December 12, 2022
Purchase of a share in LLP (Kazakhstan): transaction specifics and re-registration procedure
Recently, the demand for the purchase of a share in an existing LLP (limited liability partnership) has increased in the legal services market.
In this article we will talk about the simplest transaction for the purchase of a share in the authorized capital of an LLP by third parties, which, let’s say, was created for subsequent sale, which does not require a preliminary financial audit or legal expertise (Due diligence).
A share in the authorized capital of an LLP can belong to both an individual and a legal entity. It is also possible to sell a share to both a legal entity and an individual, including foreign persons. According to subparagraph 5) of paragraph 1 of Article 11 of the Law of the Republic of Kazakhstan “On Limited and Additional Liability Partnerships” (hereinafter referred to as the Law on LLP), each participant has the right to terminate its participation in the LLP by alienating a share in the manner and on the terms stipulated by the legislation and constituent documents.
Prerequisites that require verification.
1) Check the provisions of the charter of the acquired LLP for the absence of prohibitions, restrictions or other special conditions for the sale of shares to third parties.
2) Check the fact of payment of the contribution to the authorized capital of the LLP, since the participant’s share can be alienated only in the part in which the contribution has already been paid. Therefore, it is necessary to request supporting accounting documents (receipts, cash receipts).
3) Check whether the conditions of the right of pre-emptive purchase are met. A participant wishing to sell his share or part of it to a third party is obliged to notify the executive body of the LLP in writing of his intention and the price of the sale of his share, as well as be sure to meet the deadline stipulated by the legislator in one calendar month. After the expiration of one month and subject to the absence of intentions to acquire the share being sold from other participants, the participant has the right to sell his share to third parties on the same terms that were specified in the notice for the remaining participants of the LLP. If 100% of the share of the authorized capital belongs to one participant-the seller, then compliance with this paragraph is not mandatory.
4) If the buyer is a foreign individual, then it is necessary to obtain a business visa of an emigrant of category C5. By virtue of the Law of the Republic of Kazakhstan on Migration, business emigrants are recognized as foreign citizens who arrived for the purpose of doing business. In the presence of such a visa, a foreigner should register a company within 2 (two) months and deposit an amount for the formation of its authorized capital. The exception is citizens of those countries with which Kazakhstan has signed an agreement on mutual visa-free travel of citizens. These countries include the Republic of Belarus, the Kyrgyz Republic, the Russian Federation and the Republic of Tajikistan).
5) It is necessary to enter your data into the national register of identification numbers – to obtain an individual identification number (IIN) for individuals and a business identification number (BIN) for legal entities.
Failure to comply with the above conditions, the share purchase and sale agreement with a third party may be invalidated.
Conclusion of a contract for the purchase and sale of a share in the authorized capital of an LLP.
1) Making corporate decisions on the part of the buyer on the purchase of a stake in the LLP, on the part of the seller – on the sale of a stake in the LLP.
If the parties to the transaction are legal entities, then a simple written form of purchase and sale of a stake in an LLP is sufficient.
2) If an individual acts as a party to the transaction, then such an agreement is subject to notarization. A notary will necessarily require a notarized consent of the spouses of the parties to dispose of common property, a marriage contract, or notarize a statement from an individual that the latter is not legally married.
If a legal entity acts as a party to a transaction with an individual, then the notary will require the company’s constituent documents (charter, certificate of state registration, order (decision/protocol) on the appointment of the first head. If the company is a foreign legal entity, then notarized translations of the constituent documents will be required.
The conclusion of a contract of sale by proxy is possible.
The procedure of re-registration in connection with the change of participants of the LLP
Within 1 (one) month after the purchase of the share in the LLP, the LLP is obliged to undergo the re-registration procedure. The package of documents is provided to the Public Service Center at the location of the LLP.
For the state re-registration of a legal entity , the following documents are submitted to the authorized body:
1) application in the prescribed form;
2) the decision (extract from the decision) of the general meeting of participants on the state re-registration;
3) the original document confirming the alienation of the share (share purchase and sale agreement);
4) a document confirming the payment of the registration fee (payment order, receipt, receipt, etc.) for the state re-registration of a legal entity;
5) power of attorney for the representative submitting the application.
The re–registration period is 1 working day.