Ambitious amendments to Uzbekistan’s capital market legislation

Tue, 07/06/2016

A number of legislative amendments shall encourage foreign investment in Uzbekistan.
Amendments to 24 legislative acts, including a law on joint-stock companies and protection of shareholders' rights, came into force in April. They are designed to help improve corporate governance.

The main amendments to the provisions are as follows:

  • The increase of joint-stock companies’ authorised capital can be made solely through issuance and placement of additional shares.
  • A shareholder who has become the owner of 50% or more of the shares is obliged to announce a mandatory tender offer to the remaining shareholders within 30 days.
  • Shareholders have equal rights with regard to receiving dividend payments from common shares, as such joint-stock companies must assess their ability to fully pay the dividends prior to distribution of profit during its payment period and no later than 60 days from the initial assessment.

Starting 1 July, the following measures aimed to attract foreign investors in joint-stock companies of Uzbekistan will come into force:

  • A foreign investor in a newly founded joint-stock company should not have a share of less than 15% in authorised capital, except for cases provided by the President or the cabinet of ministers of the Republic of Uzbekistan. Existing companies with a foreign investor’s share of less than 15% in authorised capital must increase their share to the required level, except for strategic and natural monopolies, and suppliers of socially-important goods and services.
  • Dividends on shares received by foreign investors are tax exempt until 1 January 2020.
  • Joint-stock companies with a share of foreign investors ranging between 15-33% of authorised capital will benefit from tax exemptions on profit, property and other state and regional taxes.

Ksenia Liskina,
Relationship Manager, Global Securities Services Russia