On Amendments to the Law of the Republic of Uzbekistan 'On Banks and Banking Activity'

Law of the Republic of Uzbekistan

On Amendments to the Law of the Republic of Uzbekistan "On Banks and Banking Activity"

Adopted by the Legislative Chamber on February 7, 2023 Approved by the Senate on April 7, 2023

In recent times, a number of measures have been implemented in the country aimed at ensuring financial stability and the sustainability of the banking sector, creating conditions for banks to provide accessible and high-quality financial services, as well as increasing public trust in banks.

At the same time, there is a need to create additional legal conditions to ensure the stability and sustainability of the banking sector, increase the level of bank capitalization and expand their resource base, as well as attract foreign investment into this sector.

This Law introduces amendments to the Law of the Republic of Uzbekistan "On Banks and Banking Activity", providing for the introduction of requirements for a phased increase in the minimum size of the authorized capital of a bank from one hundred to five hundred billion sums by January 1, 2025. In addition, restrictions on the acquisition of bank shares by non-residents are partially lifted by granting them the right to acquire shares placed on foreign stock markets.

This Law will contribute to further increasing the level of bank capitalization and expanding their resource base, expanding their participation in the processes of structural transformations of the economy, as well as attracting foreign investment into the banking sector.

Article 1. Make the following changes to the Law of the Republic of Uzbekistan dated April 25, 1996 No. 216-I "On Banks and Banking Activity" (as amended by the Law of the Republic of Uzbekistan dated November 5, 2019 No. ZRU-580) (Vedomosti palat Oliy Majlisi Respubliki Uzbekistan, 2019, No. 11, art. 788; 2020, No. 1, art. 1; 2021, appendix to No. 4, No. 10, art. 968):

1. in Article 13: rephrase the first part as follows: "The minimum size of the authorized capital of a bank must be: up to September 1, 2023 - one hundred billion sums; from September 1, 2023 - two hundred billion sums; from April 1, 2024 - three hundred fifty billion sums; from January 1, 2025 - five hundred billion sums"; replace the fourth part with fourth and fifth parts of the following content: "The authorized capital of a bank created or reorganized in the form of merger, division, and separation is formed based on the minimum size of the authorized capital of a bank provided for in the first part of this article, on the day of creation or reorganization of the bank. At the same time, the minimum size of the authorized capital of the bank must be formed by the founders of the bank at the time of submitting an application for state registration of the bank and issuing a license. Funds contributed to the authorized capital of the created bank are credited to a savings account opened in the bank. Banks must bring the size of their authorized capital into compliance with the requirements specified in the first part of this article within the timeframes established by the first part of this article. In the privatization of banks with a state share in the authorized capital by full sale of the state share to non-residents, the Board of the Central Bank has the right to establish other timeframes than those established for bringing the authorized capital of the bank into compliance with the minimum size specified in the first part of this article"; consider the fifth part as the sixth part;

2. rephrase the fifth part of Article 17 as follows: "Founders and shareholders of a bank cannot be legal entities registered, and individuals residing in a state or territory that provides a preferential tax regime and (or) does not provide for disclosure of the identity of the ultimate beneficial owner and provision of information in the course of financial operations (except for legal and physical persons who have acquired shares of the bank on foreign stock markets)";

3. in Article 22: exclude the fifth part; consider the sixth through tenth parts as the fifth through ninth parts, respectively.

Article 2. The Central Bank of the Republic of Uzbekistan and other interested organizations shall ensure the implementation, dissemination to executors, and explanation to the population of the essence and meaning of this Law.

Article 3. The Cabinet of Ministers of the Republic of Uzbekistan: bring government resolutions into compliance with this Law; ensure the review and cancellation by republican executive bodies of their normative legal acts contradicting this Law.

Article 4. This Law enters into force from the day of its official publication. The provisions of paragraph 1 of Article 1 of this Law also apply to legal relations arising before the introduction of this Law into force.

President of the Republic of Uzbekistan Sh. MIRZIYOYEV city of Tashkent, April 19, 2023, No. ZRU-831 (National legislative database, 20.04.2023, No. 03/23/831/0219)