ABOUT BANKS AND BANKING ACTIVITIES LAW OF THE REPUBLIC OF UZBEKISTAN DD NOVEMBER 5, 2019 № LRU-580
LAW OF THE REPUBLIC OF UZBEKISTAN
NOVEMBER 5, 2019
№ LRU-580
ABOUT BANKS AND BANKING ACTIVITIES
ADOPTED BY THE LEGISLATIVE CHAMBER ON JULY 22, 2019
APPROVED BY THE SENATE ON OCTOBER 11, 2019
CHAPTER 1. GENERAL PROVISIONS
Article 1. Purpose of this Law
The purpose of this Law is to regulate relations in the field of banking activities.
Article 2. Legislation on banks and banking activities
The legislation on banks and banking activities consists of this Law and other acts of legislation.
If an international treaty of the Republic of Uzbekistan establishes rules other than those provided for by the legislation of the Republic of Uzbekistan on banks and banking activities, then the rules of the international treaty apply.
Article 3. Basic concepts
The following basic concepts apply in this Law:
bank – a legal entity that is a commercial organization that carries out in the aggregate operations of opening and maintaining bank accounts, making payments, attracting funds for deposits, providing loans on its own behalf, defined as banking activities;
banking group – an association of financial institutions that is not a legal entity in which the main bank controls other financial institutions;
bank account – an account opened by a bank to a client in accordance with an agreement under which the bank undertakes to accept and credit funds received to its account, carry out the client’s instructions to transfer and issue relevant funds and conduct other operations on the account;
stable financial condition of the bank – the condition of the bank, characterizing the balance of financial flows, sufficiency of funds to maintain solvency, liquidity and profitable activities, as well as the bank’s compliance with all prudential standards;
indirect owner (acquirer) – a person who owns shares (acquires shares) of the bank through another person over whom he exercises control;
key personnel – bank employees who are not members of the board, whose positions allow them to have a significant influence on the bank’s activities;
proposed acquisition – a decision made by a potential acquirer to acquire or increase significant ownership of the bank’s shares;
ultimate beneficial owner – an individual who directly or indirectly owns or controls a legal entity that is a potential acquirer or direct or indirect owner of bank shares;
prudential supervision – supervision carried out by the Central Bank of the Republic of Uzbekistan over the activities of banks in order to prevent and reduce specific risks of banking activities;
regulatory capital – the bank’s capital, determined by calculation for the purpose of regulating banking activities and calculating prudential standards;
systemically important bank – a bank on whose activities the stability of the banking system depends;
foreign bank – a legal entity that is a bank under the laws of the foreign state in whose territory it is registered;
substantial ownership – direct or indirect ownership by a person or persons acting jointly of at least five percent of the authorized capital (authorized capital) of a legal entity acquired as a result of one or more transactions.
Article 4. State body regulating banking activities
The Central Bank of the Republic of Uzbekistan (hereinafter referred to as the Central Bank) is a government body that regulates banking activities and exercises powers of licensing, regulation and prudential supervision.
Article 5. Financial transactions
Financial transactions carried out by banks include:
attracting funds to deposits;
making payments, including without opening bank accounts;
opening and maintaining bank accounts for individuals and legal entities, including correspondent bank accounts;
provision of loans on the terms of repayment, payment and maturity on one’s own behalf at the expense of one’s own and borrowed funds;
transactions with foreign currency in cash and non-cash forms;
trust management of property under an agreement with an individual or legal entity;
collection and cash services;
issuing guarantees and accepting other obligations for third parties providing for the fulfillment of their obligations;
acquisition of the right to demand from third parties the fulfillment of obligations in monetary form (factoring);
issue, purchase, sale, accounting and storage of securities, management of securities under an agreement with a client, and performance of other transactions with them;
acquisition and sale of refined precious metals, including maintaining safekeeping accounts for metals and impersonal (non-physical) metal accounts;
purchase and sale of coins made of precious metals;
carrying out transactions with derivative financial instruments (derivatives);
provision of special premises for rent or safes located in them for storing documents or valuables;
provision of leasing;
issuing loans in the forms provided for by law;
provision of consulting services related to financial transactions;
asset portfolio management;
issue, use and redemption of electronic money;
issuing bank cards and processing payments, servicing bank cards jointly with other organizations, including other financial institutions.
Banks also carry out other financial transactions in accordance with the legislation on banks and banking activities.
Banks are not entitled to carry out financial transactions not specified in the license for the right to carry out banking activities.
Article 6. Contribution (deposit)
A contribution (deposit) is invested funds that collectively meet the following conditions:
subject to return at the request of the client or upon expiration of the period with or without interest or other income or on terms agreed upon between the depositor or his authorized representative and the bank accepting the funds;
do not relate to subordinated debt, title or services, including insurance services;
confirmed in writing by the relevant document of the bank receiving the funds.
Only banks have the right to engage in activities to attract funds into deposits.
Article 7. Activities prohibited or limited for banks
Banks do not have the right to directly engage in production, trade, insurance and other activities not related to the implementation of financial transactions provided for by the legislation on banks and banking activities.
The restriction specified in part one of this article does not apply to the following cases:
sale or rental of specialized equipment and software used in non-cash payment systems based on bank cards;
sales of own assets;
issuing, selling and distributing check books;
carrying out activities to organize the conclusion of an insurance contract on behalf of insurance organizations – residents of the Republic of Uzbekistan;
leasing out their own property to legal entities in which the bank is a founder in accordance with a property lease (lease) agreement.
Banks are prohibited from creating legal entities and (or) acquiring shares or shares in the authorized funds (authorized capital) of legal entities, with the exception of:
legal entities carrying out credit, insurance and leasing operations on a professional basis;
legal entities that are part of the financial market infrastructure or provide information and consulting services to banks;
legal entities carrying out professional activities in the securities market;
subsidiaries of a bank abroad, created for the purpose of issuing and placing securities under the guarantee of this bank;
legal entities whose exclusive activity is collection;
legal entities providing services to ensure interaction between participants in settlements for banking transactions, including settlements for transactions with bank cards;
stock and currency exchanges;
credit bureaus;
joint stock companies on the secondary securities market in the amount of no more than twenty percent of the outstanding shares included in the stock exchange listing.
The acquisition by a bank of shares or shares in the authorized capital (authorized capital) of one legal entity in accordance with part three of this article should not exceed fifteen percent of the regulatory capital of a first-tier bank. This restriction also applies to the bank’s ownership of shares or shares in the authorized capital (authorized capital) of the specified legal entities, including in cases of their creation.
Transactions with securities carried out by banks, the acquisition of shares or interests in the authorized capital (authorized capital) of legal entities in the aggregate should not exceed fifty percent of the regulatory capital of a first-tier bank.
If the bank’s ownership of shares or shares in the authorized capital (authorized capital) of legal entities exceeds the volumes specified in parts four and five of this article, the bank is obliged to sell the excess part within one year.
The bank is prohibited from participating in the authorized fund (authorized capital) of a legal entity that owns one or more percent of the authorized capital of this bank.
The requirements of this article do not apply to cases where banks acquire shares of another bank or other securities held by another bank, or shares or shares in the authorized funds (authorized capitals) of legal entities owned by another bank when they carry out a reorganization in the form of a merger or accession .
Article 8. Independence of banks
Banks are independent in making decisions related to financial transactions.
State bodies and their officials are prohibited from interfering in the activities of banks, including in the management of business risks associated with the formation of the loan portfolio and assets of banks, the appointment of senior employees of banks, as well as demanding various types of payments and contributions from bank funds, except in cases provided for by this Law.
Article 9. Distinction of obligations of the state and banks
Banks are not liable for the obligations of the state, the state is not liable for the obligations of banks, except in cases where the banks or the state themselves assume such an obligation.
Article 10. Bank associations
In order to protect their common interests and implement joint programs, banks may create associations and other associations, if their creation does not contradict the requirements of the law.
Associations of banks can create organizations for the exchange of information and joint resolution of other issues related to banking activities.
Associations of banks, within ten days after their registration by an authorized state body or a decision on liquidation, notify the Central Bank about this.
Article 11. Name of the bank
The term “bank” or phrases with this term are used in a company name or trademark (service mark) only by legal entities licensed to carry out banking activities.
Legal entities licensed to carry out banking activities are required to include the term “bank” in their corporate name.
Article 12. Founders of the bank
The founders of the bank can be legal entities and individuals – residents, as well as non-residents.
The state may be the founder and shareholder of the bank represented by the Ministry of Finance of the Republic of Uzbekistan, as well as other government organizations based on decisions of the President of the Republic of Uzbekistan. Enterprises and organizations in which more than fifty percent of the authorized capital (authorized capital) belongs to the state cannot be founders and shareholders of the bank, unless otherwise provided by law.
Article 13. Authorized capital of the bank
The minimum amount of the bank’s authorized capital must be:
until September 1, 2023, one hundred billion soums;
from September 1, 2023, two hundred billion soums;
from April 1, 2024 three hundred fifty billion soums;
from January 1, 2025 five hundred billion soums.
The authorized capital of the bank is formed in national currency and consists of funds contributed by the founders and shareholders of the bank, or government securities, except for the following cases:
placement of bank shares among the bank’s creditors and their payment by offsetting any rights (claims) under the bank’s monetary obligations to creditors;
conversion of securities into bank shares;
exchange of outstanding shares of a bank of one type for shares of a given bank of another type.
The use of funds received on credit, on collateral, as well as other funds encumbered with an obligation, to form the authorized capital of a bank is not permitted.
The authorized capital of a bank created or reorganized in the form of merger, division and spin-off is formed based on the minimum amount of the authorized capital of the bank provided for in part one of this article on the day of creation or reorganization of the bank. In this case, the minimum amount of the bank’s authorized capital must be formed by the bank’s founders by the time of filing an application for state registration of the bank and issuance of a license. Funds contributed to the authorized capital of the newly created bank are credited to a savings account opened with the bank.
Banks, within the time limits established by part one of this article, must bring the size of their authorized capital into compliance with the requirements specified in part one of this article. When privatizing banks with a state share in the authorized capital through the complete sale of the state share to non-residents, the board of the Central Bank has the right to set deadlines other than those established for bringing the bank’s authorized capital into compliance with the minimum amount specified in part one of this article.
In the event of a systemic financial crisis, bank shares can be acquired by the Ministry of Finance of the Republic of Uzbekistan at the expense of government securities.
Article 14. Charter and internal regulations of the bank
The bank operates on the basis of its charter.
The bank’s charter must contain:
full and abbreviated company name, location (postal address) and email address of the bank;
size of the authorized capital;
procedure for increasing and decreasing authorized capital;
types and number of shares issued, ratio of types of shares;
the procedure for distribution of net profit, as well as compensation for losses;
the procedure for creating reserve and other funds;
rights and obligations of bank shareholders, including obligations to provide information requested by the bank to ensure compliance with the requirements of this Law;
information about the structure of the bank’s management bodies, the procedure for their formation, the number of members of the supervisory board and the board of the bank, their powers and functions;
measures to prevent conflicts of interest between shareholders (founders);
procedure and conditions for placement of shares by the bank;
procedure for reorganization and liquidation of the bank.
The bank’s charter, in addition to the requirements specified in this article, must contain information provided for by the legislation on joint-stock companies and the protection of shareholders’ rights.
The bank’s charter, changes and additions made to it are subject to registration with the Central Bank.
The internal regulations of the bank, as well as subsequent amendments and additions made to them, must be developed in accordance with the legislation on banks and banking activities and submitted to the Central Bank.
CHAPTER 2. MINIMUM CONDITIONS FOR ADMISSION TO BANKING ACTIVITIES
Article 15. Establishment of a bank
Banks are created in the form of a joint stock company.
Banks receive the status of a legal entity from the moment of their state registration with the Central Bank.
The Bank operates in the Republic of Uzbekistan on the basis of a license for the right to carry out banking activities (hereinafter referred to as the license) issued by the Central Bank.
The license is issued without limiting its validity period.
Transfer of the license or rights under it to other persons is prohibited.
Banking activities carried out without a license are considered illegal and entail liability. Income received as a result of such activities is subject to withdrawal to the State Budget of the Republic of Uzbekistan.
The bank licensing procedure consists of two stages:
issuance by the Central Bank of preliminary permission to establish a bank;
state registration of the bank with the simultaneous issuance of a license.
Activities for which the law requires obtaining separate licenses or permits are carried out by banks after receiving the relevant documents.
Article 16. Issuance of preliminary permission to establish a bank
To obtain preliminary permission to create a bank, a person authorized by the founders to represent their interests in creating a bank in the Central Bank (hereinafter referred to as the applicant), no later than three months after signing the constituent agreement, submits an application to the Central Bank with the following attachment:
constituent agreement;
bank charter in two copies;
minutes of the founding meeting;
list of founders;
information on direct and indirect founders, including ultimate beneficial owners with significant ownership, including information necessary for conducting an assessment in accordance with Article 24 of this Law;
in the absence of persons with significant ownership, information about direct and indirect founders, including ultimate beneficial owners, owning the largest shares in the authorized capital of the bank, the total share of which will be at least fifty percent, including information necessary for conducting an assessment in accordance with Article 24 of this Law;
financial statements of the founder – a legal entity for the last three years, confirmed by an audit organization;
documentary confirmation of information about the sources of funds contributed to form the authorized capital of the bank;
information about the members of the supervisory board and the board of the bank, necessary to assess their compliance with the requirements of Article 36 of this Law;
organizational structure of the bank;
draft regulations on the internal audit service of the bank;
the bank’s business plan for the next three years;
copies of draft credit, investment and issue policies of the bank, as well as the bank’s policies on risk management and internal control, which are subsequently subject to approval by the bank’s supervisory board.
For consideration of an application for preliminary permission to establish a bank, a fee of five times the basic calculated amount is charged.
The applicant has the right to indicate an email address in the application for preliminary permission to create a bank. Specifying an email address constitutes consent to receive notification of a decision on an application or a request for additional information in electronic form through the information and communication system.
If the Central Bank identifies shortcomings in the submitted documents and (or) the applicant provides incomplete documents specified in part one of this article, the Central Bank, within fifteen days from the date of submission of the application, sends a notification to the applicant indicating the shortcomings to be eliminated and (or ) list of documents required for submission.
An application for issuance of preliminary permission to create a bank must be considered by the Central Bank within three months from the date of submission of all documents necessary to obtain preliminary permission to create a bank. This period may be extended to four months in the cases specified in part six of this article.
If the documents and information provided by the applicant, specified in part one of this article, are insufficient to make a decision on issuing preliminary permission to create a bank, the Central Bank has the right to request additional documents and information from the applicant.
The applicant must submit the documents and information requested by the Central Bank in accordance with part six of this article within a period not exceeding thirty calendar days from the date of receipt of the request, during which the three-month period for consideration of the application for preliminary permission to create a bank is suspended.
The Central Bank in writing, including electronically through the information and communication system, notifies the applicant of the decision made within three working days from the date of adoption of the relevant decision.
Preliminary permission to create a bank remains legally valid for a period not exceeding six months from the date of its receipt.
Preliminary permission to create a bank is canceled before its expiration in the following cases if:
the fact of obtaining prior permission using forged documents has been established;
founders, including ultimate beneficial owners, who were previously assessed and met the requirements of Article 24 of this Law, no longer meet the requirements of this article;
members of the supervisory board and (or) board of the bank, who were previously assessed and met the requirements of Article 36 of this Law, no longer meet the requirements of this article, and information about the newly appointed members of the supervisory board and (or) board of the bank has not been provided;
structural changes were made to the presented business plan;
Facts have been identified indicating the impossibility of ensuring safe and stable management of the bank.
Article 17. Additional requirements for foreign founders when they create a bank or participate in the authorized capital of a bank
When a foreign bank is created or participates in the authorized capital of the bank, in addition to the documents specified in Article 16 of this Law, the following documents are additionally submitted:
decision of the authorized body of a foreign bank on the creation or its participation in the authorized capital of the bank;
charter of a foreign bank;
written confirmation from the banking supervisory authority of a foreign bank that the foreign bank is under its consolidated supervision, has the right to accept funds for deposits and has been issued permission from the banking supervisory authority to create or participate in the authorized capital of the bank or confirmation that such permission not required;
a document confirming the compliance of the adequacy of the capital and credit rating of a foreign bank with the requirements established by the Central Bank.
The Central Bank has the right to establish a separate procedure for obtaining preliminary permission when creating a bank or participating in the authorized capital of a bank of international financial institutions, foreign banks and other credit organizations with high capital and credit ratings.
The total share of non-residents – individuals and legal entities that are not international financial institutions, foreign banks and other credit organizations must not exceed fifty percent of the bank’s authorized capital.
The Central Bank has the right to establish minimum requirements for the capital and credit rating of the founders of the bank – non-residents who are not international financial institutions, foreign banks and other credit organizations, as well as for the rating of the state of residence of non-residents.
The founders and shareholders of the bank cannot be registered legal entities and individuals residing in a state or territory that provides preferential tax treatment and (or) does not provide for the disclosure of the identity of the ultimate beneficial owner and the provision of information when conducting financial transactions (except for legal and individuals who purchased bank shares on foreign stock markets).
When considering an application for preliminary permission to establish a bank, the Central Bank takes into account:
the existence of an agreement on the exchange of information between the Central Bank and the banking supervisory authority of the foreign bank that is the founder;
information and opinions of the competent authorities of the country of residence of the non-resident.
The documents specified in Article 16 of this Law and part one of this article are certified by the consular office of the Republic of Uzbekistan or other consular offices located at the place of registration of the founder bank.
Article 18. Consultations with authorities prior to licensing
The Central Bank has the right to consult with ministries, departments and other government and economic management bodies within the framework of procedures prior to licensing a bank.
Ministries, departments and other government and economic management bodies must provide the information requested by the Central Bank necessary to make the appropriate decision.
The Central Bank has the right to send requests to the competent authorities of foreign states to provide the necessary information.
Article 19. Refusal to issue preliminary permission to create a bank
The grounds for refusal to issue preliminary permission to create a bank are:
non-compliance of the submitted documents specified in Articles 16 and 17 of this Law with the requirements of the legislation on banks and banking activities;
non-compliance of the founders, including the ultimate beneficial owners of the bank, whose assessment was carried out in accordance with Article 24 of this Law, with the requirements of this article;
failure of the bank to achieve the goals presented in the business plan;
the presence in the laws or regulations of another country regulating the activities of one or more persons having close ties with the bank being created, requirements or the application of prohibitions and restrictions to these persons by the competent authorities of another country that impede the implementation of the supervisory function of the Central Bank, or the presence of other obstacles to compliance legislation on banks and banking activities of the Republic of Uzbekistan;
failure to provide additional documents and information requested by the Central Bank in accordance with part six of Article 16 of this Law.
Close ties mean a situation in which two or more persons are connected through:
acquiring direct ownership or control of at least twenty percent of the authorized capital (authorized capital) of a legal entity;
control;
the existence of permanent control established between two or all of these persons or between these persons and a third party.
Control is understood as a relationship between persons that meets one of the following criteria:
ownership by a person of a dominant share in the authorized capital (authorized capital) of another legal entity;
the right of a person who is a participant (shareholder) of a legal entity to appoint or replace the majority of members of the management bodies of this legal entity;
the ability of a person to influence the activities of a legal entity in accordance with an agreement concluded with it and (or) the provisions of its charter;
the ability of a person who is a participant (shareholder) of a legal entity to influence members of the management bodies of this legal entity appointed by him as a result of the exercise of voting rights. This criterion does not apply if the control meets one of the criteria specified in paragraphs two through four of this part;
the ability of a person who is a participant (shareholder) of a legal entity to manage a predominant share in the authorized capital (authorized capital) of this legal entity by agreement with its other participants (shareholders) or members.
The basis for refusal to issue preliminary permission to create a bank may be a reasoned judgment of the Central Bank.
A notice of refusal to issue a preliminary permit is sent to the applicant within the time limits and forms provided for in part eight of Article 16 of this Law, indicating the reasons for the refusal.
The application and documents submitted taking into account the elimination of the deficiencies specified in the written notice of refusal are considered resubmitted.
Article 20. State registration of a bank and issuance of a license
For state registration of a bank and obtaining a license, the applicant, no later than six months after receiving preliminary permission to create a bank, must submit to the Central Bank:
application for state registration of the bank and issuance of a license;
a document confirming the formation of the bank’s authorized capital in an amount not lower than the minimum amount established by this Law, as well as a list of founders;
information about the bank’s key personnel necessary to assess its compliance with the requirements of Article 36 of this Law;
conclusion of the Main Territorial Administration of the Central Bank at the location of the bank being created on the compliance of its premises, ensuring their protection, equipment, organizational and technical means and software with the requirements of the Central Bank;
copies of the documents listed in Articles 16 and 17 of this Law, in electronic form.
The Central Bank makes a decision on state registration of a bank and issuance of a license, subject to ensuring the safe conduct of banking activities and compliance with corporate governance requirements that guarantee the protection of the interests of depositors and creditors, as well as the proper functioning of the banking system.
The decision on state registration of a bank and issuance of a license is made within a period not exceeding one month from the date of receipt of the application with all the necessary documents.
The Central Bank in writing, including electronically through the information and communication system, notifies the applicant of the decision made within three working days from the date of adoption of the relevant decision.
For issuing a license, a state fee is charged in the amount established by law.
Information on the state registration of a bank and the issuance of a license to it is published on the official website of the Central Bank.
If it is established that a license was obtained using forged documents, the license is revoked by the Central Bank.
Article 21. Refusal to state register a bank and issue a license
The grounds for refusing state registration of a bank and issuing a license are:
non-compliance of the size of the formed authorized capital of the bank with the requirements of this Law at the time of filing an application for state registration of the bank and issuance of a license;
non-compliance with the requirements of Article 24 of this Law of the founders, including the ultimate beneficial owners, who were previously assessed and met the requirements of this article;
non-compliance of the bank’s key personnel with the qualification requirements of the Central Bank;
inconsistency of the bank premises, their security, equipment, organizational and technical means and software with the requirements of the Central Bank.
A notice of refusal to state register a bank and issue a license is sent to the applicant within the time frame and in the forms provided for in part four of Article 20 of this Law, indicating the reasons for the refusal and the period during which the applicant, having eliminated these shortcomings, can submit documents for reconsideration.
The period specified in the written notice of refusal to register a bank and issue a license must be proportionate to the time required to eliminate the deficiencies and cannot be less than two months.
If the applicant eliminates the reasons that served as the basis for refusing state registration of the bank and issuing a license, re-examination of the documents is carried out within a period not exceeding one month from the date of receipt of the application with all necessary documents.
When reconsidering an application for state registration and issuance of a license, a refusal on new grounds not previously specified in the written notice of refusal to state registration of a bank and issuance of a license is not permitted.
An application for state registration and issuance of a license submitted after the expiration of the period specified in the written notice of refusal of state registration of the bank and issuance of a license is considered to be filed again.
Article 22. Permission and restrictions on ownership of bank shares
Individuals and legal entities or persons acting jointly, including non-residents, are required to obtain prior permission from the Central Bank before acquiring, directly or indirectly, a share in the authorized capital of the bank, which, as a result of one or more transactions, will amount to:
five percent or more, but not more than twenty percent;
twenty or more percent, but not more than fifty percent;
fifty percent or more.
In the event of a change in shares in the authorized capital of a bank, established by part one of this article, by persons who have received prior permission from the Central Bank, it is carried out by notification in the manner specified in Article 26 of this Law.
Persons acting jointly are considered to be:
1) persons who acquired bank shares under conditions indicating a coordinated (agreed) acquisition or joint intention of these persons to acquire bank shares;
2) persons involved:
a) persons exercising control over another person or being under the control of another person, or being under the joint control of a third party;
b) persons directly or indirectly participating in agreements for the purpose of obtaining or jointly exercising voting rights, if the shares (shares) that are the subject of the agreement can provide them with control;
c) individuals who have management or control powers in a legal entity;
d) persons who have the authority to appoint a majority of members of the management bodies of a legal entity;
e) close relatives (persons who are related or related, that is, parents, blood and half-brothers and sisters, spouses, children, including adopted children, grandparents, grandchildren, parents, blood and half-brothers and sisters spouses), as well as legal entities under their control;
3) the legal entity exercising control and the legal entities controlled by it, as well as legal entities that are under the control of one legal entity among themselves;
4) a legal entity with members of its management body and involved persons, as well as these persons among themselves;
5) persons using in their financial and economic activities financial resources provided by the same person or coming from different persons who are involved;
6) persons transferring the benefits received from their economic activities to the same person or to different persons who are involved;
7) legal entities that have predominantly the same composition of participants (shareholders) or management bodies;
8) persons who have adopted or are implementing a similar investment policy through the acquisition and (or) sale of financial instruments issued by the same issuer or persons involved;
9) persons implementing a joint long-term policy in relation to the bank through similar (identical) exercise of rights granted by securities issued by the bank;
10) persons who have appointed or are appointing as an authorized representative (authorized representatives) the same person (the same persons), who is (are) the involved person (involved persons), to carry out financial and economic activities, represent interests or implement voting rights granted by the shares or shares in their possession in the authorized capital (authorized capital);
11) persons united in any organizational and legal form for the purpose of conducting operations related to the bank;
12) persons who simultaneously had or are holding shares or interests in the authorized capital (authorized capital) of one or more legal entities, exercising control over them and implementing a joint policy in relation to them;
13) persons who have carried out or are carrying out joint financial and economic activities;
14) other persons determined by the Central Bank on the basis of a reasoned judgment.
Banks are required to obtain prior approval from the Central Bank before acquiring, directly or indirectly, shares of another bank. To increase their share in the authorized capital of another bank, banks are required to obtain repeated prior permission from the Central Bank.
If obtaining preliminary permission to purchase shares of a bank requires obtaining the preliminary consent of the antimonopoly authority, the application submitted to obtain preliminary permission to purchase shares of the bank is considered by the Central Bank taking into account the decision of the antimonopoly authority.
Transactions for the acquisition of bank shares concluded without prior permission for the acquisition of bank shares specified in parts one and four of this article are considered invalid.
In the event of the acquisition of bank shares in violation of the requirements established by parts one and four of this article, from the date of conclusion of such a transaction, the owner of the shares does not have the right to vote at the general meeting of shareholders, demand the convening and holding of an extraordinary general meeting of shareholders, put issues on the agenda, nominate candidates for members of the bank’s supervisory board and board, as well as receive a portion of the bank’s profits in the form of dividends.
Obtaining permission from the Central Bank is required when a person receives bank shares in the amount specified in part one of this article, under circumstances beyond his control. From the day a person receives bank shares under circumstances beyond his control until the day the Central Bank makes a corresponding decision, the rights of the owner of the shares are suspended.
The shareholder, within sixty days from the date of receipt of the bank’s shares, under circumstances beyond his control, must submit an application for permission from the Central Bank. If a shareholder fails to submit an application, bank shares received under circumstances beyond his control are subject to alienation within three months from the date of their receipt.
Article 23. Issuance of preliminary permission for the acquisition of bank shares
To obtain preliminary permission to purchase shares of a bank, the potential acquirer submits an application to the Central Bank, attaching documents established by the Central Bank. The Central Bank, within three working days from the date of receipt of the application, sends the potential acquirer a written confirmation of its receipt.
A potential acquirer is a person or group of persons acting together who intends to acquire, directly or indirectly, including as the ultimate beneficial owner, shares of the bank in connection with the proposed acquisition.
The Central Bank evaluates the potential acquirer in accordance with Article 24 of this Law within two months from the date of sending written confirmation of receipt of the application.
If the potential acquirer does not submit all documents in full, the assessment period begins from the day the Central Bank receives all relevant documents.
The Central Bank has the right to refuse to issue a preliminary permit for the acquisition of bank shares without an assessment if there are documents and (or) information confirming that the potential acquirer does not meet one of the criteria specified in Article 24 of this Law.
During the assessment period, the Central Bank has the right to send a written request to the potential acquirer to provide additional documents and information necessary to complete the assessment.
The potential acquirer must provide, upon request of the Central Bank, additional documents and information within a period not exceeding twenty working days from the date of receipt of the request, during which the assessment period is suspended. The Central Bank has the right to extend the period for providing additional information to thirty working days if the potential acquirer is located in another state or is subject to the laws of another state. Subsequent inquiries sent by the Central Bank to the potential acquirer to clarify the information provided should not lead to the suspension of the assessment period.
The Central Bank has the right to refuse to issue preliminary permission for the acquisition of bank shares if the potential acquirer fails to comply with the deadlines specified in part seven of this article.
The Central Bank, based on a request from a potential acquirer, publishes on its official website a reasoned decision made following the consideration of an application for preliminary permission to purchase shares of the bank. The Central Bank also has the right to publish this information without a request from a potential acquirer.
Preliminary permission to purchase shares of the bank remains in force for six months from the date of its receipt.
Cancellation of preliminary permission to purchase shares of a bank is carried out in accordance with the legislation on banks and banking activities.
Article 24. Assessment of a potential acquirer
When considering an application submitted to obtain preliminary permission to purchase shares of a bank, the Central Bank evaluates:
business reputation of the potential acquirer;
business reputation, knowledge, skills and experience of members of the supervisory board and management board, as well as key personnel of the bank, whose appointment is envisaged after the proposed acquisition;
the financial solvency of the potential acquirer, in particular in relation to the size and specifics of the activities of the bank whose shares are proposed to be acquired;
the ability of the bank to comply with prudential requirements established by the legislation on banks and banking activities after completing the proposed acquisition;
absence of suspicions about the existence of attempts made or being accepted regarding the proposed acquisition to launder the proceeds of crime, financing of terrorism and financing the proliferation of weapons of mass destruction, as well as assumptions about an increase in this risk after the completion of the proposed acquisition;
possible integration of the activities of a potential acquirer with the activities of the bank and its impact on the development of the bank’s activities;
The impact of the corporate governance structure of the potential acquirer and related entities on the regulation and supervision of the bank.
Related persons of another person are:
members of the management bodies of a legal entity, as well as key personnel of the bank;
individuals and (or) legal entities who, directly or indirectly, individually or as part of a group of persons acting jointly, have a significant ownership in the bank, including ultimate beneficial owners. If close relatives of these individuals own or control a share in the authorized capital of the bank, regardless of its size, then this share is considered to be owned and controlled by this person;
persons exercising control over or under the control of another person, or under the joint control of a third party;
legal entities in which persons exercising control over the bank have significant ownership;
persons associated with the persons specified in paragraphs two to five of this part, including close relatives of an individual, as well as legal entities in which individuals and (or) their close relatives exercise control or own shares in the authorized funds (authorized capitals) ) or are members of a management body;
persons through whom a transaction with a bank is carried out in the interests of the persons specified in paragraphs two to six of this part, and who are considered to be under the influence of the persons specified in paragraphs two to six of this part in this transaction through the existence of labor, civil or other relations between by these persons defined by law;
other persons determined by the Central Bank on the basis of a reasoned judgment.
The Central Bank issues preliminary permission to a potential acquirer in the following cases:
full compliance of the potential acquirer with the criteria specified in part one of this article;
there is no suspicion that the potential acquirer is not the ultimate beneficial owner of the proposed acquisition;
absence of excessive fragmentation of shareholders – legal entities into levels (more than three levels from a potential acquirer to the ultimate beneficial owner);
submission of documents in full;
the absence of false or distorted information in the documents and information provided by the potential acquirer.
The Central Bank has the right to decide to carry out the assessment provided for in this article only in relation to the person who is the direct owner of the bank’s shares and the ultimate beneficial owner.
The Central Bank does not have the right to determine the size of the acquired share and evaluate the proposed acquisition from the point of view of the economic needs of the market.
When two or more applications are submitted simultaneously to acquire or increase a significant holding in the same bank, the Central Bank considers potential acquirers on equal terms.
The procedure and conditions for assessing a potential acquirer are determined by the Central Bank.
The requirements of this article also apply to the assessment of founders when the applicant provides documents for issuing preliminary permission to create a bank.
Article 25. Failure to comply with shareholder compliance requirements
The Central Bank has the right to apply measures and sanctions to the direct or indirect owner of substantial ownership, including the ultimate beneficial owner, who:
does not comply with the requirements of the legislation on banks and banking activities;
has a negative impact on the bank, which may jeopardize the stable financial condition of the bank;
did not provide information about the identity of the ultimate beneficial owner.
The Central Bank has the right to apply measures and sanctions to shareholders who have significant ownership as a result of concerted activities without obtaining prior permission to purchase shares of the bank.
In the cases specified in parts one and two of this article, the Central Bank applies separately or in combination the following measures and sanctions:
suspends the right to vote, the requirement to convene and hold an extraordinary general meeting of shareholders, to include issues on the agenda, to nominate candidates for members of the supervisory board and board of the bank and to receive a portion of the bank’s profits in the form of dividends;
makes a decision on the sale of bank shares by persons whose voting rights are suspended;
revokes the issued preliminary permission for the acquisition of bank shares.
Shareholders with significant ownership must sell their shares within three months from the date of revocation of the preliminary permission to purchase shares of the bank.
Persons against whom measures and sanctions have been applied in accordance with this article are not entitled to directly or indirectly own shares of the relevant bank, as well as other banks.
Article 26. Notification of acquisition, change or alienation of substantial ownership
The direct or indirect owner of significant ownership, including the ultimate beneficial owner, is obliged to notify the Central Bank and the bank within ten days in writing, including electronic form, in the following cases:
completion of a transaction for which preliminary permission was received for the acquisition of bank shares;
increasing the share of shares established by part one of Article 22 of this Law, acquired with prior permission;
making a decision on the alienation or reduction of significant ownership in the authorized capital of the bank, as a result of which the significant ownership will be, respectively, less than fifty, twenty or five percent;
receipt by a person of bank shares in the amount established by part one of Article 22 of this Law, under circumstances beyond his control.
In the cases provided for in part one of this article, the bank must notify the Central Bank in writing, including electronic form, within one day from the date of receipt of the notification.
Article 27. Obligation to inform
The bank, at the request of the Central Bank, is obliged to provide available information about the identity and size of shares in the authorized capital of the bank of direct and indirect owners, including the ultimate beneficial owner.
In order to assess the compliance of the direct and indirect owner of bank shares, including the ultimate beneficial owner, with the requirements of the legislation on banks and banking activities, these persons, at the request of the Central Bank or bank, are required to provide:
information on business activities, including annual financial statements;
information about persons associated with it and persons with whom the owner acts jointly in relation to the bank, as well as other information required by the Central Bank.
The Central Bank must be notified of any concluded agreement, the subject or content of which is:
coordinated exercise of voting rights at general meetings of bank shareholders or at general meetings of persons exercising control over the bank;
coordinated activities of members of the bank’s management body or persons exercising control over the bank;
exercise of the right to nominate a majority of members of the board or supervisory board of the bank or persons exercising control over the bank.
The notification specified in part three of this article must be sent to the Central Bank by the parties to the agreement or the bank’s management bodies within five working days from the date of signing the agreement or immediately from the moment the circumstances revealing its existence are identified.
The direct and indirect owner of significant ownership, including the ultimate beneficial owner, must notify the Central Bank of circumstances that may affect the assessment of the shareholder’s compliance with the requirements of the legislation on banks and banking activities, within five business days from the date of occurrence of such circumstances.
Article 28. Acquisition of own shares by banks
Banks are required to obtain prior permission from the Central Bank to purchase their own shares. The amount of own shares acquired by the bank cannot exceed ten percent of the bank’s authorized capital.
To obtain preliminary permission for a bank to purchase its own shares, the bank submits to the Central Bank an application and a decision of the general meeting of shareholders of the bank indicating the reasons for the acquisition of its own shares.
The Central Bank does not have the right to issue preliminary permission if the financial condition of the bank is unsatisfactory, or if the acquisition will lead to non-compliance with prudential standards.
CHAPTER 3. BRANCHES AND REPRESENTATIVE OFFICES
Article 29. Branches and other separate divisions of banks on the territory of the Republic of Uzbekistan
Banks can open branches, banking services offices and other separate divisions in the Republic of Uzbekistan.
A bank branch is a separate division of the bank, which is not a legal entity, carrying out banking activities on behalf of the bank and acting within the powers granted to it by the bank.
Banks send a notification to the Central Bank in accordance with the established procedure about the opening and liquidation of their branch or banking services office.
The following documents are attached to the notice of opening a bank branch or banking services office:
decision of the authorized body of the bank to open a branch or banking services office;
information about the director and chief accountant of the branch (if a branch is opened);
conclusion of the main territorial department of the Central Bank at the location of the branch or banking services office on the compliance of its premises, ensuring their protection, equipment, organizational and technical means and software with the requirements of the Central Bank.
To send a notification to the Central Bank about the opening of a bank branch or banking services office, the following requirements and conditions must be met:
stable financial condition of the bank;
compliance of the qualifications of the branch manager and chief accountant with the qualification requirements established by the Central Bank (in case of opening a branch);
compliance of the premises of a branch or banking services office, providing them with protection, equipment, organizational and technical means and software with the requirements of the Central Bank.
Information about the bank’s branch and the beginning of its activities is published on the official website of the Central Bank.
Activities carried out without notifying the Central Bank of the opening and closing of a bank branch or banking services office in the prescribed manner are illegal.
If the bank decides to liquidate a branch, the bank is obliged to notify clients fifteen days before the liquidation of the branch and take measures to ensure the fulfillment of obligations to them or transfer them to another branch in agreement with the client.
The bank, within two working days from the date of the decision to close the branch, must notify the Central Bank of this and submit a plan to ensure the fulfillment of obligations to customers.
A bank representative office is opened in accordance with the legislation of the Republic of Uzbekistan.
Article 30. Branches and representative offices of foreign banks on the territory of the Republic of Uzbekistan
The creation of branches by foreign banks in the Republic of Uzbekistan is not allowed.
A representative office of a foreign bank is a separate division of a foreign bank located on the territory of the Republic of Uzbekistan and representing the interests of the bank without the right to carry out banking and other commercial activities.
A representative office of a foreign bank on the territory of the Republic of Uzbekistan is accredited by the Central Bank.
Article 31. Subsidiary banks, branches and representative offices of banks abroad
Banks, with the permission of the Central Bank, can open subsidiary banks and create branches abroad, participate in the capital of banks, including in the creation of foreign banks, in the following cases:
the existence of an agreement on the exchange of information between the Central Bank and the banking supervisory authority of the host country;
the legislation of the host country and the methodology for its application do not interfere with the performance of the supervisory functions of the Central Bank over a subsidiary bank or branch of the bank;
the management and financial condition of the bank are sufficient for the planned activities carried out through a subsidiary bank or branch;
compliance and growth of prudential standards and the bank’s compliance with other requirements of the legislation on banks and banking activities.
Subsidiary banks and representative offices are opened and (or) bank branches are created in accordance with the legislation of the country in which they are opened and (or) created.
If the bank makes a decision to open a representative office, to close a subsidiary bank, representative office or branch abroad, as well as to sell shares of a foreign bank, the bank is obliged to notify the Central Bank within thirty days from the date of such decision and provide information on the impact of this decision on financial stability jar.
The Central Bank must notify the banking supervisory authority of the host country about the revocation of the license of a bank that is a legal entity in the Republic of Uzbekistan, operating through a subsidiary bank, representative office or branch in the territory of this country.
CHAPTER 4. CORPORATE GOVERNANCE OF THE BANK
Article 32. Bank management bodies
The bank’s governing bodies are the general meeting of shareholders, the supervisory board and the board of directors of the bank.
The General Meeting of Shareholders is the highest management body of the bank.
The bank is obliged to develop and approve a corporate governance policy.
The powers of the bank’s supervisory board and board cannot be delegated to third parties for execution, except in cases provided for by this Law.
Article 33. Corporate governance
The bank must have a clearly defined organizational structure for corporate governance, defining:
transparent areas of responsibility;
effective procedures for identifying, managing, monitoring and communicating risks to which the bank is or may be exposed (crisis simulation scenarios);
procedure for assessing liquidity and capital adequacy to cover operational risk;
appropriate internal control mechanisms, including accounting procedures;
employee benefit policies and practices that promote and are consistent with sound and effective risk management.
The organizational structure of corporate governance, procedures and mechanisms must be comprehensive and consistent with the nature, scale and complexity of the risks inherent in the business model and activities carried out by the bank. Internal controls should ensure, at a minimum, that management and risk assessment functions are performed and that internal audit requirements are met.
Requirements for corporate governance in banks are established by the Central Bank.
Article 34. Bank Supervisory Board
The bank’s supervisory board provides general management of the bank’s activities, performs supervisory and control functions in the process of making management decisions and is responsible for the activities and financial stability of the bank as a whole.
The bank’s supervisory board determines and exercises supervision and control over the implementation of an organizational structure for managing activities that ensures effective and prudent management of the bank, including the distribution of powers and responsibilities between members of the bank’s board, the prevention and resolution of conflicts of interest.
Members of the bank’s supervisory board must promote sound corporate governance of the bank and, when exercising their powers and duties, take into account the legitimate interests of the bank, its depositors and shareholders, as well as ensure effective cooperation between the bank and the Central Bank.
The competence of the bank’s supervisory board, in addition to that provided for by the Law of the Republic of Uzbekistan “On Joint-Stock Companies and Protection of Shareholders’ Rights,” includes:
approval and control over the implementation of strategic goals, corporate governance policies, and other internal policies of the bank, including identification, management, monitoring and reporting of risks, maintaining the bank’s capital adequacy;
control over the formation of reserves against possible losses on assets created on the basis of asset classification, as well as ensuring the maintenance of a sufficient level of capital and general reserves of the bank;
approval of the procedure for preventing and resolving conflicts of interest;
approval of plans to restore the financial position of the bank;
exercising control over the board of the bank;
control over the implementation of the adopted business plan of the bank, as well as quarterly hearing of the report of the bank’s board on the results of the bank’s activities;
organizing the work of the bank’s internal audit service, as well as assessing the bank’s board of directors’ compliance with the bank’s strategies and policies based on quarterly reports from the bank’s internal audit service;
studying, discussing and challenging information, proposals and explanations provided by members of the bank’s board of directors;
monitoring and periodically assessing the effectiveness of the business management system, including the principles of bank management, and taking appropriate measures to eliminate identified deficiencies;
submitting a report on supervisory and control activities to the general meeting of shareholders at least once a year;
approving annual financial statements and ensuring the integrity of accounting and financial reporting systems;
ensuring compliance with prudential requirements, taking into account the long-term financial interests of the bank and the capital requirements established by the Central Bank.
The number of members of the bank’s supervisory board must be an odd number of persons, but not less than five people, regardless of the number of shareholders. The majority of members of the supervisory board should not be persons associated with the bank, unless they are members of the supervisory board.
Members of the bank’s supervisory board must comply with requirements for the independence of their judgment.
A person cannot be elected as a member of the supervisory board of a bank or the elected person is deprived of the right to membership in the supervisory board if:
the person is or intends to become a member of the supervisory board of two or more banks, except when these banks belong to one banking group;
the powers of the person were terminated early at the request of the Central Bank.
Article 35. Bank board
The bank’s board, being the bank’s executive management body, carries out operational management of the bank in accordance with the strategy and activity management system approved by the bank’s supervisory board, and bears full responsibility for the bank’s activities.
The bank’s board is obliged:
implement strategic goals, corporate governance policies, and other internal policies of the bank, including those related to identifying, managing, monitoring and reporting risks, maintaining capital adequacy at the proper level;
provide an appropriate and transparent organizational structure for the management of the bank, including the distribution of powers and responsibilities among bank employees within the limits of their powers;
exercise control over the activities of bank employees;
carry out the adopted annual business plan of the bank, as well as periodically submit a report to the general meeting of shareholders and the supervisory board of the bank on the work done, measures and sanctions applied to the bank;
perform other duties provided for by the bank’s charter and legislation on banks and banking activities.
The bank’s board is accountable to the general meeting of shareholders and the bank’s supervisory board.
Article 36. Application of the guidelines
Members of the supervisory board and management board, as well as key personnel of the bank must have an impeccable business reputation, have the experience, knowledge and skills necessary to ensure effective risk management of the bank and make informed decisions within the limits of their powers.
The bank is obliged to ensure constant compliance of members of the supervisory board and the board, as well as key bank personnel, with the requirements of the legislation on banks and banking activities.
The Central Bank approves the candidacies of persons nominated for members of the supervisory board, board and key personnel positions of the bank before they take office. If preliminary approval of key personnel is not possible for objective reasons, the bank must send a request to obtain subsequent consent.
Members of the board and key personnel of the bank, with the consent of the employer, can work part-time in other organizations, with the exception of other banks or organizations in which their employment may lead to a conflict of interest.
The assessment conditions, documents required for the assessment, criteria for meeting qualification requirements, as well as the procedure for approving members of the supervisory board and the board, as well as key bank personnel, are determined by the Central Bank.
Article 37. Measures to prevent corruption, rules of ethical behavior of bank employees and avoidance of conflicts of interest
Banks develop and implement mandatory compliance requirements for members of elected bodies and bank employees:
measures to prevent corruption;
rules of ethical behavior;
policy to prevent and resolve conflicts of interest.
The identity of a member of the supervisory board, board or bank employee reporting suspicious activity, fraud or abuse related to the bank or a legal entity under the control of the bank must remain anonymous.
CHAPTER 5. PRUDENTIAL REQUIREMENTS AND RISK MANAGEMENT
Article 38. Compliance by banks and banking groups with prudential standards
In order to ensure the financial stability of banks and protect the legitimate interests of depositors and creditors, banks and banking groups are obliged to comply with the prudential standards established by the Central Bank, the calculation procedure and acceptable values of which are determined by the Central Bank.
Prudential standards include:
capital adequacy ratios;
the maximum amount of risk per borrower or group of related borrowers;
maximum size of large credit risks and investments;
concentration ratios by sector;
liquidity ratios;
the maximum amount of risk for related parties of the bank;
the maximum amount for issuing loans without collateral (blank loans);
requirements for classification and assessment of the quality of bank assets, the formation of reserves against possible losses on bank assets created on the basis of their classification;
requirements for calculating interest on bank assets and crediting them to the bank’s income account;
the maximum size of acquired shares and shares in the authorized funds (authorized capital) of legal entities;
requirements for the acquisition and ownership of real estate and other property;
open currency position limits;
other prudential standards established by the Central Bank in accordance with generally accepted international practice.
In order to reduce the risk of losses on assets, banks must maintain their own capital and liquid resources at a sufficient level, create reserves against possible losses on assets created on the basis of their classification, and also ensure the diversification of their assets.
To cover potential losses arising from maximum changes in risk factors inherent in the bank, systemically important bank and banking group, the Central Bank has the right to establish additional premiums for banks, banking groups and systemically important banks to the values of liquidity ratios and capital adequacy ratios.
Upcoming changes to prudential standards are officially announced by the Central Bank no later than a month before they come into effect.
Article 39. Restriction on distribution of profits
The bank does not have the right to distribute profits by paying dividends to shareholders, as well as remuneration to members of the supervisory board, board and bank employees in the following cases:
non-compliance of prudential standards with the requirements established by the Central Bank or their violation as a result of this distribution;
insolvency or appearance of signs of insolvency as a result of this distribution;
failure to comply with or inability to eliminate the deficiencies specified in the mandatory order of the Central Bank, including in terms of information disclosure;
the presence of a requirement from the Central Bank to the bank for non-distribution of profits.
Banks must obtain the consent of the Central Bank to distribute profits in the following cases:
the total amount of payments specified in paragraph one of part one of this article exceeds ten percent of the bank’s equity capital;
presence of a loss for the current or previous quarter and (or) for the financial year.
Article 40. Mandatory reserve requirements
Banks are required to comply with mandatory reserve requirements established by the Central Bank.
If the bank fails to comply with the mandatory reserve requirements, the Central Bank indisputably collects from the bank’s correspondent account with the Central Bank the outstanding amount of required reserves, as well as a fine in the amount of two times the current refinancing rate on an annualized basis from the outstanding amount.
Article 41. Outsourcing of banking services and operations
Outsourcing of banking services and operations (hereinafter referred to as outsourcing) is the transfer by a bank to a third party of certain types of services and operations for implementation on a contractual and continuous basis.
The Bank has the right to outsource certain types of services and operations after receiving permission from the Central Bank in accordance with the requirements established by the Central Bank.
Outsourcing of certain types of services and operations carried out on the basis of a license is permitted only to holders of the relevant license.
A person to whom certain types of bank services and operations have been outsourced is prohibited from subsequently transferring these services and operations to another person. This restriction must be reflected in the agreement on the bank’s outsourcing of certain types of services and operations.
The Bank is responsible for managing risks associated with certain types of outsourced services and operations.
When transferring certain types of services and operations to outsourcing, the bank must meet the requirements of the Central Bank, including the requirements for the presence of internal policies and reporting, as well as the provision of information to the Central Bank on certain types of services and operations transferred to outsourcing.
Banks annually or at the request of the Central Bank provide an audit of certain types of services and operations transferred to outsourcing.
The Central Bank has the right to demand termination of the outsourcing agreement in the following cases:
failure by the bank to carry out proper and regular supervision, control and risk management of outsourced services and operations;
presence in the activities of the person involved in outsourcing, shortcomings that threaten the bank’s ability to fulfill its obligations.
Article 42. Requirements for internal control and risk management system of a bank and banking group
The bank and the banking group are obliged to comply with the requirements established by the Central Bank for internal control and risk management system. The requirements of the Central Bank take into account the systemic significance, specificity, scale and complexity of the bank’s activity, taking into account the principle of proportionality.
The requirements of the Central Bank for the internal control and risk management system of a bank and a banking group include:
ensuring completeness, reliability and timeliness of financial, supervisory and other reporting for internal and external users, as well as information security and cybersecurity;
ensuring the bank’s compliance with prudential requirements;
the bank has an approved policy for identifying and managing risks that are significant to the bank, conducting stress testing, as well as a reporting system for risks and capital that are significant to the bank;
consistent execution and compliance by the bank with policies for managing risks significant to the bank and assessing their effectiveness;
exercise by the supervisory board of control over the bank’s compliance with the risk limits and capital adequacy established by the bank’s internal documents, the effectiveness of the risk management procedures used in the bank and the consistency of their application.
Article 43. Compliance by banks with the requirements of legislation on combating the legalization of proceeds from crime, the financing of terrorism and the financing of the proliferation of weapons of mass destruction
Banks are required to comply with the requirements of legislation on combating the legalization of proceeds from crime, the financing of terrorism and the financing of the proliferation of weapons of mass destruction.
Article 44. Transactions with related persons of the bank
Banks are prohibited from entering into transactions with related persons of the bank or persons acting on behalf of such persons in cases where such transactions are concluded on more favorable terms than those provided for persons not related to the bank.
Providing more favorable conditions means:
the bank entering into a transaction with a person related to it or in the interests of such a person, which, due to its nature, purpose, characteristics and risk, the bank would not enter into with other persons;
receiving remuneration and charging a fee for completing a financial transaction lower or accepting security at a value higher than that required from others.
The bank cannot issue credits (loans) without collateral (blank loans) to persons associated with it.
The bank may carry out transactions with persons related to it only by decision of the bank’s supervisory board, taking into account the requirements of this article. If a person becomes a connected person of the bank after signing an agreement on a transaction, the bank’s supervisory board, within thirty days from the day on which the person became a connected person of the bank, must approve this agreement or give an order to terminate it.
A member of the supervisory board should not be present at a meeting of the supervisory board or try to influence the decision of the supervisory board on a transaction concluded or being concluded between the bank and it or persons associated with it.
The bank is obliged to maintain a separate register of transactions with related persons and notify the Central Bank before concluding transactions with related persons of the bank.
CHAPTER 6. PRUDENTIAL SUPERVISION OVER THE ACTIVITIES OF BANKS AND SUPERVISORY MEASURES
Article 45. Prudential supervision
The Central Bank provides prudential supervision over the activities of banks in compliance with the requirements of the legislation on banks and banking activities in order to prevent and reduce specific risks of banking activities.
To ensure prudential supervision, the Central Bank supervises:
systems, strategies, procedures and mechanisms used by banks to comply with the prudential requirements of banking and banking legislation;
the risks to which banks are or may be exposed, ensuring prudent management and risk coverage of banks’ regulatory compliance mechanisms, capital and liquidity;
compliance of banks with the requirements of legislation on banks and banking activities for risk management, as well as corporate governance.
Banks are required to provide the Central Bank with the information necessary to assess their compliance with the prudential requirements of the legislation on banks and banking activities.
Banks’ internal governance, accounting and reporting, and administrative procedures should allow for verification of banks’ compliance with prudential requirements.
Banks are required to register transactions and operations in accordance with the rules established by the Central Bank in order for the Central Bank to verify the compliance of banks with prudential requirements.
The Central Bank interacts with banks to obtain information about their activities, organization and internal processes to assess the adequacy of the banks’ capital to their risk profile.
If necessary, the Central Bank has the right to hire external experts to perform supervisory functions.
Article 46. Verification and assessment process
The Central Bank reviews the systems, strategies, procedures and mechanisms used by banks to comply with the requirements of legislation on banks and banking activities, as well as assesses the existing and potential risks of banks, including the risks posed by individual banks to the banking (financial) system.
The checks and assessments specified in part one of this article take into account the need for banks to comply with the requirements of the legislation on banks and banking activities.
The Central Bank, based on the results of inspections and assessments specified in part one of this article, determines the specifics, scale and complexity of the bank’s activities, as well as the degree to which reasonable management and risk coverage are ensured by regulatory compliance mechanisms, capital and liquidity of the bank.
The frequency and extent of inspections and assessments specified in part one of this article are determined by the Central Bank without the consent or notification of state bodies and other organizations based on the principle of proportionality, as well as the systemic significance, specificity, scale and complexity of the bank’s activities.
Article 47. Prudential supervision program
The Central Bank annually approves a program of prudential supervision over the activities of banks, including:
banks whose stress test results show the presence of significant risks to their financial stability or possible non-compliance of the bank’s activities with the requirements of the legislation on banks and banking activities;
systemically important banks;
banks that, in the opinion of the Central Bank, require additional supervision.
The prudential supervision program contains:
the procedure for the Central Bank to carry out supervisory functions and allocate resources;
procedures for identifying banks subject to additional supervision and measures necessary for its implementation, in accordance with part three of this article;
bank inspection plan.
The Central Bank, taking into account the results of the bank’s risk assessment, may take appropriate measures, including:
increasing the frequency of bank inspections;
submission by the bank of additional reporting;
conducting additional checks on the execution of the bank’s business plan;
Conducting a thematic audit of identified risks.
Article 48. Consolidated supervision
The Central Bank must exercise consolidated supervision over banks in the following cases:
creation of a banking group;
determination by the Central Bank of a bank as a main bank or a member of a banking group through a reasoned judgment.
A bank can be a member of only one banking group.
In order to organize effective interaction, exchange of information and establish effective supervision on a consolidated basis, the Central Bank has the right to enter into written agreements on interaction and cooperation with banking supervisory authorities (if any) of other countries, observing the procedure for using secrets, personal data and confidential information protected by the laws of the countries.
The specifics of consolidated supervision of banks are established by the Central Bank.
Article 49. Plan for restoring the financial position of the bank
The bank, at the request of the Central Bank, develops and submits for consideration and evaluation a financial restoration plan (hereinafter referred to as the recovery plan), containing measures to restore the bank’s financial position in the event of its deterioration.
The bank must update the recovery plan annually or following changes in the bank’s organizational structure, operations or financial position that may affect the recovery plan.
The bank’s recovery plan should reflect the impact of macroeconomic and financial crisis scenarios on the bank’s activities, including systemic events and risks for the bank.
The bank recovery plan must include a list of measures and indicators that define the conditions under which appropriate decisions must be made.
The Central Bank, within three months from the date the bank submits a recovery plan, reviews and evaluates it for compliance with the following criteria:
maintaining and (or) restoring the financial position of the bank while implementing the measures specified in the recovery plan;
the ability to quickly and effectively implement the measures specified in the recovery plan in the context of the financial crisis, as well as reduce the negative impacts on the banking and financial system.
If the recovery plan does not meet the criteria specified in part five of this article, the Central Bank has the right to demand from the bank:
revising the recovery plan;
introducing changes and additions to the recovery plan determined by the Central Bank;
determination by the bank of changes in its activities necessary to eliminate deficiencies in the recovery plan or obstacles in its implementation;
reducing the risk profile;
timely adoption of measures to recapitalize the bank;
reviewing the bank’s development strategy;
changes in the organizational structure of bank management.
The measures specified in paragraphs five to eight of part six of this article are applied if the measures specified in paragraphs two to four of part six of this article do not ensure compliance of the recovery plan with the requirements of the legislation on banks and banking activities.
The principal bank of a banking group must develop a recovery plan for the banking group, which includes measures taken at group level to restore its financial position after it has deteriorated.
The recovery plan for the banking group must comply with the requirements of the legislation on banks and banking activities.
Requirements for content and updating, the procedure for submitting and evaluating the bank recovery plan are established by the Central Bank.
Article 50. Supervisory functions
In order to carry out supervisory functions, the Central Bank has the right to:
receive and check statements, as well as other documents, demand clarification of information received from banks, related persons and persons subject to its supervision, as well as persons providing services and operations outsourced by the bank;
check the activities of banks, persons providing services and operations outsourced by the bank, as well as persons subject to consolidated supervision;
use information systems and bank databases.
Article 51. Supervisory measures
The Central Bank has the right to require banks or banking groups to immediately take measures in the following cases:
non-compliance of the activities of a bank or banking group with the requirements of legislation on banks and banking activities;
availability of information, based on the motivated judgment of the Central Bank, about a possible violation by the bank or banking group of the requirements of the legislation on banks and banking activities over the next twelve months;
identification by the Central Bank of risks affecting the activities and (or) information security and cybersecurity of a bank or banking group.
In the cases specified in part one of this article, the Central Bank has the right to demand from a bank or banking group:
ensuring and maintaining prudential capital standards in an amount exceeding the requirements established by the Central Bank;
improving corporate governance, risk management, internal controls or recovery plan;
submission of an action plan to ensure compliance of the activities of a bank or banking group with the requirements of the legislation on banks and banking activities;
implementation by the bank of measures for its financial recovery, including changing the structure of its assets and reducing expenses, reorganizing the bank, closing a branch or other divisions of the bank;
application of individual reserve requirements or asset management methods taking into account capital requirements;
compliance with restrictions and (or) prohibitions on the bank’s carrying out certain financial transactions and expanding the infrastructure of the bank or banking group, entailing risks of a significant deterioration in their stability;
reducing the risk inherent in the bank’s activities, services, financial transactions and internal systems;
directing net profit to increase the bank’s authorized capital;
implementation of restrictions and (or) prohibitions on the payment of dividends and interest on subordinated debts to shareholders or holders of additional capital instruments;
implementation of restrictions and (or) prohibitions on the payment of remuneration to bank employees in the form of a percentage of net income in the event of non-compliance or possible non-compliance of the bank with capital requirements as a result of this payment;
compliance with the limitation on the interest rate determined in bank deposit agreements concluded (extended) during the period of validity of the limitation on bank deposits;
submission of additional reporting;
execution of directed orders to eliminate identified deficiencies in ensuring information security and cybersecurity;
fulfillment of the obligation to maintain the minimum amount of liquid assets necessary for uninterrupted payments, the appropriate structure of financial sources and the balance of assets and liabilities over time in order to avoid problems with the bank’s liquidity;
holding an extraordinary general meeting of shareholders by the bank’s supervisory board, consideration by shareholders of issues determined by the Central Bank, including the issue of increasing the bank’s capital to an amount sufficient to ensure the financial stability of the bank;
early termination of powers or replacement of one or more members of the supervisory board, removal from office or replacement of one or more members of the board, as well as key personnel of the bank;
drawing up an action plan by the bank’s board for restructuring the debt of several or all creditors;
additional disclosure;
compliance with other instructions of the Central Bank.
If the supervisory board of the bank fails to comply with the requirement specified in paragraph fifteen of part two of this article, the Central Bank has the right to convene an extraordinary general meeting of shareholders and determine the agenda.
Article 52. Temporary manager
If the supervisory measures taken by the Central Bank to replace one or more members of the supervisory board or board of the bank are considered insufficient, the Central Bank has the right:
temporarily work with the supervisory board and the board of directors of the bank;
temporarily replace members of the bank’s supervisory board and board;
appoint one or more temporary bank managers.
The temporary manager must comply with the requirements of Article 36 of this Law.
A person who is a shareholder, borrower, creditor or related person of the bank cannot be appointed as a temporary bank manager.
The Central Bank has the exclusive right to appoint and dismiss a temporary manager, determine his powers in accordance with the bank’s charter and this Law.
In cases determined by the Central Bank, the actions of the temporary manager must be previously agreed upon with the Central Bank. Actions carried out without prior approval are considered invalid.
The temporary manager submits to the Central Bank reports on the financial condition of the bank and measures taken within the scope of his powers, within the time limits established by the Central Bank, as well as a final report on the work done.
The Central Bank has the right to oblige the temporary manager to take measures in accordance with this Law, including convening an extraordinary general meeting of shareholders of the bank and demanding an increase in capital.
A temporary manager is appointed for a period of up to twelve months. This period may be extended by the Central Bank in exceptional cases.
The procedure for implementing temporary management in a bank is determined by the Central Bank.
CHAPTER 7. MEASURES AND SANCTIONS TAKEN BY THE CENTRAL BANK FOR VIOLATIONS OF THE LEGISLATION ON BANKS AND BANKING ACTIVITIES
Article 53. Application of measures and sanctions
The Central Bank has the right to apply measures and sanctions to the bank, members of the supervisory board and board, as well as key personnel of the bank who are responsible for the violations specified in Articles 54 , 55 and 56 of this Law.
Violations are divided into gross, serious and minor.
The procedure for applying measures and sanctions is determined by the Central Bank.
When applying measures and sanctions, the Central Bank takes into account:
level of risk, nature, scale of violations and their consequences;
systematicity and duration of violations;
the impact of the violations on the financial condition;
the ability to correct the situation as a result of the measures and (or) sanctions applied;
the reasons that led to the occurrence of identified violations and (or) risks;
effectiveness (effectiveness) of previously applied measures and sanctions;
adoption by the bank, direct and indirect shareholders, including the ultimate beneficial owner, member of the supervisory board and board, key personnel of the bank, of independent measures aimed at eliminating violations.
Article 54. Gross violations
Gross violations include:
obtaining licenses and permits using forged documents;
carrying out actions without obtaining permits, the commission of which requires obtaining prior permission from the Central Bank;
failure to comply within the prescribed period with the instructions of the Central Bank to eliminate gross violations in the activities of banks or banking groups;
failure to comply with the requirements specified in Article 39 of this Law when distributing profits;
discrepancy between the size of the bank’s authorized capital and the requirement established for the minimum amount of the bank’s authorized capital;
reduction of the capital adequacy ratio of a bank or banking group to eighty percent or less of the minimum acceptable value established by the Central Bank for a period exceeding six months;
lack of sufficient reserves against possible losses on bank assets;
carrying out financial transactions not provided for by the license;
carrying out activities prohibited or limited by this Law;
concluding transactions with the provision of more favorable conditions to the benefits of related parties of the bank;
maintaining accounting records with violations leading to distortion of reporting data and not allowing to reflect the real financial condition of the bank or banking group;
failure to provide the audit organization with financial statements and other financial information necessary to conduct an audit of the bank;
obstructing the performance of supervisory functions by the Central Bank;
violation of the rights and legitimate interests of consumers of banking services;
failure to provide, untimely provision or provision of distorted or incomplete information to the Central Bank, preventing the assessment of the solvency or liquidity of the bank or banking group;
non-disclosure of information about ultimate beneficial owners;
the presence in the organizational management structure, internal control, as well as in the risk management system of deficiencies that threaten solvency or lead to losses of the bank;
non-compliance by systemically important banks with the Central Bank’s buffer capital requirements;
failure to comply with restrictions and (or) prohibitions on the bank carrying out certain financial transactions or opening branches;
failure by the bank to submit a plan for restoring the bank’s financial position;
non-compliance of members of the supervisory board and board, as well as key personnel of the bank with the requirements of Article 36 of this Law;
violation of the requirements of the legislation on bank secrecy, legislation on combating the legalization of proceeds from crime, the financing of terrorism and the financing of the proliferation of weapons of mass destruction as well as violation of the requirements of the legislation that led to the emergence of a cyber threat or cybersecurity incident in banking information systems;
a serious violation committed again within five years after the Central Bank imposed a fine for a similar violation.
Article 55. Serious violations
Serious violations include:
non-compliance with prudential standards, with the exception of the requirement for the minimum amount of the bank’s authorized capital;
reducing the capital adequacy ratio of a bank or banking group to eighty percent or less of the minimum acceptable value established by the Central Bank for a period not exceeding six months;
untimely payments by banks;
restructuring of loans from borrowers with unstable financial situations;
failure by members of the bank’s supervisory board or board of directors to comply with the Central Bank’s requirement to inform the bank’s general meeting of shareholders about identified violations;
failure of members of the supervisory board or board or key personnel of the bank to comply with corporate governance and remuneration policies;
violation of the rules of accounting and reporting of the bank;
implementation or termination of activities (actions) carried out by notification, without notifying the Central Bank in the prescribed manner;
a minor violation committed again within three years after the Central Bank imposed a fine for a similar violation.
Article 56. Minor violations
Minor violations include non-compliance with the requirements of the legislation on banks and banking activities that are not gross or serious violations in accordance with Articles 54 and 55 of this Law.
Article 57. Measures and sanctions for gross violations
For committing gross violations, the Central Bank has the right:
collect from the bank a fine in an amount not exceeding two times the amount of income received from financial transactions carried out in violation of the legislation on banks and banking activities, if it is possible to quantify these incomes, or five percent of the net profit received by the bank for the previous financial year, or one percent of the total capital of the bank;
apply to the bank separately or in aggregate the measures specified in part two of Article 51 of this Law;
revoke the license;
collect from a member of the supervisory board, board or key personnel of the bank a fine in an amount not exceeding one hundred percent of the remuneration received for the year preceding the month the fine was applied;
publish a message about violations, measures and sanctions applied to violators in the media.
Article 58. Measures and sanctions for serious violations
For serious violations, the Central Bank has the right:
collect from the bank a fine in an amount not exceeding one and a half times the amount of income received from financial transactions carried out in violation of the legislation on banks and banking activities, if it is possible to quantify these incomes, or two percent of the net profit received by the bank for the previous financial year, or 0 .5 percent of the total capital of the bank;
apply to the bank separately or in aggregate the measures specified in part two of Article 51 of this Law;
collect from a member of the supervisory board, board or key personnel of the bank a fine in an amount not exceeding seventy-five percent of the remuneration received for the year preceding the month the fine was applied;
publish a message about violations, measures and sanctions applied to violators in the media.
In cases of untimely payments by banks, the Central Bank has the right to impose a fine in an amount equal to the amount that was not carried out due to the fault of the bank.
Article 59. Measures and sanctions for minor violations
For minor violations, the Central Bank has the right to:
collect from the bank a fine in an amount not exceeding the amount of income received from financial transactions carried out in violation of the legislation on banks and banking activities, if it is possible to quantify these incomes, or one percent of the net profit received by the bank for the previous financial year, or 0, 1 percent of the total capital of the bank;
apply to the bank separately or in aggregate the measures specified in part two of Article 51 of this Law;
collect from a member of the supervisory board, board or key personnel of the bank a fine in an amount not exceeding fifty percent of the remuneration received for the year preceding the month the fine was applied;
send the violator a written warning about the application of measures and sanctions against him.
CHAPTER 8. INTERBANK TRANSACTIONS AND CUSTOMER SERVICE
Article 60. Interbank transactions
Banks on a contractual basis can attract and place funds with each other in the form of deposits, loans, carry out settlements through settlement centers and correspondent accounts and carry out other financial transactions provided for in the license.
The Central Bank has the right to set additional limits on interbank transactions for banks in recovery mode.
Article 61. Relations between banks and their clients
Relations between banks and their clients are based on contracts.
Clients have the right to open bank accounts in national and foreign currencies in one or more banks of their choice.
The procedure for opening, maintaining and closing bank accounts, as well as settlements between banks and their clients in national and foreign currencies is established by the Central Bank.
Article 62. Interest rates on loans, deposits and the amount of commission fees on bank operations
Interest rates on loans, deposits, and the amount of commission on bank operations are set by the bank independently.
The Bank does not have the right to unilaterally change the terms of agreements concluded with clients, including interest rates on loans and the procedure for determining them, interest rates on deposits, the amount of commission and the validity period of these agreements.
Article 63. Ensuring the repayment of loans
Banks provide loans secured by collateral, guarantees, guarantees, obligations and other methods of ensuring the fulfillment of obligations provided for by law.
If the borrower violates the obligations under the agreement, banks have the right to early collect the loans provided and the interest accrued on them in the manner prescribed by the agreement, as well as foreclose on the pledged property in the manner established by law.
Shares and shares in the authorized capital (authorized capital) of legal entities that are not specified and do not comply with the requirements of part three of Article 7 of this Law cannot be accepted by banks as collateral.
Banks can decide to provide a loan without collateral (blank loan).
Banks are prohibited from providing loans against their own shares.
The norms established by this article also apply to ensuring financial transactions of banks for issuing guarantees.
Article 64. Declaring the borrower insolvent
The bank has the right to apply to the economic court to initiate an insolvency case against a debtor who fails to fulfill its obligations to repay the debt.
CHAPTER 9. PROTECTION OF THE RIGHTS AND LEGITIMATE INTERESTS OF CONSUMERS OF BANKING SERVICES
Article 65. Provision of banking services
Consumers of banking services are free to choose a bank and banking services. Banks are obliged, upon the consumer’s request, to provide him with the opportunity to familiarize himself with the terms and conditions for the provision of banking services.
The bank must not, as a condition for receiving a banking service or product, force a person to receive another banking service or product from the bank or other third party.
Article 66. Disclosure of information about banking services
General conditions for the provision of banking services, information on commissions, tariffs and interest rates for the provision of banking services are open information and are published on the official website of the bank. This information cannot be the subject of commercial or banking secrets.
Before concluding an agreement for the provision of banking services, the consumer must be provided with full disclosure of information about them. Refusal to provide the client with information about the conditions and cost of banking services provided is not permitted.
Banks must provide the client with information about the conditions under which lending is carried out, including the full cost of the credit (loan).
The full cost of a credit (loan) means the interest rate in reliable, annual and effective terms, the calculation of which takes into account the borrower’s payments associated with obtaining a credit (loan). The calculation of the full cost of the credit (loan) includes payments by the borrower, including payments in favor of third parties, if the borrower’s obligation to make such payments follows from the terms of the agreement and (or) if the issuance of the credit (loan) is made dependent on the making of such payments.
Changes to the general conditions for the provision of banking services must be published on the official website of the bank at least ten days before they enter into force, and information on changes in interest rates and currency exchange rates is published on the day of their change.
Article 67. Rights of depositors
Bank depositors can be citizens of the Republic of Uzbekistan, foreign citizens and stateless persons.
Depositors are free to choose a bank to deposit their funds and may have deposits in one or more banks.
Article 68. Consideration of appeals
Banks are required to have a procedure regulating the procedure for considering customer requests. Customer requests must be considered no later than fifteen days from the date of receipt by the bank, and when additional study and (or) verification is required, a request for additional documents – within up to one month, with a response provided in written or electronic form.
Documents based on the results of consideration of customer requests must be stored for at least three years.
Article 69. Antimonopoly rules
Banks are prohibited from using their associations and other associations to reach agreements aimed at monopolizing the market for financial transactions and limiting competition in the banking sector.
Compliance by banks with antimonopoly rules is monitored by the Central Bank, as well as the antimonopoly authority in accordance with the law.
CHAPTER 10. ACCOUNTING, REPORTING AND AUDITING IN BANKS
Article 70. Maintaining accounting records in banks
Banks organize and maintain accounting records in accordance with internal accounting policies developed on the basis of rules established by the Central Bank.
Banks may apply international financial reporting standards.
Accounting in banks must ensure:
reliability of management, financial, tax, supervisory and other reporting, reflecting the real financial condition of the bank and the results of its activities;
security of bank asset management and emerging risks;
the opportunity for shareholders and the supervisory board of the bank to control the financial condition of the bank and the work of its officials.
Article 71. Bank reporting
Banks submit financial and supervisory reports to the Central Bank.
The bank draws up and submits to the Central Bank reports on its activities in the forms, in the manner and within the time frame established by the Central Bank.
Banks, at the request of the Central Bank, provide consolidated, periodic, and one-time reporting.
The bank is responsible for the integrity and reliability of reports and other information submitted by the bank to the Central Bank.
Banks submit other types of reporting in accordance with the law.
Article 72. Publication of financial statements by banks
Banks publish financial statements, the main bank of a banking group publishes consolidated financial statements in the form established by the Central Bank, after confirmation by the audit organization of the accuracy of the information specified in them.
Banks must disclose information related to their own funds, compliance with capital requirements, liquidity, risk levels and other key indicators (standards).
Article 73. Storage of documents on bank operations
Banks are required to store documents in their departmental archives in the manner and within the time limits established by the Cabinet of Ministers of the Republic of Uzbekistan.
Article 74. Audit of banks and banking groups
The purpose of the audit of a bank and banking group is to establish by the audit organization the reliability and compliance of the financial statements and other financial information of the bank and banking group with the legislation on accounting and international financial reporting standards.
The annual financial statements of banks and the annual consolidated financial statements of a banking group are subject to mandatory audit. An audit of a bank and a banking group can be carried out at the request of the Central Bank, both in general for the activities of the bank and banking group, and in individual areas of their activities.
The auditor’s report on the annual financial statements of a bank, the annual consolidated financial statements of a banking group, in addition to what is provided by law, must contain the results of the audit by the audit organization:
compliance by the bank, banking group as of the reporting date with prudential standards;
compliance of internal control and organization of risk management systems of the bank, banking group with the requirements imposed by the Central Bank.
Auditing organizations, based on the results of auditing the activities of banks and a banking group, confirm (or do not confirm) the reliability of financial statements and compliance of the accounting procedure with established legal requirements, and also issue an audit report attached to the annual financial report of the bank, the annual consolidated financial report of the banking group.
Without an auditor’s report, the bank’s annual financial report, as well as the annual consolidated financial report of the banking group, are not accepted by the Central Bank and are not subject to publication.
Article 75. Requirements for an audit organization performing an audit of a bank and banking group
An audit of the financial statements of a bank and the consolidated financial statements of a banking group is carried out by an audit organization that has at least two auditors on its staff (including the head of the audit organization) who have a qualification certificate from the Central Bank for the right to conduct audits of banks.
The audit organization should not be a related party of the bank and have monetary obligations to it.
Agreements concluded between a bank (the main bank of a banking group) and an audit organization should not contain provisions limiting the transfer of the audit report to the Central Bank.
The audit organization is obliged to immediately inform the Central Bank about cases that:
represent a gross violation of the requirements of the legislation on banks and banking activities;
may have a negative impact on the bank’s activities;
may lead to the audit organization refusing to express an opinion on the reliability of the financial statements and the compliance of the accounting procedure with the requirements established by law, or to express a qualified opinion.
At the request of the Central Bank, the audit organization must provide additional explanations related to the audit report.
The specifics of conducting an audit of banks and the procedure for issuing an auditor qualification certificate are determined by the Central Bank.
CHAPTER 11. REORGANIZATION AND LIQUIDATION OF BANKS
Article 76. Bank reorganization
The reorganization of the bank is carried out in the form of merger, accession, division, separation and transformation by decision of the general meeting of shareholders with the permission of the Central Bank, taking into account the requirements of competition legislation. Bank reorganization can also be carried out at the request of the Central Bank.
Reorganization of a bank, the sole founder of which is the state, is carried out on the basis of a decision of the authorized body, in agreement with the Central Bank.
The basis for submitting an application to the Central Bank for permission to reorganize the bank is the presence of a decision of the general meeting of shareholders on the reorganization of the bank.
If the Central Bank refuses to reorganize the bank, the decision of the general meeting of shareholders on the reorganization of the bank is considered invalid.
After receiving permission from the Central Bank to reorganize a bank in the form of merger, division and spin-off, the organizational and technical measures necessary for state registration and obtaining a license for each newly emerging bank are carried out.
Obtaining permission from the Central Bank to reorganize a bank does not guarantee state registration and issuance of licenses to banks arising as a result of the reorganization.
The reorganized bank is obliged to complete the reorganization process within six months from the date of receipt of permission to reorganize the bank.
State registration and issuance of licenses to newly established banks as a result of reorganization is carried out in the manner established by the Central Bank.
The procedure for reorganizing a bank is determined by the Central Bank.
Article 77. Revocation of a license
The Central Bank has the right to revoke a license in the following cases:
if the bank has not begun to carry out banking activities within twelve months after receiving a license, has directly refused it, or has not carried out financial transactions for more than three months;
failure of the bank to comply with the conditions for granting a license;
the bank has committed one of the gross violations specified in Article 54 of this Law;
if the bank incurs or may incur losses in amounts exceeding ten percent of the bank’s regulatory capital in each of three consecutive quarters or fifty percent of the regulatory capital, regardless of the period of time;
termination of the bank’s activities as a result of reorganization;
adoption by the general meeting of shareholders of a decision on the voluntary liquidation of the bank;
revocation of a license from a bank of a foreign state that established a bank in the Republic of Uzbekistan;
the onset of bank insolvency.
Bank insolvency refers to the following cases:
the bank is unable to pay customer claims submitted to it within fifteen days;
the bank’s liabilities exceed its assets;
there are any other circumstances that pose a threat to the safety of funds entrusted to the bank by depositors and creditors.
The bank’s board must immediately notify the Central Bank in cases of bank insolvency or the risk of the bank’s inability to satisfy claims brought against it by clients.
The resolution of the Board of the Central Bank on the revocation of the license comes into force from the moment this resolution is adopted.
The resolution of the board of the Central Bank is handed over to the management of the bank against receipt on the day of adoption of this resolution.
Information about the revocation of a bank’s license is subject to publication in the media, as well as on the official website of the Central Bank within one day from the date of adoption of this resolution.
From the moment of adoption of the resolution of the board of the Central Bank on the revocation of the license, the bank is prohibited from carrying out activities permitted to banks in accordance with this Law, with the exception of actions related to the liquidation of the bank.
Article 78. Termination of activities and liquidation of a bank
Termination of activities and liquidation of a bank can be carried out voluntarily or compulsorily (if the Central Bank revokes its license).
The basis for termination of activity and liquidation of the bank is the decision:
general meeting of bank shareholders on voluntary liquidation;
Board of the Central Bank on the forced liquidation of the bank.
The procedure for terminating the activities and liquidation of a bank, including in a voluntary form, is determined by the Central Bank.
The liquidation of the bank is considered completed and the bank is considered liquidated from the date of making the corresponding entry in the State Register of Banks.
Article 79. Voluntary liquidation
Voluntary liquidation is carried out on the basis of a decision of the general meeting of shareholders of the bank on voluntary liquidation, subject to the possibility of satisfying the claims of creditors and depositors and obtaining permission from the Central Bank.
The decision on the voluntary liquidation of a bank is made by a three-quarters majority vote of shareholders – owners of voting shares participating in the general meeting of shareholders.
The bank is obliged to immediately inform the Central Bank in writing about the decision adopted by the general meeting of shareholders on the voluntary liquidation of the bank.
To obtain permission for the voluntary liquidation of a bank, no later than five days after the adoption of this decision by the general meeting of shareholders, it submits an application to the Central Bank with the following documents attached:
the decision to liquidate the bank, adopted by the general meeting of shareholders, indicating the reasons for the liquidation;
liquidation plan approved by the general meeting of shareholders, including organizational and practical measures within the framework of the liquidation process, procedures and deadlines for satisfying the claims of creditors and depositors;
a balance sheet at the time of applying to the Central Bank for permission to voluntarily liquidate, confirming the sufficiency of funds to satisfy the requirements;
information on the composition of the liquidation commission and other necessary data.
The bank’s liquidation commission is appointed by the general meeting of shareholders with prior approval from the Central Bank. If a liquidation commission has not been appointed, a bank liquidation commission is created by a resolution of the board of the Central Bank.
The head and members of the liquidation commission must comply with the requirements of Article 36 of this Law.
The Central Bank, within two months from the date of receipt of the application for permission to voluntarily liquidate the bank, reviews the submitted documents and issues permission for the voluntary liquidation of the bank if:
the decision to voluntarily liquidate the bank was made in accordance with the law;
the bank is solvent;
the documents submitted by the bank contain complete and sufficient information;
the presented liquidation plan ensures the possibility of fully satisfying the claims of creditors and depositors;
The bank, at the request of the Central Bank, submitted within the prescribed period additional documents necessary to determine whether the conditions for issuing permission for the voluntary liquidation of the bank were met.
If a negative decision is made, the Central Bank communicates to the bank’s supervisory board a reasoned decision to refuse to issue permission for the voluntary liquidation of the bank. If necessary, the Central Bank may require a revision of the liquidation plan and schedule or the provision of additional documents and information.
The Central Bank, after issuing permission for voluntary liquidation, revokes the bank’s license.
If, during the process of voluntary liquidation, it turns out that the bank is insolvent, the liquidation commission must immediately notify the Central Bank and submit a corresponding report and documents confirming the financial position of the bank.
The Central Bank reviews the documents specified in part ten of this article, and if one of the grounds specified in part two of Article 77 of this Law exists, makes a decision on the insolvency of the bank and initiates the process of its forced liquidation.
Article 80. Forced liquidation
The bank is forcibly liquidated on the basis of a resolution of the board of the Central Bank to revoke its license.
In case of forced liquidation of a bank, a liquidation commission is appointed by the Central Bank.
The Central Bank has the right to include Central Bank employees in the liquidation commission.
Article 81. Powers of the liquidation commission
From the moment the liquidation commission is appointed, the powers to manage the affairs of the bank, including the general meeting of shareholders, the supervisory board and the board of the bank, are transferred to it.
The liquidation commission, within two working days from the date of appointment, is obliged to publish in the media, as well as on the bank’s official website, an announcement about the liquidation of the bank, including the procedure and deadlines for its depositors and creditors to submit applications for satisfaction of claims. The deadline for submitting claims is two months from the date of publication of the notice of liquidation of the bank, and after this period the claims are not accepted by the liquidation commission.
The liquidation commission must also disclose information in accordance with the legislation on the securities market.
The liquidation commission, within two months from the date of revocation of the license, takes measures to identify creditors and receive receivables and funds deposited in the required reserve fund of the Central Bank. These funds are, as a matter of priority, used to repay the debt of the liquidated bank upon the claims of individuals, with the exception of related persons of the bank.
CHAPTER 12. FINAL PROVISIONS
Article 82. Dispute resolution
Disputes between the bank and its clients are resolved in the manner prescribed by law.
Article 83. Liability for violation of legislation on banks and banking activities
Persons guilty of violating the legislation on banks and banking activities bear responsibility in accordance with the established procedure.
President of the Republic of Uzbekistan Sh. MIRZIYOEV
The document presented in an unofficial translation from the database of the law firm “S VERENIN’S LEGAL GROUP”.
The document presented from the database of the law firm “S VERENIN’S LEGAL GROUP”.
The document presented as of _______2024г.
Share
Objects for investments
