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The Concept of a Joint Stock Company
📘 I. General Characteristics of a Joint Stock Company
A Joint Stock Company (JSC) is a legal entity whose charter capital is divided into shares and whose shareholders’ liability is limited to the value of the shares they own.
🔍 A JSC is typically used in situations where:· large-scale investments need to be mobilized;· liquidity of participation is ensured through shares;· a corporate governance structure must be maintained.
📑 II. Commentary on the Provisions of the Article
🔹 Clause 1. Definition and Liability of Shareholders
"A joint stock company is a legal entity that issues shares for the purpose of raising funds to carry out its activities..."
🔍 A JSC is a corporate commercial organization characterized by:· the right to issue shares (securities);· attracting investments through their placement.
"Shareholders are not liable for the obligations of the company..."
📘 Principle of Limited Liability:· shareholders do not bear personal property liability for the debts of the JSC;· the shareholder’s risk is limited to the value of the shares they own.
⚠️ Exceptions are possible in cases of:· bad-faith conduct (e.g., abuse of corporate control);· fictitious bankruptcy (Art. 170 of the Criminal Code of the Republic of Kazakhstan);· proven “piercing the corporate veil” — an analogous concept in international practice.
🔹 Clause 2. Separation of Property
"A JSC possesses property separate from that of its participants..."
🔍 This reflects the principle of:· the autonomy of the legal entity;· separation of the company’s property from that of its shareholders;· the JSC’s independent property liability.
📘 Important: in bankruptcy, the company’s creditors cannot claim the shareholders’ property unless unlawful acts were committed by them.
🔹 Clause 3. Sole Shareholder JSC
"A JSC may be founded by a single person..."
🔍 The law allows a JSC to be established by one shareholder, including:· the state;· an individual or legal entity;· an investor.
📘 The establishment of a JSC with a sole shareholder requires:· mandatory inclusion of this fact in the charter;· maintaining specific documentation (decisions in place of meeting minutes).
📎 Related norms:· Law of the Republic of Kazakhstan “On Joint Stock Companies,” Art. 7;· Law of the Republic of Kazakhstan “On State Property” (in cases of privatization).
🔹 Clause 4. Legal Regime
"The status of a JSC is determined by this Code and legislative acts..."
🔍 Main regulation sources:· Civil Code of the Republic of Kazakhstan — general provisions;· Law of the Republic of Kazakhstan “On Joint Stock Companies” dated 13.05.2003 No. 415-II — detailed regulation of corporate rights, governing bodies, share issuance, liquidation, etc.
📘 Special cases:· JSCs with state participation (e.g., national companies);· JSCs created in the course of privatization — additionally regulated by the Law “On State Property.”
🔹 Clause 5. Non-Profit JSCs
"In cases provided for by law, non-profit organizations may be established in the form of a JSC."
🔍 This is an exception to the general rule:· for example, the National Bank of the Republic of Kazakhstan or national holdings may be registered as non-profit JSCs, performing socially significant functions but not distributing profits among shareholders.
📎 Related acts:· Law “On Non-Profit Organizations”;· Law “On Public Administration”;· Government Resolutions of the Republic of Kazakhstan.
⚖️ III. Judicial and Law Enforcement Practice
📌 Example 1: In case No. 2-1012/2021, the court recognized the legality of creating a JSC with a single shareholder and confirmed that a shareholder cannot be held liable for the company’s obligations if acting in good faith.
📌 Example 2: In case No. 2-3398/2022, the court denied a creditor’s claim against a JSC shareholder for debt recovery, stating that the shareholder is not liable for the company’s obligations and the claimant failed to prove abuse of control.
📚 IV. Related Norms and Acts
| Norm | Content |
|---|---|
| Civil Code of the RK, Arts. 86–101 | Further regulation of JSC activities |
| Law of the RK “On Joint Stock Companies” | Primary legislative act |
| Law of the RK “On the Securities Market” | Regulation of issuance and circulation of shares |
| Law “On State Property” | Features of JSCs with state participation |
| International standards (OECD) | Principles of corporate governance |
📝 V. Conclusions and Recommendations
- A JSC is the most flexible and investment-attractive form of a legal entity, suitable for:o large-scale projects;o public capital raising;o transformation of state enterprises.
- Shareholders:o are not liable for the debts of the JSC;o bear risk only within the value of their shares;o may be individuals or legal entities, including sole owners.
- It is necessary to:o develop a charter considering the type of JSC (public/non-public);o follow corporate procedures (meetings, reporting, registries);o take into account special provisions for state participation or non-profit status.
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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