Benefits of Making Business in Kyrgyzstan | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN KYRGYZSTAN WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN KYRGYZSTAN WWW.MERGERSCORP.COM

4. Country Overview Kyrgyzstan, officially the Kyrgyz Republic, and also known as Kirghizia, is a country in Central Asia. Kyrgyzstan is a landlocked country with mountainous terrain. It is bordered by Kazakhstan to the north, Uzbekistan to the west and southwest, Tajikistan to the southwest and China to the east. The Kyrgyz, a Muslim Turkic people, constitute more than half the population. The history of the Kyrgyz in what is now Kyrgyzstan dates at least to the 17th century. Kyrgyzstan, known under Russian and Soviet rule as Kirgiziya, was conquered by tsarist Russian forces in the 19th century. Formerly a constituent (union) republic of the U.S.S.R., Kyrgyzstan declared its independence on August 31, 1991.

5. Executive Summary Kyrgyzstan, a former Soviet State, is located in Central Asia bordering Kazakhstan to the North, Uzbekistan to the West, Tajikistan to the South and China to the East. The capital is Bishkek located in the North of the country. With a Gross Domestic Product per capita of US$ 2,200 at Purchasing Power Parity, Kyrgyzstan is classified as a low income country. Life expectancy at birth is 69 years and Kyrgyzstan is ranked 120 out of 182 on the UNDP’s Human Development Index. .

6. Introduction – Doing business in Kyrgyzstan Kyrgyzstan is ranked 80 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Kyrgyzstan deteriorated to 80 in 2019 from 70 in 2018. Ease of Doing Business in Kyrgyzstan averaged 69.83 from 2008 until 2019, reaching an all time high of 80 in 2008 and a record low of 41 in 2009. Kyrgyzstan is actively seeking overseas partners to modernise its industry and introducing new technology. To this end, it has enacted a number of laws to encourage and protect foreign investors, foreigners are allowed to purchase businesses and building to carry out their activities but the government reserves the exclusive right to own land, natural resources, water, agriculture and livestock.

7. Conducting business in Kyrgyzstan Company. Additionally, one can also register either a Branch Office or a Representative Office in the country. There are significant tax holidays for foreign investors. In order to invest in Kyrgyzstan should be sent in the first instance to the State Technical Committee on Foreign Investments and Economic Assistance. The Government is particularly interested in encouraging investment in mining, industry, petroleum, hydroelectricity and agriculture. The most commonly registered business entities in Kyrgyzstan are the limited liability company (LLC) and the Joint Stock

8. Taxation in Kyrgyzstan The standard Corporate Income Tax Rate is 10%. For Leasing companies, the rate is 5% for the period from 1 January 2017 through December 2021. A 0% rate applies to corporate entities engaged in the mining of gold ore, concentrate, alloy and gold refining, as well as to certain domestic companies that use new equipment solely for the production and sell goods of their own production (provided the domestic company complies with criteria in the tax code). Resident Companies are taxed on worldwide income. Nonresident entities are subject to tax only on Kyrgyz-source income and on income received by a permanent establishment in Kyrgyzstan.

9. Trade Kyrgyzstan is the 133rd largest export economy in the world and the 68th most complex economy according to the Economic Complexity Index (ECI). In 2017, Kyrgyzstan exported $1.92B and imported $5.99B, resulting in a negative trade balance of $4.07B. In 2017 the GDP of Kyrgyzstan was $7.56B and its GDP per capita was $3.73k. The top exports of Kyrgyzstan are Gold ($712M), Precious Metal Ore ($144M), Other Ores ($95.6M), Planes, Helicopters, and/or Spacecraft ($78.5M) and Refined Petroleum ($61.1M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Rubber Footwear ($740M), Refined Petroleum ($593M), Light Pure Woven Cotton ($194M), Packaged Medicaments ($160M) and Trunks and Cases ($105M).

10. Banking in Kyrgyzstan The banking system of the Kyrgyz Republic is a two-tier system in which the first level of the system is represented by the National Bank of the Kyrgyz Republic, and the second - by the commercial banks. The objective of the National Bank is to achieve and maintain pricing stability through the appropriate credit and monetary policy. In accordance with this objective the main aim of the Bank of Kyrgyzstan is to maintain the purchasing power of the national currency, ensuring efficiency, safety and reliability of the banking and payment system in the country in order to promote long-term economic growth of the country.

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com