Share Capital Increase in France with a Kazakhstani Investor or a Person Resident in Kazakhstan: What Is the Procedure?

A Kazakhstani company, a Kazakhstani individual or a person residing in Kazakhstan may subscribe to a share capital increase of a French company and become a shareholder of that company.

The transaction requires the subscriber to be clearly identified and their legal capacity to be verified or, for a corporate subscriber, its legal existence, representation, ownership structure and ultimate beneficial owners to be established.

For a cash share capital increase, the funds may be deposited with a French notary, subject to prior review of the file and completion of the required checks.

Particular attention should also be paid to the subscriber’s country of residence, the bank account used and the Kazakhstani rules applicable to outbound investments, foreign exchange and international transfers of capital.

Who Can Subscribe to a Share Capital Increase in France from Kazakhstan?

The subscription may be made by, for example:

• a company incorporated in Kazakhstan;
• a Kazakhstani national residing in Kazakhstan;
• a Kazakhstani national residing in another country;
• or a person of another nationality residing in Kazakhstan.

The subscriber may become a shareholder for the first time through the share capital increase or increase an existing shareholding.

It is not generally necessary to establish an intermediary company in France solely for the purpose of making the investment.

These transactions are subject to the broader requirements applicable when a foreign investor acquires a stake in a French company. Where a Kazakhstani company subscribes, see also the rules applying to foreign companies subscribing to a share capital increase in France.

What Documents Are Required from the Subscriber?

The documents required depend on whether the subscriber is an individual or a company.

For an individual, the file may include:

• a copy of a valid passport or identity document;
• recent proof of address or residence;
• information concerning tax residence;
• details of the bank account from which the funds will be transferred;
• and supporting documents establishing the source of the funds.

For a Kazakhstani company, the file may include:

• a recent document evidencing its registration and legal existence;
• its articles of association or equivalent constitutional documents;
• information concerning its legal representative;
• evidence of the authority of the person acting in connection with the investment;
• an ownership structure chart;
• documentation concerning intermediate companies, where applicable;
• and information and supporting documents identifying the ultimate beneficial owners.

The precise list of documents is determined after considering the subscriber, their place of residence, the amount invested and the characteristics of the transaction.

Do Kazakhstani Documents Need to Be Translated into French?

A translation may be required.

The French notary must be able to review the documents concerning the subscriber, whether the subscriber is an individual or a company.

Where documents are drawn up in Kazakh, Russian or English, a French translation may be requested.

Depending on the nature and intended use of the documents, a certified translation may be required.

It is generally preferable to submit the available documents first so that the documents that actually require translation can be identified before unnecessary translation costs are incurred.

Do Kazakhstani Documents Need an Apostille for Use in France?

Kazakhstan is a party to the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, which entered into force for Kazakhstan on 30 January 2001.

For documents falling within the scope of the Convention and requiring international authentication, an apostille may replace legalisation.

This does not mean that every document submitted in connection with a French share capital increase must automatically be apostilled.

The requirement depends on the nature of the document and the purpose for which it is being used.

It is therefore advisable to have the file reviewed before arranging apostilles or other authentication formalities.

How Are the Subscriber and Ultimate Beneficial Owners Identified?

Where an individual subscribes directly, the file must allow their identity, address or residence, bank account and source of funds to be verified.

Where a Kazakhstani company subscribes, its ownership and control structure must be understood.

If the company is directly owned by a small number of individuals, identifying the ultimate beneficial owners may be relatively straightforward. Where it belongs to a group involving several companies or holding entities, the ownership chain may need to be documented.

An ownership chart may therefore be required together with supporting documents relating to intermediate companies and the individuals who ultimately own or control the structure.

This can be particularly relevant where a Kazakhstani group invests in France through a holding company established in another jurisdiction.

Does the Subscriber Need a French Bank Account?

Not necessarily.

An Kazakhstani company, a Kazakhstani individual or a person residing in Kazakhstan does not generally need to open a French bank account solely in order to subscribe to a share capital increase.

Subject to prior review of the file, the subscription funds may be transferred from a foreign bank account held in the subscriber’s own name to the account specified by the depositary.

As a general principle, the account holder should be the subscriber. Any third-party funding or transfer from an account held by another person or entity must be disclosed before the funds are sent.

However, the ability to receive funds in France must be distinguished from the ability to transfer those funds out of Kazakhstan.

Can the Subscription Funds Be Transferred Directly from Kazakhstan to France?

The answer depends in particular on the subscriber’s legal status, residence status under Kazakhstan’s foreign exchange rules and the characteristics of the investment.

Outbound investments and certain capital-flow agreements must be reviewed under Kazakhstan’s foreign exchange regulations. Depending on the nature and amount of the transaction, registration or reporting through the National Bank or the servicing bank may be required.

Before initiating the transfer, the subscriber should confirm with their bank and local advisers whether the agreement or transfer is subject to registration, reporting or ongoing monitoring.

Kazakhstani nationality alone does not determine the applicable regime: the subscriber’s place of residence and the bank account used must also be considered.

The subscriber should therefore confirm the applicable requirements with their advisers and bank before initiating the transfer.

The fact that a French notary can receive the funds does not exempt the subscriber from Kazakhstan’s foreign exchange rules or any applicable banking formalities.

Particular attention should also be paid to the payment arrangements. See our guide to transferring share capital increase funds from a foreign bank account to France.

Can the Funds Be Transferred from a Bank Account Outside Kazakhstan?

Yes, subject to prior review of the file.

An individual or company connected with Kazakhstan may hold funds in a bank account located in another jurisdiction.

Whether that account can be used will depend on the identity of the account holder, their relationship with the subscriber and the source of the funds.

If the account is not held by the individual or company legally subscribing to the share capital increase, this must be disclosed before any transfer is initiated.

The depositary must be able to understand the relationship between the subscriber, the account holder and the funds being invested. Additional supporting documentation may therefore be required.

What Source-of-Funds Documents May Be Required?

The supporting documents depend on the subscriber’s profile and how the investment funds were accumulated.

For an individual, these may include bank statements, evidence of income or savings, or documents relating to a sale, gift, inheritance or financing arrangement.

For a company, these may include:

• bank statements;
• annual accounts or financial statements;
• evidence of available corporate cash reserves;
• financing documentation;
• documents relating to the sale of an asset;
• or other documents providing a coherent explanation of the origin of the funds.

The documentation required will depend on the amount invested, the subscriber’s profile and the overall characteristics of the transaction.

Can the Investment Be Subject to French Foreign Investment Screening?

Yes, in certain circumstances.

France operates a foreign investment screening regime covering certain investments made by investors established outside the European Union and the European Economic Area in French companies engaged in sensitive or strategic activities.

Prior authorisation from the French Ministry for the Economy may therefore be required depending on the activities of the French company, the investor’s nationality or residence and the characteristics of the proposed investment.

This issue must be considered separately from the deposit of the subscription funds with the French notary.

How Can the Funds Be Deposited with a French Notary?

The file must be submitted to the French notary before any international transfer is initiated.

The French company provides the documents relating to the share capital increase together with the documentation concerning each subscriber.

The notary reviews the subscriber’s identity or legal existence, their representation where applicable, their ultimate beneficial owners, the bank account used and the source of the funds. Additional documentation may be requested where necessary.

Once the file has been accepted, payment instructions are provided.

The subscriber can then transfer the subscription funds in accordance with those instructions.

After receipt of the funds and completion of the required checks, the French notary can issue the depositary’s certificate required to proceed with the definitive completion of the share capital increase.

For a broader overview, see How can a foreign investor acquire a stake in a French company?

Share Capital Increase with a Kazakhstani Investor or a Person Resident in Kazakhstan: Deposit the Funds with Chassaint & Cerclé Notaires

Chassaint & Cerclé Notaires, a French notary office based in Paris, assists French companies with the deposit of funds for share capital increases involving Kazakhstani companies, Kazakhstani individuals and persons residing in Kazakhstan.

The file can be submitted remotely for review before any transfer is made.

The office can review the documents concerning the subscriber, their bank account and the source of funds and, for a company, its representatives, ownership structure and ultimate beneficial owners.

Once the file has been approved, payment instructions are provided to the subscriber.

After receipt of the subscription funds, the depositary’s certificate can be issued within 24 business hours, provided that the file is complete and the required checks have been completed.

For further information and to submit a share capital increase involving a Kazakhstani investor or a person residing in Kazakhstan, please visit our dedicated share capital increase page.