| ||||||||||||||||||||
|
|
|
Company acquisition in Uzbekistan
Almost any well-established and developed business can be subject to sale and purchase, and there will always be an entity interested in acquiring such a business. Consequently, an entity interested acquisition of such a business (or part of it) has a natural question: «How to legally formalize a transaction on acquiring such a business?" As you may know, in order to make a business in Uzbekistan, in most cases, it is required to establish a legal entity, mainly in the form of a limited liability company (hereinafter - the Company). In this article, we will describe the procedure on sale and purchase of shares (part of shares) in charter capital of a Company in Uzbekistan, as well as provide some recommendations on this topic. Such sale and purchase procedure is regulated by the Uzbek Civil Code and the Law On Limited and Additional Liability Companies dated December 6, 2001, No. 310-II. It should be noted that the sale by a shareholder of his shares (part of shares) in charter capital of the Company is allowed only after its full payment by the seller shareholder. In case of its partial payment, the shares (part of shares) can be sold only in the part in which it has already been paid. In this regard, the concept of «full payment» should be understood as making a full contribution by the seller shareholder. The entire procedure for sale and purchase of shares (part of shares) in charter capital of the Company can be conditionally divided into several steps. Step one: conducting a financial and legal audit (Due Diligence). Before investing in any legal entity, it is considered rational for the buyer (investor) to first study certain documents related to the activities of this legal entity, so as not to buy a «pig in a poke» and, subsequently, not to regret the purchase. For these purposes, it is recommended to conduct a comprehensive financial and legal audit (Due Diligence) of the activities of the targeted legal entity. Financial and legal audit is conducted for the purpose of forming an objective idea of the investment object in the buyer (investor), in this case - the Company, during which investment risks are studied, an independent assessment of the investment object is carried out, a comprehensive study of the activities of the legal entity is carried out, including a comprehensive review of its financial condition, a review of constituent documents, legal status, corporate governance documents, decisions of management bodies, etc. is carried out. It is important to note that there is no mechanism in Uzbekistan for registration and identification of any encumbrances in relation to shares (part of shares) in the charter capital of the Company. Step two: agreement with the Company shareholder(s) on the sale of shares to third parties. According to the Uzbek law, if there are two or more Company shareholders, and if one of the shareholders intends to sell his shares (part of shares) in charter capital of the Company to third parties, this seller shareholder shall propose the other shareholders of this Company to purchase his shares (part of shares), because the Company shareholders have a preferential right to such a purchase over third parties. The seller shareholder shall notify other Company shareholders in writing, indicating expected price and other conditions for the sale of shares (part of shares). The shareholders who wish to exercise the preemptive right to purchase the shares (part of shares) from the selling shareholder shall notify the latter within one month, indicating the volume of shares (part of shares) to be purchased, or inform their unwillingness to make such a purchase. If, within the period specified in the notice, the shares (part of shares) are not redeemed by the shareholders of the Company in the order of exercising the preemptive right, the seller shareholder shall be entitled to sell his shares (part of shares) to third parties. At the same time, the seller shareholder shall not be entitled to sell his/her shares (part of shares) to third parties at a price lower than that offered to other shareholders of this Company. In case of violation of this rule, the other shareholders, within three months from the moment when they found out of such violation, shall be entitled to demand in court that the rights and obligations of the buyer(s) be transferred to them. Step three: checking the sale possibility of shares to third parties. In some cases, when there are two or more shareholders in the Company, the shareholder documents of the Company may stipulate a ban or restriction on selling shares (part of shares) by the Company shareholder to third parties. In such cases, the shares (part of shares) can be sold to the other Company shareholders only. If the shares (part of shares) cannot be sold due to circumstances that do not depend on the will of the seller shareholder, this shareholder is entitled to demand that the Company itself buy out these shares (part of shares), or allow the seller shareholder to sell shares or part of it to third parties. In this case, the general meeting of shareholders of the Company shall make a choice and take an appropriate decision on this issue. Moreover, the buyer (investor) should pay attention to Company’s shareholder documents, which may stipulate a limitation on the maximum size of shares that one Company shareholder may own. In this regard, before acquiring shares (part of shares) in the Company’s charter capital, the buyer (investor) should clarify presence (or absence) of such a restriction, and if it does exist, to find out the scope of restrictions. Step four: obtaining approval from the Antimonopoly Authority According to Uzbek Law «On Competition» dated July 3, 2023, No.ZRU-850, the buyer of company shares (part of shares) may need to obtain preliminary consent (approval) from the Committee for Development of Competition and Protection of Consumer Rights of Uzbekistan (hereinafter - the Antimonopoly Authority) to purchase shares (part of shares) in the charter capital of the Company. To obtain such consent, the buyer of shares (part of shares) shall file a corresponding application and documents and information required by law to the Antimonopoly Authority. If several entities act as buyers, the application may be submitted by one of the buyers on behalf of the other buyers. Obtaining such consent is required when a person/entity (group of persons/entities) acquires shares in the Company’s charter capital, and as a result such the buyer (group of buyers) shall be able to manage (dispose) more than 1/3 (one third) of the shares in Company’s charter capital. In this case, the preliminary consent of the Antimonopoly Authority shall be obtained, if one of the following conditions is met: l if the book value of assets or revenue from the sale of goods for the last calendar year of one of the economic entities (i.e. the buyer (group of buyers) or the Company) exceeds 250,000 times the basic calculation value (BCV), which is approximately 7,4 million US dollars; l if the total book value of assets or revenue from the sale of goods for the last calendar year of the parties to the transaction (i.e. the buyer (group of buyers) and the Company) exceeds 500,000 times the BCV, which is approximately 14,7 million US dollars. Obtaining the above consent may require from 20 to 60 calendar days from the date of acceptance of the application for consideration by the Antimonopoly Authority, unless for certain reasons the consideration of application is temporarily suspended. Sale and purchase of shares (part of shares) shall be made within one calendar year from the date of receipt of consent from the Antimonopoly Authority. Step five: execution of documents on sale and purchase of shares. The sale and purchase of shares (part of shares) in the Company’s charter capital between the seller shareholder and a third party (the buyer) shall be executed by signing a written agreement. The Company’s shareholder documents may stipulate requirements for notarization of this agreement. If a legal entity acts as the buyer and/or seller of the Company shares (part of shares), then before signing the sale and purchase agreement, a decision of the authorized body of this legal entity on this sale and/or purchase may be also required (e.g. a resolution of the general meeting of shareholders of the seller or buyer). Based on the signed sale and purchase agreement, the seller of the Company shares transfers them to the buyer, and the latter, in turn, pays the seller by transferring funds to his bank account. If, prior to the sale and purchase of shares, the Company consisted of one (sole) shareholder, and in the event of such shareholder selling part of his shares to one or more persons/entities, then, in connection with the increase in the number of Company shareholders, a shareholder agreement shall be signed between all shareholders. However, if the Company’s sole shareholder sells his 100% share to another person/entity, then signing a shareholder agreement is not required, because the number of shareholders in this case does not increase. After completion of above actions, with the participation of a new shareholder, the General Meeting of shareholders of Company approves new versions of the shareholder documents in connection with the change in shareholders. The new sole shareholder of the Company shall make such a decision alone. Step six: state re-registration of the Company. Change in shareholder(s) of the Company will entail a mandatory state re-registration, carried out by the Uzbek justice departments through the State Services Centers (hereinafter - the Registration Authority). The Company management (director) shall, within one month from the date of the General Meeting of Shareholders (or decision of the sole shareholder) of the Company on approving new versions of the shareholder documents, file the following documents to the Registration Authority for state re-registration of the Company. These documents can be submitted in person through the State Services Center or online through the Government Services Portal (hereinafter - the EPIGU): 1) A standard application form, signed and sealed (stamped) by the Company manager (director). In case of filing the application online through the EPIGU, it is sufficient to sign it with the digital signature of the Company manager; 2) A decision of the General Meeting of Shareholders (or the sole shareholder) of the Company, which approved new versions of the shareholder documents of the Company; 3) New versions of the shareholder documents of the Company in Uzbek language (i.e. the charter - if there is one shareholder; the charter and the shareholder agreement - if there are two or more shareholders in the Company); 4) A signed sale and purchase agreement of shares (part of shares) in Company’s charter capital; 5) For the Company, when a foreign citizen or legal entity acts as the buyer of shares (part of shares) in the charter capital of the Company: a) if the buyer is a foreign legal entity: a legalized/apostilled extract from trade register (company register) or another legalized/apostilled document certifying that the buyer is a legal entity founded under the laws of a foreign country, with a notarized translation into Uzbek. 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 Cases is not required (I.e. Russia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, Ukraine, Azerbaijan, Armenia, Moldova, Georgia, etc.); b) if the buyer is a foreign individual (citizen): a passport copy of the foreign national. 6) Consent of the Antimonopoly Authority, when such consent is required by the Uzbek law as described above. 7) Power of attorney for the Company representative in case of filing the application and above documents through a representative person. After filing the above documents, the Company shall pay a state fee for reviewing the application for Company re-registration. If these documents comply with the Uzbek law, the Registration Authority shall carry out a state re-registration of the Company within 1-2 working day(s).
Ryskiyeva & Partners Law Firm
Доступ к документам и консультации
от ведущих специалистов |