Comment to Article 113. Foreclosure on obligations of the Republic of Kazakhstan and an administrative-territorial unit  The Civil Code of the Republic of Kazakhstan  

The property of the state treasury consists of funds from the republican budget, gold and foreign exchange reserves and diamond funds, objects of state ownership of land and other natural resources, and other state property not assigned to state-owned republican legal entities in accordance with legislative acts (see commentary to art. 192 of the Civil Code). State responsibility is possible only within the limits of this property.

The property of the local treasury consists of funds from the local budget and other communal property not assigned to state-owned legal entities (see commentary to art. 192 of the Civil Code). Accordingly, the responsibility of an administrative-territorial unit is possible only within the limits of this property.  

It follows from the logic of paragraph 2 of the commented article that one administrative-territorial unit is not responsible for the debts of another administrative-territorial unit.

The general rule of paragraph 2 of the commented article does not apply to cases when the Republic of Kazakhstan or an administrative-territorial unit has assumed a guarantee (surety) for the obligations of an administrative-territorial unit, a legal entity, or a citizen, or the specified entities have assumed a guarantee (surety) for the obligations of the Republic of Kazakhstan or an administrative-territorial unit. In this case, the liability comes in accordance with the rules of the guarantee (surety).

The Republic of Kazakhstan bears subsidiary (additional) responsibility for the obligations of republican state-owned enterprises and state institutions in the event of a shortage of their own money (see commentary to Articles 104 and 207 of the Civil Code, as well as paragraph 3 of Article 44 of the Decree on the State Enterprise).

The Republic of Kazakhstan bears subsidiary (additional) responsibility for the obligations of a republican enterprise under the right of economic management when it is transformed into a state-owned enterprise in the absence of sufficient funds from the enterprise itself.  

An administrative-territorial unit bears subsidiary (additional) responsibility for the obligations of municipal state-owned enterprises and state institutions in case they lack their own money (see the commentary to Articles 104 and 207 of the Civil Code, as well as paragraph 3 of Article 44 of the Decree on the State Enterprise).

An administrative-territorial unit bears subsidiary (additional) responsibility for the obligations of a communal enterprise under the right of economic management when it is transformed into a state-owned enterprise in the absence of sufficient funds from the enterprise itself.  

The Republic of Kazakhstan and the administrative-territorial unit are liable for the obligations of republican and local enterprises based on the right of economic management, respectively, in the event of their bankruptcy, which was caused by the actions of the founders (authorized bodies), if the enterprises' funds are insufficient to satisfy creditors' claims (art. 30 of the Decree on the State Enterprise).

The state (administrative-territorial unit) may be responsible for the activities of a business partnership where it is the main contributor, owning its shares (stakes), in cases of insolvency (bankruptcy) of a legal entity caused by incorrect instructions or other actions on the part of the depositor-the state (administrative-territorial unit). The existence of grounds for such liability must be proved by the persons concerned.

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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.