Legal Capacity of a Legal Entity

📘 1. General Characteristics of the Article

The legal capacity of a legal entity is its ability to possess civil rights and bear obligations, as well as to participate in civil turnover.

Article 35 of the Civil Code of the Republic of Kazakhstan establishes:

· the scope of legal capacity;

· the moment of its commencement and termination;

· the specific features of the legal capacity of certain types of legal entities, including budgetary institutions.

📌 The article is based on the principle of freedom of economic activity, limited only by law and the charter.

⚖️ 2. Types of Legal Capacity of a Legal Entity

📌 3. Legal Capacity of Commercial Organizations (Part 1)

“...may have rights and obligations necessary to carry out any activities not prohibited by law...”

🔹 Principle of universal legal capacity:

Commercial legal entities (for example, LLPs and JSCs):

· are entitled to engage in any economic activity;

· are not required to specify all types of activities in their charter;

· exception — where a special law applies or a license is required.

📌 Exception — state enterprises, whose legal capacity is limited:

· they have special legal capacity depending on the charter approved by the authorized body;

· they operate only within the scope of state assignments.

📜 4. Statutory Restrictions on Legal Capacity

“...the possibility of engaging in other activities may be excluded or restricted...”

Examples of restrictions:

📝 5. Licensed Activities

“...a legal entity may engage in activities only on the basis of a license...”

📌 A license is a permit issued by a competent authority to carry out a certain type of activity (see the Law of the Republic of Kazakhstan “On Permits and Notifications”).

Examples of licensed fields:

· medical activities;

· pharmaceuticals;

· transportation of hazardous goods;

· auditing;

· construction works (of a certain complexity category).

📌 A license:

· grants the right to conduct activities;

· establishes the limits of legal capacity;

· in its absence, actions are considered unlawful and entail liability (up to liquidation of the legal entity).

🕰️ 6. Moment of Commencement and Termination of Legal Capacity (Part 2)

🏛️ 7. Special Regime: State Institutions (Part 3)

“...is determined by this Code and other legislative acts...”

A state institution is a non-profit organization that:

· is fully financed from the state budget;

· operates within the limits of competence established by law or regulations;

· is not entitled to engage in commercial activities (except in certain permitted cases, such as paid educational services).

📌 Their legal capacity is exclusively special and is established in:

· the charter;

· the law governing the relevant sphere (education, healthcare, etc.).

📚 8. Related Provisions

🧾 9. Practical Examples

🔹 Example 1: Nur-Sultan, 2022

An LLP engaged in educational activities without a license. The Ministry of Education demanded termination of the activity.

📜 The court declared the actions unlawful — legal capacity in the field of education arises only from the moment a license is obtained.

🔹 Example 2: Almaty, 2021

A JSC registered as a developer engaged in private security services.

📜 The court declared such actions unlawful because the right to conduct security activities was not included in the charter and required a license.

🌍 10. International Approaches

✅ UNIDROIT Principles (2004):Support the principle of universal legal capacity for commercial organizations — any transactions are valid unless prohibited.

✅ UNCITRAL Model Law on the Registration of Legal Entities:

· legal capacity arises upon registration;

· licensed activities are permitted only upon obtaining special authorization.

✅ 11. Conclusion

Article 35 of the Civil Code of the Republic of Kazakhstan establishes:

· the universal principle of legal capacity for commercial organizations;

· restrictions arising from licensing and legislative prohibitions;

· specific features of the legal regime for state institutions.

🔹 This provision serves as the basis for regulating the participation of legal entities in civil and commercial turnover, ensuring both freedom of entrepreneurship and legal certainty. 

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