Employee stock ownership plans set to transform state-linked companies in Uzbekistan

The initiative aims to encourage employee ownership in joint-stock companies by allowing workers to acquire shares or specific packages of stock under option agreements. This policy draws on the experiences of several countries, including the United States, the United Kingdom, Spain, Russia, and Kazakhstan.

According to the new regulations, the plans must be approved at the general shareholders' meeting of the respective companies. For joint-stock companies where the government holds a majority share, it is mandatory to develop and adopt an employee stock ownership plan.

Employees will have the opportunity to purchase shares that have been pre-acquired for them in the secondary market. Additionally, the regulations include provisions for using option agreements as a form of employee incentive.

The introduction of ESOP is expected to foster a sense of ownership among employees, aligning their interests with the long-term performance and profitability of the company. In return, companies will benefit from nurturing long-term employment relationships with key staff members.

This development aligns with a presidential decree issued in September 2023, which aimed at promoting the capital market. Notably, any funds used for purchasing shares, amounting to no more than one month’s salary, will be exempt from personal income tax.