The Senate of the Oliy Majlis of Uzbekistan, at a plenary session on 19 June, approved a law allowing limited liability companies (Llcs) to issue corporate bonds, which are expected to be an alternative to bank credit.
The Capital Market Development Agency, which developed the framework, listed the innovations introduced.
Under the law, Llcs issuing bonds will be subject to external audit, financial reporting, disclosure and other requirements required of joint-stock companies.
The corporate bond rate within the size of the company’s equity is eliminated, the corporate bond bond pledge requirement is reduced, and the three-year positive financial statements and rating requirement is relaxed.
The Capital Market Development Agency (CDDA), an authorized State securities regulator, is responsible for setting the conditions and requirements for the issuance of corporate bonds.
There are currently more than 148,000 enterprises in the form of LLC. All are often more attractive to investment than equity companies, but have no alternative to bank credit financing, and corporate bonds can be such an alternative.
According to the expert, the issuance of LLC bonds will help expand the sources of financing for private projects, as well as revive the corporate debt market in the country, that it will facilitate the circulation of temporarily vacant funds of people and companies and facilitate the transfer of part of the savings from foreign to domestic currency.
The adoption of this law, as expected in the ARC, will serve to improve the country’s business climate and to attract widely and actively free funds of the population and investors to the economy of the country. This will reduce the dependence of businesses in the real sector on bank lending and State guarantees. In addition, the law will contribute to a drastic reduction in State participation in the economy.