OREANDA-NEWS. October 29, 2009. Standard & Poor’s Governance Services released its survey of Transparency & Disclosure of Kazakhstani companies - the first study performed by Standard & Poor’s in Kazakhstan. The survey found moderate average level of transparency by the largest public companies, and relatively weak disclosure by large non-public government-controlled companies.

The Standard & Poor’s Kazakhstan Corporate Transparency Index, calculated as an average score for the 22 largest public companies was 44% in our initial survey. This result is slightly weaker as compared with other emerging markets surveyed in 2008 (44% for China and 56% for Russia), and is significantly lower than disclosure standards observed in the developed economies. Already in our surveys in 2003, we found that the average transparency levels in the developed world ranged at the levels of individual countries, from 61% for Japan to 71% for the UK.

The most transparent company in our survey is KMG EP, with a score of 67%. Three more companies scored higher than 60%, namely ENRC, Kazakhmys and Kazkommertsbank.

"The relatively low average score for Kazakhstan is mainly due to disclosure weaknesses in operating performance, shareholder rights, and remuneration of executives and directors. Additional constraining factors are limited information in companies’ annual reports and limited English–language disclosure," said Standard & Poor's governance analyst Elena Pastoukhova. “On the positive side, we note the fact that all public companies in Kazakhstan disclose their financial statements under International Financial Reporting Standards (IFRS) and that information on key shareholders and governing bodies is generally available.”

Within our supplementary sample -- comprising eight non-public companies from the government-owned Samruk-Kazyna group – the average score was 25%, which is mostly due to lower disclosure requirements extending to these companies under current regulations. Within this sample, the highest scorer is the Development Bank of Kazakhstan with 53%.

Regulatory disclosure requirements in Kazakhstan have improved significantly in recent years, in our view. Mandatory IFRS reporting not only by public companies, but also all large enterprises and public interest entities, is one of the notable achievements. However, in several areas current requirements are fairly lax. For example, beneficial owners are not required to disclose information on their significant indirect holdings and their affiliates, and requirements regarding disclosure of executive compensation are low. Disclosure regulations extending to non-public entities of the Samruk-Kazyna group, for example, allow these to file their consolidated annual accounts on August 31, which is unduly late by international practices.

The survey is a research project by Standard & Poor's focused on analysis of disclosure practices of the largest Kazakhstani companies. The survey is based on public information alone. Its methodology is based on 110 criteria of disclosure grouped in three blocks:

-- Ownership structure and shareholder rights,

-- Financial and operational information, and

-- Board and management structure and processes.

The opinions expressed are the independent opinions of S&P’s Governance Services, a department of Equity Research Services, and do not reflect the opinions of other areas of Standard & Poor’s. Standard & Poor's GAMMA scores and other analytic services are performed as entirely separate activities in order to preserve the independence and objectivity of each analytic process. GAMMA scores are offered to companies in the emerging markets, with the primary focus on Brasil, Russia, India, and China (the BRIC countries).

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.