Founding and Managing an LLC in Uzbekistan

A limited liability company (LLC) is one of the most common organizational and legal forms for conducting business activities. Its attractiveness is due to a combination of several factors: limited property liability of participants, relative simplicity of establishment, flexibility of internal regulation, the possibility for both individuals and legal entities to participate, and the contractual nature of relations between the participants.

The new Law of the Republic of Uzbekistan “On Limited Liability Companies” dated April 21, 2026 No. ZRU-1137 systematically regulates relations connected with the establishment, activity, reorganization, liquidation of LLCs, corporate governance, and relations among the participants of the company. The Law directly states that its purpose is to regulate relations in the field of establishment, activity, reorganization and liquidation of limited liability companies, as well as relations concerning company management and interaction among participants.

The new Law establishes an LLC not only as a form of business organization, but also as a corporate structure in which the property autonomy of a legal entity is combined with an internal system of management bodies. Such a system provides for the distribution of competence among:

1. the general meeting of participants — the supreme management body;
2. the supervisory board — an optional body of strategic control;
3. the executive body — the body responsible for the current management of the company’s activities.

According to the new Law, a limited liability company is a business company established by one or several persons, the charter fund of which is divided into shares in the amounts determined by the founding documents. The company acquires the status of a legal entity from the moment of state registration.

The following main features of an LLC follow from this definition:

Feature	Legal meaning
Corporate nature	An LLC is established by one or several persons who become participants of the company
Share structure of capital	The charter fund is divided into participants’ shares
Independent legal capacity	The company acquires the status of a legal entity after state registration
Property separation	The company has an independent balance sheet and is liable for its obligations with the property belonging to it
Limited liability of participants	Participants, as a rule, are not liable for the obligations of the company
Organizational autonomy	The LLC acts through its management bodies

The significance of limited liability is that participants are not liable for the obligations of the company, and the risk of their property losses is limited to the value of their contributions. At the same time, the Law provides for an important exception: participants who have not fully made their contributions bear joint and several liability for the obligations of the company within the unpaid part of the contribution.

Establishment of an LLC

The establishment of a company begins with the expression of will by the founders. The Law provides that a company is established by decision of the founders or the sole founder. If there are several founders, the decision is adopted at a meeting of founders; if the company is created by one person, the decision is adopted by that person individually.

The decision to establish the company has not only registration significance, but also corporate and organizational significance. It may include:

Element of the decision	Meaning
Establishment of the company	Records the will of the founders to create a new legal entity
Company name	Individualizes the company in civil circulation
Location	Determines the legal address of the company
Amount of charter fund	Establishes the property basis of the company
Approval of the charter	Forms the main corporate document
Other matters	Allows additional aspects of the company’s creation to be regulated

The Law specifically provides that the decision to approve the charter, as well as the decision to approve the monetary valuation of non-monetary contributions, shall be adopted unanimously by the founders. This is explained by the fact that these matters affect the basic structure of the future legal entity and the property interests of all founders.

Founding Documents of the Company

The new Law establishes two types of founding documents:

1. the foundation agreement;
2. the company charter.

When a company is established by one person, the founding document is the charter approved by the sole founder. If the number of participants increases to two or more, a foundation agreement must be concluded between them.

The legal significance of the founding documents differs.

Document	Main purpose	State registration
Foundation agreement	Regulates relations among the founders during the establishment of the company	Not registered
Charter	Determines the legal status of the company, the structure of bodies, competence and decision-making procedure	Subject to state registration
Amendments to the charter	Affect the legal regime of the company and third parties	Subject to state registration

It is especially important that, in the event of inconsistency between the provisions of the foundation agreement and the charter, the provisions of the charter prevail for third parties and the participants of the company.

Content of the Foundation Agreement

The foundation agreement establishes the obligation of the founders to create the company and determines the procedure for their joint activities in establishing the company. The Law indicates that the foundation agreement must define:

Matter	Content of regulation
Composition of founders	Who participates in the creation of the company
Amount of charter fund	Total amount of the company’s capital
Size of shares	The share of each founder in the charter fund
Procedure for making contributions	Amount, method, terms and form of contributions
Liability for breach of the obligation to make contributions	Sanctions for delay or incomplete contribution
Distribution of profits and losses	Economic model of participation
Bodies of the company	Initial structure of corporate governance
Withdrawal of participants and admission of third parties	Rules for changing the composition of participants

Thus, the foundation agreement is an internal corporate agreement of the founders aimed at organizing the process of establishing the company and regulating their mutual rights and obligations.

Content of the Company Charter

The charter is the central legal document of an LLC. The new Law requires the charter to include, in particular:

Section of the charter	Legal meaning
Full and abbreviated company name	Individualization of the company
Scope of activity	Determination of the area of activity
Postal address	Communication and registration function
Composition and competence of company bodies	Main block of corporate governance
Exclusive competence of the general meeting	Protection of key rights of participants
Competence of the supervisory board, if established	Regulation of strategic control
Procedure for decision-making by company bodies	Procedural legitimacy of corporate acts
Amount of charter fund	Property basis of the company
Size and nominal value of participants’ shares	Corporate and property rights of participants
Rights and obligations of participants	Internal status of participants
Procedure for withdrawal of a participant	Mechanism for termination of participation
Procedure for transfer of a share	Regulation of the circulation of shares
Procedure for keeping documents and providing information	Information transparency
Information on branches, representative offices, subsidiaries and dependent companies	Organizational structure of the company

The requirement to specify in the charter the competence of company bodies is of particular importance, including the exclusive competence of the general meeting, the competence of the supervisory board if it exists, as well as matters on which decisions are adopted unanimously or by qualified majority.

Charter Fund of an LLC

The charter fund of the company is determined by the charter and consists of the nominal value of the shares of its participants. Contributions may consist of money, securities, things, property rights or other alienable rights having monetary value.

The Law establishes several important rules:

Rule	Content
The charter fund is formed from participants’ shares	Each share has a size and nominal value
The minimum amount of charter fund may be determined by licensing requirements	A general universal minimum amount is not always mandatory
Non-monetary contributions of significant value are subject to valuation	If the value exceeds the established threshold, valuation by an appraisal organization is required
Each participant must fully make the contribution within the term established by the founding documents	The maximum term is one year from the moment of state registration
The fact of full contribution is confirmed by a certificate	This protects the participant and the company from disputes

The charter fund performs three functions:

1. organizational — determines the share structure of the company;
2. property-related — forms the initial economic basis of the company;
3. corporate — affects the number of votes, distribution of profit and other rights of participants.

Management Bodies of an LLC

The new Law establishes a three-tier corporate governance model. According to Article 30 of the Law, the general meeting of participants is the supreme management body of the company. The charter may provide for the establishment of a supervisory board. Current activities are managed by a sole executive body or a collegial executive body; the executive body is accountable to the general meeting and, if established, to the supervisory board.

Body	Legal role	Nature of competence
General meeting of participants	Supreme management body	Strategic, founding and most significant corporate matters
Supervisory board	Body of control and strategic supervision	Intermediate link between participants and the executive body
Executive body	Body of current management	Operational management and representation of the company

This model makes it possible to separate business ownership from operational management. Participants determine key matters, the supervisory board exercises control and strategic support, and the executive body ensures the company’s day-to-day activities.

General Meeting of Participants

The general meeting of participants is the supreme management body of an LLC. This means that the participants exercise their corporate power precisely through the general meeting. The general meeting expresses the collective will of the participants and adopts decisions on the most important matters of the company’s existence.

The competence of the general meeting is determined by the Law and the company charter. At the same time, the Law identifies matters of exclusive competence that should not be arbitrarily transferred to the executive body, since they affect the foundations of the corporate structure and the rights of participants.

The powers of the general meeting may be systematized as follows:

Group of powers	Examples of matters	Legal meaning
Strategic powers	Determination of the main areas of the company’s activity	Forms the long-term development direction
Founding and charter powers	Amendments to the charter, change of the charter fund amount	Changes the legal and property basis of the company
Organizational powers	Formation of company bodies, election or appointment of relevant persons	Ensures the functioning of the management system
Property and financial powers	Distribution of profit, approval of annual reports, capital-related matters	Protects the economic interests of participants
Control powers	Review of reports of company bodies, approval of internal documents, audit-related matters	Ensures accountability of management bodies
Reorganization and liquidation powers	Adoption of decisions on reorganization or liquidation of the company	Determines the fate of the legal entity
Corporate conflict powers	Resolution of matters related to participants, shares, exclusion of a participant in cases provided for	Stabilizes the composition of participants and corporate relations

The general meeting is not merely a formal body, but the center of corporate legitimization. It is precisely its decisions that give legal force to the most significant actions of the company.

The exclusive competence of the general meeting should include matters that, by their nature, affect the foundations of the company’s existence. These include, in particular:

Matter	Why it falls within exclusive competence
Determination of the main areas of the company’s activity	Affects the strategic development of the business
Amendment of the charter	Changes the corporate “constitution” of the company
Change of the charter fund	Affects the property rights of participants
Establishment of branches and representative offices	Changes the organizational structure of the company
Formation of management bodies	Determines who will manage the company
Approval of annual reports and distribution of profit	Affects the economic interests of participants
Reorganization and liquidation	Affects the very existence of the legal entity
Approval of major internal corporate decisions	Ensures participants’ control over significant actions of the company

At the same time, the charter may specify the competence of the general meeting, the decision-making procedure, quorum, number of votes, matters requiring unanimity and qualified majority. The Law directly requires that the charter contain information on the procedure for decision-making by company bodies, including matters requiring unanimity or at least two-thirds of votes.

Supervisory Board of an LLC

The supervisory board in an LLC is an optional body: it is established if provided for by the company charter. This approach reflects the dispositive nature of an LLC: small companies may limit themselves to the general meeting and director, while more complex structures may establish a supervisory board to strengthen control and strategic management.

The supervisory board performs the function of a corporate filter between the participants and the executive body. It should not replace the executive body in day-to-day management, but may control its activities, review key transactions, preliminarily approve significant decisions, and ensure protection of the interests of participants.

The Law provides that the procedure for electing members of the supervisory board is determined by the founding documents. Candidates who receive the largest number of votes, unless otherwise established by the founding documents, are deemed elected to the supervisory board for a term of three years. Members of the supervisory board may be re-elected an unlimited number of times.

Element	Legal regulation
Obligation to establish	Not mandatory unless otherwise provided by the charter
Election procedure	Determined by the founding documents
Term of office	As a general rule, three years
Re-election	Permitted without limitation
Requirements for members	May be established by the charter or by decision of the general meeting
Number of members	Determined by the charter
Independent members	Their number must be separately specified in the charter if they are included in the board

The competence of the supervisory board must be determined by the company charter. In the corporate model of an LLC, the supervisory board may perform the following functions:

Group of powers	Content
Control powers	Control over the activities of the executive body
Strategic powers	Preliminary review of matters concerning the company’s development
Personnel powers	Participation in appointment, approval or control of the executive body, if provided by the charter
Transaction-related powers	Approval of major transactions, interested-party transactions or other significant transactions, if established in the charter
Financial powers	Control over implementation of the budget, financial plan and investment policy
Compliance powers	Supervision over compliance with legislation, the charter and internal documents
Preparation of matters for the general meeting	Submission of recommendations and proposals to participants

The supervisory board is especially important for companies with several participants, investment projects, companies with foreign participants, family companies, holding structures and companies with hired management.

Executive Body of an LLC

The executive body manages the current activities of the company. The Law allows two models:

1. a sole executive body — director;
2. a collegial executive body — board, directorate or other body, if provided by the charter.

The executive body is accountable to the general meeting of participants and, if there is a supervisory board, also to the supervisory board.

The executive body acts within the competence established by the Law, the charter, decisions of the general meeting and the supervisory board. Its powers may be divided into the following groups:

Group of powers	Content
Operational management	Management of the company’s day-to-day business activities
Representation	Acting on behalf of the company in relations with third parties
Contractual work	Conclusion of contracts and organization of performance of obligations
Personnel management	Hiring and dismissal of employees, organization of labor processes
Financial management	Disposal of funds within approved powers
Organization of accounting and reporting	Ensuring accounting, tax and corporate records
Implementation of decisions of company bodies	Implementation of decisions of the general meeting and supervisory board
Management of branches and representative offices	Appointment of heads of branches and representative offices based on decisions of the executive body, where applicable

The Law also indicates that the head of a branch or representative office is appointed on the basis of a decision of the executive body and acts on the basis of a power of attorney issued by the company.

The new Law strengthens the personal liability of persons who actually manage the company. If the insolvency of the company is caused by unlawful actions of the director, collegial executive body, member of the supervisory board, participant or trustee, and the company’s property is insufficient, subsidiary liability may be imposed on such persons. If damage is caused by several persons, they bear joint and several liability.

In addition, members of the supervisory board, the sole executive body and members of the collegial executive body are obliged to act in the interests of the company in good faith and reasonably.

This means that the new Law establishes not only a formal management model, but also a standard of conduct for company bodies: good faith, reasonableness, loyalty to the interests of the company and liability for abuse of powers.

Powers of LLC Management Bodies

Criterion	General meeting of participants	Supervisory board	Executive body
Legal status	Supreme management body	Optional body of control and strategic supervision	Body of current management
Mandatory nature	Mandatory	Established if provided by the charter	Mandatory
Main function	Expression of the will of participants	Control and supervision over the executive body	Management of current activities
Source of powers	Law and charter	Charter	Law, charter, decisions of the general meeting and supervisory board
Key matters	Charter, capital, bodies, profit, reorganization, liquidation	Control, strategy, preliminary approval of significant matters	Transactions, personnel, finance, operational activity
Accountability	To participants as holders of corporate rights	To the general meeting of participants	To the general meeting and supervisory board, if established
Nature of decisions	Most significant corporate decisions	Supervisory and approval decisions	Operational and managerial decisions
Risk of abuse	Majority pressure on minority participants	Formal control without real influence	Exceeding powers, conflict of interest
Method of minimizing risks	Clear charter, quorum, qualified majority, minority rights	Independent members, regulations, reporting	Limits of authority, approval of transactions, reporting, liability