Resolution of the Board of the National Bank of the Republic of Kazakhstan No. 61 of 29 February 2016 on Approval of the Rules for Exercising the State's Priority Right to Purchase Refined Gold to Replenish Precious Metal Assets

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«NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN»		REPUBLICAN STATE INSTITUTION
REPUBLICAN STATE INSTITUTION		«NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN»
RESOLUTION OF THE BOARD		RESOLUTION OF THE BOARD
29 February 2016		No. 61
Almaty city		Almaty city

On approval
of the Rules for exercising the state's priority right to purchase refined
gold to replenish assets in precious metals

In accordance with the laws of the Republic of Kazakhstan of 30 March 1995 «On the National Bank of the Republic of Kazakhstan», of 14 January 2016 «On Precious Metals and Precious Stones», with the aim of improving the procedure for the exercise by the National Bank of the Republic of Kazakhstan of the state's priority right to purchase refined gold to replenish assets in precious metals, the Board of the National Bank of the Republic of Kazakhstan RESOLVES:

1. To approve the attached Rules for exercising the state's priority right to purchase refined gold to replenish assets in precious metals.
2. To declare invalid:
   1) Resolution of the Board of the National Bank of the Republic of Kazakhstan of 24 August 2012 No. 241 «On approval of the Rules for exercising the state's priority right to purchase refined gold to replenish assets in precious metals» (registered in the Register of state registration of normative legal acts under No. 7955, published on 14 November 2012 in the newspaper «Kazakhstanskaya Pravda» No. 394-395 (27213-27214);
   2) Resolution of the Board of the National Bank of the Republic of Kazakhstan of 3 February 2014 No. 12 «On introducing amendments to Resolution of the Board of the National Bank of the Republic of Kazakhstan of 24 August 2012 No. 241 «On approval of the Rules for exercising the state's priority right to purchase refined gold to replenish assets in precious metals» (registered in the Register of state registration of normative legal acts under No. 9178, published on 13 March 2014 in the information-legal system «Adilet» of the republican state enterprise with the right of economic management «Republican Center for Legal Information of the Ministry of Justice of the Republic of Kazakhstan».
3. The Monetary Operations Department (Moldabekova A.M.) shall, in the procedure established by the legislation of the Republic of Kazakhstan, ensure:
   1) together with the Legal Department (Sarsenova N.V.), state registration of this resolution with the Ministry of Justice of the Republic of Kazakhstan;
   2) sending of this resolution to the republican state enterprise with the right of economic management «Republican Center for Legal Information of the Ministry of Justice of the Republic of Kazakhstan»:
   for official publication in the information-legal system «Adilet» within ten calendar days after its state registration with the Ministry of Justice of the Republic of Kazakhstan; for inclusion in the State Register of Normative Legal Acts of the Republic of Kazakhstan, the Reference Control Bank of Normative Legal Acts of the Republic of Kazakhstan within five working days from the day of its receipt by the National Bank of the Republic of Kazakhstan after state registration with the Ministry of Justice of the Republic of Kazakhstan;
   3) placement of this resolution on the official internet resource of the National Bank of the Republic of Kazakhstan after its official publication.
4. The Department for Protection of Rights of Consumers of Financial Services and External Communications (Terentyev A.L.) shall ensure sending of this resolution for official publication in periodicals within ten calendar days after its state registration with the Ministry of Justice of the Republic of Kazakhstan.
5. Control over execution of this resolution shall be entrusted to the Deputy Chairman of the National Bank of the Republic of Kazakhstan Pirmatov G.O.
6. This resolution enters into force upon expiry of ten calendar days after the day of its first official publication.

Chairman	D. Akishev
of the National Bank

«AGREED»
Ministry for Investments and Development of the Republic of Kazakhstan

«___» ______ 2016

Approved by resolution of the Board of the National Bank of the Republic of Kazakhstan of 29 February 2016 No. 61

Rules for exercising the state's priority right to purchase refined gold to replenish assets in precious metals

1. General provisions

1. These Rules for exercising the state's priority right to purchase refined gold to replenish assets in precious metals (hereinafter – the Rules) have been developed in accordance with the laws of the Republic of Kazakhstan of 30 March 1995 «On the National Bank of the Republic of Kazakhstan», of 14 January 2016 «On Precious Metals and Precious Stones» (hereinafter – the Law on Precious Metals and Precious Stones) and determine the procedure for the exercise by the National Bank of the Republic of Kazakhstan (hereinafter – the National Bank) of the state's priority right to purchase refined gold to replenish assets in precious metals (hereinafter – the priority right).
2. Assets in precious metals, for the replenishment of which refined gold is purchased, are an integral part of the gold and foreign currency assets of the National Bank.

2. Basic concepts used in the Rules

3. For the purposes of the Rules, the following concepts are used:
1) refined gold – gold obtained as a result of refining and presented in the form of:
ingots produced by the states-participants of the Eurasian Economic Union, complying with the requirements established in the states-participants of the Eurasian Economic Union or with international standards adopted by the London bullion market association and designated in the documents of that association as the standard «London good delivery»; ingots of foreign production, manufactured, hallmarked and certified in accordance with the legislation of the country of origin or with international standards adopted by the London bullion market association and designated in the documents of that association as the standard «London good delivery»; measured ingots, plates, granules, powder and other forms, with a content of chemically pure gold of not less than 995 parts per 1000, except for the items specified in table 3 of section 2.10 of the List of goods in respect of which a permit procedure is established for import into the customs territory of the Eurasian Economic Union and (or) export from the customs territory of the Eurasian Economic Union, which is appendix No. 2 to Decision of the Collegium of the Eurasian Economic Commission of 21 April 2015 No. 30 «On measures of non-tariff regulation»;
2) testing of refined gold – a set of works carried out for the purpose of establishing the quantitative and qualitative characteristics of refined gold;
3) exercise of the priority right – purchase by the National Bank of refined gold directly from clients;
4) bid-ask spread – the difference between the purchase and sale price on the international market;
5) clients – subjects of production of precious metals and persons who have become owners of refined gold as a result of processing, who, when selling refined gold on a priority basis, offer it to the National Bank;
6) purchase limit – the maximum possible volume of purchase by the National Bank of refined gold for a certain period within the framework of exercising the priority right;
7) trade ticket (transaction passport) – a document signed by the parties to a transaction containing all the essential terms and parameters of delivery of a specific lot of refined gold, in accordance with the concluded agreement on general terms of purchase and sale of refined gold to replenish assets in precious metals;
8) authorized body – the central executive body exercising management, and also, within the limits provided by the legislation of the Republic of Kazakhstan, inter-sectoral coordination in the field of regulation of production of precious metals and turnover of precious metals and precious stones, raw commodities containing precious metals, jewellery and other items made of precious metals and precious stones.

3. Exercise of the priority right

4. Clients shall submit to the National Bank schedules of forecast of production and sale of refined gold for the first half of the coming year by 1 November of the current year, for the second half of the current year – by 1 May of the current year.

5. The authorized body, for the purpose of providing subjects of production of jewellery and other items made of precious metals and precious stones with raw materials, shall submit to the National Bank, broken down by clients, for each half-year, information on the volumes of refined gold that clients plan to sell to subjects of production of jewellery and other items made of precious metals and precious stones.
   The information specified in the first part of this paragraph shall be submitted to the National Bank for the first half of the coming year by 1 November of the current year, for the second half of the current year – by 1 May of the current year.

6. The Chairman of the National Bank, based on the forecast of production and sale of refined gold, the state of the money market, indicators of monetary policy and the situation on international financial markets, in accordance with part one of paragraph 4 of article 9 of the Law on Precious Metals and Precious Stones, shall approve the purchase limit within the framework of exercising the priority right for the coming half-year or adopt a decision not to exercise the priority right for the coming period (from a month to a half-year).
   In the event of adoption of a decision not to exercise the priority right for the coming period (from a month to a half-year), the said decision shall, within five working days from the day of its adoption, be published on the official internet resource of the National Bank.

7. Within the approved purchase limit, the National Bank shall determine the volume of refined gold that will be purchased in the coming half-year from a specific client that has provided a schedule of forecast of production and sale of refined gold, with reservation of volumes of refined gold for subjects of production of jewellery and other items made of precious metals and precious stones on the basis of information submitted to the National Bank in accordance with paragraph 5 of the Rules. The volumes of purchase of refined gold or the decision to refuse to exercise the priority right for the coming period shall be communicated to clients for the first half of the coming year by 1 December of the current year, for the second half of the current year – by 1 June of the current year.

8. In the event that the expected volume of production and sale of refined gold exceeds the volume of production and sale of refined gold communicated to the National Bank in accordance with paragraph 4 of the Rules, clients shall additionally submit to the National Bank amended schedules of forecast of production and sale of refined gold.
   Within fifteen working days from the day of receipt of the amended schedule of forecast of production and sale of refined gold, the National Bank shall communicate to the client the correspondingly amended volume of purchase of refined gold or notify of leaving unchanged the previously communicated volume of purchase of refined gold by sending a refusal to purchase the new volume in accordance with the amended schedule.

9. The National Bank shall refuse to exercise the priority right in cases of reaching the purchase limit and (or) in the presence of an adopted decision not to exercise the priority right for the coming period in accordance with part one of paragraph 6 of the Rules.

10. The grounds provided for in paragraph 9 of the Rules shall not apply to the clients specified in paragraphs 7 and 8 of the Rules, within the limits of the volumes of purchase of refined gold communicated to them.

11. Purchase of refined gold shall be carried out on the basis of an agreement concluded by the National Bank with the client on general terms of purchase and sale of refined gold to replenish assets in precious metals and a trade ticket (transaction passport) drawn up for a specific lot of refined gold being purchased.

12. Payment for refined gold purchased by the National Bank from clients in accordance with the agreement on general terms of purchase and sale of refined gold to replenish assets in precious metals shall be made after delivery of refined gold by the client and (or) by way of advance payment for future deliveries of refined gold on the basis of documents submitted by the client on acceptance for refining of raw materials containing gold.

13. Advance payment for future deliveries of refined gold as a method of settlement shall be applied only to clients that have applied to the National Bank with a proposal to apply to them advance payment for future deliveries of refined gold as a method of settlement and that simultaneously meet the following criteria:
    1) having their own refining production (plant);
    2) having sold refined gold to the National Bank in a volume of not less than 10,000 (ten thousand) kilograms during the year preceding the year of application to the National Bank with the proposal specified in the first paragraph of this paragraph;
    3) having submitted to the National Bank security for performance of obligations;
    4) having submitted to the National Bank, for the purpose of providing information on their financial position:
    annual financial statements for the year preceding the last completed year, prepared in accordance with international financial reporting standards and confirmed by an audit organization – in the case of application to the National Bank with the proposal specified in the first paragraph of this paragraph before 30 June (inclusive) of the current year; annual financial statements for the previous year, prepared in accordance with international financial reporting standards and confirmed by an audit organization – in the case of application to the National Bank with the proposal specified in the first paragraph of this paragraph after 30 June of the current year; financial statements for the last completed calendar quarter, prepared in accordance with international financial reporting standards.

14. Clients carrying out delivery of refined gold on the terms of advance payment for future deliveries of refined gold shall submit to the National Bank:
    1) annual financial statements prepared in accordance with international financial reporting standards and confirmed by an audit organization – annually not later than 30 June (inclusive) of the year following the year for which the financial statements are submitted;
    2) financial statements for the calendar quarter prepared in accordance with international financial reporting standards – quarterly not later than the last day (inclusive) of the last month of the calendar quarter following the calendar quarter for which the financial statements are submitted.

15. The National Bank shall not make advance payment for future deliveries of refined gold earlier than thirty calendar days before the day (inclusive) of delivery by the client of refined gold. A decision on other general terms of advance payment for future deliveries of refined gold, as well as on the list of clients to which advance payment for future deliveries of refined gold as a method of settlement applies, shall be adopted by the Board of the National Bank.

16. With clients to which advance payment for future deliveries of refined gold as a method of settlement applies, an additional agreement to the agreement on general terms of purchase and sale of refined gold to replenish assets in precious metals shall be concluded on the terms of advance payment for future deliveries of refined gold.

17. The procedure for conducting testing of refined gold and presenting claims regarding the quality and quantity of refined gold shall be established by the agreement on general terms of purchase and sale of refined gold to replenish assets in precious metals.

18. The price of refined gold shall be determined in tenge based on the official exchange rate of the tenge to the United States dollar on the date of the transaction and the average value of the morning and evening fixing (price quotation) for gold of the London bullion market association, averaged over the entire month of delivery, and a discount including:
    transportation costs for export of gold to international markets; sale costs, including the bid-ask spread; a quality discount, which is applied in the case of purchase of refined gold that does not meet the international standards adopted by the London bullion market association and designated in the documents of that association as the standard «London good delivery». For the purposes of determining discount rates, sale costs, including the bid-ask spread, shall be taken as equal to zero only on the basis of a decision of the Board of the National Bank. Discount rates for the coming half-year shall be approved by the Board of Directors of the National Bank. A single discount rate shall apply to all refined gold of one quality purchased in one period.