Limited liability companies can issue bonds now

On July 22, the President of the Republic of the Uzbekistan signed the law which amended and supplemented the laws “On joint stock companies and protection of shareholders’ rights”, “On limited and additional liability companies” and “On capital market”. This amendment to the legislation on the capital market was initiated and developed by the Capital Market Development Agency.

Thus, the Law “On Limited and Additional Liability Companies” was supplemented by Article 28 which states that limited liability company (LLC) and additional liability company (ALC) have the right to issue and list bonds in the process set by law. Important to note that until this moment corporate bonds could be issued only by joint-stock companies (JSC) and banks. They could issue bonds only within the limits of their capital, three years of positive financial activity and rating.

Moreover, the requirement of part three of Article 30 of the Law “On joint stock companies and protection of shareholders’ rights” was cancelled. A JSC was required to issue equity-backed corporate bonds within the limits of capital on the date of the decision on their emission.

At the same time, the Law “On capital market” introduced the definition of corporate bonds which are bonds issued by joint stock companies, limited and additional liability companies. Corporate bonds are now issued in accordance with next updated terms:

  • within the limits of the equity capital of the issuer as of the date of the decision on their emission. If the amount of corporate bonds exceeds the amount of the issuer’s equity capital, then the issuer is obliged to provide collateral in excess of the amount;
  • issuers with positive indicators of profitability, solvency, financial stability and liquidity over the last year;
  • availability of an auditor’s report on financial statements for the last year preceding the bond issue;
  • together with commercial banks acting as payment agents for payment by issuers of funds due to investors.

Similar changes apply to the issue bonds by business companies and state-owned enterprises in order to raise funds to finance the creation or reconstruction of production and other infrastructure (infrastructure bonds). Plus, the requirement to insure the issuer’s liabilities on infrastructure bonds until they are fully repaid was cancelled. Business companies with state shares of 50% or more were obliged to coordinate the issue of infrastructure bonds with the Ministry of Finance of the Republic of the Uzbekistan. Also, the Capital Market Development Agency may set additional conditions for issuing corporate and infrastructure bonds.


Abovementioned changes in the legal framework are expected to expand the list of sources for financing private projects, relieve duty of the bank lending sector, revive the corporate debt market, improve the country’s business climate, boost attraction of investors to the republic’s economy, and also help strengthen the national currency to foreign one.

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