Investing in Uzbekistan: Top 5 Issues for an Astute Investor

01 – TrendsUzbekistan investment trends

Uzbekistan has moved from the periphery to the centre of Central Asia’s investment map and has become a veritable growth story. UNCTAD’s World Investment Report 2025 estimates foreign direct investment inflows into Uzbekistan at US$2.8 billion in 2024, a more than 30% year-on-year increase, which makes the country the largest FDI recipient in Central Asia for the first time in three decades.^[1] The total value of FDI in Uzbekistan’s resident enterprises (FDI stock) as of 2024 exceeded US$16 billion.^[2]

This result is a consequence of a reform programme launched in 2017. Its main pillars were the liberalisation of the foreign exchange market,^[3] a new Tax Code, a consolidated investment law^[4] and a large-scale privatisation agenda. International observers have generally acknowledged the substance of these reforms, while noting that enforcement and implementation can still be uneven in practice.^[5]

The direction of travel is signposted by Uzbekistan’s progress along the route of accession to the World Trade Organization: in March 2026 the Working Party on Uzbekistan’s accession held its twelfth meeting, and the Government publicly committed to completing accession by the end of 2026.^[6] Accession would solidify many of the domestic reforms described below into binding international commitments.

Against this backdrop, foreign investors are looking at the market with renewed interest – which raises the usual practical questions about legal risk. Below we outline five issues which, in our experience, deserve the closest attention at the stage of planning an investment into Uzbekistan.

02 – VehicleChoosing the right investment vehicle

Available forms of doing business

Foreign investors may operate in Uzbekistan through a locally incorporated company – most commonly a limited liability company (“LLC”) or a joint-stock company (“JSC”) – or through a representative office of a foreign entity, which generally may not conduct commercial activity.^[7] In practice, the LLC is the workhorse of foreign investment: it is quick to incorporate, has flexible governance and is not subject to securities market regulations. The JSC form is generally reserved for regulated sectors and for businesses operating in the capital markets; banks, for example, may be established only in the form of a joint-stock company.^[8]

A company in which at least fifteen percent of the charter capital is held by foreign investors qualifies as an enterprise with foreign investments and benefits from the guarantees afforded by investment legislation discussed in Section 4 below.^[9] The general tax framework is competitive by regional standards: corporate income tax is levied at 15% and VAT at 12%, with a 10% withholding tax on dividends paid to non-residents.^[10]

The new LLC Law: what changes from 22 July 2026

On 21 April 2026, the President signed the new Law “On Limited Liability Companies” No. LRU-1137 (“New LLC Law”), which enters into force on 22 July 2026 and replaces the law of 6 December 2001 that had governed LLCs for a quarter of a century.^[11][12] The new law, drawn up by the Ministry of Justice with input from local and foreign experts, is expressly aimed at aligning Uzbek corporate governance with international standards, strengthening protection of shareholders’ rights and improving the investment climate.^[13]

Key innovations of the New LLC Law include:

• subsidiary liability of the general director and members of the supervisory board where the company’s insolvency results from their unlawful actions;
• a comprehensive new Article 44 setting out the fiduciary duties of the company’s management bodies;^[14]
• a new Article 48 requiring a majority participant to refrain from abusing its position for personal benefit and from proposing agenda items contrary to the interests of the company or the other participants – breach gives rise to liability for losses suffered by the company and the other participants;
• the provision governing a participant’s withdrawal no longer contains the phrase “at any time”, suggesting that the charter may validly impose restrictions on the right to withdraw, which would permit lock-up periods;^[15]
• the procedure for the issuance of bonds by an LLC has been further clarified;^[16]
• any participant may now demand the convening of a general meeting; the previous 10% participation threshold has been removed;
• a 75% quorum requirement has been introduced for meetings of the supervisory board;
• a new chapter regulates affiliated persons and transactions involving them;^[17] and
• participatory interests may now be recorded through the Central Securities Depository, which is designed to reduce the risk of unlawful appropriation.^[18]

For investors who already hold interests in existing Uzbek subsidiaries or joint ventures, there is an immediate need to catch up with the changes: charters, joint venture documents and internal regulations adopted under the 2001 law have to be reviewed and conformed to the new framework before 22 July 2026. In our experience, provisions on supervisory board competence, pre-emption rights on transfers of interests and capital increases are most likely to require amendment. Majority participants and officers of LLCs may require indemnities against claims under Articles 48 and 46 of the New LLC Law brought by minority participants or the LLC itself.^[19]

03 – ShareholdersShareholders’ agreements: from grey zone to the Civil Code

Until recently, Uzbek law contained no workable legislative framework for shareholders’ agreements. Joint venture parties either relied on pithy and largely untested statutory provisions or – more commonly – moved the entire shareholder arrangement offshore by signing an English-law agreement at the level of a foreign holding company, or even at the level of a local company. A shareholders’ agreement governed by foreign law in respect of an Uzbek company carried a considerable risk of being disregarded by Uzbek courts.

This changed in 2025. By Law No. ZRU-1025 of 7 February 2025, a new Article 358¹ was introduced into the Civil Code with effect from 8 May 2025 to recognise the corporate agreement as a distinct type of enforceable contract.^[20] Under a corporate agreement, participants of an LLC or shareholders of a JSC may undertake to exercise their corporate rights in an agreed manner or to refrain from exercising them – including undertakings to vote in a particular way at the general meeting, to acquire or dispose of shares or participatory interests at a pre-agreed price or upon the occurrence of defined circumstances, or to refrain from such disposals until agreed circumstances arise. The parties are required to notify the company of the conclusion of the agreement.^[21]

Taken together with the governance flexibility of the New LLC Law, this development for the first time allows classic joint venture mechanics – voting undertakings, transfer restrictions, put and call options, drag-along and tag-along rights and deadlock-resolution procedures – to be implemented directly at the level of the Uzbek operating company in reliance on express provisions of the law. Absent these statutory provisions, the courts were reluctant to implement such terms.

Practical caution is nevertheless warranted. The statutory provisions are new, court practice on remedies for breach is yet to develop, and the interaction between a corporate agreement and the company’s charter has not been explored. At this early stage, we recommend reproducing key protections directly in the charter, agreeing that disputes under the corporate agreement be resolved by arbitration (see Section 6 below), and taking care to comply with the statutory notification requirements.

04 – GuaranteesInvestment guarantees and treaty protections

Guarantees under the Investment Law

The cornerstone of investor protection is the Law “On Investments and Investment Activities” No. ZRU-598 of 25 December 2019, which consolidated previously fragmented investment legislation into a single regime for domestic and foreign investors.^[22] The Investment Law proclaims principles of non-discrimination against investors and – rather notably – a presumption of investor good faith.^[23]

Two provisions deserve special mention:

• enterprises with foreign investments are not subject to restrictions on foreign currency transfers;^[24] and
• a stabilization guarantee: where subsequent legislation worsens the conditions of an investment – including by complicating or restricting the repatriation of profits abroad – the investor may elect to rely on the legislation in force at the date of the investment for a period of ten years.^[25] To invoke this guarantee, investors should thoroughly document the date and conditions of their investment: corporate approvals, registration of the company, and import of capital through Uzbek banks. In practice, the burden of demonstrating that conditions have “worsened” falls on the investor.

A foreign investor is further guaranteed the right freely to repatriate its investments and returns after discharging its tax and other obligations in Uzbekistan. This guarantee is subject to limited exceptions – in particular, insolvency of the investor, criminal proceedings against it, or an order of a court or arbitral tribunal.^[26]

Treaty protections

Statutory protections are complemented by protections available under an extensive bilateral investment treaty network. Uzbekistan has concluded more than fifty treaties^[27] and has been a Contracting State to the ICSID Convention since 1995.^[28] Because treaty protection follows the nationality of the investing entity, the choice of jurisdiction from which outward investment is made determines which treaty – if any – will protect it. This is a question to be answered at the structuring stage, not after a dispute has arisen.

05 – CurrencyCurrency regulation and repatriation of profits

For two decades, currency risk was the paradigm risk of the Uzbek market. Before September 2017, businesses had limited access to foreign currency due to informal restrictions. Companies faced long delays when transferring foreign currency funds, and the conversion of currency was described as “the single largest impediment to FDI” in Uzbekistan.^[29] This made imports challenging, stimulated the grey economy, and resulted in multiple exchange rates.^[30]

Presidential Decree No. UP-5177 of 2 September 2017 unified the exchange rate and opened up the currency exchange market.^[31] The reform was then put on a legislative footing by the restated Law No. ZRU-573 “On Currency Regulation” of 22 October 2019. This enacted that current (i.e. not capital) international transactions – including dividend payments, payments under foreign trade contracts and the attraction and repatriation of foreign direct investment – may be carried out without restrictions.^[32] The authorities may stop the repatriation of foreign investor funds in cases of insolvency and bankruptcy, criminal acts by the foreign investor, or when so directed by an arbitration or court decision.^[33]

There are some currency control rules that must be taken into account:

• First, the currency of payment and settlement between residents within Uzbekistan is the soum. Unlike some other countries with currency control regulations, even the denomination of obligations in foreign currency is prohibited between Uzbek residents.^[34] At most, the parties may try to provide for a mechanism to review the contract price in case of fluctuations of the foreign currency, but there is a risk that a court may treat this as a circumvention of currency restrictions.
• Second, both residents and non-residents must ensure that their foreign counterparties fully discharge their obligations under foreign trade contracts, or return advance funds paid abroad in case of failure to perform.^[35] For example, if an owner made an advance payment to an EPC contractor, the owner must ensure that the works are performed or, in case of incomplete performance, that the advance payment is returned pro rata.

06 – DisputesDispute resolution

Commercial arbitration

Uzbekistan has been a party to the New York Convention since 1996, with the result that foreign arbitral awards are enforceable in Uzbekistan subject only to the Convention’s limited grounds for refusal.^[36] In 2021, Uzbekistan adopted the Law “On International Commercial Arbitration” No. ZRU-674 of 16 February 2021, based on the UNCITRAL Model Law (as amended in 2006), which for the first time made Tashkent a credible seat of arbitration.^[37] The Tashkent International Arbitration Centre (TIAC), established by the Chamber of Commerce and Industry of Uzbekistan, administers cases under its 2021 Rules of Arbitration.^[38]

By contrast, foreign court judgments are generally enforceable in Uzbekistan only on the basis of an international treaty, and there are no such treaties with most Western jurisdictions. For that reason, arbitration is usually recommended for contracts with Uzbek counterparties. Arbitration may have its seat in Tashkent or in an established foreign venue, and an award will be entitled to enforcement locally – unlike judgments of foreign courts, which may well prove unenforceable.

Some lessons from investor-state disputes

Under President Mirziyoyev, Uzbekistan has seen a noticeable drop in the number and intensity of investor–state disputes, with new cases tending to focus on technical regulatory and contractual disputes rather than outright expropriation claims.^[39]

A few examples of investor-state disputes against Uzbekistan:

• Metal-Tech v. Republic of Uzbekistan.^[40] An Israeli investor in a molybdenum joint venture brought ICSID proceedings after the venture collapsed. The tribunal found that payments of approximately US$4 million had been made to “consultants” connected with public officials, concluded that the investment had been made through corruption in violation of Uzbek law, and declined jurisdiction altogether – leaving the investor without any treaty protection. The lesson is that statutory and treaty protections are conditional on the lawful establishment and conduct of the investment.
• Romak S.A. v. Uzbekistan^[41] concerned a Swiss grain trader’s attempt to re-characterise a one-off wheat supply contract, and a resulting GAFTA arbitral award, as a protected “investment” under the Switzerland–Uzbekistan BIT, after Uzbek courts declined to enforce the award on New York Convention grounds. The PCA tribunal held that the transaction did not meet the inherent hallmarks of an “investment” (contribution, duration and investment-type risk), found that it was a purely commercial sale of goods, and dismissed the claim for lack of jurisdiction. The case underscores that treaty protection cannot be assumed for ordinary trade receivables or award-enforcement disputes.
• Oxus Gold plc v. Republic of Uzbekistan^[42] arose out of Oxus’s long-term gold and base-metals projects at Amantaytau (AGF JV) and Khandiza, where the investor alleged expropriation, unfair and inequitable treatment, and breaches of an umbrella clause under the UK–Uzbekistan BIT following audits, tax measures, licensing issues and the eventual collapse of AGF. The tribunal rejected all expropriation and most treaty claims, but found limited breaches of fair and equitable treatment in relation to certain tax measures, and awarded Oxus only a relatively modest amount compared with the several hundred million claimed. The case shows that tribunals will scrutinise complex project histories closely, distinguish commercial or operational risk from genuine treaty breaches, and may grant only narrow, carefully quantified relief.

07 – ConclusionConclusion

Uzbekistan today offers what it could not offer a decade ago: a convertible currency, a consolidated investment law with a ten-year stabilisation guarantee, a modern arbitration framework and – from July 2026 – a contemporary LLC law supported by recognition of shareholders’ agreements. This provides exciting opportunities for structuring sophisticated investments, but does not remove the need for caution and circumspection. Early attention to the five issues outlined above – the vehicle, the shareholder arrangements, the guarantees, the currency and the disputes – may well be the difference between a smooth market entry and the loss of an investment.

The law is stated as at the date of publication. The information contained in this document is provided for general informational purposes only, does not constitute legal advice, and does not purport to be an exhaustive analysis of the issues addressed herein. Neither AKTA nor any of its employees accept any responsibility for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this document, and in no event shall they be liable for any losses resulting from reliance on or use of this information. For advice on specific circumstances, please contact AKTA.