Approval of the Regulation on the Licensing of Microcredit Organizations

14-15 (410-411)-number — 97 — Article 116
CENTRAL BANK OF THE REPUBLIC OF UZBEKISTAN
DECISION OF THE BOARD

116 On Approval of the Regulation on the Licensing of Microcredit Organizations

Registered by the Ministry of Justice of the Republic of Uzbekistan on April 13, 2010, registration number 2093

(Becomes effective from April 23, 2010)

In accordance with the laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan" (Information Bulletin of the Oliy Majlis of the Republic of Uzbekistan, 1995, No. 12, Article 247) and "On Microcredit Organizations" (Information Bulletin of the Oliy Majlis of the Republic of Uzbekistan, 2006, No. 9, Article 495), the Board of the Central Bank of the Republic of Uzbekistan resolves:

1. Approve the Regulation on the Licensing of Microcredit Organizations as per the Appendix.

2. Consider the following to have lost their force:
   Decision of the Board of the Central Bank of the Republic of Uzbekistan No. 24/4 of October 7, 2006 "On Approval of the Regulation on the Licensing of Microcredit Organizations" (registration number 1635, October 31, 2006) (Collection of Legislation of the Republic of Uzbekistan, 2006, Nos. 43-44, Article 436); Decision of the Board of the Central Bank of the Republic of Uzbekistan No. 23/4 of August 15, 2009 "On Amendments and Additions to the Regulation on the Licensing of Microcredit Organizations" (registration number 1635-1, September 14, 2009) (Collection of Legislation of the Republic of Uzbekistan, 2009, No. 38, Article 418).

3. This decision enters into force ten days after the day of its state registration by the Ministry of Justice of the Republic of Uzbekistan.

Chairman of the Central Bank F. MULLAJONOV

Tashkent,
January 23, 2010,
No. 3/5

Collection of Legislation of the Republic of Uzbekistan, 2010.

Article 116 — 98 — 14-15 (410-411)-number
Appendix to the Decision of the Board of the Central Bank of the Republic of Uzbekistan No. 3/5 of January 23, 2010

REGULATION on the Licensing of Microcredit Organizations

This Regulation establishes the procedure for licensing microcredit organizations within the territory of the Republic of Uzbekistan in accordance with the laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan" (Information Bulletin of the Oliy Majlis of the Republic of Uzbekistan, 1995, No. 12, Article 247), "On Microcredit Organizations" (Information Bulletin of the Oliy Majlis of the Republic of Uzbekistan, 2006, No. 9, Article 495), and "On Licensing of Certain Types of Activities" (Information Bulletin of the Oliy Majlis of the Republic of Uzbekistan, 2000, Nos. 5-6, Article 142).

I. General Provisions

1. The following basic concepts are used in this Regulation:
   microcredit organization — a legal entity carrying out activities in providing microcredit, micro-loans, and micro-leasing services, as well as providing other microfinance services in accordance with the Law "On Microcredit Organizations"; licensing department — a structural unit of the Central Bank of the Republic of Uzbekistan (hereinafter referred to as the Central Bank) tasked with reviewing documents submitted for obtaining a license; commission — the Credit Institutions Registration and Licensing Commission of the Central Bank.

2. In accordance with Article 9 of the Law of the Republic of Uzbekistan "On Microcredit Organizations," a microcredit organization carries out activities in providing microfinance services only after obtaining a license, in cases provided for by legislation.

II. Requirements for Obtaining a License for a Microcredit Organization

3. The minimum amount of the charter capital of microcredit organizations is established at the following amounts:
   20,000 euros equivalent — for microcredit organizations being established in Tashkent; 10,000 euros equivalent — for microcredit organizations being established in other populated areas.

The minimum amount of the charter capital of a microcredit organization must not be less than the amounts specified above, calculated according to the exchange rate of the euro announced by the Central Bank for currency operations, accounting, statistics, and other reporting on the date the microcredit organization is registered with the state.

4. Microcredit organizations with charter capital less than the amount established by this Regulation must meet the requirements for the minimum amount of charter capital within one year from the date this Regulation enters into force.

The amount of the charter capital in national currency equivalent is determined based on the exchange rate of foreign currencies announced by the Central Bank on the last day of the reporting month.

5. The charter capital of a microcredit organization is formed from monetary funds, as well as from other property not exceeding twenty percent of the amount of the charter capital of such organization.

6. It is not permitted to use funds obtained from loans and pledges, as well as other attracted funds, to form the charter capital of a microcredit organization.

7. The following persons cannot be founders of a microcredit organization:
   other credit institutions; individuals permanently residing in offshore zones and non-resident legal entities registered in such zones; legal and natural persons who have accounts in banks located in offshore zones; legal entities if their shareholders (participants) are individuals permanently residing in offshore zones or legal entities registered in such zones; state bodies, political parties, trade unions, and religious organizations.

III. Fees for Obtaining a License for a Microcredit Organization

8. A fee is collected for reviewing an application for granting a license to a microcredit organization. No fee is collected for reviewing an application for re-review.

9. A state duty is collected for granting a license to a microcredit organization.

10. The rates for fees and state duties are established by the Cabinet of Ministers of the Republic of Uzbekistan.

11. When issuing a duplicate of a license or re-registering it, a fee is collected in the amount of half the fee payable for reviewing an application for granting a license to a microcredit organization.

IV. License Requirements and Conditions

12. The following are considered license requirements and conditions for carrying out the activities of a microcredit organization:
    compliance with the Law of the Republic of Uzbekistan "On Microcredit Organizations," as well as other legislative acts related to the activities of the microcredit organization; the charter capital of the microcredit organization is not less than the amount specified in clause 3 of this Regulation; techically reinforced cash offices equipped with security and fire alarm systems; the candidate recommended for the head of the management body of the microcredit organization has the appropriate higher education and work experience.

V. Submission of Documents for Obtaining a License

13. Within one month after registration, a microcredit organization must submit the following to the Central Bank or its relevant territorial management:
    an application for granting a license; constituent documents of the microcredit organization; a notarized copy of the certificate of state registration of the microcredit organization; information on the composition of the management bodies of the microcredit organization; a bank document confirming the formation of the charter capital of the microcredit organization.

14. Cash offices in the building where the microcredit organization is located must be technically reinforced and equipped with security and fire alarm systems. An opinion from the relevant territorial management of the Central Bank regarding the technical reinforcement and equipping of cash offices with security and fire alarm systems must be obtained.

15. All documents submitted in volumes exceeding one page must be stitched into a separate folder and certified with an impression of a seal.

16. If the documents specified in clause 13 of this Regulation are submitted to the territorial management, the territorial management examines the completeness of the document set in accordance with the requirements of this Regulation within three days, and then sends this set of documents to the Central Bank along with an opinion on the technical reinforcement and equipping of the microcredit organization's cash offices with security and fire alarm systems.

17. An application with all necessary documents attached is reviewed by the Central Bank within thirty days from the date the application and necessary documents are received.

18. If the submitted set of documents is complete and complies with legislative acts and the requirements of this Regulation, the licensing department submits the issue of granting a license to the microcredit organization to the commission.

19. The Central Bank must inform the license applicant of the adopted decision within three days after the decision is made.
    A notification regarding the decision to grant a license is sent (handed over) to the license applicant in writing, indicating the bank account details and the deadline for paying the state duty.

20. Within six months from the date the license is granted, the microcredit organization must begin its activities.

21. After the decision to grant a license is made, the Central Bank formalizes legal folders containing three copies, including:
    an application for granting a license; constituent documents of the microcredit organization; a notarized copy of the certificate of state registration of the microcredit organization; information on the composition of the management bodies of the microcredit organization; a bank document confirming the formation of the charter capital of the microcredit organization; a document confirming the payment of the state duty for granting the license; an opinion from the relevant territorial management regarding the technical reinforcement and equipping of cash offices with security and fire alarm systems; a decision of the Central Bank on granting a license to the microcredit organization; a license issued for carrying out the activities of the microcredit organization.

22. The legal folders prepared in three copies are distributed by the Central Bank as follows:
    one copy containing the original license is handed over to the microcredit organization, signed by the head of the microcredit organization. The legal folder handed over to the microcredit organization is stored in a special place designated for storing legal documents; one copy is retained by the Central Bank; one copy is sent to the territorial management of the Central Bank at the address where the microcredit organization is located.

23. The Central Bank has the right to refuse to grant a license in the following cases:
    if the submitted documents do not meet the requirements established by legislative acts; if the submitted documents contain unreliable or distorted information.

24. A decision to refuse to grant a license is sent (handed over) to the license applicant in writing. The license applicant may submit documents for re-review to the Central Bank after fully eliminating the shortcomings indicated in the decision to refuse to grant a license.

VI. Additional Requirements for Establishing a Microcredit Organization with the Participation of Non-Resident Natural and Legal Persons

25. The purchase of shares (shares) of a microcredit organization established in the Republic of Uzbekistan by non-resident natural and legal persons, as well as by resident legal entities in which more than fifty percent of shares (shares) are owned, used, or controlled by non-resident natural and/or legal persons, granting ownership rights to them, and other related agreements are carried out only after obtaining prior permission from the Central Bank.

26. If non-resident legal entities participate in establishing a microcredit organization, in addition to the documents specified in clause 13 of this Regulation, the following documents are submitted:
    a) a copy of the decision of the authorized body of the non-resident legal entity regarding the purchase and/or ownership of shares (shares) of the microcredit organization within the territory of the Republic of Uzbekistan; b) the last three-year financial report of the non-resident legal entity certified by an audit firm (it must have been operating for at least three years); c) if the laws of the country where the non-resident legal entity is located require it, a document confirming the consent of the supervisory authority of the country of its location to its participation as a founder in the microcredit organization within the territory of the Republic of Uzbekistan; d) a certificate issued by a service bank regarding the solvency of the non-resident legal entity; e) information on the founders of the non-resident legal entity:
    for founder-legal entities — firm name, date and place of registration, share in the charter capital (capital) of the founder; for founder-natural persons — surname, name, patronymic, place of residence (full address), share in the charter capital (capital) of the founder.

27. If a non-resident natural person participates in establishing a microcredit organization, in addition to the documents specified in clause 13 of this Regulation, a tax declaration for the last two years is also attached.

28. The documents specified in clauses 26 and 27 of this Regulation are legalized in the consular institution of the Republic of Uzbekistan in the country where the non-resident legal entity is registered or where the non-resident natural person resides, or, if such an institution does not exist, in the Ministry of Foreign Affairs of the state where the non-resident legal entity is registered or where the non-resident natural person resides, in the consular institution or diplomatic mission of Uzbekistan in that country, in the manner prescribed, and subsequently certified by the Consular Department of the Ministry of Foreign Affairs of Uzbekistan.

29. When reviewing applications from non-residents and assessing their financial status, the Central Bank relies on information and opinions from the supervisory authority of the non-residents' country. If necessary, the Central Bank has the right to apply its own criteria and opinions.

30. The following may serve as grounds for refusing an application requesting a license for a microcredit organization with the participation of non-residents:
    the existence of a risk of negative impact on the local economy or competitive environment; recommendation of refusal by the supervisory authorities of the non-resident's country; the presence of funds obtained from criminal activities in the charter capital (capital) of the non-resident, or the presence in the composition of their shareholders (participants) of legal entities registered in offshore zones or individuals permanently residing in offshore zones; having accounts in banks located in offshore zones; if the founder is an individual permanently residing in an offshore zone or a legal entity registered in such a zone; unsatisfactory financial status of the non-resident.

VII. Requirements for the Name of a Microcredit Organization

31. The name of a microcredit organization must include the phrase "microcredit organization" and must comply with the requirements regarding firm names specified in legislative acts.

VIII. Establishment of a Branch of a Microcredit Organization and Registration with the Central Bank

32. A branch is a separate subdivision of a microcredit organization established outside its location and performing all or part of its functions, including the functions of a representative office.

33. The name of a branch must correspond to the name of the microcredit organization that established it, with the word "branch" indicated. Branches of microcredit organizations established within the territory of the Republic of Uzbekistan are not considered legal entities.

34. A branch of a microcredit organization is established or terminated based on a decision of the management body of the microcredit organization in accordance with legislative acts, after obtaining prior consent from the Central Bank.

35. A branch carries out its activities based on the regulation on the branch approved by the management body of the microcredit organization and the license issued to the microcredit organization.

36. For establishing a branch of a microcredit organization, the microcredit organization must:
    have a satisfactory financial status; meet the requirements of legislative acts and the Central Bank; have the necessary software-technical means and qualified accounting staff to prepare a daily consolidated accounting balance sheet; have been carrying out its activities for at least two years from the date the license was obtained; have appropriate rooms and equipment meeting the requirements of the Central Bank.

37. A microcredit organization is considered to have a satisfactory financial status in the following cases:
    if it has a net profit according to the results of the current year; if the amount of overdue loans constitutes less than 5% of the microcredit organization's credit portfolio over the last year; if the capital remaining after deducting the charter capital and free property from the total capital of the microcredit organization constitutes at least 10% of the microcredit organization's assets over the last year.

38. The following documents are submitted to the Central Bank for establishing a branch of a microcredit organization and registering it with the Central Bank:
    an application substantiating the establishment of this branch; a decision of the management body of the microcredit organization on establishing the branch; a regulation on the branch of the microcredit organization; information on candidates for the positions of branch head and chief accountant; an opinion from the relevant territorial management regarding the technical reinforcement and equipping of branch cash offices with security and fire alarm systems.

39. The set of documents submitted for establishing a branch is reviewed by the Central Bank within thirty days.

40. If the submitted set of documents is complete and complies with legislative acts and the requirements of this Regulation, the licensing department submits the issue of registering the branch of the microcredit organization to the commission. If the submitted set of documents contradicts the requirements of this Regulation and legislative acts, the set of documents is returned with reasons indicated. When documents are resubmitted, the regulation on the branch is re-approved by the microcredit organization.

41. If it is found that the documents submitted for establishing a branch of a microcredit organization contain subsequently incorrect or untrue information, and if the financial status of the microcredit organization has deteriorated as a result of the branch's activities, the Central Bank may demand the termination of this branch from the microcredit organization.

42. A branch of a microcredit organization opens an account in a bank in the manner specified by legislative acts at the address where the branch is located and carries out operations in accordance with legislative acts and the regulation on the branch of the microcredit organization.

IX. Re-registration of a License and Issuance of its Duplicate

43. Re-registration of a license is carried out in accordance with the Law of the Republic of Uzbekistan "On Licensing of Certain Types of Activities."

44. If the original license is lost, the microcredit organization must inform the Central Bank in writing within one week and submit the following documents for its restoration:
    an application indicating the reason for the loss of the license and requesting the issuance of a duplicate, reflecting measures taken by responsible officials and actions taken to prevent such situations; a certificate from the findings bureau confirming the loss of the license; a copy of the announcement in mass media declaring the lost license invalid.

45. The Central Bank reviews the submitted documents within one month and, if satisfied that the measures taken by the microcredit organization are in accordance with clause 44 of this Regulation, issues a duplicate of the license to the microcredit organization that lost it.

46. If the originally lost license is found after obtaining a duplicate, the microcredit organization must submit the original license to the Central Bank within five working days for cancellation.

X. Suspension, Termination, or Cancellation of License Validity

47. The Central Bank may adopt a decision to suspend the validity of a license in the following cases:
    if the microcredit organization violates the requirements of the Law "On Microcredit Organizations" and other legislative acts, including license requirements and conditions; if decisions imposing the obligation to eliminate violations identified in the activities of the microcredit organization are not executed.

48. The Central Bank's decision to suspend the validity of a license is delivered to the microcredit organization in writing, no later than three days from the date the decision is made.

49. If the circumstances leading to the suspension of the validity of the license are eliminated, the Central Bank is obliged to set a deadline for their elimination. The specified period must not exceed six months.

50. If the microcredit organization eliminates the circumstances leading to the suspension of the validity of the license, the Central Bank must adopt a decision on restoring its validity within ten days from the date the confirming documents are received.

51. The validity of a license is terminated in the following cases:
    if the microcredit organization is insolvent; if reporting information is systematically distorted; if the activity of providing microcredits is delayed for more than six months from the time the license was granted, and in other cases provided by law.

52. The validity of a license may also be terminated if the circumstances leading to the suspension of the validity of the license are not eliminated within the period set by the Central Bank for the microcredit organization. The validity of the license is terminated from the date the decision to terminate it is made.

53. If it is established that a license was obtained using forged documents, it is cancelled.

54. If a microcredit organization does not submit a document confirming the payment of the state duty for the granting of a license to the Central Bank within three months from the time the notification regarding the decision to grant a license was sent (handed over), the Central Bank has the right to cancel the specified license.

XI. Final Provisions

55. All documents required in accordance with this Regulation are submitted in compliance with the Law of the Republic of Uzbekistan "On the State Language" (Information Bulletin of the Oliy Majlis of the Republic of Uzbekistan, 1995, No. 12, Article 257).