23 July 2020

Uzbekistan permits limited liability companies to issue bonds

On July 22, 2020, the President signed the law on amendments and additions to certain legislative acts, which also provides for amendments to the Laws of the Republic of Uzbekistan “On the securities market”, “On joint-stock companies and protection of shareholders’ rights” and “On companies with limited and additional liability”. 

The adoption of this law significantly eased the requirements for issuing bonds and introduced new opportunities for limited liability companies to attract financing by issuing corporate bonds, as an alternative to bank loans.

Until now, only joint-stock companies and commercial banks could issue corporate bonds, within the limits of their capital, subject to three years of positive financial activity and rating. At the same time, the requirements for the issuer to issue bonds made this instrument an unattractive source of financing even for many joint-stock companies.

Despite the fact that corporate bonds are a convenient alternative to bank financing, such strict regulations significantly reduced the list of organizations that could turn to this instrument. This circumstance became the reason for a sharp reduction in the number and volume of corporate bonds in circulation in recent years.