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Article 319. Selling Pledged Assets

as amended by (21) Law No. 96 of 8th November 2000 of the Republic of Kazakhstan. Concerning the Introduction of Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan Concerning Issues of Appraisal of Property.

1. The selling of pledged property upon which in accordance with Article 20 of this Code a claim is imposed, shall be carried out by way of selling through public auctions in accordance with the procedure which is established by the procedural legislation, unless legislative acts stipulate any other procedure.

2. Special considerations in selling pledged assets in a compulsory non-judicial procedure shall be established by this Code and the Law Concerning Mortgage of Immovables. The rules and procedures established for selling mortgages by the Law Concerning Mortgage of Immovables, shall apply to selling property when other types of pledge are executed, unless this Code stipulates otherwise.

3. Upon the request of a pledger, the court shall have the right in the decision on imposition of a claim on pledged property to delay its sale through public auctions for a period up to one year. The delay shall not affect the rights and obligations of the parties in respect to the obligation secured with the pledge of that property, and it shall not exempt the debtor from the repayment of the creditor's losses and amounts of damages which have increased during the period of the delay.

4. Any legal entities and citizens, including the pledger and the pledge holder, shall have the right to participate in the auction.

Prior to the beginning of the auction, the court or any nominated person (Article 320 of this Code) shall have the right to require the payment of a guarantee contribution from each of the participants in the auction. The guarantee contributions shall be subject to refund after the auction. A guarantee contribution by a participant who won the auction shall be included in the amount of the final price. A guarantee contribution of a participant who won the auction but who did not pay the final price shall not be refunded and it shall remain at the disposal of the court or the nominated person.

5. When an auction is announced as invalid, because of the participation in them of less than two buyers, the pledge holder shall have the right either to turn the pledged assets into his own property at its current estimated value, which is established by the court decision, or by the nominated person on the basis of the report of the physical persons or legal entities that have licences for the performance of activities associated with appraisal of property or to require the organisation of a new auction.

6. When the amount which is received from selling pledged property is insufficient to cover the claims of the pledge holder, he shall have the right, in the absence of another indication in the legislative acts or agreement, to receive the amount of arrears from other property of the debtor without using the advantages based on the pledge.

When the amount received in selling pledged property exceeds the amount of the claim of the pledge holder, secured with the pledge, the difference shall be returned to the pledger.

7. A debtor and a pledger who is a third party (material surety) shall have the right, at any time prior to when the sale of the pledged item took place, to terminate the imposition of the claim on it and its sale, after executing the obligation secured with the pledge or a part of it the execution of which was delayed. An agreement which restricts this right shall be invalid.

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