Company Acquisitions in Uzbekistan

Uzbekistan has taken significant steps in recent years to modernize its corporate and investment framework. With a growing economy, ongoing privatization programs, and the government’s commitment to market liberalization, mergers and acquisitions have become an increasingly common entry route for both domestic and international investors.

This article outlines the principal legal mechanisms, approval requirements, and disclosure rules applicable to the acquisition of companies under Uzbek law, with a particular focus on limited liability companies and joint-stock companies. It also highlights recent regulatory developments and practical considerations relevant to foreign investors.

1. Legal Forms and General Acquisition Structures

The two main corporate forms in Uzbekistan are Limited Liability Companies (LLCs) and Joint-Stock Companies (JSCs).

The choice of structure affects not only governance and capital requirements but also the method of acquisition.
Acquisitions may be carried out through several mechanisms:

I. acquisition of participatory interest or shares from existing owners;
II. an increase of the charter capital of the company at the expense of the contribution of a third party accepted into the company as a participant;
III. contribution of participatory interest by one company to another’s charter capital, leading to indirect control; or
IV. mergers and reorganizations, though these remain less frequent in practice.

While these mechanisms are conceptually straightforward, each requires careful navigation of Uzbekistan’s corporate, tax, and antimonopoly laws.

2. Corporate Law Framework for Private Companies

2.1 Transfer of Participatory Interest

Pursuant to the Law on Limited Liability Companies (2025, as amended), a participant of a company may, unless otherwise provided by the company’s charter, transfer his or her participatory interest, in whole or in part, to third parties. A participant’s share that has not been fully paid may be transferred to another person only to the extent of the amount actually paid.

Before any transfer, the seller must provide written notice to the company and all other participants, stating the proposed price and terms.

Existing participants have pre-emptive rights to purchase the offered interest within seven days of receipt of the notice. If no participant exercises this right, the sale to third parties may proceed after one month from notification.

In practice, most Uzbek LLCs include pre-emptive and approval clauses in their charters. It is therefore advisable for foreign investors to review the charter carefully before entering negotiations, as restrictive clauses can delay or even prevent acquisitions.

2.2 Acquisition Documents and Registration

Under Uzbek law, there are no specific formal requirements for the execution of acquisition documents. Such documents are typically executed in simple written form.

Following execution of acquisition documents, the transaction shall be submitted to the Public Services Agency (PSA) under the Ministry of Justice for registration. Upon registration, the new participant’s details are reflected in the Unified State Register of Legal Entities, which serves as public evidence of ownership.

3. Taxation and Valuation Aspects

3.1 General Tax Treatment

Under Uzbek law, the transfer of a participatory interest (or any part thereof) in a company at its nominal (charter) value shall not give rise to any taxable income for the transferor. However, where the transfer price of such participatory interest exceeds its nominal value, the positive difference between the transfer price and the nominal value shall constitute taxable income of the transferor and shall be subject to corporate income tax or individual income tax, as the case may be, in accordance with the Tax Code of the Republic of Uzbekistan.

In contrast, increasing a company’s charter capital through new contributions does not trigger income taxation. However, non-monetary contributions (for example, property or equipment) are subject to value-added tax (VAT) at the standard rate of 12%, unless specific exemptions apply.

3.2 Valuation of Non-Monetary Contributions

Contributions to charter capital can be made in cash or in kind.
If the total value of a non-monetary contribution exceeds 10,000 Base Calculation Values (BCV) — approximately UZS 4.120 billion (USD 341,484) — an independent appraiser must be engaged to determine fair value. All participants must unanimously approve the valuation, and the approved amount cannot exceed the appraised value.

Foreign investors should be aware that valuation reports prepared abroad may not be automatically recognized in Uzbekistan; a local appraisal compliant with Uzbek standards is required.

4. Regulatory and Antimonopoly Approvals

4.1 Overview

Uzbekistan maintains a mandatory pre-approval regime for transactions that may result in economic concentration.

The competent authority is the Competition Promotion and Consumer Protection Committee (commonly referred to as the Antimonopoly Committee).

4.2 When Consent Is Required

Under the Law “On Competition” No. LRU-850 (4 October 2023), prior consent must be obtained for:

• Mergers or acquisitions of business entities.
• Acquisition of more than 25% of voting shares in a JSC.
• Acquisition of more than one-third of participatory interest in an LLC; or
• Obtaining the right to determine the business decisions of another entity.

4.3 Financial Thresholds

Antimonopoly approval is required only where the parties meet certain financial criteria:

• If the book value of one entity’s assets or turnover for the last calendar year exceed 250,000 BCV (approx. UZS 103.000.000.000 billion / USD 8.537 million); or
• If the combined book value of assets or turnover of the parties for the last calendar year exceed 500,000 BCV (approx. UZS 206 billion / USD 17.074 million).

Transactions involving small and medium enterprises typically fall below these thresholds, but large corporate acquisitions almost always require pre-clearance.

4.4 Filing Procedure and Timing

The application must be filed by the acquiring entity or group of entities.The Committee charges a filing fee of 1 BCV (USD 34), and the review fee ranges from 7 BCV (USD 239) to 1,000 BCV (USD 34,148), depending on the scale of the transaction.

The Committee reviews the application within 30 calendar days. If there are indications that the transaction could restrict competition or create a dominant market position, the review period may be extended by up to one month, with written justification.

5. Acquisitions of Public Companies

5.1 Regulatory Environment

Public M&A transactions in Uzbekistan are governed by the Law on Joint-Stock Companies and Protection of Shareholders’ Rights NO. 370 LRU (06 May 2014) and the rules of the Republican Stock Exchange “Toshkent” JSC (“Exchange”). Although the local capital market remains relatively small, the number of listed companies is growing, particularly in the context of state asset privatization.

5.2 Tax Treatment of Share Sales

A shareholder in a JSC may sell shares at any agreed price, regardless of nominal value. Tax treatment depends on whether the shares are listed:

• Listed shares: Income from sale, including by non-residents, is exempt from corporate and personal income tax.
• Unlisted shares: The seller pays a 0.3% transaction fee instead of income tax.

This tax regime has made listed share transactions highly attractive, especially for foreign investors seeking to minimize administrative burdens.

5.3 Implementation of Share Purchase and Sale Transactions on the Exchange

When a shareholder sells his or her shares, both the seller and the buyer must execute the transaction through their investment intermediary on the Exchange:

• on the Exchange trading floor – for listed joint-stock companies (JSCs), or
• on the over-the-counter trading floor – for non-listed JSCs.

The following sections of the Stock Market module must be used:

1. Main Board (Main Section): For sales of less than 1% of the JSC’s share capital. The share price is determined according to the market price.
2. Negotiation Auction (Nego Board): For sales of 1% or more of the JSC’s share capital. The seller and buyer may agree on the transaction price independently, which may be higher or lower than the market price.

5.4 Registration of Share Transfers without Actual Payment

Transfers of shares without actual payment (e.g., donation or debt settlement) must be registered with the purchaser’s investment intermediary (Registrar) under the Regulations on the accounting register of over-the-counter transactions with securities (Reg. No. 1919 of 9 March 2009). The Registrar certifies ownership rights, charges a registration fee, and ensures the transfer is recorded in the depository system.

6. Disclosure and Reporting Obligations

6.1 Joint-Stock Companies

The owner of shares is obliged to disclose information on the acquisition, independently or jointly with affiliated persons, as a result of one or several transactions of a block of shares in a JSC, which in the aggregate constitutes 20 percent or more of the charter capital of this JSC. Disclosure of information is carried out within two business days from the date of conclusion of the transaction (transactions) in the republican newspaper or on the official website of the stock exchange.

In addition, significant facts that must be provided in the annual report of a JSC are changing in the list of legal entities in which the issuer owns 10 or more percent of the shares (interests, shares) of each such legal entity. The annual report must also contain information on the ownership of 5 or more percent of shares (stakes, shares) of other legal entities if the issuer’s shares are included in the exchange quotation list of the stock exchange. Also, JSCs must disclose material information about an affiliate on its official website and on the Unified Corporate Information Portal within two business days from the date of the event (registration of the share transfer).

6.2 Limited Liability Companies

Disclosure requirements for LLCs are more limited. Public disclosure is required only when the transaction triggers Antimonopoly Committee approval or involves re-registration due to a change in participants.

Although transaction documents are submitted to authorities, details such as purchase price, payment terms, and beneficial ownership structure remain confidential and are not publicly available.

Please note, that applicants seeking preliminary consent from the Antimonopoly Authority must also provide information about individuals who are ultimate beneficial owners and hold actual control over a business entity through direct or indirect ownership of 25% or more of its shares or stocks.

7. Practical Insights for Foreign Investors

In practice, the Uzbek authorities — particularly the Antimonopoly Committee and the PSA — apply a strict formal approach to documentation.

Foreign investors should also anticipate longer transaction timelines than in mature markets, especially for deals requiring cross-border regulatory clearance or state participation approval.

That said, the process has improved markedly in recent years. Digital registration, simplified tax procedures, and predictable competition law enforcement have made M&A in Uzbekistan more transparent and accessible than ever before.

8. Conclusion

Uzbekistan’s M&A framework is steadily aligning with international standards while preserving its local specificities.
Whether through private acquisitions, capital increases, or stock exchange transactions, investors enjoy a clear legal basis for acquiring companies, provided they comply with the necessary tax, competition, and disclosure rules.

With its expanding economy and ongoing reforms, Uzbekistan offers promising opportunities for both strategic and financial investors.

At Lexminster, we assist clients at every stage of the transaction — from due diligence and structuring to regulatory clearance and post-acquisition integration — ensuring that each deal is executed efficiently and in full compliance with Uzbek law.

Authors:
Dr. Zurab Simonishvili – Partner
Ruslan Kholmatov, LL.M. (Penn) – Senior Associate
Email: info@lexminster.com
Website: lexminster.com