August 22 2011
The concept of a 'corporate dispute' is relatively new to Kazakh law, having been introduced on July 5 2008 by amendments to the Civil Procedural Code. A dispute is deemed to be a corporate dispute if it:
Corporate disputes occur either between commercial legal entities, such as limited liability partnerships and joint stock companies, or between a commercial legal entity and its shareholders. Disputes between non-commercial organisations or between a non-commercial organisation and its shareholders are not considered corporate disputes.
Early in 2011 the list of corporate disputes was expanded to include disputes that:
All commercial disputes that are deemed to be corporate disputes must be resolved in the commercial courts. Shareholders of joint stock companies and limited liability partnerships must be notified in writing of all corporate disputes within seven business days of receipt of a court summons.
Although corporate disputes arise for various reasons, they can nominally be grouped into two categories, based on the goals of the parties in conflict.
First, there are disputes between minority shareholders and the legal entity itself. As a rule, such conflicts are not about gaining control of the entity; rather, they tend to involve enforcement of the shareholders' basic statutory rights, such as the right to dividends and the right to information about the entity's activities. Such disputes may also arise from a minority shareholder's desire to force the entity to buy out its shareholding at a higher price. In such cases the shareholder may try to gain a strategic advantage by creating various corporate complications that require significant time and money to resolve.
Second, corporate disputes may involve an attempt to gain control of the entity by exerting influence on its operational management and gaining control of its flow of funds. In this case the conflict may take the form of a struggle for charter capital or certain key assets (or the entity's debts, potentially giving the acquirer the power to bankrupt the entity).
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