April 1, 2022

Changes in the corporate law of Uzbekistan

On March 29, 2022, the President of the Republic of Uzbekistan signed Law No. ZRU-760 “On Amendments and Additions to Certain Legislative Acts of the Republic of Uzbekistan in Connection with the Improvement of the Corporate Governance System” (hereinafter – the “Law”). The law was published and entered into force on March 30, 2022.

In accordance with this Law, the following changes were made in the corporate governance of companies in Uzbekistan:

1.      In limited liability companies (LLC), the powers of the executive body can now be transferred under a contract to a commercial organization (fiduciary management). The procedure for approving the terms of such contract can be provided for by the charter, and in the absence of such a procedure in the charter, the terms of the contract are approved by the general meeting of participants or the supervisory board (if there is one in the LLC). Previously, only an individual could act as the sole executive body of an LLC.

2.      The concept of a “golden share”, which meant the special right of the state to participate in the management of joint-stock companies (JSC), is now abolished. Such a right was not subject to alienation and was not taken into account in determining the size of the authorized fund (charter capital) and accrual of dividends. At the same time, if the decision in the joint-stock company with the golden share was taken without the participation of a representative of the state or which was vetoed, it was not subject to execution.

3.      Members of the Supervisory Board in the JSC can now be elected for a term of 3 years, not for 1 year.

4.      Now shareholders owning at least 5% of the voting shares can engage an audit organization to study the existing signs of violation of the requirements for concluding a transaction with an affiliated person, as a result of which damage has been caused to the company or will be caused in the future as a result of this transaction. Previously, such a right belonged only to shareholders owning 10% of the voting shares.

5.      An audit commission may be formed in an LLC or a joint-stock company only if it is provided for by the charter. Previously, the formation of an audit commission was mandatory for JSC, and the formation of such a commission was mandatory for LLC if the number of participants exceeded 15.