Uzbekistan has rolled out the "Regulatory Sandbox," a distinct legal framework effective from January 29, 2024. This initiative, officially sanctioned by the Ministry of Justice, offers specific guidelines tailored for foreign investment intermediaries (FII), foreign nominee holders (FNH), and non-resident legal entities participating in the nation's securities market.
Key Features of the Regulatory Sandbox:
Investment Activities by FII: Foreign investment intermediaries are permitted to conduct investment activities in the Uzbek securities market and open securities accounts.
Activities of FNH: Foreign nominee holders can open securities accounts, operate directly or through agents in Uzbekistan, and open accounts with the Central Bank in foreign and national currency.
Currency and Securities Accounts: FNHs, including custodian banks, are allowed to open accounts with the Central Bankof Uzbekistan in foreign and national currency. They can also hold securities accounts in the Central Depository and Uzbek Republican Commodity and Raw Materials Exchange.
Corporate Bonds Transactions: When issuing and circulating corporate bonds, it is allowed to set the cost of bonds and make payments in foreign currency.
Tax Implications: Certain transactions involving the transfer of securities between foreign nominal accounts are exempt from tax liabilities, benefiting both parties involved.
Licensing Exemptions: FNHs can operate in Uzbekistan without the need for a separate license, permit, or the creation of a branch or new legal entity. Qualification certificates issued to employees in recognized foreign jurisdictions are recognized in Uzbekistan.
Depository Services: Uzbek Republican Commodity and Raw Materials Exchangeis authorized to maintain FNH depository accounts for storing and accounting for government securities, providing additional depository services for FNH.
Prohibitions and Grounds for Deprivation:
Prohibitions: The special regime prohibits the activities of investment intermediaries and individual investors without proper licenses or permits. Other activities, not specified by Uzbekistan's legislation, are also restricted.
Grounds for Deprivation: Grounds for losing the status of a participant include voluntary withdrawal, providing false information, insolvency, loss of licenses or permits in recognized foreign jurisdictions, and law enforcement information about involvement in economic crimes.
The regulations also include a list of 38 recognized foreign jurisdictions within the Regulatory Sandbox. Participants are urged to adhere to the specified guidelines and comply with Uzbekistan's legal framework for continued involvement in the special regime.
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