LAW OF THE REPUBLIC OF UZBEKISTAN

On Bank Resolution and Termination

Adopted by the Legislative Chamber on February 13, 2025 Approved by the Senate on April 29, 2025

Chapter 1. General Provisions

Article 1. Purpose and Scope of Application of this Law

The purpose of this Law is to regulate relations related to the resolution and termination of banks.
The application of this Law extends to banks, banking groups, and holding companies owning the controlling package of bank shares.
Unless otherwise provided for in this Law, the provisions of this Law applicable to banks shall also apply to banking groups and holding companies owning the controlling package of bank shares.

Article 2. Legislation on Bank Resolution and Termination

Legislation on bank resolution and termination consists of this Law and other legislative acts.
If an international treaty of the Republic of Uzbekistan establishes rules other than those provided for in the legislation of the Republic of Uzbekistan on bank resolution and termination, the rules of the international treaty shall apply.

Article 3. Basic Concepts

The following basic concepts are used in this Law:
holding company owning the controlling package of bank shares (hereinafter referred to as holding company in the text) — a legal entity owning the controlling package of bank shares along with the controlling packages of shares (units) of other financial institutions; capital instruments — constituent elements of the regulatory capital of the bank being resolved; special manager — an individual who exercises the powers of the supervisory board and management of the bank being resolved; acquirer — an individual or legal entity to whom the shares of the bank being resolved are transferred (sold), as well as a bank to which the assets, claims, and liabilities of the bank being resolved are transferred (sold); resolution — implementation of resolution procedures aimed at ensuring the continuity of critical functions of banks in the event of insolvency, protecting the interests of depositors and creditors, and ensuring financial stability; resolution procedures — a set of measures related to the application of resolution tools and the exercise of powers related to resolution; subordinated debt — an unsecured debt obligation that is not repayable upon the creditor's demand before maturity and is satisfied after the claims of depositors and other creditors are satisfied upon termination; critical functions — types of bank services or operations, the cessation of which may lead to a disruption of financial stability or a limitation in the provision of services necessary for the real economy due to the difficulty of replacing them with services or operations of another bank; debt instruments — securities confirming debt relations, including bonds, as well as instruments granting the right to own debt securities.

Article 4. Competent State Body in the Field of Bank Resolution and Termination

The Central Bank of the Republic of Uzbekistan (hereinafter referred to as the Central Bank in the text) is the competent state body in the field of bank resolution and termination.
The Central Bank makes decisions independently of its executive and management bodies within the framework of its tasks and powers regarding bank resolution and termination, except for cases provided for in this Law.

Article 5. Separation of the Central Bank's Tasks in Bank Resolution from Its Other Tasks

The Central Bank performs its tasks in bank resolution separately from other tasks established by legislation, including supervisory tasks.
The Central Bank establishes the procedure for cooperation between the structural unit performing bank resolution and the structural units performing supervision of bank activities.

Article 6. Cooperation in the Field of Bank Resolution and Termination

The Central Bank carries out cooperation and information exchange with state bodies and organizations, as well as foreign state supervisory authorities exercising consolidated supervision over the activities of banks operating in the Republic of Uzbekistan (hereinafter referred to as foreign supervisory authorities in the text) in the exercise of its powers regarding bank resolution and termination in accordance with this Law. The Central Bank informs the Deposit Insurance Agency, the Ministry of Economy and Finance of the Republic of Uzbekistan (hereinafter referred to as the Ministry of Economy and Finance in the text), the Financial Stability Council, the Central Depository of Securities, and payment systems in which the bank is a participant, on the same day the decision related to the resolution of the bank enters into force. The Central Bank informs the foreign supervisory authority of its decisions related to the resolution or mandatory termination of a bank belonging to a foreign bank and operating in the Republic of Uzbekistan.

Article 7. Financial Stability Council

The Financial Stability Council (hereinafter referred to as the Council in the text) exercises interagency coordination powers aimed at ensuring financial stability in the Republic of Uzbekistan, studying (analyzing) the risks of systemic financial crises arising, taking measures to prevent their occurrence, as well as managing financial crises that have occurred and eliminating their consequences. The Council is an advisory body, and its decisions are adopted on the basis of mutual agreement of Council members and have an advisory nature. The regular meeting of the Council is held at least once every six months, and an extraordinary meeting is held upon the request of Council members. The Central Bank performs the functions of the working body of the Council. Council members provide all necessary information relevant to the Council's activities, including information protected by law. The disclosure of information protected by law by Council members and persons invited to its meetings, as well as other persons involved in preparing relevant information for the Council, is prohibited. The composition, rights and obligations of the Council, as well as other matters related to the organization of the Council's activities, are established by the decree of the President of the Republic of Uzbekistan.

Chapter 2. Bank Resolution

Section 1. Purposes and Principles of Resolution

Article 8. Purposes of Bank Resolution

The purposes of bank resolution are as follows:
prevention of the occurrence of a systemic financial crisis and minimization of its negative consequences; ensuring the continuity of the bank's critical functions; protection of the rights and interests of depositors; minimization of the allocation of funds from the State Budget of the Republic of Uzbekistan (hereinafter referred to as the State Budget in the text) for bank resolution. The purposes of resolution are of equal importance, and the Central Bank has the right to prioritize certain purposes in specific cases related to resolution.

Article 9. Principles of Bank Resolution

The principles of bank resolution are as follows:
losses are covered first at the expense of the shareholders of the bank being resolved; guarantee of the rights and legitimate interests of bank depositors and creditors; full protection of guaranteed deposits and the portion exceeding the guarantee limit; transfer of powers of management bodies; inevitability of responsibility; limitation of losses for bank depositors and creditors.

Article 10. Principle of First Coverage of Losses at the Expense of Shareholders of the Bank Being Resolved

In resolution, losses are covered first at the expense of the shareholders of the bank being resolved. In this case, each shareholder is responsible in proportion to their share in the bank's charter capital relative to the total amount of losses, and within the value of their owned shares.

Article 11. Principle of Guaranteeing the Rights and Legitimate Interests of Bank Depositors and Creditors

The rights and legitimate interests of depositors and creditors of the bank being resolved are guaranteed by observing the order of satisfaction of claims established in Article 64 of this Law. In this case, the rights and legitimate interests of depositors and creditors of the same type are guaranteed equally, except for cases provided for in this Law.

Article 12. Principle of Full Protection of Guaranteed Deposits and the Portion Exceeding the Guarantee Limit

The tools of write-off and (or) conversion are not applied to guaranteed deposits and the portion exceeding the guarantee limit in accordance with the Law of the Republic of Uzbekistan "On Guarantees of Protection of Deposits in Banks."

Article 13. Principle of Transfer of Powers of Management Bodies

The powers of the general meeting of shareholders of the bank being resolved are transferred to the Central Bank, and the powers of the supervisory board and management are transferred to the bank's supervisory board and management appointed by the Central Bank or to the special manager.

Article 14. Principle of Inevitability of Responsibility

Persons guilty of bringing the bank to a state of insolvency are held responsible in the manner established by legislation.

Article 15. Principle of Limitation of Losses for Bank Depositors and Creditors

Deposit or creditor losses resulting from the resolution of the bank shall not exceed the losses they could have incurred within the framework of the mandatory termination of the bank.

Section 2. Preparation for Resolution

Article 16. Bank Resolution Plan

The Central Bank develops a resolution plan for a systemically important bank. The resolution plan includes resolution procedures that may be applied by the Central Bank to a systemically important bank.
The resolution plan developed for a systemically important bank must be reviewed at least once a year, and also reviewed and updated if necessary when significant changes occur in the bank's organizational structure and (or) financial situation, or when other factors arise that may affect the application or content of the resolution plan. The Central Bank may also develop a resolution plan for banks that are not systemically important but perform critical functions. In this case, the frequency of review of the resolution plan is established by the Central Bank. The brief content of the resolution plan developed for the bank is presented to the bank. The bank for which a resolution plan is developed immediately informs the Central Bank of any situation requiring review or updating of the plan. The bank participates in the development and updating of the resolution plan applied to it at the request of the Central Bank. Implementation of procedures specified in the resolution plan that have lost their relevance is not of mandatory importance for the Central Bank. When grounds for initiating bank resolution arise, the Central Bank may adopt a decision on bank resolution even if no resolution plan has been developed for this bank. The procedure for developing the resolution plan and the requirements for its content are established by the Central Bank.

Article 17. Assessment of the Possibility of Bank Resolution and Elimination of Existing Obstacles

The resolution plan includes an assessment of the possibility of resolving the bank.
The bank is considered resolvable if there is a possibility of achieving resolution objectives through the implementation of resolution procedures.
In assessing the possibility of bank resolution, the Central Bank conducts an analysis of the following factors:
the possibility of outsourcing (transferring) the main directions of bank activities and critical functions to third parties; the degree of compliance of the bank's corporate governance system with the main directions of bank activities and critical functions; the availability of necessary employees, infrastructure, and mechanisms for financing, liquidity, and capital provision to support the main directions of bank activities and the performance of critical functions; the full execution of service contracts by the bank during resolution; the availability of an information system that ensures the constant receipt of accurate and complete information in the bank; the effectiveness and appropriateness of using resolution tools to achieve resolution objectives; the degree of impact of bank resolution on the financial system, the operation of payment systems, confidence in the banking system, and the economy; the possibility of reducing the negative impact of the bank on other banks or the financial market through the use of resolution tools and powers; the possibility of cooperation and information exchange with foreign supervisory authorities; other factors deemed necessary by the Central Bank. The Central Bank does not take into account the following factors when assessing the possibility of bank resolution:
state financial assistance; covering liquidity shortages through loans provided by the Central Bank based on collateral, term, and repayment conditions, except for the emergency support of liquidity of commercial banks in accordance with Article 33 of the Law of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan." The rule established in the fourth part of this article does not exclude the use of state financial assistance in resolution. If the assessment of the possibility of bank resolution reveals the existence of certain obstacles to implementing resolution, the Central Bank requires the bank to develop a plan of measures to eliminate these obstacles within the specified period. The plan of measures developed by the bank to eliminate obstacles to resolution possibilities is agreed upon with the Central Bank, and the Central Bank takes measures to ensure its execution within the established deadlines. If the Central Bank concludes that the developed plan of measures is not capable of eliminating obstacles to resolution possibilities, it has the right to require the bank to:
limit the volume of risks; sell certain assets; limit or suspend the provision of bank services and the execution of current and (or) planned operations; reduce the stratification of owners of bank shares (from the direct owner to the beneficial owner) to no more than three levels, without affecting the property rights of direct owners of bank shares, the organizational structure and (or) activities of the bank and (or) banking group, as well as to establish a holding company, main company, or subsidiary company in the territory of the Republic of Uzbekistan to facilitate resolution and ensure the continuity of the bank's critical functions; provide additional information on a permanent basis or at the request of the Central Bank for resolution purposes.

Article 18. Conducting Valuation for Resolution

Before adopting a decision on resolution, the Central Bank ensures the valuation of the bank's assets and liabilities, as well as off-balance sheet items (hereinafter referred to as valuation in the text).
Valuation is conducted by an audit organization or valuation organization (hereinafter referred to as the valuer in the text) in accordance with the requirements established in Article 75 of the Law of the Republic of Uzbekistan "On Banks and Banking Activities." The report on valuation is based on the following accounting documents and other documents:
the bank's accounting balance sheet as of the date the valuation report is drawn up, as well as the report on profits and losses; analysis and valuation of the value of accounting for bank assets and liabilities; a list of liabilities reflected in the balance sheet and off-balance sheet accounts of the bank's accounting report, with the deadlines for their execution indicated; other information required by the Central Bank that is relevant for valuation. The report on valuation must reflect all losses of the bank at the time resolution began. The results of valuation are used for the following purposes:\nto obtain information about the financial consequences of implementing various resolution procedures for the bank, as well as to choose acceptable resolution tools; to classify creditors according to the order of satisfaction of claims in accordance with this Law, as well as to obtain information about the amount of funds that each category of creditors and shareholders may receive in the event of mandatory termination of the bank; to obtain information about the level of write-off and (or) conversion of relevant capital instruments and (or) liabilities; to obtain information about the assets, rights, liabilities and (or) shares being transferred (sold), as well as about the funds paid to the bank being resolved or its shareholders. The failure to conduct the valuation provided for in the first part of this article does not prevent the Central Bank from adopting a decision on resolution. In the presence of circumstances preventing full valuation in the manner provided for in the second, third, and fourth parts of this article, as well as other circumstances endanger the achievement of resolution objectives, the Central Bank or the valuer appointed by the Central Bank conducts a preliminary valuation of the bank's assets, liabilities, and off-balance sheet items. In this case, the preliminary valuation must be conducted as close as possible to the requirements of the second, third, and fourth parts of this article. If a preliminary valuation was conducted in accordance with the seventh part of this article, a final valuation fully complying with the requirements established in the second, third, and fourth parts of this article must be conducted in a short period by the valuer appointed by the Central Bank for the following purposes:
to justify the decision on write-off or satisfaction of claims of shareholders or creditors, or to increase or decrease the amount of payments made on liabilities; to transfer assets and liabilities to a bridge bank in addition to previously transferred assets and liabilities, or to return previously transferred assets and liabilities. The final valuation conducted in accordance with the eighth part of this article:
does not affect the payments made by acquirers when using the tool of transfer (sale) of assets and liabilities; does not affect the funds received by shareholders and creditors of the bank being resolved when carrying out write-off and (or) conversion for the purpose of using assets and liabilities. The brief content of the report on the conducted valuation is published on the official website of the Central Bank in the established manner. Complaints against the valuation cannot be considered separately from the decision on resolution. Use of the valuation provided for in this article for the purpose of determining the amount of compensation in accordance with Article 42 of this Law is not permitted. The procedure for conducting valuation in accordance with this article is established by the Central Bank.

Article 19. Procedure and Conditions for Selecting a Valuer

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The Central Bank forms a list of preliminary selected evaluators within the framework of preparing for bank resolution and for the purpose of timely adoption of a decision on resolution. Organizations included in the list of preliminary selected evaluators conclude a contract with the Central Bank providing for compliance with information security requirements. The list of preliminary selected evaluators is published on the official website of the Central Bank.

The inclusion of evaluators in the list of preliminary selected evaluators is carried out in an open and transparent manner.

For the purpose of conducting an assessment for the resolution of a specific bank, the Central Bank selects an evaluator from among the preliminary selected evaluators. The Central Bank sends a notification to the preliminary selected evaluators regarding their participation in the selection.

If there are no two or more evaluators, the Central Bank sends a notification to a single evaluator included in the list of preliminary selected evaluators.

If a notification has been sent to two or more evaluators, but a proposal comes from only one evaluator regarding the assessment, this evaluator is appointed to conduct the assessment.

If the evaluators in the list of preliminary selected evaluators refuse to conduct the assessment, and the Central Bank has not reached an agreement with any of the evaluators in this list in accordance with this article, the Central Bank may select another evaluator who is not included in the list of preliminary selected evaluators but meets the relevant requirements to conduct the assessment.

Evaluators are selected based on the following criteria:

• the evaluator's experience, knowledge, and skills;
• the period offered for conducting the assessment;
• the fee for conducting the assessment.

The Central Bank concludes an assessment contract with the selected evaluator for conducting the assessment.

All payments necessary for conducting the assessment specified in the contract for conducting the assessment are made from the account of this bank, if the bank's financial situation allows. Otherwise, the Central Bank covers such expenses from its own funds.

The procedure for including evaluators in the list of preliminary selected evaluators, the requirements for evaluators, as well as the rules for assessing evaluators are established by the Central Bank.

Section 3. Commencement of Resolution

Article 20. Grounds for Commencing Resolution

The presence of all the following grounds listed below is considered as grounds for commencing bank resolution:

• the bank's insolvency or a high probability of the bank's insolvency arising;
• the measures taken by the bank, the banking group, the holding company and (or) the shareholders of the bank, as well as the control measures applied by the Central Bank, are not capable of eliminating the situation indicated in the second subparagraph of the second part of this section, or there is no probability of ensuring such a result through these measures within six months;
• the necessity of resolution in accordance with this Law due to the bank's systemic importance or the impossibility of achieving one or more of the goals specified in the first part of Article 8 of this Law through the mandatory termination of a non-systemically important bank.

A bank is considered insolvent if any of the following situations occur:

• the bank is unable to satisfy the claims of its customers within seven days due to insufficient funds;
• the bank's liabilities exceed its assets;
• the bank's capital adequacy coefficients and (or) the amount of authorized capital decrease by fifty percent or more from the minimum amount established by legislation;
• the Central Bank identifies situations where the accurate reflection of information about the bank's financial situation in reports leads to the occurrence of the grounds indicated in the second, third, and fourth subparagraphs of the second part of this section;
• there are situations posing a threat to the full preservation of funds entrusted to the bank by depositors and creditors.

A high probability of the bank's insolvency arising is considered to exist if there are situations indicating the occurrence of the grounds indicated in the second and third subparagraphs of the second part of this article within six months.

Resolution procedures are applied separately from the control measures provided for in Chapter 6 of the Law of the Republic of Uzbekistan "On Banks and Banking Activity" and do not hinder the application of these measures.

The bank's supervisory board and (or) management must immediately notify the Central Bank if the situations indicated in the second part of this article occur or if there is a probability of their occurrence.

If it is established that the grounds indicated in the second and third subparagraphs of the first part of this article exist in the bank, but the ground established in the fourth subparagraph of the first part of this article does not exist, the Board of the Central Bank adopts a decision to withdraw the license (hereinafter referred to as the license in the text) granting the right to conduct banking activity of this bank and to terminate it mandatorily.

The Board of the Central Bank may adopt a decision on the resolution of a holding company if all of the following grounds exist:

• the insolvency of the holding company or a high probability of the holding company's insolvency arising;
• the measures taken by the holding company, the banking group and (or) the owners of the holding company are not capable of eliminating the situation indicated in the second subparagraph of this part of the article, or there is no probability of ensuring such a result through these measures within six months;
• the resolution of a bank under the control of the holding company has begun;
• the necessity of its resolution due to the impossibility of achieving one or more goals of resolution through the mandatory termination of the holding company.

A holding company is considered insolvent if any of the following situations occur:

• the holding company's capital adequacy coefficients and (or) the amount of authorized capital decrease by fifty percent or more from the minimum amount established by the Central Bank on the basis of consolidated supervision;
• the holding company is unable to fulfill its obligations to be performed within seven days due to a lack of funds;
• the Central Bank identifies situations where the accurate reflection of information about the financial situation of the bank or the holding company in reports leads to the occurrence of the grounds indicated in the second and third subparagraphs of this part.

A high probability of the holding company's insolvency arising is considered to exist if there are situations indicating the occurrence of the grounds indicated in the second and third subparagraphs of the eighth part of this article within a period not exceeding six months.

From the moment the Central Bank's decision on the resolution of the holding company enters into force until the completion of the resolution, the norms of the Law of the Republic of Uzbekistan "On Insolvency" are not applied to this holding company.

The cooperation procedure between the authorized body regulating the activities of the holding company and the Central Bank is established by the Central Bank before the commencement of resolution.

Article 21. Decision on Commencing Bank Resolution and Its Consequences

If the grounds for resolution specified in Article 20 of this Law arise, the Board of the Central Bank adopts a decision on the resolution of the bank, which provides for:

• the grounds for resolution;
• the brief content of the assessment report specified in Article 18 of this Law;
• the exact start time of the resolution;
• the resolution procedures planned to be applied to the bank;
• the use of state budget funds, if necessary.

After the adoption of the decision on the resolution of the bank, the Central Bank has the right to make changes to the resolution procedures provided for in this decision.

With the entry into force of the decision on the resolution of the bank, the powers of the general meeting of shareholders, the supervisory board, and the management of the bank being resolved pass to the Central Bank. In this case, the Central Bank has the right to terminate the powers of the members of the supervisory board of the bank being resolved, dismiss the members of its management, and (or) terminate the employment contracts concluded with them.

The duties of the supervisory board and (or) management of the bank being resolved are assigned by the Central Bank to one of the following:

• a special manager appointed by the Central Bank;
• the bank supervisory board and management appointed by the Central Bank.

The dismissed members of the management of the bank being resolved provide necessary assistance to the Central Bank, the special manager, and the bank supervisory board and management appointed by the Central Bank to achieve the goals of resolution.

With the entry into force of the decision on resolution, the Central Bank, the bank supervisory board and management appointed by it, and the special manager have the right to dispose without restrictions of all assets, property, automated information systems, accounting reports, and other reports of the bank, as well as all documents of the bank. The supervisory board and management or special manager of the bank being resolved, appointed by the Central Bank, have the right to terminate employment contracts concluded with the employees of the bank being resolved.

No severance pay is paid to management members whose employment contracts with the bank being resolved have been terminated.

The decision on resolution, as well as the use of resolution tools, does not grant the bank's counterparties the right to unilaterally suspend the current contract concluded with this bank, demand changes or termination of this contract, demand the realization of collateral security or advance settlement under this contract if the bank is fulfilling its obligations under this contract.

The decision on the resolution of the bank serves as the basis for responsible persons to make necessary changes to the relevant registries promptly.

For the purpose of notifying shareholders and other interested parties of the bank being resolved, the Central Bank and the bank against which a decision on resolution has been adopted publish information about this decision on their official websites and official pages on social networks on the day the decision on resolution enters into force. The form and content of this announcement are established by the Central Bank.

Article 22. Special Manager

The Central Bank has the right to adopt a decision on the appointment of one or more natural persons as the special manager or special managers (hereinafter referred to as the special manager in the text) of the bank being resolved at the same time as adopting the decision on resolution.

The decision on the appointment of a special manager must include at least the following:

• the surname, first name, and patronymic of the special manager;
• the start and end time of the special manager's powers;
• the powers and obligations of the special manager, including powers exercised only with the agreement of the Central Bank;
• the list of restrictions applied to the bank during the term of the special manager, if such restrictions exist;
• a description of restrictions, recommendations, and orders applied to the special manager, if they exist;
• issues related to the payment of the special manager.

The Central Bank concludes a separate contract with each special manager reflecting the rules specified in the second part of this article.

A person appointed as a special manager must be free from conflicts of interest with respect to the bank being resolved and must comply with the requirements applied to the members of the bank's management bodies and important employees in accordance with Article 36 of the Law of the Republic of Uzbekistan "On Banks and Banking Activity". An employee of the Central Bank cannot be appointed as a special manager.

If the financial situation of the bank being resolved allows, the funds to be paid to the special manager are covered from the bank's account. Otherwise, the Central Bank covers such expenses from its own funds.

Information about the appointment of a special manager is published on the official website of the Central Bank and on its official pages on social networks within one business day after the contract specified in the second part of this article is concluded.

The special manager acts in accordance with this Law, other legislative acts, as well as the instructions of the Central Bank in their activities.

The Central Bank has the right to terminate the employment contract concluded with the special manager in accordance with legislation and appoint another special manager based on the requirements of this article.

From the moment the special manager is appointed, all operations carried out in the name of the bank or based on the instruction of the bank without the agreement of the special manager or a person appointed by them during the term of their activities do not have legal force and do not produce legal consequences.

The special manager is accountable only to the Central Bank, and the Central Bank monitors the performance of its duties.

The Central Bank has the following powers to monitor the activities of the special manager:

• to give recommendations to the special manager on the main directions of their activities during their activities, including proposing a plan of main measures;
• to give instructions to the special manager that must be executed;
• to request any information from the special manager about their activities and the activities of the bank;
• to extend or terminate the term of the special manager's powers in advance.

The special manager takes all measures necessary to achieve the goals of resolution and to implement the measures provided for in the decisions and orders of the Central Bank.

The special manager must immediately notify the Central Bank about all situations that may negatively affect the achievement of the goals of resolution and the implementation of resolution procedures.

The special manager submits a report to the Central Bank at least once every quarter, as well as upon the request of the Central Bank, regarding the financial situation of the bank being resolved and the actions carried out by the special manager during their activities.

The procedure for appointing a special manager to the bank being resolved and the rules related to the activities of the special manager are established by the Central Bank.

Section 4. Resolution Tools

Article 23. Types of Resolution Tools

Resolution tools consist of the following:

• transfer and (or) sale of assets and liabilities;
• establishment of a bridge bank;
• write-off and (or) conversion.

The Central Bank selects appropriate resolution tools for achieving resolution goals, taking into account the state of the financial system.

The Central Bank may apply resolution tools jointly or separately.

If the Central Bank applies only the resolution tools specified in the second and third subparagraphs of the first part of this article for the partial transfer (sale) of the assets, rights, and liabilities of the bank being resolved, the Central Bank withdraws the license of this bank, which retains remaining assets, rights, and liabilities, and adopts a decision to terminate the bank mandatorily in accordance with this Law.

Consent or permission from state bodies and organizations, legal and natural persons, as well as shareholders and creditors of the bank being resolved, is not required when applying resolution tools.

Article 24. General Rules on the Tool of Transfer (Sale) of Assets and Liabilities

The tool of transfer (sale) of assets and liabilities involves the transfer (sale) of shares, assets, rights, and (or) liabilities of the bank being resolved to the recipient.

The Central Bank may adopt a decision on the transfer (sale) to one or more recipients (except for the bridge bank) of the following:

• new shares issued by the bank being resolved;
• all or part of the assets, rights, and (or) liabilities of the bank being resolved.

In the transfer (sale) of shares, assets, rights, and (or) liabilities:

• the liabilities of the bank being resolved are transferred to the recipient in the order of satisfying creditors' claims specified in Article 64 of this Law;
• the assets and rights of the bank being resolved, as well as funds provided from the Deposit Guarantee Fund of the Deposit Guarantee Agency (hereinafter referred to as the Guarantee Fund in the text) and the resolution fund, if they are insufficient to fulfill the bank's obligations to creditors of one type, these obligations are transferred proportionally to the amount of claims of these creditors.

For the purpose of ensuring financial stability or preventing a very low level of asset value, the Central Bank has the right to selectively transfer certain types of liabilities within the framework of creditors of one type specified in Article 64 of this Law, deviating from the rules specified in the second and third subparagraphs of the third part of this article. In this case, the reason for deviation from the rules must be justified and documented by the Central Bank in the appropriate manner.

The following are not required in the transfer (sale) of assets, rights, and (or) liabilities:

• obtaining the consent of shareholders, depositors, and creditors of the bank being resolved, as well as other interested parties (in particular, persons who provided collateral security and guarantees to the bank being resolved);
• making changes to contracts concluded by the bank being resolved with depositors and creditors, as well as other parties (in particular, persons who provided collateral security and guarantees to the bank being resolved), to indicate the new party to the contracts;
• the bank being resolved concluding new bank account contracts with depositors on behalf of the recipient bank.

The transfer (sale) of shares, assets, rights, and (or) liabilities is carried out based on a transfer (sale) contract. In this case, an acceptance certificate containing information about the shares, assets, rights, and (or) liabilities being transferred (sold) is attached to the transfer contract.

The recipient submits the acceptance certificate together with the contract on the transfer (sale) of shares to the body accounting for securities rights for making changes to the relevant registry.

The transfer (sale) of shares, assets, rights, and (or) liabilities leads to the transfer of ownership rights to the recipient. In this case, the recipient becomes the legal successor of these rights and obligations from the moment the contract is signed.

The contract on the transfer (sale) of shares, assets, rights, and (or) liabilities enters into force from the moment of signing and serves as the basis for carrying out all legal procedures related to the sale.

After the contract on the transfer (sale) of shares, assets, rights, and (or) liabilities is concluded, the shareholders and creditors of the bank being resolved do not have the right to demand any compensation from the recipient for the transferred (sold) shares and (or) other claims.

After the transfer (sale) of assets, rights, and (or) liabilities, the Central Bank may, in agreement with the recipient:

• return part of the transferred (sold) assets, rights, and (or) liabilities to the bank being resolved (including the bank being resolved during the process of mandatory termination);
• transfer (sell) additional assets, rights, and (or) liabilities from the bank being resolved (including the bank being resolved during the process of mandatory termination) to the recipient.

The transfer (sale) of assets, rights, and (or) liabilities specified in the first part of this article must be carried out in compliance with the transfer (sale) procedure specified in this article.

Article 25. Application of the Tool of Transfer (Sale) of Assets and Liabilities

The Central Bank takes measures to transfer (sell) the shares, assets, rights, and (or) liabilities of a bank under resolution.

Assets, rights, and (or) liabilities may be transferred (sold) separately. Expenses related to the transfer (sale) of assets and liabilities are covered by the bank under resolution, if its financial condition allows. Otherwise, the Central Bank covers such expenses from its own funds.

The transfer (sale) of shares, assets, rights, and (or) liabilities is carried out in compliance with the following requirements:

• transparency of the transfer (sale) process;
• absence of conflicts of interest in the transfer (sale) process;
• no preferential treatment among potential acquirers in the transfer (sale) process;
• consideration of the need for prompt resolution measures;
• transfer (sale) of shares, assets, and rights at a high price.

The Central Bank has the right to transfer (sell) shares, assets, rights, and (or) liabilities even if only one potential acquirer applies.

The Central Bank may transfer (sell) shares, assets, rights, and (or) liabilities directly to potential acquirers without public announcement in the following cases:

• when public announcement may hinder the achievement of resolution objectives;
• when at least two potential acquirers are involved.

The Central Bank is authorized to carry out necessary preparatory measures for the transfer (sale) of shares, assets, rights, and (or) liabilities before a resolution decision is adopted. Preparatory measures include establishing direct contact between the bank under resolution and potential acquirers, as well as other actions necessary for the effective use of the instrument for the transfer (sale) of assets and liabilities.

The procedure for applying the instrument for the transfer (sale) of assets and liabilities is established by the Central Bank.

Article 26. Conditions for the Application of the Instrument for the Transfer (Sale) of Assets and Liabilities

The acquirer of the assets, rights, and (or) liabilities of a bank under resolution may only be a bank.

Before concluding a purchase and sale agreement for the acquisition of controlling ownership in the bank under resolution, the acquirer must obtain preliminary permission from the Central Bank to acquire the bank's shares.

In resolution, the Central Bank may establish a simplified procedure for granting preliminary permission to acquire the shares of the bank under resolution.

To ensure the immediate sale of the shares of the bank under resolution and to prevent hindrance to the achievement of resolution objectives, a purchase and sale agreement for the shares of the bank under resolution may be concluded before preliminary permission to acquire the bank's shares is granted. In this case, the voting rights for the shares are retained by the Central Bank. The exercise of this right is not mandatory for the Central Bank, and failure to use it does not entail legal consequences for the Central Bank.

After obtaining preliminary permission to acquire the bank's shares, the voting rights for the shares pass to the acquirer.

If the Central Bank refuses to grant preliminary permission to acquire the bank's shares, the voting rights for the shares remain with the Central Bank, and the Central Bank requires the acquirer to sell the shares to another person within three months.

If the shares are not sold to another person within three months, the purchase and sale agreement provided for in the fourth part of this article is terminated, and the Central Bank adopts a decision to carry out certain resolution procedures against the bank under resolution, or to compulsorily terminate this bank, or to apply other measures in accordance with the Law of the Republic of Uzbekistan "On Banks and Banking Activity."

The guarantees provided for in paragraph 7 of this chapter apply to the transfer (sale) carried out within the framework of applying the instrument for the transfer (sale) of assets and liabilities.

Payment systems in which the bank under resolution participates and stock exchanges of which the bank is a member must provide the acquirer provided for in the first part of this article with the opportunity to exercise all rights under the contract concluded with the bank under resolution, provided that the acquirer complies with the requirements established by these payment systems and stock exchanges.

If the acquirer does not comply with the participation or membership requirements established by the payment systems and stock exchanges provided for in the ninth part of this article, the Central Bank may grant the acquirer permission to connect to payment systems or stock exchanges for a period of no more than six months.