Bodies of a Legal Entity
📘 1. General Characteristics of the Article
Article 37 of the Civil Code of the Republic of Kazakhstan regulates the mechanism by which a legal entity participates in civil circulation through its bodies. Since a legal entity is an artificial legal construct, it cannot act independently and therefore exercises its rights and obligations through specific persons — its governing bodies.
The provision establishes:
· the principle of representation of a legal entity through its bodies;· the dependence of the structure and powers of such bodies on legislation and constituent documents.
⚖️ 2. Legal Nature of the Bodies of a Legal Entity
The bodies of a legal entity are not representatives in the classical sense (as in representation by power of attorney). Rather, they are structural elements of the legal entity itself and act on its behalf without requiring a special power of attorney.
🔹 Key characteristics:
· they act within the powers established by law or the charter;· they are formed in accordance with the procedure provided for by the constituent documents;· their actions directly give rise to civil rights and obligations of the legal entity itself.
📌 Example: The director of an LLP concludes a lease agreement — the obligations arise for the LLP, not for the director personally.
🧱 3. Types of Bodies (under the Civil Code of the Republic of Kazakhstan and Special Laws)
🔹 1. Supreme body — resolves strategic issues
· In an LLP — the general meeting of participants (Law of the Republic of Kazakhstan “On Limited Liability Partnerships”);· In a JSC — the general meeting of shareholders (Law of the Republic of Kazakhstan “On Joint-Stock Companies”);· In cooperatives — the meeting of members (shareholders);· In non-profit organizations — a conference or general meeting.
🔹 2. Executive body — carries out day-to-day management
· Sole executive body (director, president, chief executive officer);· Collegial executive body (management board, directorate);· May be hired or formed from among the founders.
🔹 3. Supervisory (control) body (optional)
· Audit commission, supervisory board (mandatory in JSCs);· Carries out internal control over the activities of the executive body.
🏛️ 4. Legal Regulation of Composition and Powers
Article 37 refers to the following sources:
| Source | Content |
|---|---|
| Constituent documents | Define the name, procedure for formation, and competence of bodies |
| Legislative acts | Laws “On LLPs”, “On JSCs”, “On Non-Profit Organizations” establish mandatory bodies and procedures |
| Charter | Specifies the legal status of the bodies of a particular legal entity |
📌 Without governing bodies, a legal entity cannot perform, including:
· opening bank accounts;· signing contracts;· participating in court proceedings, etc.
📝 5. Representation and Authority
The bodies of a legal entity do not require a power of attorney. However, if they act beyond the scope of their authority:
· a transaction may be challenged as concluded in excess of authority;· in cases of abuse, civil and criminal liability may arise.
📌 Indication of the director in the state register presumes the existence of his or her authority.
🧾 6. Court Practice
🔹 Example 1: Almaty, 2021
A former director of an LLP signed a contract after dismissal. The court declared the transaction invalid, as the person lacked authority to represent the legal entity.
🔹 Example 2: Nur-Sultan, 2022
The charter of a JSC provided that transactions exceeding KZT 100 million required approval of the supervisory board. The CEO signed a contract for KZT 200 million without such approval. 📜The court recognized the transaction as voidable due to a violation of internal restrictions.
📚 7. Related Provisions
| Provision | Content |
|---|---|
| Civil Code of the RK, Art. 8 | Participation of legal entities in civil legal relations |
| Civil Code of the RK, Arts. 167–171 | Representation and power of attorney |
| Law of the RK “On LLPs” | Procedure for electing bodies and their competence |
| Law of the RK “On JSCs” | Rights and duties of the board of directors and management board |
| Law of the RK “On Non-Profit Organizations” | Governing bodies of NPOs |
| Civil Procedure Code of the RK, Art. 52 | Procedural representatives (director, chairperson, etc.) |
🌍 8. International Approaches
✅ UNIDROIT Principles:
· An organization acts through its managers, whose actions are equated with the actions of the organization itself.
✅ OECD Principles of Corporate Governance:
· Emphasize the need to maintain a balance between executive, supervisory, and supreme bodies and to prevent conflicts of interest.
✅ 9. Conclusion
Article 37 of the Civil Code of the Republic of Kazakhstan defines:
· the legal-representative function of the bodies of a legal entity;· the limits and sources of their authority;· the necessity of an appropriate legal structure to ensure the legal capacity and capacity to act of a legal entity.
🔹 This provision serves as the legal foundation for understanding who may act on behalf of an organization, within what limits, and how the actions of such persons are controlled and restricted.
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.
For more information, please contact a Lawyer / Attorney by phone: +7 (708) 971-78-58; +7 (700) 978 5755, +7 (700) 978 5085.
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