May 2023 – On 19 April 2023, the President of Uzbekistan signed law No. ЗРУ-831, which came into force on 20 April 2023 and introduced changes to the law “[o]n banks and banking activities” (the “Amended Banking Law”).
Law on Banking
The Amended Banking Law (i) increases the minimum charter capital requirement for banks and (ii) lifts certain restrictions on ownership of bank shares by non-residents of Uzbekistan.
Increased charter capital requirements
The Amended Banking Law increases the requirements for the minimum amount of charter capital of banks in Uzbekistan from UZS 100 billion to UZS 500 billion (from approximately USD 8,780,000 to USD 43,898,000 as of 1 May 2023) within the following timeline:
The Amended Banking Law further stipulates that the Central Bank of Uzbekistan has the right to set a different timeline for compliance with the above minimum charter capital requirements in cases of privatization of banks with a state share by way of entire divestment of such state share to non-residents.
Ownership by non-residents
With the aim to further attract foreign investments in the banking sector, the Amended Banking Law has lifted the restriction on banks shares’ ownership by non-residents, indirect owners and ultimate beneficiaries of which are registered or reside (as applicable) in the territories that provide preferential tax treatment and/or do not require disclosure of the ultimate beneficiary owner’s identity.
However, the restriction continues to apply to direct potential shareholders of a bank, as individuals and legal entities are prohibited from being founders or shareholders of a bank in Uzbekistan if the country of their residence or registration (as applicable):
1) provides a preferential tax regime; and/or
2) does not require:
a. disclosure of identity of an ultimate beneficial owner, and
b. submission of information in the course of conducting financial transactions,
unless the individuals/legal entities have procured shares in an Uzbek bank on a foreign stock market, in which case the prohibition does not apply.