UZBEKISTAN Law and Practice Contributed by: Nodir Yuldashev, GRATA International law firm
3.2 Anti-Money Laundering Compliance AML laws are regulated by the Law on Fighting Legali - sation of Profits Generated from Criminal Activity, Financing Terrorism and Financing the Distribution of Weapons of Mass Destruction. The Law sets major principles for conducting AML compliance by desig - nated legal entities and general AML principles, such as: • AML control exercised by a special state agency; • internal control; • taking measures to audit the clients; and • taking measures for identification, evaluation and reduction of risks. The following categories of enterprises are obliged by the Law (Article 12) to conduct AML compliance on a mandatory basis: • banks and credit institutions; • professional participants of the securities market; • members of all kinds of exchanges; • insurance companies; • leasing companies; • payment companies; • pawnshops; • organisers of lotteries and gambling; • traders of precious metals and precious stones; • real estate agents; • notaries, advocates and auditing organisations; and • cryptocurrency operators. 3.3 Sanctions, National Security and Foreign Investment Controls Uzbekistan legislation does not have any restrictions for shareholders originating from particular countries to set up a legal entity. Setting up a fully foreign- owned legal entity in Uzbekistan is allowed and is not restricted apart from only a very short list of exclusions in such sectors as mass-media (no more than 30% foreign participation is allowed), banks (no more than 50% foreign private investors are allowed), hydro- electric power plants and hydro-electric power stor - age systems (no more than 75% foreign participation is allowed).
• Is there any statutory requirement to use JSC only? If, there is, shareholders do not have any choice. • Will shareholders sell their shares in the future? If they will, shareholders should construct their business model by exploring perspectives of tax benefits offered by Article 16 of the Law on the Equities Market previously described. • Will shareholders issue bonds or other kinds of securities? If so, then the form of JSC might be more suitable as it is easier and there are less regu - latory restrictions to issue securities through JSC. • Are there more than 50 shareholders? If so, then there is no choice and shareholders are obliged by law to set up a company in the form of JSC. • Will shareholders use the mechanism of pledg - ing shares? If so, then the form of JSC is a better option as there is a technical possibility to enforce the pledge by means of registering bans through the depository. This option is not available to LLCs and there is no practically enforceable mechanism for pledges and bans on LLC shares to be reg - istered at any instance which would prevent the owner from alienating the shares unilaterally. • In practically all other cases, the LLC seems to be a better option as it is much easier and far cheaper in terms of procedure for registration, manage - ment, operation, restructuring and liquidation. 3. JV Regulation 3.1 Legal Framework and Regulatory Bodies The primary regulators for the establishment of com - panies are as follows. • The Ministry of Justice and Public Service Agen - cies under the Ministry of Justice – these state bodies implement state policy in the area of corpo - rate operation, and register legal entities, their reor - ganisations and liquidations. All filings are made to regional Public Service Agencies or through online portals. • National Agency for Prospective Projects – this authority is an authorised state body for imple - menting state policy in the securities market and is the main regulator for the operation of JSCs.
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