Company registration in the Kyrgyz Republic: step-by-step guide

Company registration is the first and important step towards doing business. The Kyrgyz Republic provides equal conditions for domestic and foreign investors by offering a clear legal mechanism for establishing legal entities.

This article examines the legal regulation of the company registration procedure in the Kyrgyz Republic. It describes the main organizational and legal forms of commercial legal entities, the procedure for state registration, the specifics of foreign investor participation, and the differences between limited liability companies (LLCs) and joint stock companies (JSCs).

1. Organizational and legal forms of commercial legal entities

Main forms:

- Limited liability companies and additional liability companies (LLC and ALLC);

- Joint stock companies (JSC), divided into the following forms:

A) Open joint stock companies (OJSC);

B) Closed joint stock companies (CJSC).

- General and limited partnerships (less common).

2. Comparative analysis of LLCs and JSCs due to their prevalence in the Kyrgyz Republic

In order to choose the right legal form for a company, it is necessary to understand the differences in the management structure between JSCs and LLCs.

Management in joint stock companies (JSCs) has a more complex structure compared to limited liability companies (LLCs), especially in cases where the number of shareholders reaches fifty or more. In such joint stock companies, the law requires the presence of four management bodies:

1. General meeting of shareholders;

2. Board of Directors;

3. Executive body (sole or collegial);

4. Internal audit service (or internal auditor).

While an LLC can be managed without the mandatory formation of a board of directors, which makes this form more flexible and easier to administer, there is a limit on the number of participants in an LLC. By law, the number of participants in a limited liability company must not exceed thirty. Otherwise, it must be converted into a joint-stock company within a year, and after that period, it will be liquidated by court order if the number of its members does not decrease to the established limit.

In addition, joint-stock companies maintain a register of shareholders, which is the main tool for recording and confirming ownership rights to shares. Modern joint-stock companies, as a rule, do not issue shares in documentary form, but use a non-documentary form of issue, in which ownership is confirmed by an extract from the register of shareholders..

This register records all transactions related to the disposal or acquisition of shares. As a rule, a specialized company—a registrar with the appropriate license to maintain a register of shareholders—is engaged to maintain this register.

It should also be noted that open joint-stock companies (OJSCs) with more than 500 shareholders or those that have placed at least one issue of securities in public circulation are required to publish an annual report on the company's financial and economic activities. Such publication must be made within two months after the annual shareholders' meeting, but no later than June 1 of the year following the reporting period.

In summary, it should be said that in practice, LLCs are opened for small and medium-sized businesses, while JSCs are for large enterprises and public placement of shares.

3. Liability of founders of LLCs and JSCs

Before registering a company, it is necessary to understand what liability the founder may bear if problems arise in the company.

As a general rule, the founders of an LLC are not liable for the obligations of the LLC and bear the risk of losses associated with the activities of the LLC within the limits of the value of their contributions. However, it should be borne in mind that founders of an LLC who have not fully contributed to the authorized capital are jointly and severally liable for the LLC's obligations within the limits of the value of the unpaid portion of each founder's contribution. Shareholders of a joint-stock company are also not liable for the company's obligations; their risk is limited to the value of their shares. At the same time, the law provides for a special rule for the stage of establishing a joint-stock company:

The founders of a joint-stock company are jointly and severally liable for obligations related to its establishment and arising prior to the state registration of the joint-stock company.

In addition, the law provides for additional liability measures for founders that are legal entities.

Thus, if an LLC has established another company and has the ability to give it binding instructions as a parent organization, it bears joint and several liability for transactions entered into by the subsidiary in accordance with such instructions.

In addition, in the event of bankruptcy (insolvency) of the subsidiary through the fault of the founder-joint-stock company, the latter bears subsidiary liability for the debts of the subsidiary.

Special attention should also be paid to the authorized capital when registering a company, as its size has a direct impact on a number of legal and economic aspects of the company's activities. In particular, the amount of authorized capital may determine:

•the degree of liability of the founders;

•the size of the founders' shares and dividends;

•the distribution of votes and management influence in the company;

•the possibility of carrying out certain types of activities for which the law establishes minimum capital requirements.

The legislation of the Kyrgyz Republic establishes a minimum authorized capital for joint-stock companies of at least 100,000 (one hundred thousand) soms.

There is no minimum authorized capital requirement for limited liability companies (LLCs).

However, certain areas of activity require a certain amount of authorized capital. For example, in accordance with the legislation on payment systems:

- the minimum authorized capital of a payment organization must be at least 2,000,000 (two million) soms;

- the minimum authorized capital of a payment system operator must be at least 1,000,000 (one million) soms.

In addition, in practice, the higher the authorized capital, the more attractive the company is to large partners.

Therefore, when registering a company, it is necessary to consider not only the legal structure of the company, but also the minimum capital requirements, which can vary significantly depending on the business sector and the attractiveness of the company for transactions with large partners.

4. Stages of company registration

After choosing the organizational and legal form and determining the authorized capital, the following set of documents and information must be prepared:

1. Full and abbreviated name of the company in two languages: Kyrgyz and Russian (optional – also in English);

2. Types of activities according to the State Classifier of Economic Activities (SCEA);

3. Selected tax regime;

4. Legal address with the following attachments:

- written consent of the owner of the premises to use the address for registration;

- extract from the property ownership register.

5. Passports and registration addresses of the founders and director;

6. Information about the director (director, CEO, etc.);

7. Original power of attorney – if the registration is carried out by a representative;

8. Receipt for payment of the state registration fee (the fee may be increased for expedited registration);

9. Copy of the certificate of state registration (re-registration) of the founder – legal entity, if the participant is a local company.

Additional requirements for foreign founders:

- Foreign individuals shall provide copies of their passports with a notarized translation into Kyrgyz or Russian.

- Foreign legal entities shall provide an apostilled extract from the state register or other document confirming their legal capacity, with a notarized translation into Kyrgyz or Russian.

Legalization of documents is not required for legal entities of states that are parties to international treaties and agreements to which the Kyrgyz Republic is a party (CIS countries).

5. Submission of documents for registration

The registration of commercial legal entities is carried out online, which requires the following steps:

Step 1: Log in to the portal.

On the Ministry of Justice homepage, find the section “Electronic database of legal entities” and click the “Submit application” button.

Log in with your account (or register if you have not already done so).

Step 2: Fill out the application

Enter information about the company:

1. Full and abbreviated name in Kyrgyz and Russian;

2. Type of activity according to the General Classification of Economic Activities (GCEA);

3. Selected tax regime and amount of authorized capital;

4. Legal address – fill in the line, upload the owner's consent and the document of ownership;

Provide information about the founders and the manager:

5. Name, passport details, and registered address of the founders.

6: Name of the manager (director or CEO) and their passport details.

Step 3: Documents and upload

If registration is being carried out by a representative, upload the power of attorney.

Upload the receipt for payment of the registration fee.

Step 4: Verification and submission

Check the entered data again: names, types of activity, address, etc.

Make sure that all required documents are uploaded. Click the “Submit” button.

After submission, you will receive a notification of acceptance of the application and the specified review period.

Once the application is approved, the applicant will receive a certificate of state registration with an assigned taxpayer identification number (TIN), as well as a decision on the state registration of the legal entity. At this stage, the organization is automatically registered with the tax authorities and the Social Fund of the Kyrgyz Republic.

Next, there is need to develop a company seal and obtain tax parameters for the legal entity. To do this, forms 024 and 163 must be submitted to the tax authority at the place of registration of the company.

In addition, for a joint-stock company, additional registration of the initial issue of shares is required with the Financial Market Regulation and Supervision Service under the Ministry of Economy and Commerce of the Kyrgyz Republic.

It is also necessary to prepare the constituent documents of the legal entity. These documents include:

- Articles of Association;

- Memorandum of Association – if the company is established by two or more founders.

The memorandum of association is signed by all founders. The charter is signed by the head of the legal entity, and in the case of a company established by a single founder, by the sole founder. The founding documents are used when opening a bank account, obtaining licenses, etc.

Thus, state registration of a commercial company in the Kyrgyz Republic is a sequential legal procedure that includes choosing an organizational and legal form, preparing founding documents, submitting an application, and obtaining registration data. Proper completion of all stages enables the company to legally conduct business, open bank accounts, enter into contracts, and receive guarantees provided by law.

If you encounter difficulties with preparing documents, choosing a form, or submitting an application, it is advisable to seek legal assistance. LEX Law Firm provides support for company registration and helps entrepreneurs minimize risks and start their business in accordance with the legislation of the Kyrgyz Republic.