Benefits of Making Business in Kazakhstan | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN KAZAKHSTAN WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN KAZAKHSTAN WWW.MERGERSCORP.COM

4. Country Overview Kazakhstan, a Central Asian country and former Soviet republic, extends from the Caspian Sea in the west to the Altai Mountains at its eastern border with China and Russia. Its largest metropolis, Almaty, is a long-standing trading hub whose landmarks include Ascension Cathedral, a tsarist-era Russian Orthodox church, and the Central State Museum of Kazakhstan, displaying thousands of Kazakh artifacts. The current population of Kazakhstan is 18,682,102 as of January 2020, based on Worldometer elaboration of the latest United Nations data. Kazakhstan is a bilingual nation where both Kazakh and Russian are spoken widely in the country.

5. Executive Summary Kazakhstan has a land area equal to that of Western Europe but one of the lowest population densities globally. Strategically, it links the large and fast-growing markets of China and South Asia and those of Russia and Western Europe by road, rail, and a port on the Caspian Sea. Kazakhstan has transitioned from lower-middle-income to upper- middle-income status in less than two decades. The country moved to the upper-middle-income group in 2006. Since 2002, GDP per capita has risen six fold and poverty incidence has fallen sharply, significantly improving the country’s performance on the World Bank’s indicator of shared prosperity. .

6. Introduction – Doing business in Kazakhstan In the World Bank's Ease of Doing Business survey for 2018, Kazakhstan achieved a rank of 36th out of the 190 countries surveyed. Kazakhstan is the leading market in Central Asia and has emerged as a major transport and logistics hub in the region. The country links the large and fast-growing markets of China and South Asia and those of Russia and Western Europe by road, rail, and a port on the Caspian Sea. Kazakhstan has an abundance of natural resources, including oil & gas, coal and mineral deposits and its economy continues to be fueled by extractive industries. .

7. Conducting business in Kazakhstan In Kazakhstan the following organizational and legal forms can be formed : - joint-stock company; - open type joint-stock company; - production co-operative; - business partnership. The Civil Code of the Republic of Kazakhstan stipulates several forms of business partnerships: the general partnership, limited partnership, limited liability partnership, however, the foreign citizens and foreign legal entities may only create the business partnerships in the form of limited liability partnerships and the partnerships with the additional liability.

8. Taxation in Kazakhstan Kazakhstan tax residents are subject to personal income tax on worldwide income, while non-residents are taxed on their Kazakhstan-source income only. An individual's income in Kazakhstan is taxed at a flat rate of 10% (dividend income taxed at 5% unless specifically exempted). Tax rates: General - 30 per cent; in addition to the corporate income tax, the net income of a nonresident legal entity doing business in the Republic of Kazakhstan through a permanent establishment shall be subject to taxation at the rate of 15 percent. .

9. Trade Kazakhstan is the 53rd largest export economy in the world and the 58th most complex economy according to the Economic Complexity Index (ECI). In 2017, Kazakhstan exported $44.1B and imported $30.5B, resulting in a positive trade balance of $13.6B. In 2017 the GDP of Kazakhstan was $162B and its GDP per capita was $26.4k. The top exports of Kazakhstan are Crude Petroleum ($19.9B), Refined Copper ($3.05B), Petroleum Gas ($2.4B), Ferroalloys ($2.28B) and Radioactive Chemicals ($1.82B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($1.09B), Packaged Medicaments ($783M), Broadcasting Equipment ($758M), Cars ($575M) and Valves ($411M).

10. Banking in Kazakhstan comprised of the National Bank of Kazakhstan (NBK), which reports to the president. The second tier includes 28 commercial banks, including one state-owned bank and 14 banks in which foreigners hold 30% or more of the bank’s shares, 12 of which are subsidiaries of foreign banks. In addition to its monetary policy responsibilities, the NKB performs the functions of a financial regulator. In that role, the NBK is charged with overall supervision of the banking sector, insurance, pension system, stock market, microcredit organizations, debt collection agencies, and credit bureaus. In May 2019, the NBK proposed changes to legislation providing for establishment of a new independent regulatory body which would take charge of financial markets control and development. Kazakhstan has a two-tiered banking system. The first tier is

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com