Joint-Stock Companies in Uzbekistan: Legal Regulation and Shareholder Protection

Joint-stock companies (JSCs) represent one of the most advanced forms of business organizations in modern corporate law. In Uzbekistan, this form has gained particular importance during the processes of privatization, capital market development, and integration into the international financial system. The Law of the Republic of Uzbekistan “On Joint-Stock Companies and Protection of Shareholders’ Rights,” as amended in 2014, marked an important stage in improving corporate legislation, aimed at enhancing business transparency, strengthening investor guarantees, and protecting the interests of minority shareholders.

According to the law, a joint-stock company is defined as a commercial organization whose authorized capital is divided into a certain number of shares certifying the shareholders’ rights in relation to the company. The JSC acquires the status of a legal entity from the moment of state registration and is liable for its obligations with all its property, while shareholders bear the risk of losses only within the value of their shares.

A key principle is the separation of liability between the state and the company: neither the state is liable for the obligations of a JSC, nor is a JSC liable for the obligations of the state. This provision secures the principle of independence of business entities.

Establishment and Charter of a Joint-Stock Company

A JSC may be established either as a new entity or through reorganization (merger, division, transformation). The founders conclude a founding agreement, adopt the charter, and form the governing bodies.
The company’s charter defines its trade name, location, business objectives, management structure, the number of shares, and the procedure for their distribution.

Transparent establishment rules ensure legal certainty and serve as a guarantee for future investors.

Capital and Securities

The authorized capital of the company is formed from the nominal value of its shares, and its minimum amount may be determined by licensing requirements in specific sectors. The law provides for the possibility of increasing or reducing the authorized capital, issuing shares (ordinary and preferred), bonds, and other securities.

Special attention is given to shareholders’ rights to receive dividends, access information on the company’s activities, and demand compensation for losses. The law also regulates preemptive rights to acquire shares, protection of minority shareholders, and procedures for increasing or reducing capital.

Management Bodies and Shareholders’ Rights

The management structure of a JSC includes the general meeting of shareholders, the supervisory board, the executive body, and the audit commission. The general meeting is the supreme governing body.

Key shareholder rights include:

• participation in management through voting at the general meeting;
• receipt of profits in the form of dividends;
• access to information on the company’s operations;
• protection of rights through courts and authorized state bodies;
• association into shareholder unions.

Minority shareholders are provided with mechanisms of judicial protection, including the right to challenge transactions and decisions that infringe upon their interests.

Liability and Shareholder Protection

The law introduces an important provision on subsidiary liability of controlling shareholders if their illegal actions lead the company to insolvency. It also regulates the procedure for foreclosure on shares and the resolution of corporate disputes.

A mandatory reserve fund (at least 15% of the authorized capital) must be established, serving as a financial safeguard for both creditors and shareholders.

Stages of Establishing a Joint-Stock Company in Uzbekistan

Stage	Content	Responsible Persons	Main Documents	Deadlines / Features
1. Decision to Establish	Determination of the intent to create a JSC or transform an organization into a JSC	Founders (individuals or legal entities) or authorized state body (for state enterprises)	Decision of founders or authorized body	May have one or several founders
2. Founding Agreement	Regulates joint activities, capital formation, types of shares, and founders’ rights and obligations	Founders	Founding agreement	Mandatory if several founders
3. Preparation and Approval of the Charter	Defines name, address, objectives, authorized capital, management structure, share types	Founders	Company charter	Approved unanimously
4. Founding Meeting	Approves creation decision, charter, share distribution, and management formation	Founders	Meeting minutes	Majority voting; certain issues (e.g., asset valuation) — unanimous
5. State Registration	Formalization of legal status	Authorized body (Ministry of Justice / State Register)	Charter, founding agreement, meeting minutes, application	JSC acquires legal status upon registration
6. Formation of Authorized Capital	Payment for shares in cash, property, or property rights	Founders	Documents confirming share payment (cash, property, valuation)	Must be completed within one year after registration
7. Special Cases	Establishment with foreign investors or by transformation of state enterprises	Foreign investors, state bodies	Decision of authorized body, compliance with law	Subject to international treaties and national legislation

 

Categories of Persons Who May and May Not Be Shareholders

Category	May Be a Shareholder	May Not Be a Shareholder	Special Conditions
Individuals	Citizens of Uzbekistan, foreign citizens, stateless persons	No direct restrictions	Must be registered in the shareholders’ register or depository
Legal Entities	Domestic and foreign companies	No general prohibitions	Restrictions may apply under special laws (banking, insurance, investments)
Foreign Investors	May own shares	No prohibitions	Rights guaranteed by international treaties
State Bodies	Generally not permitted	Authorities and administrative bodies	Exception: if directly authorized by law, Presidential decree, or Cabinet decision
Subsidiary and Dependent Companies	May own shares of other legal entities	Cannot own voting shares of their parent company	Shares acquired before prohibition cannot be voted with
The JSC Itself (Treasury Shares)	May temporarily repurchase its own shares	Cannot permanently hold its own shares	Repurchased shares must be resold or canceled
Co-owners of Shares	Multiple persons may jointly own a share	Not separate shareholders	Considered one shareholder, act through a representative

The range of shareholders is broad, including both individuals and legal entities, as well as foreign investors. Restrictions mainly apply to state bodies, subsidiaries, and the company itself.

The Law of the Republic of Uzbekistan “On Joint-Stock Companies and Protection of Shareholders’ Rights” (2014 edition) establishes a modern model of corporate governance that balances the interests of the state, companies, and shareholders. Its provisions aim to increase the investment attractiveness of the economy, develop the securities market, and strengthen investor protection.

From a scientific standpoint, this law represents an important step toward harmonizing Uzbek corporate law with international standards and creating a legal foundation for the further development of corporate practice under conditions of globalization.