[Comprehensive Guide] Uzbekistan M&A Law: 10 Basic Laws that Foreign Investors Should Know

Introduction

For Japanese companies considering entering Uzbekistan, a rapidly growing market in Central Asia, M&A (mergers and acquisitions) is an effective way to acquire the know-how and sales channels of local companies. However, success depends on understanding the complex local legal system.

This article, based on the official Uzbekistan legal portal " lex.uz ," identifies the 10 most important laws related to M&A and provides easy-to-understand explanations of their contents. This is an essential guide for managers, legal personnel, and investors considering M&A in the country.

1. Basic Law of Civil Transactions: Civil Code (Гражданский кодекс)

This is a fundamental law that defines the contractual aspects and basic rights and obligations of M&A transactions.

• Link : https://lex.uz/act/3580767
• Original text (excerpt) :
  > Статья 202. приобретения права собственности.
  > Право собственности приобретается на основании… договора купли-продажи, мены, дарения или иной сделки об отчуждении имущества…
• translation :
  Article 202: Basis for Acquisition of Ownership
  > Ownership is acquired pursuant to a contract of sale, exchange, gift, or other property transfer transaction.
• Key point : The core of all M&A transactions is the transfer of ownership. The validity of the contract and the criteria for risk transfer are determined based on this provision of the Civil Code.

2. Rules of company organization and procedures: Company Law (Закон об АО и ООО)

It provides detailed provisions regarding the acquisition of shares (equity) in joint-stock and limited liability companies, procedures for mergers and divisions, and the rights of shareholders.

• Link : https://lex.uz/act/6219505
• Original text (excerpt) :
  > Статья 79. Крупная сделка.
  > Крупной сделкой признается сделка… стоимость имущества по которой составляет… двадцать пять и более процентов от стоимости активов общества…
• translation :
  Article 79 Transfer of Important Assets
  > A transfer of significant assets is a transaction in which the value of the assets is equivalent to 25% or more of the company's asset value.
• Bottom line : M&A almost always constitutes a "transfer of significant assets," which requires a special resolution of the board of directors or shareholders and is one of the most important laws to check first in any acquisition process.

3. Guaranteeing the rights of foreign investors: Foreign Investment Law (Закон об инвестициях)

The law will improve the investment environment by defining the rights of foreign investors, investment guarantees (compensation for nationalization, profit remittance, etc.), and preferential treatment.

• Link : https://lex.uz/act/6456593
• Original text (excerpt) :
  > Статья 10. Гарантии защиты иностранных инвестиций.
  > Иностранные инвестиции на территории Республики Узбекистан не подлежат национализации…
• translation :
  Article 10: Guarantees and Protection of Foreign Investment
  > Foreign investments within the territory of the Republic of Uzbekistan are not subject to nationalization…
• Key point : Acquisitions by foreign companies are considered "foreign investments." This law guarantees their safety and provides great peace of mind when deciding to carry out M&A.

4. Review to protect market competition: Competition Law (Закон о конкуренции)

The Commission reviews the impact of M&A on market competition. Transactions that exceed certain conditions require prior notification to and approval from the Competition Restrictions Commission.

• Link : https://lex.uz/act/5074697
• Original text (excerpt) :
  > Статья 18. осуществления предпринимательской деятельности…
• translation :
  > Article 18 …when a natural person or legal entity acquires a right that enables it to determine the conditions under which an entity operates…
• Key point : Transactions cannot be completed without prior approval from antitrust authorities , especially if the combined market share after the acquisition exceeds 35%. Execution without approval risks invalidating the transaction.

5. Rules for Takeovers of Listed Companies: Securities Market Law (Закон о РЦБ)

This law sets out rules for acquiring listed companies, including the obligation to report large shareholdings and procedures for tender offers.

• Link : https://lex.uz/act/3377602
• Original text (excerpt) :
  > Статья 27. направить… предложение о приобретении его акций…
• translation :
  > Article 27 …Anyone who wishes to acquire 30% or more of the voting shares… must make a proposal to acquire the shares (tender offer).
• Key point : When acquiring a listed company, a tender offer is required if you acquire 30% or more of the shares. This is a core regulation for protecting minority shareholders.

6. Determining the Cost of M&A: Tax Code (Налоговый кодекс)

This is the basic law regarding taxes that determine the structure and profitability of M&A. It stipulates taxation on capital gains and preferential treatment.

• Link : https://lex.uz/act/6457130
• Original text (excerpt) :
  > 153. Доходом от реализации имущества признается… ценных бумаг…
• translation :
  > Article 153 Income from the transfer of assets means… income from the transfer of securities.
• Key points :
  • Transfer of shares : The seller is subject to corporate income tax (basic rate 15%) on the capital gain.
  • Incentives : Large investment projects may be eligible for tax holidays and other incentives. Tax due diligence is essential.

7. Succession of Employee Rights: Labor Code (Трудовой кодекс)

This is an important law that stipulates how employee employment contracts are transferred after an acquisition.

• Link : https://lex.uz/act/6343229
• Original text (excerpt) :
  > Статья 99. продолжаются…
• translation :
  > Article 99 …If the ownership (ownership) of an organization changes…the labor relationship continues…
• Key points : Unilateral dismissal due to a change in ownership is prohibited in principle. There is an obligation to respect existing working conditions, and it is important to evaluate labor costs and labor risks.

8. How to Establish a Local Base: Foreign Corporation Branch Law

These are the rules for establishing a local base (branch or representative office) as a preliminary step to an acquisition.

• Link : https://lex.uz/act/3475992
• Original text (excerpt) :
  > п.4.
• translation :
  > 4. …The foreign corporation … files … application … and articles of incorporation ….
• Key Points : A representative office may be established during the investigation and preparation stages of an M&A. Because a branch office does not have legal personality and is subject to the responsibilities of the parent company, it is necessary to compare the risks with establishing a subsidiary.

9. Land as an essential element of property: Land Code (Земельный кодекс)

This is extremely important in determining the possibility of succession of rights (ownership/lease) to business land.

• Link : https://lex.uz/act/3588936
• Original text (excerpt) :
  > 175. Иностранным юридическим лицам… частную собственность только для…
• translation :
  > Article 175 The granting of private ownership of land to foreign legal persons shall only be permitted…
• Key point : Foreign companies are generally not allowed to own land, and are limited to a maximum lease of 50 years. It is essential to verify the land rights of the target company through due diligence.

10. Fund Remittance and Settlement: Exchange Control Law

It lays down rules for the remittance of acquisition funds and subsequent remittance of profits abroad.

• Link : Due to frequent revisions, search for " Валютное регулирование " on lex.uz.
• Key point : When transferring large amounts of money from overseas and repatriating future profits, you must comply with central bank procedures and reporting requirements. This is important legislation for fundraising and execution planning.

Summary and advice

Uzbekistan's M&A legal system is relatively open and encourages foreign investment, but there are strict restrictions in competition law, industry-specific regulations, and land law .

There is only one most important piece of advice for successful trading.

Always seek professional advice from a local law firm.

Laws are constantly changing, and there are often discrepancies between the letter of the law and actual practice. With the help of a professional, you can minimize risk and achieve success in your M&A in the Uzbekistan market.

(Disclaimer) This article is for informational purposes only and does not constitute legal advice.