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Corporate disputes in Uzbekistan
The main types of legal entities founded in Uzbekistan for commercial purposes are limited liability companies (hereinafter - LLC) and joint-stock companies (hereinafter - JSC). However, to carry out certain types of business activities in Uzbekistan, only a JSC is required (for example, banking and insurance businesses). The main issues of LLC and JSC are regulated by the Civil Code of Uzbekistan, as well as the law «On Limited and Additional Liability Companies» and the law «On Joint-Stock Companies and Protection of Shareholders' Rights». In any business, sometimes different problems may arise, including disputes between the founders (shareholders, participants) of a legal entity. In this article, we will discuss disputes related to the «corporate» category. The Uzbek law classifies the following types of disputes related to the activities of legal entities - residents of Uzbekistan as corporate: 1) disputes related to foundation, reorganization and liquidation (termination) of a legal entity. The «reorganization» shall include the procedure on merger, joining, division, separation or transformation of a legal entity; 2) disputes related to the ownership of shares in charter capital of a JSC or LLC, and encumbrances on shares and etc. However, employment disputes and disputes arising from division of inherited property or division of common property of spouses, including shares in a JSC or LLC are an exception; 3) disputes on lawsuits of a company shareholder(s) to invalidate transactions (deals) concluded by a legal entity (LLC or JSC), and/or application of invalidity consequences of such transactions; 4) disputes related to the issue of securities, including challenging decisions of the issuer's management bodies, challenging transactions (deals) made during the issue of securities, reports (notifications) on the results of issue (additional issue) of securities; 5) disputes arising from the activities of nominal holders of securities related to the recording title to shares and other securities, with exercising of other rights and obligations provided for by law in connection with the issue and/or circulation of securities; 6) disputes on convening of a general meeting of shareholders of a legal entity; 7) disputes on appealing decisions of the management bodies of a legal entity. According to Article 30 of the Economic Procedural Code of Uzbekistan (hereinafter - the EPC), corporate disputes related to legal entities - residents of Uzbekistan are subject to the jurisdiction of the economic courts of Uzbekistan. Lawsuits on corporate disputes are filed at the location (legal address) of the legal entity in Uzbekistan. Consequently, according to Article 37 of the EPC, such corporate disputes are subject to consideration exclusively in the economic courts of Uzbekistan (exclusive jurisdiction), regardless of whether all or part of the shareholders of the legal entity are residents of Uzbekistan (i.e. citizens or companies of Uzbekistan) or non-residents of Uzbekistan (i.e. foreign nationals or foreign companies). The above-mentioned corporate disputes cannot be subject to resolution in foreign courts or arbitration (i.e. resolved outside of Uzbekistan). If the above-mentioned corporate disputes are considered and their decisions are made by a foreign court or arbitration outside of Uzbekistan, recognition and enforcement of the decision of the foreign court or arbitration in Uzbekistan will not be possible by virtue of Article 255 of the EPC. Regardless of whether a dispute participant is a legal entity or an individual, corporate disputes are considered only by the economic court of Uzbekistan. The above list of corporate disputes is not exhaustive. In this regard, the Uzbek economic court is not entitled to refuse in accepting the lawsuit or terminate proceedings on the basis of the absence of a dispute type in the above list. Employment related disputes, as well as disputes arising from division of inherited property or division of common property of spouses, including shares in the charter capital of a legal entity (JSC or LLC), do not fall into the category of «corporate» disputes. Such disputes are considered by civil courts of Uzbekistan. A dispute between the CEO (director) of JSC/LLC, members of the board directors of JSC/LLC, a trustee and JSC/LLC, arising under a contract, although it arises from the activities of JSC/LLC, is not subject to the jurisdiction of the economic court, because this dispute arises from employment relations. In case a shareholder, who is also an employee of JSC/LLC, files a lawsuit to the Uzbek economic court on a labor dispute, such lawsuit shall be to transfer to the civil court according to jurisdiction. If this lawsuit was accepted by the economic court for proceedings, then this court shall issue a ruling on the transfer of the case materials to the civil court for consideration, and shall terminate the economic proceedings. The lawsuit on corporate dispute shall be accompanied by the documents stipulated by Article 151 of the EPC, as well as a document confirming the state registration of a legal entity - a resident of Uzbekistan and containing information about its location (legal address) in Uzbekistan. At the same time, in order for the Uzbek court to find out whether the plaintiff is a shareholder of a JSC or LLC, the following documents may also be required by the court: l a duly certified copy of the shareholder agreement of the LLC (if the number of shareholders is two or more) and the charter of the LLC; l an extract from the shareholders register of the JSC; l a supporting document on the waiver of a share in favor of the recipient of a share in the charter capital of the JSC/LLC (if necessary); l in case of the share sale in the JSC/LLC through an public auction - a protocol on the auction results (if necessary).
Ryskiyeva & Partners Law Firm
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