BASIC PROVISIONS ON BUSINESS PARTNERSHIPS

🔹 1. GENERAL CHARACTERISTICS

Article 58 defines the concept and legal nature of a business partnership as one of the principal forms of commercial organizations in the Republic of Kazakhstan. A business partnership is a legal entity established through the participation of two or more persons combining their contributions into the authorized capital.

This form represents a flexible and universal method of business organization, used by entities ranging from small enterprises to large holdings.

🔹 2. ANALYSIS BY CLAUSES

✅ Clause 1: Definition of a Business Partnership

“...with authorized capital divided into shares...”

📌 Key features:

· commercial purpose;

· property is formed through contributions of the founders;

· property belongs to the partnership itself, not to the participants (unlike shared ownership).

📘 Ownership rights belong to the legal entity, while participants hold obligatory rights represented by shares in the authorized capital.

✅ Clause 2: Forms of Business Partnerships

“...may be established in the form of...”

📌 Types:

1. General Partnership (GP) — participants bear joint and unlimited liability;
2. Limited Partnership (LP) — consists of general partners (liable with all their property) and limited partners (commanditists) whose risk is limited to the amount of their contribution;
3. Limited Liability Partnership (LLP) — participants are liable only within the limits of their contributions;
4. Additional Liability Partnership (ALP) — similar to an LLP, but if the partnership’s assets are insufficient, participants bear additional subsidiary liability.

📘 In practice, the LLP form is the most common (similar to an LLC in the Russian Federation).

✅ Clause 3: Number of Participants and Status of Persons

“...may be established by one person...”

📌 Principle:

· LLPs and ALPs may have a single participant;

· GPs and LPs may only be established by several individuals, not legal entities.

📘 This restriction is intended to protect individuals from improper mixing of the roles of legal entities and individuals within high-risk forms involving unlimited liability.

✅ Clause 4: Founding Documents

“...founding agreement and charter...”

📌 As a general rule:

· where there are multiple participants: founding agreement + charter;

· where there is one participant: only the charter.

📘 This reflects the principle that an agreement is necessary to regulate relations among participants.

✅ Clause 6: Contents of Founding Documents

“...must contain...”

📌 Mandatory provisions:

· size of shares;

· procedure for making contributions;

· liability for violations;

· other conditions (for example, withdrawal, transfer of shares, management issues).

📘 This provision clarifies Article 41 of the Civil Code of the Republic of Kazakhstan, which establishes general requirements for the founding documents of all legal entities.

📘 Example:

An LLP charter may provide that a participant who fails to contribute their share on time loses voting rights until the full amount is paid.

✅ Clause 8: Right to Establish Other Partnerships

“...except in cases provided for by legislative acts.”

📌 General rule: business partnerships may participate in the establishment of other entities.

Exceptions may apply, for example:

· in public-private partnership (PPP) projects;

· regarding companies receiving state subsidies;

· under antimonopoly legislation restrictions.

🔹 3. REPEALED CLAUSES

· Clause 5 was repealed in 2012 (likely containing outdated provisions regarding mandatory state registration of certain actions).

· Clauses 7 and 9 were repealed earlier and lost relevance (for example, restrictions on participation of foreign legal entities in certain forms).

🔹 4. RELATED NORMS AND LEGISLATION

Regulatory Act | Article | Subject Matter

Civil Code of the Republic of Kazakhstan | Article 41 | General requirements for founding documents

Civil Code of the Republic of Kazakhstan | Articles 59–66 | Special provisions on forms of partnerships

Law of the Republic of Kazakhstan “On Limited and Additional Liability Partnerships” | Entire Law | Detailed rules for establishment and management of LLPs and ALPs

Law “On State Registration of Legal Entities...” | Articles 6, 11 | Registration and re-registration of LLPs

Law “On Competition” | Article 51 | Restrictions on participation of legal entities in other structures

🔹 5. PRACTICAL RECOMMENDATIONS

For founders:

· choose the form depending on the level of risk and number of participants;

· the charter should contain detailed rules on management, withdrawal, and profit distribution;

· ensure timely contributions — failure to comply may lead to legal and financial sanctions.

For lawyers:

· when preparing documents for a single-member LLP, execute only the charter, without a founding agreement;

· when registering a GP or LP, ensure that all participants are individuals;

· verify restrictions on participation in other partnerships when dealing with state-owned or quasi-public sector entities.

📎 CONCLUSION

Article 58 of the Civil Code of the Republic of Kazakhstan establishes the fundamental provisions governing business partnerships as a flexible form of commercial organization that enables effective business structuring. The article covers:

· the legal status of partnerships;

· types of forms (LLP, GP, LP, etc.);

· establishment procedures;

· the structure of founding documents;

· participation in other organizations.

Attention!   

       Law and Law Law Law draws your attention to the fact that this document is basic and does not always meet the requirements of a particular situation. Our lawyers are ready to assist you in legal advice, drawing up any legal document suitable for your situation.  

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