April 27, 2023

Changes in the banking legislation

On April 19, 2023 the Law No. LRU-831 (hereinafter – the “Law”) was adopted, and it amended the Law of the Republic of Uzbekistan “On Banks and Banking Activity” (No. LRU-580 of 05.11.2019). This Law introduces changes to ensure the financial stability and sustainability of the banking sector, to create conditions for the provision of affordable and quality financial services by banks, and to increase public confidence in banks.

The Law provides that the minimum size of the authorized (charter) capital of banks will gradually increase to 500 billion UZS by January 1, 2025. This increase will occur as follows:

a) 100 billion UZS – until September 1, 2023;

b) 200 billion UZS – from September 1, 2023;

c) 350 billion UZS – from April 1, 2024; and

d) 500 billion UZS – from January 1, 2025.

In addition, the Law cancels the restriction on the ownership of shares and stocks in respect of indirect owners and ultimate beneficiaries residing or registered in the offshore territories, which provide preferential tax treatment and (or) do not provide for disclosure of the ultimate beneficiary owner’s identity. But at the same time, this restriction remains in respect of the direct owners (participants and shareholders) of the shares and stocks of the bank. Moreover, non-residents, regardless of their place of registration or residence, are granted the right to purchase stocks of the bank placed on foreign stock markets.