LAW OF THE REPUBLIC OF UZBEKISTAN

of June 23, 2025 No. ZRU-1070

About sanitation and liquidation of banks

Accepted by Legislative house on February 13, 2025

Approved by the Senate on April 29, 2025

Chapter 1. General provisions

Article 1. Purpose and scope of this Law

The purpose of this Law is relations management, connected with sanitation and liquidation of banks.

Operation of this Law extends to the banks, banking groups and holding companies holding controlling stock of bank.

If this Law does not provide other rules, then rules of this Law relating to banks extend also to the banking groups and holding companies holding controlling stock of bank.

Article 2. Legislation on sanitation and liquidation of banks

The legislation on sanitation and liquidation of banks consists of this Law and other acts of the legislation.

If the international treaty of the Republic of Uzbekistan establishes other rules, than those which are stipulated by the legislation the Republic of Uzbekistan about sanitation and liquidation of banks then are applied rules of the international treaty.

Article 3. Basic concepts

In this Law the following basic concepts are applied:

the holding company holding controlling stock of bank (further - holding company) - the legal entity who along with controlling stock of bank holds controlling stock (share) of other financial institutions;

capital tools - components of the regulatory capital of the sanified bank;

the special managing director - physical person to which powers of the supervisory board and board of the sanified bank are delegated;

the acquirer - physical person or legal entity to which are transferred shares of the sanified bank, and also bank to which are transferred (are sold) assets, requirements and obligations of the sanified bank (are on sale);

sanitation - in case of origin in banks of condition of insolvency implementation of the procedures of sanitation aimed at providing continuity of their critical important functions, depositor protection and creditors and ensuring financial stability;

procedures of sanitation - complex of the actions connected with process of use of instruments of sanitation and implementation of powers on sanitation;

subordinated debt - the unsecured debt obligation of bank which is not subject to early repayment upon the demand of the creditor and satisfied in case of liquidation of bank after satisfaction of requirements of investors and other creditors;

crucial functions - types of service or transactions of bank which in case of the termination of their rendering or implementation because of complexity of replacement with services or transactions of other bank can lead to violation of financial stability or restriction of provision of services, necessary for real economy;

debt instruments - the securities confirming debt obligations, including bonds, and also the tools granting right of possession debt securities.

Article 4. Authorized state body in the field of sanitation and liquidation of banks

Central Bank of the Republic of Uzbekistan (further - the Central bank) is authorized state body in the field of sanitation and liquidation of banks.

Central Bank makes decisions within functions and powers on sanitation and liquidation of banks irrespective of the state governing bodies, except as specified, provided by this Law.

Article 5. Department of functions of the Central bank on sanitation of banks from other its functions

Central Bank performs functions on sanitation of banks separately from other functions established by the legislation including from supervising functions.

Central Bank determines order of interaction of the structural division performing sanitation of banks with the structural divisions performing functions of supervision of activities of banks.

Article 6. Cooperation in the field of sanitation and liquidation of banks

Central Bank when implementing the powers on sanitation and liquidation of banks according to this Law performs cooperation and exchange of information with state bodies and the organizations, and also the supervisory authorities of foreign state exercising the consolidated supervision of activities of bank which performs activities in the Republic of Uzbekistan (further - foreign supervisory authorities).

Central Bank notifies Agency on guaranteeing deposits, the Ministry of Economics and finance of the Republic of Uzbekistan (further - the Ministry of Economics and finance), Council of financial stability, Central Securities Depository, and also payment service providers which member is the bank, about the decision connected with sanitation of bank in day of entry into force of this decision.

Central Bank notifies foreign supervisory authority on the decisions connected with sanitation or involuntary liquidation of the bank performing activities in the territory of the Republic of Uzbekistan and belonging to foreign bank.

Article 7. Council of financial stability

Council of financial stability (further - Council) performs powers on interagency coordination for the purpose of ensuring financial stability, studying (analysis) of risks of emergence of system financial crises in the Republic of Uzbekistan, taking measures to prevention of their origin, and also management of the arisen financial crises and elimination of their consequences.

Council is consultative body which decisions are made based on consensus of members of council and have advisory nature.

The regular meeting of Council is held at least once in each six months, and extraordinary - upon the demand of members of council.

Central Bank performs function of working body of Council.

Members of council provide to Council all necessary information important for its activities including the data protected by the legislation. The members of council and persons invited to its meetings, and also other persons participating in preparation of the corresponding data for Council are forbidden to disclose the data protected by the legislation.

The structure of Council, its right and obligation, and also other questions connected with the organization of activities of Council are established by the decision of the President of the Republic of Uzbekistan.

Chapter 2. Sanitation of bank

§ 1. Purposes and principles of sanitation

Article 8. Purposes of sanitation of bank

The purposes of sanitation of bank are:

prevention of emergence of system financial crisis and minimization of its negative consequences;

providing continuity of crucial functions of bank;

protection of the rights and interests of investors;

minimization of assignment from the Government budget of the Republic of Uzbekistan (further - the Government budget), necessary for sanitation of bank.

The purposes of sanitation are equally important and the Central bank has the right to give priority to particular purposes in some cases, connected with sanitation.

Article 9. Principles of sanitation of bank

The principles of sanitation of bank are:

covering of losses first of all for the shareholder account of the sanified bank;

guaranteeing rights and legitimate interests of investors and creditors of bank;

complete protection of the guaranteed deposits and their part exceeding guaranteeing limit;

transition of powers of governing bodies;

inevitability of responsibility;

restriction of losses of investors and creditors of bank.

Article 10. The principle of covering of losses first of all for the shareholder account of the sanified bank

In case of sanitation of bank losses first of all become covered for the shareholder account of the sanified bank. At the same time concerning the general size of losses each shareholder bears responsibility in proportion to the size of own share in the authorized capital of bank and within cost of the stocks owned by it.

Article 11. Principle of guaranteeing rights and legitimate interests of investors and creditors of bank

The rights and legitimate interests of investors and creditors of the sanified bank are guaranteed by observance of the priority of satisfaction of requirements established in article 64 of this Law. At the same time the rights and legitimate interests of uniform investors and creditors are guaranteed equally, except as specified, provided by this Law.

Article 12. The principle of complete protection of the guaranteed deposits and their part exceeding guaranteeing limit

The instrument of write-off and (or) converting is not used to the deposits guaranteed according to the Law of the Republic of Uzbekistan "About guarantees of protection of deposits in banks" and their part exceeding guaranteeing limits.

Article 13. Principle of transition of powers of governing bodies

Powers of general meeting of shareholders of the sanified bank pass to the Central bank, and powers of the supervisory board and board to the supervisory board and bank board or the special managing director appointed by the Central bank.

Article 14. Principle of inevitability of responsibility

Perpetrators which brought bank to insolvency bear responsibility according to the procedure, established by the legislation.

Article 15. Principle of restriction of losses of investors and creditors of bank

The incurring by the investor or the creditor of losses as a result of sanitation of bank is not allowed more, than they would incur within involuntary liquidation of this bank.

§ 2. Preparation for sanitation

Article 16. Plan of sanitation of bank

Central Bank develops the plan of sanitation for systemically significant bank. The plan of sanitation includes procedures of sanitation which can be applied by the Central bank to systemically significant bank.

The plan of sanitation developed for systemically significant bank shall be reviewed at least once a year, and also be reviewed and if necessary be updated in case of essential changes in organizational structure and (or) financial condition of bank or availability of other factors which can affect applicability of the plan of sanitation or its content.

Central Bank can also develop the plan of sanitation for the banks which are not systemically significant, but performing crucial functions. At the same time frequency of review of the plan of sanitation is determined by the Central bank.

The summary of the plan of sanitation is represented to bank for which it was developed.

The bank for which the plan of sanitation was developed without delay notifies the Central bank on any case which can demand review or updating of the plan of sanitation.

On demand Central bank bank participates in development and updating of the plan of sanitation developed for it.

Implementation of the procedures which lost the relevance determined by the plan of sanitation has no obligatory value for the Central bank.

In case of the bases for sanitation of bank the Central bank can make the decision on its sanitation even if the plan of sanitation was not developed for this bank.

Procedure for plan development of sanitation and requirements imposed to its content are determined by the Central bank.

Article 17. Assessment of saniruyemost of bank and elimination of the existing obstacles

The plan of sanitation of bank includes assessment of saniruyemost of this bank.

The bank is considered sanified if there is possibility of goal achievement of sanitation by means of implementation of procedures of sanitation of bank.

In case of assessment of saniruyemost of bank the Central bank carries out the analysis of the following factors:

possibility of transfer (translation) of the main activity and crucial functions of bank to the third parties;

level of compliance of corporate management system of bank to its main activity and crucial functions;

availability of personnel, infrastructure, and also funding mechanisms, ensuring liquidity and capital necessary for support of the main activity and accomplishment of crucial functions of bank;

execution by bank in full service provision agreements in case of sanitation of bank;

availability in bank of the information system providing permanent receipt of the exact and complete information;

efficiency and feasibility of use of instruments of sanitation for sanitation goal achievement;

extent of influence of sanitation of bank on financial system, functioning of payment systems, trust to bank system and influence on economy;

possibility of decrease in negative impact of bank on other banks or the financial market by means of use of tools and powers on sanitation;

possibility of cooperation with foreign supervisory authorities and implementation of exchange of information;

other factors which the Central bank will consider necessary.

In case of assessment of saniruyemost of bank the Central bank does not consider the following factors:

financial aid of the state;

liquidity deficit covering for the credit account of the Central bank provided on the terms of security, urgency and the paid nature, except for the emergency liquidity support of commercial banks according to article 33 of the Law of the Republic of Uzbekistan "About the Central bank of the Republic of Uzbekistan".

The rule established in part four of this Article does not exclude use of financial aid from the state in case of sanitation.

If as a result of assessment of saniruyemost of bank availability of certain obstacles for implementation of sanitation by the Central bank is revealed, then the Central bank demands from bank to develop during the specified term the actions plan on elimination of these obstacles.

The actions plan developed by bank on removal of obstacles for possibility of sanitation will be approved with the Central bank and bank measures for its execution are taken at the scheduled time.

If the Central bank comes to conclusion that the developed actions plan is not capable to eliminate obstacles for possibility of sanitation, he has the right to demand from bank the following:

limit the extent of risks;

sell some assets;

limit or suspend provision of banking services, implementation of the current and (or) planned activities;

without affecting property rights of direct shareholders, organizational structure and (or) activities of bank and (or) banking group to reduce crushing of shareholders (from the potential acquirer to the beneficial owner) more than three levels, and also for the purpose of simplification of sanitation and providing continuity of crucial functions of bank to create holding company, the main society or subsidiary company in the territory of the Republic of Uzbekistan;

for the purpose of sanitation to provide the additional information on permanent basis or at the request of the Central bank.

Article 18. Evaluating for sanitation

Central Bank before decision making about sanitation provides carrying out assessment of assets and liabilities, and also off-balance sheet items of bank (further - assessment).

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