Share Acquisitions in Uzbekistan

LLC participatory interest acquisition

Acquisition of participatory interests in an Uzbek LLC — the most common M&A structure in Uzbekistan. Key issues: mandatory pre-emption rights of existing participants, compliance with charter transfer restrictions, state registration of ownership change through a Public Services Centre, and tax authority notification. Title passes only on entry in the Unified State Register, and a transfer that misses the required form or that entry can be declared invalid (Article 21 of Law No. ZRU-1137).

EFI status — maintaining investor protections

The guarantees on expropriation, free transfer and national treatment protect investors generally under Law No. ZRU-598. Enterprise with Foreign Investment (EFI) status adds rights such as accounts in any currency, and requires at least 15% foreign ownership and at least 400 million UZS charter capital. Bond Stone advises on structuring acquisitions to obtain or maintain EFI status where it provides strategic value to the acquirer.

Pre-emption rights

Existing participants in an Uzbek LLC have statutory pre-emption rights on a sale to a third party, and the company has the right next. Transfers between participants need no consent unless the charter says otherwise. The charter may prohibit third-party transfers or impose additional restrictions. The seller must give written notice of the price and terms to the participants and the company. If the whole share is not taken within one month, or another period in the charter or a participants' agreement, it may be sold to the third party on those terms. If the right is breached, a participant may claim the buyer's position in court within three months (Article 21 of Law No. ZRU-1137). Bond Stone advises on pre-emption right compliance — running the notice procedure or obtaining written waivers from the other participants before transfer — and on structuring acquisitions that minimise pre-emption right risk.

Mandatory offer to minority participants

A person who reaches 50% or more of an LLC's charter capital, having held less before, must within 15 days offer to buy the minority participants' shares at market value. If a participant accepts in writing within 30 days, the buyer must complete the purchase. The state is exempt (Article 21 of Law No. ZRU-1137). Buyers of a controlling stake should allow for this in the price and timetable.

SEZ resident — acquisition considerations

Acquisition of a target with SEZ resident status requires assessment of whether SEZ benefits — tax and customs exemptions — are attached to the entity or the specific investor. Bond Stone advises on SEZ benefit continuity post-acquisition and on SPA provisions that address SEZ status risk.

Merger control

Share acquisitions that meet the thresholds in Article 26 of Law No. ZRU-850 need the Competition Committee's preliminary consent. The test covers more than 25% of a JSC's voting shares or more than one third of an LLC. Bond Stone conducts threshold analysis at the outset of every share acquisition mandate and manages notification filings through clearance.