National Bank of the Kyrgyz Republic

Creation date: 2013-06-14

Bishkek

March 12, 2005 # 49

THE LAW OF THE KYRGYZ REPUBLIC

On the pledge

(As amended by the Laws of the Kyrgyz Republic of August 6, 2007 # 133,

December 17, 2008 # 265, March 30, 2009 #97,

March 30, 2009 #98, May 26, 2009 #173,

June 29, 2009 #195,

Decree of the Interim Government of the Kyrgyz Republic

of July 27, 2010 IG#110,

Laws of the Kyrgyz Republic of July 12, 2011 #93,

October 10, 2012 #170)

SECTION I. GENERAL PROVISIONS

Chapter 1. Main provisions on the pledge

Chapter 2. Registration of the pledge

SECTION II. KINDS OF THE PLEDGE

Chapter 3. Pledge with transfer of the pledged property to the pledgeholder

(pawn)

Chapter 4. Pledge to abandonment of the pledged property from the pledgegiver

Chapter 5. Pledge of rights

SECTION. FORECLOSURE OF THE PLEDGED PROPERTY AND

SALE OF THE COLLATERAL

Chapter 6. Foreclosure of the pledged property

Chapter 7. Sale of the collateral, which is subject to foreclosure

SECTION IV. PROTECTION AGAINST ENCROACHMENT ON THE RIGHTS IN THE PLEDGED PROPERTY

SECTION V. FINAL PROVISIONS

SECTION I

GENERAL PROVISIONS

Chapter 1

Main provisions on the pledge

Article 1. Concept of the pledge and reasons for its creation

1. The pledge - a way to enforce monetary or expressed in monetary obligation secured by property rights or other proprietary rights on the property. Because of the pledge a creditor on the secured liability (the pledgeholder) is entitled in the event of non-fulfillment or improper fulfillment of obligations by the debtor to obtain satisfaction of its demands from the value of the pledged property prior to other creditors of the pledgegiver with the exemptions established by this Law.

2. The pledge occurs on the basis of the law or the agreement concluded between the pledgegiver and the pledgeholder in accordance with the provisions of the Civil Code of the Kyrgyz Republic and the present Law. Such an agreement may be either a separate agreement, or part of the agreement, leading to the emergence of the secured obligations.

The pledge gives the pledgeholder the rights of the pledged property in accordance with this Law. The pledgeholder shall exercise its rights in accordance with terms of the pledge agreement.

3. The pledge may be provided by the actual performance of any obligation under the law between any of the entities referred to in (individuals and / or legal entities, the state).

All subsequent references in this Law on the pledge include mortgage, unless otherwise follows from the nature of the agreement and any reference to the pledgeholder or the pledgegiver is a reference to the pledgegiver or the pledgeholder on the pledge or mortgage.

4. The pledgeholder has the right to get on the same footing satisfaction of indemnity for loss of or damage to the pledged property irrespective of in whose favor it is insured, unless the loss or damage is caused by the fault of the pledgeholder.

Article 2. Legislation on the pledge in the Kyrgyz Republic

1. This Law defines the basic provisions of the pledge.

Relations on the pledge in the Kyrgyz Republic not regulated by this Law are governed by the Civil Code, the Land Code and other laws and normative legal acts of the Kyrgyz Republic. If the pledgegiver is subject to bankruptcy process, the relationships of the pledge are also governed by the Law of the Kyrgyz Republic “On bankruptcy (insolvency)”.

2. If international agreements, which entered into force in accordance with the law stipulates other rules than those stipulated in this Law, the rules of the international agreement are applied.

3. Foreign individuals and legal entities, as well as stateless persons in the relationship on the pledge enjoy the same rights and bear the same responsibilities as individuals and legal entities of the Kyrgyz Republic, taking into account the features provided by the laws of the Kyrgyz Republic.

Article 3. Main concepts

The pledge agreement – an agreement in which one party – the pledgeholder, who is a creditor of the obligation secured by the pledge (the principal obligation) has the right to obtain satisfaction of its monetary demands against the debtor under this obligation of the value of the pledged property or real rights (the collateral) to the other side of the pledgegiver prior to other creditors of the pledgegiver with the exemptions established by this Law.

The pledgegiver - a person who has the right of property or other proprietary right of the collateral. The pledgegiver may be the debtor of the obligation secured by the pledge, or a third party not involved in this undertaking.

The pledgeholder - a person whose demands on the principal obligation are secured by the pledge.

The pledged property - any property referred to in article 4 of this Law, provided as the pledge.

The movable property - things that do not belong to the property, including money and securities.

The immovable property – land plots, subsoil areas, isolated water bodies and everything that is closely associated with the land, that is, objects which movement without disproportionate damage to their purpose is not possible, including forests, perennial plantings, buildings, structures, etc.

Registration of rights to the pledged movable property - a mandatory procedure by which the pledge agreement between the pledgegiver and the pledgeholder, which provides liability in excess of 300 estimate indicators, registered in the Pledge Registration Office.

Registration of rights to the pledged immovable property - a mandatory procedure for registration of rights and encumbrances (restrictions) on immovable property by which the mortgage, arising by law or the rights arising from the pledge agreement of immovable property (mortgage) are registered in the Unified State Register of Rights to Immovable Property, in accordance with the legislation of the Kyrgyz Republic on the state registration of immovable property rights. Registration of the pledge gives the previous pledgeholder having registered the pledge, the prior rights of the creditors (pledgeholders) further pledges the same collateral, as well as with respect to any third parties.

Pledge of the immovable property on the basis of the law (mortgage by operation of law) - the pledge to an acquisition of immovable property with borrowed cash assets (credit) of the bank or other credit organization or target loan funds granted to other legal entities or individuals. The pledgeholder is a bank or other credit organization which granted cash assets (credit), or any other legal entity or individual providing target loan for the purchase of immovable property. To the mortgage by operation of law shall be applied the rules on the pledge arising by virtue of the mortgage agreement, unless the law provides otherwise.

Registered pledge - a pledge that has passed the registration procedure in accordance with Chapter 2 of this Law.

Pledge Registration Office - state registration body, acting in accordance with this law, which are the responsibility of the registration and maintenance of a computerized database of all registered pledges, and other duties specified in this Law.

Unified State Register on pledges - a computer database of pledges that is created and maintained in the Pledge Registration Office in accordance with this Law.

Unified State Register of immovable property rights - a unified state system of registration of rights to immovable property, determined in accordance with the Law of the Kyrgyz Republic “On the State Registration of Rights to Immovable Property”.

(As amended by the Laws of the Kyrgyz Republic of December 17, 2008 #265, March 30, 2009 #98, July 12, 2011 #93)

Article 4. Collateral

1. The collateral may be entitled to property or other proprietary right of any movable or immovable property, rights or things that can be disposed in accordance with the legislation of the Kyrgyz Republic.

2. The collateral may be any movable or immovable property, including any goods, fixed assets and current assets, structures, buildings, including unfinished construction equipment, inventory, finished goods, precious metals without any restrictions, planting, objects of material and spiritual culture of the items, cash (both in national and foreign currency), monetary instruments and their derivatives, certificates of securities and other assets are not withdrawn from civil circulation.

3. The collateral may be owned by the pledgegiver of property rights, including royalties for the use of a property right, the right to receive the money, the right to use, including the rights of the lessee, the right to benefit from things that do not belong to the pledgegiver on the right of ownership, rights to intellectual property, rights to securities in the form of records, active debt or other rights (demands) arising out of agreement obligations. The right for a specified period may be pledged only to its expiration.

4. The collateral can also act as a thing or right which will arise in the future, including the future stocks of output of the pledgegiver, or receivables without any restrictions.

5. The rules on the pledge of immovable property shall be applied to the pledge of use rights to land plot, the rights of the lessee under a lease agreement of such property (the lease), unless otherwise provided by the law and does not contradict the essence of the relationship.

6. Unless otherwise provided in the pledge agreement, the main thing being the collateral is pledged together with its accessories as a whole. Part of the property, section of which in nature is impossible without changing its purpose (indivisible thing), cannot be the subject of separate collateral.

7. Agricultural land plot, formed from land shares among family members are pledged to the procedure established by article 49 of this Law.

8. As the collateral cannot be rights to a personal nature, including the right to receive wages, pensions, or the right to receive personal services.

Pledge of rights to develop and use of mineral deposits and other natural resources owned by the State, in accordance with the Constitution of the Kyrgyz Republic, the Civil Code of the Kyrgyz Republic, the Land Code of the Kyrgyz Republic, the Law of the Kyrgyz Republic “On Subsoil” with the consent of the competent state bodies.

Article 5. Developed land plots

1. Pledge of building, structure or residential house extends to the land on which that building, structure or residential house, as well as on the part of the land that is necessary for use of the pledged object in accordance with its purpose, but according to the pledge agreement, the pledge right may extend to the entire land plot, inseparable from the building, structure or residential house.

2. When the pledge of the land plot on which the building, structure or residential house, which are not the collateral under this agreement, the portion of the land plot on which these are building, structure or residential house and part of the land plot necessary for the use of the object in according to its purpose, must be provided in a separate land plot that is not subject to the collateral.

Article 6. Subject of pledge relations

1. Participants of the pledge relations are citizens, legal entities and the state.

2. Commercial banks and specialized credit institutions undertake operations related to the pledge, in accordance with the legislation of the Kyrgyz Republic and subject to the requirements set by the National Bank of the Kyrgyz Republic.

3. Pledgeholders under the pledge agreement of agricultural land plots are banks and specialized financial organizations that have received a license or certificate of the National Bank of the Kyrgyz Republic.

4. Pledgegivers under the pledge agreement of agricultural land plot are citizens of the Kyrgyz Republic, with the right to ownership of the collateral.

Article 7. Right to grant the property and rights of pledge

1. The pledge can be transferred any property (things) or rights that belong to the pledgegiver on the property right or other proprietary right, with the exemptions established by this Law.

2. In case of pledge rights the pledgegiver may only be a person who owns the pledge right.

A person having the right to use, the right to pledge its right to use, including the right to lease, which may be pledged only with the consent of the lessor, unless the law or agreement provides otherwise.

3. Property owned by the pledgegiver to the right of economic management or operational management, can be pledged with the consent of the owner.

4. It is not allowed pledging of property seized or restricted for civilian purposes, or property, the privatization of which is prohibited or which in accordance with the law provides for the mandatory privatization, as well as the property on which by the law cannot be levied.

5. If the collateral is immovable property, the alienation of which requires the consent or permission of another person or entity, such as consent or authorization is required for the pledge of the property.

6. The property being in joint ownership (without determining the share of each owner in common ownership) can be pledged only with the written consent of all owners or governing body, chosen by owners to manage their property. In case of after the transfer of the property as collateral additional property owners, with the consent of the parties is not required.

7. The co-owners shall have the right to lay its share in the common property without the consent of other owners, if the share of each owner is defined in the common property. In the case of treatment at the request of the pledgeholder foreclosure on this share when it is sold, applied the rules of the Civil Code of the Kyrgyz Republic on the preferential right to purchase a share in the common property and foreclose on a share in the common property.

8. Members of the cooperative or other enterprises with common ownership may individually or collectively, to pledge their rights to the enterprise in accordance with the legislation of the Kyrgyz Republic.

The consent of all members of the Company may decide to pledge all or any part of the property of the enterprise.

9. The owner of an apartment in the apartment house by itself decides on its transfer to the pledge.

Article 8. Right to early fulfillment of obligation

1. In the event of failure of the pledgegiver to fulfill the requirement of the pledgegiver to replace the pledged property in accordance with paragraph 4 of article 31 of this Law, the pledgeholder may demand early performance of the secured obligation and foreclose on the pledged property.

2. The pledgegiver shall have the right at any time to require the early termination of the pawn by the obligation secured by the pawn, unless otherwise provided in the pledge agreement.

3. If the obligation is a monetary obligation, and the pledgegiver – an individual, the pledgegiver may terminate the pawn before the time specified in the pledge agreement, by paying off the debt secured by the pawn, unless otherwise provided by the agreement.

Article 9. Obligations and requirements secured by the pledge

1. The pledge can be set to ensure the obligations under the credit agreement, loan agreement or other monetary or expressed in monetary obligations, including obligations based on the sale, lease, agreement, tort or other agreements with the installments of performance, unless otherwise provided by the law.

Unless otherwise provided in the pledge agreement, the pledge to the pledgegiver provides value of the liability at the time of foreclosure on this pledge, including the unpaid portion of the principal amount, interest, penalties, costs based on the content necessary to preserve the value of the pledged property, compensation for losses caused late performance, as well as the costs of compulsory collection of the pledge.

2. The pledge may provide one or more obligations. Multiple commitments and future obligations secured by the pledge can be identified by the description of obligations included in the pledge.

3. In the case of one of the obligations of the pledge can without remove the prohibition to provide and any subsequent liability if the agreement relates to the same parties and provided for the pledge agreement.

4. The pledge ensures payment of the pledgeholder the principal amount of the credit agreement or other obligation secured by the pledge entirely or in part, under the pledge agreement.

The pledge set in the enforcement of the credit agreement or loan agreement with the condition of interest, also provides a payment to the creditor (the lender) of the interest payable for the use of credit (borrowed money).

5. If the agreement provides otherwise, the pledge also provides payment to the credit of amounts owed to it:

1) in compensation for the costs associated with the maintenance and / or protection of the collateral (taxes, fees, utilities, etc.);

2) in the form of interest for wrongful use of money provided by the principal obligation or the law;

3) in compensation for damages and / or forfeit (fines, penalties) due to non-performance of delay in performance or other improper performance of the principal obligation;

4) in the recovery of legal costs and other expenses caused by the foreclosure on the collateral;

5) in reimbursement for the sale of the collateral.

Article 10. Form and content of the pledge agreement

1. The pledge agreement must be in writing by drafting a document signed by the parties.

2. The pledge agreement must be notarized if the pledge to provide obligations on the agreement which are subject to notarization, and in cases stipulated by the agreement of the parties.

See:

“Certification of pledge agreements of residential house (part of house), apartment and other premises, structures, buildings and other movable property” Instruction on notarial acts of notaries of the Kyrgyz Republic (approved by the Order of the Ministry of Justice of the Kyrgyz Republic of July 7, 2004 # 106)

The pledge agreement of immovable property is concluded and enters into force on the date of its registration in accordance with the legislation of the Kyrgyz Republic on the state registration of rights to immovable property.

3. Failure to comply with the rules on the form of the pledge agreement set out in paragraphs 1 and 2 of this article shall entail the invalidity of the pledge agreement. This agreement is null and void.

4. The pledge agreement must contain:

1) name (full name) and location (address) of the parties;

2) description of the secured obligations, which may be expressed maximum amount of the liability;

3) general description of the collateral sufficient to identify it;

4) right by virtue of which the property that is the collateral owned by the pledgegiver, with details of the title document for immovable property or property subject to registration;

5) (Excluded in accordance with the Law of the Kyrgyz Republic of March 30, 2009 #97)

Parties may provide in the pledge agreement “arbitration clause” to refer to arbitration all or certain disputes which may arise between them in connection with pledge relations. The arbitration agreement can be executed by the separate agreement. Conditions and procedure for the conclusion of the arbitration agreement are provided by the applicable law.

Parties may provide in the pledge agreement other conditions.

5. If the rights of the pledgeholder shall be certified by the instrument of pledge, this should be stated in the pledge agreement.

6. (Null and void in accordance with the Law of the Kyrgyz Republic of March 30, 2009 #97)

Attention!

Due to the fact that the original wording of the Law of the Kyrgyz Republic of March 12, 2005 # 49 “On the pledge” (newspaper “Erkintoo” of March 18, 2005 #23) article 10 of the Kyrgyz and Russian languages have differences, changes in the Kyrgyz language adopted by the Law of the Kyrgyz Republic of August 6, 2007 #133, made in paragraph 7 of this article

8. In cases where liability on the pledge is based on any agreement, should identify the parties of this agreement and the date of its conclusion.

9. If the amount of the obligation secured by the pledge is to be determined in the future, the pledge agreement shall specify the procedure and other necessary conditions of its determination.

10. If the collateral is owned by the pledgegiver the right to lease, the pledge agreement shall specify the leased property and the term of the lease.

(As amended by the Laws of the Kyrgyz Republic of August 6, 2007 #133, March 30, 2009 #97)

Article 11. Further pledge of the pledge property (surcharge)

1. Property pledged under the pledge agreement to secure the fulfillment of one obligation (previous pledge) may be granted as the pledge to secure the performance of another obligation (further pledge).

The order of the pledgeholders is set based on registration data of the Pledge Registration Office and the Unified State Register of immovable property rights since occurrence of the pledge, determined in accordance with the laws of the State Registration or the date of the pledge agreement conclusion in the absence of registration.

2. Further pledge is allowed if it is not prohibited by the previous pledge agreements of the same property, the effect of which has not ceased at the time of conclusion of the further pledge agreement. If the previous pledge agreement provides for the terms on which shall be entered into the further pledge agreement, it must be enclosed in compliance with these conditions.

3. Demands of the further pledgeholder are satisfied from the value of the collateral to the demands of the previous pledgeholder, if the previous pledgeholder having preemptive right, in writing, has not agreed with the further pledgeholder otherwise.

4. The pledgegiver must notify each further pledgeholder the information on all existing pledges of the property, as well as the nature and extent of the obligations secured by these pledges and is liable for damages caused by the pledgeholder as a result of breach of this duty.

5. The pledge, which is registered first, except for pawns, is prioritized to ensure the right of satisfaction of the pledged property in relation to any further registered pledge. Each further pledge is registered in order of priority according to the date and time of registration, respectively, will be the pledge to the next stage of the previously registered pledge.

If the amount of proceeds from the forced sale of the pledged property carried out in accordance with section III of this Law, is not sufficient for the payment of demands of pledgeholders of subsequent queues, their demands are terminated as unsecured, despite the legitimacy of these demands, if the pledge agreement provides otherwise.

6. The further pledgeholder in possession of the pledged property, may sell it by forcing foreclosure in accordance with section 6 of this Law, but if it is not a priority pledgeholder, in accordance with subparagraph 4 of paragraph 1 and paragraph 2 of article 58 of this Law:

1) it shall notify any pledgeholder of the prior pledge agreement on its intention to sell it;

2) on the request of any of the previous pledgeholder it must pass the previous pledgeholder possession of the pledged property;

3) if the pledged property is sold, the pledgeholder is responsible for the sale, must first of all meet the requirements of the priority pledgeholder (s), and only then has the right to use the proceeds to satisfy its demands.

If these demands are not met, the further pledgeholder who sells the property shall be liable to any previous pledgeholder, and the property will not be free of pledges recorded of previous pledgeholders whose demands remain valid with respect to any purchaser of the pledged property.

7. The order of the preemptive right to meet in accordance with this Law may be amended by the written agreement of pledgeholders.

8. The pawn remains valid without registration, despite any subsequent surcharge.

9. The collateral cannot be subject to foreclosure on debts to the state budget of the pledgegiver. The requirement of the tax authorities or court decision on damages is only in the order of priority. Therefore, if the pledge is registered at the time of the court decision, the pledgeholder has the right of any creditor before executing the court's decision.

Article 12. Maintenance and repair of the pledged property

If the pledge agreement provides otherwise, the pledgegiver must maintain the pledged property in good condition and to bear the costs for maintenance and repair (current and capital) that property until the termination of the pledge.

The pledgeholder has the right to verify the existence, status and conditions of the property pledged under the pledge agreement.

Article 13. Insurance

If the pledge agreement entrusts the duty of the pledgegiver to insure the pledged property, the pledge will apply to any rights of the pledgegiver under this insurance policy and the pledgeholder shall have a preferential right to satisfy its secured demand of any subsequent amount of insurance indemnity directly from the insurer without the consent of the pledgegiver.

If the pledge agreement provides otherwise, the pledgegiver shall insure the pledged property for an amount not less than the amount of demand.

The pledgeholder is deprived of the right to satisfaction of its claim from the insurance indemnity if the loss or damage to property occurred to it.

Article 14. Manager of the pledge

1. Pledgeholder may appoint a manager of the pledge of its representative to the enjoyment of all rights of the pledgeholder of the pledged property. Manager of the pledge can be any individual or legal entity.

2. Appointment by the pledgeholder the manager of the pledge is carried out by entering into a separate agreement with it in accordance with the Civil Code of the Kyrgyz Republic (including agency agreement, etc.) and the inclusion of an additional condition on the appointment of the manager of the pledge in the pledge agreement.

3. Information on the appointment or termination of powers of the manager of the pledge should be directed to the pledgegiver in the case of registered pledge provided in the registration office or the local authority of the authorized state body for registration of rights to immovable property, if the collateral is an immovable property.

Article 15. Rights of third persons in relation to the collateral

1. The pledgegiver may dispose of the pledged property by sale, donation (except agricultural land plots), exchange, making it as a contribution to the assets of a partnership or company or as a share contribution to the assets of the cooperative or otherwise, except with the written consent of the pledgeholder, and if this is expressly agreed in the pledge agreement or agreement on the satisfaction of demands of the pledgeholder out of court, at the same time concluded with the pledge agreement or in subsequent agreements of the pledgegiver and the pledgeholder.

The pledgegiver has the right to bequeath to the pledged property. Terms of the pledge agreement or other agreement restricting the right of the pledgegiver is null and void.

Anyone who acquires a pledged property in the pledgegiver and any person who receives a benefit from the transaction are not entitled to the pledged property is not free from the pledge, except as provided in paragraph 2 of this article.

A person who has acquired the pledged property under the pledge agreement as a result of its disposition or succession, including the reorganization of the legal entity or by inheritance, takes the place of the pledgegiver and bears all obligations of the latter under the pledge agreement, including those that are not properly executed by the original pledgegiver, unless otherwise provided by the agreement.

If the property pledged under the pledge agreement, moved to several persons, each of the successors of the original pledgegiver is derived from the pledge relations consequences of failure of obligation secured by the pledge commensurate passed to it part of the pledged property.

If the collateral is indivisible or otherwise supplied to the common property of successors of the pledgegiver, successors become joint creditors.

Pledge of property remains valid regardless of whether the transition of the property to other persons violated any established rules for such a transition.

2. A person (s) acquires a pledged property free of pledge in the following cases:

- if the pledge agreement or in writing for amending directly authorized to dispose of the property is free from pledge either in general or in favor of a particular third party;

- if the pledged property consists of goods in circulation;

- if the pledgegiver activity is retail trade,

third person who purchases the property from the normal retail transaction acquires it free from pledge, except in cases where the purchaser before the sale is notified in writing that the pledgeholder is entitled to exercise its rights of pledge on the goods.

3. Upon the alienation of the property pledged under the pledge agreement, in violation of the provisions of paragraph 1 of this article the pledgeholder shall have the discretion to require:

- that the transaction for alienation of the pledged property as invalid and the application of consequences provided for by the Civil Code of the Kyrgyz Republic;

- early performance of the secured obligations and to foreclose on the pledged property, regardless of who owns it.

4. If it is proved that the purchaser of the property pledged under the pledge agreement, at the time of its acquisition knew or should have known that the property is alienated in violation of the rules of paragraph 1 of this article, such purchaser is within the value of the said property liability for non-secured pledge solidarity with the debtor under this obligation.

If the pledged property is expropriated in violation of the rules of paragraph 1 of this article the pledgegiver, not the debtor by the secured obligation, jointly and severally with the debtor as the responsibility of the purchaser of the property, and the previous pledgegiver.

Article 16. Encumbrance of the pledged property by rights of other persons

1. Unless otherwise provided by the law or by the pledge agreement, the pledgegiver may, without the consent of the pledgeholder, with notice to it to rent the pledged property, transfer it to a temporary free use and by agreement with another person to provide the latter the right of limited use of this property (servitude) under conditions that:

- period for which the property is available for use, does not exceed the period of the secured obligation;

- property provided for use for the purposes of the relevant purpose of the property.

2. In the case of foreclosure by the pledgeholder of the pledged property on the grounds provided by the law or by the pledge agreement, all lease rights and other rights to use that property, provided by the pledgegiver to third parties without the consent of the pledgeholder after the conclusion of the pledge agreement shall be terminated upon the entry into force of the court to foreclose on the property, and if the requirements of the pledgeholder are met without going to court - after 15 days from the date the notice based on conditions on the satisfaction of demands of the pledgeholder out of court under the pledge agreement or an agreement on the satisfaction of demands of the pledgeholder in court, at the same time concluded with the pledge agreement, or in subsequent agreements of the pledgegiver and the pledgeholder.

3. The pledged property may be granted by the pledgegiver to third parties for a period exceeding the term of the secured obligation, or for purposes other than intended purpose of the property, except with the written consent of the pledgeholder.

4. Providing by the pledgegiver the pledged property to another person does not relieve the pledgegiver from its duties under the pledge agreement if the pledge agreement provides otherwise.

Article 17. Consequences of appropriation by the state of the pledged property

1. If the ownership of the pledgegiver on the property that is the collateral is terminated on the grounds and in the manner prescribed by the law, as a result of withdrawal (redemption) of the property for state or public needs, its requisition or nationalization, the pledgegiver is provided other property or appropriate compensation in accordance with the legislation of the Kyrgyz Republic. The pledge is extended to granted return property or the pledgeholder acquires the right to preferential satisfaction of its demands from the amount payable to the pledgegiver.

2. The pledgeholder, whose interests may not be fully protected by the rights provided for in paragraph 1 of this article shall have the right to demand early performance of the secured obligations and enforcement of property provided to the pledgegiver instead seized.

3. In cases where the property that is the collateral is taken from the pledgegiver by the state as a sanction for the commission of crime or any other offense (confiscation), the pledge remains in force, applied the rules of paragraph 9 of article 11 of this Law. However, the pledgeholder, whose interests may not be fully protected by the application of these rules, shall have the right to demand early performance of the secured obligations and enforcement of the confiscated property.

Article 18. Consequences of recovery of the pledged property

In cases where the property that is the collateral is taken from the pledgegiver in accordance with the law on the grounds that in fact the owner of the property is another person (vindication), the pledge in respect of that property shall be terminated. The pledgeholder after the entry into force of a court decision may demand early performance of the obligation that is secured by the pledge.

Article 19. Cession of rights and assignment of debt on the pledge agreement

1. The pledgeholder has the right to assign its rights under the pledge agreement to another person unless the agreement provides otherwise.

2. A person to whom the rights are transferred under the pledge agreement takes the place of the previous pledgeholder under this agreement. Assignment of rights under the pledge agreement must be made in accordance with the rules established by the Civil Code of the Kyrgyz Republic.

3. Assignment of rights of the pledgeholder under the pledge agreement to another person is valid, if the same person is conceded the right of demand against the debtor of the obligation secured by the pledge.

Unless proven otherwise, assignment of rights under the pledge agreement and assignment of rights is on the secured obligation.

4. The debtor has the right to transfer its debt to another person with the consent of the pledgeholder (creditor). Transfer of debt is in accordance with the rules established by the Civil Code of the Kyrgyz Republic.

Chapter 2

Registration of the pledge

Article 20. Registration of the pledge of immovable property

1. State registration of the pledge of immovable property and rights arising from the pledge agreement, on the mortgage, and the mortgage by operation of law, are carried out by the authorized state body for registration of rights to immovable property which is the Unified State Register of Rights to Immovable Property, in accordance with the laws the Kyrgyz Republic on the state registration of immovable property rights.

2. The right arising from the pledge agreement, on the mortgage, and the mortgage by operation of law, shall be registered with the local registration authority at the location of the property.

3. The pledge of an enterprise as a property complex that includes real and personal property must be registered with the authorized state body for registration of rights to immovable property at the location of the collateral.

4. If the pledge of immovable property does not specify a single identification number of immovable property, the pledge must be registered in the Unified State Register of Rights to Immovable Property, provided that the description of the pledged property in the pledge agreement is sufficient to define it.

5. In the case of pledge of an enterprise as a property complex, in accordance with the legislation of the Kyrgyz Republic, if the immovable property of an enterprise that is the collateral, is not described separately, the pledge must be registered in the Unified State Register of Rights to Immovable Property in respect of any immovable property which is registered in the name of the enterprise.

6. State registration of the mortgage by operation of law as an encumbrance of immovable property is made simultaneously with the state registration of ownership of the borrower on the immovable property, unless otherwise provided by the agreement.

(As amended by the Law of the Kyrgyz Republic of March 30, 2009 #98)

Article 21. Registration of the pledge of immovable property

1. In addition to pawns, all pledges of immovable property to ensure commitment in the amount of more than 300 estimate indicators must be registered in the Pledge Registration Office.

Pledges, securing the obligations of up to 300 estimate indicators can be registered in the Pledge Registration Office at the request of participants of secured transactions.

Registration of the pledge is made in order to give to the pledgeholder priority right to satisfy its demands before other creditors who have no prior registered pledge.

2. The pawn shall be effective from the date of transfer of the pledged property in the possession of the pledgeholder or a person authorized by it under the pledge agreement.

3. Registration of the pledge, which acts as monetary instruments, securities, corporate bonds, carry the bodies authorized to maintain the register of holders of such instruments and securities.

4. Pledge of cash assets can only be performed by transferring it into the possession of the pledgeholder. Cash assets are maintained by the pledgeholder in a deposit account in which the interest is paid to the pledgegiver.

5. Registration in the Pledge Registration Office is made at the request of the pledgeholder (creditor) or the pledgegiver (debtor) under the pledge agreement.

6. Registration of pledges of movable property shall be in accordance with the Regulations on the Registration of pledge transactions, approved by the Government of the Kyrgyz Republic.

(As amended by the Laws of the Kyrgyz Republic of December 17, 2008 #265, June 29, 2009 # 195, Decree of the Kyrgyz Republic of July 27, 2010 IG #110, Law of the Kyrgyz Republic of July 12, 2011 #93)

See:

Order of the Ministry of Justice of the Kyrgyz Republic of August 11, 2006 # 116 “On approval of the Regulations on the Registration of pledge transactions of movable property by the pledge registration offices of the Kyrgyz Republic” (null and void);

Order of the Ministry of Justice of the Kyrgyz Republic of June 3, 2009 # 131 “On approval of the Regulations on the Registration of pledge transactions of movable property by the pledge registration offices of the Kyrgyz Republic”

Article 22. Access to the Unified state register on pledges

1. Any person may obtain information from the Unified State Register on pledges of movable property, payment of fees in accordance with the normative legal acts of the Kyrgyz Republic.

2. Any person may obtain information from the Unified State Register of Rights to Immovable Property in accordance with the Law of the Kyrgyz Republic “On the State Registration of Rights to Immovable Property”.

Article 23. Size of fee

The fees for the registration of pledge are established by the Government of the Kyrgyz Republic.

SECTION II

KINDS OF THE PLEDGE

Chapter 3

Pledge with transfer of the pledged object to the pledgeholder (pawn)

Article 24. Concept of pawn

1. The pawn - a type of pledge when the pledged property is transferred from the pledgegiver to the pledgeholder in possession under the pledge agreement.

2. Under an agreement with the pledgeholder and the pledgegiver the pawn can be left with the pledgegiver under lock and seal of the pledgeholder (fixed charge). Individually specific thing may be left in the possession of the pledgegiver with the imposition of signs showing the pawn.

The provisions of this section shall apply to a fixed charge to the extent that their use does not contradict the essence of the relationship of the pledgeholder and the pledgegiver under this pledge.

Article 25. Responsibilities of the pledgeholder under the pawn

When the pawn the pledgeholder, unless otherwise provided by this Law or the agreement shall:

1) take measures under the agreement or reasonably necessary for the physical preservation of the pledged property and the pledgegiver recovers all costs incurred, if it is stipulated in the pledge agreement;

2) immediately notify the pledgegiver of the damage or destruction of the pledged property, and any threat (risk) in respect of the property;

3) report regularly to the pledgegiver for the use of the pledged property;

4) insure the subject of the pawn in the amount of its cost and expense for the benefit of the pledgegiver;

5) properly maintain the pledged property;

6) promptly return the pawn after the secured obligation.

Note. The term “immediately” as used in this Law means the three (3) working days, unless the pledgeholder does not specify a valid reason for the delay, which could not be foreseen at the time of creation of the pledge.

Article 26. Rights of the pledgeholder under the pawn

1. The pledgeholder has the right to use the subject of the pawn only to the extent provided by the pledge agreement, except in cases where the pledged property is cash assets on the bank account, and a bank acts as the pledgeholder. The pledgeholder-bank has the right to use the cash assets on the accounts, if the pledge agreement provides otherwise.

The acquired property benefits are directed primarily to cover the costs of the pledgeholder for maintenance and preservation of the pledged property, and then to payment of interest on the principal amount of the debt.

2. If the pledgegiver knows about the threat of death, injury or decrease the value of the pledged property caused by the nature or composition of the pledged property, and not the fault of the pledgeholder, it shall immediately inform the pledgeholder and requires protection. If such death, injury or decrease in value of the pledged property does not take place due to the fault of the pledgeholder, the pledgeholder may require the replacement of the pawn, as well as compensation for any losses suffered as a result of the pledgeholder.

Article 27. Responsibility of the pledgeholder for loss and damage of the pawn

Unless otherwise provided by the agreement, the pledgeholder under the pawn is liable to the pledgegiver for the loss of or damage to the pledged property, unless it proves that it is not its fault. The extent of damage to be paid to the pledgeholder is determined by calculating the amount by which the decreased market value of the pledged property after loss or damage, compared to the market value of the property at the time of the pawn.

(As amended by the Law of the Kyrgyz Republic of March 30, 2009 #97)

Article 28. Pawn shop

1. Pawn shops specialize in pawn of things as means of providing loans without charging additional obligations to the pledgegiver for any non-payment.

2. Pledge of things in a pawn shop is in accordance with article 341 of the Civil Code of the Kyrgyz Republic.

3. For pawn shops do not apply the provisions of paragraph 7 of article 11 and Chapter 6 of this Law.

4. In order to avoid liability is in accordance with article 27 of this Law, the pawnshop has to prove that the loss or damage to the pledged property are caused by intent or gross negligence of the pledgegiver or force majeure.

5. Secured ticket is issued by the pawnshop, has the power of the pledge agreement.

Article 29. Pledge of cash assets

Pledge of cash assets may only be performed by transferring them into the possession of the pledgeholder. Cash assets provided by the pledgegiver which is not a bank are maintained by the pledgeholder in the deposit account of a bank or notary office. Interest accrued on that amount, owned by the pledgegiver.

A bank, which has the account of the client, shall be entitled to take from this client as a pledge of cash assets in its account to secure bank credits to the client (the pledgegiver), or a third party with the consent of the parties. Such pledge is considered to be the pawn.

Funds of the bank's client (the pledgegiver), being both on the client's account at the bank, can act as the collateral (pawn) to a third party (the pledgeholder) with the consent of the parties.

Funds being the collateral cannot be paid from the client's account in the bank (the pledgegiver) without the consent of the pledgeholder, if the bank informed in writing by the pledgegiver and the pledgeholder for a pledge of funds to the bank account of a client and it is a written confirmation of the bank.

Chapter 4

Pledge to abandonment of the pledged property from the pledgegiver

Article 30. Collateral to the abandonment of the pledged property from the pledgegiver

1. The collateral with leaving thing in the pledgegiver may be movable and immovable property (buildings, structures, apartment in the apartment house, land plots), vehicles and other non-civil turnover thing.

2. (Null and void in accordance with the Law of the Kyrgyz Republic of March 30, 2009 # 97)

(As amended by the Law of the Kyrgyz Republic of March 30, 2009 #97)

Article 31. Rights of the pledgeholder in the pledge with leaving things in the pledgegiver

Unless otherwise provided in the pledge agreement, the pledgeholder of the pledge with leaving things in the pledgegiver has the right to:

1) physical access to the property, as well as any existing documentation on it, necessary to check the size, condition and storage, or use the pledged property;

2) require the cessation of any infringement of the collateral, threatening it death, damage or reducing its cost;

3) require from the pledgegiver taking measures aimed at the protection of the collateral if it is justified;

4) require repair or replacement of the pledged property in case of its damage through no fault of the pledgeholder or the repayment of debt (relevant part of the debt) irrespective of the agreed payment dates;

5) exercise other rights provided by the pledge, and not inconsistent with this Law.

Article 32. Rights of the pledgegiver of the pledge with leaving things in the pledgegiver

Unless otherwise provided in the pledge agreement, the pledgegiver of the pledge with leaving things in the pledgegiver has the right to:

1) own and use the collateral in accordance with its nature and purpose;

2) exercise other rights provided by the pledge agreement.

Article 33. Responsibilities of the pledgegiver of the pledge with leaving things in the pledgegiver

Unless otherwise provided in the pledge agreement, the pledgegiver of the pledge with leaving things it must:

1) take all measures necessary for the preservation of the collateral, including the production of capital and current repairs in accordance with the agreement;

2) insure at its own expense left the collateral in full;

3) in case of death of the collateral to restore or replace the collateral thing of equivalent market value of the collateral below the lost or repay the debt (relevant part of the debt) irrespective of the agreed terms of payment agreed by the parties;

4) notify the pledgeholder for the transfer of the collateral to the lease.

Article 34. Pledge of goods in circulation

1. Goods in circulation are considered inventory, raw materials, semi-finished and finished products, which can be used and replenished over time. In accordance with this article may be pledged such goods, that can be given a general description that can be installed goods. The pledge agreement of goods in circulation must contain a general description of goods in circulation, which are the subject of pledge. In the case of the pledge of enterprise as a property complex it includes a pledge of goods in circulation held by the enterprise (if the pledge agreement provides otherwise), and there is no necessity to describe or define the characteristics of the goods or their individual value and other properties.

2. In case of pledge of goods in circulation the collateral are goods of defined value. Unless otherwise provided in the agreement, the pledgegiver has the right to replace the collateral with the fact that the total value of the goods is not less than that specified in the pledge agreement, except for the case where the reduction of the total collateral value of goods in circulation is allowed proportionate performed part of the obligation secured by the pledge, unless otherwise provided by the agreement.

3. Pledge of goods in circulation is a pledge of goods leaving them with the pledgegiver. In case of pledge of goods in circulation and processing the pledgegiver retains the right to own, use and dispose of the collateral, subject to this chapter.

4. Goods in circulation, purchased by the pledgegiver in accordance with the terms of the pledge agreement of goods in circulation, are the collateral to the moment of their transfer to the pledgegiver on the property right or other proprietary right. Goods that are in circulation cease to be the pledge from the moment they enter the property, the full economic management or operational management of the purchaser.

5. The pledgeholder that provides credit to the pledgegiver for the purchase of goods in circulation and has the registered pledge on such goods until such time as they are subject to collateral has priority over any other pledgeholders who have received notice of the above facts before moving goods in circulation in the property or in the immediate possession of the pledgegiver.

6. In presenting by the pledgeholder to the pledgegiver a notice of foreclosure in accordance with article 58 of this Law, the pledgegiver is prohibited to dispose of any product in circulation, and if the pledgeholder has registered the fact of foreclosure in the Pledge Registration Office, any person receiving the goods in circulation or goods with which they are mixed or have been replaced, receives the property subject to the pledge.

7. Pledge of goods can be carried by the transmission of a title document of the pledgeholder, which is in accordance with the legislation of the Kyrgyz Republic a security. Pledged securities can be transferred to the deposit of a notary office or a bank.

(As amended by the Law of the Kyrgyz Republic of March 30, 2009 #97)

Article 35. Mortgage

1. Mortgage - a way to ensure the performance of a monetary or expressed in monetary obligation secured by property rights or other proprietary rights to immovable property or the pledge, which includes immovable property as part of the collateral, including the pledge of enterprise as a property complex. Features of mortgage of agricultural land plots are regulated by the land legislation of the Kyrgyz Republic.

2. The mortgage agreement is subject to the general rules of the Civil Code of the Kyrgyz Republic on the conclusion of agreements, the Law of the Kyrgyz Republic “On the management of agricultural lands” as well as the provisions of this Law.

Immovable property which is set mortgage remains in the pledgegiver in its possession and use.

Transfer of the mortgaged property in the possession of the pledgeholder does not mean that such pledge is the pawn, but it is subject to compulsory state registration in the authority responsible for the registration of rights to immovable property.

3. The subject of the mortgage could be the right of ownership or other real rights on immovable property:

1) land plots, including agricultural lands;

2) buildings, structures;

3) residential houses and apartments in an apartment house and / or parts of houses and apartments, consisting of one or more separate rooms;

4) cottages, garden houses, garages and other buildings for consumer purposes;

5) other assets, divided by the legislation of the Kyrgyz Republic to the immovable property, except buildings and hydroelectric dams.

4. The provisions of this Law apply to the mortgage of unfinished construction of immovable property, including buildings and structures.

5. Unless otherwise provided by the agreement, the main thing being the subject of the mortgage is pledged along with accessories as a whole.

6. Part of the property, part of which in nature is impossible without changing its properties and purpose (indivisible thing), cannot be the subject of a separate mortgage.

7. The rules on mortgage of immovable property shall be applied to the pledge of land use rights, the rights of the lessee under a lease agreement of such property (the lease), unless otherwise provided by law and does not contradict the essence of the relationship.

Pledge of land plots, enterprises and other immovable property can occur only as long as their turnover is not limited to the legislation of the Kyrgyz Republic.

Article 36. Securities, secured by the pledge

The rights under the secured main obligation on the agreement and the pledge of immovable property (i.e., the mortgage agreement) can be certified by a mortgage, a security. Issue and circulation of mortgage bonds are regulated by the legislation of the Kyrgyz Republic.

Article 37. Pledge of an enterprise

1. When the pledge of an enterprise as a property complex (the enterprise), unless otherwise provided by the law or agreement, the right of pledge applies to all included in its composition of movable and immovable property, tangible and intangible assets, including buildings, structures, equipment, inventory, raw materials, finished products, demands, exclusive rights, including those acquired during the pledge.

The composition of the pledged property belonging to the company and the evaluation of its value determined on the basis of a complete inventory of the property. An inventory, the balance sheet are mandatory attachments to the pledge agreement.

2. Belonging to the pledgegiver the right of perpetual use of the land plot on which the enterprise is located, the right of pledge does not apply. At the foreclosure of such enterprise a person who acquires the property in the property, acquires the right to use the land plot under the same conditions and to the same extent as the previous owner (the pledgegiver) of immovable property.

3. Transfer of the enterprise as collateral shall be allowed with the consent of the owner of the property belonging to the company or its authorized body. The pledge agreement of the enterprise entered into in violation of this requirement shall be void.

Article 38. Rights of the pledgegiver in relation to the pledged enterprise

1. The pledgegiver may, with the consent of the pledgeholder to sell, exchange, lease, grant a loan of property related to the enterprise, pledged, or otherwise dispose of the said property, and to make changes in the composition of the property if it does not lead to reduction of the pledge agreement the total value of the property belonging to the pledged enterprise, and does not violate other terms of the pledge agreement.

2. Without the consent of the pledgeholder the pledgegiver is not entitled to transfer the property belonging to the enterprise, as pledge to make transactions towards the alienation of immovable property belonging to the enterprise, unless otherwise provided by the pledge agreement. The pledgegiver of the enterprise shall, at the request of the pledgeholder to provide a current profit and loss statement and balance sheet of the enterprise, confirmed by the certificate of an independent auditor.

3. At default obligations, secured enterprises, the pledgeholder has the right to take measures to improve the financial situation of the enterprise, provided by the pledge agreement, including the appointment of representatives to the company's management, restriction of the right to dispose of produced goods and other property of the enterprise. If these measures do not give adequate results, the pledgeholder has the right to foreclose on the pledged enterprise.

Article 39. Powers of the manager of an enterprise

1. The purpose of activity of the manager of the enterprise is the management by the enterprise at the time of preparation for the sale, and then the organization of sale of the enterprise as a whole as a going concern or some of its assets, or separation on a variety of parts, some of which may be sold as a functioning production process.

2. Following the appointment of the manager of the enterprise, it takes care of all the rights laid down by the management of the pledged enterprise and acquires the powers of control of the pledgegiver - the owner of the enterprise. These powers are not ceased when excited with respect to the pledgegiver of the bankruptcy process and the appointment of an administrator. All the powers of other entities to manage the pledged enterprise arising under agreements with the owner of the pledged enterprise or other relationship with the enterprise be terminated after delivery of the notice on the initiation of foreclosure on the collateral out of court, which contains information on the appointment of a manager of the enterprise or from the time as defined in the agreement on the satisfaction of the pledgeholder out of court, or on the date indicated by the court.

Any person whose authority to manage are terminated thus they are obliged to provide all necessary information and assistance to the manager of the enterprise for the performance of its duties.

Manager of the enterprise is not liable for debts of the enterprise, with the exception of those which it creates during the management of the enterprise.

3. At the initiation of bankruptcy proceedings against the pledged enterprise after the appointment of the manager of the enterprise, the latter may act as special administrator of the enterprise.

Article 40. Application of rules on the pledge of residential houses and apartments

1. The rules contained in articles 40-48, 65 of this Law shall be applied to the pledge held for permanent residential houses and apartments in apartment houses, beneficially owned by the citizens.

2. Pledge of residential houses and apartments owned by the state or municipal property, as well as office premises is not allowed.

3. Hotels, holiday homes, cottages, garden houses and other buildings and facilities are not designed for permanent residence may be pledged on the same basis.

In the case when the collateral is part of a residential house or apartment, consisting of one or more separate rooms, to such pledge shall be applied the rules of articles 40-48, 65 of this Law.

4. Unless otherwise provided in the pledge agreement, the pledgegiver has the right to pass an employer located in a building free apartment only with the consent of the pledgeholder.

5. If the agreement provides otherwise, the pledge of residential house or a house under construction the pledge right applies to the land.

Article 41. Pledge of apartments in the apartment house

With the pledge of an apartment owned by the pledgegiver on the property right in an apartment house, parts of which are jointly owned by the pledgegiver and others considered to be pledged, along with the apartment, the corresponding share in the rights to common property and land plot.

Article 42. Pledge of residential houses in the course of building

In the construction of a residential building in the pledge agreement may provide for the maintenance of obligations of land plot, apartments, under construction and owned by the pledgegiver materials and equipment prepared for construction.

Article 42-1. Mortgage of residential houses and apartments, purchased at the expense of the credit of a bank or other credit organization or target loan of other individual or legal entity

Unless otherwise provided by the agreement, a residential house or an apartment, purchased or constructed with borrowed money (credit) from banks or other credit organization or a target loan granted to the other individuals or legal entity shall be deemed encumbered by mortgage upon the state registration of ownership of the borrower to a residential house or apartment. In this case, the pledgeholder is a bank or other credit organization or a legal entity or individual that provides a credit or target loan for the purchase or construction of a residential house or apartment.

(As amended by the Law of the Kyrgyz Republic of March 30, 2009 #98)

Article 43. Loan and savings building cashes

1. Loan and savings building cash is a specialized credit institution, which aims at accumulation of cash assets of participants in the special housing savings deposits and granting credits to participants for individual construction or purchase of residential houses or apartments.

2. Loan and savings building cash is an independent form of a legal entity, a non-profit organization and receives the status of a legal entity from the moment of state registration in accordance with the legislation of the Kyrgyz Republic.

3. Loan and savings building cash is working to raise funds of its participants in the housing and savings deposits and granting housing credits to its participants on terms of maturity, repayment and interest payment.

4. (Null and void in accordance with the Law of the Kyrgyz Republic of October 10, 2012 #170)

5. Loan and savings building cash provides its participants with target credits for the construction and / or purchase of residential house (apartment) due to the accumulated savings deposits of housing.

6. Capital of the Loan and savings building cash consists from paid for housing savings deposits and reserves. Capital must be formed at the expense of funds of participants.

7. (Null and void in accordance with the law of the Kyrgyz Republic of October 10, 2012 #170)

(As amended by the Law of the Kyrgyz Republic of October 10, 2012 #170)

Article 44. State specialized institution on the mortgage

1. State specialized mortgage institution - a state body that operates the debt securities market, stimulates circulation debt obligations on the mortgage credit, and provides a mechanism for refinancing residential mortgage credit.

2. State specialized institution on the mortgage is a legal entity which is regulated by this Law and the relevant normative legal acts of the Kyrgyz Republic.

3. State specialized institution on the mortgage has the right to acquire residential mortgage debt obligations with a view to the issue of government debt mortgage securities guaranteed by the Government of the Kyrgyz Republic.

Issue and circulation of mortgage debt obligations are regulated by the law.

4. The acquisition of mortgage debt obligations is executed by the agreement in accordance with the legislation of the Kyrgyz Republic. Executing the agreement the state specialized institution on the mortgage can further assessment of the mortgaged property by an independent appraiser.

5. On the basis of repurchased mortgage debt obligations the state specialized agency on the mortgage issues freely marketable government debt mortgage securities.

Specialized agency of the State is obliged to redeem the mortgage government debt mortgage-backed securities in the period to maturity, unless otherwise provided by law or agreement.

6. The Government of the Kyrgyz Republic provides the state specialized institution on the mortgage cash assets to purchase mortgage debt obligations and / or state debt of mortgage securities in the amount specified in the law on budget for the year.

7. Between the state specialized institution on the mortgage and commercial bank may be executed an agreement to service the mortgage credit, in which a commercial bank acts as the fiscal agent of the state body on the mortgage related to banking services of the mortgage credit.

Article 45. Participation of local bodies in the mortgage credit

Local governments within their own budgets can create special bodies to support and develop the system of mortgage credit in the region. The activities of such bodies are carried out with the specifications defined in this Law.

Local governments can act as issuers of housing certificates.

Article 46. Characteristics of the housing credit

1. Housing credits for the construction or purchase of housing may be provided by banks, specialized credit institutions and / or other parties. Conditions and procedure for granting housing credits are determined by the parties individually, taking into account current practices and in compliance with the legislation of the Kyrgyz Republic.

2. Credit for construction of a residential house is available under the terms of the credit agreement.

Article 47. Housing certificates

1. Housing certificate is a security that certifies the right of owners to purchase a certain total area of housing, under the conditions defined in the prospectus. The order of production and circulation of housing certificates are carried out in accordance with the law.

2. Housing certificate confirms that the owner (legal entity or individual acquiring the certificate) funds to build a specific public housing area, the size of which does not change during the specified period of housing certificates.

The owner of housing certificates has the right to the purchase of residential premise (house, apartment) in the event that it owns a certain number of certificates of series, set in the prospectus.

A person, who issued the housing certificates, allows the acquisition of the residential premise (house, apartment).

3. The issuer of housing certificates - a legal entity registered in the territory of the Kyrgyz Republic, which has the rights of ownership or other legally allotted (acquired) in due course land plot for construction (reconstruction) of property which is the object of raising funds, as well as a legal entity, which in due order passed all of the above rights, shall issue certificates of housing and a commitment by them to their owners.

4. Issue of housing certificates must be provided by the rights of holders of these securities guaranteed by the acquisition of a certain total area, the size of which does not change during the specified period of housing certificates.

5. Guarantors of issue of housing certificates may be - a bank, other credit institution, insurance company, other legal entity (commercial organization), local governments, which are in accordance with the agreement concluded with the issuer, assume the obligations of the issuer to the holders of housing certificates for their redemption in the event of default by the issuer.

6. The advertising of housing certificates issuer shall specify in the advertisement information about the date of registration of the prospectus and the location of the object of raising funds through the issue of housing certificates.

7. The authorized state body for the securities market regulates issuers of housing certificates in the manner and in the cases provided for by the legislation of the Kyrgyz Republic.

Article 48. State guarantees for participants of the mortgage

1. Taxation of amounts allocated by individuals on payment of principal and interest on residential mortgage credits for the purpose of Loan and savings building cashes intended for the construction and / or purchase of housing as well as intended for the purchase of housing certificates, in accordance with the tax legislation of the Kyrgyz Republic.

2. State or local governments may provide some benefits associated with the repayment of housing credits from the budget, in accordance with the legislation of the Kyrgyz Republic.

Article 49. Land plots, which can be the collateral

1. Under a pledge agreement may be pledged land plots owned by citizens, legal entities, as well as the right to use land plots subject to limitations established by the land legislation of the Kyrgyz Republic.

2. Land plots that are pledged should be isolated in a separate land plot.

By the agreement of pledge of land plot shall be applied as a mandatory annex a copy of the plan (drawing boundaries) of the land plot issued by the appropriate authorized state body.

3. When common share or common ownership of land referred to in paragraph 1 of this article, the pledge can only be set on belonging to a citizen or legal entity the land plot allocated in a separate area, which is in the common share or common property, in accordance with the rules of the Civil Code of the Kyrgyz Republic, taking into account the peculiarities of the pledge of land plots and agricultural land shares under the land legislation of the Kyrgyz Republic.

Article 50. Pledge of the land plot, where situated buildings or constructions

1. When the pledge of land plots the pledge right applies to buildings, structures or residential buildings, located on the land plot at the time of the pledge agreement, including construction in progress.

2. When the pledge of the land plot on which the buildings, structures or residential constructions, some of the land plot occupied by these objects, and part of the land plot necessary for their use, must be provided in a separate land plot. In this case, the remainder of the land plot pledge does not apply.

Article 51. Improvement by the pledgegiver of buildings and constructions on the pledged land plot

On the land plot, pledged under the pledge agreement, the pledgegiver has the right to build in due course buildings and facilities are not subject to the rights of the pledgeholder, if this right is provided for by the pledge agreement.

If the construction of the pledgegiver of the pledged land plot the building or structure results in or may result in the deterioration of the security provided to the pledgeholder the pledge of this plot, the pledgeholder has the right to require changes in the terms of the pledge agreement, including, if necessary, through the distribution of the pledge on the building or structure erected.

Chapter 5

Pledge of rights

Article 52. Pledge of rights

1. In the case when the collateral is debt, owed to the pledgegiver, the pledgegiver shall not, except as required by legislation to notify its debtor, its debt transferred to the pledge. The debtor, the debt is pledged to repay it by making payments to the pledgegiver or the person who will appoint the pledgegiver unless the pledgegiver or pledgeholder does not notify the debtor of the existence of the pledge. After delivery of such notice to the debtor, the pledgeholder may direct to pursue the debtor to pledge on debt owed to the pledgegiver, and pledged debt can be repaid only by paying the pledgeholder or a person designated by the pledgeholder.

Pledge of the enterprise as a property complex includes the pledge of all the rights belonging to the enterprise, unless otherwise stated in the pledge agreement.

2. If the collateral is an agreement obligation to a third party before the pledgegiver is not a debt, such an agreement obligation is satisfied by the obliged party pursuant to an agreement with the pledgegiver. In this case, the pledgeholder may obtain satisfaction after when any value on the agreement into the possession of the pledgegiver.

The pledgeholder may obtain satisfaction directly from the obliged party under an agreement obligation only after the pledgeholder will send a copy of the notice for enforcement of the obliged party, pointing out that the pledgeholder shall, in accordance with this Law, the right of enforcement of agreement obligations of the parties will commit to the pledgegiver.

(As amended by the Law of the Kyrgyz Republic of March 30, 2009 #97)

Article 53. Responsibilities of the pledgegiver in the pledge of rights

Unless otherwise provided in the pledge agreement, when the pledge of rights the pledgegiver:

1) not to transfer the pledged right;

2) not to implement actions leading to termination of the pledged right or decrease its value;

3) to take the necessary steps to ensure the validity of the pledged right;

4) to take all measures to protect the pledged right against infringement by third parties;

5) to inform the pledgeholder of any changes to the pledged right, its violations by third parties and the claims of third parties on this right.

Article 54. Rights of the pledgeholder in the pledge of rights

Unless otherwise provided by the agreement, when the pledge of rights the pledgeholder has the right to:

1) regardless of the maturity of the obligation secured by the pledge, go to the court to transfer to itself the pledge right, if the pledgegiver violated the obligations provided for in article 53 of this Law;

2) in the event of default by the pledgegiver requirements under subparagraph 4 of article 53 of this Law, independently take action to protect the pledged rights from abuses by third parties;

3) act as a third party in a case in which the claim is considered on the pledged right.

SECTION III

FORECLOSURE OF THE PLEDGED PROPERTY AND

SALE OF THE COLLATERAL

Chapter 6

Foreclosure of the pledged property

Article 55. Grounds for foreclosure on the collateral

1. Foreclose on the collateral to satisfy the demands of the pledgeholder (creditor) referred to in this Law may be paid in the event of default and / or inadequate performance by the debtor of the secured obligation, in particular:

1) violation of the term of payment obligations;

2) default by the debtor on the early performance of the secured obligation in the cases provided for in article 56 of this Law.

2. Foreclosure of the pledged property shall be as prescribed by the pledge agreement or other agreement establishing the mortgage by operation of law, unless otherwise provided in this Law. In case of difference terms of the pledge agreement or other agreement establishing the mortgage by operation of law, and conditions of the secured obligation in respect of the demands that can be met by foreclosure of the pledged property, preference is given to the terms of the pledge agreement or other agreement establishing a mortgage in force law.

(As amended by the Law of the Kyrgyz Republic of March 30, 2009 #98)

Article 56. Foreclosure of the collateral in dissatisfaction of requirements on early fulfillment of the obligation secured by the pledge

The pledgeholder has the right to demand early performance of the secured obligations, and if the demand is not satisfied, to foreclose on the collateral in the event of:

1) violation by the pledgegiver of the rules on the disposal of the collateral or if the collateral is dropped from the possession of the pledgegiver;

2) violation of the rules of the pledgegiver for repair or replacement of the collateral;

3) loss of the collateral due to circumstances for which the pledgegiver is not responsible if the pledgegiver does not use the right of replacement or repair of the collateral;

4) violation of the rules of the pledgegiver on further pledge;

5) violation by the pledgegiver obligations to maintain the safety of the collateral;

6) breach by the pledgegiver of duties to prevent the pledgeholder on rights of third parties on the collateral;

7) in other cases provided by the law or by the pledge agreement or other agreement establishing the pledge.

(As amended by the Law of the Kyrgyz Republic of March 30, 2009 #98)

Article 57. Foreclosure of the collateral on demands secured by previous or further pledge

1. In the case of foreclosure on the collateral for demands secured by further pledge, at the same time may be foreclosure on the collateral and demands secured by the previous pledge, the deadline for presentation to the penalty which has not yet come.

If the pledgeholder in the prior pledge agreement does not exercise that right, the collateral which is foreclosure on demands secured by the further pledge then transfers to the purchaser encumbered by the previous pledge.

2. In the case of foreclosure on the collateral for demands secured by the previous pledge, allowed the simultaneous foreclosure of the collateral and demands secured by the further pledge, the deadline for presentation to the penalty which has not yet come.

Demands secured by the previous pledge, not subject to early satisfaction if to satisfy demands secured by the previous pledge, it is enough to take possession of a part of the collateral.

3. If you foreclose on the collateral demands of previous the pledgeholder under the previous pledge agreement are satisfied from the value of the collateral after the satisfaction of its demands by the pledgeholder under the previous pledge agreement.

4. The provisions of this article shall not apply if the pledgeholder under the previous and further pledges are one and the same person.

In this case, the demands provided by each of the pledges are satisfied in the order of priority, the relevant terms of performance of the obligations, unless the law or the agreement of parties provides otherwise.

Article 58. Procedure of foreclosure of the collateral

1. To excite the foreclosure on the collateral out of court or judicial the pledgeholder must:

1) prepare a notification to start the process of foreclosure on the collateral;

2) if the collateral subject to registration, register the notice in the body / bodies of state registration of the pledge;

3) give written notice to the debtor (pledgegiver and, if it is at the same time is not the debtor). If impossibility of direct sending the notice shall be delivered to the debtor (and the pledgegiver) by registered mail to the addresses specified in the agreement, and / or sends a message by fax;

4) send a copy of the notice to pledgeholders preceding and forth pledge, except in cases where pledgeholders are one person.

2. The notice shall be in writing and shall contain:

1) description of the pledge agreement, liabilities and pledged assets in respect of which the procedure of foreclosure, a brief description of the circumstances satisfy the obligation secured by the pledge, by reason of default of which is excited by the procedure of foreclosure;

2) proposal for voluntary execution of obligations, including the payment of the amounts of all debts over a period which may not be less than 15 days from the date of delivery of the pledgegiver (debtor) notice;

3) warning of a possible beginning of the foreclosure on the collateral;

4) with a reported pledge - registration number and date of registration;

5) other information that, in the opinion of the pledgeholder, is necessary;

6) date of notification and the signature of the pledgeholder or its authorized representative, and in the case of foreclosure of pledged enterprise - signature of the first stage of the pledgeholder in the pledge of the enterprise, as well as the signature and the data assigned to a manager of the enterprise.

Article 59. Action of the pledgegiver (debtor) after receipt of

notice to initiate the procedure of foreclosure of the collateral

1. The pledgegiver (debtor) in accordance with subparagraph 2 of paragraph 2 of article 58 of this Law shall satisfy the demands of the pledgeholder specified in the notice, and terminate the circumstances which are the basis for the notice. In this case, the excitation process of foreclosure on the collateral is terminated in accordance with this Law.

2. Upon receipt of the notice the pledgegiver (debtor) has the right to:

1) enter into an agreement with the pledgeholder to satisfy its demands secured by the pledge out of court;

See: Standard Agreement on the satisfaction of demands of the pledgeholder out of court, approved by the Ministry of Justice of the Kyrgyz Republic of April 28, 2005 # 44

2) apply to the court to conduct the foreclosure and sale of collateral in court if non-judicial foreclosure of the property is not provided by the pledge agreement and / or agreement, or to satisfy the demands of the arbitration agreement;

3) when there is a dispute to take steps to resolve it without going to court or ask the court to revoke the notice by the pledgeholder.

Article 60. Non-judicial procedure of foreclosure of the collateral

1.Foreclosure on the collateral out of court on the basis of:

1) pledge agreement or agreements containing provisions on the order of foreclosure on the collateral out of court in respect of movable property;

notarized agreement between the pledgeholder and the pledgegiver of the foreclosure on the collateral out of court in respect of immovable property concluded simultaneously with the pledge agreement or other agreement establishing the mortgage by operation of law, and is an integral part of, or entered into during the term of the pledge agreement or other agreement establishing a mortgage by operation of law;

See: Standard Agreement on the satisfaction of demands of the pledgeholder out of court, approved by the Ministry of Justice of the Kyrgyz Republic of April 28, 2005 #44

2) executive endorsement of a notary in the presence of the pledge agreement or other agreement that establishes the mortgage by operation of law, the rights of the pledgeholder to the foreclosure on the collateral out of court.

2. The pledgeholder has the right to apply for execution of executive endorsement of a notary after drawing notice in accordance with article 58 of this Law in the absence of intent of the pledgegiver (debtor) to meet the demands of the pledgeholder.

Executive endorsement of a notary commits to the procedure established by the legislation of the Kyrgyz Republic.

3. Foreclosure on the collateral under the pledge agreement or an agreement on the satisfaction of demands of the pledgeholder in non-judicial procedure is made after the notification provided for in article 58 of this Law.

4. The agreement on the satisfaction of demands of the pledgeholder under the further pledge agreement is valid if it has been made with the participation of the pledgeholders under the previous pledge agreement. The agreement on the satisfaction of demands of the pledgeholder in non-judicial procedure may be held invalid by a court at the claim of the person whose rights have been violated by this agreement.

5. If the agreement (contract) concluded between the pledgegiver and the pledgeholder, installed non-judicial foreclosure procedure on the collateral, neither party can unilaterally change the order of foreclosure or otherwise refuse to the agreement (contract) of the order of foreclosure on collateral.

In this case, after the cause of foreclosure on the collateral the parties may provide some additional agreement other than originally specified by the pledge agreement and / or agreement, the order of non-judicial foreclosure on the collateral.

6. If the amount received for sale of the pledged property is insufficient to cover the demands of the pledgeholder, it is entitled, in the absence of any indication in the agreement, to receive the remaining amount of the other assets of the debtor, not taking advantage, based on the pledge.

(As amended by the Law of the Kyrgyz Republic of March 30, 2009 #98)

Article 61. Transfer to the pledgeholder the collateral, subject to the non-judicial foreclosure procedure

1. In the cases referred to in paragraph 1 of article 60 of this Law, the pledgegiver must provide the transfer of the pledgeholder or its authorized representative, including the organizer of bidding, the collateral, unless otherwise provided by agreement of the parties.

2. In the event that the transfer of the collateral prevents a third party, the pledgegiver, the pledgeholder or their authorized representatives shall have the right to take any legal steps necessary to transfer collateral.

3. On receipt of the collateral and its implementation until the pledgeholder has the right over the collateral, established by the law or agreement, including the right to improve the collateral through cleaning, renovation, repair, etc. or to reduce the costs of its sale.

The pledgeholder has the responsibilities in relation to the collateral, the law or agreement, including the obligation to ensure its safety.

4. After the pledgeholder notice of forced foreclosure, it or its representative shall acquire the right to immediate entry into the possession of the relevant collateral.

5. After taking possession of the pledged property before the sale and foreclosure by the pledgeholder has the rights and obligations with respect to the pledged property, established by this Law in respect of the pawn. The pledgeholder may take steps to increase the selling price of the property through improvements in the form of cleaning, renovation, repair and completion of construction or reduction of selling expenses. The pledgeholder may take steps to protect the collateral at any time by agreement with the pledgegiver. At the request of the pledgeholder, made after the registration of the notice of the enforcement proceedings, the court may decide on other measures to protect the pledged property.

6. After the time limit specified in subparagraph 2 of paragraph 2 of article 58 of this Law, the pledgegiver cannot change the agreement obligation or to exercise their rights in relation to agreement obligations without the consent of the pledgeholder. In the case where the pledgeholder exercises its rights in respect of the pledgegiver in relation to its agreement obligations to pledge, the pledgeholder is obliged to comply with any corresponding obligation of the pledgegiver, arising out of the same agreement obligations.

7. In the event of a conflict between two or more pledgeholders that excite the foreclosure procedure in respect of the same pledged property, the right to conduct the foreclosure, including the sale, and the right to own and protect the pledged property before the sale, belongs to the pledgeholder, which has a priority right in accordance with this Law, except when appointed manager of the enterprise for management by the pledged enterprise as a going concern, if for other obligations pledged the individual assets of the enterprise. The pledgeholder who exacts pledged enterprise as a going concern, it may carry out the procedure of foreclosure of the pledged enterprise in relation to all the property, provided that the pledgeholder of the enterprise provides an advantage in obtaining payment from the proceeds of such foreclosure by the pledgeholder of the first stage.

Article 62. Legal process of the foreclosure on the collateral

1. Foreclosure on the collateral may be produced in court on the basis of the decision of the court, if the pledge agreement does not provide the possibility of foreclosure on the collateral in non-judicial procedure and if the pledged property is related to the procedure established by the law to the property having significant historical, artistic or other cultural value to the community.

2. The pledgeholder (creditor) has the right to bring an action to foreclose on the collateral in court after the expiry of the period specified in subparagraph 2 of paragraph 2 of article 58 of this Law.

The pledgegiver (debtor) has the right to sue to foreclose on the collateral in the court in the case provided for in subparagraph 2 of paragraph 2 of article 59 of this Law.

3. The suit to foreclose on the collateral is presented and the case is considered by the court at the location of the pledged property in accordance with the rules of civil procedural legislation of the Kyrgyz Republic with the peculiarities stipulated in this Law and the Land Code of the Kyrgyz Republic.

4. The pledgeholder must submit to the court, which is presented in a lawsuit, the evidence of direction to the pledgegiver (debtor) notice of foreclosure on the collateral provided for in this Law.

The pledgeholder must also submit to the court, which is presented in a lawsuit, the evidence for delivery of notices to the previous and further pledgeholders to initiate the foreclosure on the collateral, except in cases where they are one and the same persons, and when the pledgeholder has no knowledge of them.

5. If the materials of the case to foreclose on the collateral it is clear that the pledge is or should have been done with the consent of other persons or body, the court in which the action is brought, shall notify the appropriate person or authority and provides them with the opportunity to participate in the case.

6. Persons with based on law or agreement the right to use the pledged property (renters, employers, adult members of the family of the owner of premises and others) or property rights to the property (easement, the land use rights and other rights), the right to participate in the trial on the treatment of foreclosure on the collateral as an interested party.

Article 63. Issues, resolved by the court in consideration of a case of the foreclosure on the collateral

In addition to general issues provided the procedural legislation of the Kyrgyz Republic, in the proceedings to foreclose on the collateral the court must determine and specify in the decision:

1) all amounts payable by the pledgeholder of the value of the collateral except for the amounts of expenditure on protection and sale of the collateral, which are defined at the end of its sale. For amounts that are calculated as a percentage shall be specified sum on which interest bearing, interest and penalties, as well as the period for which they are due;

2) collateral, the value of which must be satisfied the demands of the pledgeholder;

3) way of sale of the collateral, which is subject to foreclosure;

4) initial (starting) sale price of the collateral for its sale, which is determined on the basis of the agreement of the pledgegiver and the pledgeholder, and in case of dispute - by the court on the basis of an independent appraiser;

5) measures to ensure the safety of the collateral before sale, if any;

6) order and priority of allocation of revenue from bidding in accordance with the requirements of this Law.

Article 64. Characteristics of the foreclosure on the pledged enterprise

1. In case of default by the debtor of the secured obligations of the enterprise or its improper performance of the pledgeholder is entitled to foreclose on the company.

The foreclosure can be done either by the company as a whole as a property complex or its individual assets, the cost of which is sufficient to cover the secured liabilities (debt).

2. The pledgeholder shall be entitled to foreclosure of the enterprise and appointed a manager of the enterprise and must meet the requirements specified in article 73 of this Law for the organizer of bidding.

In case of foreclosure as a whole on a going concern the appointment of a manager of the enterprise is mandatory.

3. Foreclosure of the entire enterprise as a property complex cannot be carried out on the basis of executive endorsement of a notary.

Article 65. Characteristics of the foreclosure on the pledged residential house or apartment

After the foreclosure of the pledged residential house (apartment) and the sale of this property the pledgegiver and living with it the family, and any third parties must at the request of the proprietor of the house (apartment) for 30 days to vacate the premises.

In case of failure the requirements of this article, the owner of the house (premise) has the right to exercise its rights as owner of the premises, including through the eviction by administrative or judicial pledgegiver and living together with its family members, as well as from third parties they occupy premises.

Eviction of the pledgegiver and living together with the family members, as well as those of third parties, arbitrarily occupied the room, made out in non-judicial administrative procedure with sanction of procurator, if non-judicial procedure is stipulated by the agreement on the satisfaction of demands of the pledgeholder in court, concluded at the same time with the pledge agreement or in subsequent agreements between the pledgegiver and the pledgeholder.

Article 66. Characteristics of the foreclosure on the agricultural land plots

1. In foreclosure on agricultural land plots pledged under the mortgage agreement may be denied if the debtor admitted violation of the principal obligation is extremely small and the size of the pledgeholder's demands as a result of this is clearly disproportionate to the market value of the pledged land.

2. Foreclosure on the agricultural land plots that is the subject of collateral permitted in the event that the pledgegiver has no other pledged under this agreement on the mortgage of the property.

3. If there are valid reasons related to the use of agricultural lands, which are the basis of default, among which are recognized crop failure, natural disasters, flood, hail and other extreme weather conditions, at the request of the pledgegiver is entitled to the court decision to delay the foreclosure of the implementation of these lands in the up to one year.

In determining the period for which the delay of the sale, the court takes into account including the fact that the amount of the pledgeholder's demands, subject to satisfaction of the value of the pledged land at the time of the grace period shall not exceed the estimated value of pledged land specified in the pledge agreement, and also takes into account the financial position of the pledgeholder or fact brought against the pledgegiver (debtor) or the pledgeholder case of acceptance of its bankrupt (insolvent).

Delaying sale does not affect the rights and obligations of the parties of the obligation secured by the pledge of the property, and does not release the debtor from the increased compensation for the delay damages the pledgeholder (creditor), due to the pledgeholder (creditor) interest and forfeit.

4. When declaring a repeated public bidding on the sale of agricultural land failed, the state has the right to redeem the collateral (mortgage) at market value.

If the state is not redeemed the collateral, then it is subject to the order of foreclosure on the pledged property, as provided by the Law, taking into account the characteristics of the land legislation.

(As amended by the Law of the Kyrgyz Republic of May 26, 2009 #173)

Chapter 7

Sale of the collateral, which is subject to foreclosure

Article 67. Sale of the collateral

1. After 15 days of the commencement of the foreclosure the pledgeholder has the right to dispose of the collateral through foreclosure, unless otherwise provided by court order and the legislation of the Kyrgyz Republic.

2. The sale of the collateral by foreclosure should be either public or otherwise made to match the type and status of the property.

The pledgegiver and the pledgeholder must conscientiously take measures to ensure the sale, so that it is the most beneficial for all parties involved with the actual conditions of reality.

3. Any person, including the pledgeholder and the pledgegiver but excluding any persons acting on behalf of the pledgegiver, which offers the highest price among the participants at public bidding on foreclosure in accordance with this article and which does not participate in collusion with others to reduce the purchase price and does not know no violations in the process of foreclosure, acquires title to the pledged property.

4. If the collateral acts as the pawn and as the collateral are cash deposit, securities, or other fungible things or other things that can be replaced with identical items in case of the necessity for their return to the pledgegiver, the pledgeholder may exercise its rights under the foreclosure of unfulfilled obligations as they become due the obligation secured by the pledge.

Regardless of whether the pledge is the pawn or registered pledge, the pledgeholder has the right to sell or otherwise realize this pledge immediately after taking possession of the pledge, if this provision in its physical properties is perishable or is there a danger that it will quickly lose its cost.

5. The pledgegiver may redeem the collateral by public bidding or by foreclosure of the pledged property may redeem at any time prior to bidding on foreclosure by paying the entire amount due the pledgeholder relating to the obligation secured by the pledged property, including the costs of foreclosure.

6. Alienation of the collateral by the foreclosure in order to meet the requirements of the obligation secured by the pledge, not a bidding operation.

Article 68. Rights and obligations of the pledgeholder in sale of the collateral

1. The pledgeholder may implement the pledged property any convenient way, with the specifications provided by the land legislation of the Kyrgyz Republic. The pledgeholder may appoint a pledge administrator acting on its behalf, to sell solutions or solute any related matter. The pledgeholder has the right to wait for the sale of the collateral with the consent of the previous and further pledgeholders to obtain higher prices of pledged property, with the exceptions established by the land legislation of the Kyrgyz Republic to the pledged agricultural land.

This postponement shall not exceed three months from the start of the foreclosure or the expiry of any extension installed interim order. Duration delay the sale of pledged property, except agricultural land may be extended without going to court if the pledgegiver and all pledgeholders are willing written consent to the extension of the delay.

2. The pledgeholder invests any proceeds from bidding in foreclosure in excess of the amount due the pledgeholder, to the depositary. This amount will be used for payments to pledgeholders next turn, and promptly returned to the remains of the pledgegiver. All the funds spent on legal fees by the pledgeholder, maintenance, improvement or completion of the pledged property at the foreclosure sale or the costs, in accordance with paragraph 5 of article 61 of this Law apply to the cost of foreclosure in accordance with article 9 of this Law and liable to the pledgeholder.

Article 69. Responsibility to the pledgegiver arising from the illegal sale of the collateral

If the court finds that the pledged property is sold by the pledgeholder by unjustified price due to non-compliance with the procedures established in this Law, the obligations of the parties are in original condition.

If the pledgegiver or the pledgeholder next line proves that the fair market value of the pledged property at the time of the implementation of the recovery exceeds the selling price and that as a result of fraud by the pledgeholder of the first stage, which carried out the implementation, the pledgegiver or the pledgeholder next stage is deprived of revenue from the sale, which has remained after satisfaction of all of the priority of the secured obligations in accordance with paragraphs 2 and 3 of article 68 of this Law, the pledgegiver or the pledgeholder next stage may petition the court for reimbursement of damages in the amount of the pledgeholder of the lost amount.

(As amended by the Law of the Kyrgyz Republic of March 30, 2009 #97)

Article 70. Consequences arising from the illegal entry possession of the collateral

The pledgegiver to the pledgeholder may recover damages in accordance with the legislation of the Kyrgyz Republic, if the pledgeholder takes possession of the pledged property, without having the legal right, or illegally.

Article 71. Preemptive tenant right (purchase) by the pledgegiver of the agricultural land plot after the collateral and sale on the bidding

1. In the case of the lease of agricultural land by a person who acquired it at the bidding, the pledgegiver shall have a preferential right to lease of the land for one year from the date of disposal of the purchaser at the bidding, on equal terms with others.

The lessor of land plot shall notify in writing to the pledgegiver on intention to lease land to another person with the term of the lease, rent and other material terms of the lease. If the pledgegiver refuses to enter into a lease or rental agreement within a month from the date of receipt of the notice, the lessor has the right to transfer land to lease to another person.

When the lease of the land in violation of the preemptive rights of the pledgegiver may, within three months of the court require it to transfer the rights and obligations of the tenant.

2. In the event of a subsequent sale of the agricultural land by a person who acquired it at the bidding, the pledgegiver has a preferential right of purchase of the land for one year from the date of disposal of the purchaser at the bidding, on equal terms with others. The seller of agricultural land plot shall notify in writing the pledgegiver on intention to sell the land to another person with the price and other material terms of sale. If the pledgegiver refuses to buy or not to acquire a land plot sold during the month from the date of notification, the seller has the right to sell the land to another person, satisfying the requirements of land legislation of the Kyrgyz Republic, at a price not lower than specified to the pledgegiver.

Upon the sale of land in violation of the preemptive right to purchase the pledgegiver may, within 3 months of claim in the court of transfer to it of the rights and obligations of the purchaser.

The provisions of this paragraph shall also apply in the alienation of land for agricultural purposes on a swap contract.

3. The assignment of the pledgegiver preferential right to lease or purchase is not allowed.

4. The provisions of this article shall also apply to lease or alienation of land for agricultural purposes with the specifications established by the Law of the Kyrgyz Republic “On the management of agricultural lands”.

Article 72. Methods of sale

1. The collateral which is subject to foreclosure in accordance with this Law is implemented by way of sale by public bidding or otherwise provided by agreement of the parties, as well as through the acquisition of the collateral by the pledgeholder in accordance with the requirements of this Law.

2. Public biddings are held in an open bidding or tender. The form of bidding is determined by a court (at the foreclosure in court) or the pledge agreement or an agreement on the satisfaction of demands of the pledgeholder (if non-judicial foreclosure procedure).

3. The procedure for public bidding is determined by the relevant articles of the Civil Code of the Kyrgyz Republic, this Law and other regulations, as well as the pledge agreement or an agreement on the satisfaction of demands of the pledgeholder in court.

4. In the event of foreclosure of the pledged leasehold property it is implemented in accordance with the rules of this Law with the subsequent registration of the assignment of the right. In this case, the subject of bidding is the right to enter into an appropriate agreement (lease, rent, etc.).

Article 73. Appointment of the organizer of bidding

1. When foreclose on the collateral in the court of public bidding an organizer is appointed by the court. The court may, at the request of the side (s) to designate as organizers:

1) a person who is in accordance with the procedural legislation rests with the execution of judicial decisions;

2) a person who is an independent organizer of bidding.

2. The candidacy of independent organizer of bidding has the right to propose to the court the pledgeholder, the pledgegiver with the requirements established in article 74 of this Law.

If there are several candidates for the appointment of an independent organizer of bidding made on a competitive basis. Terms, conditions and procedure for the competition are determined by the court.

3. When foreclose on the collateral out of court the organizer of bidding is determined by the agreement (contract) of the parties or the pledgeholder in the event of foreclosure on the basis of executive endorsement of a notary.

In non-judicial procedure the organizer of bidding may act on the basis of the agreement (contract) on the satisfaction of demands of the pledgeholder in non-judicial procedure or a separate civil agreement with the pledgeholder.

4. The organization and execution of bidding the organizer of bidding shall have the right to act on behalf of the owner of the property (the owner of the property right), or on its behalf pursuant to a court order or agreement.

5. The organizer of bidding in the normal course of work under the protection of the law, governed by the legislation of the Kyrgyz Republic has rights and obligations established by the legislation of the Kyrgyz Republic and the agreement.

Article 74. Independence of the organizer of bidding

1. The court may appoint an independent organizer of bidding a legal entity or individual (sole proprietor), except for an official working in the bodies of state power and government, local government and in the courts of the Kyrgyz Republic.

A foreign legal entity or individual may be appointed by the court an independent organizer of bidding on the same basis, unless otherwise provided by law.

2. Appointment by the court as the organizer of bidding a person to which, in accordance with the legislation of the Kyrgyz Republic entrusted the execution of court decisions, or an independent third party is not permitted if the person has a property interest, namely:

1) person is a party (founder, shareholder, member) or the property owner or the head of the pledgegiver (debtor) or the pledgeholder;

2) person is a creditor, debtor, the insurer pledgegiver (debtor) or the pledgeholder;

3) person is a pledgegiver (debtor) or the pledgeholder close relatives (spouses, children, parents, brothers, sisters).

3. There can also be appointed as the organizer of bidding a person in respect of which there is a restriction on the implementation of the management of the affairs, and (or) property of others, and the person who has outstanding (unexpunged) record.

4. The size and order of payment of compensation determined by an independent organizer of bidding:

1) in foreclosure in court - and the court stated in its decision;

2) in non-judicial foreclosure procedure - agreement between the parties and specified in the agreement on the satisfaction of the pledgeholder out of court or in a separate civil law agreement.

5. Person which is in accordance with the procedural law of the Kyrgyz Republic is assigned the execution of court decisions and is designated as the organizer of bidding, the remuneration shall be paid in accordance with the requirements of procedural legislation of the Kyrgyz Republic.

Article 75. Procedure of bidding

1. Bidding of the pledged immovable property is held by its location.

Bidding of the pledged movable property is held:

а) at the place specified by the parties to the pledge agreement of or in the Agreement;

b) at the place specified by the pledgeholder, in the case of bidding in accordance with paragraph 4 of article 60 of this Law;

c) at the location determined by the court in the case of bidding on the basis of a court decision.

2. Organizer of bidding announces the upcoming bidding of not less than 30 calendar days prior to the bidding by publishing in the press announcement of tenders.

Invitation to bidding shall be published once in the mass media of national importance and once in the mass media of the local (district, city) meaning.

3. Invitation to bidding shall contain:

1) name, description and characterization of the collateral put to tender;

2) exact location of the collateral;

3) initial (starting) the sale price of the collateral;

4) size, timing and order of the guarantee fee (deposit) of the bidder, if required by the terms of bidding;

5) procedure and terms of payment of the purchase price;

6) time and place of the bidding ;

7) name and address (location) of the bidding organizer, its phone number for more information and payment details.

If the bidding is subject to the right to sign the agreement in accordance with paragraph 4 of article 72 of this Law, the notice of upcoming bidding s should be given provided for this term.

4. One copy of the bidding announcement is posted, if it is possible and there is no obstacle to this, in a prominent location right on the property, which will be put up for sale, not later than one month before the date of the event.

5. Information on such a declaration, the time and place of public bidding or privately on the proposed terms of private sale is sent to the pledgegiver and others who have registered rights to the pledged property, not later than 7 days prior to sale, unless the property is perishable or if it is otherwise will not plummet in value.

6. The bidding does not have the right to participate as purchasers of the following persons:

1) organizer of the sale and those related by close relationships, as well as legal entities in the charter capital of which 5 percent or more of shares (shares) owned by the organizer of bidding;

2) court officials;

3) state enterprises, institutions, organizations, if the subject of trade is state property or property rights;

4) persons who, in accordance with the legislation of the Kyrgyz Republic cannot be owners of the property put to bidding , or the holders of property rights.

7. Before bidding persons wishing to take part in them, make a security deposit in the manner and within the period specified in the announcement of bidding. The size of the security deposit cannot exceed 5 percent of the initial purchase price of the collateral, subject to the specifications provided by the land legislation of the Kyrgyz Republic.

8. The pledgeholder participating in the bidding shall be exempt from paying the security deposit, as well as in the event of winning bidding - from paying the purchase price up to the amount of its requirements.

9. Security deposits of bidders shall be returned in case of:

1) If the person who has made a security deposit, for any reason, do not participate in the bidding;

2) If the bidder participated, but did not win the bidding;

3) if bidding invalidated.

The security deposit of winner of the bidding shall be included in the purchase price.

The security deposit of winner of the bidding, but failed to pay the purchase price remains at the disposal of the bidding system and uses them in accordance with article 80 of this Law.

10. The winner of the bidding is a person who offered the highest price for the property sold, and the contest - a person who, in accordance with the conclusion of the organizer of bidding s scheduled in advance of the competition committee has offered the best conditions.

A person who wins the bidding, and the organizer of bidding on the day of signing of the minutes on the results of the public bidding, which has the power to agreement. Avoidance of any of them to sign the minutes entails consequences provided for in paragraph 5 of article 409 of the Civil Code of the Kyrgyz Republic.

11. The winner of the public bidding shall, within the time limit set by the organizer of bidding, but not more than one week, to make the amount for which they purchased the collateral (the purchase price), less the amount previously entered security deposit.

Sale of repossessed the collateral in order to obtain satisfaction of the obligation secured by the pledge, not a bidding operation.

12. If the bidding is subject to the property subject to state registration, the minutes on the results of bidding is the basis for making the necessary entries in the state registers of the relevant government authorities.

13. If the subject of the bidding is the only right to conclude an agreement, the agreement must be signed by the parties not later than 20 days or other specified in the notice after bidding and execution of the minutes. This agreement and the minutes on the bidding results are the basis for making the necessary entries in the unified state register of immovable property.

In case of failure of one of the parties to conclude an agreement, the other party may apply to the court to compel the agreement, as well as compensation for damages.

Article 76. Announcement of public bidding failed

1. The organizer of bidding announces public bidding invalid in cases:

1) if the bidding is less than two participants;

2) if none of the participants made allowances against the initial sale price of the collateral (the lack of competition customers);

3) if the party wins the bidding, has not paid the purchase price when due.

Invitation to bidding is issued as invalid act, which shall be delivered to the organizer of bidding the day of the bidding, when the bidding is less than two participants or is not made allowances for the initial sale price of the collateral.

Bidding shall be declared invalid, not later than the next day after the party who won the bidding, the purchase price has not made within the prescribed period.

2. When declaring a public bidding failed the pledgeholder may, by agreement with the pledgegiver to purchase the collateral for its initial sale price at the public bidding and set off against the purchase price of their demands secured by collateral, pledge in this case is terminated.

3. If an agreement on the acquisition of property by the pledgeholder under paragraph 2 of this article shall not be held no later than one month after the first public bidding shall be repeated public bidding.

Repeated bidding announced and held in the manner provided in article 75 of this Law. The initial (starting) selling price of the collateral at the second bidding is determined by the organizer of bidding. The organizer of bidding has the right to set the initial (starting) selling price of the first bidding or a new (estimated) price.

4. When declaring a failed re-bidding for the reasons stated in paragraph 1 of this article, the pledgeholder has the right to retain the collateral (allowing for the foreclosure of the pledged agricultural land plots under the land legislation of the Kyrgyz Republic), with an estimate of the amount of it in no more than ten percent below the price set at the second bidding by signing with the organizer of bidding the minutes on results of bidding having the force of the agreement. In this case, the value of the collateral, enshrined in the minutes, offset by the pledgee's demands secured by the collateral.

If the pledgeholder has left the pledged property which, by its nature and purpose cannot belong to the right of ownership or used for the purposes of its core activities, it is obliged to dispose of the property within one year in accordance with the legislation of the Kyrgyz Republic, unless otherwise provided by the law.

Article 77. Recognition of bidding invalid

1. The bidding may be declared void by the court at the suit of the person concerned in the case of:

1) if the bidding held in violation of the rules established by this Law;

2) if the collateral sold to a person who have not the right to participate in the bidding ;

3) if the organizer of bidding , the purchaser or pledgeholder commence the offense, give rise to administrative or criminal liability if the offense is connected with the process of bidding.

2. Recognition of bidding invalid entail the invalidity of the agreement entered into with a person who won the bidding, as well as other consequences provided for by the legislation of the Kyrgyz Republic.

Article 78. Right to production in court

1. If the grounds provided for in paragraph 1 of article 77 of this Law, the pledgegiver has the right to challenge the results of bidding in the court at the place of the bidding.

2. In the event of failure of the pledgegiver to transfer (free) to the purchaser immovable property purchased at the bidding, the purchaser has the right to go to court at the location of the property.

Any dispute arising under this legal costs reimbursed by the pledgegiver with the funds received from the sale of collateral.

3. If agreement on the satisfaction of demands of the pledgeholder out of court is provided for non-judicial foreclosure on the collateral, the eviction of the pledgegiver is carried out in the manner provided in article 65 of this Law.

Article 79. Termination of sale of the collateral

1. At any time before the sale of the collateral at the bidding or acquisition of the pledgeholder in accordance with this Law the procedure of foreclosure on the collateral and its implementation should be terminated if the debtor and / or the pledgegiver, who is the third person who will perform the secured obligation in full or in that part of non-performance or improper performance which is the basis for foreclosure by paying the amount for the requirements of the pledgeholder to the extent which these demands occur at the time of payment of the corresponding amounts, and will reimburse the pledgeholder the amount of legal fees and other costs caused by the foreclosure on the collateral and its sale.

An agreement restricting the right referred to in this paragraph shall be void.

2. After receipt of the amounts referred to in paragraph 1 of this article, the pledgeholder must:

1) prepare a notification of termination of the foreclosure on the collateral and its sale;

2) if the collateral is subject to state registration, register the notice in the body / bodies that conducted state registration of the pledge;

3) with a reported pledge to register notice of the Pledge Registration Office;

4) at the request of the pledgegiver (debtor) or pledgeholders of the previous and further pledge to provide them with copies of the notice.

3. The notice shall be in writing and shall contain the following information:

1) name and location (address) the pledgegiver (debtor);

2) name and location (address) of the pledgeholder;

3) amounts paid by the pledgegiver (debtor) on the secured demands of the pledgeholder, the failure of which is the basis for foreclosure on the collateral and the amount of legal fees and other costs caused by the foreclosure on the collateral and its sale;

4) instructed to termite the foreclosure on the collateral and its sale;

5) other information that, in the opinion of the pledgeholder, is necessary;

6) date of notification and the signature of the pledgeholder.

Article 80. Revenue distribution from the bidding

1. Security deposits of bidders, as well as the amount of money made by the purchaser in the purchase price shall be kept on deposit with the court, notary bodies or the bank account of the organizer of bidding.

2. The organizer of bidding shall distribute the proceeds of bidding no later than 10 days from its receipt.

3. The organizer of bidding distributes the proceeds from bidding in the following order of priority:

1) to cover the expenses and costs of the bidding ;

2) on payment of the pledgeholder's demands secured by collateral referred to in article 9 of this Law;

3) on payment of the pledgeholder's demands, secured by further pledges, provided that the further pledgeholders to make a claim to be paid at the expense of the collateral subject to the conditions provided for in article 57 of this Law;

4) to return to the pledgegiver the amount remaining after satisfaction of all of the above requirements.

Article 81. General requirements to the content of the report of the organizer of bidding

1. Proper performance of its duties the organizer of the bidding on sale of collateral are the preparation and delivery of the report.

2. The report shall be in writing and sent to the court (with the foreclosure in court) or party (non-judicial foreclosure procedure) within 10 days:

1) from the date of the final distribution of proceeds at the bidding funds in case if the bidding took place;

2) from the date of the pledgeholder decision to purchase the collateral in accordance with the requirements of this Law.

3. The report on the bidding must contain the following information:

1) name, location, description and characterization of the collateral imposed on bidding;

2) time and place of the bidding ;

3) name and address (location) of the purchaser's phone number for inquiries and payment details;

4) purchase price of the collateral, the procedure of its payment;

5) distribution of proceeds from the bidding ;

6) date of preparation, the name and address (location) of the organizer of bidding, its phone number for more information and payment details.

The report may contain other information, which, in the opinion of the organizer of bidding, essential.

4. The report on failed bidding must contain:

1) information provided for in subparagraphs 1, 2 and 6, paragraph 3 of this article;

2) base call for bidding (initial or recurrent) failed;

3) purchase price of the collateral in accordance with the requirements of this Law.

The report may contain other information, which, in the opinion of the organizer of bidding, essential.

5. To the report the organizer of bidding shall attach copies of documents related to the organization of bidding and sale of the collateral.

Article 82. Characteristics of sale of the pledged land plots

1. A person who has acquired land plot for sale at the public bidding has the right to change the purpose of the site is only in the cases stipulated by the land legislation of the Kyrgyz Republic.

2. Sale and purchase at the public bidding of pledged land plots are carried out in compliance with the requirements established by the Land Code of the Kyrgyz Republic and the present law.

Article 83. Grounds for termination of the pledge

1. The pledge is terminated in whole or in part on the grounds stipulated by the Civil Code of the Kyrgyz Republic, this Law and pledge agreement.

2. Upon the termination of the pledge the pledgeholder must:

1) prepare a notification of termination of the pledge;

2) if the collateral subject to registration, register the notice in the body / bodies of state registration of the pledge;

3) notify the Pledge Registration Office of the termination of the pledge for 3 days;

4) at the request of the pledgegiver (debtor) or pledgeholders on the previous and further pledges to provide them with copies of the notification.

3. The notice shall be in writing and shall contain the following information:

1) name and location (address) the pledgegiver (debtor);

2) name and location (address) of the pledgeholder;

3) circumstances which are the basis for the termination of the pledge;

4) other information that, in the opinion of the pledgegiver (debtor) and / or the pledgeholder, is necessary;

5) date of notification and the signature of the pledgeholder.

(As amended by the Law of the Kyrgyz Republic of December 17, 2008 #265)

SECTION IV

PROTECTION AGAINST THE ENCROACHMENT ON THE RIGHTS IN THE PLEDGED PROPERTY

Article 84. Invariability of the pledge agreement

1. In cases where after the agreement conclusion the legislation of the Kyrgyz Republic shall establish new rules that modify the contractual rights the pledgegiver and / or pledgeholder, the terms of the concluded pledge agreement shall remain in force unchanged for the duration of its action, unless otherwise provided by agreement of the parties.

2. In the case of making by the state bodies, local governments and their officials decisions violating the rights of the pledgeholder to possess, use and dispose of the collateral, such decisions is not lawful under the claim of the pledgeholder.

3. All damages caused by the pledgeholder as a result of making decisions referred to in the second part of this article, shall be reimbursed in full by the government and the local governments that have made such a decision.

Article 85. Liability on infringement rights to the pledged property

1. In the event of adoption by the Kyrgyz Republic of legislative acts terminating or infringe the rights of the pledgegiver or the pledgeholder of the pledged property, the damages caused to the pledgegiver or the pledgeholder as a result of the adoption of these acts shall be recovered in full from the national budget of the Kyrgyz Republic.

2. In cases of immediate confiscation of the pledged property or a significant decrease in its value due to the decision of the state body, including a decision to take the land plot on which the house is pledged, other structures or plantings, losses caused to the pledgeholder as a result of this decision, the pledgeholder shall be reimbursed in full by the state body that made the decision.

3. Disputes relating to the amount of damages referred to in this article shall be settled in court.

SECTION V

FINAL PROVISIONS

Article 86. On the order of the enactment of this Law

1. This Law shall come into force from the date of publication.

It is published in the newspaper “Erkintoo” of March 18, 2005 # 23

2. To recognize null and void:

- Law of the Kyrgyz Republic “On amendments and modification to the Law of the Kyrgyz Republic “On the pledge” (Bulletin of the Supreme Council of the Republic of Kyrgyzstan, 1993, #3, article 97);

- Law of the Kyrgyz Republic “On the pledge” (Bulletin of the Jogorku Kenesh of the Kyrgyz Republic, 1997, #6, article 233);

- Law of the Kyrgyz Republic “On the mortgage” (Bulletin of the Jogorku Kenesh of the Kyrgyz Republic, 1999, #9, article 438);

- Law of the Kyrgyz Republic ““On amendments and modification to the some legislative acts of the Kyrgyz Republic” (the newspaper “Erkin Too” of July 20, 2001, #53);

- Law of the Kyrgyz Republic “On amendments and modification to the Law “On the mortgage” (Bulletin of the Jogorku Kenesh of the Kyrgyz Republic, 2002, # 3, article 122)

3. Before bringing into compliance with this Law other laws and normative legal acts of the Kyrgyz Republic, these laws and normative legal acts shall apply to the extent not inconsistent with this Law.

4. The relations of the pledge arising before the enactment of this Law, this law does not apply, unless otherwise provided by agreement of the parties.

5. The Government of the Kyrgyz Republic within three months:

- to bring its normative legal acts into compliance with this Law;

See:

Decree of the Government of the Kyrgyz Republic of January 13, 2006 #14 ““On amendments and modification to some of the decisions of the Government of the Kyrgyz Republic and annulment of the decree of the Government of the Kyrgyz Republic of June 30, 2003 #397 “On approval of the Procedure of issue, circulation and redemption of housing certificates in the Kyrgyz Republic”

- to prepare and submit to the Jogorku Kenesh of the Kyrgyz Republic on bringing legislative acts of the Kyrgyz Republic in accordance with this Law.

President of the Kyrgyz Republic A.Akaev

Adopted by the Legislative Assembly

of the Jogorku Kenesh of Kyrgyz Republic January 20, 2005