Commentary to article 70. Liability of participants for debts of the general Partnership of the Civil Code of the Republic of Kazakhstan  

Participants in a full partnership are liable for the obligations of the partnership in a subsidiary manner (art. 357 of the Civil Code), that is, only if they lack their own property. At the same time, the responsibility of all participants is in solidarity, which, in accordance with Article 287 of the Civil Code, makes it possible for creditors of a general partnership to recover the corresponding debt from any of its participants. The participants of the partnership are liable for its obligations with all their property, which may be subject to foreclosure in accordance with legislative acts, in particular the CPC RK.

For creditors, it does not matter who and when of its participants joined the general partnership, since each of the participants is responsible for the debts of the partnership, regardless of whether they arose after or before his entry into the partnership. This rule is valid as the main one, since legislative acts have not established otherwise at the moment.  

Although creditors have the right to file a claim for repayment of debts of a general partnership to any of its participants, however, in relations between themselves, the participants are liable for the obligations of the partnership within the limits of their shares in its property. Therefore, a participant who has repaid the debts of a general partnership in excess of his share in the partnership's property has the right, in accordance with art. 289 of the Civil Code, to apply for a recourse claim in the relevant part to the other participants who are jointly liable to him in proportion to the size of their shares in the partnership's property.

The commented article of the Civil Code defines cases of liability for obligations of a general partnership or cases of exemption from liability of participants who have left the partnership.

To protect the interests of both the general partnership itself and its creditors, the Civil Code establishes a rule according to which participants or legal successors (heirs) of deceased participants who left the general partnership at their own request, as well as participants excluded from the partnership by a court decision, are not exempt from liability for the partnership's debts. However, they are liable only for those obligations of the general partnership that arose prior to their retirement, and within two years from the date of approval of the partnership's activity report for the year in which they left the partnership.  

This provision of the Civil Code mainly protects the interests of creditors who have entered into a relationship with a general partnership and who know specific persons who, in the event of a lack of property in the partnership, will be liable for its obligations, and subsequently cannot lose the right to sue them for repayment of the partnership's debts. In addition, when participants withdraw, the general partnership does not lose its creditworthiness for previous obligations and can continue to operate without losing much of its credibility in the eyes of its counterparties.  

This rule also applies to participants who are recognized as missing, incapacitated or with limited legal capacity and who have left the general partnership by decision of the trustee or with the consent of the trustee (paragraph 3 of Article 24 of the Decree on Business Partnerships).  

In other cases, upon leaving the general partnership, the participants are released from further liability for its obligations.

First of all, this applies to cases of share transfer. When transferring a share (part of a share) in the property of a general partnership, there is a succession, that is, the transfer of all rights and obligations of the former owner to the new one. Therefore, a participant who has left the partnership in order to transfer a share is relieved of the obligation to bear subsidiary responsibility for the debts of the general partnership, since now this responsibility is borne by the acquirer of the share.  

This rule also applies to participants who have withdrawn from a full partnership, by way of foreclosure on their share in the partnership's property (see the commentary to paragraph 2 of Article 69 of the Civil Code).  

The legal successors (heirs) of deceased participants who were denied entry into a general partnership are not voluntarily deprived of all rights to participate in its activities. And therefore, it is quite legitimate to release them from the obligation to bear responsibility for the debts of the partnership.  

Participants who are recognized as missing or incapacitated, whose guardians have been denied the right to participate in the activities of the partnership on behalf of these participants, are also exempt from liability for the debts of the general partnership. The same applies to participants who have been recognized as having limited legal capacity and who have left the partnership due to the refusal of other participants to participate in the partnership's activities (paragraph 4 of Article 24 of the Decree on Business Partnerships).  

After the termination of the general partnership, the participants are liable for the obligations of the partnership that arose before its termination, within two years from the date of termination of the partnership. Termination of any legal entity, including a general partnership, occurs through reorganization or liquidation.

When a full partnership is reorganized, all rights and obligations are transferred to the legal successor of the partnership. In this case, in order to protect the rights of creditors of the partnership, a rule is established according to which the participants are liable for the obligations of the reorganized general partnership that arose prior to its termination, in a subsidiary manner with the legal successor of the partnership. If the legal successor does not have enough funds to cover the debts of the general partnership, creditors have the right to file claims against its participants within two years from the date of the partnership's reorganization.  

As for the liquidation of a general partnership, in this case this rule does not apply, since in accordance with paragraph 6 of Article 51 of the Civil Code, creditors' claims that were not filed before the approval of the liquidation balance sheet are considered settled. In this regard, the participants of the general partnership bear subsidiary liability only for those obligations that were declared by creditors before the approval of the liquidation balance of the partnership. At the same time, they bear property responsibility for these obligations not for two years from the date of liquidation of the general partnership, but according to the general rules established by the Civil Code.  

The procedure for the property liability of participants in a general partnership is regulated by the mandatory norms of the Civil Code. The constituent documents or agreements of the participants of the partnership, changing the requirements specified in this article on the property liability of the participants of the general partnership, are invalid.

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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.