Commentary to article 86. Open and closed joint-stock companies The Civil Code of the Republic of Kazakhstan
Joint-stock companies are divided into open and closed (in the old legislation - joint-stock companies of open and closed types). An open company distributes its shares among an indefinite circle of persons and therefore only it has the right to conduct an open subscription to its shares and their free sale in accordance with the procedure established by the securities legislation. Its shareholders freely alienate their shares, which makes the membership of such a company variable and unlimited.
Shares of open joint-stock companies can be freely traded on the securities market. In this regard, their issue (issue) in accordance with the Law on the Securities Market is subject to registration with a special state body. Such a body is currently the National Securities Commission of the Republic of Kazakhstan, which, according to Article 11 of the Securities Law, is a state body for regulation and supervision of the securities market (or an authorized body).
At the time of the establishment of an open joint-stock company, all its shares must be distributed among the founders (see the commentary to paragraph 2 of Article 88 of the Civil Code). In this case, registration of the share issue with the National Securities Commission of the Republic of Kazakhstan may be carried out without providing a prospectus for the issue. However, shares whose issue is registered in this way cannot be freely traded on the securities market. The basis for the free circulation of shares on the securities market is the existence of an issue prospectus, which is submitted at the time of registration of the share issue and published after registration (paragraphs. 11 and 29 of the Regulations on the procedure for registration, cancellation of the issue of Shares and approval of the report on the results of the issue and placement of Shares in the Republic of Kazakhstan, approved by Resolution No. 141 of the National Securities Commission of the Republic of Kazakhstan dated November 29, 1996).
Unlike an open joint-stock company, a closed joint-stock company distributes its shares only among the founders or another predefined circle of people, that is, it is characterized by a permanent membership. Therefore, it is deprived of the right to openly subscribe to its shares or offer them for purchase by other persons in any other way.
Closed joint-stock companies, unlike open ones, may not issue shares at all, either in materialized or dematerialized form. At the same time, the number of shares acquired by one or another participant is indicated in the constituent documents, usually in the founding agreement. According to the new paragraph of clause 3, shares of a closed joint-stock company are not subject to registration.
The participants of a closed joint-stock company enjoy the right of pre-emptive purchase of shares sold by other shareholders, which is intended to preserve their previously limited composition. Therefore, the number of participants in a closed joint-stock company should not exceed the limit set by the Decree, i.e. fifty shareholders (clause 4 of Article 38 (previously 55) of the Decree on Business Partnerships).
If the number of such shareholders of a closed joint-stock company exceeds the specified limit, the general meeting of shareholders of the company must, within six months from that moment, decide on the transformation of the company into an open one, make appropriate changes to its constituent documents and ensure their registration. Upon expiration of the specified period, the joint-stock company is subject to judicial liquidation at the request of interested parties, unless such a decision is made and the number of holders of ordinary shares of the company is reduced to the above limit.
The right of pre-emptive purchase of shares held by the participants of a closed joint-stock company applies only to cases of sale or exchange of shares, but not to cases of their other alienation. In this case, the shares are purchased on the terms that were established by agreement with a third party. In accordance with clause 6 of Article 38 (previously 55) of the Decree on Business Partnerships, a shareholder of a closed joint-stock company wishing to sell his shares is obliged to offer to buy them back to other members of the company or to the company itself, unless otherwise provided by the constituent documents. If the participants of the joint-stock company refused to purchase shares, the shareholder has the right, with the consent of the company (or failure to receive a response within one month from the date of the request), to sell shares to third parties.
The new version of clause 5 replaced the old procedure for excluding a shareholder from a closed joint-stock company with a new procedure for compulsory share repurchase.
The Law of the Republic of Kazakhstan "On Amendments and Additions to Certain Legislative Acts" dated December 7, 1996 amended paragraph 8 of Article 16 of the Decree on Banks and Banking Activities. It is determined that when a negative amount of capital is established for a bank, the National Bank has the right, in agreement with the Government of the Republic of Kazakhstan, to make a decision on the compulsory purchase of the share of its shareholders (shares) in the authorized capital of the bank and immediately sell them to a new investor.
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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.
