Exclusion of a Participant from a General Partnership
📘 Article 68 of the Civil Code of the Republic of Kazakhstan: Exclusion of a Participant from a General Partnership
🔷 General Characteristics
A general partnership is a commercial organization based on personal trust between its participants, who bear joint and unlimited liability for its obligations. In this regard, the presence of a participant who violates obligations or is incapable of conducting the partnership’s affairs may threaten the interests of the entire partnership.
The exclusion of a participant is a legal mechanism that allows maintaining the stability and viability of the partnership.
🔹 Paragraph 1. Exclusion by Court: Conditions and Procedure
“…by a unanimous decision of the remaining participants and in the presence of valid reasons…”
📌 Conditions:
1. Unanimous decision of the other participants
If at least one of the remaining participants objects, a claim for exclusion is impossible.
The requirement of unanimity reflects the trust-based nature of full liability within the partnership.
2. Presence of valid reasons, for example:
systematic violation of contractual obligations;
causing losses to the partnership;
inability to manage (illness, loss of legal capacity);
abuse of authority;
refusal to comply with decisions of the general meeting.
📍 Judicial practice:
In the practice of the courts of Kazakhstan (for example, case No. 2-327/2022), repeated failure to execute meeting decisions, as well as concluding transactions on behalf of the partnership in the interests of competitors, were recognized as serious violations.
📌 Important: The claim is filed by the partnership itself through its participants, not by third parties or state bodies.
🔹 Paragraph 2. Settlements with the Excluded Participant
“…the value of the respective share of property shall be paid in accordance with paragraph 2 of Article 67 of the Civil Code of the Republic of Kazakhstan.”
📘 Article 67, paragraph 2 — key elements:
Payment of the share is made according to the balance sheet as of the date of exclusion.
The amount is calculated proportionally to the actually contributed capital, not the declared one.
Payment may also be made in kind, by agreement of the parties.
The participant is also entitled to a portion of the net profit for the period of participation during the current year.
Property transferred only for use is returned without remuneration.
📍 Example from practice:
If the excluded participant did not fully contribute their share, the calculation of their portion is made only based on the amount actually contributed. This must be confirmed by accounting and/or audit documents.
📚 Related Legal Provisions
| Provision | Content |
|---|---|
| Article 67 CC RK | Withdrawal of a participant and settlement procedure |
| Article 65 CC RK | Rights and obligations of participants |
| Article 60 CC RK | Management of the partnership |
| Article 94 CC RK | Exclusion of a participant from an LLP (analogy) |
| Article 102 CC RK | Liability of participants in a general partnership |
⚖️ Judicial Aspects
The burden of proving the existence of valid reasons lies with the partnership that files the claim.
The court carefully evaluates the presence of real violations rather than merely subjective conflicts.
In the absence of valid reasons, the court refuses exclusion even if there is unanimous consent among participants.
📌 Case No. 2-1448/2021 (Karaganda Region):The court refused to exclude the participant because there was no evidence of serious violations; only a personal conflict between the participants was established.
🔚 Conclusions
Exclusion of a participant is possible only through the court and by unanimous decision of the remaining participants.
Valid reasons must exist and must be proven.
The excluded participant is guaranteed compensation similar to that in the case of voluntary withdrawal.
This mechanism protects the stability of the partnership while balancing the interests of the departing participant.
In case of disputes regarding the amount of payment, the issue of valuation of the share may be resolved through court proceedings.
Attention!
Law and Law Law Law draws your attention to the fact that this document is basic and does not always meet the requirements of a particular situation. Our lawyers are ready to assist you in legal advice, drawing up any legal document suitable for your situation.
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