Stocks and shares but not for sale – More reorganization in Kazakhstan’s universities

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stacked cats
Reorganizing cats – easier than herding them

The Kazakh government has typically paid a very active role in the organization and governance of higher education in the country. Over time the particular policy instruments du jour have changed depending on the main aim being pursued by the state. Of late, there has been an uptick in the number of university mergers as well as the (pseudo-)privatization of the many state funded universities and specialized institutes. 

In the most recent round of reorganization in October 2019, 25 universities have been affected. The top-down directive switches their status from ‘republican state enterprise*’ (i.e. state funded) to ‘non-profit joint stock company’. This isn’t quite an act of privatization as the new status transfers all shares in the new company to the Ministry of Education and Science!

This status of non-profit joint stock company (NPJSC) is unusual: joint stock companies tend to be profit-making, which make sense given their ability to make the company’s stocks available to buy and sell. According to the Kazakhstani Law on Non-Profit Organizations (2001), a non-profit organization may be created as a joint stock company or in several other formats (e.g. religious association, public association, foundation).

NPJSCs are described in article 16 of the law as ‘a legal entity that issues shares with the aim of attracting funds to conduct its activities whose income used exclusively for the development of this company’. It may not issue preference shares, derivative and converted securities and it cannot later become a profit-making organization.

The economic aim of the status change appears to be to move the burden of funding these universities away from the state, although if as suggested the only shareholder so far is the Ministry of Education, this must be a long-term goal. It appears there is a secondary (also longer term) mission to diversify ownership of these universities through the transition to a shareholding organization, but without the ability to make profit from the shares, it’s not clear to me which individuals or companies might like to part-own a university.

The October reorganization also envisages the merger of a number of universities – Taraz State Pedagogical University is to be brought together with Taraz State University to become Taraz Regional University; the same fate awaits the State and State Pedagogical universities of Kostanay. In addition, various so-called ‘daughter state enterprises’ – research institutes and laboratories – of the Al-Farabi National University are to be folded into the university.

As usual, it’s a blur of activity in Kazakhstan, with the latest changes reflecting the state’s continued interest in higher education and its creativity in applying new legal and organizational statuses to universities. For more background, check out other posts I’ve written on this topic at Universities for sale in KazakhstanPrivatizing Kazakhstan’s universitiesMergers and acquisitions in Kazakhstan’s universities and I’d close some universities if I could – Kazakh Ambassador to Canada.

 

 

*In Russian, this is республиканское государственное предприятие на праве хозяйственного ведения, often shortened to РГП на ПХВ which translates more specifically as ‘republican state enterprise on the right of economic management’ – can any legal experts out there help explain this in lay terms?

One thought on “Stocks and shares but not for sale – More reorganization in Kazakhstan’s universities

    […] the back of recent news that a number of universities in Kazakhstan are to be reorganized and some merged, rumours are now spreading that at least one of the proposed mergers will not in […]

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