UZBEKISTAN Law and Practice Contributed by: Nodir Yuldashev, GRATA International law firm
The JV may also be funded by loans, financial assis - tance from shareholders and third parties or through any other contractual arrangements, however, these arrangements may lead to some tax or regulatory actions, for example, receipt of a loan from any for - eign entity must be registered with the Central Bank of Uzbekistan. Tax consequences may arise in the form of reduced right to deduct particular interests paid under loan agreements with affiliated persons or additional taxes to be paid in respect of interest-free loans received within Uzbekistan. 6.4 Deadlocks Except standard voting and decision-making proce - dures, both of the laws regulating activities of LLCs and JSCs do not provide any detailed or explicit solu - tions for deadlock situations among shareholders. Therefore, in many instances shareholders are free to agree on resolution of deadlock situations by means of executing corporate agreements and adding spe - cial provisions regulating this kind of situation. 6.5 Other Documentation Depending on the project, the shareholders may agree on any kinds of additional documents to be executed between the parties or the JV itself. In order for these arrangements to be effective and legally binding, they must be included in the JVA or the articles of associa - tion of the JV. 6.6 Rights and Obligations of JV Partners Article 8 of the Law on LLCs establishes the following basic rights for shareholders of an LLC. • Participation in managing the JV within powers established by the Law and corporate documenta - tion. As a rule, this means management through participation in the general meeting of sharehold - ers. • Receive information regarding the JV’s activity and become acquainted with the financial books of the JV and other JV documents. • Participate in distribution of profits. • Sell or assign own share/s to other shareholders or third persons. • Exit the JV at any time regardless of consent of other shareholders.
• Receive part of the property remaining after liqui - dation of the JV. • Any other rights stipulated in any corporate agree - ment signed by the shareholders. A very similar set of rights is provided to JSC share - holders under the law regulating activities of joint- stock companies. 6.7 Minority Protection and Control Rights Minority shareholders in LLCs are entitled to exercise all rights provided to shareholders as described in 6.6 Rights and Obligations of JV Partners . The law does not provide minority shareholders any additional rights, however, in specific situations minor - ity shareholders in both LLCs and JSCs may force any new buyer of 50% or more shares to buy minority shareholders’ shares at market price. 6.8 Applicable Law and Dispute Resolution in International JVs As a general rule, Article 1191 of the Civil Code stipu - lates that an agreement for establishment of a legal entity with foreign participation should be governed by legislation of the country where such legal entity is established. Therefore, all JVAs should be governed by Uzbekistan law. The Economic Procedural Code of Uzbekistan estab - lishes that all corporate disputes as defined in Arti - cle 30 should be referred to the economic courts of Uzbekistan. However, Article 240 of the same Eco - nomic Procedural Code of Uzbekistan approves the list of disputes which are subject to exclusive compe - tence of Uzbek economic courts, which include only two kinds of disputes. • Disputes over a property owned by the state which is located in Uzbekistan. • Disputes over a real estate property located within Uzbekistan. There are two groups of lawyers in Uzbekistan who believe that: • the mentioned Articles 30 and 240 contradict each other and, therefore, there is ambiguity; or
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