How to open a representative office in Uzbekistan

Most national companies, at a certain period of their development, set one of their goals, bringing their manufactured products, performed works and rendered services to foreign markets, which can be done, among other things, by expanding their actual geographic presence outside the country of company's incorporation (location of the head office). This process is natural and predictable, with the possible exception of activities of companies with a narrow niche focus of their activities, strictly tied to a certain jurisdiction or geographic territory.

In the context of constant development and improvement of global IT and telecommunications, as well as the Internet, the territorial borders of countries in their traditional sense are erased, becoming in most cases conditional. However, the legal and actual presence of company divisions outside the territory of its incorporation is acquiring current significance in our time, being an integral element of financial, tax and strategic planning.

Moreover, in a broad sense, for most business companies, it is not so much important to carry out commercial activities directly in a particular jurisdiction, but rather to maintain control over their business in a particular country, ensure uniform quality standards, warranty and information support for their consumers and contractors, as well as the ability to promptly participate in business processes.

The main tools for implementing the above tasks traditionally include opening representative offices and branches of foreign companies outside the country of their primary establishment (registration).

The legislation of Uzbekistan quite clearly defines the procedure for opening (accreditation) and activities of representative offices of foreign commercial companies in Uzbekistan (hereinafter - the Foreign Companies). However, the mechanism for opening (registering) branches of foreign companies is not regulated in Uzbek law, despite the Civil Code of Uzbekistan allows creation of a branch by any legal entity, including a foreign company.

Representative offices are separate divisions of a foreign company in Uzbekistan and do not have the status of a legal entity. Representative offices are entitled to protect and represent interests of a foreign company, as well as to carry out transactions and other legal actions on its behalf in Uzbekistan. Uzbek legislation does not allow representative offices to directly carry out commercial activities in Uzbekistan, unlike the business activities of branches, to which such functions are legally granted.

In most cases, the main tasks of representative offices are as follow:

• direct access to and work in Uzbek market;
• expanding the clients of the parent company;
• assistance in finding partners for joint projects and their consultancy;
• performing not only certain instructions of a foreign company, but also organizing technical and household support for negotiations, meetings, other events and concluding contracts;
• reviewing proposals from potential investors and passing information to a foreign company, developing advertising activities, studying the market situation, summarizing information and proposals for creating joint ventures and much more.

Representative offices carry out their activities on the basis of regulations approved by the parent company, while their heads (directors) are appointed by the parent company and act on the basis of power of attorney. It should be noted that both a foreign citizen and a citizen of Uzbekistan can be appointed as the head of a representative office. Any foreign citizen - employee of the representative office shall undergo an accreditation procedure (i.e. obtain an accreditation card, which replaces a work permit). The personnel of the representative office may consist of both foreign citizens and Uzbekistani citizens. At the same time, the share of foreign citizens employed to the representative office should not exceed 40% (forty percent) and 5 (five) people of the total personnel. Accredited foreign employees are entitled to work in Uzbekistan (i.e. in the representative office) without obtaining a work permit.

According to the Uzbek law, opening a representative office of a foreign company in Uzbekistan is carried out through its accreditation at the Ministry of Investment, Industry and Trade of Uzbekistan (hereinafter - MIIT or Accrediting Authority). To accredit (register) a representative office, a foreign company shall file following documents to MIIT. At the same time, these documents can be filed in person through the Centers of Public Services (hereinafter - the CPS) or online via my.gov.uz portal (hereinafter - the Portal):

1. A standard application form for accreditation. It shall be signed by the head of foreign company and stamped with the company seal (if available);

2. Regulations on representative office, in 2 copies, which shall be signed by the head of foreign company;

3. Power of attorney issued by the foreign company to the head of representative office;

4. Decision/Resolution (or extract from the Decision/Resolution) of the foreign company on establishing (opening) a representative office;

5. An extract from the trade register (company register) or other document (certificate of registration, trade license, company license) certifying that the foreign company opening a representative office in Uzbekistan is a legal entity under the laws of its country of residence;

6. A copy of the constituent documents (charter and shareholders agreement) of the foreign company;

7. A power of attorney for a representative of a foreign company (e.g. a law firm) for filing above documents to the Accrediting Authority.

The above documents of a foreign company are filed to the Accrediting Authority with a notarized translation into Uzbek or Russian language, as well as with legalization (apostille). However, legalization (apostille) of documents of foreign companies registered (established) in countries participating in the Minsk Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters (Russia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, Ukraine, Azerbaijan, Armenia, Moldova, Georgia, etc.) is not required.

No fee (state duty) is charged for reviewing the application for accreditation. Accreditation procedure of a representative office includes verification of the company’s documents for compliance with Uzbek laws by the Accrediting Authority.

If company’s documents comply with the Uzbek laws, the Accrediting Authority shall approve accreditation or reject on accreditation within 5 (five) working days. In case of a positive decision of the MIIT, the foreign company shall pay a state fee of approximately 1400 US dollars within one month, after which the MIIT shall issue an accreditation certificate (through the CSU or Portal).

During accreditation process, the Accrediting Authority shall register the representative office with the Uzbek tax authority.

Accreditation of a representative office is provided for up to 3-year term. Upon accreditation of the representative office, its head (general manager) can order a round seal (stamp), open  bank accounts for the representative office, and hire employees.

The representative office is provided with property by the foreign (parent) company and carries out activities on the basis of it regulations. At the same time, the representative office is not entitled to  implement activities not stipulated in its regulations.

The representative office is allowed to make short-listed payments, related to covering its following needs:

• expenses related to representative office’s activities;
• expenses for purchasing inventory items for its own needs;
• payments of employees salaries;
• travel expenses of the employees;
• rent (lease), utility and tax payments.

Representative offices are also allowed to make payments for receiving marking codes for the goods (products) to be imported to Uzbekistan.