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Civil Code of the Republic of Kazakhstan

(excerpts)

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Paragraph 2. Legal Entities


I. General Provisions


Article 33. The Definition of a Legal Entity
1. An organization which pursue the recovery of income as the primary purpose of the activity (commercial organization) or doesn’t have gaining income as a goal and doesn’t distribute any net income between the parties (non-profit organization) shall be recognized as the legal entity.
2. A legal entity shall have a seal with its name.

Article 34. The Types and Forms of Legal Entities
1. A legal entity may be an organization which pursues the extraction of profits income as the principal purpose of its activities (commercial organization), or which does not have the extraction of profits income as such a goal and which does not distribute earned profits, earned net income between its participants (non-commercial organization).
2. A legal entity which is a commercial organization (enterprise) may be created solely in the form of a state-owned enterprise, business partnership, joint-stock company or production cooperative.
3. A legal entity, which is a non-commercial organization, may be created in the form of an institution, public association, joint-stock company consumer co-operative, public foundation, religions association and any other form which is provided for by legislative acts. A non-commercial organization may engage in entrepreneurial activity only for as long as it is consistent with the objectives of its charter.
3-1. A legal entity that is a non-commercial organization and maintained at the expense of the state budget may be formed exclusively in the form of a state-owned institution.
4. Legal entities may create associations.
5. A legal entity shall act on the basis of this Code, the Law concerning each of legal entities, any other legislative acts and their foundation documents.

Footnote. Article 34 as amended by the Laws of the Republic of Kazakhstan dated 11.07.1997 No. 154; dated 02.03.1998 No. 211; dated 10.07.1998 No. 282; 16.12.1998 No. 320; dated 12.01.2007 No. 225 (shall be enforced from the date of its official publication); dated 27.04.2012 No. 15-V (shall be enforced upon expiry of ten calendar days after its first official publication).

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Article 41. Foundation Documents of a Legal Entity
1. A legal entity shall carry out its activities on the basis of its Charter and the Foundation Agreement or, if a legal entity is found by one person it shall carry out its activities on the basis of its Charter and the written resolution about foundation of the legal entity (resolution of the sole founder) unless it is otherwise provided for by legislative acts of the Republic of Kazakhstan. In the cases specified by legislative acts of the Republic of Kazakhstan, a legal entity which is not a commercial organization, may operate on the basis of general regulations concerning the organizations of that.
A legal entity which is a small business may carry out its activities on the basis of the Model Articles the content of which is defined by the Government of the Republic of Kazakhstan.
2. The foundation agreement of a legal entity shall be entered into and its charter shall be approved by its foundation parties. No foundation agreement shall be entered into if a commercial organization is established by one person.
3. The foundation documents of a non-commercial organization and of a state-owned enterprise, must define the objects and aims of the activities of that legal entity.Foundation documents of a business partnership, joint-stock company and a production cooperative may provide the objectives and purposes of their activity.
4. In the foundation agreement parties (founders) undertake to create a legal entity, define the procedure for their joint activities to create it, the conditions for the vesting into its ownership (business authority, operational management) of their property and for their participation in its activities. The agreement shall also define the terms and procedure for the distribution of net income between the founders, management of the business of the legal entity, cessation of founders and approve its charter, unless it is otherwise provided for by this Code or legislative acts concerning specifics of legal entities.
Any other provisions may be included into a foundation agreement by the consent of the founders.
4-1. The decision of the sole founder shall contain the provisions of transfer of ownership (economic management, operational management) the property and other solutions that do not contradict to the legislation of the Republic of Kazakhstan.
The decision of the sole founder-legal entity is taken by the authorities that have the right to make such decisions in accordance with the legislation of the Republic of Kazakhstan and the charter of the legal entity.
5. The name of a legal entity, its location, procedure for the formation and the competence of its bodies, provisions of the reorganization and termination of its activities shall be provided I n the charter.
If a legal entity is established by one person, then a procedure of the formation of the property and the distribution of profits shall also be defined in its charter.
Other provisions which do not contradict legislation may be specified in a charter.
6. In the case of contradictions between the foundation agreement and the charter of the same legal entity, their provisions must apply as follows:
1) those of the foundation agreement, when they are associated with internal relationship of founders;
2) those of the charter, when their application may have significance for relations of the legal entity with third persons.
7. Any interested parties shall have the right to peruse the charter of a legal entity.

Footnote. Article 41 as amended by the Laws dated 15.07.1996 No. 30; dated 19.06.1997 No. 132; dated 11.07.1997 No. 154; dated 02.03.1998 No. 211; dated 22.04.1998 No. 221, dated 10.07.1998 No. 282, dated 16.05.2003 No. 416, dated 12.01.2007 No. 225 (shall be enforced from the day of its official publication), dated 04.07.2008 N 54-IV (the order of enforcement see Art. 2), dated 08.12.2009 No. 225 - IV (the order of enforcement see Art. 2), dated 01.03.2011 No. 414-IV (shall be enforced from the date of its first official publication).

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III. JOINT-STOCK COMPANY

Article 85. Definition of a Joint-Stock Company
1. A legal entity which issues shares for the purposes of raising funds for the performance of its activities shall be recognized as a joint-stock company. The shareholders of a joint-stock company shall not be liable for its obligations, and they shall bear the risk of losses associated with the company's business, within the limits of value of the shares they hold, except for the cases provided for by legislative acts.
2. A joint-stock company shall possess the assets which are separate from the assets of its participants, shall be liable for its obligations within the limits of its property and it shall not bear any liability for the obligations of its participants.
3. A joint-stock company may be created by one person and it may consist of one person in the case the acquisition by one shareholder of all the shares of the company, unless it is otherwise stipulated in legislative acts.
4. The legal status of a joint-stock company, the rights and obligations of the shareholders shall be determined by legislative acts in accordance with this Code. Special considerations with regard to the legal status of joint-stock companies which are created by way of privatizing state-owned enterprises, shall be determined in legislation.
5. Non-commercial organizations may be created in a form of the joint-stock company in the cases provided for by legislation.

Footnote. Article 85 as amended by the Laws of the Republic of Kazakhstan dated 19.06.1997 No. 134, dated 11.07.1997 No. 154, dated 02.03.1998 No. 211, dated 10.07.1998 No. 282, dated 13.10.2003 No. 486, dated 28.12.2011 No. 524 - IV (shall be enforced upon expiry of ten calendar days after its first official publication).

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VII. Non-Commercial Organization


Article 105. An Institution
1. An organization created and financed by its founder for the performance of managerial, social and cultural or any other functions of non-commercial nature, shall be recognized as institution.
2. An institution created by the State in accordance with the Constitution and the laws of the Republic of Kazakhstan or on the basis of the regulatory legal acts of the President of the Republic of Kazakhstan, Government of the Republic of Kazakhstan and the local executive body of regions, cities of republican status, capital, districts, cities of regional status, which are maintained solely at the expense of the Budget or State Budget, National Bank of the Republic of Kazakhstan unless it is otherwise established by legislative acts of the Republic of Kazakhstan, shall be recognized as state-owned institution.
3. Assumption of the contractual obligations shall be carried out in accordance with the Budget Code of the Republic of Kazakhstan.
4. Legal rights of the enterprises shall be specified by this Code, legislative acts of the Republic of Kazakhstan.
Footnote. Article 105 is in the wording of the Law of the Republic of Kazakhstan dated 01.03.2001 No. 414-IV (shall be enforced from the date of its first official publication).

Article 106. A Pubic Association
1. In the Republic of Kazakhstan political parties, trade unions and other associations of citizens created on a voluntary basis for the attainment by them of the goals in common which do not contradict legislation, shall be recognized as public associations.
Creation and participation features of public associations for individuals shall be specified by the legislative acts of the Republic of Kazakhstan.
The participants (members) of public associations shall not have the right to the assets which are transferred to those associations, including the membership fees. They shall not be liable for the obligations of the public associations in which they participate as their members, and the indicated associations shall not be liable for the obligations of their members.
2 - 6. They are excluded by the Law of the Republic of Kazakhstan dated 02.03.1998 No. 211.
7. Assets of a public association which is liquidated upon the resolution of the convention (conference) or the general meeting shall be used on the purposes which are stipulated in its charter.
Assets of a public association liquidated upon a court decision shall be used in accordance with this Code or other legislative acts.
8. The legal status of public associations shall be determined by legislative acts in accordance with this Code.

Footnote. Article 106 as amended by the Decree of the President of the Republic of Kazakhstan having the force of the Law dated 05.10.1995 No. 2489; by the Laws of the Republic of Kazakhstan dated 11.07.1997 No. 154; dated 02.03.1998 No. 211; dated 15.07.2010 No. 338-IV (the order of enforcement see Art. 2); dated 12.01.2012 No. 537-IV (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 107. A Public Foundation
1. A non-commercial organization without any membership, which is founded by citizens and (or) legal entities on the basis of their voluntary property contributions, and which pursues social, educational, and any other publicly-useful purposes shall be recognized as a public foundation.
2. A public foundation shall be a legal entity and in the Civil rights turnover it shall be represented by the bodies of the foundation, it shall have an independent balance-sheet and the bank account.
3. The assets which are transferred to a public foundation by its founders shall be property of the foundation.
Founders of a foundation shall have not property rights with regard to the property of a given public foundation.
4. The funds as well as other assets of the founders, sponsorship, voluntary, charity donations and any other legal receipts shall be the source of income for a public foundation.
5. The procedure for managing a public foundation and the procedure for the formation of its bodies shall be determined by its charter as approved by the founder.
The charter of a public foundation, aside from the information contained in paragraph 5 of Article 41 of this Code, must contain information about the institutions of the foundation, on the procedure for the appointment of the officials of the foundation and their dismissal, the allocation of the foundation property in the event of its liquidation.
6. The foundation shall be obliged to publish in official publications annually the reports concerning the use of its assets.
7. Upon the resolution of the court a public foundation may be liquidated in the following cases:
1) where the assets of the foundation are not sufficient for attaining its objectives and the probability of obtaining the required assets is not realistic;
2) where the purposes of a foundation may not be reached and appropriate changes of foundation's objectives may not be made;
3) in the event that the foundations in its activities deviates from the objectives stipulated in its charter;
4) in any other cases which are stipulated in legislative acts or the foundation documents.
8. The assets which remain after the liquidation of a public association shall be used for the purposes contemplated in its charter.

Footnote. Article 107 as amended by the Law of the Republic of Kazakhstan dated 27.04.2012 No. 15-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 108. Consumer Co-operatives
1. A consumer co-operative shall be recognized as a voluntary association of citizens on the basis of the membership, for the satisfaction of their financial and or any other needs, which is implemented by way of its members uniting their property (share) contributions.
In the cases provided by the legislative acts, legal entities may enter the consumer co-operative.
2. Members of a consumer co-operative shall be obliged to cover within three months after the approval of the annual balance-sheet the formed losses, by way of additional contributions. In the case of a failure to execute this obligation, the co-operative may be liquidated in a judicial procedure upon demand of the creditors.
Members of a consumer co-operative shall jointly bear a subsidiary liability with regard to its obligations, within the limits of the unpaid amount of the additional contribution of the co-operative members.
3. The charter of the consumer co-operative must contain, aside from the information indicated in the paragraph 5 of Article 41 of this Code, the conditions with regard to the size of the co-operative member shares; the composition and procedure for contribution of shares by the co-operative members and their responsibility for the violation the obligations associated with the contribution of the shares; concerning the composition and the authority of the governing bodies the co-operative and the procedure for adopting by them of the resolutions, including on the issues, the resolutions on which are to be adopted unanimously or by a qualified majority of votes; concerning the procedure for the compensation by the members of the losses incurred by the co-operative.
4. Income received by a consumer co-operative may not be distributed amongst its members and it shall be used on the charter purposes.
5. In the case of the liquidation of a consumer co-operative, or in the case of departure from it of a co-operative member, he (she) shall have the right to appropriate his (her) share in the assets of the consumer cooperative in proportion to his (her) share. In the case of death of a co-operative member, his (her) heirs shall have the priority right to be accepted as members of the co-operative, unless otherwise stipulated in the co-operative charter. In the latter case the co-operative shall pay to the heirs the share in the property of the consumer co-operative, in proportion to his (her) share.
6. The legal status of the consumer co-operative, and also the rights and obligations of its members, shall be determined by legislative acts in accordance with this Code.
7. Rural consumer co-operatives may be created for the satisfaction of financial and any other needs of not only their members, but other citizens as well, who reside in rural areas. Special considerations in the rural consumer co-operation shall be determined by special-purpose legislation in compliance with this Article.
8. Features of the consumer cooperatives - mutual insurance companies are determined by legislative acts of the Republic of Kazakhstan.

Footnote. Paragraph 1 of Article 108 is supplemented with the paragraph 2 by the Law of the Republic of Kazakhstan dated March 2, 1998 No. 211; dated July 5, 2006 No. 164 (the order of enforcement see Art. 2).

Article 109. Religious Association
1. A voluntary association of citizens who unite in accordance with the procedure stipulated in legislative acts, on the basis of their common interests for satisfying their spiritual needs, shall be recognized as religious associations.
2. (Is excluded) .
3. Religious associations in the Republic of Kazakhstan, which have governing centers beyond the boundaries of the Republic, shall be subject to registration at the bodies of justice. Charters (articles) of the governing centers may be used as a basis of charter (articles) of such religious associations, if they do not contradict legislation of the Republic of Kazakhstan.
4 - 8. (They are excluded).
9. A religious association shall have the right to own the assets which are acquired or created by it at the expense of its own resources, as well as those donated by citizens, or organizations, or those transferred by the State, and acquired on any other grounds, which do not contradict legislative acts.
10. The participants (members) of a religious association shall not retain rights with regard to the assets which are transferred by them to that organization, including their membership fees. They shall not be liable for the obligations of the religious association and the religious association shall not be liable for the obligations of its members.
11. Special considerations concerning the legal status of religious associations shall be determined in accordance with this Code and legislative acts of the Republic of Kazakhstan.

Footnote. Article 109 as amended by the Decree of the President of the Republic of Kazakhstan having the force of the Law dated October 5, 1995 No. 2489. Paragraphs 2, 4-8 are excluded by the Law of the Republic of Kazakhstan dated March 2, 1998 No. 211.

Article 110. Amalgamation of individual entrepreneurs and (or) legal entities in the form of an association (union)
1. Individual entrepreneurs and legal entities may create associations (unions) in order to coordinate their entrepreneurial activities, and also to provide and protect their common interests.
Creation and participation features of legal entity associations (unions), which carry out their activity in the financial trade, shall be specified by the legislative acts of the Republic of Kazakhstan.
2. Public associations and any other non-commercial organizations, including institutions, may voluntarily unite into associations (unions) of those organizations.
3. Associations (unions) shall be non-commercial organizations.
4. Members of an association (union) shall retain their independence and the rights of legal entities.
5. An association (union) shall not be liable for the obligations of its members. Members of an association (union) shall bear subsidiary liability for its obligations in the amount and in accordance with the procedure stipulated in the foundation documents of the association (union).

Footnote. Article 110 as amended by the Laws of the Republic of Kazakhstan dated March 2, 1998 No. 211; dated May 16, 2003 No. 416; dated January 12, 2007 No. 225 (shall be enforced from the date of its official publication).
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