1. The essence of representative offices of foreign companies in Uzbekistan
Any business structure, the company in the world is trying to grow and to enter foreign markets and expand its geographical presence in the global economic space. There is no any other way for a business if its real aims are further expansion, development and growth.
Surely, in the modern world of constant development and improvement of the global information technology and telecommunications, as well as the World Wide Web, country borders get gradually erased, almost become conventional, but the legal and actual presence of the parent company outside the territory of its institutions is essential and, therefore, it becomes the actual significance nowadays.
In this sense for any business structure (the parent company) it is not so important to maintain (implement) it directly on the business of a particular territory, how important preservation (retention) the control over their business in a particular country.
Certainly, the corporate practice in almost every country in the world provides the possibility of opening companies in various legal forms. For example, in Uzbekistan, the most common legal forms arejoint stock companies (JSC), a limited liability company (LLC), private enterprises (PE), etc. Foreign companies can create its subsidiaries of foreign companies in one of the above forms with owning full stake (shares) or joint venture with the Uzbek capital.
In addition, the ability of foreign companies to operate in the territory of Uzbekistan in the form of representative office, including the procedure of accreditation activities permitted by applicable law. The national accreditation body, the Ministry for Foreign Economic Relations, Investments and Trade of the Republic of Uzbekistan (MFERIT), is responsible for accreditation of representative offices.
2. The aims and advantages of representative offices of foreign companies
The purpose of the accreditation of a foreign company is to represent and protect the interests of a foreign company in Uzbekistan. With that, the main advantages of creating representative offices are:
- Direct access and work in the Uzbek market;
- Expansion of the customer list of the foreign parent company;
- Assistance in finding partners for joint projects and consultations;
- Not only perform certain orders of a foreign company, but also the organization of technical and Welfare negotiations, meetings and other events and transactions;
- Processing proposals from potential investors and transmission of information of a foreign company;
- Development of promotional activities;
- The study of conditions, synthesis of information and proposals to establish joint ventures and more.
3. Features of the way representative offices operate
It should be note that the representative officesare not legal entities and not conduct business or other commercial activity. An exception is the case regarding representative offices of foreign airline companies, which have the right to conduct business in the territory of Uzbekistan in accordance with the legislation.
However, it does not mean, as erroneously believed, that a representative officedoes not carry out any activities or such activities are very limited. We are talking only about engagement of a representative office in commercial activities in any of its forms.
Nevertheless, representative offices carry out certain activities that are not contrary to the law, therefore, the possibility of the implementation of which should be provided by its main, so-called "founding document," which isthe regulation of the representative office.
4. Aim and content of the regulation of the representative office
Theregulation of the representative office should clearly identify the measures of possible activities, the scope of authority of a representative office. In particular, it is expressed as follows:
- Representation and protection of interests of the company in the territory of the Republic of Uzbekistan;
- Organizational and technical support of the company's employees;
- Execution of single orders of the company;
- Organization of technical and Welfare negotiations, meetings and other events, as well as the negotiation and conclusion of transactions on behalf of the company;
- The research of the main market of the parent company as well as assistance in finding partners for joint projects, including the search for potential investors and their advice;
- Preparation and organization of fairs, symposiums, exhibitions, seminars, presentations and negotiations; Processing proposals from potential investors and transfer of information;
- Development of promotional activities; business cycle research, synthesis of information and proposals for the establishment of joint ventures.
In addition, the representative office's functions can also consists of:
- Conducting foreign economic activity of the company in Uzbekistan, including the import and export of the property;
- Signing declarations, invoices and other shipping documents customs, getting in customs, by mail, telegraph, railway any property packages, values, letters or telegrams addressed to the Company, including the right to provide any of mentioned or any other form of requests and claims for consideration by the public authorities or the courts, if there is a necessity of such actions;
- Representation of company to any state agency, department or ministry, any legislature or any other agency or state or private institution for the protection of the rights of the company;
- Recourse to the courts, providing written responses to the request of the court in all legally recognized forms;
- Protection of the company in any legal action or choice of legal counsel, if necessary, to protect the rights and assets of the company;
- The imposition of any legal proceedings against the third party or other parties in violation of contractual agreements with the company;
- Implementation of all necessary actions in accordance with applicable law to ensure that the business activity of the company carry out appropriate and effective methods to implement the objectives of the company;
- The payment of all taxes and mandatory payments in accordance with the current legislation of the Republic of Uzbekistan.
However, in practice, there are often cases when the above-mentioned authority not found in full in their positions, which sometimes can become a serious obstacle in relations with state bodies and institutions, banks, stock exchanges, etc.
5. Structure of the regulation of the representative office
While legislation does not require clearly defined forms for such document, nevertheless, in its structure such regulations are encouraged to include:
1) General (name, address, status, etc.);
2) The tasks and functions of the representative office;
3) The property of the representative office;
4) The management of the representative office;
5) The authority of the company (in terms of its representative office);
6) The authority of the head of the representative office;
7) The control over the activities of the representative office;
8) The personnel and labor relations;
9) The obligations of the representative office before the MFERIT of the Republic of Uzbekistan;
10) The accounting and reporting of the representative office;
11) The termination of the representative office, etc.
In practice, foreign companies very often do not prescribe such regulations, which ultimately affects not in favor of the company in its activities.
In addition, the legislation requires the regulation to be properly executed (legalized in an appropriate consulate or apostilled).
Thus, for accreditation of foreign companies' representative offices, the companies must have at least a general idea about the status of representative offices, forms of their activities, as well as those nuances regarding their creation, which the companies may not always be aware of.
Partner, Executive Director
«Diplomat Law Firm»