PRESS OF UZBEKISTAN
April 29, 2016
LAW \"ON JOINT-STOCK COMPANIES AND PROTECTION OF SHAREHOLDERS\' RIGHTS\" AMENDED
The President of the Republic of Uzbekistan on 25 April signed the law that introduced amendments and additions in the 24 legislative acts including the Law \"On joint-stock companies and protection of shareholders\' rights\".
The necessity to improve the legislation on joint-stock companies and protection of shareholders\' rights is connected with the adoption of the Decree of the President of the Republic of Uzbekistan dated April 24, 2015 \"On measures on introduction of modern methods of corporate management in joint-stock companies\", which approved the Programme of measures to radically improve the system of corporate governance.
Based on international practice, the new wording of article 18 of the law establishes that the increase in authorized capital of JSC from now is made solely through the issuance and placement of additional shares. Prior to this, raising the authorized capital was possible through raising the nominal value of shares, as a rule, at the expense of reinvestment of JSC\'s profit that, in contrast to the issuance of additional shares, is not actually an income for shareholders. As practice shows, the previous rule misleads the shareholders, especially minority, regarding the real value of their shares because the purchase and sale of shares and redemption of shares upon demand of shareholders are carried out at market value, regardless of their nominal value.
Article 40 of the law has been augmented with the widespread in the international practice the rule, according to which a person who became the owner of 50 percent or more of the shares,, is obliged within 30 days to announce the offer to the holders of the remaining shares to sell him the shares at market value, if the person has not owned shares or owned less than 50% of the shares of this company. In the case of receiving the written consent of the shareholder to sell his shares within 30 days from the date of announcement, the owner of 50 percent or more of the shares is obliged to buy these shares.
This supplement is necessary to protect the interests of minority shareholders, as the owner of 50 percent or more of shares can take almost any decisions independently. Moreover, article 68 of the law established that the general shareholders \' meeting is considered competent (has the quorum) if at the time of the end of registration for participation in the meeting, the number of registered shareholders in the aggregate is more than 50% of the outstanding voting stock of JSC.
Along with the above innovations, the article 51 of the law has been supplemented with an important clarification that the payment by the company of accrued dividends on common shares is carried out with the observance of the equal rights of shareholders to receive dividends. Such a refinement is due to the fact that, as a rule, in practice, the dividends must be paid first for large shareholders, because they have a greater impact on the executive body of the JSC and for minority shareholders, the number of which reaches several tens of thousands of individuals - citizens of the Republic, the payment of dividends is carried out with significant delays or not paid at all, according to this or that reasons.
In this regard, it is necessary for JSC before deciding on the distribution of profits to study its structure, namely the ability to pay the full amount of dividends during the repayment period which under article 51 of the act, cannot be later than 60 days from the date of such decision. Hereby, JSC should not have signs of bankruptcy.
In addition, in order to simplify the procedure of increasing the authorized capital of JSC, the Supervisory Board is now given the right, along with the right to make a decision about increasing the authorized capital, the board can make amendments and additions to the Charter of JSC, associated with a decrease in the number of authorized shares of JSC.
The above and other amendments and additions in the Law \"On joint-stock companies and protection of shareholders\' rights\" came into force on 26 April 2016.