Management of a Joint-Stock Company
📘 I. General Provisions
The management of a joint-stock company (JSC) is based on the following principles:
· separation of powers among governing bodies (General Meeting of Shareholders, Board of Directors, Executive Body);
· inadmissibility of delegation of exclusive competencies;
· hierarchy of accountability: Executive Body → Board of Directors → General Meeting of Shareholders (GMS).
📑 II. Structure of the Commentary by Clauses
🔹 Clauses 1–2. Supreme Body – General Meeting of Shareholders
“The supreme body of a JSC is the general meeting of its shareholders. The exclusive competence of the GMS is determined by legislative acts.”
📘 According to Article 35 of the Law of the Republic of Kazakhstan “On Joint-Stock Companies”, the exclusive competence of the GMS includes, inter alia:
· approval of annual financial statements;
· adoption of decisions on dividends;
· election of the Board of Directors;
· amendment of the charter, including changes to the authorized capital;
· approval of major transactions;
· reorganization or liquidation of the company;
· approval of the external auditor.
📎 Example: In case No. 760-21-00-2/5000, the court declared invalid the decision of the Board of Directors to increase the authorized capital, as this matter fell within the exclusive competence of the GMS.
🔹 Clause 3. Prohibition on Delegation of Exclusive Competence
“Decisions on matters falling within the exclusive competence of the GMS may not be transferred to other bodies.”
⚠️ Legal significance:
· any actions of the executive body or the Board of Directors exceeding their competence are null and void (Article 157 of the Civil Code of the Republic of Kazakhstan).
📎 This position is supported by judicial practice and regulatory legal acts of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market.
🔹 Clause 4. Board of Directors
“The Board of Directors exercises general supervision over the company’s activities, except for matters within the competence of the GMS.”
📘 The Board of Directors:
· is a collegial strategic body;
· is elected by the GMS (or appointed by a shareholder holding 100% of the shares);
· forms and supervises the executive body;
· approves business plans, internal documents, and transactions outside the competence of the GMS.
📎 Article 44 of the Law “On Joint-Stock Companies” regulates the powers and procedures of the Board of Directors.
🔹 Clause 5. Executive Body
“The executive body may be collegial or sole…”
📘 Powers:
· day-to-day management of the company;
· conclusion of contracts and personnel appointments;
· implementation of decisions of the GMS and the Board of Directors;
· obligation to report to the Board of Directors.
📎 Appointment procedure, term of office, and remuneration are regulated by Article 51 of the Law “On Joint-Stock Companies.”
🔹 Clause 6. Other Bodies
“Other bodies may be established in a JSC…”
📘 Such bodies may include:
· internal audit service;
· remuneration committee;
· risk management committee;
· corporate ethics compliance commission;
· supervisory board — for certain industries or in cases of state shareholding.
📎 Mandatory for JSCs with state participation (see the Law “On State Property”).
🔹 Clause 6-1. Manager in Bankruptcy or Rehabilitation
“In the event of bankruptcy or rehabilitation, all powers are transferred to the manager…”
📘 Based on the Law of the Republic of Kazakhstan “On Rehabilitation and Bankruptcy”:
· a temporary manager is appointed during court-supervised rehabilitation;
· a rehabilitation manager — during reorganization;
· a bankruptcy manager — during liquidation.
📎 The manager:
· represents the interests of the JSC;
· replaces the management bodies;
· disposes of the company’s property in the interests of creditors.
🔹 Clause 7. General Rules of Management
“The competence and decision-making procedure are determined by the charter and the law.”
📘 Procedure:
· established by the charter (mandatory and additional bodies);
· may be regulated by internal acts (regulations, provisions on committees);
· formalized by minutes, which are legally significant documents.
⚖️ III. Related Norms and Acts
| Norm | Content |
|---|---|
| Law of the Republic of Kazakhstan “On Joint-Stock Companies”, Articles 35–51 | Details on JSC governing bodies |
| Civil Code of the Republic of Kazakhstan, Articles 85–92 | General provisions on JSCs |
| Law “On Rehabilitation and Bankruptcy” | Powers of managers |
| Law “On Corporate Governance” (for quasi-public sector) | Corporate standards |
| IFRS / KASE Corporate Governance Code | Voluntary standards for public JSCs |
📌 IV. Practical Aspects
✅ Mandatory bodies for all JSCs:
· General Meeting of Shareholders;
· Board of Directors;
· Executive Body.
✅ For public joint-stock companies:
· internal audit;
· disclosure of information (including through KASE and the National Bank).
⚠️ Common mistakes leading to disputes:
· adoption of major decisions by the executive body instead of the GMS;
· absence of formal election of the Board of Directors;
· failure to hold the GMS within the statutory time limits (usually once a year, by May 31).
📝 V. Conclusions
- Article 92 of the Civil Code of the Republic of Kazakhstan establishes a strict hierarchy of JSC management based on the separation of strategic and operational powers.
- All bodies act within the limits of their competence as established by the Civil Code, the Law “On Joint-Stock Companies,” and the charter.
- In case of violation of management procedures:
o decisions may be challenged;
o legal liability arises, including compensation for damages under Article 9 of the Civil Code of the Republic of Kazakhstan.
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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