INFORMATION ABOUT PROTECTION MECHANISMS OF INVESTORS AND LEGISLATIVE FRAMEWORK

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INVESTMENT CLIMATE

Investments are major prerequisite for economic development of the Kyrgyz Republic; therefore, investment legislation of the Kyrgyz Republic is quite liberal. The Constitution is the basic and paramount law and all other laws must conform with it. Some of these laws directly or indirectly regulate investments in the Kyrgyz Republic such as Licensing law, Joint-Stock Companies law, Mining law, Free Economic Zones law of the Kyrgyz Republic, Tax Code, Land Code, Customs Code, Civil Code, Public-Private Partnership law of the Kyrgyz Republic. Nonetheless, the principal is Investment law of the Kyrgyz Republic”.

Thus, according to the legislation of the Kyrgyz Republic, foreign investors shall enjoy the national treatment applied to individuals and legal entities of this country. Legislation provides a broad scope of rights and guarantees to foreign investors, including guarantees of export and repatriation of investments, property and information out of the Kyrgyz Republic, guarantees of protection against investment expropriation and reimbursement of losses incurred by investors, guarantees of income use and freedom of monetary transactions, and others. Currently, the Cabinet of Ministers of the Kyrgyz Republic is actively working to implement the Decrees of the President of the Kyrgyz Republic S. Japarov "On the protection of property and support of entrepreneurs and investors" dated January 29, 2021, "On measures for the further development of the financial market" dated February 8, 2021, "On additional measures to protect business entities" dated March 4, 2021, as well as on the basis of proposals developed during the work of the Council for Economic Reforms under the Government (now the Cabinet of Ministers) Kyrgyz Republic.

STATE GUARANTEES TO FOREIGN INVESTORS

Subject to its legislation, the Kyrgyz Republic provides the following guarantees to foreign investors:

Equal investment rights of domestic and foreign investors, no intervention into the business activities of investors, protection and restitution of infringed rights of investors in accordance with the legislation of the Kyrgyz Republic;

Export or repatriation of profit gained on investment, proceeds of investment activities in Kyrgyz Republic, property and information out of the Kyrgyz Republic;

Protection against expropriation (nationalization, requisition, or other equivalent measures, including action or omission on the part of authorized government bodies of the Kyrgyz Republic that has resulted in seizure of investor’s funds or investor’s deprivation of the possibility to use the results of their investment). In exceptional cases involving public interest, investments may be expropriated with concurrent state guarantees of appropriate coverage of damage incurred by the investor;

The investor has the right to freely use the income derived from their activities in the Kyrgyz Republic;

The freedom to invest in any form into objects and activities not prohibited by the legislation of the Kyrgyz Republic, including the activities subject to licensing;

Freedom of monetary transactions (free conversion of currency, unbound and unrestricted money transfers; should provisions restricting money transfers in foreign currency be introduced into the legislation of the Kyrgyz Republic, these provisions will not apply to foreign investors, with the exception of cases where investors engage in illegitimate activities (such as money laundering));

Free access to open-source information;

The right to: establish legal entities of any organizational and legal form in accordance with the legislation of the Kyrgyz Republic; open branches and representative offices on the territory of the Kyrgyz Republic; select any organizational and managerial structure for the business entities, unless a different structure is explicitly required by the law for the given organizational and legal form of a business entity; acquire property (with the exception of land plots), shares, other securities, including governmental securities; participate in privatization of state property, establish associations and other unions; hire local and foreign employees subject to legislation of the Kyrgyz Republic; and engage in other investment activities not prohibited by legislation in the Kyrgyz Republic;

Recognition of all intellectual property rights of foreign investors by public authorities and officials of the Kyrgyz Republic;

In the event of amendments to the Investments law or the tax legislation of the Kyrgyz Republic or the non-tax payments legislation, an investor and the investee who meet the statutory requirements have the right, during 10 years from the date of signing the stabilization agreement, to choose such conditions as may be most favorable to them for taxes payment purposed including VAT, but excluding other indirect taxes, and non-tax payments (except fees and charges for public services) in a way stipulated in the laws of the Kyrgyz Republic. The procedure and conditions to apply for stabilization regime to tax and non-tax legal relationships are established by the laws of the Kyrgyz Republic;

Other guarantees specifically provided in bilateral and multilateral international agreements on the investment promotion and protection signed by the Kyrgyz Republic.

INVESTMENT AGREEMENT WITH THE CABINET OF MINISTRIES OF KYRGYZ REPUBLIC

The Cabinet of Ministries of the Kyrgyz Republic may execute investment agreements for implementing investment projects initiated by an investor in accordance with state development programs in high priority economic and social sectors. Such investment agreements may be executed through direct negotiations between the Cabinet of Ministries of the Kyrgyz Republic and an investor, if the amount of investment made by an investor in the investment project exceeds USD 50 million and the investor has internationally recognized business reputation, unique knowledge and experience in successfully implementing the projects in the similar area.

SETTLEMENT OF INVESTMENT DISPUTES

According to the legislation of the Kyrgyz Republic investment dispute parties may agree on any applicable procedure for settlement of investment disputes. An investment dispute between Kyrgyz authorities and an investor should be settled wherever possible by consultations between the parties. If the parties do not settle amicably within 3 months from the day of the first written request for such consultation, any investment dispute between the investor and Kyrgyz authorities shall be settled in courts of the Kyrgyz Republic, unless either party of the dispute between the foreign investor and the authority requests to consider the dispute in accordance with one of the following procedures by addressing the case to:  the International Center for Settlement of Investment Disputes (ICSID) under the Convention on the Settlement of Investment Disputes between States and Citizens of Other States or under the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the ICSID; or  arbitration or an international ad hoc arbitral tribunal (commercial court) formed in accordance with the arbitration rules of the United Nations Commission on International Trade Law; Some agreements on mutual support, encouragement and protection of investment (capital expenditure), signed by Kyrgyz Republic, contain provisions entitling foreign investors to submit their investment disputes to international arbitral tribunals. Currently, the Ministry of Investments (Kyrgyz Development and Investments Agency) the draft decree of the Cabinet of Ministers of the Kyrgyz Republic "On the procedure for consideration and support of investor complaints", prepared with the support of the IFC (World Bank Group), was sent for approval.