June 15, 2021

Privatization in Uzbekistan

1. Basic Regulatory Acts

2. Competent Authorities and their Competences

3. Objects of Privatization

4. Subjects of privatization

5. Privatization procedures

5.1. Transformation of a state-owned enterprise into a business partnership or company

5.2. Procedure for the sale of the state share in the LLC

5.3. Procedure for the sale of state-owned real estate objects

6. Land Privatization

6.1. The procedure for the privatization of land plots on which real estate objects are located

6.2. Procedure for the privatization of vacant land plots and land plots granted to the Urban Development Fund

7. Privatization and foreign investment

1. Basic Regulatory Acts

1. Law of the Republic of Uzbekistan No. 425-XII of 19.11.1991 “On Denationalization and Privatization”;

2. Law of the Republic of Uzbekistan No. ZRU-552 of 13.08.2019 “On the Privatization of Non-agricultural Land Plots”;

3. Resolution of the Cabinet of Ministers dated 06.10.2014 No. 279 “On Approval of the Regulations on the Procedure for the Privatization of State Property”.

4. Resolution of the Cabinet of Ministers dated 29.03.2021 No. 166 “On Approval of the Strategy 2021-2025 for the Management and Reform of Enterprises with State Participation”;

5. Resolution of the Cabinet of Ministers dated 04.05.2021 No. 266 “On additional measures for the effective use of the assets of enterprises with state participation”.

2. Competent Authorities and their Competences

The authorized body in the field of privatization of state property is the Agency for the Management of State Assets.

3. Objects of Privatization

According to the general rule, objects of public property of the Republic of Uzbekistan, namely, republican and municipal property, are subject to privatization and denationalization (in whole or in part), with the exception of the following objects:

  • land, its subsoil, internal waters, air basins, flora and fauna within the Republic of Uzbekistan;
  • objects of material cultural heritage, including objects of material cultural heritage stored in state funds, national funds, information and library funds and in the funds of research institutions, as well as archives, museums and protected natural areas;
  • funds of the State Budget of the Republic of Uzbekistan, the foreign exchange reserve, state trust funds, the Central Bank of the Republic of Uzbekistan, as well as the gold reserve of the Republic of Uzbekistan;
  • state organizations for the maintenance of monetary circulation, enterprises and organizations that ensure the production of securities, orders, medals and postage stamps;
  • enterprises, institutions and military-technical property (before industrial disposal, as well as not subject to industrial disposal) The Armed Forces, the State Security Service and the Ministry of Internal Affairs of the Republic of Uzbekistan;
  • enterprises and facilities that carry out research and development, development, production and sale of X-ray equipment, devices and equipment using ionizing radiation sources;
  • enterprises and facilities engaged in the extraction, production, transportation, processing of radioactive elements, disposal of radioactive waste, sale of uranium and other fissile materials, as well as products made from them;
  • enterprises engaged in the development, production, repair and sale of weapons and ammunition, protective equipment, military equipment, spare parts, components and devices for them, pyrotechnic products, as well as special materials and equipment for their production;
  • enterprises and organizations engaged in the production, repair and sale of hunting and sporting firearms and ammunition, as well as edged weapons (except for souvenir knives of national types);
  • enterprises that produce potent poisons, narcotic and toxic substances, as well as those that sow, cultivate and process crops containing narcotic and toxic substances;
  • state reserves of the Republic of Uzbekistan. Objects and property of civil protection and mobilization purposes;
  • specialized enterprises and organizations that carry out construction and installation work, operation and repair of facilities (installation of equipment, systems and equipment) nuclear power and strategic facilities;
  • specialized enterprises that transport explosive and toxic substances;
  • public roads;
  • sanitary and epidemiological stations. Bureau of Forensic Medical Examinations. Environmental Monitoring and Nature Protection Services;
  • medical and industrial workshops, enterprises of institutions for the execution of punishments;
  • special purpose enterprises;

It is important to note that this list is not exhaustive, namely, by the decision of the President of the Republic of Uzbekistan, other objects may also be classified as objects that are not subject to denationalization and privatization.

In addition, the privatization of the following objects is carried out by the Decree of the President:

  • enterprises with the book value of fixed assets of more than one hundred thousand basic calculation values;
  • enterprises for the extraction and processing of precious, rare earth metals, precious stones;
  • enterprises and organizations of basic industries: fuel and energy, mining (including enterprises and organizations engaged in the development, production and sale of explosives, as well as special materials and equipment for their production), machine-building and cotton processing complexes. Enterprises and organizations that produce oil, gas and coal, and drill wells. Main oil and gas pipelines, oil product pipelines, electric and heat generating stations and system-forming electric networks;
  • chemical enterprises (production of herbicides, mineral fertilizers, synthetic fibers, toxic chemicals for the control of agricultural pests, and others);
  • electric communication enterprises, television, radio reception and radio transmission centers and their engineering structures;
  • enterprises and facilities that develop, manufacture, repair and sell rocket and space complexes, communication systems and control systems;
  • printing companies and publishing houses;
  • information and telegraph agencies;
  • enterprises and organizations engaged in the production, repair, sale and operation of encryption equipment;
  • enterprises and organizations of standardization and metrology;
  • enterprises and organizations engaged in the construction and operation of high-risk facilities and potentially hazardous industries, the manufacture of equipment, control systems and emergency protection for them;
  • objects of engineering infrastructure: electricity, heat, gas supply, water supply and sewerage facilities of district centers and cities;
  • enterprises and organizations that transport passengers and cargo by rail, air and river transport;
  • higher, secondary specialized and vocational educational institutions of ministries, state committees, departments, as well as general education institutions;
  • organizations of the Academy of Sciences of the Republic of Uzbekistan, the Uzbek Scientific and Production Center of Agriculture. State research centers;
  • state breeding farms and farms, stud farms, elite seed farms, seed and breeding stations, state seed inspections and laboratories for assessing the technological quality of agricultural crops, variety testing stations and plots;
  • postal service companies;
  • enterprises and organizations of forestry, geological, cartographic and geodetic, hydrometeorological services and their information centers;
  • landfills, buildings, structures and equipment for the disposal of solid industrial and household waste, animal burial grounds;
  • machine testing stations, grain elevators;
  • state health resort facilities located outside the Republic of Uzbekistan;
  • enterprises of film production and concert and entertainment institutions, as well as information and library institutions and reading rooms;
  • health care facilities;
  • enterprises and institutions of the state veterinary service, plant protection service;
  • homes and boarding schools for the disabled, the elderly and other categories of socially vulnerable citizens;
  • health-improving children’s, adolescent and youth institutions.

4. Subjects of privatization

Public property may be acquired by:

  • Citizens of the Republic of Uzbekistan, other states, stateless persons;
  • Non-state legal entities;
  • Foreign legal entities.

At the same time, objects of privatization, shares of privatized enterprises (with the exception of joint stock companies) cannot be acquired by persons who are prohibited from engaging in entrepreneurial activity. In addition, restrictions in the subject composition can be established for individual objects of privatization.

5. Privatization procedures

Privatization and denationalization can be carried out in the following forms:

  1. transformation of a state enterprise into a business partnership or a company;
  2. sale of state property to non-state legal entities and individuals by tender and auction, as well as in other forms that do not contradict the legislation of the Republic of Uzbekistan.

5.1. Transformation of a state-owned enterprise into a business partnership or company

  1. Submitting an application to the Agency

Citizens, non-state legal entities of the Republic of Uzbekistan and legal entities of other States, the labor collective, the manager of public property objects have the right to initiate the denationalization and privatization of the enterprise. Offers and applications for the transformation of state organizations are submitted by the initiators to the Agency for the Management of State Assets of the Republic of Uzbekistan or their Territorial Administration (hereinafter – the “Agency”). The Agency, if there are no restrictions established by law on the transformation of a state organization, within five working days after receiving the application, sends a request to the founder of the state organization and to the relevant local government authority to submit an opinion on the feasibility of transforming the state organization, which must be signed by the first head of the founder of the state organization and the local government authority and stamped. There may be cases of privatization without obtaining the consent of the organization that is the object of privatization. The decision to carry out denationalization, privatization or to refuse them is made by the administrator of public property objects within ten days from the date of receipt of the application and is communicated in writing to the applicant and the labor collective of the denationalized and privatized enterprise. At the same time, the decision to transform a state-owned enterprise into a joint-stock company is made by the Agency.

The Agency may decide to refuse the transformation in the following cases:

  • if the state organization is included in the list of objects not subject to privatization;
  • there is a need to use this state organization in order to meet the public and social needs of the population;
  • conclusion about inexpediency of transformation of the state organization was received.
  1. Sending a package of documents to the territorial competition commission

If an application (offer) for the transformation of a state organization into the Agency is received, and there are no reasons for refusing the transformation, the application (offer) is sent to the Territorial Administration of the Agency (hereinafter – the “Territorial Administration”) to form a package of documents that are formed and submitted by the Territorial Administration to the territorial competition commission within fifteen working days.

  1. Creation of a commission for the preparation for the transformation (hereinafter – the “Commission”)

The Agency or Territorial Administration creates a Commission, which includes authorized representatives of:

  • the founder;
  • administration and employees engaged in labor activity in the transformed state organization;
  • financial authority;
  • state tax service body;
  • service bank;
  • local government authorities;
  • Agency on Cadastre.
  1. Preparing for transformation

The Commission, in order to prepare the state enterprise for transformation, carries out a list of the following works:

  • Determines the composition of tangible and intangible assets;
  • Defines measures to ensure the safety of the property of the transformed state organization;
  • Identifies and prepares information on the obligations of the state organization that were not fulfilled at the time of the transformation;
  • Draws up a plan for the transformation of the state organization;
  • Organizes the preparation of draft constituent documents of the newly formed business company.
  1. Inventory of property and financial liabilities

The organization and carrying out of inventory of property and financial obligations of the transformed state organization are carried out in accordance with the National Accounting Standards of the Republic of Uzbekistan (hereinafter – the “NSBU RUz”). The inventory is carried out on the date of creation of the interim balance. According to its results, acts are drawn up according to the established forms and signed by the chairman and members of the Commission. According to the results of the Commission, the following documents are submitted to the Agency or Territorial Administration:

  • a copy of the order on the creation of the inventory commission;
  • Minutes of the Commission meetings;
  • inventory reports signed by the members and the head of the Commission;
  • copies of the cadastral documentation of the transformed state organization, including the cadastral map (plan), and other documents of title (if available);
  • documents confirming the right to land, mineral resources and other natural resources;
  • financial (interim) statements with an audit report;
  • breakdown of accounts receivable and payable, including overdue accounts;
  • information about the existing encumbrances or restrictions of the state organization;
  • basic information about the state organization in the form established by the Agency;
  • action plan for the transformation of the state organization with the attachment of the draft constituent documents of the newly formed business company;
  • if necessary, offers for the restructuring of the property complex of the state organization or the reorganization of the state organization in another way (merger, merger, division, separation) in compliance with the requirements of the antimonopoly legislation.
  1. Decision-making by the Agency

After the submission of the documents by the Commission within at least seven days, the Agency or Territorial Administration:

  • – if there are shortcomings in the documents – returns the Commission for revision. If the shortcomings have not been eliminated the Commission is dissolved and a new one is appointed;
  • – in accordance with the documents, approves the transformation plan and enters into a contract with the evaluation organization for the evaluation of the transformed state organization.
  1. Order on the transformation of a state organization

On the basis of the evaluation report of the transformed state organization and the documents submitted by the Commission, the Agency or Territorial Administration issues an order on the transformation of the state organization. When transforming into an LLC, the order approves the charter, the amount of the authorized capital and the share in it. The order, charter, and issue prospectus (in the case of a joint-stock company) are approved by the authorized head of the Agency or Territorial Administration.

  1. Transformation Message

The agency or its territorial division publishes an information message in the media about the transformation of the organization into a business company within thirty days from the date of signing the order on the transformation.

  1. Election of governing bodies

The election of the management bodies of a newly formed business company is carried out within ten days from the date of its state registration.

  1. The emergence of the right of ownership of property

The right of ownership of the property of the transformed state organization arises from the moment of receipt by the newly formed economic company of the state order for the right of ownership issued by the Agency. The state order is issued within no more than ten working days after the formation of the governing bodies. No state fee is charged for the issuance of a state warrant for the right of ownership.

5.2. Procedure for the sale of the state share in the LLC

The sale of the state share is carried out by the seller on the basis of privatization programs.

  1. Currency of payment for the share

The sale of state shares to residents of the Republic of Uzbekistan is carried out for the national currency (Soum). Non-residents can purchase state shares for both SLE and Soums.

  1. Initiating the sale of the share

The sale of the state share may be initiated by state bodies or an economic management body, by the company itself, by non-state legal entities or individuals by submitting offers or applications to the Agency or Territorial Administration, respectively. The offer for the sale of the state share is also accompanied by:

  • conclusion on the absence of the need to preserve the state share proposed for sale, which is signed by the first head of the state body, the economic management body or the company itself and certified by the seal;
  • basic information about the company in the form established by the Agency;
  • copy of the company’s constituent documents.
  1. Sending information to the territorial competition commission

In case of receipt of the application (offer) for the sale of the state share in the Territorial Administration, in the absence of reasons for refusal to sell, the Territorial Administration within fifteen working days from the date of receipt of the application (offer) for the sale of the state share, sends to the territorial competition commission information with the following documents:

  • copies of the company’s constituent documents;
  • copies of the certificate of state registration of the company;
  • copies of the company’s cadastral documentation;
  • copies of the financial statements for the last three years, signed by the first manager and stamped;
  • information on the amount of accrued and paid (or not paid) dividends for the last three years on the state share;
  • information on the ratio of actual assets (after the annual revaluation of fixed assets as of January 1) to the state share in the authorized fund (authorized capital) of the company;
  • conclusions about the possibility of implementation.

If, based on the results of the consideration of the application (offer) for the implementation of the state share, it is included in the draft privatization program, the Agency or Territorial Administration shall inform the applicant in writing about this within one month from the date of receipt of the application (offer).

  1. Inventory of property

The agency or Territorial Administration sends a written request to the company to conduct an inventory of property and financial liabilities in accordance with the National Accounting Standards. Based on the results of the inventory, the Agency or Territorial Administration is provided with:

  • a copy of the order on the establishment of the inventory commission;
  • minutes of meetings of the inventory commission;
  • inventory reports signed by the members and the head of the inventory commission;
  • copies of the financial statements for the last year, signed by the first head of the company’s executive body and stamped;
  • breakdown of accounts receivable and payable, including overdue accounts;
  • according to the form approved by the Agency, the company’s passport with the attachment of photographs (at least four);
  • photos of fixed assets (the number of photos is determined based on the composition of the property).
  1. Share estimation and price determination

Within a week after the submission, the Agency or the Territorial Administration, if the submitted documents comply with the requirements of the legislation, enters into a contract with the appraisal organization to assess the share to be sold.

The initial price of the state share when put up for auction is determined by the seller in the amount determined in the report of the valuation organization on the valuation of the share and the expert opinion on the results of the examination of the reliability of the valuation report.

  1. Right of pre-emptive purchase

After determining the initial price, the Agency or the Territorial Administration notifies the company’s participants and the company itself in writing of its intention to sell the state share. If the company’s participants and the company itself refuse to buy out the state share, or if there is no response to the letter from the Agency or the Territorial Administration within one month from the date of notification of the company, unless otherwise provided by the company’s charter or the agreement of the company’s participants, the state share may be sold at auction.

  1. Acceptance of the order to put the share up for auction

The agency or Territorial Administration issues an order for the state share to be put up for auction, in which it approves the initial price of the state share, the terms of sale and the type of auction. After the adoption of the order to put the state share up for auction and the publication of the relevant notice in the mass media about the state share up for auction, this state share is not subject to revaluation.

  1. Holding an auction or tender or direct negotiations

The state share can be sold either at an auction, or through a tender on the electronic trading platform “E-IJRO AUKSION”, or through direct negotiations.

  1. Conclusion of the purchase and sale agreement

According to the results of the auction or competition on the electronic trading platform “E-IJRO AUKSION”, the purchase and sale agreement is concluded on the basis of the electronic auction protocol provided by the auction organizer. No later than twenty days after the signing of the protocol, unless otherwise specified in the notice of the auction (tender) or an invitation to make offers, a purchase and sale agreement is concluded with the winner (participant) of the auction (competition), the participant who submitted a single application that fully meets the terms of the auction or the bidder who most meets the terms of the offer. Registration of purchase and sale agreements is made by the seller. The contract of sale must reflect the following information and conditions:

  • names and addresses of the parties;
  • the basis for the conclusion of the contract of sale;
  • the amount, currency, terms, procedure and terms of the redemption payment;
  • obligations of the parties, including the conditions, procedure and sequence of transfer of ownership of the realized state share from the seller to the buyer, including the issuance of a certificate of ownership;
  • liability of the parties for late performance and (or) non-performance of obligations assumed under the contract of sale, the amount and conditions of payment of the fine;
  • dispute resolution procedure, terms of termination of the contract of sale, applicable law, definition and procedure of actions in the event of force majeure, language, number of copies, terms of amendments and additions to the contract of sale, its entry into force;
  • annexes in the form of guarantees of the parties.
  1. Settlement and issuance of title documents

After the conclusion of the purchase and sale agreement, the buyer or his authorized representative makes purchase payments and fulfills investment and social obligations in accordance with the terms of the concluded purchase and sale agreement. At the same time, if the auction or tender is won, the deposit made by the winner is included in the amount of redemption payments, and the deposit made to the other bidders is returned within five banking (working) days. The term of payment of redemption payments for state shares is established by the seller, but may not exceed three years from the date of entry into force of the purchase and sale agreement, unless otherwise established by the decisions of the President or the Cabinet of Ministers of the Republic of Uzbekistan or the State Tender Commission.

If the buyer makes a full payment of the purchase payments within one month from the date of conclusion of the purchase contract, the payment is made taking into account the discount from the amount of the purchase payments in the amount of the annual refinancing rate of the Central Bank on the date of conclusion of the purchase contract.

If the share is realized by the buyer of the investment obligations, the seller within ten working days from the date of receipt of the redemption payments in full:

  • notifies the company of the sale of the state share;
  • issues the buyer a certificate of ownership of the share in the authorized fund of the company in the prescribed form. This certificate certifies the right of the buyer to participate in the management of the company until the relevant amendments are registered in the company’s charter.

For state shares sold at auction with the buyer’s acceptance of investment and (or) social obligations, the seller within ten working days from the date of receipt in full of redemption payments and penalties (if any) for the period until the buyer fulfills all obligations under the purchase and sale agreement, issues a certificate with the mark “without the right of disposal”, valid until the full fulfillment of investment and (or) social obligations, which certifies the buyer’s right to participate in the management of the company until the relevant changes are registered in the company’s charter.

After fulfilling all the obligations assumed under the purchase and sale agreement, the buyer acquires the ownership right to the purchased state share. At the same time, from the date of the buyer’s submission of the original certificate by the seller, the mark “with the right of disposal” is entered in it within no more than five working days.

  1. Re-registration of constituent documents

The executive body of the company, within thirty days from the date of submission by the buyer of the title documents for the sold state share, is obliged to ensure that the relevant changes are made to the constituent documents and their registration in accordance with the established procedure.

  1. Investment Use Agreement

Within ten days after the conclusion of the purchase and sale agreement with investment obligations, the buyer and the executive body of the company are obliged to conclude an agreement on the use of investments.

5.3. Procedure for the sale of state-owned real estate objects

The sale of state-owned real estate objects to residents is carried out for the national currency of the Republic of Uzbekistan (Soum).

Non-residents can purchase state-owned real estate for SLE or for the national currency of the Republic of Uzbekistan (Soum).

  1. Initiation of the sale of state-owned real estate objects

The sale of state-owned real estate objects may be initiated by a state body or an economic management body, a balance sheet holder, non-state legal entities or individuals by submitting offers and applications for the sale of state-owned real estate objects to an Agency or Territorial Administration. The application (offer) is accompanied by:

  • a conclusion on the absence at the time of implementation of the need to preserve the proposed state property for sale, which is signed by the first head of the state body, the economic management body or the balance sheet holder and certified by the seal;
  • copies of cadastral documentation, including the cadastral map (plan);
  • certificate of registration of the balance sheet holder in the register of state enterprises and state institutions of the Republic of Uzbekistan, if the balance sheet holder is a state enterprise or state institution.

The Agency or Territorial Administration, if there are no restrictions established by law on the privatization of a state-owned real estate object, within five working days after receiving the application, sends a request to the balance sheet holder of the state-owned real estate object and to the relevant local government authority to submit an opinion on the feasibility of its implementation, which must be signed by the first head of the balance sheet holder and the local government authority and stamped.

  1. Sending information to the territorial competition commission

In the case of the receipt of the application (offer) on the implementation of state of the property in the Territorial Administration, in the absence of reasons for the rejection of privatization and the territorial Department within fifteen working days from the date of receipt of the application (offer) directs the territorial competition Commission information along with the following documents:

  • copies of requests (offers), on the implementation of state of the property;
  • the act of inspection of the state real estate object in the form established by the Agency with the attachment of at least four photos of the object;
  • basic information about the state real estate object in the form established by the Agency;
  • copies of cadastral documentation, including the cadastral map (plan);
  • conclusions of the balance sheet holder and the local government authority on the feasibility of selling a state-owned real estate object;
  • conclusion about the possibility of implementation.
  1. Making a proposal to the Cabinet of Ministers

On the basis of the received applications (offers) for the implementation of the state real estate object, the Agency and the territorial competition commission, as soon as applications are received, but at least once a year, make proposals to the Cabinet of Ministers of the Republic of Uzbekistan for the approval of privatization programs for state real estate objects that are subject to implementation by decision of the President of the Republic of Uzbekistan or the Cabinet of Ministers of the Republic of Uzbekistan.

  1. Preparation for the implementation of the state real estate object

In accordance with the approved privatization program, the Agency or Territorial Administration creates a Commission on Privatization (hereinafter – the “Commission”).

  1. Organization and conduct of inventory

The organization and carrying out of the inventory of the state real estate object being sold is carried out in accordance with the NSBU RUz. Based on the results of the inventory, the relevant inventory reports are drawn up in accordance with the forms established by law.

  1. Results of the Commission’s work

Based on the results of the work, the Commission submits to the Agency or Territorial Administration the following documents:

  • a copy of the order on the creation of the inventory commission;
  • Minutes of the Commission meetings;
  • inventory reports signed by the members and the head of the Commission;
  • copies of the cadastral documentation of the state real estate object, including the cadastral map (plan), and other documents of title (if available);
  • documents confirming the right to land, mineral resources and other natural resources;
  • information about existing encumbrances or restrictions affecting the right to dispose of a real estate object being sold by the state;
  • basic information about the state real estate object in the form established by the Agency;
  • conclusion of the authority for the protection and use of cultural heritage objects (if necessary).
  1. Conclusion of a contract with an appraisal company

If the submitted documents comply with the requirements of the legislation, the Agency or the Territorial Administration enters into a contract with the appraisal organization for the evaluation of the state real estate object within at least seven working days after the consideration of the documents submitted by the Commission. The initial price of a state-owned real estate object when put up for auction is determined by the seller in the amount determined in the report of the appraisal organization on the assessment of the value of the state-owned real estate object and the expert opinion on the results of the examination of the reliability of the assessment report.

After the adoption of the order and the publication of an announcement in the mass media about the putting up of a state-owned real estate object for auction, this object is not subject to revaluation.

  1. Putting the property up for auction

The state real estate object is put up for auction on the basis of the order of the Agency or the Territorial Administration.

  1. “Right of pre-emptive purchase”

If the state property being sold is leased for at least a year, after determining the initial price, the seller notifies the lessee in writing. If the lessee agrees to buy the property, the sale of the state-owned property is carried out at a price determined by the seller by entering into a direct contract of sale with the lessee.

A state-owned real estate object sold under privatization programs is sold to a craftsman at an estimated value on the basis of a direct purchase and sale agreement, without holding a public auction.

  1. Sale of the property

The sale of a real estate object is possible through an open/closed auction, competition and through direct negotiations.

  1. No later than ten days after the signing of the protocol (receipt of the protocol of electronic bidding provided by the organizer of the auction), unless otherwise specified in the notice of the auction (tender) or the offer, with the winner (participant) of the auction (competition), the participant who submitted the only application that fully meets the terms of the auction, or the bidder who most meets the terms of the offer, the lessee of the state real estate object being sold, a purchase and sale agreement is concluded on the terms of the offer. Registration of the contract of sale is made by the seller. The contract must reflect the following conditions and information:
  • The name and addresses of the parties;
  • The basis for the conclusion of the contract of sale;
  • Name and location of the state real estate object;
  • the amount, currency, terms, procedure and terms of the redemption payment;
  • obligations of the parties, including the conditions, procedure and sequence of transfer of ownership of the state-owned real estate object from the seller to the buyer, including the issuance of a state order for ownership;
  • liability of the parties for late performance and (or) non-performance of obligations assumed under the contract of sale, the amount and conditions of payment of the fine;
  • dispute resolution procedure, terms of termination of the contract of sale, applicable law, definition and procedure of actions in the event of force majeure, language, number of copies, terms of amendments and additions to the contract of sale, its entry into force;
  • annexes in the form of guarantees of the parties.
  1. Making payments and issuing a state order for the right of ownership

The term of payment of redemption payments for state-owned real estate objects is established by the seller, but may not exceed three years from the date of entry into force of the purchase and sale agreement, unless otherwise established by decisions of the President of the Republic of Uzbekistan or the Cabinet of Ministers of the Republic of Uzbekistan or the State Tender Commission. The term of fulfillment of investment obligations should not exceed five years, except in cases of sale of state-owned real estate objects by separate decisions of the President of the Republic of Uzbekistan or the Cabinet of Ministers of the Republic of Uzbekistan or the State Tender Commission. The buyer has the right to pay the redemption payment for the sold state property ahead of time.

For a state-owned real estate object sold without investment and (or) social obligations, the seller within five working days from the date of receipt of redemption payments in full:

  • notifies the balance sheet holder of the sale of the state real estate object;
  • issues the buyer a state order for the right of ownership.

For a state-owned real estate object sold with the buyer’s acceptance of investment and (or) social obligations, the seller, within five working days from the date of receipt of the full amount of redemption payments and penalties (if any) for the period until the buyer fulfills all obligations under the purchase and sale agreement, issues a state order for ownership with the mark “without the right of disposal”, valid until the full fulfillment of investment and (or) social obligations.

It is important to note that the property right is subject to state registration on the basis of an issued warrant.

6. Land Privatization

It is important to note that since recently, land plots can be privatized by legal entities and individuals residents of the Republic of Uzbekistan (hereinafter – the “Subjects“). Foreign citizens and non-resident legal entities, as well as stateless persons, may not privatize land plots, unless otherwise established by the Land Code of the Republic of Uzbekistan.

The following land plots may be privatized:

  • land plots on which buildings and structures owned by legal entities on the right of ownership or privatized by them, objects of industrial infrastructure, as well as adjacent land plots in the amount necessary for the implementation of production activities are located;
  • land plots provided to citizens for individual housing construction and maintenance of a residential building;
  • vacant land plots ;
  • Land plots provided to the Fund for the Development of Urbanization under the Ministry of Economy and Industry of the Republic of Uzbekistan (hereinafter – the “Fund for the Development of Urbanization“).

The following land plots are not subject to privatization:

  • located in territories that do not have approved and published planning schemes;
  • where mineral deposits are located, strategic objects of state property that are not subject to privatization, the list of which is determined in accordance with the legislation;
  • included in the land of nature protection, health, recreation, historical and cultural purposes, as well as land of forest and water resources, common use of cities and towns (squares, streets, driveways, roads, embankments, squares, boulevards);
  • contaminated with hazardous substances and subject to biogenic contamination;
  • granted to participants of free economic and small industrial zones.

The land plot can be privatized by:

  • purchase by the Subjects of land plots that are on the rights of permanent use (possession) or lifelong inherited possession;
  • sales of land plots through an electronic online auction.

6.1. The procedure for the privatization of land plots on which real estate objects are located

  1. Submission of an Application to the Public Services Center (hereinafter – the “CSU“) or through the Unified Portal of Interactive Public Services (hereinafter – the “EPIGU“) at the location of the land plot

The application is submitted by the Subjects and is the basis for consideration of the issue of privatization of the land plot by the Commission for Consideration of Issues of Provision (Sale) of Land Plots (hereinafter – the “Commission“). It is important to note that the privatization of the land plot is carried out within the area and boundaries of the land plot, which are indicated either in the Certificate of Registration of the right to the land plot, or in the statement on the state registration of rights to land plots.

  1. Obtaining the Commission’s Opinion

Within ten working days from the date of receipt of the application, the Commission considers it and draws up its positive or negative conclusion. The conclusion of the Commission is the basis for the adoption of the relevant decision by the khokim of the district (city).

  1. Payment for land plot

Upon receipt of a positive Conclusion of the Commission on the privatization of the land plot, the Subjects must pay for the land plot within ten working days. In turn, the amount of payment for the privatized land plot on which the real estate objects are located is determined by the Cabinet of Ministers of the Republic of Uzbekistan in multiples of the land tax rate from legal entities and individuals established for the corresponding lands on the day of privatization. It is important to note that the Cabinet of Ministers has the right to apply differentiated coefficients for certain categories of land plots and Subjects, including those exempt from paying land tax.

  1. Adoption of a decision by the khokim on privatization or on refusal to privatize

In case of a positive Conclusion, the Decision on privatization is made within three working days after the payment of the land plot by the Subjects. The decision on the privatization of land plots is not subject to review out of court. The decision to refuse to privatize land plots is made on the day of drawing up a negative opinion of the Commission and may be appealed to the administrative court.

6.2. Procedure for the privatization of vacant land plots and land plots granted to the Urban Development Fund

Vacant land plots are determined by the khokimiyats in accordance with the general plans of settlements and territories. Vacant land plots are sold to the property of the Subjects through an electronic online auction in coordination with the Agency of Urbanization under the Ministry of Economy and Industry of the Republic of Uzbekistan.

  1. Submission of an application for participation in the auction

An application for participation in an electronic online auction for the privatization of vacant land plots and land plots provided to the Urban Development Fund is submitted by:

  • a legal entity – for the implementation of business and urban development activities;
  • an individual – for individual housing construction and maintenance of a residential building, as well as for the implementation of business and urban development activities.
  1. Payment for land plots

The cost of the privatized free land plot is determined by the results of an electronic online auction. The starting price of land plots is set equal to their market value at the time of putting them up for electronic online auction. The amount of the deposit and the step price are set as a percentage of the starting price and in monetary terms. The fee for the services of organizing an electronic online auction is charged according to the contract concluded between the organizer of the auction and the initiator of the electronic online auction.

Privatized land plots are private property and objects of civil turnover. The right of private property arises from the moment of state registration of the right. The seizure of a land plot is possible only through the procedure of nationalization, requisition of confiscation, where the first two procedures imply the paid seizure of land.

7. Privatization and foreign investment

In order to reduce the state’s participation in business in Uzbekistan, the Cabinet of Ministers adopted Resolution No. 166 of 29.03.2021 “On Approval of the Strategy 2021-2025 for the management and reform of enterprises with state participation”. According to this decree, it is planned to reduce the number of state-owned enterprises by 75%, to introduce modern management methods in enterprises with the involvement of foreign specialists, including leading specialists of the European Bank for Reconstruction and Development. Moreover, it is planned to increase the number of independent members of the supervisory board in state-owned enterprises. From July 1, 2021, an audit committee under the Supervisory Board and an internal audit service under the Supervisory Board will be established at all enterprises with state participation. It also provides for the placement of shares of at least 20 state-owned enterprises for public auction.

I would also like to note that on 04.05.2021, the Cabinet of Ministers adopted Resolution No. 266 “On additional measures for the effective use of the assets of enterprises with state participation”. This resolution contains lists of non-core and unused state property, which, first, will be put up for public auction. Secondly, it will be donated to the state administration bodies and local executive bodies on the right of operational management at the book value to the state property for further effective use. Third, the resolution provides for a list of organizations whose shares in the authorized capital are transferred to state authorities, local executive bodies and business entities at book value.