LAW OF THE KYRGYZ REPUBLIC

No. 167 of 30 July 2013

On guarantee funds in the Kyrgyz Republic

(As amended by the Law of the Kyrgyz Republic of October 26, 2016 No. 172)

This Law defines the legal and economic basis of creation and activity of guarantee funds in the Kyrgyz Republic.

Chapter 1

General provisions

Article 1. Basic concepts and terms used in this Law

The Guarantee Fund is a legal entity created in the organizational and legal forms provided for by this Law in order to increase the accessibility for small and medium-sized enterprises of bank loans allocated by them for business development, expansion of production, acquisition and modernization of fixed assets, introduction of new technologies, innovative activity and opening of new enterprises, by providing guarantees (sureties).

Financial and credit institutions are banks, microfinance organizations that, on the basis of their licenses issued by the National Bank of the Kyrgyz Republic, have the right to carry out banking operations that have concluded or intend to conclude a cooperation agreement with the guarantee fund and lending entities of small and medium-sized enterprises.

Guarantee capital – a set of financial resources consolidated by the guarantee fund to ensure the fulfillment of obligations of small and medium-sized enterprises to creditors by providing guarantees (sureties).

Obligations of a small and medium-sized enterprise entity – obligations of a small and medium-sized enterprise entity arising under loan agreements and meeting the requirements of this Law.

Guarantee (surety) – a written obligation of the guarantee fund to be responsible for the fulfillment of obligations of small and medium-sized enterprises to a financial and credit institution under a loan agreement, leasing agreement (hereinafter – a loan agreement).

The guarantee case is the fact of non-fulfillment by small and medium-sized enterprises of obligations under the loan agreement.

Regulations for the provision of guarantees (sureties) – a document approved by the authorized body of the guarantee fund and regulating the procedure and conditions for the provision of guarantees (sureties).

Small and medium-sized enterprises are individuals engaged in entrepreneurial activities without the formation of a legal entity, commercial organizations and enterprises defined in accordance with the legislation of the Kyrgyz Republic.

The client is a small and medium-sized enterprise entity that has entered into a loan, leasing agreement with a financial and credit institution with a share of guarantee security (surety) of the guarantee fund.

Multiplier ratio – the ratio of excess of guarantees (sureties) of the guarantee fund, which is ready to accept the financial and credit institution, over the funds of the guarantee fund, placed in the specified institution.

Guarantee activity – the activity of guarantee funds aimed at providing guarantees (guarantees) to customers.

Participants of guarantee funds are founders, shareholders, shareholders and members of guarantee funds.

Recourse claim – the right of the guarantee fund to require the client to reimburse the amount paid to the financial institution in fulfillment of the obligation under the guarantee agreement (guarantee).

Article 2. Name of guarantee fund

The guarantee fund must use only the name given in the charter of the organization and use the words “Guarantee Fund” in the name, and the abbreviation “Guarantee Fund” in its short name, respectively.

Article 3. Differentiation of liability of the Kyrgyz Republic and guarantee funds

Guarantee funds are not liable for the obligations of the Kyrgyz Republic, and the Kyrgyz Republic is not liable for the obligations of guarantee funds, except when the parties voluntarily accept such obligations.

Chapter 2

Organizational and legal forms of guarantee funds. Activities of guarantee funds

Article 4. Creation of guarantee fund

1. Guarantee funds may be established by natural and legal persons subject to the requirements of this Law.

2. Guarantee funds may be established in the form of joint stock companies, limited liability companies, cooperatives, institutions and funds.

3. Guarantee funds form management bodies depending on the organizational and legal form, according to the legislation of the Kyrgyz Republic and in accordance with the constituent documents.

4. Legal entities that do not meet the requirements of this Law shall not have the right to engage in guarantee activities.

Article 5. Associations of guarantee funds

1. In order to coordinate their activities, protect and represent common interests, implement joint guarantees and for other similar purposes, guarantee funds may form associations or unions.

2. Guarantee funds are prohibited from using associations or unions for the purpose of setting fees, contributions or for other purposes aimed at limiting competition, monopolizing the market and impairing the access of small and medium-sized enterprises to credit resources.

Article 6. Branches and representative offices of guarantee funds

1. The branch of the guarantee fund is its separate division, which is not a legal entity, located outside the location of the head guarantee fund, performing all and/or part of the operations on the basis of the regulation approved by the guarantee fund, and acting within the limits of the powers granted to it by the guarantee fund.

The branch has the same authorized capital as the guarantee fund, the balance sheet, as well as the name completely coinciding with the name of the guarantee fund, with the addition of the word “branch.”

2. The representative office of the guarantee fund is its separate division, which is not a legal person, which protects and represents the interests of the guarantee fund, performs transactions and other legal actions on its behalf, with the exception of issuing guarantees (guarantees).

3. The actions of branches and/or representative offices of guarantee funds are considered as the actions of guarantee funds, and their created guarantee fund is fully responsible for the actions of branches and/or representative offices.

Article 7. Independence of guarantee funds in the Kyrgyz Republic

1. Guarantee funds independently organize and carry out their activities within the competence granted to them by this Law and other normative legal acts of the Kyrgyz Republic.

2. State bodies and bodies of local self-government and their officials are prohibited from interfering in any form in the resolution of issues related to the activities of guarantee funds, except in cases established by the legislation of the Kyrgyz Republic.

3. The amount of remuneration for services is independently established by the guarantee fund in accordance with the contract concluded with the client.

Chapter 3

Guarantee capital

Article 8. Guarantee capital

Guarantee capital of the guarantee fund consists of fully paid charter capital, retained profit, voluntary donations and contributions not prohibited by the legislation of the Kyrgyz Republic.

Article 9. Authorized capital of the guarantee fund

1. The minimum authorized capital of the guarantee fund shall not be less than 6 million soms, except for guarantee funds established and in force prior to the adoption of this Law.

During the whole period of activity, the amount of equity of the guarantee fund must be at least the minimum amount of authorized capital.

2. The share of each of the individuals and legal entities in the authorized capital of the guarantee fund is not limited.

3. (Lost in accordance with the Law of the Kyrgyz Republic of October 26, 2016 No. 172)

4. The formation of the authorized capital of the guarantee fund is carried out in cash. The authorized capital includes the authorized capital, which is not borrowed.

5. The funds invested by the participants in the authorized capital of the guarantee fund can be obtained by them only by selling their shares, shares or shares.

(As amended by the Law of the Kyrgyz Republic of October 26, 2016 No. 172)

Article 10. Sources of charter capital formation

1. The authorized capital of the guarantee fund may be formed at the expense of the national, local budgets, voluntary contributions and other extrabudgetary sources, in accordance with the legislation of the Kyrgyz Republic.

2. The authorized capital is consolidated by the guarantee fund by placing it in bank deposits (deposits).

Chapter 4

Basic conditions and procedure of guarantees (sureties)

Article 11. Provision of guarantees (sureties)

1. Guarantees (sureties) are provided by the guarantee fund through the conclusion of a guarantee (surety) agreement between the guarantee fund, the financial and credit institution and the small and medium-sized enterprise subject on the terms and conditions defined by this Law and the regulations for the provision of guarantees (sureties), on the basis of the decision of the Evaluation Commission.

2. The composition of the Evaluation Commission shall be determined by the participants of the guarantee fund. The members of the Evaluation Commission are appointed by the supreme management body of the guarantee fund for a period of 2 years.

3. Selection of obligations of small and medium-sized enterprises provided by guarantee (surety) of the guarantee fund and requirements to these entities are determined by the relevant competent body of the guarantee fund in accordance with the procedure and conditions established by this Law and the charter of the guarantee fund.

4. The Bank accepts guarantees (sureties) from the guarantee fund according to the multiplier coefficient established by the agreement between the guarantee fund and the financial and credit institution.

Article 12. Main conditions of guarantees (sureties)

1. Guarantees (sureties) of the guarantee fund are provided for an unsecured part of the obligation of the business entity under the loan agreement.

2. The liability of the guarantee fund under the concluded guarantee (guarantee) agreements should not exceed 50 percent of the volume of the main obligation (principal amount of the loan) of the client to the financial institution.

3. The guarantee (surety) amount of the guarantee fund per client cannot exceed 10 percent of the total guarantee capital of the guarantee fund.

4. The guarantee (surety) is provided on a reimbursable basis and is determined by the guarantee (surety) agreement.

(As amended by the Law of the Kyrgyz Republic of October 26, 2016 No. 172)

Article 13. Liability of the guarantee fund

1. The liability of the guarantee fund in case of non-fulfillment or improper performance by the client of the guarantee (surety) obligation is solidarity in the amount specified in the guarantee (surety) agreement.

2. The guarantee fund does not ensure fulfillment of the client’s obligations to pay interest on the loan, penalty, fine, penalty, commission.

3. The obligation of the guarantee fund to fulfill the client’s obligations occurs when the client violates the loan repayment terms. At the same time, the financial and credit institution within 5 working days from the date of non-fulfillment by the client of obligations under the loan agreement in writing notifies the guarantee fund of violation of the terms of the loan agreement made by the client.

The obligation of the guarantee fund specified in the first paragraph of this part arises after providing a certified statement on the client’s loan account and the implementation by the financial and credit institution of all measures to collect debt in the manner provided for by agreements and legislation of the Kyrgyz Republic.

4. In case of confirmation of fulfillment of the conditions stipulated by the second paragraph of part 3 of this article, the guarantee fund shall pay off the debt on the terms of the guarantee (guarantee) agreement at the expense of the guarantee fund.

5. After repayment by the guarantee fund of the client’s debt under the loan agreement, all rights of the financial and credit institution under the loan agreement in the amount of fulfilled obligations are transferred to the guarantee fund. At the same time, within 3 days from the date of fulfillment by the guarantee fund of obligations under the guarantee (surety) agreement, the financial institution must transfer to the guarantee fund documents certifying the rights of claim to the debtor client.

6. The Guarantee Fund shall have the right to demand from the client, in recurrence, reimbursement of the amount paid to the financial institution in fulfillment of the obligation under the guarantee (guarantee) agreement, in accordance with the legislation of the Kyrgyz Republic.

7. The funds received by the guarantee fund when meeting the recourse requirements to the debtor client remain at the disposal of the guarantee fund and are allocated for the development of the guarantee fund.

Chapter 5

Final provisions

Article 14. Accounting and reporting in guarantee funds

1. The Guarantee Fund shall ensure that documents used in accounting and reporting are recorded and stored.

2. The list of the main documents to be stored and the terms of their storage shall be established by the legislation of the Kyrgyz Republic.

Article 15. Reorganization and/or liquidation of guarantee funds

1. The guarantee fund may be reorganized (merger, accession, separation, allocation) subject to the requirements established by the legislation of the Kyrgyz Republic.

2. The funds of the guarantee fund remaining after the satisfaction of all obligations are subject to distribution among the founders, shareholders in proportion to their shares, with the exception of guarantee funds created in the form of funds.

Article 16. Entry into force of this Law

1. This Law shall enter into force after 15 days from the date of official publication.

2. Guarantee funds established and in force prior to the adoption of this Law shall be obliged to increase the authorized capital to the amount provided for in Part 1 of Article 9 within 2 years from the date of adoption of this Law.

President

of the Kyrgyz Republic

A. Atambayev