Antitrust approval for transactions with affiliated persons in Kyrgyzstan: key aspect for business

In the developing economy of the Kyrgyz Republic, antitrust legislation is an important tool for ensuring fair competition in the market. Since 2011, with the entry into force of the Law of the Kyrgyz Republic “On Competition,” antitrust control has become an integral part of regulating business activity, and more and more companies undergo the registration procedure in compliance with these legislative requirements.

If your company plans an economic concentration such as a merger, acquisition, establishment of a new business entity, or especially a transaction involving affiliated persons, prior approval from the Antimonopoly Regulation Service under the Ministry of Economy and Commerce of the Kyrgyz Republic is mandatory. This article aims to provide an overview of how this mechanism works and which key aspects must be taken into account to avoid legal risks.

ECONOMIC CONCENTRATION AND THE ROLE OF AFFILIATED PERSONS

Economic concentration refers to transactions or other actions that may affect the competitive environment in the relevant commodity market. In Kyrgyzstan, antitrust control applies to the following forms of economic concentration:

• Reorganization of business entities (merger, acquisition, transformation);
• Establishment of commercial organizations if:
  • more than 5% of their shares (participation interests in the authorized capital) belong to the state;
  • shareholders are affiliated persons and/or a group of persons;
• Acquisition of shares (participation interests) or controlling stakes of a dominant entity.

Special attention in the context of antitrust regulation is paid to affiliated persons. According to the Law of the Kyrgyz Republic “On Competition,” an affiliated person is any individual or legal entity capable of directly or indirectly influencing the decisions of a business entity.

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Authors:

Aisanat Safarbek kyzy, Partner

Tilek Obolbekov, Associate