Commentary to article 91. Issuance, distribution of securities and payment of dividends The Civil Code of the Republic of Kazakhstan
Preferred shares guarantee the payment of dividends to the shareholder in a fixed amount, whereas the dividends of ordinary shares depend on the results of the business activities of the joint-stock company. In order to prevent an excessive imbalance in the property interests of holders of common and preferred shares, the Civil Code established that the share of preferred shares in the total authorized capital of the company should not exceed 25 percent.
The number and nominal value of preferred shares issued by the Joint-stock company must be indicated in the constituent documents. When establishing a joint-stock company, the founders must decide on the issue of preferred shares and their share in the total authorized capital. Preferred shares may also be issued after the establishment of the company through an additional issue.
The issue of bonds by JSC is limited by the amount of funds available to it for their repayment. Therefore, bonds may be issued by a company that has been stable for at least two years since its establishment, as evidenced by its two duly approved annual balance sheets.
The issue of JSC bonds must be registered with the National Securities Commission of the Republic of Kazakhstan.
No dividends are declared or paid until the authorized capital is fully paid, as the formation of the financial basis of the JSC's activities has not yet been completed. Similarly, dividends are not payable in cases where the amount of equity capital may become smaller as a result of the payment of dividends. These rules apply to all types of shares, including preferred ones.
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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.
