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LAW OF THE REPUBLIC OF UZBEKISTAN

of April 26, 1996 No. 223-I

About joint-stock companies and protection of shareholder rights

(as amended on 22-01-2020)

Chapter 1. General provisions

Article 1. Purpose of this Law

The purpose of this Law is regulation of the relations in the field of creation, activities, reorganization and liquidation of joint-stock companies, and also protection of shareholder rights.

Article 2. Legislation on joint-stock companies and protection of shareholder rights

The legislation on joint-stock companies and protection of shareholder rights consists of this Law and other acts of the legislation.

Features of creation and legal status of joint-stock companies in spheres of banking, investing and insurance activity, and also joint-stock companies in case of privatization of the state organizations are determined by 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 joint-stock companies and protection of shareholder rights then are applied rules of the international treaty.

Article 3. Legal status of joint-stock company

Joint-stock company (further - society) the commercial organization is recognized, the authorized capital (authorized capital) of which is divided into certain number of the shares certifying shareholder rights in relation to society.

Society is legal entity and has the isolated property in property, including the property contributed to it to authorized capital (authorized capital), considered on its separate balance can acquire and perform on its own behalf the property and personal non-property rights, perform duties, to be claimant and the defendant in court.

Society acquires the status of the legal entity from the moment of its state registration.

Society is created without restriction of term if other is not established by its charter.

Society has the right to open bank accounts for the territories of the Republic of Uzbekistan and beyond its limits.

Society has the complete and can have the reduced trade name with indication of on its form of business.

Society has the right to have the round stamp containing its full trade name in state language and specifying of the place of its stay. In seal the trade name in any other language can be at the same time specified. Society has the right to have stamps and forms with the name, own emblem, and also trademarks and other means of individualization of participants of civil circulation, goods, works and services registered in accordance with the established procedure.

The location of society is determined by the place of its state registration if in the charter of society other is not established.

Society shall have the postal address and the e-mail address to which with it communication is performed. Society shall notify on change of the location (postal address) and e-mail address bodies of state registration of legal entities (further - registering body) by the direction of the written notice, and shareholders - by publication in mass media.

Article 4. Responsibility of society

Society bears responsibility according to the obligations all property belonging to it.

Shareholders do not answer for obligations society and bear risk of the losses connected with its activities, within cost owned by them stocks.

The shareholders who did not completely pay shares bear joint liability according to obligations of society within unpaid part of cost of the stocks owned by them.

Society does not answer for obligations the shareholders.

If bankruptcy of society is caused by wrongful acts of person acting as the shareholder who has the right to give instructions, obligatory for society, then on the specified shareholder in case of insufficiency of property of society subsidiary responsibility according to its obligations can be conferred. The shareholder has the right to give obligatory instructions only in case this right is provided in the charter of society.

Bankruptcy of society is considered caused by actions of the shareholder who has the right to give instructions, obligatory for society, only if he used the specified right for the purpose of making of action by society, obviously knowing that thereof there will come bankruptcy of society.

The state and its bodies do not bear responsibility according to obligations of society, as well as society does not answer for obligations the state and its bodies.

Article 5. Carrying out subscription to the shares issued by society

Society has the right to carry out open subscription to the shares issued by it by public placement taking into account requirements of the legislation.

Society has the right to carry out the closed subscription to the shares issued by it by private placement, except as specified, when the possibility of carrying out the closed subscription is limited to the legislation and the charter of society.

Shareholders have the right to alienate the stocks owned by them without the consent of other shareholders and society, except for the case established in article 6 of this Law.

Article 6. The privilege to share acquisition at the shareholder

If the number of shareholders does not exceed fifty, the privilege can be provided by the charter of society:

at the shareholders on share acquisition sold by other shareholders of this society at the price and on the terms of the offer to the third party it is pro rata to the number of the shares belonging to each of them;

at society on share acquisition, sold by its shareholders if other shareholders of this society did not use the privilege.

The shareholder selling the shares shall inform in writing directly or through society of other shareholders on intention to sell the shares with indication of the price and conditions of the offer to the third party.

The procedure and terms of implementation of the privilege of share acquisition, sold by shareholders, are established by the charter of society, at the same time the term of use of the privilege cannot be less than ten and more than thirty days from the moment of the offer of shares for sale.

In case of sale by the shareholder of the stocks owned by him with violation of the privilege, any shareholder of society and (or) society have the right within three months since the moment when the shareholder or society learned or shall learn about such violation, require judicially the translation of the rights to them and obligations of the buyer.

The concession of the specified privilege of share acquisition is not allowed.

Article 7. Branches and representative offices of society

Society has the right to create branches and to open representations.

Branch is the separate division of society located out of the place of its stay and performing all its functions or their part, including functions of representation.

Representation is the separate division of society located out of the place of its stay, representing the interests of society and performing their protection.

The branch and representative office of society are not legal entities. They act on the basis of the provision approved by the supervisory board of society. The property of society which allocates branch and representation is considered on balance of society.

The head of branch or representation is appointed by society and acts on the basis of the power of attorney, issued by society.

Responsibility for activities of branch and representation bears the society which created and opened them.

Creation of branches by society and opening of representations outside the Republic of Uzbekistan are performed according to the legislation of the country in the location of branches and representations if other is not provided by the international treaty of the Republic of Uzbekistan.

Article 8. Affiliated and dependent economic societies

Society can have affiliated and dependent economic societies in the form of joint-stock company or limited liability company.

Affiliated economic society does not answer for obligations the main society.

Affiliated economic society has no right to have voting shares of the main society in property. Affiliated economic society which acquired voting shares of the main society before entry into force of the prohibition established in this part having no right to vote at general meeting of shareholders of the main society.

Dependent economic society has no right to have voting shares of society in property. Dependent economic society which acquired voting shares of society before entry into force of the prohibition established in this part having no right to vote at general meeting of shareholders of society.

The main society which has the right to give to affiliated economic society obligatory instructions bears joint liability with affiliated economic society according to the bargains concluded by the last in pursuance of such instructions. The main society is considered having right to give to affiliated economic society obligatory instructions only in case this right is provided in the contract with affiliated economic society or the charter of affiliated economic society.

In case of bankruptcy of affiliated economic society because of the main society the last bears subsidiary responsibility according to its obligations.

Bankruptcy of affiliated economic society is considered event because of the main society only in cases when the main society gave to affiliated economic society obligatory specifying and (or) used opportunity for the purpose of making of action by affiliated economic society, obviously knowing that thereof there will come bankruptcy of affiliated economic society.

Shareholders (participants) of affiliated economic society have the right to require compensation by the main society of the losses caused through his fault to affiliated economic society. Losses are considered caused because of the main society only in case the main society used the rights which are available for it and (or) opportunity for the purpose of making of action by affiliated economic society, obviously knowing that thereof affiliated economic society will suffer losses.

Economic society is recognized dependent if other participating society has more than twenty percent of its voting shares (share).

Chapter 2. Creation of society

Article 9. Methods of creation of society

Society can be created by organization or reorganization of the legal entity (merge, separation, allocation, transformation).

Article 10. Organization of society

Creation of society by organization is performed according to the decision of founders (founder). The decision on organization of society is made by the constituent assembly. In case of organization of society one founder the decision on its organization is made by it solely.

Founders of society sign among themselves the foundation agreement about its creation determining procedure them joint activities for organization of society, the size of authorized fund (authorized capital) of society, types of the shares which are subject to placement among founders, the size and procedure for their payment, the right and obligation of founders on creation of society.

The decision on organization of society shall reflect results of vote of founders and decisions made by them concerning organization of society, approval of the charter of society, forming of governing bodies of society.

Decisions on organization of society, approval of its charter and approval of money value of the securities, other property rights or other rights having money value, introduced by the founder in payment of shares of society are accepted by founders unanimously.

Creation of society with participation of foreign investors is performed according to the legislation of the Republic of Uzbekistan.

When transforming the state organization to joint-stock company the decision on its organization is made by body, authorized to dispose of state-owned property.

The number of founders and shareholders of society is unrestricted.

Article 11. Founders of society

Founders (founder) of society the legal entities and physical persons which signed the foundation agreement about its creation are recognized.

State bodies cannot act as founders (shareholders) of society if other is not established by the law, the decision of the President of the Republic of Uzbekistan or the Cabinet of Ministers of the Republic of Uzbekistan.

Founders of society bear joint liability according to the obligations connected with its creation before state registration. Society bears responsibility according to the obligations of founders connected with its creation only in case of the subsequent approval of their actions by general shareholder meeting.

When transforming the state organization to joint-stock company by the founder of society the body is, authorized to dispose of state-owned property.

Distribution of shares between founders of society is performed according to the constituent document.

Article 12. Constituent assembly

Constituent assembly:

makes the decision on organization of society and approves its charter;

approves the contracts signed by founders during organization;

determines payment procedure of shares founders;

determines types of the issued shares and their quantity;

elects the supervisory board, audit committee (auditor) of society;

forms (chooses, appoints) executive body of society.

Vote at the constituent assembly is taken according to the shares contributed by founders.

The constituent assembly makes decisions by a simple majority vote, except as specified, when decisions on change of the foundation agreement are made what requires the consent of all founders.

Solutions of the constituent assembly are drawn up by the protocol signed by all founders of society.

Transformation of the state organization to joint-stock company is performed on the basis of the decision made by body, authorized to dispose of state-owned property without carrying out the constituent assembly.

In society with one founder the constituent assembly is not held.

Article 13. Charter of society

The constituent document of society is its charter which shall contain the following data:

complete (in the presence reduced) trade name, location (postal address) and e-mail address of society;

subject (main directions) and activities purposes;

size of authorized fund (authorized capital);

quantity, nominal value, types (simple, exclusive) shares of society;

management structure society, number of members of the supervisory board, audit committee and executive body of society, procedure for their forming, power of these bodies.

Restrictions of the maximum size of the share in authorized capital (authorized capital) of society belonging to one shareholder can be set by the charter of society.

The charter of society concerning which the state enters the special participation right in management of society ("golden share") shall contain regulations on use by the state of the specified special right.

The charter of society may contain also other provisions according to the legislation.

Upon the demand of the shareholder or any interested person society shall give within three working days to them opportunity to study the charter of society, including changes and amendments to it. Society shall provide to the shareholder according to its requirement the copy of the charter of society.

Article 14. State registration of society

Society is subject to state registration as the legal entity.

For state registration society submits to registering body the charter and other documents of society, stipulated by the legislation. The society created by transformation of the state organization, and also created by one founder represents the charter of society.

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