Business Life Magazine
Yerlan Galiyev
MinTax Group

In the construction of the legal structure of business, investors usually faced  the following questions at the same time:

1) Problems of legal registration of the company’s management structure; 2) Problems of financial planning; 3) Problems of tax planning; 4) Problems of recruitment and personnel management; 5) Other issues.

The most common legal form of doing business in Kazakhstan is a limited liability partnership. Participants of the limited liability partnership are entitled:

1)  To participate in the management of the company in the manner provided for by the Law on LLP[1]  and the charter of the company;

2)  To obtain information on activities of the company and study its accounting and other documentation in accordance with the procedure stipulated by a charter of partnership;

3)   To receive income from the partnership’s activities in accordance with the Law on LLP, constituent documents of the partnership and the decisions of its general meeting;

4)   To obtain, in the case of liquidation of the partnership, the value of the part of property remaining after payments to creditors, or by agreement of all of the partners, a part of the property in kind;

5)   To terminate participation in the partnership by disposal of its share in the manner provided for by the Law on LPP;

6)   To challenge in court the decisions of LLP’s bodies, violating their     rights provided for by the Law on LLP and (or) the Charter of the Partnership.

The exclusive competence of the general meeting of the limited liability partnership includes:

 1)  Amendment to the charter of the Partnership, including changes in the amount of its chartered capital, location, company name or approval of the charter of the partnership in the new version;

2)  Foundation of executive body of the partnership and early termination of its powers, as well as taking a decision on transfer of the limited liability  partnership or its property to a trust management and determination of terms and conditions of such the transfer;

3)  Election and early termination of the powers of the Supervisory Board, and (or) the audit commission (auditor) of the partnership, as well as approval of the reports and conclusions of the audit commission (auditor) of the partnership;

4)   Approval of the annual financial statements and distribution of net income;

5) Approval of internal rules, procedures for its accepting and for other documents regulating internal activity of the partnership, except for documents, approval of which is referred by the Charter to a competence of other bodies of the Partnership;

6)  Decision on participation of the partnership in other business partnerships, and in the nonprofit organizations;

7)     Decision on reorganization of  or liquidation of partnership;

8)    Assignment of liquidation committee  and approval of liquidation balances;

9)     Decision on  forced  buying out  of the share of the participant of the partnership;

10)   Decision on pledge of property of the partnership;

11)   Decision  on additional contributions to the property;

12) Approval of the procedure and terms of provision of participants of the partnership and purchaser of shares with information on activities of partnership.

In settling issues on corporate law in current reality, the attorney at law must take into account features of corporate governance. The purpose of corporate governance is to give to shareholders the opportunity to perform an effective control and monitoring of management and, thus, help to increase the company’s capitalization. This control includes both the internal control procedures and external legal and regulatory mechanisms. Shareholders (participants) want to exactly know what kind of responsibility to them the senior officials of the company’s bears for results achieved. Investors want to understand whether they have a real opportunity to influence important decisions[2].

Owners, to meet their investment objectives, require a clear definition of responsibilities and powers of the executive and other bodies of the company, including for the results achieved.

Owners wish:

  • To take strategic decisions;
  • To control the activities of executive bodies;
  • To understand peculiarities of companies operating and the degree of transparency;
  • To have opportunity to assess their risks;
  • To dispose financial, management and operating reports concerning activities of companies;
  • To dispose information to take investment decisions.

In a crisis, owners have become more assertive in their desire to be fully informed about the state of affairs in companies, and be involved in the real control over the process of management.  At the same time, each owner must simultaneously take into account:

1)             Own investment interests;

2)             Issues on business stability;

3)             Interests of the company’s management;

4)             Matters on observance of laws.

Besides, interests of the owner (a participant) of the company are not always in line with interests of other owners and with interests of the company’s management.

Besides, in practice, as a rule, one should create not only one LLP, but a group to run the business.

In light of the above, the correctness of the organizational structure of the company, legal consolidation of authority and participants of LLP and its management is one of the decisive factors in the sustainability of the business and its success in the development of the mid-term and long- term.

For example, in practice, we can see four standard models to manage a group of companies, “Strategist”, “Operator”, “Investor” and “Kapitalizator”. The models differ by the intervention of the corporate center (CC) in the management of the business units (BU), and by the core of the business, which can be objective or investment. If we implement the “Investor” model, its performance is largely determined by our competences in the management of a portfolio of businesses, in particular, the ability to profitably buy and sell businesses. On the contrary, in the “Operator” model competencies are key insight in the management of business domain. As for purchase and sale of the business, in this case is probably better to think less than often[3].

Furthermore, in practice, standard problems on application of above models have been formed. They include:

• Mixing fundamentally different models;

• Unclear division of powers between the CC and BE;

• Uncritical application of common standards without consideration of the specific of business units.

Each of these problems can have the following negative consequences:

• Internal organizational conflict;

• Failure to reach the set investment goals;

• Reduction or loss of control over business;

• Financial loss and / or reduction in profitability.

Thus, in construction of the legal structure of the business, it is recommended that strategic and tactical goals, as well as the needs of an investor in the degree of participation in the conduct of business should be taken into consideration. Preliminary planning of the legal structure of business, taking into account all available factors and risks will subsequently enable one to avoid many problems of organizational, financial and legal nature.


[1] The Law of the Republic of Kazakhstan dated  22 April 1998 No. 220-I On “Limited Liability and Supplementary Liability Partnerships”

[2] Corporate governance: history and practice //


[3] Dmitriy Syrotkin, Aleksandr Pechorskiy. Typical Models and Typical Problems of Management //

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