A. Overview
1. What is the main legislation and international treaties governing the project financing in your jurisdiction?
The most relevant act is the (i) Civil Code, (ii) Tax Code, (iii) Registration of Legal Entities and Individual Entrepreneurs Act, (iv) Public Private Partnership Act, (v) Limited Liability Companies Act, (vi) Joint Stock Companies Act.
Tajikistan has entered into a number of bilateral treaties related to investment protection. That said, international treaty applicability for the time being is left to be desired.
2. How mature is the project finance market in your jurisdiction, and what are the most significant project financings closed during the last 12 months?
In Tajikistan, the market for project financing is continually growing but is still quite small.
Yet, there are a number of project funding options accessible to those who are interested; additional details may be found at http://ppp.tj/ppp-database/ and http:// www.eprocurement.gov.tj/en/searchanno. The majority of these financing options are tied to the infrastructure or energy industries.
B. Security Interest
3. What are the most commonly used security types in project financings in your jurisdiction?
Depending on the particulars of the project and the interests of the parties involved, different methods of security may be utilized. In project financings, common security types that might be employed include:
Mortgage: This type of security entails the sale of a property interest to the lender in exchange for loan collateral. The lender may foreclose on the property and sell it to recoup its investment if the borrower defaults on the loan.
Pledge: This type of security entails giving the lender possession of a moveable item, such as equipment or stock in a corporation, in exchange for a loan. The lender may sell the pledged asset to recoup its investment if the borrower fails on the loan.
Guarantee: This type of security entails a third party (like a parent business or a government body) assuring the lender that the borrower will pay back the loan. The guarantor is responsible for repaying the loan in the event that the borrower misses a payment.
Assignment of rights: A rights assignment is the transfer of a party's contractual rights to another party.
It is important to note that the use of security in project financings can be complicated and may require the blending of many types of protection. It will depend on the nature of the project and the lender's criteria as to which specific security types are employed in a project financing transaction. To preserve their investment in the project, lenders often attempt to get the highest level of security.
4. Can the shares of a company be pledged as a security to the benefit of lenders? If so, is there a specific requirement in terms of formalities or procedure to be followed for establishing or perfecting a share pledge?
Shares can be pledged under an agreement. A written agreement between the pledgor and the pledgee is required under Tajik law. The number and kind of shares being pledged, the size of the secured debt, how long the pledge will last, and other terms must all be specified in the agreement.
The pledge agreement must be registered with the Ministry of Justice of Tajikistan for the share commitment to be perfected. Getting a login and password and filling out the necessary information online is required for the registration procedure. The registration is voluntary, and when carried out and gives priority over unregistered pledge.
5. Is private sale a recognized method for the enforcement share pledge? What are the endorsement types typically used for the share certificates?
Yes, private sale is a legitimate way to enforce a share agreement.The terms of the private sale can be agreed upon by the pledgor and pledgee in the pledge agreement.
The pledgee may enforce the pledge by selling the pledged shares in the event of the pledgor's default. The pledgee must notify the pledgor of the planned sale, including the date, location, and manner of sale as well as the minimum selling price, which must be equal to or higher than the total amount of the debt that is being pledged as security.
The surplus proceeds from the sale of the pledged shares must be given back to the pledgor if they exceed the amount of the outstanding obligation. The pledgor is still responsible for paying the balance of the obligation even if the shares are sold for less than the whole amount owed.
6. Can security interest be established over future assets, rights and receivables of the borrower?
Tajik law permits the inclusion of clauses establishing security interests over future assets, rights, and receivables.
7. What are the steps to be taken by the lenders to enforce their security interest, in case the borrower becomes insolvent, is technically insolvent and/or commences composition process?
Any claims in the event of insolvency must be made through an external manager. Additional measures and steps are decided upon and disclosed by an external management on a case-by-case basis and are not governed by laws.
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