Withdrawal of a Partner from a General Partnership
📘 Article 67 of the Civil Code of the Republic of Kazakhstan: Withdrawal of a Partner from a General Partnership
🔷 General Overview
A general partnership, as a form of business partnership, is based on mutual personal trust between the partners and their unlimited joint liability. In this regard, a partner’s withdrawal is a significant legal event that affects both the property and management structure of the partnership.
📍 Paragraph 1: Notice of Withdrawal
"A partner may withdraw at any time by notifying the other partners within the period specified by law or the partnership agreement."
Analysis:
- This is a unilateral legal act, requiring only notification.
- The law does not directly restrict a partner’s right to withdraw (unlike withdrawal from an LLC under Article 94 of the Civil Code, which is subject to certain conditions).
- However, the exercise of this right is tied to the notice period — the parties may specify a precise notice term (usually 1–3 months) in the partnership agreement.
📌 Example:
If the agreement provides for a 2-month notice period, the partner must comply with it. Otherwise, the withdrawal may be deemed to violate the interests of the other partners (see Supreme Court Ruling No. 2-1792/2021).
📍 Paragraph 2: Settlement and Payment of the Share
"The withdrawing partner shall be paid the value of their share proportionate to their contributed capital..."
Analysis:
- The calculation is based on the balance sheet as of the withdrawal date. Other dates (e.g., year-end) do not apply unless otherwise agreed by the parties.
- The payment does not include future profits, only:
- the value of the share in the property (based on actual contribution),
- the portion of net income earned from the beginning of the year up to the date of withdrawal.
Important: if the partner contributed only part of the pledged amount, the settlement is made in proportion to the actual contribution, not the declared amount.
🔄 Return of Contribution in Kind
"…with the partnership’s consent, the contribution may be returned in whole or in part in kind."
Analysis:
- This is possible only by mutual agreement.
- In-kind return is preferable for highly liquid assets (real estate, equipment).
- Often used in cases of corporate conflict to avoid prolonged monetary settlements.
📦 Return of Property Provided for Use Only
"…shall be returned in kind without compensation."
Analysis:
- This property was not part of the charter capital, only provided for use.
- The partner retains ownership but is not entitled to rent or other compensation unless otherwise provided by agreement.
📚 Related Provisions
| Provision | Content |
|---|---|
| Art. 59 of the CC RK | Partner’s contribution and valuation of share |
| Art. 65 of the CC RK | Management of a general partnership |
| Art. 68 of the CC RK | Expulsion of a partner |
| Law of the RK "On Accounting" | Used to determine the balance sheet |
⚖️ Judicial Practice
- Case No. 2-641/2020 (Shymkent): A partner demanded monetary compensation for property provided for use. The court denied the claim, stating the return must be in kind and without compensation.
- Case No. 2-382/2022: The partnership attempted to reduce the partner’s share value by referring to anticipated future losses. The court ruled that only the actual balance as of the withdrawal date applies.
📌 Conclusions
- A partner may freely withdraw but must observe the notice period.
- Property settlements are based on the balance sheet as of the withdrawal date.
- The contribution may be returned in kind, but only by agreement.
- Net income is payable only for the actual participation period in the year of withdrawal.
- Property provided for use must be returned in kind without compensation.
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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