Reorganization and Liquidation of a Joint-Stock Company
📘 I. General Characteristics
Article 93 of the Civil Code of the Republic of Kazakhstan establishes the general rules for the reorganization and liquidation of a Joint-Stock Company (JSC), and also allows its transformation into certain specific organizational forms, including non-profit organizations. These provisions are supplemented by special laws and subordinate regulatory acts.
📑 II. Commentary by Paragraphs
🔹 Paragraph 1. General Rule: by Decision of Shareholders
“A JSC may be reorganized or liquidated by a decision of the general meeting of shareholders…”
📘 In accordance with:
• Article 35 of the Law of the Republic of Kazakhstan “On Joint-Stock Companies” — this issue falls within the exclusive competence of the General Meeting of Shareholders (GMS);
• Article 49 of the Civil Code of the Republic of Kazakhstan — types of reorganization: merger, accession, division, separation, transformation.
🔹 Forms of Reorganization
| Type | Brief Description |
|---|---|
| Merger | Formation of a new JSC from two or more companies |
| Accession | Termination of one JSC with transfer of assets to another |
| Division | Termination of a JSC with distribution into two or more companies |
| Separation | Creation of a new JSC without terminating the original one |
| Transformation | Change of the organizational and legal form |
📎 Judicial Practice:Courts recognize as invalid transactions concluded after the decision on liquidation if they violate the interests of creditors (see Resolution of the Supreme Court of the Republic of Kazakhstan No. 1 dated July 10, 2003).
🔹 Liquidation is also possible:
• by a court decision (for example, in case of bankruptcy — Law of the Republic of Kazakhstan “On Rehabilitation and Bankruptcy”);
• upon cancellation of a license;
• in case of serious violations of legislation.
🔹 Paragraph 2. Transformation into Special Forms
“A JSC has the right to be transformed into a non-profit organization in the form of…”
📘 These provisions are exceptional and apply only to certain categories of JSCs involved in:
• scientific and educational activities;
• innovation clusters;
• the quasi-public sector.
🔹 Possible Forms of Transformation
| Form of Organization | Legal Basis | Features |
|---|---|---|
| Higher Scientific Organization | Law of the Republic of Kazakhstan “On Science and Technological Policy” | Non-profit activity, state funding |
| Business Partnership | Civil Code of the Republic of Kazakhstan, Articles 87, 93 | Loss of shareholder status, personal participation |
| Production Cooperative | Law of the Republic of Kazakhstan “On Production Cooperatives” | Labor participation, collective ownership |
| Autonomous Educational Organization | Law “On the Status of Nazarbayev University and Others” | Autonomy, special legal regime |
| Cluster Fund | Law “On the Innovation Cluster ‘Park of Innovative Technologies’” | Operates within technological parks |
📎 Example from Practice:JSC “National Center for Scientific and Technical Information” was transformed into a non-profit scientific organization to perform functions of national importance.
📌 Important Limitation:Transformation requires:
• approval by the General Meeting of Shareholders;
• registration of amendments to the charter;
• coordination with relevant authorized state bodies.
⚖️ III. Related Legal Norms
| Norm | Content |
|---|---|
| Civil Code of the Republic of Kazakhstan, Articles 49–51 | General provisions on reorganization and liquidation |
| Law “On Joint-Stock Companies” | Articles 35, 44, 61 — decision-making procedure |
| Law “On Rehabilitation and Bankruptcy” | Procedure for compulsory liquidation |
| Law “On State Registration of Legal Entities” | Registration of reorganization |
| Regulatory acts of the Ministry of Justice of the Republic of Kazakhstan | Requirements for submitting liquidation documents |
🛠️ IV. Practical Aspects
✅ Documents required for voluntary liquidation:
• minutes of the General Meeting of Shareholders;
• appointment of a liquidation commission;
• notification of tax and state authorities;
• publication in the media (Legal Entities Bulletin);
• transfer act (in case of reorganization);
• notification of creditors and settlement with them.
⚠️ Errors and Risks:
• failure to notify creditors → the court may invalidate the liquidation;
• failure to confirm the absence of debts (taxes, social contributions);
• violation of labor guarantees during reorganization (see Labor Code of the Republic of Kazakhstan, Article 49).
📌 V. Conclusions
The General Meeting of Shareholders has exclusive competence in matters of reorganization and liquidation of a JSC.
Reorganization is allowed in all forms established by the Civil Code, taking into account special restrictions.
Transformation into non-profit or quasi-public structures is possible only if special legislation exists.
During liquidation, it is necessary to comply with the entire established procedure, including notifying creditors and registering with justice authorities.
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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