Dependent Joint-Stock Company
📘 I. Legal Nature of a Dependent Joint-Stock Company
A dependent joint-stock company (DJSC) is a legally independent joint-stock company (JSC) that is under the significant influence of another legal entity (the predominant/participating entity) holding a substantial block of its voting shares (≥ 20%).
This is a form of corporate dependence that does not imply full control, unlike a subsidiary company (see Article 94 of the Civil Code of the Republic of Kazakhstan), but allows significant influence over strategic decisions.
📑 II. Commentary by Paragraphs of the Article
🔹 Paragraph 1. Criterion of Dependence — More Than 20% of Voting Shares
“A JSC shall be recognized as dependent if another legal entity holds more than twenty percent of its voting shares.”
📌 This is the statutory threshold of influence, under which:
the participating entity does not necessarily obtain full control but may block certain decisions, especially those requiring a qualified majority (e.g., amendments to the charter);
in some cases, this entity may form the board of directors, block the issuance of additional shares, influence dividend policy, etc.
📎 Related provision — Article 64 of the Law of the Republic of Kazakhstan “On Joint-Stock Companies,” according to which a person acquiring ≥ 20% of voting shares becomes an affiliated person and is obliged to:
publish a relevant notification;
disclose information on transactions;
comply with antimonopoly regulation.
🔹 Paragraphs 2 and 3 — Excluded
(The former provisions concerned notification and approval procedures, which are now regulated by sector-specific legislation, particularly in the field of securities and competition law.)
🔹 Paragraph 4. Specifics of the Legal Regime — Reference to Legislation
“The specifics of the status … shall be determined by legislative acts.”
📘 The regulation of dependent companies is carried out by the following acts:
| Law | Regulates |
|---|---|
| Law of the RK “On Joint-Stock Companies” | Affiliated persons, disclosure obligations |
| Law of the RK “On Competition” | Control over economic concentration |
| Law of the RK “On the Securities Market” | Disclosure of information, protection of minority shareholders |
| Law of the RK “On Corporate Governance” (for the quasi-public sector) | Transparency of influence in dependent JSCs |
🔹 Paragraph 5. Obligation to Disclose Information
“A legal entity is obliged to publish information on the acquisition of more than 20% of voting shares.”
📌 This obligation is aimed at:
ensuring market transparency;
protecting the interests of minority shareholders;
maintaining antimonopoly control.
📎 In accordance with:
Article 65 of the Law “On Joint-Stock Companies”;
Article 53 of the Law “On the Securities Market”;
Article 50 of the Law “On Competition” — acquisition of more than 25% of shares may require prior approval from the Antimonopoly Authority.
🛠️ Publication is carried out through:
official websites of the JSC and KASE (if public);
the QDISC information disclosure system — for professional market participants.
⚖️ III. Comparison with a Subsidiary Company (Article 94 of the Civil Code of the RK)
| Feature | Dependent Company (Art. 95) | Subsidiary Company (Art. 94) |
|---|---|---|
| Participation | >20%, but ≤50% of shares | >50% or contractual control |
| Control | Partial influence | Direct management |
| Liability | The predominant entity is not liable for obligations of the DJSC | The parent company may bear subsidiary liability |
| Disclosure | Mandatory upon acquisition of 20%+ | Mandatory upon 50%+ |
📌 IV. Practical Aspects
✅ When dependence becomes the subject of a legal dispute:
Minority shareholders demand disclosure of information;
Rules of disclosure/approval are violated in transactions;
A corporate conflict arises (e.g., over dividend distribution);
The antimonopoly authority identifies economic concentration without authorization.
⚠️ Risks for the participating entity:
Fines for violation of antimonopoly rules (up to 5% of annual turnover);
Recognition of the transaction as invalid;
Lawsuits from shareholders.
📘 V. Judicial and Supervisory Practice
📎 Example: In one case reviewed by the Agency for Protection and Development of Competition of the RK, a foreign company acquired 24% of shares in a Kazakhstani JSC without notifying the antimonopoly authority. The transaction was recognized as economic concentration carried out in violation of the established procedure, and a fine was imposed.
📎 Another case: A minority shareholder proved that the dependent JSC executed decisions of the participating entity to the detriment of other shareholders — damages were recovered through court proceedings based on violations of corporate governance rules.
📝 VI. Conclusions
A JSC is considered dependent if another legal entity owns more than 20% of its voting shares — this represents a level of significant but not full control.
The law requires disclosure of such dependence through publication in order to ensure transparency and protect minority shareholders.
The specifics of regulation depend on legislation concerning joint-stock companies, the securities market, and competition.
Violations in the management of a dependent company or non-transparent transactions may entail civil and administrative liability.
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.
Attorney at Law Almaty Lawyer Legal Services Legal Advice Civil Criminal Administrative Cases Disputes Protection Arbitration Law Firm Kazakhstan Law Office Court Cases
