ORDER OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC

of May 24, 2016 No. 273

About approval of the Procedure for the conclusion of the agreement of compulsory liability insurance of depositary and managing companies

For the purpose of protection of the rights and interests of investors (participants) and insured persons, according to articles 10 and 17 of the constitutional Law of the Kyrgyz Republic "About the Government of the Kyrgyz Republic", article 18 of the Law of the Kyrgyz Republic "About investment of means for financing of investment part of the state pension on the national social insurance in the Kyrgyz Republic" the Government of the Kyrgyz Republic decides:

1. Approve the Procedure for the conclusion of the agreement of compulsory liability insurance of depositary and managing companies according to appendix.

2. This resolution becomes effective after fifteen days from the date of official publication.

Appendix

Procedure for the conclusion of the agreement of compulsory liability insurance of depositary and managing companies

1. General provisions

1. This Procedure determines basic provisions of the conclusion (prolongation, the termination) the relevant agreement of compulsory liability insurance of depositary before the State accumulation pension fund of Social fund of the Kyrgyz Republic (further - GNPF) and managing companies, and also managing companies - before GNPF for the agreement breaches about rendering services of depositary caused by mistakes, negligence or intentional illegal actions (failure to act) of employees of depositary / managing company or intentional illegal actions of other persons (further - the insurance contract).

2. In this Procedure the following terms and determinations are used:

1) the insurer - the legal entity (insurance organization) having the license for implementation of obligatory types of insurance;

2) the insurer - the legal entity having the license for implementation of depository activity in the security market or the license for implementation of trust management of investment assets;

3) the agreement of compulsory liability insurance (insurance contract) - the agreement between the insurer and the insurer owing to whom the insurer shall make insurance payment in case of loss occurrence and the insurer shall pay insurance premiums in accordance with the established procedure;

4) agreement parties of insurance (party) - the insurer and the insurer who signed the insurance contract;

5) beneficiaries - physical persons or legal entities, the clients of the insurer who are those it is exclusive based on contractual relations with the insurer:

- depositors: persons using services of depositary in storage of securities and/or accounting of the rights to securities based on the depositary agreement (the agreement on the custody account) governing the relations of depositary and depositors in the course of depository activity;

- GNPF using services of managing companies based on the trust management agreement of pension assets of investors (participants) and insured persons;

6) object of insurance - the valuable interests of the insurer which are not contradicting the legislation of the Kyrgyz Republic, connected with risk of approach of responsibility for damnification to valuable interests of the beneficiary when implementing by it of the activities for rendering financial services specified in the insurance contract, except for profitability percent, and also loss of market value of securities;

7) mistakes and negligence of employees of insurer - the inadvertent wrong, negligent actions (failure to act) of workers allowed in case of execution of job (office) responsibilities by them during implementation by the insurer of activities of managing company or depositary according to the legislation of the Kyrgyz Republic;

8) illegal actions (failure to act) - socially dangerous, guilty and punishable offense (action or failure to act) in the sphere of economy, against public safety and public order;

9) insurance premium - payment for insurance which the insurer shall pay to the insurer according to the procedure and the terms established by the insurance contract;

10) insurance risk - expected event on which case of approach the insurance having signs of probability and accident of its approach is led;

11) insured event - the accomplished fact provided by the insurance contract with which approach there is obligation of the insurer to make insurance payment, in established by the legislation and the insurance contract procedure and amount, in case of observance of provisions of this Procedure;

12) insurance rates - the price rates developed and applied by the insurer in case of determination of insurance premium under the agreement of compulsory insurance;

13) insurance sum - the sum of money determined by the insurance contract proceeding from which the size of insurance premium and the amount of insurance payment in case of loss occurrence are established. The insurance sum is determined in national currency of the Kyrgyz Republic;

14) the franchize - part of losses which is determined by the insurance contract, not subject to compensation by the insurer to the insurer or the other person, established in percentage ratio from insurance sum or the amount of harm (damage) or in the fixed size (monetary value).

2. Object of insurance. Insurance risk. Insured event

3. If insurer is the managing company, insurance risk is the risk of emergence of responsibility of managing company to beneficiaries owing to agreement breach of trust management of means of pension accruals.

4. If insurer is the depositary, insurance risk is the risk of emergence of responsibility of depositary to beneficiaries and managing company owing to agreement breach about rendering services of depositary, as a result of mistakes, negligences or intentional illegal actions (failure to act) of employees of the managing company / depositary or intentional illegal actions (failure to act) of other (third) persons and anyway excepting the cases which entailed violation of the insurance contract by the insurer

5. According to the insurance contract of risk of responsibility for violation of the agreement only the risk of responsibility of the insurer can be insured.

6. In case of liability insurance of managing company insured event is the violation by the insurer of the trust management agreement of means of pension accruals caused by the mistakes, negligence or intentional illegal actions (failure to act) of employees of managing company or intentional illegal actions (failure to act) of other (third) persons which happened during the term of the agreement insurance, the entailed emergence of losses at the beneficiary.

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