Chinese and Kazakh Partners Conflicting Over Steel Plant in Shymkent

The largest metallurgical plant in Shymkent has been idle for quite some time now. The problem lies in the founders. The Chinese partners initiated a lawsuit. They are trying to challenge the decision of the first instance court. The appellate city court must decide the fate of the metal processing enterprise, reports Vera.kz.

According to the decision, all transactions and contracts involving the investors from China are invalid. In fact, their lawyer says that this ruling of the Shymkent Economic Court deprives all partners of shares in the business.

"We are challenging the court's decision. According to it, all transactions were declared invalid. The reason was that the Chinese founders did not have a C-5 visa. But these deals were executed in 2017 and in 2018. We petitioned the court to apply the statute of limitations, because it is three years. In addition, a tax audit was conducted in 2018, and then they knew that the founders were foreigners, but they did not file a lawsuit, but they did five years later,"

Lawyer Gulzada Nogaibayeva.

The claim of the State Revenue Department of the Enbekshinsky district is against the Amir-A enterprise (the steel plant). The department appealed to the court after the Chinese buisnessmen's Kazakh partner, Aldykul Amirbekova, came to the prosecutor's office with a complaint.

The lawyer also said that Amirbekova stated that the Chinese partners have been working without a C-5 visa. The court did not support the foreigners, referencing the statute of limitations, as the state authorities found out about the absence of a visa only in 2022.

At the same time, the judge was not perplexed by the fact that during the company's re-registration state bodies had checked the workshops more than once and the lack of a visa did not cause any questions.

"All counterparties will suffer from the decision. The founders will remain without shares. Registration and re-registration of enterprises is regulated by the law "On State Registration". There is not a single point in this law that if a foreign citizen is a member of the founders, then a C-5 visa must be provided. I think this is an omission in the law. In addition, Chinese businessmen are the founders of Sin Yuan Steel LLP and Amir-A LLP. According to the law, they can only get one visa. This is also an omission in the law,"

Nogaibayeva

The State Revenue Department of the Yenbekshi district filed a similar claim for invalidation of all transactions made in respect to the enterprise Sin Yuan Steel LLP. It was later withdrawn for some reason. The representative of the state revenue, however, could not explain to the judge why there was such selectivity in the Appeal Court.

It was decided to continue the meeting of the appeals board after reviewing the mediation conclusion, which was signed by the Kazakh and Chinese partners.

According to the Kazakh side's representative, Aldykul Amirbekova undertook, regardless of the court decision, to return the shares to the Chinese partners in the amount in which they were before the start of the judicial strife.

The construction of the plant, which was planned to process scrap, began in 2017. There was already a small facility on this territory. It became larger in area and in production capacity. Lawyers say they were able to expand the company at the expense of Chinese investors. Foreign founders have invested 18 billion KZT in it. After a few years of work, they found out that they could lose everything.

"The construction of the plant took three years. In 2021, they already reached full capacity and disputes began. Then a lawsuit was filed from the tax service. The founder Aldykul Amirbekova, as a representative of the Kazakh side, knew this loophole, that we did not have a C-5 visa. If the transactions are invalid, then she will remain the sole founder,"

The founder from China, Ke Jiangdong, at a briefing in November.

While investors are arguing about who is the main owner at the plant, more than a hundred people are out of work. Akimat of Shymkent is trying to find a temporary job for them. 250 people can be employed at the enterprise.

Original Author: Dilara Yahyarova

Disclaimer: This is a translated piece, the content is the same. for Accuracy please refer to the original version in Russian.