General legal newsletter for March 2023

Some of the most notable legal developments in Uzbekistan in March 2023 related to the management and privatization of state property. Hence, among other things, a Law on the Management of State Property and Presidential Resolutions on the transformation of enterprises with state participation, acceleration of privatization, and improvement of the operation of the State Assets Management Agency were passed. Other notable developments include the adoption of the Cabinet of Ministers’ Resolution on a register of importers of goods of international brands. 

 1.  LAW ON MANAGEMENT OF STATE PROPERTY

On 9 March 2023, a Law on the Management of State Property was adopted. The following is, among other things, provided by the Law:

• the main principles of managing state property; grounds for the emergence and termination of rights of state ownership; powers of state bodies in managing state property;
• property owned by the central government and municipal property is designated;
• the following entities are defined as enterprises with state participation: (i) business entities where state share exceeds 50%; (ii) business entities where state share is greater than shares of each other shareholder, and (iii) state unitary enterprises;
• rules for corporate governance in enterprises with state participation;
• rules for lease, fiduciary management, pledge, and free use of state property. It is provided that the use of state property in public-private partnership (PPP) projects is governed by the PPP legislation;
• a list of state property that may not be privatized.

Law No. ZRU-821 of 9 March 2023

 2.   OPERATION OF STATE ASSETS MANAGEMENT AGENCY

The President has signed a Resolution on improving the operation of the State Assets Management Agency (the “SAMA”), which, among other things, provides for the following:

(a) starting from 1 May 2023: 

• immovable property and shares owned by the central government are transferred to the SAMA, except for the property that belongs to the Strategic Development Agency and the Fund for Reconstruction and Development or where a decision of the President provides otherwise;
• public partners shall input information on PPP projects implemented based on state-owned immovable property and vacant land plots into the system “State Property” within 10 days after the conclusion of a relevant PPP agreement;
• before entering into agreements on the implementation of investment projects based on state-owned immovable property, agreements on the alienation of such property, or agreements based on which a third party makes an investment into an enterprise with state participation, ministries, departments, and local state authorities shall obtain a relevant conclusion of the SAMA;

(b) starting from 1 June 2023:

• heads of enterprises with state participation and their deputies shall be appointed on a competitive basis unless decisions of the President provide otherwise;
• members of the supervisory board of enterprises with state participation, as elected based on state share, shall propose dividends upon agreeing on a relevant amount with the SAMA, based on investment projects, indicators of a business plan, and the financial condition of an enterprise;

(c) till 1 October 2023, a web portal for the placement of information on trades in state-owned objects will be created.

Presidential Resolution No. PP-101 of 24 March 2023

 3.  PRIVATIZATION OF STATE PROPERTY

The President has signed a Resolution on additional measures to reduce the involvement of the state in the national economy. The following is, among other things, envisaged in the Resolution:

• the following state assets will be privatised: (i) state shares (participatory interest) in 1,001 enterprises (Annex 1 to the Resolution);(ii) state shares in 40 enterprises, being sold through public auctions within the framework of “people's IPO” based on the principle "one share – one lot" (Annex 1a); (iii) 1,046 state-owned real estate objects (Annex 2);
• criteria for determining that a particular state-owned object is a municipal property (Annex 3). Within 3 months from the date of the Resolution, the Cabinet of Ministers shall prepare lists of objects managed at the central government level and objects managed at the municipal level based on the relevant criteria;
• the Committee for the Development of Competition and Consumer Protection shall review whether exclusive rights have been given to the enterprises listed in Annex 1 and submit proposals for the cancellation of such rights;
• starting from 1 September 2023, (i) the intermediate monitoring of the fulfillment of investment obligations in respect of privatized property, including quarterly on-site inspections, is abolished; (ii) reports on the fulfillment of investment obligations in respect of the privatised property shall be submitted online.

Presidential Resolution No. PP-102 of 24 March 2023

 4.  TRANSFORMATION OF ENTERPRISES WITH STATE PARTICIPATION 

The President has signed a Resolution on the transformation of large enterprises with state participation for ensuring that they operate transparently and based on market principles. It, among other things, provides for the following:

• a list of 31 enterprises with state participation subject to the transformation (Annex to the Resolution);
• the Agency for Strategic Reforms and the state holding company JSC “UzAssets” are instructed to implement the transformation. State shares in the enterprises included in the above list are transferred to the management of JSC “UzAssets”;
• for implementing the transformation, JSC “UzAssets” is authorized to engage audit, investment, and consulting companies, investment banks, and the private sector.

Presidential Resolution No. PP-83 of 1 March 2023

 5.  REGISTER OF IMPORTERS OF GOODS OF INTERNATIONAL BRANDS

Following Presidential Resolution No. PP-393 of 12 November 2022, the Cabinet of Ministers has adopted a Resolution on the formation and maintenance of a register of importers of certain types of goods of international brands operating based on a direct agreement with brand owners or their authorized suppliers (the “Register”). The Resolution, among others, envisages the following:

• starting from 1 January 2023, reduced import customs duties will apply to the import of specific types of goods of international brands based on the Register;
• based on relevant conclusions of the Council for the Tariff and Non-Tariff Regulation, the Ministry of Investments, Industry, and Trade maintains the Register and includes information on importers;
• for an importer to be included in the Register, a relevant brand has to be registered in the Global Brand Database of WIPO and be traded in retail chains (websites) in at least two of the following regions (countries): North America, Europe, Japan, and UAE.

Resolution of the Cabinet of Ministers No. 99 of 9 March 2023

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Have a good day!

Sincerely,
Kosta Legal Law Firm