BISHKEK, Kyrgyzstan, July 2. The amendments to the legislation on the securities market aimed at increasing the transparency of corporate governance and bringing it in line with international practice will come into force in Kyrgyzstan on July 10, Trend reports.
As explained by the State Service for Regulation and Supervision of the Financial Market of Kyrgyzstan, the document affects key mechanisms for regulating joint-stock companies and introduces new concepts related to securities.
One of the most notable innovations is the replacement of audit commissions with an internal audit service. Professional auditors will now be involved in the internal control of companies, which, according to the developers, will strengthen independent oversight of the financial activities of joint-stock companies.
Another important amendment concerns the procedure for share buybacks. If a company’s shares have been traded on the stock exchange for at least six months, the buyback price cannot be lower than the weighted average market price for that period. This eliminates the need for an independent valuation when organized trading exists. Additionally, in the case of buybacks of global depositary receipts, the company is relieved of the obligation to purchase the underlying shares.
Moreover, a new rule has been introduced allowing majority shareholders (with a stake of more than 80 percent) to buy out shares from so-called “silent” minority shareholders through the court - those who have not participated in general shareholder meetings for more than 10 years and with whom there is no contact. The buyout is only possible after an independent valuation and publication of a notice two months before filing a court application. The funds are transferred to the National Depository. If shareholders do not claim their rights within 10 years, the money goes to the state.
The law also expands and clarifies the basic terms of securities legislation. Concepts such as underwriter, beneficial owner, global depositary receipt, “green” and Islamic bonds, qualified investors, and others are introduced. This will allow more precise regulation of professional activities in the stock market and attract investments.
