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LAW OF THE KYRGYZ REPUBLIC

of March 27, 2003 No. 64

About joint-stock companies

(as amended on 12-05-2021)

Accepted by General Court of Jogorku Kenesh of the Kyrgyz Republic on January 28, 2003

Chapter I. General provisions

Article 1. Scope of this Law

1. This Law determines procedure for creation and legal status of joint-stock companies, the rights and obligations of their shareholders, and also provides protection of the rights and interests of shareholders.

2. This Law extends to all joint-stock companies created or created in the territory of the Kyrgyz Republic if other is not established by this Law.

The features of legal relationship connected with transfer to concession of property of the joint-stock companies formed based on strategic objects, distribution companies of power industry in which the state owns at least two thirds of shares are determined by the concession treaty approved by Jogorku Kenesh of the Kyrgyz Republic.

3. The state body regulating the corporate legal relationship following from this Law, and exercising supervision of them is the authorized state body of the Kyrgyz Republic regulating the security market.

4. Features of creation, activities of the joint-stock companies performing activities of non-state pension fund, investment fund, insurance activity are regulated by this Law in the part which is not contradicting the special laws regulating activities of data of societies.

5. Features of creation and activities of the joint-stock companies performing banking activity or separate banking activities are regulated by this Law in the part which is not contradicting the Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic, banks and banking activity".

Article 2. The basic concepts used in this Law

In this Law the following basic concepts are used:

the share - the security certifying the right of her holder (shareholder) to receipt of part of profit of joint-stock company in the form of dividends on participation in administration of joint-stock company and on part of the property which remained after its liquidation;

the shareholder - the physical person or legal entity which is holding at least one share of society granting it liability law on property of joint-stock company and having with respect thereto the rights and obligations established by this Law and the legislation of the Kyrgyz Republic;

dividends - the part of the distribution income (profit) of joint-stock company received by the shareholder in income type from the stocks of this society owned by it;

the closed society - joint-stock company which shares are placed and address only among his participants or other, in advance determined group of people;

the convertible security - the security issued by joint-stock company which is subject to exchange for security of other type of this joint-stock company on the conditions established in case of release of the convertible security;

the code of corporate governance - the internal document of society approved by general shareholder meeting, containing the body of principles, the rules and procedures directed to observance of the rights and legitimate interests of all participants of the corporate relations, and regulating relations between bodies of society, officials and shareholders;

cumulative vote - method of vote in case of which the number of votes equal to total number of members of collegiate organ of management of society is the share of each share participating in vote;

independent registry holder - the professional participant of the security market performing activities for maintaining and storage of the register of owners of personalized securities;

open society - joint-stock company which shareholders can alienate the stocks owned by them without the consent of other shareholders of this society;

bond redemption - the redemption joint-stock company of earlier issued bonds at par value or their converting in the share of this joint-stock company according to the legislation of the Kyrgyz Republic;

the independent board member - the board member who is not affiliate of this joint-stock company also was not him within three years preceding its election in the board of directors (except for case of his continuance in office of the independent director of this joint-stock company), is not affiliate in relation to affiliates of this joint-stock company; it is not connected by subordination with officials of this joint-stock company or the organizations - affiliates of this joint-stock company and it was not connected by subordination with these persons within three years preceding its election in the board of directors; is not government employee; is not the shareholder's representative at meetings of bodies of this joint-stock company and was not it within three years preceding its election in the board of directors; does not participate in audit of this joint-stock company as the auditor working as a part of auditing organization and did not participate in such audit within three years preceding its election in the board of directors;

placed shares - the shares belonging to shareholders;

the authorized capital is the minimum capital of society at the time of its organization which size is established by this Law.

Article 3. Legal status of joint-stock company

1. Joint-stock company (further - society) is the legal entity performing the activities for the purpose of profit earning and raising funds by release and share placing. Society shall issue shares which cost is expressed in national currency of the Kyrgyz Republic, irrespective of contributing form.

Society has the right to issue other securities according to the procedure, established by the legislation of the Kyrgyz Republic.

Shareholders do not answer for obligations society and bear risk of the losses connected with its activities, within cost owned by them stocks.

The state and its bodies do not bear responsibility according to obligations of society, as well as society does not answer for obligations the state and its bodies.

2. Society has the isolated property considered on its separate balance in property can acquire and perform on its own behalf the property and personal non-property rights, perform duties, to be claimant and the defendant in court.

Society bears responsibility according to the obligations all property belonging to it.

Society does not answer for obligations the shareholders.

3. Society has the civil laws and obligations necessary for implementation of the any kinds of activities which are not forbidden by the laws. Society can be engaged in separate types of activity which list is determined by the laws only based on special permission (license).

4. The right to pledge shares of society cannot be limited or excluded by charter provisions. The shareholder has the right to vote and according to the share pledged by it if other is not provided by terms of the contract of pledge. Features of transfer to pledge of shares of separate types of joint-stock companies are regulated by special legal acts.

5. Society is forbidden to accept as a deposit the shares issued by it.

6. Society is considered created as the legal entity from the moment of its state registration in the procedure established by the legislation of the Kyrgyz Republic. Society is created without restriction of term of activities if other is not established by its charter.

7. Society has the right to open in accordance with the established procedure bank accounts for the territories of the Kyrgyz Republic and beyond its limits.

8. Society shall have the seal containing its trade name in the Kyrgyz and Russian languages. The trade name of society in any foreign language and language of the people of the Kyrgyz Republic can be also specified seals. In addition to trade name, the seal of society may contain others stipulated by the legislation details of the Kyrgyz Republic.

Society has the right to have stamps and forms with the name, own emblem, and also the trademark registered in accordance with the established procedure and other means of visual identification.

9. Society has the right to open branches and representations and to create subsidiaries according to the procedure, established by the legislation of the Kyrgyz Republic.

Article 4. Name and location of society

1. Society has the trade name which shall contain specifying on its form of business and type (closed or opened) and nature of its activities.

Society shall have the complete and reduced names in the Kyrgyz and Russian languages and has the right to have the complete and reduced names in foreign languages and languages of the people of the Kyrgyz Republic.

Society which trade name is registered in the procedure established by regulatory legal acts of the Kyrgyz Republic has exclusive right of its use.

2. The location of society is determined by the place of its state registration if according to other laws in the charter of society other is not established.

3. Society shall have the postal address to which with it communication is performed, and shall notify bodies of state registration of legal entities, and also the bodies which performed registration of issues of securities of society on change of the postal address.

Article 5. Branches and representative offices of society

1. Society can create branches and open representations in the territory of the Kyrgyz Republic with observance of requirements of this Law and other laws.

Creation of branches by society and opening of representations outside the territory of the Kyrgyz Republic are performed, besides, according to the legislation of foreign state in the location of branches and representations if other is not provided by the ratified international treaty of the Kyrgyz Republic.

2. The branch and representation are not legal entities, act on the basis of the provision approved by society. The branch and representation are allocated with the society which created them property which is considered both on their separate balances, and on balance of society.

Heads of branch and representation are appointed by society and act on the basis of the power of attorney, issued by society.

3. The branch and representation perform activities on behalf of the society which created them. Responsibility for activities of branch and representation bears the society which created them.

Article 6. Affiliated and dependent societies

1. Society can have in the territory of the Kyrgyz Republic the affiliated and dependent societies with the rights of the legal entity created according to this Law and other laws, and outside the territory of the Kyrgyz Republic - according to the legislation of foreign state in the location of affiliated or dependent society if other is not provided by the ratified international treaty of the Kyrgyz Republic.

2. Society is recognized affiliated if other (main) economic society (partnership) owing to the prevailing participation in its capital or according to the agreement signed between them, or otherwise has opportunity to determine the decisions made by such society.

3. The subsidiary does not answer on debts of the main society (partnership).

The main society (partnership) which under the agreement has the right to give to subsidiary obligatory for the last specifying, answers solidary with subsidiary according to the bargains concluded by the last in pursuance of such instructions.

In case of bankruptcy (insolvency) of subsidiary because of the main society (partnership) the last bears subsidiary responsibility on its debts. Bankruptcy (insolvency) of subsidiary is considered event because of the main society (partnership) only in case the main society (partnership) used the specified right and (or) opportunity for the purpose of making of action by subsidiary, obviously knowing that thereof there will come bankruptcy (insolvency) of subsidiary.

Shareholders (participants) of subsidiary have the right to require compensation by the main society (partnership) of the losses caused through his fault to subsidiary. Losses are considered caused because of the main society (partnership) only in case the main society (partnership) used the right and (or) opportunity which are available for it for the purpose of making of action by subsidiary, obviously knowing that thereof the subsidiary will suffer losses.

The subsidiary cannot acquire shares of the main society.

4. Society is recognized dependent if other participating society has more than 20 percent of its voting shares. Society which acquired more than 20 percent of voting shares of other society shall publish without delay data on it according to the procedure, determined by the legislation of the Kyrgyz Republic.

Article 7. The opened and closed societies

1. Society can be open or closed that is reflected in its charter and trade name.

2. Open society has the right to carry out public placement of the shares issued by it and to perform their free sale taking into account requirements of this Law and other regulatory legal acts of the Kyrgyz Republic. The provisions limiting free sale of shares cannot be provided by the charter.

The number of shareholders of open society is not limited.

In case of transformation of private company to open society the limiting provision operating under the closed society in open joint stock company is invalid.

3. Public placement of the shares issued by it has no right to carry out the closed society, to otherwise offer them for acquisition to the unrestricted group of people.

The number of shareholders of the closed society shall not exceed fifty.

If the number of shareholders of the closed society will exceed the limit set by this Item, the specified society within one year shall be transformed to open. If the number of its shareholders does not decrease, society is subject to liquidation judicially.

4. Shareholders of private company have the privilege of share purchase, sold by other shareholders of this society.

If none of shareholders use the privilege within five days from the date of the notice or in other time provided by the charter of society or in case of not reaching an agreement on their price, the joint-stock company has the right to acquire these shares at the price approved with their owner. In case of refusal of joint-stock company of share acquisition or not reaching an agreement on their share price can be aloof to any third party. Bid price to the third party cannot be lower than the offer to shareholders and the society. Otherwise the transaction can be recognized as invalid.

5. In case of pledge of shares of private company and the subsequent address of collection on them the pawnbroker respectively applies rules of item 4 of this Article. However the pawnbroker to the third party having the right instead of alienation of shares to reserve them.

6. Shares of the closed society pass to heirs of physical person or legal successors of the legal entity who was the shareholder according to the legislation of the Kyrgyz Republic.

7. Societies as which founders act in the cases established by the laws, authorized bodies of the Kyrgyz Republic can be only open.

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