Key Legal Nuances in Buying and Selling a Company in Kyrgyzstan

This article provides brief information on the legal nuances to consider when buying or selling a company. A company refers to limited liability companies (LLC) and joint-stock companies (JSC).

Legislative Framework:

• Civil Code of the Kyrgyz Republic dated May 8, 1996, No. 15
• Law "On Joint-Stock Companies" dated March 27, 2003, No. 64
• Law "On Economic Partnerships and Societies" dated November 15, 1996, No. 60

When buying or selling a company, four main stages can be identified. Let’s examine each of them in detail.

Stage 1. Legal Due Diligence and Company Valuation

The buyer needs to check the company’s documents. The seller must provide:

• Founding documents: founding agreement, charter, certificate of legal entity, resolutions on establishment and appointment of authorized persons.
• Financial documents confirming the financial viability of the company.
• Property documents: certificate of absence of tax arrears, documents confirming ownership rights, and documents on payment of the charter capital.

If the buyer is a legal entity, they provide their founding documents. If the buyer is an individual, they provide their passport and, if necessary, notarized consent from their spouse.

The buyer may also engage an independent appraiser to assess the market value of the company and its assets.

Stage 2. Adoption of Corporate Decisions

For the seller, the sale of the company means a change of participant (shareholder), which requires a decision to change ownership and amend the founding documents. For LLCs, state re-registration is required with the justice authority.

The buyer must ensure that the individuals entering into the transaction have the appropriate authority. This is especially important for legal entities.

Stage 3. Sales Agreement

The agreement must be drawn up in simple written form and include all essential conditions: subject matter, price, rights and obligations of the parties, liability, duration, etc. It is important to clearly outline the conditions for the transfer of ownership rights, payment procedure, and the acceptance-transfer of documents and assets.

For transactions involving shares in the charter capital of LLCs, notarization is required. For shares of JSCs, registration with the registrar is sufficient.

Stage 4. Registration of Changes in Founding Documents

Changing the composition of participants in an LLC requires state re-registration with the Ministry of Justice of the Kyrgyz Republic. Changing the composition of shareholders in a JSC requires registration with the registrar.

For state registration, a complete set of formalized documents must be submitted. After successful registration, information about the change of ownership will be entered into the unified database of legal entities.

Our TOLT lawyers can assist in the preparation and execution of such buying or selling transactions of a company.

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