Some aspects of arrangements constitutive documents of legal entities

Most professionals involved in supporting corporate operations are used to the idea that instruments of incorporation (pre-incorporation contract and/or charter) need to be notarized and registered with the justice department. However, according to the latest legislative amendments in Kazakhstan certain private businesses are no longer required to notarize their constitutive documents and can essentially reduce their notarial expenses, as well as no longer being required to file copies of their constitutive documents with the justice department upon incorporation or reincorporation.

E.g., amendments were made as far back as 2010 to art. 4 of the Law on Business Partnerships, and to s.4 art. 17 of the Law on Limited and Additional Liability Partnerships (hereinafter referred to as the Law) to repeal the requirements of mandatory notarization of memorandum of associations of business partnerships, such as general partnership, limited partnership, additional liability partnership and limited liability partnership (hereinafter referred to as LLP), classified as small businesses, and in December 2012 there was a total rollback of requirements for mandatory notarization of business partnership memorandum of associations across the board (i.e., for large, medium and small businesses).

There was also a consistent rollback of requirements for mandatory notarization of article of association of business partnerships. E.g., in 2010 exemption from mandatory notarization of article of association was granted to business partnerships classified as small businesses, and in December 2014 it was granted to LLPs classified as medium-sized businesses, as well as to general partnerships, limited partnerships and additional liability partnerships.

At this juncture, the requirements for mandatory notarization of constitutive documents remain in place for the article of association of LLPs classified as large businesses (s.5, art. 15 of the Law) and the article of association, memorandum of associations and amendments to the memorandum of associations of a joint-stock company (art. 8 and art. 9 of the Law on Joint-Stock Companies).

For the purposes of incorporation and reincorporation, as well as upon amendments of constitutive documents that do not require reincorporation (amendment of public records), the requirement that the memorandum of associations (statutes) and amendments to the constitutive documents (corporate constitution) be filed with the justice department remains in effect only for not-for-profits (political parties, religious entities, non-governmental organizations, etc.), their branches and representative offices, and joint-stock companies and their branches and representative offices.

Upon reincorporation of not-for-profits, their branches and representative offices, and joint-stock companies and their branches and representative offices, the originals of their former constitutive documents (memorandum of associations, statutes) are to be returned to the justice department (art. 14 of the Law on Incorporation and Registration of Corporate Branches and Representative Offices).

Moreover, upon reincorporation of all legal entities, incl. privately held large, medium and small businesses, incorporated prior to March 2013, the justice department recalls the originals of their former constitutive documents (memorandum of associations) and national incorporation/reincorporation certificates (s. 43 of the Guidelines for Incorporation and Registration of Corporate Branches and Representative Offices).

That said, although private businesses are currently not required to notarize their constitutive documents (incl. business partnerships and LLPs that are classified as small and medium-sized businesses as regards the notarization of memorandum of associations and article of association, and LLPs that are classified as large businesses as regards the notarization of memorandum of associations) and file them with the justice department for registration, they are still subject to the requirement of producing their constitutive documents in writing or making in the resolution and filing with the justice department a statement to the effect that the business partnership or LLP operates under a model memorandum of associations.

So, the next time you decide to incorporate or reincorporate your business, pause before spending money on the notarization of your constitutive documents. Your unnotarized paperwork will probably be enough.

Vyacheslav Chernyakov

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