Uzbekistan has banned the capital stock increase using reinvestment of profit

Almaty. May 3. Silkroadnews – The amendments to the law “On joint-stock companies and shareholders’ rights protection” entered into force in Uzbekistan saying the authorized capital stock may be increased through the additional shares issue and placement only, Trend reports.

The article says, earlier the law also allowed you to increase the JSC authorized capital through the increase of the shares nominal value, through reinvestment of JSC profit as a general practice.

The comments by the Republic’s center on coordination and development of the securities say “the growth of the JSC authorized capital stock through the increase in the nominal value of shares misleads the shareholders, especially the minority ones, on the real value of their shares as the purchases and sales of shares, along with repurchases, at the request of shareholders are carried at market value, regardless of their nominal value”.

The amendments were adopted by the legislative chamber (lower house of parliament) of Uzbekistan and approved by the senate (the upper house) late March.

According to the central securities depository, at the end of April 2016 there are 694 joint-stock companies operating in the country, the total volume of shares issued amounted to 20.9 trillion som. There are 2.83 trillion of common and preferred shares in circulation.