President Shavkat Mirziyoyev signed a bill into law permitting limited liability companies to issue bonds, the Capital Market Development Agency said.
On July 22, 2020, the President signed the law amending and supplementing certain acts, which also provides for amendments to Securities Market Law, Joint-Stock Companies and Protection of Shareholders’ Rights Law, and Companies With Limited and Additional Liability Law.
The adoption of this Law has significantly eased the requirements for issuing bonds and gave new opportunities for limited liability companies to draw financing by issuing corporate bonds, as an alternative to bank loans.
Until now, only joint-stock companies and commercial banks could issue corporate bonds, within the limits of their capital, subject to three years of positive financial activity and rating. While, the requirements for issuer to issue bonds made this instrument an unattractive source of financing even for many joint-stock companies.
Despite the fact that corporate bonds are a convenient alternative to bank financing, such strict regulations significantly reduced the list of organizations that could turn to this instrument. This circumstance became the reason for a sharp reduction in the number and volume of corporate bonds in circulation in recent years.
