when the deposit can be withdrawn (for term certificates), the name of the holder who made the deposit and who is the holder of the certificate (for certificates in nominative form), and the signature of the head of the bank or other authorized person.
52. Certificates of deposit are issued by banking establishments at interest rates specifically established under an agreement, for a specific period of time or until demanded by the depositor.
53. Individuals may purchase certificates of deposit using their own funds while enterprises shall purchase certificates of deposit with funds available at the labor collective and upon the agreement of the labor collective.
54. The payment of income from certificates of deposit is carried out upon the presentation for payment of the certificate by the holder at a banking establishment.
In cases of premature presentation for payment of a certificate of deposit, the holder is paid the face amount of the certificate with interest calculated at a lower rate based on the actual number of complete years of holding the certificate.
55. The regulation of the issuance and distribution of certificates of deposit is conducted in accordance with the order set by the National State Bank of the Kazakh SSR.
56. A promissory note is a financial paper which represents an unconditional monetary obligation of the issuer of the promissory note to pay, upon expiration of a term, a specified amount of money to the owner of the promissory note (note holder).
57. A simple promissory note contains the following information:
a) the name "promissory note", which is included in the text and expressed in the language in which the document is written;
b) a plain and unconditional promise to pay a definite amount;
c) the time payment is due;
d) the place where payment shall occur;
e) the name of the person to whom payment shall be made or to whose order it shall be made;
f) the date and the place of the issuance of the promissory note;
g) the signature of the person issuing the document (note maker)
A negotiable promissory note must contain the following information, in addition to the information provided above in subsections (b), including:
- a plain unconditional offer to pay a specified amount;
- the name of the person who must pay (payor).
58. A document which fails to contain any one of the requisites listed in section 57, for the simple or negotiable promissory note, does not have the force of a simple or negotiable promissory note, except for the following situations:
- a promissory note which does not contain the term of repayment is deemed to be due and payable upon demand;
- in the absence of information with regard to a definite place stated next to the name of the payor (the place of making the document, for a simple promissory note), it is considered to be the place of payment as well as the place of residence of the payor (note issuer for simple promissory note);
- a promissory note in which the place of making is not provided is considered signed at the location stated next to the name of the maker of the promissory note.
59. Procedures governing the issuance and circulation of promissory notes in the Kazakh SSR are set forth in the Regulations on Negotiable and Simple Promissory Notes, approved by the National State Bank of the Kazakh SSR.
60. An issuer has a right to issue financial papers from the moment of their registration, regardless of the general volume of the issuance.
Financial papers shall be sold directly by the issuer, or through banking establishments.
61. Registration of the issuance of
- stocks of labor collectives,
- bonds and stocks of enterprises which are located on the territory of
the Kazakh SSR and which carry out their activity in accord with the effective
legislation of the Kazakh SSR concerning enterprises, as well as
- bonds of local borrowing
is carried out according to the location of the issuer by oblast', Alma-Ata and Lenin metropolitan financial management establishments.
62. Registration of an issue of
- bonds and stocks of auction societies established on the territory
of the Kazakh SSR, as well as
- bonds and stocks of commercial banks,
- treasury bonds and promissory notes of the Kazakh SSR,
- bonds of state internal indebtedness of the Kazakh SSR
is conducted by the Ministry of Finance of the Kazakh SSR.
The rules of registration for issuance of stocks and bonds is conducted by the Ministry of Finance of the Kazakh SSR.
63. Registration of certificates of deposit and control over their issuance is conducted by the lending institution which carries out their issuance, in the manner established by the National State Bank of the Kazakh SSR.
Circulation of promissory notes is carried out under the general supervision of the National State Bank of the Kazakh SSR.
64. The Ministry of Finance of the Kazakh SSR carries out the inspection of the issuance and controls the circulation of financial papers on the territory of the Kazakh SSR.
Enterprises, joint-stock societies, and other organizations that enjoy the right to issue financial papers must report to the corresponding agencies the registration and circulation data with regard to the financial papers issued by them.
Local financial agencies report to the Ministries of Finance of the Kazakh SSR concerning the total value of the financial papers which have been registered and placed, according to their types.
65. The Ministry of Finance of the Kazakh SSR reports to the State Committee of the Kazakh SSR for Statistics and Analysis the necessary data concerning the circulation of financial papers.