Comment to article 101. Reorganization and liquidation of a production cooperative The Civil Code of the Republic of Kazakhstan
Reorganization and liquidation are ways to terminate a production cooperative as a legal entity.
On reorganization, see the commentary to art. 45 of the Civil Code, on liquidation - to art.49 of the Civil Code.
In both cases, the cooperative's activity as a legal entity is terminated, however, upon reorganization, its rights and obligations are transferred to other persons.
When reorganizing in the form of mergers and acquisitions of cooperatives, the absolute size of a cooperative member's share (i.e., its amount) remains, but its percentage share in the total assets of the newly created cooperative will change.
The specific reason for the liquidation of a cooperative is to reduce the number of its members below the minimum limit, i.e. less than two people.
The decree on a production cooperative stipulates that if, as a result of the departure of other members, a single member remains in the cooperative, he has the right, within six months, either to accept new members and retain the cooperative, or to reorganize it into an economic partnership that, in accordance with the Civil Code, can be created by one person (see commentary to art. 58 of the Civil Code). If these requirements are not met, the cooperative is subject to liquidation after six months.
The property of the liquidated cooperative remaining after satisfying creditors' claims (the so-called "liquidation quota") is distributed among its members in proportion to their shares.
The introduction of the rule according to which the transformation of a cooperative into an economic partnership can take place only by a unanimous decision of the cooperative's members (paragraph 2 of the commented article) is dictated by the desire to protect the interests of each member, since such a reorganization entails a significant change in both the status of the legal entity as a whole and the legal position of each participant in it.
A production cooperative can be transformed into an economic partnership of any type (JSC, LLP, general partnership, etc.), however, in compliance with the requirements imposed by legislative acts on legal entities of this type. For example, the number of members of an LLP cannot exceed fifty, so a cooperative whose number of members exceeds this number cannot be transformed into this partnership.
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The commentary was prepared within the framework of the scientific and practical research program of the Scientific Research Center of Private Law of the Kazakh State Law University.
Head of the working group on the preparation of the draft Civil Code of the Republic of Kazakhstan, Corresponding Member of the Academy of Sciences of the Republic of Kazakhstan, Professor Suleimenov M.K.
Deputy head Professor Basin Yu.G.
