Bishkek
November 15, 1996, # 60
THE LAW OF THE KYRGYZ REPUBLIC
On business partnerships and companies
(As amended by the Laws of
December 2, 1998 # 148, November 27, 1999 # 131,
January 21, 2002 # 9, February 17, 2003 #38,
March 27, 2003 #64, December 24, 2003 #238, January 27, 2006 #25,
January 19, 2009 #7, March 30, 2009 #105, July 24, 2009 #245,
October 12, 2009 #265)
SECTION 1. GENERAL PROVISIONS
SECTION 2. SPECIFICS OF PARTICULAR TYPES OF BUSINESS PARTNERSHIPS
AND COMPANIES
Chapter 1. General Partnership
Chapter 2. Limited Partnership
Chapter 3. Limited Liability Company
Chapter 4. Joint-Stock Company
SECTION 1
GENERAL PROVISIONS
Article 1. Main provisions on business partnerships and companies
1. Business partnerships and companies are commercial organizations with the charter capital divided into parts (contributions) or shares of participants whose main aim is to make a profit. Property, created from participants' contributions or from their acquisition of shares, as well as property produced or purchased by a business partnership or company during its activities, belongs to it on the basis of ownership right.
2. Business partnerships and companies may be established as general partnerships, limited partnerships, limited liability companies, additional liability companies.
3. Banks, insurance companies, investment companies and funds, and other similar organizations, the activities of which are based on attracting capital and other property of people who are not participants of the partnership or company, are founded and act as a business partnership or company according to the special legislative acts.
(As amended by the Law of the Kyrgyz Republic of December 24, 2003 #238)
Article 2. Legislation on business partnerships and companies
1. Legislation on business partnerships and companies consists of the Constitution of the Kyrgyz Republic, the Civil Code of the Kyrgyz Republic, this Law, laws of the Kyrgyz Republic, and normative acts of the President and Government of the Kyrgyz Republic.
2. If the Kyrgyz Republic is a party of an international agreement which establishes rules other than those contained in this Law, the provisions of the international agreement shall govern.
3. Minimum amount of the charter capital, specifics of its formation and use, the legal regime for property and specifics of activity of management bodies, and restrictions on business activities of banks, insurance companies, joint ventures, and other business partnerships and companies are regulated both by this Law and by the special legislative acts.
(As amended by the Law of the Kyrgyz Republic of November 27, 1999 #131)
Article 3. Participants of business partnerships and companies
1. Participants of general partnerships and general partners in limited partnerships may be individuals and/or legal entities.
2. A citizen may be a participant of only one general partnership or a general partner in one limited partnership.
3. A business partnership shall not have fewer than two participants.
4. Participants of a limited liability company, of an additional liability company, and of a joint stock company, and contributors in a limited partnership may be individual entrepreneurs and/or legal entities, except for bodies of the legislative, executive, and judicial powers.
Legislative acts may set forth instances when executive bodies may be participants of a business partnership specially created for certain purposes.
5. A limited liability company, an additional liability company may be established by one person or consist of one person in case one person acquires all shares of the charter capital of a company.
6. Foreign states, international organizations, foreign legal entities and foreign citizens, as well as stateless persons may participate on the same terms in business partnerships and companies established in accordance with this Law unless otherwise provided by the legislation.
(As amended by the Law of the Kyrgyz Republic of December 24, 2003 #238)
Article 4. Foundation documents of business partnerships and companies. State registration of business partnerships and companies
1. Foundation documents of a business partnership or company are the Foundation agreement and Charter.
2. The foundation document of a business partnership established by one person is its charter.
3. The contents of the foundation agreement of a business partnership or company are a commercial secret. The foundation agreement must be presented to state or other official bodies, as well as to third parties only by a decision of participants of the business partnership or company or in cases provided by the legislative acts.
All interested persons have the right to review the charter of a business partnership or company.
4. The foundation agreement of a business partnership or company shall be signed by all participants.
5. The charter of a business partnership shall be signed by a person designated as the manager by the general meeting of participants of the company.
The charter of a business partnership with participation of one person shall be signed by the participant.
6. (It is excluded in accordance with the Law of the Kyrgyz Republic of March 30, 2009 #105)
7. In the foundation agreement, the participants obligate themselves to establish a business partnership or company, to establish a procedure of activity for its creation and to determine: terms of transfer of the participants' property to the property of the partnership or company; participation in its activities; distribution of profits and losses among participants; management of its activities; withdrawal from it; amount of parts (shares) of each participant; amount, form, timing and procedure of making contributions; liability of participants for violation of obligations to make contributions; and amount and composition of the charter capital.
The foundation agreement may contain any other information provided by the legislation or participants.
8. The charter of a business partnership shall be ratified by participants who are specified in the foundation agreement.
The charter of a business partnership, and also the foundation agreement of a business partnership, shall determine: type of a partnership or company, its name, location, duration of its activities ( if established at the time of its foundation), powers of the head of the company, management and control bodies, their jurisdiction, procedure of formation of its assets, procedure of distributing profits and recovering losses, terms of termination of the activities (restructuring or liquidation) of a partnership or company, and mutual relationships between the partnership or company and its participants.
The charter of a business partnership and the foundation agreement of a business partnership may also contain other provisions set forth by the legislation or by participants.
The charter of a business partnership and the foundation agreement of a business partnership may also contain provisions, defining powers of the general meeting, and executive body of the company on settlement major transactions, and also prohibiting and restricting disposal by the executive body of the company of property, going into the charter capital.
9. In addition to the provisions contained in paragraphs 7 and 8 of this article, the foundation documents shall include provisions set forth by this Law for different types of partnerships and companies.
10. In case terms required by paragraphs 7, 8 and 9 of this article are absent from the foundation documents, the foundation documents shall be deemed invalid at the request of state bodies having this right in accordance with the legislation as well as at the request of other interested persons in a judicial proceeding.
11. After the state registration of a business partnership or company, the participants are referred to as owners of the partnership or company.
12. A list and contents of foundation documents of particular types of commercial organizations founded as business partnerships or companies shall be determined by the legislative acts on these organizations.
13. State registration of business partnerships and companies shall be in accordance with procedures established by the legislation.
The specifics of state registration of business partnerships and companies with participation of foreign states, international organizations, foreign legal entities and foreign citizens, as well as persons without citizenship, shall be determined by the legislation.
(As amended by the Laws of the Kyrgyz Republic of December 2, 1998 #148, December 24, 2003 #238, March 30, 2009 #105, October 12, 2009 #265)
Article 5. Assets of business partnerships and companies
1. The assets of a business partnership or company consist of fixed assets, current assets, and other property, the value of which is reflected in the balance sheet of the partnership or company.
2. Property belongs to a business partnership or company on the basis of ownership right.
3. Sources of formation of the property of a partnership or company are:
1) Contributions of participants to the charter capital;
2) Income derived from its activities;
3) Other sources which are not prohibited by the legislation.
Article 6. The charter capital of a business partnership or company
1. The total of the participants' contributions constitutes the charter capital of the business partnership or company.
2. The contribution of participants to a business partnership or company may consist of money in national currency of the Kyrgyz Republic or, in cases provided by the legislation, in foreign currency, and also buildings, structures, equipment, raw materials, materials, goods, production, securities, other material valuables and alienable ownership rights, including the rights to the results of intellectual activities, the value of which shall be reflected in the balance sheet of the partnership or company.
3. If a participant transfers property to a partnership or company only for use, the amount of the contribution and the respective participant's share shall be determined on the basis of rent for use of the property for the entire period of activity indicated in the foundation documents of the partnership or company or for another period if otherwise not provided for in the foundation documents.
The risk of casual loss or damage to property transferred to a partnership or company is on the participant who transferred the property, unless otherwise provided by the foundation documents.
4. Reduction of the charter capital of a business partnership or company is allowed only after all creditors have been notified, personally, in writing. In this case, creditors have the right to demand early termination or fulfillment of corresponding obligations and compensation for related losses.
5. Reduction of the charter capital below the minimum size provided by this Law and other legislative acts for special types of business partnerships and companies is prohibited.
Reduction of the charter capital in violation of the procedure set forth in paragraphs 4 and 5 of this article is a basis for liquidation of the business partnership or company pursuant to the court decision at the request of interested parties.
Article 7. Participants' shares in the property of a business partnership or company
1. The shares of participants in the property of a business partnership or company are proportional to their contributions to the charter capital.
2. The shares of participants in the property of a business partnership or company shall be calculated in percent form.
3. Participants of a business partnership or company may establish different methods to determine their shares in the property of the partnership or company.
4. Participants of a business partnership or company have the right to encumber or sell their shares of the property of the partnership or company unless otherwise provided by the special legislative acts or the foundation documents.
(As amended by the Law of the Kyrgyz Republic of December 24, 2003 #238)
Article 8. Management of a business partnership or company
1. The supreme body of a business partnership or company is the general meeting (meeting of representatives) of its participants. The activities of a general or limited partnership shall be managed by the general consent of general partners.
2. Executive body (collegial or singly) which carries out everyday management of its activities shall be created in a business partnership or company and shall be subordinate to the general meeting of participants.
3. Collegial bodies may be established as:
1) management (directorate);
2) supervisory authority;
3) other bodies established by a decision of the general meeting (meeting of representatives) of the participants of the business partnership or company.
4. The general meeting of participants may establish the audit committee for the purpose of monitoring the activity of the executive body.
5. The jurisdiction of management bodies of a business partnership or company, the procedure of their election (appointment), as well as the procedure of adoption by them of decisions, is provided by this Law, other legislative acts and the foundation documents.
(It is excluded by the Law of the Kyrgyz Republic of December 24, 2003 #238)
(As amended by the Laws of the Kyrgyz Republic of December 2, 1998 #148, February 17, 2003 #38, December 24, 2003 #238)
Article 8-1. Subsidiary business partnerships and companies, affiliates and representative offices
1. Business partnerships and companies may form subsidiary companies, affiliates, and representative offices within and outside of the Kyrgyz Republic in compliance with the requirements of this Law and other legislative acts, and provisions of the international agreements of the Kyrgyz Republic.
2. A company shall be recognized as a subsidiary, if other parent (main) business partnership or partnership by virtue of its dominant participation in the charter capital thereof, or pursuant to an agreement made by and between them, or otherwise, has an opportunity to determine decisions that such company shall bring forth. A subsidiary company shall not be liable for debts of the parent company.
3. A subsidiary company is a legal entity and shall operate as a business entity on its own; its relationships with a parent (main) company shall be formed based on its charter and the laws of the Kyrgyz Republic.
4. The parent (main) company, which may give instructions binding upon the subsidiary company, shall be liable jointly with the subsidiary company for transactions made by the latter in implementation of instructions of the parent (main) company.
5. Participants in the subsidiary company may require from the parent (main) company to indemnify losses incurred by its fault to the subsidiary company.
6. Affiliates and representative offices are not legal entities, shall be provided with capital and working assets for the account of the property of the parent (main) company, shall operate pursuant to regulations established by it, and perform activities on behalf of the company that has formed them. The parent (main) company shall be liable for activities of its affiliate and representative office.
Heads of affiliates and representative offices shall act under powers of attorney issued by the parent (main) company.
(As amended by the Laws of the Kyrgyz Republic of December 2, 1998 #148)
Article 9. Termination of activities of a business partnership and of a company
1. The activity of a business partnership or company ceases:
1) upon expiration of the term for which it is created;
2) upon achieving the aim for which it is created;
3) by agreement of the participants;
4) upon declaration of the business partnership or company as bankrupt in the established procedure;
5) in other cases provided by this Law, other legislative acts or by the foundation documents of the business partnership or company.
2. The activities of a business partnership or company cease upon its reorganization (merger, consolidation, break-up, or change of type of legal entity) or in case of liquidation.
Upon the reorganization of a business partnership or company, the necessary changes in the foundation documents of the partnership or company and in the Unified State Register of legal entities, affiliates (representative offices) shall be made, and in the case of liquidation - a corresponding notation in the Unified State Register of legal entities, affiliates (representative offices).
3. Business partnerships and companies of one type may be reorganized into business partnerships or companies of another type upon a decision of the general meeting of participants in accordance with the provisions of this Law.
4. Upon reorganization of a general or limited partnership into a limited liability company, or an additional liability company, each general partner remaining as a participant of the limited liability company or additional liability company shall bear joint and several liability with all its property for the obligations of the general or limited partnership alienation by a former general partner of its stock (shares) does not free it from such liability.
5. Liquidation of a business partnership or company is conducted by the liquidation committee appointed by its participants, and in the case of a court ordered bankruptcy, by the liquidation committee appointed by the court.
The liquidation committee shall publish a notice on the forthcoming liquidation of the business partnership or company in accordance and in the time periods set forth in the civil legislation of the Kyrgyz Republic.
6. From the moment of the appointment of the liquidation committee, all authority for the management of a business partnership or company is transferred to it. The liquidation committee shall evaluate current assets of the partnership or company, notify its creditors and satisfy their demands, and prepare the liquidation balance sheet and submit it to participants of the partnership or company.
Creditors' demands shall be satisfied in accordance with the Civil Code of the Kyrgyz Republic, legislation on bankruptcy, and other legislative acts of the Kyrgyz Republic.
7. Remaining property of a business partnership or company, after settlement of wages to employees, including compensatory pay allowed by the legislation to employees of the partnership or company, and fulfillment of obligations to the budget and to creditors of the partnership or company, shall be distributed among participants in proportion to their contributions to the charter capital of the partnership or company or in accordance with other procedures set forth in the foundation documents.
8. (Null and void in accordance with the Law of the Kyrgyz Republic of October 12, 2009 #265)
9. Liquidation is considered complete and a business partnership or company shall cease its activity from the moment of issuance of the registration authority of the relevant order.
(As amended by the Laws of the Kyrgyz Republic of December 24, 2003 #238, October 12, 2009 #265)
SECTION 2
SPECIFICS OF PARTICULAR TYPES OF BUSINESS
PARTNERSHIPS AND COMPANIES
Chapter 1
General partnerships
Article 10. The concept of a general partnership
A general partnership is a business partnership, the participants of which bear joint and several liabilities for all its obligations with all their property in case of insufficiency of the property of the general partnership.
Article 11. Rights and responsibilities of participants of a general partnership
1. Participants of a general partnership have the right to:
1) participate in the management of the general partnership pursuant to the procedures set forth in this Law and in the partnership's foundation documents, and which include the right to participate in the distribution of profits earned by the partnership;
2) receive full information on the activities of the general partnership, including the right to review accounting and other documents of the partnership;
3) receive profit from the activities of the general partnership according to the size of the participant's share in the property of the partnership if otherwise not provided by the foundation documents;
4) withdraw from the general partnership in accordance with the established procedures;
5) in case of liquidation of the general partnership, to receive a part of its property or the value of the same corresponding to the participant's share of the property of the partnership remaining after satisfaction of creditors' demands.
2. Participants of a general partnership may also have other rights provided by this Law, by other legislative acts, and by the foundation documents of the partnership.
3. Waiver of rights provided to participants of a general partnership by this Law or other legislative acts, including by an agreement between the participants of the partnership, is invalid.
4. Participants of a general partnership are obligated to:
1) fulfill the provisions of the foundation documents of the general partnership;
2) participate in the activities of the general partnership in accordance with the procedure set forth in the foundation documents, including to conduct business on behalf of the partnership or to assist it in carrying out its activities;
3) make contributions in accordance with the procedure, form and amount set forth in the foundation documents of the general partnership;
4) refrain from conducting transactions on their own behalf and in their own interests which are similar to those which are areas of the partnership's activities;
5) not disclose information which the partnership considers a commercial secret.
5. Participants of a general partnership may also bear other responsibilities provided by this Law, other legislative acts, and the foundation documents.
6. Agreements among the participants of a general partnership obligating them to undertake actions which are beyond the duties provided by this Law, other legislation and by the foundation documents are invalid.
7. In case a participant of a general partnership does not fulfill obligations set forth in this Law, other legislative acts and the foundation documents, and such non-fulfillment causes harm to the partnership or to its participants, other participants have the right to demand from such a participant compensation for losses, and in case there is substantial harm, to demand its expulsion from the partnership through a judicial proceeding.
Article 12. The charter capital of a general partnership. Shares of participants in the property of a general partnership
1. Participants of a general partnership shall create the charter capital of the partnership.
2. The amount, procedure and period for creation of the charter capital of a general partnership shall be set forth in the partnership's foundation documents.
3. Shares of the participants in the property of a general partnership shall be determined in accordance with the provisions of article 7 of this Law.
Article 13. Implementation of business activities in a general partnership
1. Each participant of a general partnership has the right to act on behalf of the partnership, if the foundation agreement does not state that all its participants shall implement business activities jointly, or that conducting business affairs is delegated to specified participants.
A decision on internal issues of a general partnership shall be made by the general agreement of all participants.
The foundation documents of a general partnership may provide cases when a decision shall be made by a majority vote of participants. Each participant of a general partnership has one vote if the foundation agreement does not set forth another procedure to determine the number of votes of its participants.
The foundation documents may set forth that the number of votes of participants shall be determined in proportion to their share in the partnership's charter capital.
2. Management of a general partnership, taking into consideration the provisions contained in paragraph 1 of this article, may be delegated to the executive body of the general partnership.
Types, procedure for creation, and jurisdiction of management bodies, shall be determined by the foundation documents.
3. A participant of a general partnership does not have the right to conduct transactions in its name, in its own interest, or in the interest of third parties when the transactions are similar to those of the partnership's activities, without the consent of other participants. In case this provision is violated, a partnership may, at its discretion, demand that such a participant either cover the losses the partnership has suffered or transfer all the profits derived from these transactions to the partnership.
4. Management bodies of a general partnership which are authorized to implement the activities of a partnership are obligated to present to any participant upon demand full information on its activities.
5. A participant, whose actions are in the general interest of the partnership but unauthorized and are not ratified by remaining participants, has the right to demand that the partnership reimburse all expenses incurred upon proof that, due to these actions, the partnership has saved or acquired property in excess of the expenses incurred by the partnership.
Article 14. Changes of the composition of participants of a general partnership
1. In case of change in the composition of participants of a general partnership as a result of the participant's withdrawal from the partnership, its declaration as bankrupt, or in case a creditor (creditors) executes against its share in the property of the partnership, or in case of a participant's death or declaration of its death, or acknowledged as missing due to unknown reasons, or is generally or partially incapacitated, the activities of the general partnership shall be terminated unless otherwise provided by the foundation documents of the partnership or otherwise stated by an agreement of remaining participants.
2. In case a general partnership continues its activities, as well as upon transfer of the share of a participant in the property of the partnership to other participants or to third parties, exclusion of a participant from the partnership or acceptance into the partnership of new participants, the partnership shall be re-registered and corresponding amendments shall be introduced to the foundation documents.
Article 15. Withdrawal of a participant from a general partnership
1. A participant of a general partnership has the right to withdraw from it upon notice of its refusal to participate further in the partnership.
2. Notice of refusal to participate in a general partnership must be made by a participant no less than 6 months before its actual withdrawal from the partnership.
3. The foundation documents of a general partnership may provide a different notice period for withdrawal of a participant from a partnership than that provided by this article.
Any agreement among participants of a partnership on denial of the right to withdraw from a partnership is invalid.
Article 16. Consequences of withdrawal of a participant from a general partnership
1. A participant who withdraws from a general partnership shall be paid the value of the partnership's property which is proportional to the amount of the participant's contribution to the charter capital of the partnership.
2. Calculation of the value of the portion of the general partnership's property due to a participant upon its withdrawal shall be determined in accordance with the partnership's balance sheet made as of the date of the participant's withdrawal and it shall be paid within 30 days from the date of the participant's actual withdrawal from the partnership.
3. By agreement between the withdrawing participant and the remaining ones, payment of the value of the portion of the general partnership's property may be made in-kind.
4. A withdrawing participant shall be also paid its portion of profit received by the general partnership in the given year of its withdrawal from the partnership.
5. Upon withdrawal, a partner who has only partially made its contribution to the charter capital of the general partnership shall be paid only the value of the paid portion, unless the foundation documents or an agreement of participants provide otherwise.
6. Property which a withdrawing participant has transferred for use by the general partnership shall be returned without paying any fee unless otherwise provided by the foundation documents of the partnership.
7. After a participant's withdrawal, the shares of remaining participants in the property of the general partnership shall increase in proportion to their original amount determined as of the date of withdrawal, unless otherwise provided by the foundation documents or by an agreement among participants.
(As amended by the Law of the Kyrgyz Republic of December 24, 2003 #238)
Article 17. Transfer of a share (part of a share) of a participant of the general partnership
1. A participant may transfer its share (or portion of share) to other participants of the partnership or to third parties only with the approval of all other participants.
2. Upon transfer of a share to another participant of the partnership or to a third party, there is a simultaneous transfer of all rights and liabilities of a withdrawing participant.
3. In case of the death of a participant of the partnership or of its being declared dead, the legal successor (heir) may join the partnership with the approval of remaining participants.
4. In case a legal successor (heir) declines to join the general partnership or in case the partnership declines to admit the successor (heir), it shall be paid the value of the share in the property of the partnership belonging to the successor as determined on the date of the participant's death or of the declaration of its death in accordance with procedure established by article 16 of this Law.
Article 18. Expulsion of a participant from the general partnership
1. If any participant of the general partnership is declared missing, incapacitated or partially incapacitated, it may be expelled from the partnership by the unanimous decision of remaining participants. The same procedure applies to the expulsion of a participant which is a legal entity and which has begun reorganization procedures pursuant to the court decision.
2. Participants of the general partnership have the right to demand through a judicial proceeding that one or more participants be expelled from the partnership on the basis of the unanimous decision of remaining participants and if there is good cause for the expulsion, such as a gross violation of responsibilities or discovery of incapability to rationally conduct business.
3. A participant dismissed from the general partnership shall be paid for the value of its share of the partnership's property in accordance with the procedure in article 16 of this Law.
4. All losses caused to the partnership by a withdrawing participant may be recovered, by the court decision, from the value of the share of the partnership's property payable to this participant which would be due to it under the withdrawal procedure and if this value is insufficient, then the costs may be recovered against other property belonging to the withdrawing participant.
Article 19. Foreclosure of share of a participant in the general partnership
1. Foreclosure of share of a participant of the general partnership's property is allowed only if its other property is insufficient to recover these debts. Creditors of such a participant have the right to demand the general partnership to assign a share of the partnership's property proportionate to the debtor's contribution to the charter capital of the partnership in accordance with the procedure established by article 16 of this Law in order to execute against this property. The share of property or its value subject to assignment shall be determined according to a balance sheet made at the moment which creditors make their demand for such assignment.
2. Foreclosure of share of a participant of the general partnership's property shall terminate its participation in the partnership and bring the consequences set forth in articles 14, 18, and 23 of this Law.
Article 20. Consequences of Declaring a Participant of the General Partnership Missing Due to Unknown Reasons, Incapacitated or Partially Incapacitated
1. If a participant of the general partnership has been declared missing due to unknown reasons or incapacitated, the trustee of this participant or of this participant's property may take part in the partnership's activities only with the approval of all remaining participants of the partnership.
A similar approval of all participants of the partnership is required for participation in the business of the partnership of a participant declared partially incapacitated.
2. If the trustee of the participant declared missing due to unknown reasons or incapacitated refuses to participate in the activities of the general partnership in the name of the participant or if the partnership denies its participation, the trustee, being the participant's legal representative, shall be paid the value of the share of the partnership's property belonging to the participant in accordance with the procedure set forth in article 16 of this Law.
To the participant declared to have limited legal capacity shall be paid the value of its share of the partnership's property in the event of the refusal of the partnership or if the legal representative of the participant refuses to participate in the activities of the partnership.
Article 21. Admission of new participants to the general partnership
1. Admission of new participants is possible only with the approval of all participants of the general partnership.
2. In case of admission of new participants the following amendments shall be introduced to the foundation documents of the general partnership:
1) new size of shares of participants of the partnership;
2) procedure for management of the partnership;
3) amounts, procedures, periods and methods of making the contribution by a new participant of the partnership;
4) other conditions connected with the admission of a new participant.
Article 22. Distribution of profits and losses of the general partnership
1. Profits and losses of the general partnership shall be distributed among its participants in proportion to the size of their contributions to the charter capital of the partnership, unless otherwise provided by the foundation agreement or by other agreement among participants.
2. Agreements according to which any participant of the general partnership is precluded from participation in distribution of profits and losses are invalid.
Article 23. Liability of participants for debts of the general partnership
1. If the general partnership is being liquidated and its property is not sufficient to cover all its debts, its participants bear joint and several liabilities for uncovered debts with all their property which, in accordance with the legislative acts, may be used to cover these debts.
2. A participant of the general partnership admitted to it after its founding through a transfer or inheritance of a share bears the same liabilities as other participants, including for obligations which occur after its admission to the partnership.
A participant who joins a partnership after its founding as a new participant is responsible only for those obligations which have emerged after its admission to the partnership.
3. A participant who has withdrawn from a general partnership by transferring its share to another participant or to a third party, whose creditor (creditors) has (have) executed against its share of the property of the partnership, or who has been refused by remaining participants to participate in the activities of the partnership, or also a successor (heir) of a deceased or declared deceased participant whose admission to the partnership has been refused by remaining participants, is not responsible for obligations of the partnership.
4. A participant who has fully or partially paid debts of the general partnership has the right to demand contribution for their corresponding share from other participants who are responsible to it in proportion to the amount of their shares in the property of the partnership.
5. Upon termination of the activities of the general partnership, the participants are liable for obligations incurred by it before the date of termination for two years from the termination date.
6. Agreements between participants which change the procedure of their liability established in the Kyrgyz legislation for obligations of the general partnership set forth in this article are invalid.
Article 24. Specifics for termination of activities of the general partnership
1. In addition to reasons indicated in article 9 of this Law, the activities of the general partnership may also be terminated if there remains only one participant.
2. A participant of the general partnership has the right to admit new participants and save the general partnership within 6 months from the date when it became the only participant of the partnership.
3. A participant may, within 6 months from the date when it became the only participant of the general partnership, undertake the following actions:
1) enter into an agreement with contributors on financing the activities carried out by the partnership and establish a limited partnership;
2) found an additional liability company, a limited liability company or a joint stock company in accordance with the requirements of this Law on minimum charter capital for the respective type of a company, or liquidate the partnership.
(As amended by the Law of the Kyrgyz Republic of December 24, 2003 #238)
Chapter 2
Limited partnership
Article 25. The concept of a limited partnership
1. A limited partnership is a business partnership which consists of one or more participants bearing joint additional liability for obligations of the partnership with all their property (general partners), and of one or more participants whose liability is limited by their contribution to the charter capital of the partnership (contributors) and who do not participate in conducting the entrepreneurial activities.
2. The legal status of general partners of a limited partnership and their liability for the obligations of the partnership are determined by the provisions for participants of the general partnership.
3. Requirements provided by this Law for the general partnership (articles 10-24) apply to a limited partnership unless they contradict the provisions contained in this chapter.
Article 26. Rights and responsibilities of contributors of the limited partnership
1. Contributors of the limited partnership have the right to:
1) receive a share of the partnership's profit in proportion to their share of property and charter capital of the partnership in accordance with the procedure set forth in the foundation documents;
2) review annual reports and balance sheets of the partnership as well as verify the accuracy of their contents;
3) transfer their share or a part of their share of the property to another contributor or to a third party in accordance with the procedure set forth in this Law and by the foundation documents of the partnership;
4) withdraw from the partnership in accordance with the procedure set forth in paragraph 2 of article 30 of this Law and by the foundation documents of the partnership.
2. Contributors of a limited partnership may also have other rights provided by this Law, other legislation and the foundation documents of the partnership.
3. Waiver of rights provided by this Law and other legislative acts for contributors of a limited partnership, including when based on an agreement between contributors and general partners, is invalid.
4. Contributors of a limited partnership are obligated to:
1) fulfill the requirements of the foundation documents of the partnership;
2) make their contributions according to the procedure, method, and size set forth in the foundation documents of the partnership;
3) in cases determined by the partnership's foundation documents, provide assistance in implementation of its activities including providing services to the partnership.
5. If a contributor makes a transaction in the interests of the limited partnership without proper authorization, and then if the partnership ratifies the transaction, it shall be fully liable to creditors. In case no such ratification is gained, the contributor is solely liable to a third party with all its property upon which according to the legislation can be foreclosure.
6. Contributors of a limited partnership may also bear other responsibilities provided by this Law, other legislative acts and the foundation documents of the partnership.
7. Agreements between general partners and contributors obliging contributors of the limited partnership to undertake actions which are beyond the scope of their responsibilities provided by this Law, other legislative acts, and the foundation documents, are invalid.
8. If a contributor of a limited partnership does not fulfill its obligations set forth in this Law, other legislative acts and the foundation documents, and which causes harm to the partnership or to its participants, the general partners have the right to demand recovery of damages from the contributor, and in case of substantial harm - its expulsion from the partnership through a judicial proceeding.
Article 27. The charter capital of a limited partnership.
Shares of participants in the property of a limited
partnership
1. The charter capital of a limited partnership consists of contributions of general partners and contributors.
2. The total amount of shares of contributors in the charter capital shall not be more than 50 percent. The foundation documents of a limited partnership may set forth a contributor's responsibility to pay the contributions (portion of the contributions) of general partners.
3. The amount, procedure and terms of creation of the charter capital of a limited partnership shall be determined by the partnership's foundation documents.
4. Shares of the participants in the property of a limited partnership shall be determined in accordance with the procedure established by article 7 of this Law.
Article 28. Contents of foundation documents of the limited partnership
1. The foundation documents of a limited partnership must indicate its firm name, which shall contain either the name of all general partners and the words "limited partnership" or the name of at least one general partner, the words "and company" plus the words "a limited partnership".
2. The foundation documents of a limited partnership shall also contain the information required by paragraphs 7 and 8 of article 4 of this Law.
Article 29. Management of the activity of a limited partnership
Management of business activities in a limited partnership shall be carried out by general partners. The procedure for managing and conducting the business of a limited partnership by its general partners shall be established by them in accordance with the requirements for a general partnership. Contributors may not participate in the management of a limited partnership, nor undertake any actions on its behalf without a corresponding power of attorney. Contributors of a limited partnership may not dispute actions undertaken by general partners in the management of the business activities of the partnership.
Article 30. Changes in the composition of contributors in a limited partnership
1. The transfer by a contributor of its share (part of a share) of the property of a limited partnership to other contributors, general partners or to third parties is allowed only with the approval of all general partners, unless otherwise provided by the foundation documents of the partnership.
Upon the transfer of a share to other contributors, general partners or third parties, there is a simultaneous transfer of all rights and obligations belonging to the contributor withdrawing from the limited partnership.
2. A contributor of a limited partnership has the right to withdraw from it after the end of its fiscal year upon giving notice of its refusal to participate further in the partnership.
Notice of withdrawal must be made by the contributor not less than six months before the end of the fiscal year unless otherwise provided by the foundation documents of a partnership.
Withdrawal of a contributor from a limited partnership causes the consequences provided by article 16 of this Law.
3. The procedure for execution by a creditor (creditors) on the share of a contributor in the property of a limited partnership is determined by article 19 of this Law.
4. If by the unanimous decision of all general partners, the general partners have the right to demand through a judicial proceeding that one or more contributors be dismissed for failure to make their full contributions to the charter capital of the partnership.
A contributor expelled from a limited partnership shall be paid the sum of its contributions to the charter capital of the partnership unless otherwise provided by the foundation documents.
If a contributor has not made any contribution to the charter capital of a limited partnership, its membership in the partnership shall be terminated within 30 days from the date set forth in the partnership's foundation documents for making contributions, unless otherwise provided by the foundation documents of the partnership.
5. In case of termination (liquidation or reorganization) of a legal entity-contributor of a limited partnership, or in case of death or declaration of death of a person-contributor of a partnership, legal successorship shall take place in accordance with the procedure provided by the Civil Code of the Kyrgyz Republic.
Article 31. Consequences of withdrawal of participants from a limited partnership
If a participant (a general partner or a contributor) withdraws from a limited partnership, the shares of other participants in the property of the partnership increase in proportion to their initial size established on the date of the participant's withdrawal, unless otherwise provided by the foundation documents or by an agreement of the participants.
Article 32. Admission of new participants to a limited partnership
1. Admission of new general partners or contributors to a limited partnership may take place only on the basis of the agreement of all general partners.
2. Upon admission of new general partners or contributors, amendments may be introduced to the foundation documents of the limited partnership which relate to:
1) new size of shares of participants in the property of the partnership;
2) changes of the procedure for management of the partnership;
3) size, procedures, terms and methods of making contributions to the charter capital of the partnership by new general partners and contributors;
4) other conditions connected with admission of a new participant.
Article 33. Distribution of profits and losses of a limited partnership
1. Profits and losses of a limited partnership shall be distributed among all its participants in proportion to the size of their shares in the property of the partnership, unless otherwise provided by the partnership's foundation documents or by an agreement of the participants.
2. An agreement to preclude any participant from participating in the distribution of profits or covering losses of a partnership is not permissible.
Article 34. Liability of participants for debts of a limited partnership
1. General partners bear joint and several liabilities with all their property for debts of a limited partnership in accordance with the procedure set forth in article 23 of this Law.
2. Liability of contributors for debts of a limited partnership is limited to the amount of their contributions to the charter capital of the limited partnership.
Article 35. Specifics of termination of activities of a limited partnership
1. The activity of a limited partnership, in addition to reasons indicated in article 9 of this Law, shall be terminated in case of withdrawal from it of all general partners or of all contributors.
A limited partnership may exist as long as at least one general partner and one contributor remain.
2. The remaining general partners in a limited partnership, within six months from the date of withdrawal of the last contributor, or remaining contributors in the partnership, within six months from the date of withdrawal of the last general partner, have the right to admit into the partnership new participants in order to save the partnership. In this case, the general partners or contributors- individuals also have the right to reorganize the limited partnership into a general partnership.
3. In case only general partners or only contributors remain in a limited partnership, they also have the right to undertake actions provided by paragraph 3 of article 24 of this Law.
4. In the liquidation of a limited partnership, contributors have a priority right over the general partners to receive contributions from the property of the partnership which remains after satisfaction of demadns of its creditors. After the creditors are satisfied, the remainder of the limited partnership's property shall be distributed to the general partners and contributors in proportion to their contributions in the property of the partnership, unless another procedure is established by the foundation documents.
Chapter 3
Limited Liability Company
Article 36. The concept of a limited liability company
1. A limited liability company is a business partnership, the participants of which are not liable for its obligations and whose risk of losses connected with the activity of the company is limited to the value of their investment.
Participants of a limited liability company who have only partially made their contributions to the charter capital bear joint and several liabilities for the company's obligations to the extent of value of unpaid contributions of each of participants.
Article 37. Rights and Obligations of Participants of a Limited Liability Company
1. Participants of a limited liability company have the right to:
1) participate in the management of the limited liability company in accordance with the procedure set forth in this Law and in the company's foundation documents, including to participate in distribution of the profits of the company;
2) receive all information on the activity of the limited liability company, including to review accounting and other documents of the limited liability company;
3) receive profit from the activity of the limited liability company according to year-end results in accordance with the size of their share of the property of the limited liability company, unless otherwise provided by the foundation documents;
4) withdraw from the limited liability company in accordance with established procedure;
5) upon liquidation of a limited liability company, to receive a part of its property or its value corresponding to their share of the property of the partnership remaining after satisfaction of creditors' demands.
2. Participants of a limited liability company may also have other rights provided by this Law, other legislative acts, and the foundation documents of the limited liability company.
3. Waiver of rights provided to participants of a limited liability company by this Law and by other legislation, including by an agreement of participants of a limited liability company, is invalid.
4. Participants of a limited liability company are obligated to:
1) fulfill the provisions of the foundation documents of the limited liability company;
2) participate in the activity of the limited liability company in accordance with the procedure set forth in the foundation documents;
3) make contributions in accordance with the procedure, method and size set forth in the foundation documents of the limited liability company;
4) keep confidential information which the limited liability company considers a commercial secret.
5. Participants of a limited liability company may also have other obligations set forth by this Law, the legislative acts, and the foundation documents.
6. In case a participant of a limited liability company does not fulfill its obligations set forth in this Law, other legislative acts, and the foundation documents, and such non-fulfillment causes harm to the limited liability company or to its participants, other participants have the right to demand such a participant to compensate the loss, and in case the harm done is substantial, they may demand expulsion through a judicial proceeding.
Article 38. The charter capital of a limited liability company.
Shares of participants in the property of a limited
liability company
1. Participants of a limited liability company shall create the charter capital, the size of which must be stated in the foundation documents.
2. Defined by participants in the foundation documents the size of the charter capital is paid by participants in full during the first year of the activity of company from the state registration.
In case of noncompliance with the periods of payment, the company must either declare a reduction of its charter capital and register this reduction in accordance with the established procedure or terminate its activities through liquidation.
3. Shares of participants in the property of a limited liability company shall be determined in accordance with the provisions of article 7 of this Law.
4. If, at the end of the second and subsequent fiscal years, the value of net assets of a limited liability company is less than its charter capital, then the company shall, in accordance with requirements provided by paragraph 4 of article 6 of this Law, declare a reduction of its charter capital and register it according to the established procedure.
5. An increase in the charter capital of a limited liability company may be done only after all participants have made their contributions to the company's charter capital as stated in the foundation documents.
6. Participants of a limited liability company may increase or decrease the amount of charter capital.
The decision of participants to change the charter capital shall come into force from the moment of re-registration of the limited liability company.
(As amended by the Laws of the Kyrgyz Republic of December 2, 1998 #148, January 27, 2006 #25, March 30, 2009 #105)
Article 39. Issuance of bonds by a limited liability company
1. The Company may issue bonds in an amount not exceeding the amount of equity, no earlier than the third year of activity, when properly approved by that time two annual balance sheets.
2. The Company may issue bonds with collateral of the security provided by the company itself or provided to the Company for such purposes by third parties. The requirements imposed by paragraph 1 of this article to the size of capital of the company and its operations deadline do not apply.
(As amended by the Law of the Kyrgyz Republic of January 19, 2009 #7)
Article 40. Management of a limited liability company
1. The supreme body of a limited liability company is the general meeting of its participants.
2. A limited liability company shall create its executive body (collegial or (and) one person) which carries out regular management of its activity and which is subordinate to the general meeting of its participants. A non-participant may be elected as the single person executive body.
3. The jurisdiction of management bodies in a limited liability company and the procedure of adopting decisions and acting on behalf of the company shall be determined by this Law, other legislative acts, and the foundation documents.
4. The following issues are in the exclusive jurisdiction of the general meeting of participants of a limited liability company:
1) amendments to the company's charter, including changes of the size of its charter capital;
2) establishment and recall of the company's executive bodies;
3) approval of a company's annual reports and balance sheets and distribution of its profits and losses;
4) adoption of decisions on reorganization or liquidation of the company;
5) election of the audit committee (auditor) of the company.
The charter of a company may also provide that decisions on other such issues are within the exclusive jurisdiction of the general meeting of the company's participants. Issues referred to the exclusive jurisdiction of the general meeting of participants of the company cannot be delegated to the company's executive body for resolution.
5. The number of votes belonging to each participant of a limited liability company shall be in proportion to the participant's share in the company's charter capital, unless otherwise provided by the foundation documents.
6. Decisions at the general meeting of participants are by a simple majority vote of total votes, except that decisions on issues set forth in subparagraphs 1) and 4) of paragraph 4 of this article shall be by two-thirds of the total number of votes.
The foundation documents of a limited liability company may provide a different procedure from that contained in this article for adopting decisions.
7. The participants of a limited liability company have the right to delegate their powers at the general meeting to another participant of the company, unless otherwise set forth in the foundation documents.
8. A representative (permanent or temporary) of a participant of a limited liability company may act on behalf of the participant at a company's general meeting.
9. A participant of a limited liability company may, at any time, terminate the powers of persons indicated in paragraphs 7 and 8 of this article, by giving notice to other participants or the executive bodies about the termination.
Article 41. Control over the activities of the executive body of a limited liability company
1. The general meeting of participants of a limited liability company has the right to establish the audit committee in order to implement control over the activity of the company's executive body.
2. The audit committee of a limited liability company may consist of persons who are authorized, in accordance with legislative acts, to provide auditing services, of independent experts in the field of finance and accounting, and of other persons.
Members of the company's executive bodies may not be members of the audit committee.
3. When conducting an audit of the financial and business activities of the executive body of a limited liability company, the audit committee has the right to demand that members of the executive body submit all necessary materials, accounting and other documents and personal explanations to the audit committee. The audit committee shall present the results of audit to the general meeting of participants of the limited liability company.
4. The audit of financial and business activities of a limited liability company's executive body shall be implemented in accordance with the procedure established by the general meeting of the participants.
5. In cases provided by the legislation or decisions of the general meeting of participants of a limited liability company, the audit committee shall make a statement on the annual balance sheet and other accounts of the company. In this case, the general meeting of participants cannot approve the annual balance sheet and other accounts of the company and distribute its profits and losses without such an opinion.
6. Participants of a limited liability company have the right to set forth other procedures than those in this article for control over the activity of the executive body.
7. In cases set forth in the legislation, the general meeting of participants of a limited liability company is obligated to arrange an independent audit of the company's activities.
8. At the request of any participant of the company, the audit of the activity of the limited liability company must be conducted. In this case, payment for the expense of the audit is shared equally by the participant demanding the audit and the company, unless otherwise set forth in the foundation documents of the company.
9. A limited liability company is not obligated to publish its accounts except for cases provided by the legislation or in the company's foundation documents.
Article 42. Changes of the composition of participants of a limited liability company
In case of a change in the composition of participants of a limited liability company, the corresponding changes must be introduced into the foundation document.
(As amended by the Law of the Kyrgyz Republic of October 12, 2009 #265)
Article 43. Withdrawal of a participant from a limited liability company
1. Participants of a limited liability company have the right to withdraw from it at any time without the consent of other participants. Notice on refusal to participate further in the company must be submitted by a participant not less than one month before actual withdrawal from the company.
The foundation documents of a limited liability company may set forth any other period of notice of withdrawal from the company.
2. A participant withdrawing from a limited liability company shall be paid the value of its share of the company's property, pursuant to the procedure, method, and periods provided by article 16 of this Law.
Article 44. Transfer of a participant's share in the property of a limited liability company
1. A participant of a limited liability company has the right to sell or otherwise transfer its share or a part thereof in the company's property which corresponds to its share in the charter capital of the company to one or several participants of the company.
The share of a participant of a limited liability company may be sold before full contribution to charter capital is made by it or to the extent to which the contribution has been paid, unless otherwise set forth in the foundation documents of the company.
2. The transfer by a participant of its share (or part of share) of the property of a limited liability company to third parties is allowed.
Participants of a limited liability company have a preemptive right to purchase a participant's share (or part of share) in proportion to the size of their shares in the company's property, unless otherwise set forth in a company's charter or by an agreement among its participants.
If participants do not exercise their preemptive right within a month from the date of notice or within any other period set forth in the company's charter or by an agreement among its participants, a participant may transfer its share to a third party.
3. If the charter does not allow transfer of a participant's share (or part of share) to third parties, and other participants of the company have refused to purchase it, the company is obligated to pay its actual market value or to give it in-kind property of the same value.
4. If a share (or part of share) of a participant is acquired by the limited liability company itself, it is obligated to sell it to other participants or to third parties within the term and pursuant to the procedure set forth in the foundation documents of the company or to decrease its charter capital in accordance with to paragraph 4 of article 38 of this Law. During this period of time, distribution of profits, and also voting at the supreme body of the company, shall be made without counting the share acquired by the company.
5. In the event of the death or declaration as dead of a person-participant of a limited liability company, or in the event of the termination of activity (liquidation or reorganization) of a legal entity participant of a limited liability company, their shares in the company's property shall be transferred to the legal successors (heirs).
If a dead person-participant of a limited liability company dies or is declared dead or a legal entity-participant of the company which has terminated its activities has not fully made contributions to the charter capital of the company, their legal successor (heir) shall be paid only the value of the paid in portion of the contribution unless otherwise established by the company's charter.
(As amended by the Law of the Kyrgyz Republic of December 24, 2003 #238)
Article 45. Expulsion of a participant from a limited liability company
1. A participant of a limited liability company may be expelled from the company only by a decision of the court only when caused harm to the company or other its participants.
2. The expulsion of a participant from a limited liability company shall be done according to the procedure set forth in paragraphs 3 and 4 of article 18 of this Law.
(As amended by the Laws of the Kyrgyz Republic of December 2, 1998 #148, July 24, 2009 #245)
Article 46. Foreclosure of the share of a participant in the property of a limited liability company
1. Foreclosure of personal debts on the share of a participant in the property of a limited liability company is allowed only in case the participant's other property is insufficient to cover such debts. Creditors of such a participant have the right to demand from the limited liability company payment of the value of the property of the company which corresponds to the debtor's share in the charter capital or to assign a part of the property of the company in satisfaction of the foreclosure. The part of the company's property appropriated or its value shall be determined in accordance with a balance sheet made on the date on which notice of the demand is made by the creditors.
2. If a participant has not fully made its contribution to the charter capital of the limited liability company, creditors have the right to demand the sum of this contribution unless otherwise provided by the company's charter.
3. Foreclosure of entire share of a participant in the property of a limited liability company shall terminate its participation in the company.
Article 47. Consequences of declaring an individual-participant of a limited liability company missing, legally incapacitated or partially incapacitated
1. If a person-participant of a limited liability company is declared missing or legally incapacitated, its guardian may participate in the activity of the company as the legal representative of this participant, unless otherwise provided by the foundation documents.
2. If a person-participant of a limited liability company has been declared partially incapacitated, it may participate in the activity of the company with the approval of its guardian, unless otherwise provided by the foundation documents.
Article 48. Consequences of withdrawal of participants from a limited liability company
Upon a participant's withdrawal from a limited liability company, the shares of the remaining participants shall increase in proportion to their initial size determined on the date of withdrawal of the participant from the company, unless otherwise provided by foundation documents or by an agreement among the participants of the company.
Article 49. Admission of new participants to a limited liability company
1. Admission of new participants to a limited liability company is allowed only with the approval of all participants, unless otherwise provided by the foundation documents of the company.
2. Upon admission of new participants, the following changes shall be made to the foundation documents of the limited liability company:
1) new size of charter capital and of the shares of participants of the company;
2) amount, procedure, terms and methods of making contributions to the charter capital of the company by new participants;
3) other conditions required for admission of a new participant.
Article 50. Additional contributions of participants of a limited liability company
By a decision of the general meeting of participants of a limited liability company, making additional contributions may be required. A decision on this issue must be adopted by a qualified two thirds majority vote of all participants of the company, unless the provisions of the company's charter require the unanimous decision of all participants. Herewith the participants' shares shall be changed proportionately.
Article 51. Specifics of termination of activity of a limited liability company
1. A limited liability company shall terminate its activities for reasons set forth in article 9 of this Law.
2. A limited liability company may be converted only into a joint stock company.
Chapter 4
Joint-Stock Company
(Null and void in accordance with the Law of the Kyrgyz Republic
of March 27, 2003 #64)
Article 80. Entry into force
1. This Law shall enter into force on January 1, 1997.
2. The Law of the Republic of Kyrgyzstan "On joint-stock companies of the Kyrgyz Republic" of June 26, 1991 # 513-XII, with amendments of December 17, 1992 # 1084-XII, January 11, 1994 # 1367-XII, May 28, 1994 # 1563-XII, November 21 and December 28, 1995 # 38-I shall be null and void as of the moment of entry into force of this Law.
3. The Government of the Kyrgyz Republic shall:
- bring its decisions into compliance with this Law;
- adopt all necessary normative acts on issues related to this Law which are in the jurisdiction of the Government of the Kyrgyz Republic.
President of the Kyrgyz Republic A.Akaev
Adopted by the Legislative Assembly
of the Jogorku Kenesh of the Kyrgyz Republic June 5, 1996
