Arbitration as the Method of Settlement of Investment Disputes against the Kyrgyz Republic
AKIpress Analytics section, March 19, 2013

The Kyrgyz Republic has already participated in several arbitration proceedings. Therefore, it might be reasonable to analyze peculiarities of legal regulation of arbitration in the KR, the causes and consequences of arbitration disputes and make relevant conclusions…

What risks foreign investors should take into account while investing into the Kyrgyz mining sector,
The Times of Central Asia, March 1, 2012.

Overview of Anti-Corruption Laws in Kyrgyz Republic,
Comparative Summary of Anti-Corruption Laws in the CIS Economic Region, 2011,
The CIS Leading Council Network.

What a foreigner should know about tax regime in the Kyrgyz Republic?
The Times of Central Asia, publication expected.

Kyrgyzstan is not an offshore zone and does not provide tax exemptions, but the rates of many of them are not very high.

Registration of Legal Entities in the Kyrgyz Republic: 8 Frequently Asked Questions

There are various types of legal structure for businesses in the Kyrgyz Republic («KR»). However, since the most common legal structures are a limited liability company («LLC») and a joint stock company («JSC»), we will refer to them in answering the questions below.

1. Who can be a participant(s) of the legal entity?

LLCs/JSCs can be founded by one or more entities, which might be both individuals and legal entities. JSCs can be also founded by the KR Government and local self-government authorities.

LLCs/JSCs cannot have another business entity as its sole founder/shareholder (hereinafter – “participant”), if this legal entity consists of only one person. LLCs must not have more than 30 and closed JSCs more than 50 participants, while open JSCs may have an unlimited number of participants.

If the number of participants of a closed JSC/LLC exceeds the established threshold, this legal entity must, within one year, change its legal structure to suit the legal requirement. However, if the respective change has not occurred, and one year later, the number of its members still exceeds the limit established for this business legal structure, such legal entity will be liquidated through judicial process.

2. What documents are required for registration of a legal entity?

For registration of a legal entity, the following documents must be submitted to the registration authority:

- Application for registration;
- Participant’s decision to establish a legal entity;
- Copy of the participant’s passport (if the participant is an individual);
- Copy of the certificate of state registration (if the participant is a legal entity);
- Copy of the CEO’s passport;
- Other data provided by KR law.

A foreign legal entity being the participant of a KR legal entity must additionally submit a legalized/apostilled extract from the state register or other certificate of good standing in accordance with the legislation of its country. The filing period for the extract from the state register or other certificate of good standing in accordance with the legislation of its country must not exceed 6 months from the date of issuing the said documents.

The articles of association and the memorandum of association are not required to be submitted to the registration authority except for the founding documents of financial/lending and other institutions licensed and/or regulated by the National Bank of KR.

3. What are the formal requirements for the registration documents?

The participant’s decision to establish a legal entity must be signed by each participant and contain the following data:

- Name of the to-be-registered legal entity in Kyrgyz and Russian;
- Legal address of the newly established legal entity;
- Data about each participant including the last name, first name and patronymic, place of residence (for natural persons), or full name, place of location (for legal entities);
- Amount of the charter capital and amount of each participant’s share in the charter capital of a legal entity;
- Last name, first name and patronymic of the chief executive officer.

The signature of the authorized representative of the legal entity on the decision establishing the legal entity must be attested by its seal or certified by the notary. The signature of the participant being a natural person must be certified by the notary.

The registration documents must be submitted to the registration authority either in Kyrgyz or in Russian. The documents prepared in a foreign language must be submitted to the registration authority together with the notarized translation into Russian or Kyrgyz.

4. Which authorities are responsible for registration of legal entities?

The KR Ministry of Justice and its territorial units are responsible for state registration of legal entities in KR.

State registration of legal entities is carried out by the registration authority according to the principle of a single window. The single-window principle means that the state registration of legal entities is performed in the registering, tax, statistics and KR Social Fund at the same time. In practice, after state registration with the KR Ministry of Justice or its respective territorial unit (at the place of location of the legal entity) the legal entity must submit necessary documents to the tax authority and social fund at the place of its location for recording purposes.

It should be noted that in cases provided by law the registration of a legal entity requires prior written consent of the state antimonopoly authority.

In case of state registration of financial and lending institutions, it is required to submit the written consent of the KR National Bank or its territorial unit. Also, in the cases established by law, the preliminary written consent of the KR state antimonopoly authority is required.

If you register a JSC, you must register it with the State Service for Regulation and Supervision of Financial Market under the KR Government within not later than 1 month from the date of state registration of the initial share issue.

5. How long does it take to register a legal entity?

State registration of legal entities by the justice bodies is performed within 3 business days from the date of submission to the respective justice body of all necessary documents required by the legislation.

Financial and lending institutions are registered by the justice bodies within 10 calendar days.

6. How to obtain a seal of the legal entity?

After receiving from the justice body the certificate of state registration indicating a taxpayer’s identification number (TIN) a legal entity can order a seal to be made by a private company making seals. At present, to have a seal made, a legal entity is not required to receive any permission from state authorities of KR.

7. What is the procedure for opening bank account?

After receiving the certificate of state registration and the seal, a legal entity may open account in any bank of KR.

After opening a settlement account, the bank must within 5 business days notify the tax authority at the place of location of a legal entity to this effect.

8. What is the minimum authorized capital required?

Pursuant to KR law, the authorized capital defines the amount of the property of a legal entity guaranteeing interests of its creditors. The amount of the authorized capital of the legal entity is defined by its participants in its constitutive documents. It should be noted that in JSCs the authorized capital must not be less than KGS 100,000 , whereas in LLCs the authorized capital may be minimal, which is up to KGS 1.

In JSCs, the authorized charter capital must be fully paid up at the moment of its establishment. As regards LLCs, their authorized capital must be paid up by its participants in full within 1 year from the moment of state registration of LLC with the justice body. If the authorized capital is not fully paid up within 1 year, LLC must either announce a decrease in the authorized capital and register its decrease as required or cease operation through liquidation.

Participants of LLC or shareholders of JSC who fail to fully pay up their contributions to a LLC or the value of shares in a JSC bear joint liability for obligations of the legal entity to the extent of the value of the unpaid contribution or value of shares.

Contribution to the authorized capital of the legal entity may include money, securities, movable or immovable property or proprietary rights , having monetary value. Monetary evaluation of the contribution of the participant is made by the agreement of the participants of the legal entity, and in cases provided by law is subject to independent expert appraisal.

As of March, 2013

 

 

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