New exceptions for the transfer of objects related to subsoil use rights

09.09.2026

New exceptions for the transfer of objects related to subsoil use rights

Timur Odilov,

Partner, Haller Lomax LLP

t.odilov@hallerlomax.com

Mikhail Abdulov,

Senior Associate, Haller Lomax LLP

m.abdulov@hallerlomax.com

Olzhas Abubakirov

Associate, Haller Lomax LLP

o.abubakirov@hallerlomax.com

On 7 September 2026, amendments to the Code of the Republic of Kazakhstan On Subsoil and Subsoil Use («SSU Code») came into effect, expanding the exceptions to the requirement to obtain the competent authority’s consent for the transfer of objects related to subsoil use rights («Objects»). These changes are particularly relevant to the structuring of M&A transactions involving mining and oil and gas assets.

KEY CHANGES:

the threshold under Article 44.2.5 of the SSU Code has been increased from less than 1% to less than 25% - consent is no longer required if, as a result of the transaction, the acquirer will hold less than 25% of the relevant participatory interests, shares, units or other forms of equity participation;

a new exception has been introduced for certain passive investments that do not confer voting rights or rights to participate in the management of the subsoil user or a person directly or indirectly controlling the subsoil user;

a change in the owner of participatory interests, shares, units and other equity instruments pursuant to an arbitral award, as in the case of a court decision, is no longer treated as a transfer of Objects.

Given that the state has historically taken a highly conservative approach to national economic security in the subsoil use sector, and that these amendments were adopted within a short timeframe without broad public discussion, it remains unclear how durable these provisions will be and how the new exceptions will be applied in practice.

25% INSTEAD OF 1%

The new threshold applies to the interest acquired in a particular company within the corporate chain, rather than to the acquirer’s ultimate indirect interest in the subsoil user itself.

Previously, the state allowed an exemption from the approval requirement for the transfer of Objects where, as a result of the transaction, a person becomes the owner of less than 1% of the participatory interests, units or shares in the charter capital of a legal entity.

This threshold has been increased to 25%.

In practice, there is often an assumption that this mechanism can be applied to the same person through a series of transactions, each of which remains below the applicable threshold. This is not the case. The legislature deliberately used the phrase «becomes the owner», meaning that a person may carry out any number of transactions involving the acquisition of Objects, but the result of each acquisition, taking into account the Objects already owned, must not exceed the threshold.

Under the current rules, for example, an existing holder of 10% of the shares may acquire an additional 14% without the competent authority’s consent, resulting in a total holding of 24%.

STRATEGIC SUBSOIL PLOTS AND STATE CONTROL

Separate issues arise in relation to strategic subsoil plots.

The legislature has not provided for any special restriction on the application of the new 25% threshold to strategic subsoil plots. Accordingly, the new threshold also applies to companies holding Objects associated with strategic subsoil plots.

Thus, for example, the acquisition of less than 25% of the shares in a foreign company that, through the corporate chain, indirectly owns a subsoil user operating on a strategic subsoil plot formally does not require the competent authority’s consent.

This, in turn, means that the mechanism for exercising the State’s priority right to acquire Objects associated with a strategic subsoil plot does not apply in the same circumstances.

A SEPARATE ISSUE - ARBITRATION

Another important change is the extension to arbitral awards of the exception previously available for court decisions. A change in the owner of participatory interests, shares, units and other equity instruments constituting Objects in the hydrocarbons and solid minerals sectors pursuant to an arbitral award is now also not recognised as a transfer of Objects. Accordingly, the competent authority’s consent is not required in such a case.

Arbitration may be administered by a permanent arbitral institution or conducted ad hoc for a particular dispute.

A particular practical issue arises in relation to foreign companies that directly or indirectly own Kazakhstan subsoil users.

A dispute concerning the shares of a foreign HoldCo may be resolved entirely outside Kazakhstan by a foreign permanent arbitral institution or through ad hoc arbitration.

If such proceedings result in the transfer of 100% of the shares in HoldCo to another person, the indirect owner of the Kazakhstan subsoil user will effectively change at the same time.

Attempts to use foreign arbitration, including ad hoc arbitration, together with an artificially created dispute to change the indirect owner of a subsoil user without going through the approval procedure in Kazakhstan cannot be ruled out.

At the same time, the SSU Code does not provide for any specific limitations depending on the place of arbitration, its type, the size of the interest transferred, or whether the relevant subsoil use right relates to a strategic subsoil plot or a major deposit.

NON-VOTING INVESTORS

Another change is that the competent authority’s consent is no longer required for the transfer of shares, units and other securities (financial instruments) associated with subsoil use rights if they do not confer voting rights or rights to participate in the management of the subsoil user or a person directly or indirectly controlling the subsoil user.

For the purposes of determining Objects and, accordingly, whether the competent authority’s consent is required, the legislature previously did not distinguish between voting and non-voting equity instruments in legal entities. This specific exemption may imply that previously all equity instruments in legal entities were subject to the approval regime regardless of whether they carried voting rights.

The new provision, however, does not clarify whether the competent authority’s consent is required for the transfer, for example, of preference shares where the relevant shareholder’s right to participate in the management of the legal entity has arisen or may arise under applicable law or contract.

WHAT NEXT?

The new provisions significantly expand the range of circumstances in which Objects may be transferred without the competent authority’s prior consent.

On the one hand, the changes make the regime more flexible and may facilitate minority and passive investments in subsoil use projects. On the other hand, they may provide a basis for structuring transactions so as to circumvent the approval regime.

Given the novelty of the regulation and the competent authorities’ historically conservative approach, it remains an open question how literally the new exceptions will be applied in practice and whether some of them will require further legislative or enforcement clarification.

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This client alert has been prepared for the purpose of informing Haller Lomax clients and other interested parties and does not constitute legal advice or a legal basis for making specific decisions. Haller Lomax accepts no liability for any loss incurred by any person in connection with the use of this client alert.

Yours sincerely,

Haller Lomax LLP