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

📝 V. Conclusions and Recommendations

1. 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.
2. 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.
3. 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.

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