President of Kyrgyzstan Sadyr Japarov signed a law amending Part I of the Civil Code, strengthening the regulation of limited liability companies. The document will come into force in a month.
According to the amendments, if an LLC has a sole founder who is also the sole shareholder of another business entity, such entities must not be under the direct or indirect control of a foreign company.
The law also introduces joint and several subsidiary liability for companies with a single shareholder. They will be liable for the obligations of:
- companies in which they are or were previously the sole shareholder;
- companies in a chain of ownership where the shareholder is a business entity wholly affiliated with a single shareholder.
Additionally, the law prohibits registration of new companies if the chain of such «single-member» entities exceeds three ownership levels.
Furthermore, the provisions on subsidiary liability in Article 143 of the Civil Code have been clarified, with government agencies and municipal structures excluded from the list of entities subject to this rule.
The Cabinet of Ministers is required to conduct an explanatory campaign for businesses within one month and ensure its decisions are in line with the law.
