Сorporate legislation of the Republic of Uzbekistan has been amended

President of Uzbekistan Shavkat Mirziyoyev signed the Law “On amendments and supplements to certain legislative acts of the Republic of Uzbekistan” No. 640 dated by 05.10.2020, which amended and supplemented the laws “On joint stock companies and protection of shareholders’ rights”, “On the securities market” and the Economic Procedure Code.

This package of amendments to the legislation is aimed at increasing the responsibility of officers and ensuring the rights of the parties to proof in court proceedings.

The following changes were made in part 5 and part 6 of article 81 of the Law “On joint stock companies and protection of shareholders’ rights”:

  • if the court finds a member of the supervisory board, a director or a member of the board of directors of a company guilty of causing property damage to the company, their powers can be terminated by a court decision, with a ban on holding a managing position in companies for a period of at least one year;
  • a member of the supervisory board, director or member of the management board of a company shall be liable for causing property damage to the company, as a result of:
  1. providing misleading or deliberate false information;
  2. violation of the procedure of providing information, established by the Law;
  3. proposals for conclusion and (or) adoption of decisions on conclusion of major transactions and (or) transactions which have an interest, as well as transactions with affiliates in order to receive profit (income) for them or their affiliates, resulting in losses for the company.

Part 2 of Article 86 of the Law “On joint stock companies and protection of shareholders’ rights” is amended. Accordingly  information on transactions with affiliates, their written notifications and full decisions making on transactions, information on the decision making persons, and information on conflicts of interest when concluding transactions with affiliates now must be included to the annual report of the company.

At the same time, part 5 of Article 88 of the Law “On joint stock companies and protection of shareholders’ rights”, establishes that when deciding to conclude a transaction with affiliates of the company, the amount of which is ten or more percent of the company’s net asset value, it is mandatory for an independent external audit organisation to study the conditions and market value of the property determined by the evaluating organisation.

Part 5 of Article 104 of the Law “On joint stock companies and protection of shareholders’ rights” gives shareholder in court proceedings the right to receive from the company and from witnesses all documents that may be relevant to the case, with the exception of documents constituting state secrets or other secrets protected by law.

Also, Article 106 of the Law “On joint stock companies and protection of shareholders’ rights” is supplemented by Part 6, which obliges a company to disclose on the Single portal of corporate information and on the official website of the company information about the transaction concluded between the company and affiliates within 72 hours from the moment of its conclusion.

Article 44 of the Law “On the securities market” is supplemented with a paragraph obliging the issuer to disclose information about the transaction concluded between the issuer and the affiliates by posting on the Single portal of corporate information and its official website – within 72 hours from the moment of its conclusion.

The Economic Procedure Code of the Republic of Uzbekistan was also supplemented by Part 3 of Article 42, which gives the parties in court proceedings the right to request from each other and from witnesses all documents that may be relevant to the case, with the exception of documents constituting state secrets or other secrets protected by law.

 

 

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