New Law of the Republic of Uzbekistan “On Limited Liability Companies”: Key Changes and Practical Implications for Business

On 21 April 2026, the new Law “On Limited Liability Companies” (the “Law”) was adopted in the Republic of Uzbekistan providing for a comprehensive revision of corporate regulation of limited liability companies (“LLCs”). The Law substantially modernizes the existing corporate governance framework, strengthens the protection of the rights of participants and creditors, expands the range of corporate control tools, at the same time increasing the requirements for transparency of the company’s activities and its internal corporate procedures.

The changes affect virtually all key aspects of companies’ activities, including governance arrangements, operation of management bodies, circulation of participatory interests, related party transactions, corporate conflicts, rights of minority participants, and liability of controlling persons.

The Law will enter into force on 22 July 2026.

Set out below are the most significant changes and their practical implications for business.


EXPANSION OF OPERATIONAL FLEXIBILITY AND REVISED APPROACH TO DETERMINING THE LOCATION OF LLCS

The Law substantially expands the operational flexibility of LLCs, changing the approach both to determining permitted types of activity and to establishing the location of the company.

In particular, the right of an LLC to engage in any activities not prohibited by law has been expressly recognized, even where such activities are not directly specified in the charter. Unlike the previous regulation, under which the content of the charter played a key role in defining the scope of the company’s activities, the new version enables businesses to launch new lines of business swiftly without amending the charter or undergoing state re-registration, and reduces the risk of transactions being challenged on formal grounds.

In addition, the Law refines the approach to determining the company’s location. As a general rule, the location of an LLC is deemed to be its place of state registration; however, the charter may provide that the company’s location is the permanent seat of its management bodies or the place where its principal activities are carried out. Therefore, the legislator departs from the previously prevailing formal approach, which tied the company’s location predominantly to its state registration address.


SYSTEMATIZATION OF REGULATION OF BRANCHES, REPRESENTATIVE OFFICES, SUBSIDIARIES AND ASSOCIATES

The Law substantially updates and systematizes the regulation of branches, representative offices, subsidiaries and associates, consolidating the provisions, which were previously fragmented and partially dispersed between the prior version of the Law and the Civil Code, into a single legislative act.

At the same time, the corporate procedure for adopting decisions on the opening of branches and representative offices has been changed: whereas such decisions generally required the unanimous consent of the participants, a qualified majority of not less than two-thirds of the votes is now sufficient, unless the charter provides for a higher threshold.

The Law also substantially strengthens the regulation of the parent company’s liability for the activities of its subsidiaries.

In particular, the following are now set out in more detail:

• Cases of joint and several liability in respect of a subsidiary’s transactions
• Grounds for subsidiary (secondary) liability
• Consequences of causing a subsidiary to become insolvent
• Possibility of recovering damages from controlling persons

In effect, the legislator is tightening the liability of holding structures and persons exercising de facto corporate control, while establishing a more coherent and systematic model for the regulation of company groups.


CHANGES TO REGULATION OF WITHDRAWAL OR EXPULSION OF PARTICIPANTS FROM LLCS

The Law adjusts the regulation of a participant’s right to withdraw from the company. In particular, the wording permitting withdrawal “at any time” has been removed from the provision establishing the right of a participant to withdraw from an LLC irrespective of the consent of the other participants.

Although the change is editorial in appearance, it may have substantial practical significance, as it strengthens the role of:

• Provisions of the charter
• Corporate (shareholders’) agreements
• Withdrawal procedures and conditions agreed upon by the participants

Whereas previously the right of withdrawal was perceived as being maximally free and unconditional, the new version of the Law may indicate a shift towards a more corporately structured approach, under which the procedure for exercising the right of withdrawal acquires greater significance from the standpoint of the company’s internal regulations.

Simultaneously, the Law expands the grounds for expulsion of a participant through the courts, which now extend not only to a gross breach of duties, but also to acts or omissions that impede or prevent the company’s activities.

The change is intended to enhance the stability of corporate governance but at the same time increases the risk of corporate pressure and judicial disputes between participants.


INTRODUCTION OF ALTERNATIVE MECHANISMS TO RESOLVE CORPORATE DISPUTES

One of the important innovations of the Law is the express recognition of the possibility of using alternative methods to resolve corporate disputes.
Under the existing regulation, a dispute between a company’s participants on governance matters, where the requisite number of votes for adopting a decision is lacking, is subject to resolution exclusively through the courts.

According to the new version, where it is impossible to reach agreement on matters of company governance owing to irreconcilable disagreements between participants, the dispute may also be resolved using alternative methods such as mediation or arbitration, provided, however, that such mechanisms are expressly stipulated in the company’s constituent documents.


CLARIFICATION OF THE “QUALIFIED MAJORITY” CONCEPT

For the first time, the Law expressly defines the concept of a “qualified majority,” setting it at not less than two-thirds of the total number of votes of the company’s participants, unless the charter provides for a higher threshold.


NEW RULES GOVERNING PARTICIPATORY INTERESTS AND THE CHARTER CAPITAL

The Law strengthens the judicial and corporate mechanisms for protecting participants’ rights in disputes relating to participatory interests in the company.

In particular, it is now possible for a court to restrict changes to the company’s charter capital where there is pending litigation concerning a participant’s interest.

In practical terms, this is aimed at:

• Preventing the dilution of participatory interests
• Preventing changes to the ownership structure during a corporate conflict
• Protecting the interests of participants where the rights to a participatory interest are contested

In addition, the Law provides for the possibility of maintaining records of participatory interests and the charter capital through the Central Securities Depository.


FORMALIZATION OF THE PROCEDURE FOR INCREASING THE CHARTER CAPITAL

The Law significantly tightens the requirements for increasing the charter capital out of the company’s assets, including retained earnings.
Whereas previously the relevant decision could be adopted predominantly on the basis of the company’s accounting records, the financial statements must now be confirmed by an external auditor’s report.


ENHANCED PROTECTION OF MINORITY PARTICIPANTS

The Law substantially expands the mechanisms for protecting minority participants and strengthens their procedural and corporate rights.

One of the most notable changes is the broadening of the right to initiate an extraordinary general meeting of participants.

Whereas previously the right to demand the convening of an extraordinary general meeting was, as a rule, vested only in participants collectively holding at least 10% of the company’s votes, the new version of the Law effectively grants any participant of the company the right to initiate an extraordinary general meeting, regardless of the size of their interest.

For the first time, the Law also introduces consistent regulation of the status of minority and majority participants, including the possibility of establishing a committee of minority participants.

At the same time, the Law tightens the liability of majority participants and controlling persons for the abuse of their position and for the adoption of decisions to the detriment of the company or its other participants.

The Law also shortens the period for submitting a mandatory offer to minority participants.

A person who has become the owner of 50% or more of the participatory interests in the company is now required, within 15 days, to offer to buy out the participatory interests of the minority participants at market value. Previously, this period was 30 days.


STRENGTHENING OF CORPORATE PROCEDURAL REGULATION

The Law sets out in considerable detail the procedures for:

• Convening and conducting general meetings of participants
• Registering participants attending the meeting
• Verifying the authority of representatives
• Preparing the minutes
• Notifying the participants
• Determining the quorum and counting the votes

This signals a shift toward a substantially more formalized model of corporate administration, in which even procedural breaches may serve as grounds for challenging corporate decisions.


CONTENT OF THE COMPANY’S CHARTER

The Law refines the requirements for reflecting corporate governance arrangements in the charter. In particular, additional emphasis is placed on the need to set out the powers of the supervisory board (if any), and the qualified majority threshold is specified at not less than two-thirds of the votes. Under the current law, these provisions are formulated in more general terms.

A separate change is a new requirement to include information on subsidiaries and associates in the charter, which was not previously expressly provided for.


NEW APPROACH TO MAJOR TRANSACTIONS AND INTRODUCTION OF REGULATION OF RELATED PARTY TRANSACTIONS

One of the key changes is the revised criterion for determining what constitutes a major transaction.

Whereas previously a major transaction was determined primarily by reference to the value of the company’s property, the new version of the Law ties the materiality criterion to the value of the company’s net assets.

In effect, the legislator is moving from a formal asset-based approach to a more advanced financial criterion for assessing the materiality of a transaction.

The Law also introduces, for the first time, separate and comprehensive regulation of affiliated persons and related party (interested party) transactions, which was effectively lacking in the relevant LLC legislation.

In particular, the Law provides for the following:

• Definition of affiliated persons
• Obligation to disclose information on affiliations
• Special procedures for the approval of transactions
• Restrictions on the participation of interested persons in voting
• Ability to challenge transactions
• Need to determine the market value of a transaction in certain cases

For transactions amounting to 10% or more of the company’s net assets, the transaction terms must be additionally reviewed by an independent external auditor.


ISSUANCE AND PLACEMENT OF BONDS

The new legislative amendments enable LLCs to raise financing through the issuance of bonds.

One of the significant innovations of the Law is the expansion of the range of financing instruments available to LLCs, including the ability to issue bonds.
Previously, the use of debt instruments at this level was more closely associated with joint-stock companies, while for LLCs the corresponding mechanisms were substantially limited or not directly regulated by designated LLC legislation.

The new version of the Law is in effect aimed at expanding investment and financing opportunities available to limited liability companies and at gradually aligning the corporate regulation of LLCs with more flexible corporate financing models.

The powers of the relevant bodies have been defined: the decision is taken by the general meeting of participants or by the supervisory board, where the charter so provides. A requirement has also been introduced under which bonds may be issued only after the charter capital has been paid up in full.

The disclosure requirements have been set out separately and in more detail. Namely, it has been established that:

• The scope of the information to be disclosed is determined by the legislation on the securities market
• The decision to issue bonds is itself subject to mandatory disclosure as a material fact
• Disclosure is to be made in the Unified State Register of Business Entities and on the company’s official website
• A specific time limit has been established to disclose information – within two business days of the date the decision is adopted

SUPERVISORY BOARD

The Law significantly expands the regulation of the company’s supervisory board, establishing a more robust system of internal corporate control.
In particular, the Law:

• Sets out the procedure for electing members of the supervisory board
• Establishes a term of office of up to three years
• Permits the re-election of board members
• Introduces requirements applicable to independent members
• Introduces the requirement to specify the numerical composition of the supervisory board, including independent members, in the charter
• Sets a higher quorum for meetings of at least 75%
• Provides for the possibility of voting in absentia by a qualified majority

FIDUCIARY DUTIES OF MANAGEMENT BODIES

The Law contains a new explicit provision establishing the fiduciary duties of members of the supervisory board and the executive bodies. No such provisions exist in the current version of the law.

The provision establishes a baseline standard of conduct, including the duty to act in good faith and in the interests of the company, a prohibition on using its property and corporate opportunities for personal gain, restrictions on competing activities, requirements to maintain confidentiality, and a prohibition on receiving property benefits from interested persons in connection with adopted decisions.

These duties can also be specified and expanded in the charter and internal documents.

The introduction of the above provision institutionalizes fiduciary standards and creates a more precise legal basis for assessing the conduct of management bodies and holding them to account.


LIABILITY OF MANAGEMENT BODIES

The Law supplements the existing regulation with a specific case of liability arising from a breach of the procedure for entering into major transactions and related party transactions.

It is stipulated that, where such breaches cause harm to the company and the fault of the executive bodies has been established, liability may be shifted onto the subsidiary where the assets of the company itself are insufficient to satisfy creditor claims.


EXPANSION OF AUDIT AND CORPORATE CONTROL MECHANISMS

The Law substantially expands the ability of participants to initiate an audit and internal corporate control procedures.

In particular:

• ·An external audit may be carried out following the expiry of the term of office, or the early dismissal, of a director or a member of the executive body
• ·A participant is granted the right to initiate an audit at their own expense
• ·Subsequent reimbursement of audit costs is permitted by decision of the general meeting of participants