3. RIGHTS AND BENEFITS TO THE PURCHASE OF SHARES AND FACILITIES

               The content of guarantees, benefits and rights

Act legislation 

54

It shall be established, that:

•   purchase by foreign investors of the enterprises or stocks and shares are made for the hard currency, and investment obligations are formed both in a foreign currency, and in form of supplies of the modern technological equipment, the cost of which is defined in the established order;
•  assets in a foreign currency or the technological equipment, received by the privatized enterprise on account of investment obligations of a foreign investor, are not object of taxation by income (profit) and value added taxes.       Paragraphs 1-2, 5 of the Clause 4 of the Resolution of the Cabinet of Ministers as of 18.11.1998 №477 "On measures to stimulate attraction of the foreign capital during privatization of a state property".

Paragraphs 1-2, 5 of the Clause 4 of the Resolution of the Cabinet of Ministers as of 18.11.1998 №477 "On measures to stimulate attraction of the foreign capital during privatization of a state property".

55

The State Commission for conducting tenders on sale of the state-owned property to foreign investors, in separate cases, when involving investments into the enterprises possessing strategic value for the economy is granted the right:

•   to adopt the decision on re-structuring of accumulated before sale of the enterprise (stocks and share) debts to the state budget and the state enterprises, including a delay of payments on them; 
•  to establish upon the request by the foreign investor the moratorium on increase of requirements on nature protection parameters for the period of setting-up of new capacities and production.

Clause 3 of the Resolution of the Cabinet of Ministers as of 26.11.1999 №511 "On measures to denationalize and privatize the enterprises with participation of foreign investors in 2000-2001"

56

During attraction of the investments, including the foreign ones, into the increase of the charter fund of joint-stock companies, the decrease of state-owned share in it is allowed, except for enterprises the size of state-owned share in which is fixed by separate Resolutions of the Government.

The paragraph 5 of Clause 2 of the Resolution of the Cabinet of Ministers as of 09.03.2001 №119 "On further measures to denationalize and privatize the enterprises with participation of foreign investors in 2001-2002".

57

Non-residents of the Republic of Uzbekistan shall be permitted to use amounts in national currency present in their accounts at clearance chambers of commodity and raw material exchanges and joint-stock company “UzKurgazmaSavdo”, in “Loro” correspondent foreign bank accounts opened at authorized banks of the Republic of Uzbekistan, special accounts at clearance chambers of exchanges;

- for purchasing stocks and shares released by domestic issuers both at primary and secondary markets;

- at performing combined payment for state-owned property acquired by a decision of the State Committee for Conducting Tender Sales.

Paragraph 3 of the Resolution by the Cabinet of Ministers dated March 9, 2001 No 119 “On further measures aimed at privatization of enterprises with attraction of foreign investors during the period of 2001-2002”  

58

To grant the State Tender Commission the right to adopt decisions upon proposal by the State Property Committee of the Republic of Uzbekistan previously agreed with (branch) Complexes of the Cabinet of Ministries related to flexible application by foreign investors of various forms of payment for the share packages and objects being purchased by them.

Paragraphs 1-2 of Clause 4 of the Resolution of the Cabinet of Ministers as of 09.03.2001 №119 "On further measures to denationalize and privatize the enterprises with participation of foreign investors in 2001-2002".

59

State Property Committee of the Republic of Uzbekistan:

•   upon previous agreement with the Complexes of the Cabinet of Ministries in the established order can make decisions on sale on a competitive basis of the stocks, shares of enterprises and objects as a whole-piece, which were not sold during one year (except for the enterprises subject to privatization by Case-by-Case Projects), with inclusion into the price of an object  of the cost of investor's investment obligations provided that the investor submits a sound business-plan for financial rehabilitation of the enterprise;
•   has the right to transfer on a competitive basis the state-owned property into trust management by an investor, with the right of its subsequent purchase in installments within 5 years, at presence of the business - plan on financial rehabilitation of the enterprise and concrete investment obligations;
• - in cooperation with the appropriate Complexes of the Cabinet of Ministries, at the expediency, carries out in the established manner, the restructuring (reorganization) of large, non-perspective and unprofitable enterprises, with the right of putting up their property for sale by separate parts.

Paragraphs 3 - 5 of the Clause  2 of the Resolution of the Cabinet of Ministers as of 26.03.2002 № 97 "On additional measures to ensure implementation of denationalization and privatization programs, attract the foreign investments»

60

Founders of the enterprises with foreign investments may use their dividends, received in hard currency and intended for repatriation abroad, for purchasing shares (stakes) of enterprises and objects as a whole-piece in the Securities’ Market of Uzbekistan.

Clause 4 of the Resolution of the Cabinet of Ministers as of 26.03.2002 № 97 "On additional measures to ensure implementation of denationalization and privatization programs, attract the foreign investments".

61

The investment obligations accepted by foreign investors at purchase of shares (stakes) of the enterprises and objects as a whole-piece, can be implemented in form of direct investments in way of supplies of the equipment, spare parts and accessories for technical modernization and reconstruction of production facilities, repayment by an investor of the enterprises’ debts to state budget, the state specialized funds and the credits received under Government guarantees.

Paragraph 3 of the Clause 4 of the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan as of 17.04.2003 №185 "On the program of denationalization and privatization of the enterprises for 2003-2004".

62

Upon the decision by the State Tender Commission and the Board of the State Property Committee the state assets of unprofitable, financially insolvent and low profitable enterprises, which are unable to independently find financial resources for re-structuring and rehabilitation, can be sold on a competitive basis to investors by the price below par value under condition of acceptance by the buyers of investment obligations, sufficient for technical re-equipment and expansion of production volumes, as well as repayment of creditor debts of the enterprise.

Paragraph 5 of the Clause 4 of the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan as of 17.04.2003 №185 "On the program of denationalization and privatization of the enterprises for 2003-2004".

63

On low-profit, unprofitable, economically insolvent enterprises, investors realized at zero redemption value for investment commitments, written off bad debts of previous years of payments to the budget and extra budgetary funds, including interest accrued thereon fines and penalties.

Fourth paragraph of paragraph 3

Resolution of the Cabinet of Ministers dated 26.08.2003, № 368 "On additional measures to accelerate privatization of state low-profit, unprofitable, economically insolvent enterprises and facilities,

Decision of the Ministry of Finance, State Tax Committee, State Property Committee "On approval of the procedure for determining and bad debt write-off amounts of previous years of payments to the budget and extra budgetary funds, including interest accrued thereon fines and penalties for low-profit, unprofitable, economically insolvent state-owned enterprises, implemented investors at zero redemption value ", registered with the Ministry of Justice 24.12.2004g. № 1436.

64

Investors who have purchased minority (not controlling)  stock (share) packages but make substantial volumes of investments into modernization and technical re-equipment of enterprises – shall be awarded by the right to manage a state-owned share at those enterprises without conduct of a competition.

Resolution by the State Property Committee of the Republic of Uzbekistan dated July 8, 2005 No01/06-18/03 “On the approval of Provisions on the order of awarding to investors who have purchased minority (not controlling)  stock (share) packages but make substantial volumes of investments into modernization and technical re-equipment of enterprises, the right to manage a state-owned share at those enterprises without conduct of a competition” registered by Ministry of Justice under No 1504 date August 5, 2005.