Fundamental Provisions on a Limited Partnership (Commandite Partnership)

📘 I. General Characteristics of a Limited Partnership

A Limited Partnership (LP) is a special organizational and legal form of a legal entity that combines features of a general partnership and limited liability. It includes two types of participants:

1. General partners — bear unlimited (subsidiary) liability with all their property;
2. Limited partners (contributors, commanditists) — bear limited liability within the amount of their contribution and do not participate in management.

This structure is analogous to limited partnerships in continental European and Anglo-American legal systems.

📑 II. Commentary by Paragraphs of the Article

🔹 Paragraph 1. Dual Structure of the Partnership

This paragraph establishes the legal model of a limited partnership:

• it provides for a mixed composition of participants: active (general partners) and passive (limited partners);
• it differentiates the level of liability: limited partners do not participate in management and are liable only within the limits of their contribution.

📌 Practical example:In the bankruptcy case of LP “Dostyk,” a limited partner attempted to claim the return of his share during insolvency proceedings. The court denied the claim, noting that the limited partner’s rights and liability are restricted to the amount of the contribution, while management and obligations are borne by the general partners (Ruling of the Almaty City Court dated February 3, 2021).

🔹 Paragraph 2. Application of Rules on a General Partnership

This paragraph clarifies that the same rules applicable to participants of a general partnership also apply to general partners in a limited partnership:

• they have the right to manage the partnership;
• they act on behalf of the partnership without a power of attorney;
• they bear subsidiary liability for the partnership’s debts.

📎 Related provisions:

• Article 70 of the Civil Code of the Republic of Kazakhstan — “General Partnership”;
• Article 67 of the Civil Code of the Republic of Kazakhstan — “Business Partnerships”.

🔹 Paragraph 3. Restrictions on Participation of Individuals as General Partners

This paragraph introduces the following restrictions:

• an individual may be a general partner in only one limited partnership;
• an individual may not simultaneously be a participant in a general partnership.

📌 Purpose: to prevent conflicts of interest and fragmentation of liability, since general partners bear full property liability.

📘 Clarification:These restrictions do not apply to legal entities unless otherwise provided by law.

🔹 Paragraph 4. Subsidiary Application of Rules on a General Partnership

This paragraph states that the rules governing a general partnership apply to a limited partnership insofar as they do not contradict the specific provisions regulating limited partnerships. This ensures regulatory flexibility.

📎 Related provisions:

• Article 68 of the Civil Code of the Republic of Kazakhstan — general provisions on business partnerships;
• Article 69 of the Civil Code of the Republic of Kazakhstan — contributions to the partnership’s property;
• Article 71 of the Civil Code of the Republic of Kazakhstan — liability of general partners.

⚖️ III. Comparison with International Practice

Core principle:Active management entails unlimited liability, while passive participation entails limited liability.

📌 International standards:

• UNCITRAL standards for international commercial associations;
• OECD Principles of Corporate Governance.

🧾 IV. Practical Aspects and Judicial Practice

🏛 Typical disputes:

• disputes over abuse or excess of authority by general partners;
• recovery of debts from general partners under subsidiary liability;
• attempts by limited partners to participate in management (and possible loss of limited liability protection).

📌 Judicial practice of the Republic of Kazakhstan:

1. Resolution of the Supreme Court of the Republic of Kazakhstan No. 1 dated July 10, 1998: establishes that if the assets of a limited partnership are insufficient, a creditor may bring a claim against a general partner.
2. Review of judicial practice on business partnerships (Normative Resolution of the Supreme Court of the Republic of Kazakhstan No. 1 dated June 27, 2003): indicates that limited partners who take part in management may be recognized as de facto general partners.

📚 V. Related Articles of the Civil Code of the Republic of Kazakhstan and Other Acts

📝 VI. Conclusions and Recommendations

1. A limited partnership is a flexible form of capital aggregation but requires careful legal structuring, especially with regard to the division of rights and obligations.
2. Participation of a limited partner in management may result in the loss of limited liability status.
3. General partners must be prepared for unlimited property liability, including extrajudicial claims by creditors.
4. It is recommended to conclude an internal agreement among the participants of the limited partnership detailing management mechanisms and exit procedures.

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