Types and Forms of Legal Entities
📘 1. General Overview of the Article
Article 34 of the Civil Code of the Republic of Kazakhstan defines the types and organizational-legal forms of legal entities depending on their purposes:
Profit-making (commercial);
Other socially significant purposes (non-commercial).
This classification is crucial for:
the scope of legal capacity;
taxation procedures;
regulation of liability;
participation in economic turnover.
⚖️ 2. Types of Legal Entities by Purpose (Part 1)
| Type | Purpose | Features |
|---|---|---|
| Commercial legal entity | Profit-making | Profits are distributed among participants |
| Non-commercial legal entity | Social, cultural, scientific, religious, and other purposes | Profits are not distributed but used for statutory purposes |
📌 The key criterion is whether profit is the purpose, not merely the result.
🏢 3. Forms of Commercial Legal Entities (Part 2)
A commercial legal entity may exist only in one of the following forms:
🔹 1. State Enterprise
Based on the right of economic management (flexible operations)
Or operational management (state-owned enterprise)
Founder – the state
🔹 2. Business Partnership
General partnership (GP) or limited partnership (LP)
Participants bear joint or limited liability
🔹 3. Joint-Stock Company (JSC)
Authorized capital divided into shares
Participants are not liable for the company’s obligations
🔹 4. Production Cooperative
Voluntary association of individuals (or legal entities)
Joint economic activity
Mandatory labor participation
🏛️ 4. Forms of Non-Commercial Legal Entities (Part 3)
These forms are more diverse, reflecting different purposes and funding sources.
| Form | Key Features |
|---|---|
| Institution | Established by an owner, does not acquire ownership of property |
| Public Association | Voluntary association of citizens (parties, unions, associations) |
| Consumer Cooperative | Created to satisfy бытовые, social, and financial needs |
| Foundation | Property-based entity for socially beneficial purposes |
| Religious Association | Operates based on religious doctrines |
| JSC (not always commercial) | May be used as a non-commercial form in certain cases |
| Other forms | E.g., notarial chambers, bar associations under special laws |
📌 A non-commercial organization may engage in entrepreneurial activity if it serves its statutory purposes and profits are not distributed.
🏢 5. Budget-Funded Non-Commercial Organizations (Part 3-1)
“A non-commercial organization funded from the state budget may be created only in the form of a state institution”
🔹 These include:
Schools, hospitals, museums, archives, libraries;
Fully funded by the state budget;
Cannot be established as foundations, JSCs, etc.
📌 This form implies strict control, reporting, and limited powers.
🔗 6. Associations of Legal Entities (Part 4)
Legal entities may form associations, unions, etc. (see Article 110 of the Civil Code).
Such associations:
May be independent legal entities;
Represent the interests of their members;
Do not have the right to interfere in members’ activities.
📌 Associations are widely used in the business environment (e.g., associations of builders, carriers, etc.).
📑 7. Regulatory Legal Acts
| Norm | Content |
|---|---|
| Civil Code of RK, Articles 42–47 | Establishment, registration, and liquidation of legal entities |
| Law “On Limited and Additional Liability Partnerships” | Regulates LLPs |
| Law “On Joint-Stock Companies” | Regulates JSCs |
| Law “On Non-Commercial Organizations” | Covers institutions, foundations, associations |
| Law “On State Property” | Regulates state enterprises and institutions |
🧾 8. Practical Examples
🔹 Example 1: Almaty, 2021
A foundation was found in violation of Article 34 because it transferred all profits from its business activities to its founder.📜 The court held that a non-commercial organization may not distribute profits among founders.
🔹 Example 2: Nur-Sultan, 2023
An association of legal entities was registered as a JSC.The court ruled that a JSC form is permissible for non-commercial purposes if profit-making is not the objective and no dividends are distributed.
🌍 9. International Approaches
✅ UNIDROIT / OECD / EU models:
Division into for-profit and non-profit entities;
Legal regimes depend on purpose, funding sources, and profit distribution rights.
✅ CIS countries (Russia, Belarus, Uzbekistan):
Similar classification approach;
Comparable legal forms (LLC, JSC, foundations, etc.).
✅ 10. Conclusion
Article 34 of the Civil Code of the Republic of Kazakhstan:
Defines the main types of legal entities;
Establishes organizational-legal forms;
Sets the limits of entrepreneurial activity for non-commercial organizations.
🔹 This provision ensures a structured civil turnover system by clearly defining the legal status and permissible conduct of each organization.
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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