Foreign ownership restrictions / limitation of foreign investments and equity in corporations in Kyrgyzstan

1) Are there any restrictions on foreign ownership in companies?

In Kyrgyzstan, foreign participants may own 100% of the shares, without mandatory local partnership. Also, foreign companies can open branches and representative offices without restrictions. 

However, restrictions on foreign ownership apply in certain strategic sectors and regulated industries, such as subsoil use, telecommunications, finance, and others.

2) Is government approval required for foreign investment in local companies?

Under the legislation of the Kyrgyz Republic, foreign investors are granted “national treatment,” which ensures that they enjoy the same rights and conditions for conducting economic activities as local investors. This principle guarantees equal investment rights irrespective of the investor’s citizenship, nationality, language, gender, race, religion, location of business activity, or the country of origin of the investor or the investment.

As a result, foreign investors generally do not require any special governmental approval to invest in local companies. However, it is important to note that certain sectors, particularly those deemed strategic or subject to licensing requirements, may necessitate prior approval or compliance with additional regulatory procedures.

3) Which sectors are subject to special rules or restrictions for foreign investors?

Under the legislation of the Kyrgyz Republic, certain areas may be designated where, based on the requirements of ensuring national security, the activities of foreign investors and enterprises with foreign investment may be restricted or prohibited. Such sectors include Subsoil use (specific activities only), Television and radio broadcasting, Agricultural and residential lands, Strategic objects, etc.

4) Can foreign persons own 100% of a limited liability company or joint-stock company?

Yes, foreign persons may own 100% in a limited liability company or joint-stock company.

5) Are beneficial ownership rules applicable to foreign participants?

Yes, Kyrgyzstan requires that foreign investor or shareholders’ ultimate beneficial owners are properly identified and disclosed when opening a bank account according to banking rules and upon the receival of the subsoil license.

6) Are there any quotas or thresholds on foreign ownership in strategic companies?

Yes, there are quotas and thresholds for foreign ownership in strategic companies. 

For example, a legal entity or an individual, including a foreign entity, recognized as the winner of an auction or tender for the right to use large and medium-sized gold and silver deposits, must establish a legal entity in the Kyrgyz Republic with a mandatory state shareholding of at least 30% in order to obtain a subsoil use license for it.

In the event that the owner intends to sell a strategic asset held in municipal, private, or other forms of ownership, the Cabinet of Ministers of the Kyrgyz Republic has the pre-emptive right to purchase the strategic asset in accordance with the procedure established by the legislation of the Kyrgyz Republic.

Privatization and other forms of alienation of strategic assets that are in state ownership shall be carried out with the approval of the Jogorku Kenesh of the Kyrgyz Republic.

7) Is disclosure of foreign shareholders/participants required when registering a company?

Yes, it is obligatory to disclose information on shareholders\participants (foreign and local) when registering a company in Kyrgyzstan. You shall provide all data on the shareholders\participants in accordance with the legislation of the Kyrgyz Republic and AML/CFT requirements.

8) Are there any restrictions on the acquisition of real estate by foreign legal entities?

Yes, foreign legal entities and individuals are prohibited from owning agricultural land in the Kyrgyz Republic. However, they may acquire ownership of real estate (such as buildings or structures) situated on such land plots, provided that the underlying land is leased on a long-term basis-typically for up to 49 years. In general, land plots may be granted to foreigners only for fixed-term (temporary) use.

Agricultural lands transferred into the ownership of foreign legal entities shall be subject to alienation within two years from the moment the ownership right arises.

Additionally, there are restrictions on acquiring real estate or land located within special zones, including areas of strategic significance, military installations, and border territories.

9) Are there any business or office localization requirements for foreign investors?

Generally, there are no mandatory requirements for localization of business or offices for foreign investors in Kyrgyzstan. Foreign investors may own and manage a company remotely. However, every company must have an official address of company registration (legal address) within the Kyrgyz Republic.

Foreign licenses and permits may be recognized in accordance with the legislation of the Kyrgyz Republic.

10) Are sanctions or other restrictions applied to investors from specific countries?

Generally, Kyrgyzstan maintains an open and non-discriminatory investment environment, where foreign investors are generally welcomed regardless of their country of origin. There are no formal legal restrictions that ban investment based solely on nationality. In principle, any foreign individual or entity may register and operate a business in Kyrgyzstan on equal terms with Kyrgyz nationals.

However, in accordance with the Law of the Kyrgyz Republic on Combating the Financing of Criminal Activities and the Legalization (Laundering) of Criminal Proceeds, a Consolidated Sanctions List of the Kyrgyz Republic and the UN Security Council is maintained, covering individuals and legal entities, as well as a list of high-risk countries to which measures (sanctions) are applied.

Authors: Aisanat Safarbek kyzy, Elvira Maratova, Zhanygul Kaparova