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External management law to reduce investment attractiveness of Kyrgyzstan

The law on external management will significantly reduce the investment attractiveness of Kyrgyzstan. The Institute of the country’s Business Ombudsman says.

The Parliament adopted changes that allow imposing external management at enterprises.

The Business Ombudsman warns that adoption of this law creates an unfavorable precedent and may lead to a significant reduction of the investment attractiveness of the country.

Potential investors intending to participate in investment projects in the Kyrgyz Republic will have to take into account the risks associated with external management arising from this regulatory legal act.

These innovations may negatively affect the position of Kyrgyzstan in international economic ratings, the institute notes.

The Business Ombudsman stresses that it is additionally necessary to take into account the possible risks associated with proceedings in international arbitration.

Successful international experience in attracting investment provides for the state to ensure the rule of law, the presence of stable, predictable rules for doing business, and guarantees of the state in protecting the rights, freedoms and legitimate interests of entrepreneurs and investors.

On May 7, the Parliament of Kyrgyzstan adopted in three readings a bill that allows, under certain circumstances, to give the government full control over the activities of a certain entity. The draft law on Amendments to Certain Legislative Acts in the Sphere of Corporate Governance (Law on Joint Stock Companies, Criminal Code) provides for temporary external management of financial, organizational, administrative, personnel and other decisions of the company. The amendments stipulated by the bill apply to joint stock companies exercising their right to use subsoil on the basis of a concession agreement.

Only one enterprise, Kumtor Gold Company, operates under such conditions in Kyrgyzstan.