Commentary to article 10. Protection of the rights of entrepreneurs and consumers The Civil Code of the Republic of Kazakhstan
The development of entrepreneurship is a prerequisite for the functioning of a stable, active and efficient market economy. Article 26 of the Constitution of the Republic of Kazakhstan establishes: "Everyone has the right to freedom of entrepreneurial activity."
Therefore, the commented article protects the rights and legitimate interests of entrepreneurs.
It follows from the definition of entrepreneurial activity that it is an economic activity characterized by the following necessary features::
a) it is aimed at generating income (profit) through the production and free sale of products, services, and works on the market;
b) it is proactive, i.e. it can be carried out only at the entrepreneur's own request in accordance with his interests and discretion. Carrying out actions on the orders or direct instructions of any governing bodies or individuals cannot be considered entrepreneurship.;
c) such activity is carried out on the basis of the complete property independence of the entrepreneur. As a rule, he is the owner of its property base and he also bears the full risk of possible property losses and expenses in the course of entrepreneurship (specifically, Article 360 of the Civil Code speaks about entrepreneurial risk);
d) the entrepreneur acts in civil turnover on his own behalf.
These are the main signs of entrepreneurship, in the absence of at least one of which economic activity cannot be considered entrepreneurship, even if it is remunerative, economic, etc.
However, not all of these features are equally inherent in all entrepreneurs, which depends primarily on the type of ownership on which entrepreneurship develops. The most fully considered signs are manifested in private entrepreneurship, i.e. in entrepreneurship based on private property, regardless of whether a citizen or a non-governmental legal entity acts as an entrepreneur.
These signs are much less fully manifested in the activities of enterprises owned by the state. The State, represented by authorized bodies, has the right to restrict both the initiative of state-owned enterprises and the range of their entrepreneurial activities.
State support and guarantees of entrepreneurial activity are expressed mainly in legislative prohibitions to restrict the freedom of entrepreneurship and in judicial protection of the rights and legitimate interests of entrepreneurs from any violations by government agencies or officials, business partners or outside entities.
More specific ways to protect and support entrepreneurship are provided for in paragraph 3 of the commented article. In particular, paragraph 3 provides for a simplified procedure for admission to entrepreneurial activity. Some of its types can be carried out by citizens without contacting any official authorities at all, that is, purely by turnout.
The Decree on the State Registration of Legal Entities establishes the general procedure for registration of legal entities, including those engaged in entrepreneurial activities.
The specifics of the state registration of citizens engaged in entrepreneurship without forming a legal entity are shown in art. 19 of the Civil Code.
During registration, the legality of engaging in entrepreneurial activity is checked. It is prohibited to refuse registration with reference to its inexpediency in these conditions (there is no demand for goods and services, great competition, etc.). For registration, an applicant entrepreneur must apply to only one registration authority. If all the documents required by the Decree on State Registration of Legal Entities are in proper form, the registration authority has no right to refuse registration or require the applicant to provide any additional visas, approvals, permits, etc.p.
The main task of licensing business activities is to limit such types of activities, which can either by themselves or, when carried out in inappropriate conditions, violate the interests of the state or the interests of citizens. The legislative basis for business licensing is the Decree on Licensing.
But licensing is not a substitute for day-to-day control. Therefore, an already issued license may be terminated prematurely, revoked or suspended if the conditions of permitted business activity are improperly observed. In case of violation of the terms of the license, it may be declared invalid. All grounds for early termination, revocation, suspension of a license or its invalidation must be determined exhaustively by legislative acts.
For those types of licensed activities that promote competition in the market and increase consumer demand, but do not require special government restrictions, licenses should be issued without hindrance to all persons who meet the established requirements. In cases where state interests require limiting the range of entrepreneurs (for example, in oil exploration and production, extraction of precious metals from the depths), it becomes necessary to select from the total number of applicants only those possible licensees who can bring more benefits to the republic. In such cases, it seems more appropriate to issue licenses by selling them at auction or by competitive selection among applicants. Thus, paragraph 4 of Article 13 of the Decree on Licensing establishes the sale of licenses for the export of goods by commercial intermediaries (i.e. not by manufacturers of such goods) through open auctions or contests. Amendments to the Decree on Licensing, introduced by Presidential Decree of December 23, 1995, allow for the establishment of special legislation on licensing activities related to the use of natural resources and environmental protection.
For the specifics of licensing business activities of citizens without forming a legal entity, see Article 19 of the Civil Code and its commentary.
An important measure to protect the interests of entrepreneurs is the legislative provision for the preservation of their trade secrets. According to Article 21 of the Law on the Protection and Support of Private Entrepreneurship, a commercial secret is understood to mean information that is not state secrets, related to production, technological information, financial management and other activities of an economic entity, the disclosure (transfer, leakage) of which may harm its interests. Unless otherwise provided by law, the composition and volume of information constituting a commercial secret are determined by business entities. Commercial secrets often include new technologies, a product quality control system, sources of supply, the cost of purchased property, etc. Know-how, i.e. technological, organizational or commercial information that constitutes production secrets, is also protected as a trade secret.
Persons who have access to commercial secrets by virtue of their state control functions, investigative or judicial actions, official position, etc., are obliged not to disclose it to other persons. Responsibility for the disclosure of commercial secrets is provided for in Article 28 of the Law on the Protection and Support of Private Entrepreneurship.
However, the law does not allow the misuse of trade secrets for the unfair violation of other people's interests, misleading business partners, evading responsibility, etc. Therefore, the Law on the Protection and Support of Private Entrepreneurship contains a special article 23 "Information that does not constitute a trade secret."
It is prohibited, in particular, to make secret the results of annual business activities, including the balance of the profit and loss account, the amount of authorized capital, the combined amounts of accounts payable and receivables, etc.
The Republic of Kazakhstan has a number of regulatory legal acts aimed at the development of entrepreneurship. Among them are the Laws "On Freedom of Economic activity and development of entrepreneurship in the Kazakh SSR" dated December 11, 1990, "On Protection and support of private Entrepreneurship" dated July 4, 1992, "On State Support of Small Business" dated June 19, 1997, "On Individual Entrepreneurship" dated June 19, 1997.; Decrees of the President of the Republic of Kazakhstan "On additional measures to implement state guarantees of freedom of entrepreneurial activity" dated June 14, 1996, "On measures to strengthen state support and enhance the development of small business" dated March 6, 1997, "On the protection of the rights of citizens and legal entities to freedom of entrepreneurial activity" dated April 27, 1998, etc.
A very important principle of the civilized functioning of market relations is the protection of the rights of consumers, i.e. buyers, customers, passengers and other persons who use the fruits of entrepreneurial activity on a paid basis. It is quite understandable that an entrepreneur wants to entrust the sale of goods and services, i.e. to receive as much income as possible from the consumer. In conditions of unlimited market freedom, such income is often achieved by economically forcing the consumer to use the services of only one manufacturer (entrepreneur), which allows the latter to impose on the consumer conditions for the sale of products, works, and services that are very unprofitable for him. Therefore, the main lever for protecting consumer interests in market turnover is the fight against producer monopolism, the maximum development of competition, in which it is not the consumer who is forced to look for the manufacturer (seller, contractor, etc.), but the producer who must look for the consumer. This is specifically stated in Article 11 of the Civil Code.
But the law also provides for other compulsory ways to protect the interests of the consumer. This is stated, in particular, in Articles 387 (Public Agreement) and 389 (Accession Agreement) of the Civil Code and other legislative rules.
Kazakhstan has a special Law "On Consumer Rights Protection" dated June 5, 1991, which, like the Civil Code, provides for the responsibility of producers (entrepreneurs) to consumers for violating their rights and legitimate interests.
For a more complete and effective protection of their rights, consumers can create public associations and consumer organizations. Organizations of this kind have been formed and operate both throughout the republic and in many of its regions. Such organizations explain their rights to consumers, help protect them, provide legal assistance, raise issues of quality control of manufactured products or the quality of work before government agencies, etc.
Constitution Law Code Standard Decree Order Decision Resolution Lawyer Almaty Lawyer Legal service Legal advice Civil Criminal Administrative cases Disputes Defense Arbitration Law Company Kazakhstan Law Firm Court Cases
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.
