Uzbekistan Introduces Amendments to Banks’ Capitalization Requirements and Liberalizes Access to Ownership by Non-Residents

New Law Aims to Increase Capitalization Requirements and Attract Foreign Investments

On April 19, Uzbekistan’s President signed Law No. ЗРУ-831, which came into effect on April 20. The law amends the “Law on Banks and Banking Activities” to increase capitalization requirements for banks and liberalize access to their ownership by non-residents.

Increased Capitalization Requirements

The minimum charter capital requirement for banks in Uzbekistan has been increased from UZS 100 billion to UZS 500 billion. The Central Bank of Uzbekistan will have the right to set a different timeline for compliance with this requirement in cases of privatization of banks with state shares.

Liberalized Ownership Access by Non-Residents

The liberalization of ownership access by non-residents aims to attract foreign investments into the banking sector. The restriction on bank share ownership by non-residents, indirect owners, and ultimate beneficiaries has been lifted, provided that:

• They are registered or reside in territories that provide preferential tax treatment.
• They do not require disclosure of the ultimate beneficiary owner’s identity.

However, the following restrictions still apply:

• Direct potential shareholders of a bank: individuals and legal entities are prohibited from being founders or shareholders of a bank in Uzbekistan if their country of residence or registration provides a preferential tax regime and/or does not require disclosure of the ultimate beneficial owner’s identity.
• Individuals/ legal entities who have procured shares in an Uzbek bank on a foreign stock market are exempt from this prohibition.

Expected Impact

The increased capitalization requirements and liberalized ownership access are expected to boost the country’s banking sector, making it more attractive to foreign investors and enhancing its competitiveness in the region.