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Limited Partnership Contributor
📘 I. General Characteristics of the Institution of a Contributor
A contributor (limited partner) is a participant of a limited partnership who:
- contributes a share (monetary, property, or other);
- does not participate in the business activities of the partnership;
- bears limited liability – within the limits of their contribution;
- has limited but legally protected rights.
This institution is designed to allow an investor to share in profits without the risk of unlimited personal liability.
📑 II. Commentary by Points
🔹 Point 1. Obligation to Make a Contribution
The contributor is obliged to make the initial contribution and, if necessary, additional contributions, provided that this is explicitly stipulated in the founding documents (charter or partnership agreement).
📎 Related norms:
- Article 69 of the Civil Code of the Republic of Kazakhstan (CC RK) — on the form and procedure of contribution;
- Article 41 CC RK — on the content of founding documents;
- Article 42 CC RK — on state registration of amendments to the charter.
📌 Example: If the partnership’s charter stipulates that the contributor must annually increase their share by 10% of the profit, such a requirement is legally valid and binding.
🔹 Point 2. Rights of the Contributor
Let’s examine each right in detail:
🔸 1) Right to Profit
The contributor is entitled to a share in net profit, which is determined proportionally to their share in the charter capital, unless otherwise provided by the charter.
📌 Case law: In case No. 2-4841/2022, the court rejected the contributor’s claim to 50% of the profit, since according to the charter their share was only 20%.
🔸 2) Right of Access to Financial Information
This right ensures transparency and protects the interests of the passive investor:
- review of financial statements;
- demand for verification of the accuracy of documents.
📎 Related norms:
- Law of the Republic of Kazakhstan “On Accounting and Financial Reporting”;
- Entrepreneurial Code of the Republic of Kazakhstan (Article 131 – obligation to maintain documentation).
🔸 3) Right to Transfer a Share
The contributor may transfer their share to:
- another contributor;
- a third party, subject to restrictions in the charter and legislation.
🛑 Important: transfer of the entire share terminates the contributor’s participation in the partnership.
📌 Case law: In case No. 3-2743/2021, the court declared the transfer of a share to a third party invalid, since the charter did not contain consent of the general partners, which violated the procedure.
🔸 4) Right to Withdraw from the Partnership
Withdrawal is possible:
- by personal application;
- in the manner provided by the charter and the law.
📎 Related norms:
- Article 52 CC RK — termination of participation;
- Article 49 CC RK — withdrawal from business partnerships.
📌 Participation terminates after payment of the contributor’s share in the property based on valuation results.
🔹 Other Rights
Founding documents may expand the contributor’s rights, but:
🔒 It is prohibited to restrict or abolish the fundamental rights established by law — such provisions are void.
📎 Legal basis: Article 8 CC RK — prohibition of restricting civil rights outside the law.
⚠️ Point 3. Contributor’s Liability for Unauthorized Transactions
If a contributor enters into a transaction on behalf of the partnership without a power of attorney or authority, two outcomes are possible:
✅ If the partnership approves the actions:
- the partnership bears full liability to the counterparty.
❌ If approval is not granted:
- the contributor is personally liable with all their property;
- they lose the protection established by Article 72 CC RK.
📌 Case law: In case No. 2-3912/2020, a contributor signed a lease agreement on behalf of the limited partnership without a power of attorney. The partnership refused to recognize the transaction, and the court recovered damages from the contributor personally.
📎 Related norms:
- Article 157 CC RK — representative’s authority;
- Article 145 CC RK — unauthorized transactions;
- Article 272 CC RK — restitution and consequences of invalidity.
⚖️ III. International Comparison
A similar approach exists in international practice:
| Country | Provision | Analogue |
|---|---|---|
| Germany | HGB §171 | Kommanditist – liable within contribution |
| France | Code de commerce | Associé commanditaire |
| United Kingdom | Limited Partnership Act 1907 | Limited Partner |
| USA | Uniform Limited Partnership Act | Limited Partner – cannot manage |
🔑 General principle: limited liability applies as long as the contributor does not interfere in management.
📚 IV. Related Norms
| Norm | Content |
|---|---|
| Article 69 CC RK | Contributions of participants |
| Article 70 CC RK | Liability of general partners |
| Article 75 CC RK | Reorganization and liquidation of limited partnerships |
| Law “On Accounting and Financial Reporting” | Right of access to reporting |
| Supreme Court Normative Resolution No. 1 of 27.06.2003 | On disputes between participants of business partnerships |
📝 V. Conclusions and Recommendations
- The contributor has a clearly limited role — they do not manage, but invest and monitor.
- It is inadmissible to deprive the contributor of statutory rights — any restrictions in the charter will be void.
- Entering into transactions without authority is extremely risky for the contributor: they lose legal protection.
- It is recommended to stipulate in the charter:
- the procedure for withdrawal of a contributor;
- conditions for approval of transactions;
- mechanism for share transfer.
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.
For more information, please contact a Lawyer / Attorney by phone: +7 (708) 971-78-58; +7 (700) 978 5755, +7 (700) 978 5085.
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