Distribution and agency agreements in Kazakhstan at the exit stage: what in-house counsel need to know

Unlike common-law jurisdictions, where terminating a distribution or agency relationship typically resolves on notice and a final account, Kazakh law places a distinct set of obligations on the departing foreign principal – obligations that surface at the exit stage and that in-house counsel frequently encounter only after the decision to exit has been made. For foreign companies operating in Kazakhstan through local distributors or commercial agents, the exit process engages not only the terms of the underlying contract but also Kazakhstan's mandatory statutory protections, regulatory notification requirements, and, where the relationship has cross-border elements, coordinating considerations with the EAEU framework. This guide sets out the key steps for in-house counsel managing that process in 2027.

A distribution or agency exit in Kazakhstan begins well before any formal termination notice is issued. The in-house counsel team should assemble the contractual record and conduct a threshold assessment of which statutory protections are engaged.

The starting point is the written agreement itself. Kazakhstan's civil law framework does not recognise an implied agency or distributor status based on conduct alone; the legal characterisation of the relationship – and therefore the applicable exit rules – follows the contract. Counsel should confirm whether the agreement is structured as a commercial agency (komissia or poruchenie), a distribution arrangement (an exclusive or selective supply agreement), or a mixed structure that draws on both. The distinction matters: agency relationships carry specific rules on remuneration upon termination; distribution agreements are primarily governed by contract, with mandatory rules engaging at the margins.

In parallel, the following should be verified before notice is served:

• Governing law and dispute resolution clause: where the agreement nominates a foreign governing law, the parties' choice is generally respected under Kazakh private international law, but mandatory provisions of Kazakh law applicable at the place of performance may still apply.
• Notice period: the contractual notice period must be observed strictly. Where the agreement is silent, the default period under Kazakh civil law applies, and counsel should not assume it mirrors the position under their home-law template.
• Inventory and stock position: for distribution agreements, the treatment of unsold inventory at termination – whether the principal is obliged to repurchase, and at what value – must be identified before notice, not after.
• Exclusivity and post-term restrictions: any exclusivity granted to the distributor, and any post-term non-compete clause, requires review for enforceability under Kazakh law before the exit documents are finalised.
• Regulatory licences and accreditations held in the distributor's name: where the distributor holds product registrations, import licences, or sector-specific accreditations on behalf of the principal, exit triggers a licensing gap that must be addressed through a parallel process.

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Kazakh civil law contains several mandatory provisions that apply regardless of the contractual terms agreed by the parties, and foreign principals who rely solely on their contract frequently find these provisions create obligations they had not anticipated.

For commercial agency relationships (poruchenie structure), the principal is required to compensate the agent for work already performed at the date of termination, even where the termination is for cause on the principal's side, unless the agent's own breach justified the termination. In a komissia arrangement, the principal must also settle any advances or costs the agent has incurred in the ordinary performance of the agency before the termination date.

For distribution agreements, the position is more contractual, but several implied terms have been recognised in Kazakh court practice: the duty to deal in good faith in the exit process, the obligation not to use confidential commercial information provided by the distributor after termination, and – in cases involving exclusive territorial grants – a residual duty not to appoint a replacement distributor before the notice period has expired.

Compensation on termination – sometimes referred to informally as a goodwill payment in the context of European law – does not exist as a statutory right in Kazakhstan in the same form as it does under EU agency directive-derived legislation. This is a materially different position from what in-house counsel familiar with EU or UK law would expect, and it is an important point: a Kazakh commercial agent does not have an automatic statutory claim to indemnity or compensation equivalent to the EU model. The claim, if any, must be grounded in the contract or in a specific factual basis for unjust enrichment.

Where the relationship involves a cross-border element – for example, a principal entity incorporated in Russia, Germany, or another jurisdiction supplying goods to a Kazakh distributor – the exit process also implicates customs and EAEU regulatory considerations. Product registrations, certificate of conformity (EAC) holders, and import authorisations may be registered at the EAEU level and attached to the distributor's legal entity. Unwinding these registrations requires a separate regulatory step that is independent of the civil law termination process and typically takes longer.

The civil law termination of a distribution or agency contract does not automatically discharge the foreign company's regulatory standing in Kazakhstan. In-house counsel should identify, at the pre-termination planning stage, which of the following notifications or deregistration steps apply.

Competition authority notification: where the distribution agreement included exclusivity provisions, a minimum purchase commitment, or a territorial restriction that was notified to or filed with the Kazakhstan Competition Agency (the Agency for the Protection and Development of Competition) at inception, an exit may require a corresponding denotification. Counsel should verify the original filing position.

Product registration and EAC certificates: where the distributor held EAC certificates of conformity in its own name on behalf of the principal, the principal must either transfer those registrations to a new authorised representative or allow them to lapse. Lapsing without transfer means the principal's products cannot lawfully enter the Kazakhstan market through any route until new certificates are obtained. This is frequently the longest-lead-time item in a distribution exit and should be initiated before or simultaneously with the contractual termination process.

Tax registration of a permanent establishment: where the distribution arrangement was structured so that the principal's activities in Kazakhstan – through the distributor's conduct – created or risked creating a permanent establishment for tax purposes, the exit should be accompanied by a review of the principal's registered tax position in Kazakhstan. Where a representative office or branch was registered separately, its formal liquidation is a distinct procedural step governed by Kazakh company law.

Customs broker or authorised importer registrations: in certain regulated product categories, the distributor may hold customs authorisations specific to the principal's goods. These should be identified and addressed in the exit protocol.

Note: Failure to address outstanding product registrations before completing the contractual exit can result in the principal's goods being detained at the Kazakh border if a new distributor attempts to import them before the registration transfer is completed. This is not a fine-based penalty; it is an operational disruption that is difficult to resolve once the original authorised registrant has exited the relationship.

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A distribution or agency exit in Kazakhstan is most securely documented through a formal termination agreement (the local equivalent of a settlement and release), rather than through a unilateral notice alone. This is particularly important where the relationship has been long-standing, where the distributor has made market-development investments, or where there is any ambiguity in the contractual record.

The termination agreement should address the following elements:

• Confirmation of the termination date and the basis for termination (mutual agreement, expiry, or for cause)
• Final account: all sums due to and from each party as at the termination date, including unsettled invoices, credit notes, returns, and any agreed compensation for work in progress
• Inventory: the parties' agreed position on unsold stock, including any repurchase obligation, the valuation method, and the logistics protocol for return or disposal
• Intellectual property: confirmation of the reversion of all trademark licences, use of trade names, domain names, and marketing materials – and a deadline for the distributor to cease using the principal's marks
• Confidentiality: a restatement of confidentiality obligations for the post-termination period
• Non-disparagement and reference: increasingly included in commercial termination agreements, particularly where the distributor may approach the principal's other regional partners
• Mutual release: a mutual release of claims arising from the distribution relationship, subject to any carved-out claims that the parties specifically identify and reserve

Where the agreement was in Russian – Kazakhstan's second official language alongside Kazakh – and the principal's team is working in English, the termination agreement should be prepared in both Kazakh and Russian, with a clearly designated governing-language clause. A termination document in English alone, signed by a Kazakh-resident entity, may face enforceability challenges if disputed in a Kazakh court.

For Distribution & Franchising (/jurisdictions/kazakhstan/distribution-franchising/) matters and the broader legal landscape for foreign companies entering or exiting Kazakhstan, Vetrov & Partners works with regional counsel to provide coordinated advice across the EAEU.

Where a distributor or agent resists the termination – or asserts claims arising from it – the dispute resolution pathway in Kazakhstan is defined primarily by the contract's jurisdiction clause. In-house counsel should review this clause carefully before any exit notice is served, because the practical options differ significantly depending on whether the parties have agreed to Kazakh state courts, the ICAC at the Kazakh Chamber of Commerce (the International Arbitration Centre under the Kazakh law on arbitration), the AIFC Court in Astana (which applies English common law), or an international arbitral institution seated outside Kazakhstan.

The AIFC Court represents a distinctive option: operating within the Astana International Financial Centre, it applies English law principles, conducts proceedings in English, and has its own enforcement mechanism within the AIFC jurisdiction. For foreign principals who included an AIFC Court clause in their original distribution agreements, this provides a significantly more familiar procedural environment than the Kazakh state court system. However, the AIFC Court's jurisdiction is limited to matters connected with the AIFC, and its awards are enforceable against Kazakh-resident entities through a separate recognition step in the Kazakh state system if assets outside the AIFC are in scope.

Where the dispute is to be resolved before Kazakh state courts, the procedural timeline from filing to first-instance judgment in a contested commercial dispute is typically measured in months rather than weeks. Foreign principals should be aware that interim measures – injunctive relief to preserve assets or restrain a distributor's conduct during the dispute – are available in principle but require a showing of urgency and are granted at the court's discretion.

For matters with a Russian element – for example, where a holding structure involves a Russian parent, or where goods were routed through Russia under EAEU free-circulation rules – the cross-border Kazakhstan–Russia dimension of a distribution dispute may require coordinated advice from both Kazakh and Russian qualified counsel. Vetrov & Partners provides that coordinated approach through its regional network, supporting matters across Russia and Central Asia. See our Cross-border Disputes (/jurisdictions/kazakhstan/disputes/) and Enforcement of Foreign Judgments & Awards (/jurisdictions/kazakhstan/enforcement/) practice pages for the Kazakhstan-specific context.

[CTA: If a distribution or agency exit in Kazakhstan has given rise to a dispute, or if you are assessing the contractual and procedural position before serving notice, speak to our team: info@vetrovpartners.com | WhatsApp/Telegram: +7 (983) 510-38-76]

• Distribution and franchising in Kazakhstan: market entry framework (/jurisdictions/kazakhstan/distribution-franchising/)
• Company formation and exit in Kazakhstan: a guide for foreign investors (/jurisdictions/kazakhstan/company-formation/)
• Cross-border disputes involving Kazakhstan: forum selection and enforcement (/jurisdictions/kazakhstan/disputes/)

Q: Does a Kazakh commercial agent have the same statutory right to compensation on termination as an EU agent?

A: No. Kazakh law does not replicate the EU Commercial Agents Directive's statutory right to indemnity or compensation on termination. A Kazakh agent's claim on exit must be grounded in the contract or in a specific legal basis such as unjust enrichment. Foreign principals with EU-derived contract templates should review the compensation provisions carefully, as they may create obligations under the express terms of the agreement even where Kazakh statute would not require them. Taking local legal advice before finalising the termination structure is advisable.

Q: How long does the regulatory deregistration process take for a distribution exit in Kazakhstan?

A: The timeline varies by sector and the type of registration to be transferred or lapsed. Product registrations and EAC certificates of conformity typically require the longest lead time – in some regulated categories, the transfer or reissuance process can take between two and six months depending on the complexity of the product dossier and the responsiveness of the new authorised representative. Competition authority filings, where applicable, typically resolve within four to eight weeks. Tax deregistration of a representative office follows Kazakh company law liquidation timelines, which are typically three to six months for an uncontested process. In-house counsel should map all outstanding registrations at the pre-termination planning stage and build these lead times into the exit programme.

Q: Can we rely on an English-language termination agreement for a Kazakhstan-based distributor?

A: Not without risk. A termination document executed in English alone, where the counterparty is a Kazakhstan-resident entity, may face enforceability challenges in Kazakh state courts if the terms are disputed. Kazakh procedural rules require documents in foreign languages to be accompanied by certified translations. More significantly, courts may scrutinise a termination agreement in a language the counterparty does not use in its ordinary course of business. The practical standard is a bilingual document in Kazakh and Russian, with a governing-language clause. Where the agreement will be enforced through the AIFC Court, an English-language document is appropriate, provided the original distribution agreement contained an AIFC jurisdiction clause.

Vetrov & Partners is a Russian boutique law firm established in 2009, recognised by Pravo-300 – Russia's principal legal directory – for eight consecutive years, and listed as a trusted adviser by the German Consulate General in Novosibirsk.

The firm's regional practice covers cross-border matters across Russia and Central Asia, including distribution and agency relationships, exit structuring, and commercial dispute resolution. For Kazakhstan-specific matters, the firm coordinates with regional counsel qualified under Kazakh law, providing foreign clients with coordinated advice across the EAEU footprint.

With over 1,000 matters handled since inception, the team combines direct partner involvement with regional analytical capacity across the CIS and EAEU jurisdictions.

Enquiries: info@vetrovpartners.com | WhatsApp / Telegram: +7 (983) 510-38-76 | t.me/vitvetcom

This publication is provided for informational purposes only and does not constitute legal advice under Russian or any other applicable law. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Vetrov & Partners is a Russian-qualified law firm. For matters governed by foreign law or requiring local admission in another jurisdiction, we collaborate with trusted counsel in the relevant jurisdiction. For advice regarding your particular situation, please contact info@vetrovpartners.com.

— Aigerim Serikbayeva Contributing Regional Analyst — Kazakhstan, Vetrov & Partners vetrovpartners.com/contributions/