Transfer of a Share in the Authorized Capital of a Limited Liability Partnership to Another Person

📘 I. General Characteristics of the Institution

The transfer of a share in the authorized capital of an LLP (Limited Liability Partnership) is a mechanism for changing participants or redistributing shares among them. It may be carried out:

• through alienation (sale, donation, etc.);

• by inheritance;

• through legal succession of legal entities;

• through redemption of the share by the LLP itself.

📌 The purpose of regulation is to ensure a balance between the freedom to dispose of property and the protection of the interests of existing participants.

📑 II. Article-by-Article Commentary

🔹 Clause 1. Transfer of a Share to Other Participants

“A participant has the right to sell or assign their share... to other participants”

🔍 Principle: a participant is free to dispose of their share within the partnership (in favor of other participants).🛑 Exceptions are those established by law (e.g., seizure of a share or restrictions imposed by a court act).

📘 A transaction between participants does not require the consent of other participants (unless otherwise provided by the charter).

🔹 Clause 2. Transfer to Third Parties and Pre-Emptive Right of Purchase (PRP)

“Allowed unless otherwise provided by the constituent documents...”

🔍 A share may be transferred to third parties, but:

• it may be restricted or prohibited by the charter;

• in the case of sale, other participants have a pre-emptive right of purchase (PRP).

📌 If several participants wish to acquire the share, it is distributed proportionally to their shares unless otherwise provided.

📎 Related provisions:

• Article 23 of the Law of the Republic of Kazakhstan “On LLPs and ALPs” — regulates PRP;

• Article 82 of the Civil Code of the Republic of Kazakhstan — compulsory redemption of a share.

📘 Case law: In case No. 2-1832/2021, the court upheld a participant’s claim to transfer the rights and obligations of the buyer, since the share was sold in violation of the PRP. The claimant proved timely notification and filed the claim within the 3-month period.

🔹 Clause 3. Prohibition of Transfer to Third Parties and Obligation to Redeem the Share

“If the transfer of a share is impossible and other participants refused to purchase it...”

🔍 In this case:

• the partnership is obliged to redeem the share from the participant;

• redemption is carried out at fair (actual) value (valuation as of the date of the claim);

• in-kind compensation (property) is possible if agreed.

📌 This serves as protection of the participant’s rights when the transfer of the share is blocked.

📘 Example: a participant cannot exit, the share is illiquid, and other participants refuse to buy — the partnership must pay compensation.

🔹 Clause 4. Transfer of an Unpaid Share

“May be transferred only in the paid portion”

🔍 A participant cannot transfer more than what has actually been paid.This prevents fictitious transfers and protects the interests of the LLP and its creditors.

📘 Example: if the contribution is 1 million tenge, but only 400,000 has been paid — only that portion may be transferred.

🔹 Clause 5. Acquisition of a Share by the Partnership

“Must be sold... or the authorized capital must be reduced”

🔍 Two possible scenarios:

1. The LLP sells the share to other participants or third parties;

2. The authorized capital is reduced by the value of the share.

📌 Until the share is redistributed:

• it is not taken into account for voting;

• it does not participate in profit distribution.

📎 Related provision:

• Article 22 of the Law on LLPs — regulates the status of a share acquired by the partnership.

🔹 Clause 6. Transfer of a Share to Heirs / Legal Successors

“Passes... unless otherwise provided by the constituent documents”

🔍 General principle: a share is inherited or transferred to legal successors if the charter allows it.🛑 If the charter requires the consent of participants — such consent must be obtained.

📘 In case of refusal:

• the partnership is obliged to redeem the share from the heirs;

• compensation is paid at fair value or in kind.

📎 Related provisions:

• Articles 24–25 of the Law on LLPs;

• Article 1046 of the Civil Code of the Republic of Kazakhstan — legal succession of legal entities;

• Tax Code — taxation of inherited shares.

📘 Example: an heir of a deceased participant claimed the share. The charter required consent of participants. After refusal, the partnership paid the value of the share based on an independent valuation (case No. 2-1425/2023).

⚖️ III. International Comparison

🔍 General trend: internal “closed” structure and control over participants is an international standard for limited liability companies.

📚 IV. Related нормативные acts

📝 V. Conclusions and Recommendations

1. An LLP participant is free to dispose of their share in favor of other participants, but when selling to third parties, the pre-emptive right of purchase applies.

2. The charter may:

   • prohibit transfer to third parties;

   • require consent for inheritance;

   • determine the procedure for valuation of the share upon exit.

3. In case of violation of the PRP, any participant may demand transfer of rights to themselves within 3 months.

4. Acquisition of a share by the LLP requires:

   • its resale; or

   • reduction of the authorized capital.

5. Heirs receive the share only with consent; otherwise, they are paid compensation.

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