Bishkek September 24, 1997, # 66
 
THE LAW OF THE KYRGYZ REPUBLIC

On foreign investments in the Kyrgyz Republic

     Chapter I.   General provisions
     Chapter II.  Guarantees for foreign investors
     Chapter III. Rights and obligations of foreign investors
     Chapter IV.  The creation and registration of legal entities with foreign participation
     Chapter V.   Taxation of foreign investors and accounting
     Chapter VI.  Instructions of the labor legislation for foreign  investors
     Chapter VII. Final provisions 
 
     This Law is aimed at the creation of legal, economic and organizational preconditions for attraction of foreign investments, development  of  the bases for a favorable investment climate in the Kyrgyz Republic  for foreign investments.  It establishes their legal regime, the proce-  dure for settlement of investment disputes, and also regulates the protection and provision of foreign investors with guarantees.
 
Chapter I
General provisions

Article 1. Basic concepts and terms used in this Law
 
     1. Invistmints mean tangible and intangible assets, in particular:
     money;
     movable and immovable property;
     property rights (mortgages, liens, pledges and others);
     stock and other forms of participation in a legal entity;
     bonds and other debenture liabilities;
     rights (claims) to money,  goods, services and any other claims to
performance under a contract;
     the right to intellectual property including goodwill, copyrights,  patents, trade marks, industrial designs, technological processes, trade names, and know-how;
     any right to activity based on a license or in other form given by  State agencies;
     concessions based on Law including concessions for  search,  development, mining or exploitation of natural resources;
     profit received and re-invested within the territory of the Kyrgyz Republic.
     The form in which property is invested,  or a change of this  form does not affect its nature as investments.
     2. "Foreign investments" are investments appearing as  contributions  of foreign investors into objects of economic activity in the territory of the Kyrgyz Republic to derive profit.
     3. "Foreign investor" means:
     1) any individual who is:
     a foreign citizen; or
     citizen of the Kyrgyz Republic who has permanent residency  status abroad  provided  that he is registered in the country of his permanent residency to conduct economic activity; or   a person without a citizenship, permanently living abroad;
     2) any legal entity which is either:
     created and registered in accordance with the legislation of a fo-
reign State; or
     founded in accordance with the legislation of the Kyrgyz Republic,
and has its legal address or principal place of business on the  terri-
tory of a foreign State; or
     an enterprise with foreign participation,  i.e. founded in compli-
ance with the legislation of the Kyrgyz Republic, and also:
     a) wholly owned by one or more foreign individuals,  legal entiti-
es; or
     b) controlled and managed by one or more foreign individuals,  le-
gal entities on the basis of: a written contract, the rights to exerci-
se the majority of the voting shares,  right to appoint the majority of
the members in its executive or supervisory bodies; or
     c) in which not less than twenty percent (20%) of the Charter  ca-
pital owned by foreign citizens, individuals without citizenship perma-
nently living abroad or legal entities referred to in this Article;
     3) a  foreign State or its administrative-territorial unit conduc-
ting economic activity;
     4) a  legal  entity  created  on the basis of an intergovernmental
treaty or agreement.
     4. "Profit" is the amount received as a result of investment acti-
vity and defined as the difference between total annual income and  de-
ductions as is defined by the Tax Code of the Kyrgyz Republic.
     5. "Investment dispute" means any dispute between a foreign inves-
tor and the Kyrgyz Republic concerning a foreign investment.
     6. "Freely tradable currency" means  any  currency  determined  as
such by the International Monetary Fund.
 
     Article 2. Priority of interstate agreements
 
     Provisions of intergovernmental agreements and other acts ratified
by the Jogorku Kenesh of the Kyrgyz Republic of which the Kyrgyz Repub-
lic  is  a  signatory,  shall have priority over the provisions of this
Law.
 
                              Chapter II
                   Guarantees for foreign investors
 
     Article 3. Guarantees of national treatment, equitable and fair
                treatment, full and constant protection for foreign
                investors
 
     1. The  Kyrgyz  Republic  shall accord to foreign investors making
investments within the territory of the Kyrgyz Republic fair, equitable
legal treatment, full and constant protection, and guarantees.
     The Kyrgyz Republic through  its  authorized  governmental  bodies
shall  abstain  from interference in the economic activity,  rights and
legally recognized interests of foreign investors.
     Officials of  the Kyrgyz Republic who fail to comply with the pro-
visions of this Article shall be held liable  in  accordance  with  the
Laws of the Kyrgyz Republic.
     2. The Kyrgyz Republic shall provide foreign investors,  who  make
investments,  with  the national treatment of economic activity applied
to legal entities and individuals of the Kyrgyz Republic within the ex-
ception  that restrictions which can be introduced in the areas related
to defense,  the protection of national security, health of the popula-
tion, and public morals.
 
     Article 4. Guarantees of non-discrimination of foreign investors
 
     The Kyrgyz  Republic  through  its  authorized governmental bodies
shall permit no discrimination in respect of foreign investors  on  the
basis of their citizenship,  residency, religion, place of economic ac-
tivity, and State of origin of investors or investments taking into ac-
count international agreements of the Kyrgyz Republic.
 
     Article 5. Guarantees of protection from expropriation of foreign
                investments
 
     1. Foreign investments shall not be subject to expropriation  (na-
tionalization,  requisition  or  any other equivalent measure including
inactivity on the part of the authorized  governmental  bodies  of  the
Kyrgyz  Republic which has the effect of forced alienating of assets of
a foreign investor or depriving of an opportunity to use investment re-
sults),  except  in  those instances when such expropriation is carried
out for an overriding public purpose, on a non-discriminatory basis, in
accordance  with  the  required  legal  procedure,  and  accompanied by
prompt, required and actiual compensation.
     2. Compensation  shall be equivalent to the objective market value
of the expropriated investment or the portion of the investment exprop-
riated on the date the decision is adobted concerning expropriation.
     3. Compensation shall be actually made and is required to be  made
in a freely traded currency.  Compensation shall include interests cor-
responding to the interest rate of a long-term credits used by the  Na-
tional  Bank  of  the Kyrgyz Republic calculated for the period between
the date of expropriation and the date of compensation payment.
     4. The  required legal procedure will provide for the right of the
foreign investor which claims to be effected by expropriation to prompt
review,  including  the valuation of his investment and payment of com-
pensation in accordance with the provisions of this Article by a  judi-
cial  authority or any other competent authority of the Kyrgyz Republic
without violating the procedure for compensation foreign investors  un-
der Article 23 hereof.
 
     Article 6. Reimbursement of losses to foreign investors
 
     1. Foreign  investors who incurred losses related to their foreign
investments within the territory of the Kyrgyz Republic as a result  of
a war or other military conflict,  revolution, emergency situation, ci-
vil conflicts (unrest) or other similar circumstances shall be  granted
the  legal status and conditions not less favorable than the status and
conditions given to legal entities and individuals of the Kyrgyz Repub-
lic.
     2. The Kyrgyz Republic through its authorized governmental  bodies
shall without delay and honestly fulfill all the obligations created by
law in force or by any agreement with a foreign investor.  If a foreign
investor  has  incurred losses as a result of activity or inactivity of
the Kyrgyz Republic's officials and such activities contradict the  le-
gislation of the Kyrgyz Republic, the foreign investor has the right to
compensation in accordance with the Article 5 this Law.
 
     Article 7. Guarantees for the use of incomes
 
     1. Foreign investors shall have the right to  use  freely  and  to
apply  at  their discretion their investments and incomes received from
investment activities for any purposes which are not prohibited by  the
legislation of the Kyrgyz Republic.
     2. For the protection and use of incomes and any other  resources,
foreign  investors shall have the right to open in the territory of the
Kyrgyz Republic accounts in the national and foreign currency in accor-
dance with the legislation of the Kyrgyz Republic.
 
     Article 8. Freedom of currency transactions
 
     1. Currency transactions shall be carried out by foreign investors
in accordance with the Law of the Kyrgyz Republic "On Foreign  Currency
Transactions"  and other legislation of the Kyrgyz Republic on Currency
Controls.
     2. Foreign  investors  shall with respect to all payments relating
to a foreign investment in the Kyrgyz Republic have the right to freely
convert  the  national  currency  of the Kyrgyz Republic into any other
currency.
     3. All  foreign investment-related foreign currency transfers in a
foreign currency into and out of the Kyrgyz Republic shall  be  carried
out  freely  and without delays under the condition of payment of taxes
and other mandatory payments in accordance with the procedure establis-
hed by the legislation of the Kyrgyz Republic.
     Such transfers shall include:
     profits, incomes, payments for services and commissions;
     compensation received for losses incurred;
     dividends, interest rates payments;
     proceeds from the sale of one's property;
     proceeds from  the sale or liquidation of a part of or all invest-
ments;
     membership dues fees, royalties, payments on management contracts,
and expenses related to debt servicing;
     the Charter capital and additional amounts to establish or increa-
se a foreign investment;
     payments made under contracts including local agreements;
     payments arising from settlement of disputes;
     salary and other remuneration to foreign employees;
     proceeds legally received from other sources.
     4. In  the  territory  of  the  Kyrgyz Republic a foreign investor
shall have the right to freely dispose of the National currency of  the
Kyrgyz Republic which belongs to the investor.
 
     Article 9. Free access to the open information
 
     1. Laws  and  regulations,  and  also court decisions which in any
manner affect interests of foreign  investors  must  be  accessible  to
them, and in cases directly provided for by the legislation of the Kyr-
gyz Republic they must be published.
     2. State  bodies,  at  foreign investors' requests,  shall provide
them with information they are interested in  accordance  with  to  the
procedure provided for by legislation of the Kyrgyz Republic.
 
     Article 10. State body effectuating the attraction of foreign
                 investments
 
     1. A Governmental Organ to attract investments shall be created in
order to facilitate the attraction,  realization,  development and pro-
tection of foreign investments in the Kyrgyz Republic.
     2. To  foreign investments the Governmental Organ effectuating the
attraction of investments shall guarantee communication between foreign
investors  and  the  Kyrgyz  Republic  and will carry out the following
functions:
     1) preparation  and  distribution  of information about investment
opportunities and conditions in the Kyrgyz Republic;
     2) advising potential foreign investors on legal, economic and ot-
her issues regarding a specific activity;
     3) providing  foreign investors with necessary information related
to the licensing procedure of permissibility for carrying out  activity
and providing necessary assistance;
     4) developing proposals for all organs of the Kyrgyz Republic con-
cerning improvement of the investment climate in the Kyrgyz Republic;
     5) within its power,  representing the Kyrgyz Republic or partici-
pating  on  behalf of the Kyrgyz Republic in international negotiations
or consultations on foreign investments;
     6) advising  any  organs and officials on the existing policy or a
policy being planned in the area of foreign investments;
     7) performing other functions aimed at the attracting support, ma-
intenance and protection of foreign investments in the Kyrgyz Republic.
     3. Foreign investors shall, on equal basis, have the right but not
the obligation to use services of the  State  Organs  effectuating  the
attraction  of investments concerning the development and protection of
their interests.
 
                              Chapter III
              Rights and obligations of foreign investors
 
     Article 11. Economic autonomy of foreign investors
 
     1. Foreign investors shall have the right independently to attract
legal entities and individuals, including foreign, on a contractual ba-
sis who are needed to realize their investments.
     2. Foreign investors may establish subsidiary enterprises, as well
as branches and representative offices within the territory of the Kyr-
gyz Republic in compliance with the legislation of the Kyrgyz Republic.
Affiliates  and  representative offices shall act based upon procedural
rules for them approved by their founding foreign investor.
     3. A foreign investor may assign his property rights and authority
concerning investments to other legal entities and individuals  in  ac-
cordance with the procedure established by laws of the Kyrgyz Republic.
Interrelations between parties to an assignment of rights are regulated
by law or by an agreement.
     4. Foreign investors shall have the right to  attract  funds  into
the Kyrgyz Republic in the form of credits,  issuance of securities and
loans. Property and various types of property rights of an investor may
be used as collateral to secure obligations of a foreign investor.
 
     Article 12. Formation of charter capital
 
     Foreign investors are free to choose the amount (size), compositi-
on and structure of the charter capital of a legal entity being created
in  accordance with requirements of the Civil Code of the Kyrgyz Repub-
lic and the law of the Kyrgyz Republic "On  Economic  Partnerships  and
Enterprises".
 
     Article 13. The observance of Kyrgyz Republic laws by foreign
                 investors
 
     While conducting economic activity within  the  territory  of  the
Kyrgyz  Republic,  foreign investors are obliged to observe laws of the
Kyrgyz Republic, in particular, but not exclusively, concerning ecology
and environmenal protection, labor, health and municipal building requ-
irements.
 
     Article 14. Insurance of foreign investments
 
     Legal entities with foreign participation may and,  in circumstan-
ces  specified by legislation of the Kyrgyz Republic,  must be insured.
Foreign investments may be insured both in the Kyrgyz Republic and out-
side its borders.
 
                              Chapter IV
                The creation and registration of legal
                  entities with foreign participation
 
     Article 15. The procedure for creation and registration of legal
                 entities with foreign participation
 
     1. A legal entity with foreign participation is created in  accor-
dance  with  the  Civil  Code of the Kyrgyz Republic and the Law of the
Kyrgyz Republic "On Economic Partnerships and Enterprises".
     2. State registration of legal entities with foreign participation
shall be carried out at the Ministry of Justice of the Kyrgyz  Republic
in accordance with the Civil Code of the Kyrgyz Republic and the law of
the Kyrgyz Republic "On State Registration of Legal Entities" with con-
sideration of special requirements set forth in this law.
 
     Article 16. Special requirements for state registration of legal
                 entities with foreign participation
 
     1. In addition to the documents provided in the law of the  Kyrgyz
Republic  "On  the State Registration of Legal Entities," a foreign in-
vestor must provide the Ministry of Justice of the Kyrgyz Republic with
the  following  documents  or  their  notarized copies with a notarized
translation in the Kyrgyz or Russian languages:
     for a foreign individual:
     a passport,  but for an individual without a citizenship any other
document which verifies his identity;
     for a foreign legal entity:
     an extract  from a trade register,  certificate or any other docu-
ment which verifies that the foreign participant is a legal  entity  in
accordance  with  the  legislation of the country where the given legal
entity has been registered.
     2. For  conducting  specific types of activity,  foreign investors
shall obtain licenses in accordance with the law of the Kyrgyz Republic
"On Licensing".
 
                               Chapter V
             Taxation of foreign investors and accounting
 
     Article 17. Taxation of foreign investors
 
     Unless this Law states otherwise,  the taxation of foreign  inves-
tors  and  foreign  investments shall be carried out in accordance with
the tax legislation of the Kyrgyz Republic.
 
     Article 18. Accounting and reporting
 
     1. Foreign investors must keep accounting  records  and  reporting
according to the rules in force in the Kyrgyz Republic.
     2. Foreign investors shall be obliged to present  reporting  docu-
ments  and information to tax,  statistics and other agencies according
to the procedure established by legislation of the Kyrgyz Republic.
 
                              Chapter VI
                 Instructions of the labor legislation
                         for foreign investors
 
     Article 19. Labor relations with citizens of the Kyrgyz Republic
 
     Citizens of the Kyrgyz Republic who work at enterprises which  are
fully  or  partially  owned by a foreign legal entity or individual and
which are located in the territory of the Kyrgyz Republic shall be sub-
ject to laws and other legal acts which are in effect within the terri-
tory of the Kyrgyz Republic.
 
     Article 20. Attraction of foreign workers
 
     1. Foreign citizens may be hired as employees by foreign investors
and may be part of the management of a legal entity with foreign parti-
cipation.
     2. The  Kyrgyz Republic through its authorized governmental bodies
shall assist the entry and stay of foreign citizens related to activity
concerning the conducting of foreign investments for the period of the-
ir work in the Kyrgyz Republic in compliance with  the  legislation  of
the Kyrgyz Republic.
     3. Labor relations between foreign investors and  their  employees
who are not nationals of the Kyrgyz Republic shall be regulated by laws
chosen in their labor agreements. These labor agreements may not estab-
lish standards lower than mandatory requirements established by the La-
bor Code of the Kyrgyz Republic. In the event that there is no such la-
bor agreement Laws and other legal acts of the Kyrgyz Republic on labor
shall apply to foreign citizens who work at enterprises located in  the
territory of the Kyrgyz Republic.
 
     Article 21. Social insurance and security
 
     1. Foreign investors shall be obliged to pay for its employees re-
quired contirbutions to the Social Fund and  other  non-budget  special
purpose financial funds established by Law.
     2. Foreign investors and employees shall be exempt from  mandatory
contributions  to  the Social and other funds of the Kyrgyz Republic in
the amount which correspond to the amount of paid payments  to  corres-
ponding funds of a foreign State.
 
                              Chapter VII
                           Final provisions
 
     Article 22. Foreign investments in free economic zones
 
     Specifics about foreign investments in free economic  zones  shall
be  regulated  in accordance with legislation of the Kyrgyz Republic on
free economic zones.
 
     Article 23. Settlement of investment disputes
 
     1. Without limiting other means of legal protection which could be
used  by  a  foreign investor in accordance with the legislation of the
Kyrgyz Republic an investment dispute shall be  settled  in  accordance
with any applicable which is previously agreed upon between the foreign
investor and the authorized governmental organs of the Kyrgyz Republic.
     2. When such an agreement is absent, an investment dispute between
the authorized governmental organs of the Kyrgyz Republic and a foreign
investor shall be settled,  if possible,  through consultations between
the parties thereto.  If the parties thereto cannot come to a  peaceful
settlement of the dispute within three months from the day of the first
written request for such consultations,  the dispute shall  be  settled
through arbitration in accordance with one of the following procedures:
     Regulations of the Third Party Arbitration Court under the Chamber
of Industry and Commerce of the Kyrgyz Republic;
     The Convention concerning the procedure for the settlement of  in-
vestment disputes between governments and citizens of any other states,
("Convention ICSID" signed in Washington DC on March 19,  1965) if app-
licable;
     Arbitration (Auxiliary) regulations of  the  International  Center
for the settlement of the investment disputes (ICSID), if applicable;
     Arbitration regulations of the Commission of  the  United  Nations
Organizations on International Trade Law (UNCITRAL Regulation); in this
case the appointing body shall be General Secretary of ICSID.
     3. The  Kyrgyz  Republic  through its authorized governmental body
shall consent to the transfer of the investment dispute for arbitration
by  virtue of this law.  A foreign investor's agreement may be given at
any time through a written notification to the State Body  effectuating
the  attraction of investments or at the moment of resort to the arbit-
ration.
     4. Disputes between foreign investors and individuals or legal en-
tities of the Kyrgyz Republic are resolved upon the  agreement  of  the
parties  through a Third Party Arbitration Court located inside or out-
side the Kyrgyz Republic.  In the event that there is no such agreement
the  disputes  are decided in accordance with the procedure established
by legislation of the Kyrgyz Republic.
     A decision of the Court shall be binding and final.
 
     Article 24. Application and protection from denouncement
 
     1. No  legislative act of the Kyrgyz Republic which worsen the le-
gal regime of foreign investors established by this Law shall be retro-
active.
     2. If any provision of this law is changed or  is  abolished,  and
such change or abolishment will cause worsening of a foreign investor's
condition,  then the foreign investor shall have the right to compensa-
tion for any losses incurred which is thereby caused in compliance with
Article 5 hereof.
     3. Benefits  provided in Part I of Article 20 and in Article 23 of
the Law of the Kyrgyz Republic "On foreign investments in the  Republic
of Kyrgyzstan" (Vedomosti of the Supreme Soviet of the Republic of Kyr-
gyzstan,  1991,  # 13,  page 449) with amendments and supplements as of
May 7,  1993,  and July 28,  1995,  (Vedomosti of Jogorku Kenesh of the
Kyrgyz Republic,  1993, # 9, page 181; 1995, # 10, page 390) before the
expiration  of  the  term of their validity shall be applied to foreign
investors registered in the Kyrgyz Republic before this Law comes  into
force.
 
     Article 25. Enactment procedure for this Law
 
     1. This Law shall come into force from the moment of publication.
     2. The Law of the Kyrgyz Republic "On foreign investments  in  the
Republic  of Kyrgyzstan" (Vedomosti of the Supreme Soviet of the Repub-
lic of Kyrgyzstan,  1991, # 13, page 449) is no longer in force, except
as provided in parag.1 of Article 20 and Article 23 of that Law in app-
lication to parag.3 of Article 24 of this Law.
     3. The  Cabinet of Ministers of the Kyrgyz Republic within a three
month period shall:
     prepare and submit to Jogorku Kenesh of the Kyrgyz Republic propo-
sals on bringing normative acts in compliance with this law;
     bring its own decisions in compliance with this law.
 
     President of the Kyrgyz Republic                A.Akaev
 
     Adopted by the Legislative Assembly of          September 16, 1997
     Jogorku Kenesh of the Kyrgyz Republic