September 20, 2023

The Roadmap for the development of the capital market in 2023-2025 has been approved.

On 02.09.2023, the President of the Republic of Uzbekistan signed Resolution No. RP-291 “On additional measures for the development of the Capital market” (hereinafter referred to as the “Resolution”). The resolution was adopted in order to ensure the further development of the capital market, improve its infrastructure, stimulate the attraction of investors to the capital market, simplify the procedure for the participation of foreign investors in the local stock market, and protect the rights of investors.

In accordance with this Resolution:

  1. The State Unitary Enterprise “Central Securities Depository” decided to transform into a joint-stock company.
  2. In co-founding with JSC “Uzbek Republican Currency Exchange”, it was decided to create JSC “National Clearing Center”.
  3. To introduce a special legal regime “Regulatory sandbox” in the field of the capital market.
  4. The Ministry of Economy and Finance, together with interested departments, within two months shall submit to the Cabinet of Ministers a draft law according to which citizens will be granted the right to make voluntary accumulative pension contributions for the purchase of securities on the local stock market.
  5. It was decided to transfer to the National Agency for Perspective Projects (hereinafter referred to as “NAPP”), the powers of the Ministry of Economy and Finance to regulate the capital market, including the activities of the organizers of securities trading, as well as the powers of the Central Securities Depository for the development of corporate governance, and for the implementation of regulation, licensing, licensing procedures in the activities of insurance organizations.
  6. To approve the Roadmap for the development of the capital market in 2023-2025.

Below is a detailed overview of the above changes:

1. The privatization of the State Unitary Enterprise “Central Securities Depository” was announced in Appendix No. 1 to the Decree of the President of the Republic of Uzbekistan No. 102 dated 03.24.2023. At the moment, in accordance with the transformation of the state unitary enterprise “Central Securities Depository” into a joint–stock company, the state block of shares in the charter fund of the enterprise is transferred free of charge to the Central Bank of the Republic of Uzbekistan. It is noteworthy that in accordance with Article 4 of the Law “On the Central Bank of the Republic of Uzbekistan”, the Central Bank is prohibited from participating in the capitals of banks and other legal entities, with the exception of participation in the capitals of the People’s Bank of the Republic of Uzbekistan, joint-stock commercial bank “Mikrokreditbank”, currency exchange, as well as enterprises and organizations that support the activities of the Central Bank. Further, until the end of 2028, Central Securities Depository JSC will enjoy certain benefits (it will be exempt from accrual and payment of dividends with the target direction of these funds for its development) and will undergo the following changes in competence:

  • From 01.01.2025, the unified accounting of state and corporate securities will be conducted in the Central Securities Depository JSC;
  • Until 01.05.2024, a correspondent account of JSC “Central Securities Depository” is opened for settlements in the Central Bank;
  • Until 31.12.2028, JSC “Central Securities Depository” is exempt from accrual of dividend payments with the target direction of these funds for their development.
  • A correspondent account in the Central Bank will also be opened for JSC “National Clearing Center” until 01.05.2024.

2. Within the framework of the “Regulatory Sandbox” in the field of the capital market, the following has been approved:

  • the main concepts used in the capital market within the framework of the legal regime – “Regulatory sandbox”;
  • separate rules for the activities and operations of foreign participants in the capital market under the special legal regime “Regulatory Sandbox”;
  • mechanisms for ensuring the confidentiality of information about the owners of securities and the protection of their property rights.

3. In the new draft law being developed by the Ministry of Economy and Finance and the relevant departments, it is also planned:

  • granting the pre-emptive right to purchase shares to employees of enterprises in the event of a public offering of these shares within the framework of the company’s employee share ownership plan (ESOP). At the same time, their funds, which do not exceed their monthly salary and equivalent payments directed to the purchase of shares, are exempt from personal income tax;
  • extension until 31.12.28 of the validity period of benefits provided for in paragraph 1 of the Decree of the President of the Republic of Uzbekistan No. PD-90 dated 17.01.2022;
  • exemption from personal income tax, taxpayer’s income channeled from wages and other income totaling up to 100 times the minimum wage during the tax period to an individual investment account for the purchase of securities issued on the local stock market, provided they are not returned within 12 months.

4. Due to the fact that the Law of the Republic of Uzbekistan “On State Property Management” does not allow simultaneous performance of the functions of both the owner and the regulator in relation to enterprises with state participation, NAPP becomes the legal successor of the Ministry of Economy and Finance under capital market contracts. A state unitary enterprise, the Stock Market Information and Resource Center, is also donated to the Agency.