Commentary to article 99. Management of a production cooperative of the Civil Code of the Republic of Kazakhstan

The organization of the cooperative's management is based on democratic principles and allows each of its members to actively participate in the cooperative's affairs.

The Decree on the production cooperative stipulates that in cooperatives with more than 100 members, the constituent documents may provide for the assignment of the functions of the highest body to the meeting of commissioners.

The Civil Code does not provide under what conditions a supervisory board may be established in a cooperative, therefore leaving the decision of this issue at the discretion of the cooperative itself (more precisely, its members).

Only members of the cooperative can be members of the supervisory board, i.e. the inclusion of employees in this board is not allowed.  

The members of the supervisory Board are elected at the general meeting of the cooperative members. The number, duration and competence of the supervisory board are determined by the charter of the cooperative.  

The prohibition of combining membership in the supervisory board and the board of the cooperative is aimed at preventing possible abuses.  

The decree on the production cooperative establishes that the charter of the cooperative may include the competence of the supervisory board to periodically hear reports from the board of the cooperative (chairman of the cooperative), consent to the appointment of officials of the executive office, preliminary approval of transactions in excess of the amount established by the charter, monitoring the implementation of decisions of the general meeting of cooperative members.  

Matters falling within the exclusive competence of the supervisory board may not be transferred to them for decision by the executive bodies of the cooperative.  

An audit commission may be established in the cooperative, which monitors the financial activities of the executive bodies of the cooperative. Only members of the cooperative may be members of the audit commission. The members of the audit commission may not be members of the supervisory board and the executive body of the cooperative.

The members of the audit commission are elected at the general meeting of the cooperative members. The number, duration and competence of the audit commission are determined by the charter of the cooperative. The founding documents of a cooperative may provide for the election of an auditor of the cooperative instead of the audit commission.  

The audit commission (auditor) of the cooperative submits to the general meeting of the cooperative members an opinion on the reliability of the financial statements of the cooperative.  

The audit commission may carry out inspections on behalf of the general meeting of the cooperative, the supervisory board, on its own initiative or at the request of at least 10 percent of the cooperative's members.  

The Audit Commission has the right to review the financial documentation of the cooperative.  

In order to verify financial activities and confirm financial statements, the cooperative may involve external auditors from among persons who have the right to audit in accordance with legislative acts.  

An audit of the financial activities of a cooperative may be carried out at the request of the audit commission, the supervisory board, as well as at the request of at least 10 percent of the cooperative's members. In the latter case, the auditor's services are paid for by the cooperative members who requested such an audit.  

Specifying the structure and competence of the executive bodies of the cooperative, the Decree on the Production cooperative establishes that the board of the cooperative is headed by the Chairman of the Board, elected by the general meeting from among the members of the board.

In cooperatives with no more than twenty members, the functions of the board may be assigned to the chairman of the cooperative.  

The members of the board of the cooperative (the chairman of the cooperative) are elected at the general meeting of the cooperative members.  

The number of members of the management board, as well as the term for which the management board (chairman of the management board) is elected, are determined by the charter of the cooperative.  

A member of the management Board (chairman of the cooperative) may not simultaneously be a member of the supervisory board.  

The Board of the cooperative (the chairman of the cooperative) carries out the day-to-day management of the cooperative's activities, it is under the control of the supervisory board and is accountable to the general meeting of cooperative members.  

The competence of the board of the cooperative (the chairman of the cooperative) includes resolving all issues of the cooperative's activities that are not attributed by the Decree on the production cooperative and the founding documents of the cooperative to the exclusive competence of the general meeting or the supervisory board of the cooperative.  

The Management Board makes its decisions at regular meetings. A meeting of the Management Board is considered valid if more than half of the members of the Management Board are present.  

Issues at the Board meeting are resolved by voting. The decision of the Management Board is considered adopted if more than half of the members of the Management Board present at the meeting voted for it. If the votes "for" and "against" are equally divided, the vote of the Chairman of the Management Board is considered decisive.  

The charter of a cooperative may provide for a range of issues, decisions on which are taken by a qualified majority of votes or unanimously.  

The Chairman of the management Board (chairman of the cooperative) acts on behalf of the cooperative without a power of attorney; disposes of the cooperative's property within the limits provided for by this Decree and issues powers of attorney, including with the right of proxy, on behalf of the cooperative; opens accounts of the cooperative in banks and other credit organizations; employs and dismisses employees; within the limits of his The competence issues orders and gives instructions that are mandatory for the members of the cooperative and employees.  

In addition to those matters referred by the commented article to the exclusive competence of the general meeting of cooperative members. The Decree on the production cooperative also includes the following:

1) establishment of the types and sizes of funds and reserves of the cooperative and the directions of their use;  

2) adoption and amendment of the rules of the internal labor regulations of the cooperative, regulations on remuneration of officials of the cooperative, its members and employees, and other internal acts of the cooperative;  

3) establishment of branches and representative offices of a cooperative, establishment of business partnerships and joining them as a participant;  

4) resolving the issue of making additional property contributions;  

5) approval of the report of the audit Commission;  

6) hearing the report of the board of the cooperative (Chairman of the Board).  

The founding documents of the cooperative may also include the resolution of other issues within the exclusive competence of the general meeting.  

The decree on the production cooperative divides general meetings into regular and extraordinary ones.

The next general meeting is held within the time limits set by the board of the cooperative (the chairman of the cooperative), but not later than three months after the end of the next financial year.  

The next general meeting of the cooperative members:  

1) approves the financial report of the cooperative;  

2) approves the report of the audit commission;  

3) hears the report of the board of the cooperative (chairman of the cooperative);  

4) resolves other issues of the cooperative's activities.  

The extraordinary general meeting is convened by the Board of the cooperative (chairman of the cooperative) on their own initiative, by decision of the supervisory Board, at the request of the audit commission, as well as at the request of at least 20 percent of the cooperative's members.  

The request to the Management Board to convene an extraordinary general meeting is subject to execution within twenty days from the date of its application. Otherwise, the members of the cooperative who have requested the convening of an extraordinary general meeting are entitled to convene the meeting on their own.  

The Chairman of the Management Board (chairman of the cooperative) shall notify the members of the cooperative in writing of the date, place, time and agenda of the general meeting of the cooperative members at least twenty days before the date of the meeting.  

The General Meeting may not amend the agenda or make decisions on issues not included in it, unless otherwise decided unanimously by the members of the cooperative present at the meeting, provided there is a proper quorum. The general meeting is reconvened in the same manner if its term has been postponed due to the lack of a quorum.  

The general meeting is considered valid if it is attended by more than half of the cooperative's members or their representatives.

The rules of procedure of the general meeting and the voting procedure (open or secret) are determined by the general meeting of the cooperative members.  

The decision of the general meeting is considered adopted if more than half of the members of the cooperative or their representatives present at the meeting voted for it.  

Decisions on issues such as changing the cooperative's charter, making additional property contributions, admitting and expelling members of the cooperative, reorganizing and liquidating the cooperative are considered accepted if at least two thirds of all cooperative members voted for them.  

The reorganization of a cooperative in the form of its transformation into an economic partnership is carried out on the basis of a unanimously adopted decision.  

The Charter of the cooperative may define other issues, decisions on which are taken by a qualified majority of votes or unanimously.  

Each member of the cooperative has one vote when making decisions by the general meeting, regardless of the size of his share, the amount of the property contribution, the degree of personal labor participation in the activities of the cooperative, his position in the management bodies of the cooperative, etc. This once again underlines the high level of cooperative democracy.

Decisions and actions of the executive bodies of the cooperative may be appealed by the cooperative members and employees to the supervisory board, which has the right to suspend the appealed acts until the issue is considered at the general meeting of the cooperative members.

Decisions and actions of the chairman of the management Board may be appealed to the board of the cooperative, which has the right to cancel the appealed acts.  

Decisions and actions of officials of the executive office of the cooperative may be appealed to the Chairman of the board (chairman of the cooperative), who has the right to cancel the appealed act.  

Decisions of any governing bodies of the cooperative and officials of its executive office may be appealed to the general meeting of the cooperative members, which has the right to cancel any appealed acts.  

Decisions of the cooperative's governing bodies may be appealed to the court.

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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.