Uzbekistan has adopted a new Law on Limited Liability Companies, introducing a significantly updated corporate governance framework and strengthening investor protection mechanisms.

The reform modernizes the regulation of LLCs, aligning key elements with international corporate governance standards and addressing long-standing gaps in practice.

Key Legal Developments

 

Enhanced corporate governance framework

The Law formalizes the role of the supervisory board in LLCs, including its powers, composition and procedures for appointment. It also explicitly allows for remote decision-making, including absentee voting, reflecting modern governance practices.

 

Introduction of fiduciary duties

For the first time at a legislative level, fiduciary obligations are clearly defined for members of the supervisory board and executive bodies. This introduces a higher standard of conduct, including duties of care and loyalty, and increases potential liability exposure for management.

 

Minority shareholder protections

The Law strengthens the position of minority participants by:

• enabling the establishment of internal committees;
• allowing the initiation of independent audits;
• enhancing oversight over company management.

These mechanisms are expected to improve transparency and internal accountability.

 

Regulation of affiliated party transactions

Clearer rules are introduced for affiliated persons and related-party transactions, addressing a key risk area in corporate structures and improving safeguards against conflicts of interest.

 

Enforcement of capital contribution obligations

Participants who fail to fully contribute their share in the charter capital may now be excluded through court proceedings, reinforcing capital discipline and protecting other participants.

 

Optional centralization of capital records

LLCs are permitted to transfer the accounting of charter capital to the Central Securities Depository on a contractual basis is an option that may improve transparency and reliability of ownership records.

Practical Implications for Businesses

 

The new Law will require companies and investors to reassess existing structures and documentation:

• Charters (constitutional documents) should be reviewed and potentially updated;
• Governance models (including the introduction of a supervisory board) should be reconsidered;
• Shareholder and joint venture agreements may need alignment with new rules;
• Internal policies on conflicts of interest and related-party transactions should be strengthened;
• Businesses should monitor capital contribution compliance more closely.

Overall, the reform increases both compliance expectations and governance accountability.

Entry into Force

 

The Law will enter into force on 22 July 2026.

This reform represents a significant step toward improving corporate governance and investor confidence in Uzbekistan. While it introduces additional compliance considerations, it also provides clearer rules and stronger protections for market participants.