Overview of the Uzbek Law On Limited Liability Companies

The development of the market economy and entrepreneurial activity in the Republic of Uzbekistan has necessitated the legal regulation of various organizational and legal forms of business entities. Among these, limited liability companies (LLCs) occupy a special place, being the most widespread form of doing business due to their flexibility, limited liability of participants, and relatively simple establishment procedure. The Law of the Republic of Uzbekistan “On Limited Liability Companies” dated December 6, 2001, No. 310-II (hereinafter referred to as “the Law”) is the fundamental normative act defining the legal status, procedure for establishment, operation, reorganization, and liquidation of LLCs.

The Law provides that an LLC may be founded by one or more persons whose charter capital is divided into shares. The key principle is that participants are not liable for the obligations of the company and bear the risk of losses only within the limits of their contributions. However, if a contribution is not fully paid, the participants bear joint and several liability within the unpaid portion.

An LLC acquires the status of a legal entity from the moment of its state registration. It may engage in any type of activity not prohibited by law, while certain activities require a license. The state is not liable for the obligations of the company, and vice versa.

Founding Documents

The founders conclude a founding agreement and approve the company’s charter. The charter is the principal document defining the company’s name, business scope, charter capital, rights and obligations of participants, procedures for withdrawal and share transfer, and the structure of management bodies.

A unanimous decision of the founders is required for charter approval and the valuation of non-monetary contributions. Amendments to the charter are subject to mandatory state registration, ensuring legal certainty for participants and third parties.

Charter Capital and Property Issues

The Law clearly regulates the formation and modification of the company’s charter capital. Contributions may consist of money, securities, property, or property rights. An important safeguard is the requirement for independent valuation of non-monetary contributions exceeding a certain threshold.

An increase in charter capital is permitted only after full payment of the existing amount, while a decrease is allowed in cases of insolvency or when the value of net assets fails to meet legal requirements. Creditor protection is ensured through their right to demand early termination of obligations if the charter capital is reduced.

Management of the Company

The supreme governing body is the General Meeting of Participants, whose competence is strictly defined by law and includes key matters such as approval of the charter, profit distribution, formation of management bodies, reorganization, and liquidation.

Executive bodies may be either sole (Director) or collective (Management Board, Directorate). For companies with more than 50% state ownership, the inclusion of an independent member in the Supervisory Board is mandatory, reflecting international standards of corporate governance.

Rights and Obligations of Participants

Participants enjoy a broad range of rights, including participation in management, access to information on the company’s activities, withdrawal from the company, and the right to dividends and liquidation quotas. At the same time, they are obliged to make timely contributions and maintain confidentiality of the company’s information.

The Law maintains a balance between majority and minority interests: if the number of participants exceeds 50, the company must be transformed into a joint-stock company, and in cases of gross violation of duties by a participant, expulsion through court proceedings is permitted.

Procedure for Establishing an LLC

Stage	Action	Documents	Notes / Particularities
1	Decision to establish	Minutes / Resolution of founders	May be established by a single founder (sole participant)
2	Conclusion of founding agreement	Founding agreement	Mandatory if ≥ 2 founders; defines shares and procedure for contributions
3	Approval of charter	Charter of the company	Main document; required in all cases; defines name, scope, management, and withdrawal rules
4	Formation of charter capital	Documents confirming contributions (payment orders, asset transfer acts, valuation reports)	Minimum amount may be set by licensing requirements; non-monetary contributions must be independently evaluated
5	State registration	Application, charter, founding agreement, details of founders, receipt for state duty	The LLC obtains legal personality upon registration
6	Post-registration actions	Obtaining seal, opening bank accounts, notifying authorities	The company may begin operations only after registration and completion of organizational procedures

 

Charter Capital of an LLC

Aspect	Description	Notes / Comments
Definition	The charter capital is the aggregate nominal value of participants’ shares	Defined by the charter and reflects the property base of the company
Formation	Funded through participants’ contributions: money, securities, property, property rights	Real estate, equipment, and usage rights may also serve as contributions
Valuation of contributions	Monetary valuation of non-cash contributions approved unanimously by the general meeting	Independent valuation required if exceeding 10,000 base calculation units
Minimum size	May be defined by licensing regulations	For example, banks and credit institutions have higher minimum requirements
Contribution deadline	Set by the founding documents, but not exceeding one year from registration	For credit institutions, at least 30% must be paid before registration
Certificate of contribution	Issued to participant upon full payment	Confirms fulfillment of contribution obligation

The Law of the Republic of Uzbekistan “On Limited Liability Companies” serves as the cornerstone of corporate regulation in the country. It combines protection of the rights of participants, creditors, and the state, ensuring a balance between business and societal interests.

Analysis of the Law’s provisions demonstrates that it:

• enshrines modern corporate governance standards;
• provides legal protection for participants and creditors;
• promotes entrepreneurship under market-economy conditions.

Thus, the Law on LLCs not only regulates one of the key forms of business organization but also plays a crucial role in shaping a stable business environment in Uzbekistan.