How to avoid the risks of compulsory liquidation of an LLP in Kazakhstan

published on 7 July 2025 | reading time approx. 3 minutes

In the developing market conditions of the Republic of Kazakhstan, legal entities need to consider the legal risks associated with a possible compulsory liquidation. According to Article 49 of the Civil Code of the Republic of Kazakhstan, liquidation by court order of legal entities may be carried out on several grounds. This article will consider one of such grounds, namely the absence of the legal entity at its registered location or actual address, as well as the absence of key officers and founders for a period exceeding one year.

The grounds for compulsory liquidation of a legal entity in the Republic of Kazakhstan are:

Absence of the legal entity at the place of its state registration or actual address
Absence of founders (participants)
Absence of officials without whom the legal entity cannot carry out its activities for one year (executive body, e.g. director)

Should all three signs persist for a period of one year, this would indicate a situation where the organisation is unable to function effectively. This would constitute a violation of the legislation and, as a consequence, authorised bodies would be empowered to petition the court for compulsory liquidation.

What can serve as a confirmation of the absence of the company at the address?

Tax audits are a standard procedure used by tax authorities to verify that a company is properly registered at its address. In the event that a company cannot be found at the specified address during an audit, the tax authorities will send a notification requesting confirmation of its actual location. Should a response not be received within the prescribed timeframe, this may result in serious consequences, including the suspension of operations on bank accounts and exclusion from the register of VAT payers.

What does "absence of founders" mean?

The absence of founders (participants) can be understood as a situation in which it is impossible to locate and communicate with the founders of the company. This may be due to the founders having lost contact with the company, not participating in meetings, not making decisions, and in fact not exercising any rights and obligations provided for by their status. Such a situation may be revealed, including through tax audits and unanswered requests from state authorities.

What risks arise when a director works remotely?

In practice, it is common for a company director to work remotely, especially for foreign companies. Although the legislation of Kazakhstan does not prohibit remote work of directors, there is a risk that the company may be recognised as absent at the place of registration.

In accordance with Article 39 of the Civil Code, the legal address of a legal entity is defined as the location of its permanent body. Although there is no clear definition of a permanent body in the law, it is generally understood to mean the executive body of a legal entity (director). Consequently, the absence of a director may indicate the absence of a legal entity at the legal address.

Consequently, during audits, the absence of a director from the workplace may be interpreted by the tax authorities as confirmation of the company's non-existence. Nevertheless, such risks can be mitigated if the company's employees provide an office lease agreement and an employment contract confirming the director's remote mode of work.

How to minimise the risks?

In order to eliminate or significantly reduce the risk of compulsory liquidation, the following measures are recommended:

Appointment of a local director: appointing a citizen of the Republic of Kazakhstan as a director allows to ensure the physical presence of the director at the registered address and eliminate possible legal risks.
Collegial executive body: the establishment of a management body with the participation of at least one Kazakhstan resident ensures sustainability of management and continuous representation of the company at the registered address.
Regular stay of the director in Kazakhstan: regular visits of the director to Kazakhstan, confirmed by passport stamps or migration notices, provide evidence of involvement and control over the company's activities.
Appointment of a temporary director: the temporary appointment of a director who is physically located at the registered office of the company can also minimise risks.

It is important to realise that the final decision on liquidation is made by the court on the basis of a claim by the tax authority. Thus, companies should constantly monitor the relevance of their location data and promptly respond to any notifications from the state authorities.

Conclusion

Compulsory liquidation in Kazakhstan is a serious procedure that can be initiated when a company fails to fulfil its obligations to provide accurate information about its location and key employees. Knowledge of the law, transparency and timely communication with the tax authorities will help companies minimise risks and ensure stable operations in the Kazakhstan market.