The legal basis for the activities of consumer cooperatives and other forms of economic communities in the Republic of Kazakhstan in the work organization system developed by the “National Association of Cooperatives and other forms of economic communities of the Republic of Kazakhstan” is regulated by the following legal documents:
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• Constitution of the Republic of Kazakhstan;
• Civil Code of the Republic of Kazakhstan (general part) of December 27, 1994;
• Law "On consumer cooperatives";
• Law "Agricultural cooperatives";
• Law "On production cooperatives";
• Law "On housing relations";
• Law "On non-profit organizations"

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• Rules and standards of SRO ALE "National association of cooperatives and other forms of economic communities of the Republic of Kazakhstan"
• Checklist for compliance of cooperatives with the requirements of SRO ALE NAK to counteract their transformation into financial pyramids
• Model Charter of the Consumer Cooperative (PC)
• Model Charter of Housing and Construction Cooperatives (HCC)
• Model charter of the Association of Apartment Owners (OSI)
• Public Offer Agreement for the MLM Industry Development Committee
• Public Offer Agreement of Associate Members of the OSI
• Public offer agreement of associate members of the Committee for the Development of Cooperatives of Vermifarmers

In order to know about your rights and obligations in consumer cooperatives in accordance with the legislation of the Republic of Kazakhstan, we suggest that you study the submitted documents.

Law of the Republic of Kazakhstan "On Consumer Cooperative"

dated May 8, 2001 No. 197

This Law defines the legal status of consumer cooperatives, the organizational, economic, and social conditions for their establishment, operation, reorganization, and liquidation, the rights and obligations of members, and the powers and responsibilities of management and control bodies.

Chapter 1. General Provisions

Article 1. Basic Concepts

The following concepts are used in this Law:

• Property (share) contribution: a contribution made by members of a consumer cooperative to the property (share) fund of the consumer cooperative in money, property, or property rights having a monetary valuation.
• Property (share) fund: a fund consisting of property (share) contributions made by members upon the establishment or joining of a consumer cooperative, and being one of the sources for the formation of the consumer cooperative's property.
• Consumer cooperative: a voluntary association of citizens based on membership for the satisfaction of the material and other needs of participants, carried out by uniting their property (share) contributions.
• Reserve fund: a fund intended to cover losses caused by extraordinary circumstances, the procedure for its formation and use is determined by the consumer cooperative's charter.
• Member of a consumer cooperative: a citizen and/or legal entity meeting the requirements of this Law, who has made a property (share) contribution in the amount and manner established by the consumer cooperative's charter and has been admitted to the consumer cooperative with voting rights.

Article 2. Legislation on Consumer Cooperatives

1. The legislation of the Republic of Kazakhstan on consumer cooperatives is based on the Constitution of the Republic of Kazakhstan, the Civil Code, and consists of this Law and other regulatory legal acts.
2. Excluded by Law of the Republic of Kazakhstan dated 29.10.2015 No. 373-V (effective from 01.01.2016).
3. Features of the activities of consumer cooperatives engaged in mutual insurance are determined by the legislative acts of the Republic of Kazakhstan.
4. Footnote: Article 2 amended by Laws of the Republic of Kazakhstan dated July 5, 2006 No. 164 (see Article 2 for entry into force); dated 29.10.2015 No. 373-V (effective from 01.01.2016).

Article 3. Basic Principles of Consumer Cooperative Establishment and Operation

Consumer cooperatives operate based on the following principles: voluntary entry and exit; mandatory payment of a property (share) contribution; democratic management; mutual assistance and protection of its members' interests; accessibility of information about the consumer cooperative's activities for all its members.

Article 4. Consumer Cooperative

1. A consumer cooperative is a non-profit organization and can engage in entrepreneurial activity only to the extent that it complies with its charter goals.
2. A consumer cooperative is established through property (share) contributions to perform specific functions related to satisfying its members' interests.
3. A consumer cooperative is considered established for an indefinite period, unless the constituent documents provide that it is established for a definite period or to achieve a specific goal.
4. Labor relations in a consumer cooperative are regulated by this Law, labor legislation, and the charter. The amounts of remuneration for personal labor participation of consumer cooperative members in its activities, as well as the amounts of remuneration for persons working under an employment contract, are established by a decision of the general meeting.
5. Personal labor participation of consumer cooperative members in its activities is not mandatory.
6. The primary consumers of the results of its activities (manufactured or acquired goods, works, services) are the members of the consumer cooperative.
7. Footnote: Article 4 amended by Law of the Republic of Kazakhstan dated May 15, 2007 No. 253.

Article 5. Name and Location of the Consumer Cooperative

1. The name of a consumer cooperative includes its designation and an indication of its organizational and legal form. It may include additional information provided by law.
2. The location of a consumer cooperative is deemed to be the location of its permanently operating body.
3. When changing its location, a consumer cooperative must notify the body responsible for state registration of legal entities at the consumer cooperative's actual address, to make the necessary changes to the National Register of Business Identification Numbers.
4. Footnote: Article 5 amended by Law of the Republic of Kazakhstan dated 24.12.2012 No. 60-V (effective ten calendar days after its first official publication).

Article 6. Legal Capacity of the Consumer Cooperative

1. A consumer cooperative is a legal entity and has the following powers:
2. to engage in activities aimed at satisfying its members' needs;
3. to carry out entrepreneurial activity as long as it serves to achieve its charter goals;
4. to have its branches and representative offices in the manner established by the legislation of the Republic of Kazakhstan and provided for in the cooperative's charter;
5. to appeal in court the acts of state bodies, acts of local self-government bodies, and actions of their officials that violate the rights of the consumer cooperative;
6. to exercise other rights of a legal entity necessary to achieve the goals provided for in the consumer cooperative's charter.
7. A consumer cooperative may engage in certain types of activities or actions (operations) established by the Law of the Republic of Kazakhstan "On Permissions and Notifications" only on the basis of a permission or by submitting a notification.
8. The subject and goals of the consumer cooperative's activities are determined by its constituent documents.
9. Footnote: Article 6 amended by Law of the Republic of Kazakhstan dated 16.05.2014 No. 203-V (effective six months after the day of its first official publication).

Article 7. Branches and Representative Offices of the Consumer Cooperative

1. Outside its location, a consumer cooperative has the right to establish branches and open representative offices in accordance with the legislation of the Republic of Kazakhstan.
2. Decisions on the establishment of branches and opening of representative offices of a consumer cooperative are made by the executive body of the consumer cooperative, unless the charter provides that such decisions are made by the general meeting.

Article 8. State and Consumer Cooperative

1. State bodies and local self-government bodies have no right to interfere in the activities of a consumer cooperative, except in cases provided for by legislative acts of the Republic of Kazakhstan.
2. Acts of state bodies or acts of local self-government bodies that violate the rights of a consumer cooperative may be declared invalid in the manner established by the legislation of the Kazakhstan.
3. Damage, including lost profit, caused to a consumer cooperative as a result of illegal action or inaction of state bodies and local self-government bodies or their officials, is reimbursed in the manner established by the legislation of the Republic of Kazakhstan.

Chapter 2. Establishment of a Consumer Cooperative

Article 9. Procedure for Establishing a Consumer Cooperative

1. The establishment of a consumer cooperative begins with the holding of an constituent meeting and ends with state registration as a legal entity.
2. Citizens may form initiative groups to prepare for the constituent meeting of the consumer cooperative and draft documents to be submitted for its consideration.

Article 10. Constituent Meeting of the Consumer Cooperative

1. The constituent meeting of the consumer cooperative resolves the following issues:
2. adopts a decision on the establishment of the consumer cooperative, its name, and location;
3. approves the list of consumer cooperative members based on their applications, indicating surname, first name, patronymic, place of residence, and identity document data for citizens, and indicating name, location, and bank details for a legal entity;
4. defines the subject and goals of activity;
5. determines the composition, amount, and terms for making property (share) contributions;
6. approves the charter and constituent agreement;
7. elects the executive, control, and other bodies;
8. determines the terms and persons responsible for state registration;
9. resolves other issues related to the establishment of the consumer cooperative.
10. The decision of the constituent meeting is formalized by a protocol. The protocol of the constituent meeting is signed by the chairperson and secretary of the constituent meeting. The chairperson of the constituent meeting is elected by a majority of votes of its participants.

Article 11. Charter of the Consumer Cooperative

1. The charter of a consumer cooperative must contain:
2. name and location;
3. subject and goals of activity;
4. procedure for members' admission to and withdrawal from the consumer cooperative, including the allocation of their share in the cooperative's property;
5. composition, amount, and procedure for making property (share) contributions, responsibility for violating obligations to make property (share) contributions;
6. procedure for forming, electing (re-electing), and powers of the executive, control, and other bodies of the consumer cooperative, procedure for their decision-making;
7. composition and competence of the consumer cooperative's management bodies;
8. procedure for decision-making by management bodies, including on issues for which decisions are made unanimously or by a qualified majority of votes;
9. procedure for consumer cooperative members to cover losses incurred by the cooperative;
10. conditions for the reorganization and termination of the cooperative's activities;
11. information about branches and representative offices;
12. nature and procedure of personal labor participation of consumer cooperative members in its activities;
13. relationships between the consumer cooperative and its members, the executive body of the consumer cooperative, and hired employees.
14. A list of consumer cooperative members is attached to the consumer cooperative's charter, indicating the surname, first name, patronymic, place of residence, and identity document data of the citizen, as well as the name, location, and bank details of the organization, if the consumer cooperative member is a legal entity.
15. The consumer cooperative's charter may contain other provisions not contradicting the legislation of the Republic of Kazakhstan.
16. Changes and additions to the consumer cooperative's charter are registered by authorized state bodies in the manner established by law.
17. In relations with third parties, the consumer cooperative and its members have the right to refer to changes in the consumer cooperative's charter from the moment the state registration body is notified of the changes and additions made to its charter or their registration in the manner established by legislative acts of the Republic of Kazakhstan, or from the moment information about the change in the consumer cooperative's charter is entered into the National Register of Business Identification Numbers based on a court decision. However, third parties have the right to act taking these changes into account even before the specified circumstances and deadlines.
18. Footnote: Article 11 amended by Laws of the Republic of Kazakhstan dated 27.04.2012 No. 15-V (effective ten calendar days after its first official publication); dated 24.12.2012 No. 60-V (effective ten calendar days after its first official publication).

Article 12. State Registration of the Consumer Cooperative

1. A consumer cooperative is considered established from the moment of its state registration.
2. State registration of a consumer cooperative is carried out by justice authorities in the manner determined by the legislation of the Republic of Kazakhstan on state registration of legal entities and registration of branches and representative offices.
3. Footnote: Article 12 amended by Law of the Republic of Kazakhstan dated 24.12.2012 No. 60-V (effective ten calendar days after its first official publication).

Chapter 3. Membership in a Consumer Cooperative

Article 13. Membership in a Consumer Cooperative

1. Citizens who have reached the age of eighteen, and legal entities, can be members of a consumer cooperative.
2. Citizens and legal entities can be members of several consumer cooperatives.
3. The number of members of a consumer cooperative must be at least two citizens. The maximum number of members of a consumer cooperative is not limited.
4. The admission of new members to a consumer cooperative, carried out in compliance with the provisions of this Law and the consumer cooperative's charter, is formalized by a decision of the general meeting.
5. A citizen or legal entity wishing to become a member of a consumer cooperative submits a written application for admission to the consumer cooperative to the executive body. The application must indicate the surname, first name, patronymic, place of residence, and identity document data of the citizen, or the name, location, and bank details of the legal entity.
6. The application for admission to a consumer cooperative must be considered within ten days by the executive body of the consumer cooperative.
7. Third parties who have acquired the right to a share in the consumer cooperative's property after its establishment have a preferential right to be admitted as members of the consumer cooperative.
8. In case of the death of a consumer cooperative member, their heirs have a preferential right to be admitted as members of the consumer cooperative, unless otherwise provided by the cooperative's charter. In the latter case, the consumer cooperative pays the heirs a share in the consumer cooperative's property proportionate to their property (share) contribution.

Article 14. Rights of Members of a Consumer Cooperative

Members of a consumer cooperative have the right to:

1. voluntarily withdraw from the consumer cooperative in the established manner;
2. participate in the activities of the consumer cooperative, elect and be elected to management and control bodies, make proposals for improving the consumer cooperative's activities, and eliminating shortcomings in the work of its bodies;
3. acquire (receive) goods (services) of the consumer cooperative preferentially over other citizens and legal entities, carry out services based on contracts for the sale of products and goods of their own production, personal subsidiary farms, and crafts through consumer cooperative organizations;
4. enjoy benefits provided for consumer cooperative members by the general meeting of the consumer cooperative;
5. receive information about the activities of the executive, control, and other bodies of the consumer cooperative, including access to accounting data, reports, and other documentation in the manner determined by the charter;
6. appeal to the general meeting of the consumer cooperative with complaints about unlawful actions of its executive, control, and other bodies;
7. appeal in court the decisions of the executive, control, and other bodies of the consumer cooperative that affect their interests;
8. receive, in case of liquidation of the consumer cooperative, the value of the part of the property remaining after settlements with creditors, or, by agreement of the majority of consumer cooperative members, part of this property in kind, proportionate to their property (share) contribution;
9. allocate their share in the property of the consumer cooperative and receive its value or, by agreement of the majority of consumer cooperative members, property in kind, proportionate to their property (share) contribution, in case of withdrawal from it;
10. receive remuneration for their work in the consumer cooperative in the form of salary or other form determined by the charter. The charter of the consumer cooperative may establish other rights of members that do not contradict the legislation of the Republic of Kazakhstan.

Article 15. Obligations of Members of a Consumer Cooperative

Members of a consumer cooperative are obliged to:

1. comply with the charter;
2. execute decisions of the general meeting, executive, control, and other bodies;
3. fulfill their obligations to the consumer cooperative regarding participation in its activities, as defined by the charter;
4. make property (share) contributions in the amounts, manner, and terms established by the charter. Members of a consumer cooperative may also bear other obligations provided for by the consumer cooperative's charter, which do not contradict the legislation of the Republic of Kazakhstan.

Article 16. Termination of Membership in a Consumer Cooperative

1. Membership in a consumer cooperative terminates in the following cases:
2. voluntary withdrawal;
3. exclusion;
4. loss of the right to a share in property;
5. death of a citizen who is a member of a consumer cooperative, declaration of their death, recognition as missing in the manner established by the legislation of the Republic of Kazakhstan;
6. liquidation of a legal entity that is a member of a consumer cooperative;
7. liquidation of the consumer cooperative.
8. In case of voluntary withdrawal, a consumer cooperative member has the right to the allocation of their share in the consumer cooperative's property, proportionate to the contributed property (share) contribution, in the manner established by this Law.
9. A consumer cooperative member may be excluded from the consumer cooperative by a decision of the general meeting if they, without valid reasons, fail to fulfill their obligations established by the charter, or commit intentional actions causing damage to the consumer cooperative.
10. The consumer cooperative's executive body must notify the consumer cooperative member in writing, no later than ten days in advance, of the reasons for submitting the issue of their exclusion from the consumer cooperative to the general meeting, and invite them to the said general meeting, where they must be given the right to express their opinion. If the excluded consumer cooperative member is absent from the consumer cooperative's general meeting without a valid reason, the general meeting has the right to decide on their exclusion without their participation. The decision is considered adopted if two-thirds of those present at the meeting vote for it. The excluded consumer cooperative member receives an allocation of a share in the consumer cooperative's property, proportionate to the contributed property (share) contribution, in the manner established by this Law. The decision of the general meeting on the exclusion of a consumer cooperative member from the cooperative may be appealed in court.
11. A consumer cooperative member who has lost the right to a share in the consumer cooperative's property ceases their membership in the consumer cooperative. Loss of a share occurs on the following grounds:

• sale;
• donation;
• other disposal;
• court decision.

1. A consumer cooperative member who has lost the right to a share in property informs the executive body of the consumer cooperative about this. This information may be provided to the executive body of the consumer cooperative by persons who have acquired the right to a share in property. Termination of membership in a consumer cooperative in case a member loses the right to a share in property is formalized by a decision of the executive body of the consumer cooperative.
2. In case of the death, recognition as missing, or declaration of death of a citizen who is a member of a consumer cooperative in the established manner, their membership in the consumer cooperative terminates.
3. The executive body of the consumer cooperative allocates the share of the deceased consumer cooperative member in the property as of the date of death, recognition as missing, or declaration of their death, proportionate to their share, in the manner established by this Law, for payment to their heirs.
4. The executive body informs consumer cooperative members of all cases of termination of membership in the consumer cooperative.

Chapter 4. Management of the Consumer Cooperative

Article 17. Management Bodies of the Consumer Cooperative

1. The management bodies of a consumer cooperative are:
2. the supreme body - the general meeting;
3. the executive body - the board (chairperson);
4. the control body - the audit commission (auditor).
5. The charter of a consumer cooperative may provide for the establishment of other bodies of the consumer cooperative.
6. In cases where a consumer cooperative is declared bankrupt or subject to rehabilitation procedures and a temporary or bankruptcy or rehabilitation manager is appointed in the manner established by the legislative act of the Republic of Kazakhstan on rehabilitation and bankruptcy, all powers of its management pass accordingly to the temporary or bankruptcy or rehabilitation manager.
7. Footnote: Article 17 amended by Law of the Republic of Kazakhstan dated 07.03.2014 No. 177-V (effective ten calendar days after its first official publication).

Article 18. General Meeting of the Consumer Cooperative

1. The general meeting of a consumer cooperative is its supreme body and is authorized to resolve all issues related to its activities. Regular or extraordinary general meetings may be convened, which are recognized as valid if more than half of all consumer cooperative members are present. A decision of the general meeting is considered adopted if more than half of the members present at the meeting vote for it. In this case, each consumer cooperative member has one vote when making decisions of the general meeting, regardless of the size of their share in the consumer cooperative's property.
2. A regular general meeting of the consumer cooperative is convened by the executive body within the terms established by the charter, but at least once a year.
3. The general meeting dedicated to the approval of the consumer cooperative's annual financial statements must be held no later than three months after the end of the reporting financial year.
4. An extraordinary general meeting of the consumer cooperative is convened in cases provided for by this Law, the charter, and in any other cases when the interests of the consumer cooperative require the convening of such a meeting.
5. An extraordinary general meeting of the consumer cooperative is convened by the executive body on its own initiative, as well as at the request of the audit commission (auditor) or at the initiative of at least one-tenth of the total number of consumer cooperative members.
6. If, despite the demands of the audit commission (auditor) or consumer cooperative members, the executive body does not convene an extraordinary general meeting, it may be convened independently by the audit commission (auditor) or at least one-tenth of the total number of consumer cooperative members.
7. An extraordinary general meeting of a consumer cooperative undergoing liquidation may also be convened by the liquidation commission.
8. A decision of the consumer cooperative's general meeting adopted in violation of the general meeting procedure, and the adoption of decisions established by this Law, the charter, or rules and other documents regulating the consumer cooperative's internal activities, as well as a decision of the general meeting contradicting this Law or the charter, including a decision that violates the rights of consumer cooperative members, may be declared invalid in whole or in part by a court upon application of consumer cooperative members. Such an application may be filed within six months from the date of the general meeting.
9. The procedure for convening and holding, and decision-making is determined by the consumer cooperative's charter.

Article 19. Competence of the General Meeting of the Consumer Cooperative

1. The competence of the general meeting of the consumer cooperative is determined in accordance with this Law and the consumer cooperative's charter.
2. The exclusive competence of the general meeting includes:
3. making changes and additions to the consumer cooperative's charter, including changes to the amount of property (share) contribution, location, and name, or approving the charter in a new version;
4. determining the main directions of the consumer cooperative's activity;
5. electing the head and members of the executive, control, and other bodies of the consumer cooperative, terminating their powers, hearing reports on their activities, determining the amount of funds for their maintenance;
6. excluding consumer cooperative members from the cooperative;
7. approving internal rules, their adoption procedures, and other documents regulating the internal activities of the consumer cooperative;
8. resolving issues of establishing an association (union) of consumer cooperatives, joining and withdrawing from an association (union);
9. approving annual financial reports, the report of the audit commission (auditor) of the consumer cooperative;
10. the procedure for covering losses incurred by the consumer cooperative;
11. determining the types and procedure for forming and spending the funds of the consumer cooperative;
12. alienation of real estate of the consumer cooperative, the value of which exceeds the value determined by the charter;
13. making decisions on the reorganization and liquidation of the consumer cooperative;
14. electing the chairperson and members of the liquidation commission and approving the liquidation balance sheet.
15. Along with issues attributed by this Law to the exclusive competence of the general meeting, other issues may be attributed to its exclusive competence by the consumer cooperative's charter.
16. The general meeting has the right, unless otherwise established by the consumer cooperative's charter, to delegate powers not related to its exclusive competence to the executive body of the consumer cooperative.
17. The general meeting of the consumer cooperative has the right to consider issues of confirming or canceling decisions of executive, control, and other bodies.
18. The general meeting of the consumer cooperative has the right to consider any issue related to the consumer cooperative's activities.

Article 20. Executive Body of the Consumer Cooperative

1. The executive body of the consumer cooperative carries out the ongoing management of the consumer cooperative's activities and the conduct of its affairs and is accountable to the general meeting.
2. Members of the executive body of the consumer cooperative are elected in the composition and for the term determined by the charter and may be released from performing duties (powers) at any time by a decision of the general meeting of the consumer cooperative.
3. The procedure for the work and decision-making of the executive body is determined by the consumer cooperative's charter.
4. The competence of the executive body includes all issues of ensuring the consumer cooperative's activities that are not within the competence of the general meeting, as defined by this Law and the cooperative's charter.
5. The competence of the executive body of the consumer cooperative also includes the powers of the general meeting not related to its exclusive competence, transferred to the executive body in accordance with paragraph 4 of Article 19 of this Law.
6. In relations with third parties, the consumer cooperative has no right to refer to the established limitations of the executive body's powers. However, the consumer cooperative has the right to challenge the validity of a transaction concluded by its executive body with a third party in violation of established limitations if it proves that at the time of concluding the transaction, the third party knew or clearly should have known about such limitations.
7. Members of the consumer cooperative's executive body are prohibited from:
8. concluding transactions with the consumer cooperative aimed at obtaining property benefits from it (including gift agreements, loans, gratuitous use, purchase and sale, and others) without the consent of the general meeting;
9. receiving commission remuneration from both the consumer cooperative itself and from third parties for transactions concluded by the consumer cooperative with third parties;
10. acting on behalf or in the interests of third parties in their relations with the consumer cooperative;
11. engaging in entrepreneurial activity that competes with the activities of the given consumer cooperative.
12. The limitations provided for in sub-paragraphs 1)-3) of paragraph 5 of this article also apply to close relatives and in-laws who are members of the consumer cooperative's executive body.

Article 21. Supervisory Board of the Consumer Cooperative

1. A supervisory board of a consumer cooperative may be established, if provided for by the consumer cooperative's charter, for the purpose of controlling the activities of the consumer cooperative's executive body by its members.
2. The powers of the supervisory board are determined by the charter.
3. The supervisory board of a consumer cooperative consists of its members, elected by the general meeting of consumer cooperative members. The number of supervisory board members and the procedure for their decision-making are established by the consumer cooperative's charter.
4. A member of the supervisory board cannot simultaneously be a member of the executive body, audit commission of the consumer cooperative, or the chairperson of the consumer cooperative.

Article 22. Audit Commission (Auditor) of the Consumer Cooperative

1. To exercise control over the financial and economic activities of the consumer cooperative, an audit commission (auditor) must be formed from among the consumer cooperative members, unless otherwise provided by the charter.
2. The functions of the audit commission may be entrusted to one of the consumer cooperative members as an auditor.
3. The audit commission or auditor of the consumer cooperative is elected by the general meeting for a term specified in the charter.
4. Members of the executive body of the consumer cooperative cannot be members of the audit commission (auditor).
5. The audit commission (auditor) of the consumer cooperative is accountable to the general meeting.
6. The audit commission (auditor) has the right to conduct inspections of the financial and economic activities of the consumer cooperative. For this purpose, the audit commission (auditor) has the right to unconditional access at any time to all documentation of the consumer cooperative. At the request of the audit commission (auditor), the executive body must provide the necessary explanations in oral or written form.
7. The audit commission (auditor) must review the annual financial statements of the consumer cooperative before their approval by the general meeting. The general meeting has no right to approve the annual financial statements without the conclusion of the audit commission (auditor).
8. The procedure for the work of the audit commission (auditor) is determined by the charter, as well as by rules and other documents regulating the internal activities of the consumer cooperative.

Article 23. Audit of the Consumer Cooperative

1. To verify and confirm the accuracy of the annual financial statements of the consumer cooperative, as well as the current state of its affairs, the consumer cooperative has the right, in cases and in the manner provided for in its charter, to engage an auditing organization not related by property interests to the consumer cooperative, members of its executive, control, and other bodies, or members of the consumer cooperative.
2. A member of a consumer cooperative has the right to demand an audit of the cooperative's financial statements at their own expense.
3. If the executive body of the consumer cooperative evades conducting an audit of the cooperative's financial statements when the audit is mandatory or when a cooperative member requires it, the audit may be appointed by a court decision adopted upon application of an interested person or a cooperative member.
4. Footnote: Article 23 amended by Law of the Republic of Kazakhstan dated May 5, 2006 No. 139 (see Article 2 of Law of the Republic of Kazakhstan No. 139 for entry into force).

Article 24. Appealing Decisions and Actions of the Executive, Control, and Other Bodies of the Consumer Cooperative

Decisions and actions of the executive, control, and other bodies of a consumer cooperative may be appealed by consumer cooperative members at a general meeting or in court.
Decisions and actions of the head of the executive body of a consumer cooperative may be appealed at a general meeting of the consumer cooperative or in court.

Chapter 5. Property of the Consumer Cooperative

Article 25. Property of the Consumer Cooperative, Sources of Its Formation

1. The owner of the property accounted for on the balance sheet of the consumer cooperative is the consumer cooperative as a legal entity.
2. The property of a consumer cooperative is formed by uniting its members' property (share) contributions.
3. In addition to property (share) and additional contributions, sources for the formation of the consumer cooperative's property include income received from the consumer cooperative's entrepreneurial activities and other sources not prohibited by the legislation of the Republic of Kazakhstan.
4. Income received by a consumer cooperative cannot be distributed among its members and is directed towards charter goals.
5. Disposal of property owned by the consumer cooperative is carried out by a decision of the general meeting.

Article 26. Property (Share) Contribution

1. A property (share) contribution may be made in money, securities, tangible assets, property rights, including the right of land use and the right to intellectual property results, and other property. Contributions in the form of personal non-property rights and other intangible benefits are not allowed.
2. Contributions in kind or in the form of property rights are valued in monetary form by agreement of all members of the consumer cooperative or by a decision of the general meeting of the consumer cooperative.
3. In cases where the right to use property is transferred to the consumer cooperative as a contribution, the amount of this contribution is determined by the fee for use, calculated for the entire period determined by the general meeting of the consumer cooperative.
4. Premature withdrawal of property, the right to use which is a property (share) contribution, is not allowed without the consent of the general meeting of the consumer cooperative.
5. Unless otherwise provided by the charter, the risk of accidental loss or damage to property transferred for use to the consumer cooperative rests with the property owner.
6. The terms for making property (share) contributions are determined by the consumer cooperative's charter.

Article 27. Funds of the Consumer Cooperative

1. In carrying out its activities, a consumer cooperative has the right to form the following funds:
2. property (share);
3. consumer cooperative development;
4. reserve;
5. stimulation and social support for consumer cooperative members;
6. other funds in accordance with the charter.
7. The property (share) fund consists of property (share) contributions of consumer cooperative members and is one of the sources for the formation of the consumer cooperative's property.
8. The source for the formation of other funds is income received by the consumer cooperative and other sources not prohibited by the legislation of the Republic of Kazakhstan.
9. The procedure for forming and using funds, and their redistribution, are established by the general meeting of the consumer cooperative.

Article 28. Shares of Consumer Cooperative Members in Property

1. The shares of all consumer cooperative members in the property (in the value of property) of the consumer cooperative are determined proportionate to their contributions to the consumer cooperative's property.
2. The charter of the consumer cooperative or the general meeting may establish a procedure for determining and changing shares depending on each member's contribution to the formation and increase of property.
3. Each member of a consumer cooperative has the right, at their discretion, to sell, donate, bequeath, mortgage their share, or dispose of it in any other way, subject to the conditions provided for by this Law and the charter.
4. Before performing any operations with their share in the property, a consumer cooperative member must submit an application to the executive body within the terms determined by the consumer cooperative's charter, demanding the allocation of their share from the common property.

Article 29. Disposal by a Consumer Cooperative Member of Their Share in Property

1. A consumer cooperative member's share in the consumer cooperative's property may be alienated or mortgaged before full payment of the property (share) contribution only in the part in which the contribution has already been paid.
2. A consumer cooperative member has the right to sell or otherwise assign their share in the consumer cooperative's property or a part thereof to one or more consumer cooperative members of their choice. Similarly, a consumer cooperative member has the right to mortgage a share to secure their obligation to another member. The consent of the consumer cooperative or other consumer cooperative members is not required for these transactions.
3. Alienation by a consumer cooperative member of their share (or part thereof) to third parties or pledging a share (or part of a share) to secure a consumer cooperative member's obligation to a third party is allowed.
4. The consumer cooperative's charter may provide that the sale of a share to a third party is permissible only under certain conditions.

Article 30. Preemptive Right to Purchase an Alienated Share

1. A consumer cooperative member enjoys a preemptive right over third parties to purchase a consumer cooperative member's share or part thereof when it is sold by any of the consumer cooperative members. Each consumer cooperative member may exercise this right. If there are several consumer cooperative members wishing to exercise the preemptive right to purchase, and unless otherwise provided by the charter or other agreement of the consumer cooperative members, the preemptive right to purchase a share (or part thereof) is exercised by consumer cooperative members proportionate to the sizes of their shares in the consumer cooperative's property.
2. Within seven days from the date of receiving notice from a consumer cooperative member of the offer to sell a share, the executive body notifies all consumer cooperative members. A consumer cooperative member wishing to exercise the preemptive right to purchase must notify the executive body within seven days, stating that they intend to acquire the offered share in full or in a specific part.
3. If the total amount of received offers does not exceed the size of the share being sold, each consumer cooperative member acquires the part they specified in their notification. The remaining part of the share may be alienated to a third party if no additional offers from consumer cooperative members are received before such alienation.
4. If a share or part thereof is sold in violation of the preemptive right to purchase, any consumer cooperative member may appeal this violation in court within three months.
5. The preemptive right to purchase an alienated share is exercised regardless of the method of share sale, including at auctions.
6. Assignment of the preemptive right to purchase a share is not allowed.
7. In case of acquisition of an alienated share or part thereof by a member (members) of the consumer cooperative, their share in the cooperative's property increases.
8. The rules of this article also apply to the alienation of a share under an exchange agreement.
9. If consumer cooperative members do not wish to exercise the preemptive right to purchase a share or part thereof when it is sold to a third party, the consumer cooperative itself may exercise the preemptive right to purchase.

Article 31. Sale of a Consumer Cooperative Member's Share if Other Members Refuse to Purchase the Share

1. The consumer cooperative's charter may provide for a prohibition or restriction on a consumer cooperative member selling their share to third parties.
2. In cases where the sale of a share, due to circumstances beyond the seller's control, cannot be carried out in compliance with the prohibitions or restrictions provided for in paragraph 1 of this article, a consumer cooperative member wishing to sell the share has the right to appeal to the consumer cooperative with a demand to buy out this share or permit its sale to a third party.
3. The choice of one of these options is made by the general meeting of consumer cooperative members.
4. When the consumer cooperative buys out a share, the price of the share is determined by agreement of the parties, and if no agreement is reached, by court.
5. If the consumer cooperative agrees to the sale of the share to a third party, the consumer cooperative members retain the preemptive right to purchase the share.

Article 32. Consequences of a Consumer Cooperative Buying Out a Consumer Cooperative Member's Share

1. After a consumer cooperative buys out the shares of consumer cooperative members, the consumer cooperative is obligated to offer other consumer cooperative members to acquire this share at a price determined by a decision of the general meeting.
2. If several consumer cooperative members express an intention to acquire a share, the share is divided among them proportionate to the size of their shares in the consumer cooperative's property.
3. The size of the share bought out by a consumer cooperative member is added to the size of the share that belonged to that member before the buyout. In this case, the possibility of limiting the size of the share that can belong to one consumer cooperative member is observed.
4. The consumer cooperative, by decision of the general meeting, has the right to sell the bought-out share on behalf of the consumer cooperative to a third party.

Article 33. Allocation of a Share to a Consumer Cooperative Member Subject to Exclusion from the Consumer Cooperative

1. The allocation of a share to a consumer cooperative member subject to exclusion from the consumer cooperative is carried out by a decision of the general meeting.
2. If a consumer cooperative member causes intentional harm to the consumer cooperative or its members, they have the right to demand compensation for the harm from the perpetrator at the expense of the allocated share.
3. If the parties do not reach an agreement on the amount of indemnifiable harm and the allocated share to the consumer cooperative member subject to exclusion, disputes are resolved in court.

Article 34. Property Liability of the Consumer Cooperative and its Members

1. A consumer cooperative is liable for its obligations with all its property and is not liable for other obligations of consumer cooperative members.
2. Consumer cooperative members are obligated to cover incurred losses through additional contributions within three months after the approval of the annual balance sheet.
3. The subsidiary liability of consumer cooperative members for the obligations of the consumer cooperative is determined in the manner provided for by the civil legislation of the Republic of Kazakhstan.

Chapter 6. Reorganization and Liquidation of the Consumer Cooperative

Article 35. Reorganization of the Consumer Cooperative

1. The reorganization of a consumer cooperative (merger, accession, division, spin-off) may be carried out voluntarily by decision of the general meeting. Alienation of a share or other change in the composition of consumer cooperative members does not constitute a reorganization of the consumer cooperative.
2. In cases established by legislative acts, the compulsory reorganization of a consumer cooperative in the form of its division or the spin-off of one or more consumer cooperatives from its composition is carried out by a court decision.
3. A consumer cooperative cannot be transformed into other types and forms of legal entities.

Article 36. Merger, Accession of Consumer Cooperatives

1. The merger of two or more consumer cooperatives is carried out by the full unification of their property. As a result of the merger, a new consumer cooperative arises, and the merging consumer cooperatives cease their activities. In this case, all rights and obligations of each of the consumer cooperatives participating in the merger pass to the newly formed consumer cooperative in accordance with the transfer act.
2. The accession of one or more consumer cooperatives to another consumer cooperative is carried out by including the property of the acceding consumer cooperatives into the property of the acceding consumer cooperative. In this case, the acceding consumer cooperatives cease their activities, and all their rights and obligations pass in accordance with the transfer act to the acceding consumer cooperative, into whose charter related changes and additions are made.
3. The executive bodies of consumer cooperatives participating in the merger or accession prepare a draft agreement on the merger or accession and submit for consideration by the general meeting of each consumer cooperative questions on the merger or accession and approval of the merger or accession agreement.
4. The agreed text of the merger or accession agreement is signed by the authorized executive bodies of the consumer cooperatives.
5. The merger or accession agreement must contain information on the name, location, and address of each of the consumer cooperatives participating in the merger or accession, the basic data of their balance sheets, and also provide for the procedure and conditions for the merger or accession.
6. Each consumer cooperative participating in the merger or accession is obliged, within two months from the date of the general meeting's decision on the merger or accession, to send written notifications of the merger or accession to all its creditors and place a corresponding announcement in official print media. The notification (announcement) must be accompanied by information about other consumer cooperatives participating in the merger or accession, as specified in paragraph 3 of this article.
7. Creditors of the consumer cooperative have the right, within two months from the date of receiving the notification or publication of the announcement, to demand from the consumer cooperative additional guarantees or early termination or performance by the consumer cooperative of the relevant obligations and compensation for damages. Demands are sent to the consumer cooperative in writing.
8. Each consumer cooperative participating in the merger or accession is obliged, from the moment the general meeting decides on the merger or accession, to inform creditors of this decision regarding obligations arising after the decision.
9. Based on the merger or accession agreement of consumer cooperatives, members of the merging or acceding consumer cooperatives adopt the charter of the newly formed consumer cooperative at a general meeting and elect the executive, control, and other bodies.

Article 37. Division, Spin-off of a Consumer Cooperative

1. The division of a consumer cooperative is carried out by dividing the property of that consumer cooperative between two or more emerging consumer cooperatives. In this case, the rights and obligations of the divided consumer cooperative pass to the newly emerging consumer cooperatives in accordance with the division balance sheet.
2. The spin-off of one or more consumer cooperatives from a consumer cooperative is carried out by allocating a part of the consumer cooperative's property and transferring it to one or more newly emerging consumer cooperatives.
3. In this case, a part of the rights and obligations of the reorganized consumer cooperative passes to the newly created consumer cooperatives in accordance with the division balance sheet.
4. The executive body of the reorganized consumer cooperative prepares a division or spin-off plan and drafts of the charters of the newly emerging consumer cooperatives, and submits for consideration by the general meeting questions on the division or spin-off of the consumer cooperative, approval of the division or spin-off plan, charters of the newly emerging consumer cooperatives and the division balance sheet, as well as on the election of executive, control, and other bodies of the newly emerging consumer cooperatives.
5. Unless otherwise provided by the consumer cooperative's charter, upon its division or spin-off, each consumer cooperative member has the right to receive a share in the property of each of the newly emerging consumer cooperatives equal to their share in the property of the reorganized consumer cooperative, or to receive a single share in the property of one of the newly emerging consumer cooperatives.
6. From the moment the general meeting decides on the division or spin-off, the consumer cooperative is obligated to inform creditors of this decision regarding obligations arising after the decision.
7. The consumer cooperative is obligated, within two months from the date of the general meeting's decision on the division or spin-off, to send written notifications of the division or spin-off to all its creditors and place a corresponding announcement in official print media. The notification (announcement) must be accompanied by the division balance sheet, as well as information on the name, location, and address of each of the newly emerging consumer cooperatives.
8. Creditors of the reorganized consumer cooperative have the right, within two months from the date of receiving the notification (publication of the announcement), to demand from the consumer cooperative early termination or performance of the relevant obligations and compensation for damages. Demands are sent to the consumer cooperative in writing.
9. Consumer cooperatives arising from the division or spin-off of a consumer cooperative bear joint and several liability for its obligations for one year from the date of registration of the new consumer cooperatives.

Article 38. Consequences of Non-Compliance with a Court Decision on Forced Division or Spin-off of a Consumer Cooperative

1. If the executive body of the consumer cooperative, authorized to carry out the division or spin-off, does not carry out the division or spin-off within the term specified in the court decision during forced reorganization by court decision, the court appoints a trustee of the consumer cooperative's property and instructs them to carry out the division or spin-off at the expense of the reorganized consumer cooperative's property.
2. From the moment of the trustee's appointment, the powers to manage the consumer cooperative pass to them, and the executive, control, and other bodies of the consumer cooperative cease their activities.
3. The trustee acts on behalf of the consumer cooperative in court, prepares a division balance sheet, and submits it for court approval along with the constituent documents of the consumer cooperatives arising from the division or spin-off. Court approval of these documents serves as the basis for state registration of the newly emerging consumer cooperatives.

Article 39. State Registration of Legal Entities Arising from the Reorganization of a Consumer Cooperative

1. State registration of a consumer cooperative arising from reorganization is carried out in accordance with the legislation of the Republic of Kazakhstan on state registration of legal entities and registration of branches and representative offices.
2. In case of a merger of consumer cooperatives, state registration is carried out by the registering authority at the location of the newly emerging consumer cooperative.
3. In case of accession of consumer cooperatives, state registration is carried out by the registering authority at the location of the acceding consumer cooperative.
4. In case of division or spin-off of consumer cooperatives, state registration is carried out by the registering authority at the location of the reorganized consumer cooperative. This registering authority reports information on the state registration of new consumer cooperatives to the authorities performing state registration of legal entities at the location of the newly formed consumer cooperatives.
5. State registration of a consumer cooperative arising from reorganization is carried out by the body performing state registration of legal entities after the expiration of the period granted to creditors to file claims against the reorganized consumer cooperative.
6. If, within one year from the date when the general meeting of the last consumer cooperative participating in the reorganization made a decision on reorganization, an application for state registration is not filed or the necessary evidence (paragraph 3 of this article) is not submitted, the reorganization is considered to have failed.
7. Consumer cooperatives participating in reorganization, except in cases of reorganization in the form of accession and spin-off, cease their activities from the moment of state registration of the newly formed consumer cooperatives and are excluded from the National Register of Business Identification Numbers. The acceding consumer cooperative ceases its activities from the moment its accession to another consumer cooperative is registered and is excluded from the National Register of Business Identification Numbers.
8. Footnote: Article 39 amended by Law of the Republic of Kazakhstan dated 24.12.2012 No. 60-V (effective ten calendar days after its first official publication).

Article 40. Liquidation of the Consumer Cooperative

1. A consumer cooperative may be liquidated by a decision of the general meeting or by a court decision in accordance with the legislation of the Republic of Kazakhstan.
2. The general meeting of the consumer cooperative, which has decided on its liquidation, appoints a liquidation commission and establishes the procedure and terms for the liquidation of the consumer cooperative.
3. In case of liquidation of a consumer cooperative, a cooperative member has the right to the allocation of a share in the cooperative's property, proportionate to their property (share) contribution.

President of the Republic of Kazakhstan

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