In 2025, Uzbekistan adopted a new Law “On Limited Liability Companies”, representing one of the most significant developments in the country’s corporate legislation in recent years. The new Law goes far beyond technical amendments and introduces a fundamentally updated approach to the regulation of LLCs in Uzbekistan, strengthening corporate governance, transparency, and the accountability of company participants and management bodies.
The Law is largely aligned with modern international corporate governance standards and is expected to increase the investment attractiveness of Uzbek companies, particularly for foreign investors and large corporate groups.
Regulation of Subsidiary and Affiliated Companies in Uzbekistan
One of the key innovations of the new Law is the more detailed regulation of corporate groups. For the first time, the Law systematically establishes the legal status of subsidiary and affiliated companies, as well as the specifics of their participation in corporate governance. Under the new rules, a company may be recognised as a subsidiary if another company has the ability to determine its decisions through dominant participation in the charter capital, contractual mechanisms, or other forms of control.
At the same time, subsidiaries are prohibited from owning participatory interests in the parent company or voting such interests. The Law also introduces joint and subsidiary liability of the parent company in cases where losses are caused to the subsidiary or where the subsidiary is driven into bankruptcy. Separate rules are also introduced for affiliated companies. In particular, a company may be recognised as affiliated if another company owns more than 20% of its voting participatory interests. These restrictions are aimed at preventing conflicts of interest and abuse of corporate control.
New Corporate Governance Standards for LLCs
Strengthening the Role of the Supervisory
Board The new Law significantly expands the powers of the supervisory board. Members of the supervisory board are now elected for a term of three years with the possibility of unlimited re-election. In addition, the Law introduces requirements for independent directors and establishes restrictions on vote delegation and participation of executives of subsidiary companies in the supervisory board of the parent company. As a result, the supervisory board becomes a полноценный instrument of corporate oversight and strategic management.
Fiduciary Duties of Executives
One of the most notable changes is the introduction of fiduciary duties for company executives. Executives are now required to act in good faith and exclusively in the interests of the company, avoid conflicts of interest, refrain from competing with the company, and not use company assets or their official position for personal benefit. These provisions significantly increase the personal liability of business managers in Uzbekistan.
Protection of Minority Participants
The Law also strengthens the protection of minority participants in LLCs. Participants who do not possess substantial influence over decisions of the general meeting are now entitled to establish committees aimed at protecting their interests. This may become particularly important for companies with several participants or complex corporate structures.
Liability of Majority Participants
Special attention is also given to majority participants. The new Law expressly prohibits abuse of a dominant position within the company. Moreover, majority participants may now be held liable for damages caused to the company or other participants as a result of bad faith conduct or abuse of control.
Related Party Transactions
One of the key changes introduced by the new Law is the creation of a separate chapter dedicated entirely to affiliated persons and related party transactions. For the first time, the Law comprehensively regulates this area by introducing a closed list of affiliated persons, mandatory disclosure of conflicts of interest, procedures for review and approval of transactions, and requirements for independent valuation of major transactions. Under the new framework, an affiliated person must notify the company in advance about its interest in a proposed transaction.
Such transactions are then subject to mandatory review by the supervisory board or the general meeting of participants. In certain cases, the legislation additionally requires an independent valuation of the transaction. The new Law also strengthens the rights of participants to monitor such transactions. In particular, participants holding at least 5% participatory interest are now entitled to independently review related party transactions and challenge them in court where grounds exist.
What Does the New Law Mean for Businesses in Uzbekistan?
The new Law substantially changes corporate practice in Uzbekistan and establishes a more modern framework for doing business. On the one hand, it makes Uzbek companies more understandable and attractive for investors, strengthens the protection of participants’ rights, and introduces modern corporate governance standards. These changes may be especially important for foreign investors, holding structures, joint ventures, large family-owned businesses, and companies with state participation.
Overall, the Law creates a more transparent and predictable corporate environment, which is expected to positively affect the investment climate in Uzbekistan. On the other hand, the Law significantly increases requirements related to corporate discipline and internal control. Executives and supervisory board members now bear increased responsibility for their decisions, while intra-group transactions become subject to stricter regulation and oversight. As a result, businesses in Uzbekistan will need to pay considerably more attention to corporate governance, internal procedures, and legal compliance.
Conclusion
The new Law “On Limited Liability Companies” represents one of the most substantial reforms of corporate legislation in Uzbekistan in recent years. The Law not only modernises the regulation of LLCs, but also significantly aligns Uzbekistan’s corporate framework with international standards. The adopted changes are aimed at increasing business transparency, strengthening corporate governance, protecting the rights of participants, and improving the investment attractiveness of Uzbek companies.
At the same time, the Law considerably increases the responsibility of executives, majority participants, and management bodies. In practice, the new Law will require businesses to review their corporate structures, internal procedures, charters, and decision-making mechanisms. Therefore, companies operating in Uzbekistan are advised to proactively adapt their internal documentation and corporate processes to the new legislative requirements.