Business restructuring and M&A in Uzbekistan

1) In what forms can the reorganization of a legal entity be carried out?

Under the Civil Code, the reorganization of a legal entity can be carried out in the following forms: 

• merger;
• consolidation;
• division;
• separation;
• transformation.

2) What are the procedures for the division or merger of a company?

Reorganization by division or merger of a legal entity consists of the following procedures:

1. Decision on such reorganization by the General Meeting of Participants of the legal entity (legal entities) being reorganized in the form of a division or merger. In case of a division, a decision is also made on the procedure and conditions for the division of the legal entity, on the creation of new legal entities and on the approval of the separation balance sheet;

2. The participants of each company created as a result of a division sign a memorandum of association, a charter and elect the company's bodies. In the case of a merger, the merger agreement and the charter of the new company created as a result of the merger are approved, as well as the approval of the transfer deed.

3) How to separate a specific type of activity into an independent company?

The General Meeting of Participants of the legal entity reorganized in the form of a separation, decides on such reorganization, on the procedure and terms of the separation, on the creation of a new legal entity and on the approval of the separation balance sheet, introduces into the constituent documents of the legal entity reorganized in the form of a separation, changes related to changes in the composition of the participants of the legal entity, determining the size of their shares, and other changes provided for by the decision on the separation, as well as, if necessary, resolves other issues, including the issues of the separation of the legal entity from the legal entity.

The participants of the legal entity to be separated shall sign the memorandum of association.

4) Is it possible to reorganize a company in case of bankruptcy?

According to Article 3 of the Insolvency Law No. ZRU-763 dated 12 April 2022, a bankrupt is a debtor recognized as insolvent on the basis of a court decision and subject to liquidation proceedings or sale of its property. Reorganization, in accordance with Article 34 of the Insolvency Law, is one of the pre-trial rehabilitation measures aimed at restoring solvency. Accordingly, reorganization may be carried out prior to a court decision declaring a legal entity bankrupt.

5) Which government agencies' approvals should be obtained for mergers and acquisitions?

In accordance with Article 26 of the Competition Law No. ЗРУ-850 dated 3 July 2023, in case of reorganization through merger (takeover) or acquisition, a legal entity must obtain the prior consent of the Committee for the Development of Competition and Consumer Protection of the Republic of Uzbekistan, if the book value of assets or revenue from the sale of goods for the last calendar year of one of the business entities involved in the transaction exceeds two hundred fifty thousand times the base calculation value (approximately USD 7,400,000), or if the total book value of their assets or revenue from the sale of goods for the last calendar year exceeds five hundred thousand times the base calculation value (approximately USD 14,800,000).

Authors: Javokhir Urinov, Sitora Kozimjanova