UZBEKISTAN Law and Practice Contributed by: Nodir Yuldashev, GRATA International law firm
8. IP and ESG 8.1 Ownership and Use of IP
ie, regulations of the board of directors, employment agreements, articles of association, and others. For the purposes of monitoring the executive body (individual or collegial), shareholders may also estab - lish a supervisory board. The supervisory board is a team of shareholders’ representatives who gather reg - ularly to exercise control over directors’ or the board of directors’ activities, and to authorise specific kinds of deals. If a supervisory board is established, the hier - archy of the decision-making process in the JV shall be as follows. • Shareholders, through a general meeting of share - holders (GMS), shall be treated as the supreme governing authority in a JV. • The supervisory board shall be subordinated to the GMS and responsible for the exercise of regular control, monitoring and co-ordinating activities of the executive body. • The executive body – director or board of directors – shall be responsible for daily management of the JV subordinated to both the supervisory board and GMS. 7.3 Conflicts of Interest Both laws regulating LLCs and JSCs contain provi - sions identifying a strict procedure for appointment of members to the supervisory board and making trans - actions with affiliated parties. All shareholders are treated as members of the gen - eral meeting of shareholders and have the right to participate in and vote on all issues discussed at the meetings. As a rule, members of the supervisory board are appointed proportionately to holding shares in share capital of the company. Shareholders are free to dis - cuss and approve the structure of the supervisory board in the corporate agreement or the articles of association. The law only forbids employees of a JV to become members of the supervisory board. Under general rules, shareholders are free to nominate and appoint any person, including themselves, as a mem - ber of the collegial executive body – ie, a member of the board of directors – or as a sole executive body – ie, a director. There is no legislative restriction on this.
Following the mentioned freedom-of-contract princi - ple, IP issues can be part of any corporate agreement and regulated in detail. Nevertheless, any correspond - ing licence agreement leading to provision of a right to use specific IP objects should be additionally signed with the JV as it may require registration with a local intellectual property agency of Uzbekistan. 8.2 Licensing v Assignment of IP Rights Licensing or assigning IP rights is purely a business decision as there are different legal consequences. If the shareholders do not wish to lose control over the object of IP, then licensing the IP rights may seem to be the most effective option. In assignment of IP rights, the JV shall acquire the title and become the sole owner. In terms of contributions to share capital, IP rights can be used as the object of contribution by means of evaluating the right to use IP rights over an agreed period of time and contributing the right to use the IP object over this time at an agreed value. In this case, the shareholder that has contributed the right to use the IP object to the share capital will have to withdraw from the JV once the term has expired and such a shareholder shall be vulnerable to the risk of not agreeing with other shareholders to remain in the Although Uzbekistan law regulating the protection of the environment, safety of employees and corporate governance is detailed enough, the concept of ESG (environment, social and governance) and related con - siderations are not yet sufficiently developed in Uzbek legislation. Having said that, the vast majority of pro - jects financed by international, and many domestic, financial institutions tend to require the introduction of ESG principles and policies in the JV companies prior to approving facility agreements. Compliance with ESG principles also earns more points during public procurement tenders, including receiving for - mal rankings (especially for engineering design and construction companies). JV for an additional period of time. 8.3 ESG Considerations in JVs
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