Production Base In Kazakhstan: Can Foreign Contractors Avoid Licence Suspension?

Construction sector in Kazakhstan is now under a targeted regulatory scrutiny. Following inspections by state authorities and the prosecution service that occurred recently, a number of construction licences have been suspended or revoked due to alleged non-compliance with licensing and qualification requirements ¹.

Part of this enforcement trend is understandable. The authorities have identified multiple cases where certain companies applied for and obtained construction licences not for genuine construction activity, but for the purpose of later selling “ready-made” licensed companies. Such applications were filed with use of “conveyor” production bases (one base used in several applications), falsified certificates of engineers, and confirmation of experience in the construction field. In other cases, licensees allegedly carried out activities with serious violations of safety standards or did not satisfy the Unified Qualification Requirements ² which is a set of criteria used to assess whether an applicant or licensee is capable of carrying out activities in the field of architecture, urban planning and construction.

However, the same enforcement trend has also created a difficult position for good faith foreign construction companies operating in Kazakhstan.

Foreign Contractor Dilemma

For a Category I construction licence, Unified Qualification Requirements include, among other things, the requirement for a licensee to have a production base specifically under the right of ownership, economic management or operational management, equipped with the necessary administrative and production premises ³. In practical terms, this means that the licensee must be able to demonstrate control over a properly equipped operational facility that supports its construction activities, rather than merely relying on a formal licence or nominal presence.

At first glance, this appears straightforward and simple. In practice, however, the issue becomes more complex for foreign companies. Such companies often operate under a different legal and operational model: they may obtain a Kazakhstan construction licence on the basis of a licence issued in their home jurisdiction, while the Unified Qualification Requirements do not contain specific rules addressing licensees with a foreign element.

Many foreign contractors obtain a Kazakhstan construction licence based on their licence, experience and qualifications in their home jurisdiction. They may have a substantial production base, equipment and technical capacity abroad, while maintaining a leased production facility or operational base in Kazakhstan for local projects.

In practice, foreign contractors may acquire or otherwise secure a production base at the licence application stage in order to satisfy the formal licensing requirements. However, they may later dispose of, relocate or cease using that production base for various commercial or operational reasons, including the absence of ongoing construction projects in Kazakhstan or the need to perform works in another, geographically remote region of the country.

The key question is therefore:
If a foreign company owns a production base in its home jurisdiction but does not own a production base in Kazakhstan, does this amount to a violation of Kazakhstan’s qualification requirements? And if so, should this automatically result in suspension of the construction licence?

The conservative position of state authorities, including architecture and urban planning departments and prosecution authorities, is generally that no owned production base in Kazakhstan means non-compliance.

This position has often been supported by courts In different regions. As a result, foreign construction companies may find themselves exposed to administrative liability in form of fine, but, in addition, which is more important - licence suspension and, in repeated cases, even licence revocation.

The Case: Non-Suspension for a Foreign Company

Our firm recently represented a foreign construction company with a branch in Kazakhstan in an administrative case concerning alleged non-compliance with the qualification requirements for a Category I construction licence.

The allegation was based on the absence of a production base owned by the company in Kazakhstan. At the same time, the company had a production base in its home jurisdiction and leased a production facility in Kazakhstan. Although the court found that the elements of an administrative offence were present, it exercised its discretion and refused to suspend the licence. Instead, the court imposed only an administrative fine.

Why the Court Refused to Suspend the Licence

The court’s reasoning is important for both lawyers and business decision-makers.

1. The court took into account the legal uncertainty in the qualification requirements. The applicable rules required a production base under ownership, but did not expressly and unambiguously state that such production base must necessarily be located in Kazakhstan for foreign legal entities. That is also consistent with the position of the Supreme Court which provides that any uncertainty or ambiguity in the law should be interreted and applied in favour of the accused person ⁴.
2. The court relied on general principles of administrative liability, including fairness, proportionality and the need for the sanction to correspond to the nature and circumstances of the alleged violation ⁵.
3. The court considered that the company had not previously been held administratively liable for a similar offence and that, at the time of inspection and preparation of the administrative protocol, it had not yet actually carried out construction and installation works in Kazakhstan. Therefore, there was no evidence of harm or threat of harm to public interests, safety or protected legal interests.

As a result, the court applied a more balanced approach: it recognised the formal issue but refused to impose the most disruptive measure.

Why this Matters for Foreign Construction Companies

This case should not be viewed as allowing foreign companies to disregard Kazakhstan’s qualification requirements. The current enforcement practice remains conservative, and licensees that cannot clearly demonstrate compliance continue to face regulatory risk.

At the same time, the case shows that licence suspension is not always inevitable. The prospects of avoiding suspension will depend on the specific facts, including the company’s operational model, licensing history, actual presence and resources in Kazakhstan, ongoing or planned projects, and whether the alleged non-compliance created any real risk to public interests or construction safety.

Accordingly, foreign contractors facing similar allegations should seek early legal advice. A properly structured defence may help demonstrate that the alleged violation should be assessed in its broader factual and legal context, including the proportionality of the proposed sanction.

The Risk of Repeated Violations

Businesses should also understand that the first violation and a repeated violation may lead to very different consequences.

If a licensee does not comply with qualification requirements, the first case may result in an administrative fine, with or without suspension of the licence. The application of suspension may depend on the court’s assessment of the circumstances, including proportionality, harm, prior conduct and the seriousness of the violation ⁶.

However, if a similar violation is committed again, the consequences may be significantly more severe. A repeated violation may lead to revocation of the licence, which is the most serious outcome for a construction company and may leave far less room for judicial discretion ⁷.

For a contractor, licence revocation is not merely a regulatory penalty. It may affect ongoing projects, tenders, financing arrangements, contractual performance, reputation and the ability to continue operating in Kazakhstan.

Practical Recommendations

Foreign construction companies holding or planning to obtain a Kazakhstan construction licence should reassess their compliance position now.

The safest practical approach is to ensure that the company has a production base in Kazakhstan that clearly satisfies the qualification requirements, preferably under the right of ownership, where this is required for the relevant licence category.

Foreign construction companies should carefully assess whether their current licensing and operational arrangements in Kazakhstan are sufficiently robust to withstand regulatory scrutiny. This includes reviewing the basis on which the licence was obtained, the company’s actual technical and operational capacity, its local presence, project commitments, and the documentation available to support compliance with applicable qualification requirements.

Given the current enforcement environment, such review should not be treated as a purely formal exercise. Early assessment may help identify potential vulnerabilities, reduce the risk of licence suspension, and allow the company to develop an appropriate strategy before any regulatory concerns escalate into administrative proceedings.

If an inspection has already been initiated, or an administrative protocol has been drawn up, the company should not treat the matter as a routine administrative formality. At this stage, early engagement of experienced legal counsel is critical, as any suspension of a construction licence may have immediate and significant commercial consequences for ongoing projects, contractual obligations, tender participation and overall business continuity in Kazakhstan.

Footnotes

1. Orda.kz, In Almaty, Over 400 Companies Received Fictitious Licenses for Construction Work, 29 March 2026. InfoHub.kz, Kazakhstan: Over 400 Construction Licenses Sold Illegally in Almaty, 28 March 2026.

2. Order No. 136 of the Acting Minister of National Economy of the Republic of Kazakhstan dated 9 December 2014, “On Approval of the Unified Qualification Requirements Applicable to Licensed Architectural, Urban Planning and Construction Activities”, registered with the Ministry of Justice of the Republic of Kazakhstan on 24 December 2014 under No. 9994, available through the “Adilet” Legal Information System.

3. Paragraph 28 of the Unified Qualification Requirements.

4. Article 55 of the Code of the Republic of Kazakhstan on Administrative Offences dated 5 July 2014 No. 235-V.

5. Paragraph 3 of the Normative Resolution of the Supreme Court of the Republic of Kazakhstan No. 12 dated 22 December 2016 “On Certain Issues of Application by Courts of the Provisions of the General Part of the Code of the Republic of Kazakhstan on Administrative Offences”.

6. Paragraph 1 of Article 464 of the Code of the Republic of Kazakhstan on Administrative Offences.

7. Paragraph 2 of Article 464 of the Code of the Republic of Kazakhstan on Administrative Offences.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.