LAW OF THE REPUBLIC OF UZBEKISTAN ON FOREIGN INVESTMENT

Article l.Objectifs of the Act

This Law determines the basic principles and the legal formalities of investments in the Republic of Uzbekistan. The main objectives of this Act are:

– Assistance to economic development of Uzbekistan and its integration into the global economic system by stimulating the inflow of foreign investment;

– Attraction and effective use of foreign financial, material, intellectual and other modern technologies and know-how foreigners.

Article 2. Legislation for Foreign Investment

Foreign investment legislation consists of this Act, the law of “Guarantees and protective measures for the rights of foreign investors”, and other legislative acts. If the regulations established by the Treaty of Uzbekistan, are different than а those established by the legislation on foreign investment treaty regulations are in force.

Article 3. Foreign Investments

All kinds of material goods and non-material and their rights, including the rights of intellectual property, and other profits made from а foreign investment by foreign investors in start-ups and other activities not prohibited by law, and particularly for а get profits (income), are seen in Uzbekistan as foreign investment.

Earnings placed by foreign investors as reinvestment in entrepreneurship and other activities, under this Act, consists of all assets from investments in Uzbekistan, including profits, interest , dividends, royalties, bonuses, commissions and salaries licenses, services rendered, technical assistance and other types of payments.

Article 4. Foreign Investors

Investors in Uzbekistan can be:

– Foreign countries, their administrative or local authorities;

– International organizations, created in accordance with, s governmental agreements and contracts, and international public rights of workers;

– Legal persons or other organizations of people, organizations or associations created, that are in compliance with legislative acts of foreign countries;

– Individuals citizens of foreign countries, persons without nationality and citizens of Uzbekistan а permanent residents abroad.

Article 5. Forms of foreign investments

Foreign investment by foreign investors in the Republic of Uzbekistan, can be made:

– By reports in the statutory funds and other property companies, people associations, banks, insurance, or various companies, created in conjunction with legal entities and (or) physical Uzbekistan

– Through the creation and development of associations of persons and companies, banks, insurance agencies and various companies owned by foreign investors their entirety;

– The acquisition of property, shares and other financial assets, including claims, issued by residents of the Republic of Uzbekistan;

– By intellectual property rights, including copyrights, patents, trademarks, mod7les helpful, industrial designs, signs and know-how, as well as a good business reputation;

– By concessions, including concessions for exploration, exploitation, extraction or exploitation of resources;

by ownership rights outlets and utilities services, real estate and land, as well as property and land use (including leases), and natural resources.

Foreign investors can make investments in Uzbekistan in other forms, in line with current legislation.

Changes in the ways in which the initial or repeated investments were made, will not change their investment qualification.

Article 6. Foreign Investment Enterprises

Foreign investors can create in Uzbekistan enterprises to foreign investment and have the rights, guarantees and privileges granted to them by the legislation of the Republic of Uzbekistan.

Companies with foreign investments in the Republic of Uzbekistan, are companies with foreign investment represents less than 30% of shares (funds, shares) or statutory funds. They are in effect in all legal forms in accordance with the legislation of the Republic of Uzbekistan. One of the contractors of the company with foreign investments should be one of the investors referred to in paragraphs 2,3 and 4 of Article 4 of this Act.

The creation of a company with foreign investments can be made either by the institution or by the acquisition of shares (updates, shares) in the company instituted before without foreign investment or by obtaining a whole, there including privatization.

The company with foreign investments obtains the rights of a legal person а from the time of registration by the government. Registration procedures are determined by the Cabinet of Ministers of the Republic of Uzbekistan.

Article 7. affiliates, subsidiaries and representations of foreign investment

Companies with foreign investments have the power to create affiliates, subsidiaries rights of a legal person, as well ‘: the representations and subdivisions without the rights of a legal person, with the observation of legislation of the Republic of Uzbekistan. The existence of structures, named above, is possible outside the Republic of Uzbekistan.

Article 8. Groupings of economic institutions

Companies with foreign investments can create, in accordance with the legislation of the Republic of Uzbekistan, on a voluntary basis, associations, corporations, consortia and other economic institutions, as well as being members а full of establishments activity.

Article 9. Legal regime of foreign investments in the territory of the Republic of Uzbekistan

The State guarantees the protection of all rights of investors in the territory of the Republic of Uzbekistan.

Investors and foreign investment can have equal rights and legitimate regime, a permanent and full protection and security. Such a system can not be less beneficial than that established by the treaties of the Republic of Uzbekistan.

The legal regime of foreign investment can not be less beneficial than to own investment regime of physical and legal persons of the Republic of Uzbekistan.

The legislation of the Republic of Uzbekistan may contain, in accordance with international human rights standards, limitations or bans investment in certain industrial sectors and activities, for the purposes of defending the national interests of the state.

the law and the treaties of the Republic of Uzbekistan guarantees foreign investors the restoration of the rights and interests, if they will come а violated.

Article 10. Rights of foreign investors

The foreign investor in accordance with the international rights and laws of the Republic of Uzbekistan, has the right to:

– Independently determine the amount, type and orientation of investments;

– Conclude treaties with physical and legal persons to invest;

– Hold, use and disposal of its investments and for their results. Do their procurement in accordance with the legislation of the Republic of Uzbekistan, to natural or legal persons. The relationship of the parties, during the procurement are regulated by contract;

– Freely decide to patent his inventions, models of utility and industrial designs, resulting from investments in Uzbekistan а abroad and in the Republic of Uzbekistan;

– Have, independently, the investment income (including its unobstructed repatriation);

– Make a call of funds by the credits and loans in the Republic of Uzbekistan;

– Use the local monetary means in their account for the purchase of foreign currency in the local exchange market;

– Buy the rights to the land in the cases and conditions provided by law;

– Use the property and all rights to property held as property, а as security for all types of commitments, including commitments oriented Call of funds in accordance with the legislation of the Republic of Uzbekistan ;

– Obtain adequate compensation for requisition of investments and other assets;

– Compensation for damage caused unlawful acts (crimes) and decisions taken by government leaders, organizations of governmental authority and their representatives.

Foreign investors also have other rights provided for by the legislation of the Republic of Uzbekistan.

Article 11. Obligations of foreign investors

Foreign investors in their investments in the territory of the Republic of Uzbekistan shall:

– To respect the law of the Republic of Uzbekistan;

– To pay their impфts and perform other statutory payments of the Republic of Uzbekistan, to be responsible for commitments relationships with their investments;

-to have the expertise conclusions investment projects concerning compliance with environmental standards, health and others, from the legislation of the Republic of Uzbekistan;

-to refrain from all forms of direct and indirect influences on partner investment or government authorities and bodies of local power, to obtain additional privileges and advantages vis а vis its competitors.

The foreign investor is responsible for any violation of the legislation of the Republic of Uzbekistan а legal title and responds on its property, а as owner, can be punished in accordance with the legislative acts of the Republic of Uzbekistan.

Article 12. Economic activity of foreign investors

The economic activity of foreign investors, including the creation of business, sales, reorganization or liquidation of enterprises with foreign investments, their affiliates, subsidiaries or other structures, and their economic associations and all companies , corporate training funds to foreign investment, lease agreements signatures and other contracts are regulated by the laws of the Republic of Uzbekistan.

Companies with foreign investments pay the impфts and other payments in accordance а the legislation of the Republic of Uzbekistan, including insurance and social security of their employees, who are citizens of the Republic of Uzbekistan. All expenses of the companies to foreign currency foreign investments must be made on their own cash flow, as well as other sources of foreign exchange earnings, legalized by the legislation of the Republic of Uzbekistan. Their self-financing may be provided as part of creation of consortia, of undertakings and other structures. Companies with foreign investments independently conduct their import-export, in accordance with the legislation of the Republic of Uzbekistan. Their own export production does not require an export license and a quota. Companies with foreign investments have the right to import unlicensed products for their own needs, as а the legislation of the Republic of Uzbekistan. Identification procedures of their production, export and import for their own needs, are established by the Cabinet of Ministers of the Republic of Uzbekistan.
Material goods imported in Uzbekistan by foreign investors for their own production needs and personal needs of investors and citizens of foreign countries, are not taxed.

The breyetage and introduction into practice of industrial models belonging to foreign investors placed as investment and enterprises with foreign investments, are determined according to the procedures established by the legislation of the Republic of Uzbekistan.

Companies with foreign investments independently establish the list, the order and the use of company funds. Personnel working relationships with foreign investors are regulated by the legislation of the Republic of Uzbekistan. Insurance and social security company personnel to foreign investment (except insurance and social security of foreign personnel) are regulated by the legislation of the Republic of Uzbekistan.

Companies with foreign investments may acquire land in the framework and conditions determined by law.

In the case of transfer of building ownership, objectives, rights to land are also transferred according to the procedures and conditions established by the legislation of the Republic of Uzbekistan.

Renting property to foreign investors is performed by the tenant after an agreement and in accordance а legislation.

Accounting and reporting of the companies with foreign investments must be made according to the standards of the legislation of the Republic of Uzbekistan. Accounting and financial records must be established in local currencies, а their discretion in convertible currencies.

Article I3.Contrats concession

The grant of a right of prospecting, exploration, exploitation of resources and various economic activities is determined by the concession contract between foreign investors and the authorities concerned, according to the procedures of the law.
The concession is allowed in all areas and types of activities, if they are not prohibited by the laws of the Republic of Uzbekistan, and if they meet the purpose of the concession contracts.

Article 14. Recruitment of foreign personnel

Foreign investors foreign companies have the right under the law of а Uzbekistan, establish independently a contract of employment for people of all foreign countries and stateless persons residing outside the territory of the Republic Uzbekistan, for the purpose of investing activities. Individuals may come and stay in Uzbekistan for the duration of the employment contract and have their corresponding multiple visas.

Labor remuneration, leave and pensions are а individually determine employment contracts.

Wages and other statutory remuneration may be transferred to foreign countries without any limit, after payment of impфts and various types of regular mandatory payments.

The payments of social security and social insurance are made by foreign investors and companies with foreign investments directly into the body concerned in the country of residence of the employee.

Article 15. Freedom of movement

Foreign investors, their representatives and foreign employees, located in Uzbekistan to an investment activity, can move freely throughout the territory of the Republic of Uzbekistan.

Some limitations may occur, exceptionally, in the context of the sыreté of the state, а provided that such limitations are provided for by the legislation of the Republic of Uzbekistan.

Article 16. Investment insurance

Insurance of investments and risks of foreign investors are voluntary.

Foreign investors enjoy legal rights in Uzbekistan insurance with the same title as local investors.

Insurance of investments on political and other risks can be made by international insurance, international export credit agencies and the various insurances.

Insurance of foreign investments are not liable for obligations of the Republic of Uzbekistan. The state is not responsible for the insurance obligations, а except in cases stipulated by the agreements of the parties.

Insurance of investments guarantee the protection of political and other risks, including:

– The expropriation of the property, as well as all legislative or administrative measures, leading а confiscation of the property or its alienation, loss of contrфle or earnings;

– Foreign currency transfer restriction outside the country;

– The introduction of changes in legislation discriminatory vis а vis certain groups of investors;

– Intervention by government authorities, local government bodies and their representatives in the contractual relations of investors;

– Wars, popular revolts and similar events;

– Political risks and the various risks to investors and foreign investment.

Article 17. Guarantees of commitments

The property and rights to foreign investment companies property may be used as collateral of all types for their liabilities, including borrowings. As security commitments may include its trade property and services rendered, as well as its real estate and land, rights to bвtiments, buildings, equipment, as well as all other duties on various goods.

All property and rights to property, which the investor is owner, regardless of their locations, can be presented as guarantee commitment.

Article 18. Reorganization or liquidation of companies with foreign investments

Reorganization or liquidation of companies with foreign investments is done according to the legislative procedures of the Republic of Uzbekistan.

Companies with foreign investments, which have not formed their statutory background, into constituent figures, within a year, а from the date of their government record, are recognized as bankrupt and liquidated in accordance with procedures legislative.

Corporate assets to foreign investment that are in liquidation shall be subject to taxation in accordance with established procedures.

The remaining portion is distributed among the contributors of society, in proportions of their share in the property, if other conditions were not included in the statutory documents.

The foreign investor, in case of withdrawal of the company to foreign investment or liquidation, is entitled to reimbursement of its share of financial assets а title or dealer and proportionate to the market price.

A reorganization or liquidation а company to foreign investment rights and interests of the staff, including the contract was interrupted, are warranted in accordance а legislation

Article 19. Commitments of the State on foreign investment

The state administrative authorities and bodies of local authorities are responsible for commitments in foreign investors contracts signed by accredited persons of the legislature of the Republic of Uzbekistan.

The State is not liable for the residents of the commitments in Uzbekistan, who appealed to foreign investment, а the exception of those that have been legislatively guaranteed by the state.

Article 20. Functions of the organizations, calling for foreign investment

In order to attract, realize and protect foreign investment, the government agency, administrative authorities and local public authorities and non-governmental organizations concerned shall:

– Prepare the information and inform the possibilities and conditions for investment in the Republic of Uzbekistan;

– Consult potential investors on legal and economic issues, and others, and to aid and assistance to the questions asked;

– To represent, in the context of its power, the Republic of Uzbekistan in international relations foreign investment

– To perform the functions directed to the attraction, realization and protection of foreign investment.

Article 21. Powers of the authorities on the contrфle foreign investors

Contrфle the application of the requirements of the legislation of the Republic deJ’Ouzbékistan on investors and companies to foreign investment, is performed by the proxies of the Republic of Uzbekistan.

Trade secret must be ensured by contrфle organizations. The trade secret revelation continued with the legislation of the Republic of Uzbekistan.

Article 22. Conflicts

In the case of non-conformity between this Act and other legislative acts or treaties of the Republic of Uzbekistan, priority is given to the most favorable provisions to foreign investors.

The President of the Republic of Uzbekistan

Mr. I. Karimov

Tashkent April 30th, 1998