Commentary to article 49. Grounds for liquidation of a legal entity of the Civil Code of the Republic of Kazakhstan
Liquidation can be carried out voluntarily or forcibly.
The liquidation of a republican state-owned enterprise is carried out by a decision of the Government of the Republic of Kazakhstan, and a municipal enterprise by a decision of the head of the local administration (part 1, paragraph 1, Article 16 of the Decree on the State Enterprise).
Voluntary liquidation of a joint-stock company, LLP, TDO and a production cooperative may be carried out only by a decision of the general meeting of their participants (subparagraph 4 of paragraph 2 of Article 79; paragraph 3 of Article 84; subparagraph 8 of paragraph 2 of Article 92 and subparagraph 5 of paragraph 3 of Article 99 of the Civil Code).
Voluntary liquidation of full and limited partnerships, as well as public associations and consumer cooperatives, is carried out by decision of the general meeting of their participants or their authorized body, as well as by decision of the body of the relevant legal entity authorized to do so by the constituent documents.
Voluntary liquidation of an institution is carried out by a decision of its body, if it is authorized to do so by the constituent documents. In addition, the institution may be liquidated by the decision of the owner of its property or the body authorized by the owner.
By a court decision, a legal entity may be liquidated in case of bankruptcy. The grounds and procedure for bankruptcy liquidation are determined by the Bankruptcy Law (see the commentary to Articles 52-57 of the Civil Code).
By a court decision, a legal entity may be liquidated if the registration of the legal entity is declared invalid due to violations of the law committed during its creation, which are irreversible. The unavoidable nature is determined by violations of the norms of legislative acts on certain types of legal entities. For example, an indication by a non-profit organization as the main purpose of its activities is one that aims to generate income; registration of a joint-stock company with an authorized capital less than required by law, etc.
By a court decision, a legal entity may be liquidated in the event of systematic conduct of activities contrary to the statutory objectives of the legal entity. This requirement does not apply to commercial organizations, which, as a general rule, have not a special but a general legal capacity, unless otherwise stipulated by legislative acts. In relation to non-profit organizations, the systematicity is determined by at least two non-statutory activities, which is fixed by the court at the request of the person concerned.
Subparagraph 4 of paragraph 2 of the commented article provides for the judicial liquidation of a legal entity in carrying out activities prohibited by legislative acts. Such acts may provide for a list of works, types of goods and services that are prohibited for private enterprise, prohibited or restricted for export or import. Restrictions for state-owned legal entities are provided for by their constituent documents and regulations on their legal status, as well as international agreements of Kazakhstan. For example, Kazakhstan, as a nuclear-weapon-free State, cannot produce and distribute nuclear weapons.
Subparagraph 4 of paragraph 2 of the commented article provides for the judicial liquidation of a legal entity when carrying out activities with repeated or gross violation of the law. The repetition is determined by at least two violations of the law. However, the same consequences can be caused by a single but gross violation of the law.
Paragraph 2 of the commented article does not contain an exhaustive list of grounds for the liquidation of a legal entity by a court decision. Such grounds may be provided for by legislative acts. For example, "a general partnership, in addition to the grounds specified in Article 49 of this Code, is also liquidated when a single participant remains in the partnership if he does not transform the partnership or accept new participants within six months" (paragraph 1 of Article 71 of the Civil Code); "a limited partnership is terminated upon the retirement of all those who participated in it." depositors" (Clause 1 of Article 76 of the Civil Code); limited and additional liability partnerships are terminated: 1) if the number of participants in the partnership exceeds fifty; 2) if the size of the authorized capital decreases below the minimum size; 3) if the participants do not form the authorized capital of the partnership within the prescribed time (clause 1 of Article 69 of the Law on LLP).
Part 1 of paragraph 3 of the commented article establishes the persons who have the right to file a claim for bankruptcy of a legal entity. Tax and other authorized state bodies with respect to mandatory payments to the budget and extra-budgetary funds, as well as legal entities and individuals who are creditors under civil law obligations, have the right to file a creditor's application to the court for declaring the debtor bankrupt (Clause 2, Article 15 of the Bankruptcy Law).
In addition to creditors, the prosecutor has the right to apply to the court for declaring the debtor bankrupt:
1) when they found signs of intentional bankruptcy;
2) in the interests of the creditor - the Republic of Kazakhstan, state bodies;
3) in the interests of creditors of the absent debtor (clause 1, Article 26 of the Bankruptcy Law).
In respect of state-owned enterprises, as well as business partnerships in which the state's share in the authorized capital is at least 2/3, bankruptcy proceedings, in addition to the above-mentioned persons, are initiated in court on the basis of an application from an authorized state body.
The right to sue for the liquidation of a legal entity on the grounds of invalidation of the registration of a legal entity in connection with violations of the law committed during its creation, which are irretrievable, is possessed by the state body that carries out the registration of a legal entity.
The state licensing authority has the right to sue for the liquidation of a legal entity on the grounds of carrying out activities without a proper permit (license).
The Prosecutor's Office has the right to sue for the liquidation of a legal entity on the grounds of carrying out activities prohibited by legislative acts, or with repeated or gross violation of the law.
Part 2, paragraph 3 of the commented article allows for the assignment of responsibilities for the liquidation of a legal entity by a court decision to "another body (person) appointed by the court." In this case, we are talking about the trustee of the property. Such a liquidator can be either a legal entity or an individual. His rights as a trustee arise on the basis of a court decision and are regulated by the Civil Code and the legislative acts adopted in accordance with it.
If the value of the property of a legal entity, in respect of which a decision on liquidation has been taken in accordance with paragraph 1 of the commented article, is insufficient to satisfy creditors' claims, such a legal entity may be liquidated judicially or out ofcourt according to the rules established by the chapters "Simplified Bankruptcy Procedures" or "Out-of-Court Procedures" of the Bankruptcy Law (paragraph 5 of Article 3).
A legal entity, in respect of which a decision has been made to liquidate it, having found out that its property is not enough to repay its obligations to creditors, may, through negotiations with creditors, officially declare bankruptcy and voluntary liquidation, or the application of rehabilitation procedures, or the peaceful settlement of debts. The procedure and conditions for conducting out-of-court procedures are determined by an agreement between the debtor and creditors (Article 96 of the Bankruptcy Law).
If the legal entity being liquidated does not agree with creditors on repayment of debts and declaring itself bankrupt out of court, it is obliged to apply to the court for declaring it bankrupt (art. 17 of the Bankruptcy Law). Failure to fulfill this obligation entails the application of subsidiary liability to the debtor's manager for the debtor's obligations to creditors (clause 6, Article 3 of the Bankruptcy Law).
Liquidation of certain types of legal entities is possible on special grounds provided for by legislative acts.
Such grounds are established, for example, by the Decree on Banks and Banking Activities.
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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.
