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LAW OF THE KYRGYZ REPUBLIC

of July 7, 2016 No. 101

About mortgage securities

Accepted by Jogorku Kenesh of the Kyrgyz Republic of June 2, 2016

Chapter 1. General provisions

Article 1. Sphere of regulation

1. This Law governs the relations arising in case of issue and the circulation of mortgage securities, and also in case of obligation fulfillment according to mortgage securities.

2. The relations connected with mortgage mortgages are regulated by this Law only regarding their use as a part of mortgage covering.

Article 2. Basic concepts

For the purposes of this Law the following basic concepts are used:

1) the mortgage security - the bond with mortgage covering or the hypothecation certificate of participation;

2) mortgage covering - the requirements about return of the main amount of debt and about interest payment for credit agreements and loan agreements provided with mortgage certified by mortgage mortgages and also money in national currency of the Kyrgyz Republic and (or) foreign currency, government securities of the Kyrgyz Republic, real estate in the cases established by this Law;

3) the mortgage mortgage - the personalized security certifying the following rights of her legal owner:

a) the right to execution according to the monetary commitments provided with mortgage without submission of other proofs of existence of these obligations;

b) the right to satisfaction of the obligations provided with mortgage at the expense of the property encumbered with mortgage;

4) the hypothecation certificate of participation - the personalized security certifying share of its owner in the right of common property to mortgage covering, the right to demand from the issued her face of proper trust management of mortgage covering, the right to the money received in obligation fulfillment, requirements for which constitute mortgage covering, and also other rights provided by this Law;

5) the bond with mortgage covering - the bond on which obligation fulfillment is provided with pledge of mortgage covering;

6) bond issuing institution with mortgage covering - the person who issued on its own behalf mortgage securities and incurring in this regard all obligations on them;

7) the issuer of hypothecation certificates of participation - the professional participant of the security market having the license for activities for trust management of investment assets, determined by bond issuing institution with mortgage covering as the trustee mortgage covering in case of its bankruptcy.

Chapter 2. Issue and the circulation of bonds with mortgage covering

Article 3. Mortgage covering

1. The mortgage covering is created by bond issuing institution with mortgage covering for each their release separately. The size of mortgage covering for each bond issue with mortgage covering cannot be less than 100 percent from their total nominal value during all term of their address.

The size of mortgage covering is calculated bond issuing institution on the basis of the conclusion of the independent appraiser according to the procedure and the terms established by the Government of the Kyrgyz Republic.

2. The mortgage mortgages included in mortgage covering shall conform to the below-specified requirements:

1) the subject of the agreement of loan (credit agreement) in providing requirements for which there was mortgage, only money shall be;

2) the agreement on mortgage and the mortgage mortgage providing relevant requirements shall not provide possibility of replacement or alienation by the pledger of the pledged real estate which is mortgage subject without the consent of the pawnbroker;

3) the real estate pledged in ensuring execution of the corresponding obligation shall be insured against risk of its loss or damage for benefit of the pawnbroker during all obligation duration. At the same time the insurance sum shall be at least the size (amount) of the requirement provided with mortgage;

4) the main amount of debt according to the obligation provided with mortgage under each agreement or the mortgage shall not exceed 80 percent of the market value (money value) of the real estate which is mortgage subject determined by the independent appraiser.

3. Mortgage mortgages in cases cannot constitute mortgage covering if:

1) they are pledged in providing other obligations or included in structure of mortgage covering according to other mortgage securities;

2) there is non-execution of obligations according to the mortgage mortgage which is expressed in violation of terms of introduction of payments according to it more than for 3 months or more than three times within 12 months following one after another;

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