Kazkommertsbank JSC (Kazakhstan) comments on banks' proposed amendments to legislation On Shared Construction

/KASE, May 30, 08/ - Kazkommertsbank JSC (Almaty), a listing company of Kazakhstan Stock Exchange (KASE), provided KASE with the press release: Quotation start Kazakhstan Association of Financists initiated the amendments to the legislation On Shared Participation, which will allow for establishing of the mechanism controlling purposeful usage of the funds of shareholders and banks at developing construction projects. The head of product support department of Kazkommertsbank, Sergey Mokrousov has commented on the amendments to the legislation proposed by banks: Proposed measures are intended to avoid in the future the system problems, which may downgrade residential construction industry, and disrupt clients' trust to construction companies. This is why we propose a number of changes to be made in the legislation On Shared Participation. One of those is a mandatory establishment of a separate project company with a special banking account for each construction project. The money of shareholders and bank credits will arrive exclusively to this account, and will be spent for construction of this object only. This will create conditions for control of purposeful usage of the funds of shareholders and bank credits. On the whole in Kazakhstan the special accounts mechanism has been introduced within the program of shareholders' support at the expense of "Kazyny". We believe, considering the events, which took place last year, the legislation On Shared Participation in Kazakhstan requires to be further developed. It must be supplemented with normative rules for better protection of the rights of shareholders. Without that, it will be hard to restore the trust to construction shared financing mechanism. The things we offer are based on the international experience. Compared with the banks studying projects and estimating risks, before crediting, an individual can not calculate risks of a developer, and estimate its solvency. All information which is available to him - is advertisement on TV and newspapers. Therefore, the legislation reducing shareholders' risks is required. If we compare, in USA in the 20-ties of the last century population was actively investing in a fast developing stock market. Most of investors had no special knowledge in this area and made decisions having very little or no information. When in 1929 the crisis broke out, it appeared that people understood little of the risks, associated with such investments. One of the conclusions, made after these events, was enforcement of the stock market regulation mechanism. With adoption of the Law on Securities in1933 a normative base for such regulation being perfected today started to develop. It was set, on one side, to protect investors by implementing mechanisms, which allowed for people receiving more data for making decisions. On the other side, investments to weekly regulated market segments remained possible mainly for professional investors and for the investors, whose capitals would sustain big losses. In our case if a construction company goes on the shares participation market, it, in fact, sells an investment product. This means, there must be certain requirements to such company - the requirements that must be enforced by laws, for example the minimum capital to secure financial stability. Our offers intend to restore the trust to shared participation in residential construction. Construction needs to be assisted to overcome the current situation and become stable and strong, reduce probability of shareholders related problems. To contact: Press-service: +7 (727) 258-53-92 E-mail: pr@kkb.kz Quotation end [2008-05-30]