In Kyrgyzstan, owners of limited liability companies may be forced to pay their companies' tax debts

In Kyrgyzstan, amendments to certain legislative acts regulating the activities of limited liability companies have been submitted for public discussion. The document was developed by the Ministry of Economy and Commerce and aims to create a more transparent business environment and combat abuse in the use of LLCs.

The discussion of the bill will continue until March 24.

One of the key innovations of the project is the introduction of subsidiary liability of founders and participants of LLCs for the company's obligations to the state in terms of taxes, non-tax payments, and insurance contributions.

It is assumed that such liability will apply to all limited liability companies regardless of their ownership structure and number of participants.

The initiators of the bill note that today the organizational and legal form of an LLC is often used to evade tax obligations. In practice, companies are created that do not conduct any real economic activity and are used to carry out dubious transactions, after which they are liquidated or go bankrupt, leaving debts to the budget.

Another important change concerns the management of new companies. The bill proposes to establish that during the first 24 months after registration of an LLC, its director must be one of the founders. It will only be possible to appoint an outside person to this position after confirmation that the company is actually conducting economic activities.

According to the developers, this measure should reduce the practice of using nominal directors and front men when registering a business.

The draft also provides for changes to bankruptcy legislation. If a company is officially declared bankrupt, its manager will automatically be deprived of the right to conduct business or hold management positions:

• from 1 to 3 years for the first bankruptcy;
• up to 10 years for a repeat bankruptcy.

This measure is aimed at combating deliberate and fictitious bankruptcies.

According to the draft, most of the amendments will come into force 10 days after the official publication of the law. At the same time, a number of provisions, including those on the subsidiary liability of LLC members, are planned to be applied from July 1 this year.