Economics

G.Pazylkhairova

JSC “Ordabasy Corporation”, Kazakhstan

Reforming of property in Kazakhstan as a condition for corporative forms development

Annotation: Theoretic aspects of joint stock companies; share capital as a property of associated producers; corporations as a high form of finance assets consolidation have been considered.

Key words: denationalization private, sector heterogeneous economy, property form diversity, freely competitive economic, entities entrepreneur corporative forms.

I.Introduction: Soviet economy crisis demanded property types reforming. Realization of economy policy development of market relation was impossible on the basis of socialist property. The pivot fundamental transformation of property relations became the course at scale denationalization. The target aim of this process – variety of property forms for dynamic economy development.

II. Statement of problem: Actuality of institutional transformation, search of new tools of organizational – economic activities on transformation of old and appearance of property forms becomes obvious and indisputable. Kazakhstan did not have practical experience in solving such issues, economy science at that moment could not suggest new investigations. Model developed by RK Government was built on theoretical investigations of foreign authors and world experience. Our task is that the analysis of the passed stage of property new relation establishment, development of joint stock companies and corporations.

III. Results: Axiomatic that denationalization does not mean full liquidation of national property, but supposes chiefly its competitive transformation. National sector in civilized market economy too embraces those of its key spheres in which social effectiveness of national management reached World experience gives a lot of such examples especially in productive and social spheres, including facilities of defense complex, railway transport, health, education, culture and other institutions.

Yet, possibilities of effective functioning of national sector institutions enterprises depend directly from inside renewal of the national property itself at the beginning of its democratization and commercialization. It is not occasionally that in many countries two types of national property: social and commercial coexist.

Further institutional transformations in Kazakhstan, expressed in formation and strengthening of private sector of economy and privatization of national enterprises promoted tendency of redistribution of economic spheres of population employment. First, in the frame of economy liberalization in Kazakhstan large-scale privatization of enterprises took place. In particular, 4056 units were privatized in 1996, 6777 - in 1977, 3073- in 1998, 1724 - in 2000. And mechanism of privatization included various ways – open auction, commercial competition, investment competition and others. In recent years open auction mechanism dominated (by this way in 1997 4813 units, in 1998 2069 units, in 2000 1420 units were privatized). From the point of view economy deregulation a significant step was made – from monopolized whole national property to heterogeneous economy and property form diversity. From quantitative parameters it may be stated that ideology of freely competitive economic entities consolidated firmly in Kazakhstan: in structure of industrial production according to property forms during 2005 private property prevails and makes up 82,8%; property of other states makes up 4,6%, national property – 12,6% [1].

Secondly, a competition between different entities of economic activity was formed. Thus, alongside with domestic producers joint and foreign enterprises, acting in republic of Kazakhstan (in 1997 there were 1388, in 2000 – 2366 such enterprises, in 2005-6422) appeared [1].

Besides, structure of financing resources investment into the basic capital as a financial basis for reproduction of private property changed.

Thus, fundamental reformation in property relations took place: thus, in 2000 year 53% from the investment volume had own enterprise funds as own resource and only 11% - budget funds and population funds. Positive tendencies appear also in the structure of industrial produce according to property form and to dynamic of main funds according to property forms. In particular, in the result of carried out reforms there are more than 78% of power capacities [1].

Today one may state that overcoming of national property monopolism in all spheres of national economy is the main result of market reorganization of relations. The most important result of this is transformation of individual and private property into dominating form of economy.

In the system of property entities interconnection relations on the occasion of owning means of production is basic element, as owners of the latter are usually and in the relation to produced material welfare forming corresponding mechanism of their appropriation.

Real possibilities for development of entrepreneur corporative forms in Kazakhstan partially predetermined and by historic peculiarity of labour division in the frame of the Soviet Union. Under conditions of union specialization, Kazakhstan occupied leading place in heavy engineering industry, metal working, branches of chemical and oil – chemical complexes, gas extraction and agricultural – industrial complex. Main industrial funds, set in motion in these branches, formed physical basis to form large firms of horizontal and vertical integration. This promoted establishment of big concerns and trusts.

Peculiarity of establishment of big business was orientation at the development of multi-profile of intersectoral firms . In connection with this one may state that organizational structure of big business differentiated in the following way: single profile production preferentially concentrated in national sector, which is expressed in republic national enterprises (RNE). Multi profile entrepreneurship is expressed in private forms of corporation. Holding formation was their primary basis. In the course of reforming this process showed, first of all, in modification in the acting economic entities structures. If in 1999 in the country there functioned 86791 economic entities, out of them 3503 units were enterprises of private property forms or 40,4% then in 10 years private property forms made 93444 units, that makes 84,1%.

Here it is necessary to pay attention to appearance of private property status, which is connected with the development denationalization and privatization processes. And this, in its turn led to reformation of legal basis of economic relations. In particular, in the frame of law “About privatization” there were perspectives of private entrepreneurship development laid and facilities of privatization, grouped by types of national property, namely defined:

· national enterprise and institution – as property complex;

· property of enterprise;

· production and non – manufacturing departments, as well as structural units of enterprise – as property complex. Privatization of which does not break technological cycle;

· stock and equities in authorized capitals of partnership.

Thus, reforming of social relation system in Kazakhstan, realizing possession, use and directions of conditions and results of production, directly connected also with changes of legal property relations. Juridical property right – this is institutional relation of people to property facilities, so far as it is established and regulate by the society itself. And though right of property is derived from economic relations of property, it is precondition for economic appropriation in civilized society.

Acting in the country legal foundation, authorized corresponding norms of property relation, foresees the following system of organizational – legal property forms: economic partnership ( full or limited) and companies with limited or double liability, as well as public limited partnership or private limited partnership); production cooperatives; unitary enterprises(national and municipal); non-commercial institutions. Principally distinctive features of each form of property are: property owner; number of participants; presence and means of distribution of income; forms of enterprise management; “borders” of responsibility.

Funding and formation of joint –stock companies is historically and practically necessary condition for development of corporation and its institutional legalization. Joint-stock company represents an association , the capital of which is formed by means of selling securities. First joint – stock companies appeared in England (English East Indiaman trade company, 1600). Remote causes of share capital turning into integral component of economic structure of capitalism lie in capital accumulation. They are directly connected with the needs of fulfilling of processes of concentration and centralization of the production. Process of socializing of capital is material basis of joint – stock enterprises appearance. Defining share capital, as a logical result of development, K.Marx interpreted it as “a necessary transition point of capital return conversion into producers’ property, but this time not into private property of separate producers but into the property associated producers, direct social property”. And so far as in joint – stock companies, as in social enterprises, joining of producers and owners takes place then the capital obtains “direct form of social capital (capital of directly associated individuals) contrary to private capital” [2].

And though K.Marx stressed immaturity of appeared social form of property, nevertheless, he considered capitalistic joint – stock companies and cooperative factories as a transition forms from capitalist means of production to associated. Such character share property interpretation allows to interpret it in a different way but from the position of today the following becomes obvious. Mentioned change of capitalist way of production into associated found reflection in the direction of developing individual property into share and that part of the population whose standard of living is higher become its sole proprietors. This allows it to turn the largest part of the income into savings in the form of shares.

Joint stock property is characterized by its big flexibility. Economic theory points out two main directions on which development joint stock relations must render its favourable influence on current situation and perspectives of modern functioning market. First, this wide involvement of temporary free money resources into economic turnover; and, secondly, overcoming of a worker’s alienation from social property, harmonization of economic relations inside the production process. Specific peculiarity especially of joint stock company is in the fact that distribution of share between the workers causes a feeling of joint owner, in spite of minimal personal participation in the company affairs.

Analyzing advantages of such organization form as closed corporation , that is in situation, when workers own the shares , the enterprises should not lay too big hopes upon them. A.Marshall in his time said: “ the enterprise workers themselves are not always the best owners of their own masters and managers. The most hard job on managing an enterprise is usually that, which least visible but the ones, who are engaged in physical labour, inclined underestimate the intensity of tension, connected with high form of work on managing enterprise and envy payment for such work” [3]. Besides such companies cause group selfishness, which is very dangerous, if the enterprise is big. Yet, peculiar meaning of such feature of share form of entrepreneur activity as ability to quick mobilization of capital resources and ability of concentration them into branches demand priority development should be pointed out.

So far as development stock capital attracts evolution of corporative sector, lets follow trajectory of its movement.

Thus, development of share form of entrepreneur activity is shown in forming of new organizational – legal forms of companies, based on common part of property: limited liability companies, different partnerships.

Limited liability company is a form of joining capital at which members of the company are responsible according to the obligation only by their investment but not property. Principle differences between initial type joint – stock company and limited liability companies are in the following:

- first, authorized capital of joint - stock company may be formed not only at the expense of exchange of founders money on being established company shares (founding incorporation), but also at the expense of free sale of company share to those who want to buy them in the process of subscribing incorporation. Authorized capital of the limited liability company is formed at the expense of founders share investments which may be contributed by property;

- secondly, to establish joint stock company a minimum of authorized capital and minimum size of one share is defined. A small minimum size of authorized capital is required to establish a limited liability company;

- thirdly, to establish a joint stock company requires a definite minimum of founders, and upper limit of a number of shareholders is usually not settled. A number of shareholders in a limited liability company often have an established limit and significantly less than shareholders in a joint - stock company. And in some countries even one man, in particular, Japan, Federal Republic of Germany and Kazakhstan can establish a limited liability company.

- fourthly, transition of shares from one owner to the other does not limit, if it does not lead to violation of antimonopoly legislation. As a rule, shares are sold and bought freely at stock exchange, and at market price.

Consolidation of individual private capitals, realized on the level of physical assets, caused corresponding organizational- economic and legal forms of share capital existence. Partnerships appeared in which the amount belonging to a definite owner physical assets and means of inclusion have become decisive factors of economic power realization, getting income and distribution of risk burden.

But junction of physical assets opened perspectives for decision mainly short term objectives. Realization of entrepreneur activity, connected with “industrial” development of modern industrial production, shows rising demands to finance resources, oriented to long term perspective Thus, partnerships organically move to its high form corporation, based on share property economically heterogeneous subjects.

Thus, process of corporatization with functional positions presents a process of corporation by means of stock market capitalization. And in domestic conditions this process as a preliminary condition for corporation establishment.

IV. Conclusion: On the basis of fulfilled research we can draw the following conclusions that have theoretical and practical meaning. In Kazakhstan for a comparatively short period a reformation of forms of property was successfully carried out, there appeared variety of them. One of the most widespread is joint stock property which has the aims of attracting financial assets and workers participation in a company joint ownership. The highest form of partnership in joint stock company is corporation. The suggested model may be accepted by companies to increase the effectiveness of their activity.

References:

1.Statistical vearbook of Kazakhstan. Statistical compendium /Agency on Staristics of the Republic of Kazakhstan-Almaty,2005,p.177

2. Marx K. Capital.B.1// Marx K., Engels F. Collection work,book 23, p.157

3. Marshall A. Principales of political economy.-M.:Progress,1993.p.87