Management in a Limited Liability Partnership (LLP)

📘 I. General Overview of Management in an LLP

An LLP as a form of legal entity provides for a system of governance based on:

• the will of the participants (through the general meeting),
• delegation of authority (to the executive body),
• internal control (auditor or supervisory board, if necessary).

Article 79 of the Civil Code of the Republic of Kazakhstan defines the competence structure of LLP bodies and sets out the exclusive matters that cannot be delegated to other bodies.

📑 II. Commentary by Sections

🔹 Section 1. General Principles of Governance Regulation

“The competence of the partnership’s bodies... shall be defined in accordance with this Code, legislative acts, and the charter…”

🔍 The legislation sets out a regulatory hierarchy:

1. The Civil Code and the Law of the Republic of Kazakhstan "On LLPs and Production Cooperatives" — mandatory;
2. The Charter of the LLP — secondary, but may detail procedures (cannot contradict the law).

📘 The Charter may define:

• the structure of governing bodies;
• the procedure for decision-making;
• quorum and voting thresholds;
• the specifics of delegation of authority.

📎 Related provisions:

• Law “On LLPs,” Articles 43–45 — management and general meeting;
• Law “On Accounting” — financial reporting;
• Law “On Reorganization and Liquidation” — liquidation procedures.

🔹 Section 2. Exclusive Competence of the General Meeting of Participants

The general meeting is the highest governing body of the LLP. Below is a brief overview of each item:

1) Amendments to the charter, changes in charter capital

📘 These are fundamental issues affecting the legal identity of the LLP. To make changes:

• quorum must be met;
• changes must be registered properly (Art. 42 CC RK, Law on LLPs, Arts. 17–18).

2) Appointment of the executive body and trust management

📘 The executive body (director or board):

• may be individual or collective;
• acts on behalf of the LLP without power of attorney (Art. 86 CC RK).

Trust management (under Art. 879 CC RK) is possible as a form of temporary management of property.

3) Approval of financial statements and distribution of net income

📌 Profit cannot be distributed among participants without the approval of the general meeting.

4) Reorganization and liquidation

📘 The decision must follow a strict procedure and be subject to registration (CC RK, Arts. 45–47).

5) Supervisory board, audit commission

🔍 Optional bodies, but may be established:

• to control the activities of the executive body;
• to protect the interests of minority participants.

📘 Case law: In case No. 2-4523/2022, the court declared the meeting decision invalid, as the audit commission did not approve the financial statement — the charter required such approval.

6) Internal rules and regulations

📘 Regulations:

• define document workflow, responsibilities, recordkeeping;
• may include provisions on conflict of interest, minority protection.

7) Participation in other entities

📘 Example: The LLP may participate in another LLP, JSC, cooperative, or non-profit organization. Such decisions must consider risks and the interests of all participants.

8) Appointment of liquidation commission and approval of balances

📘 In liquidation, it is mandatory to:

• approve interim and final balances;
• notify creditors (Art. 50 CC RK).

9) Compulsory buyout of a share (Art. 82 CC RK)

📘 Applied when:

• a participant significantly breaches the charter;
• a threat to the LLP’s interests arises.

🔹 Section 3. Prohibition on Delegation of Exclusive Powers

“Matters within the exclusive competence... may not be delegated to the executive body…”

🔍 This is a strict limitation:

• it is not allowed to “bypass” the general meeting by transferring powers to the director;
• any such delegation is considered null and void.

📘 Exceptions are possible only under a special law, for example:

• for natural monopoly entities;
• for large state-owned enterprises in the quasi-public sector.

⚖️ III. International Comparison

🔍 Common trend — the general meeting remains the body responsible for strategic matters: charter, capital, director composition, reorganization, and liquidation.

📚 IV. Related Provisions

📝 V. Conclusions and Recommendations

1. The general meeting of LLP participants is the highest body whose powers cannot be delegated (except as expressly provided by law).
2. All key governance matters — charter, profit, capital, director appointment, and liquidation — must be decided at the meeting.
3. The LLP charter must clearly define:
   • the structure of the governing bodies;
   • the procedure for meetings;
   • quorum and voting rules;
   • conditions for delegation of non-exclusive powers.
4. If the prescribed procedure for decision-making is violated, such decisions may be contested in court and related transactions declared invalid.

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. 

Attorney at Law Almaty Lawyer Legal Services Legal Advice Civil Criminal Administrative Cases Disputes Protection Arbitration Law Firm Kazakhstan Law Office  Court Cases