On sponsorship (LRU-96-son)

02.05.2007

LAW OF THE REPUBLIC OF UZBEKISTAN

Adopted by the Legislative Chamber on February 28, 2007 Approved by the Senate on March 29, 2007

Chapter 1. General provisions

Article 1. Purpose of this Law

The purpose of this Law is to regulate sponsorship relations.

Article 2. Legislation on sponsorship

Legislation on sponsorship consists of this Law and other legislative acts.

If an international agreement of the Republic of Uzbekistan establishes rules other than those provided for by the legislation of the Republic of Uzbekistan on sponsorship, then the rules of the international agreement are applied.

Article 3. Basic concepts

The following basic concepts apply in this Law:

volunteers — individuals who carry out sponsorship in the form of gratuitous performance of work, provision of services for the benefit of the beneficiary or sponsorship organization;

sponsors — legal entities and individuals carrying out sponsorship;

sponsorship (sponsorship activity) — voluntary disinterested assistance (activity) of legal entities and individuals, expressed in gratuitous or on preferential terms transfer of property to other legal entities and individuals, including cash, in the performance of work for them, the provision of services and the provision of other support for sponsorship purposes;

beneficiaries — legal and natural persons receiving sponsorship;

subjects of sponsorship — sponsors, volunteers, sponsorship organizations, as well as beneficiaries;

sponsorship organization — a non-governmental non-profit organization created to carry out sponsorship activities in the interests of society, certain categories of legal entities and individuals;

sponsorship charities — property, including funds allocated for sponsorship purposes.

Article 4. Sponsorship purposes

Sponsorship is carried out in order to:

social support and protection of citizens, including improving the material well-being of socially unprotected and low-income segments of the population, and social rehabilitation of the unemployed, persons with disabilities, and other persons who, due to their physical or intellectual characteristics or other circumstances, are unable to independently exercise their rights and protect their legal interests;

promoting peace, friendship and harmony among peoples;

promoting the prestige and role of the family in society;

promoting the protection of motherhood, childhood and fatherhood;

promoting activities in the field of education, science, culture, art, enlightenment, as well as the spiritual development of the individual;

promoting activities in the field of disease prevention and protecting public health, as well as promoting a healthy lifestyle, and providing moral and psychological assistance to citizens;

promoting activities in the field of physical education and mass sports;

preparing the population to overcome the consequences of natural disasters, environmental, industrial or other disasters, to prevent accidents;

providing assistance to victims of terrorist acts, natural disasters, environmental, industrial or other disasters;

environmental protection;

protection of cultural heritage sites.

In accordance with the law, sponsorship can be carried out for other purposes.

The provision of cash and other material resources, the provision of assistance in other forms to commercial organizations, political parties and movements, as well as their support is not a sponsorship.

Sponsorship for the purpose of pre-election campaigning and campaigning on issues submitted to a referendum is prohibited.

Support through sponsorship of any activity contrary to the law is prohibited.

Article 5. The right to charity

Legal entities and individuals are entitled to voluntarily and unhindered sponsorship.

The annual expenditures on sponsorship of business entities whose state share in the charter fund (charter capital) exceeds 50 percent shall not exceed 3 percent of the net profit received in the previous year, and these expenditures shall be carried out upon the fulfillment of the indicators of their business plan relevant to the net profit of the past reporting period, except for cases stipulated in the decisions of the President of the Republic of Uzbekistan and the Cabinet of Ministers of the Republic of Uzbekistan.

Legal entities and individuals are entitled to carry out sponsorship individually or by combining, with or without the formation of a sponsorship organization.

Sponsors have the right to determine the purpose and procedure for using their sponsorship charities.

Article 51. Recording and disclosing sponsorship charities

Beneficiaries (legal entities and individual entrepreneurs) are required to:

keep track of received sponsorship charities;

disclose information on sponsorship charities received within ten days from the date of their receipt in the media, as well as if available, on their official websites.

Chapter 2. Sponsorship organizations

Article 6. Legal form of sponsorship organizations

Sponsorship organizations may be created in the form of a public association, public foundation, as well as in a different form provided for by legislative acts.

Sponsorship organizations in order to coordinate their activities, as well as represent and protect common interests, may unite in associations (unions) and other associations that are non-governmental non-profit organizations.

Article 7. Founders of a sponsorship organization

The founders of a sponsorship organizations, depending on their legal form, may be legal entities and (or) individuals.

State power and administration bodies, self-governing bodies of citizens, as well as state institutions and organizations, may not be founders of a sponsorship organization.

Article 8. State registration of sponsorship organizations

State registration of sponsorship organizations is carried out by the justice bodies in the manner prescribed by law.

The decision of the justice body to refuse state registration of a sponsorship organization, as well as its violation of the terms of state registration, may be appealed to a court.

Article 9. Property of sponsorship organizations

The property of a sponsorship organization may include buildings, land, transport, facilities, equipment, cash, securities and other property, as well as information resources and other results of intellectual activity.

A sponsorship organization has the right to make any transactions with its property that do not contradict the law, the charter of the organization and sponsorship purposes.

A sponsorship organization has the right to use for the maintenance (including all expenses associated with the activities) of the organization no more than 20 percent of the financial resources spent by this organization for a financial year. This restriction does not apply to the remuneration of persons involved in the implementation of sponsorship programs.

A sponsorship organization may pay for the expenses of volunteers associated with their activities in this organization (travel, transportation and other expenses).

The funds of the State budget of the Republic of Uzbekistan and state trust funds received to the account of a sponsorship organization are used only for sponsorship purposes indicated when they are allocated.

Sponsorship charities donated to sponsorship organizations are used only for sponsorship purposes and cannot be used for their maintenance.

The property of a sponsorship organization cannot be sold or transferred to the founders or members of this organization on more favorable conditions than for other persons.

A sponsorship organization is liable for its obligations with property, which may be levied in the manner prescribed by law .

Article 10. Sources of the formation of property of a sponsorship organization

The sources of the property of a sponsorship organization may be:

contributions of the founders of a sponsorship organization, and for sponsorship organizations based on membership — membership fees;

sponsorship charities of legal entities and individuals in cash and (or) other property form;

income from shares and other securities;

income from entrepreneurial activity permitted by law, including income from commercial structures established by a sponsorship organization;

funds received from campaigns to attract sponsors and volunteers, including the organization of recreational, cultural, sports and other public events held to collect sponsorship charities;

income received from holding lotteries and auctions in the manner prescribed by law;

funds of the State budget of the Republic of Uzbekistan and state trust funds;

other proceeds not prohibited by law.

Article 11. Sponsorship program

A sponsorship program is a set of activities approved by the supreme governing body of a sponsorship organization and aimed at solving problems that correspond to the charter goals of this organization.

The sponsorship program includes estimates of estimated income and planned costs (including remuneration of persons involved in the implementation of the sponsorship program), sets the stages and terms for its implementation.

To fund sponsorship programs (including the cost of labor of persons participating in the implementation of sponsorship programs, and other expenses related to the implementation of sponsorship programs), at least 80 percent of the proceeds received for the financial year, income from entrepreneurial activity permitted by law, should be used including proceeds from commercial structures established by a sponsorship organization.

When implementing sponsorship programs, the funds received are used within the time frames established by these programs.

Article 12. Reorganization and liquidation of a sponsorship organization

Reorganization and liquidation of a sponsorship organization are carried out in the manner prescribed by law.

When a sponsorship organization is liquidated, its property remaining after satisfying creditors' requirements is used for sponsorship purposes in the manner prescribed by the charter of the organization, or by decision of the liquidation commission, if the procedure for using the sponsorship organization's property is not provided for in its charter or unless otherwise provided by law.

Chapter 3. The participation of the state in the implementation of sponsorship. International sponsorship activity

Article 13. State guarantees to sponsorship subjects

The rights and legitimate interests of sponsorship subjects are guaranteed by the state.

Restriction of the sponsorship subject in the freedom to choose the goals of his sponsorship and the forms of its implementation is not allowed.

Article 14. State support for sponsorship

The state may support sponsorship in the following forms:

state funding on a competitive basis of sponsorship programs developed by sponsorship organizations;

transfer of state property to the ownership of sponsorship organizations on a free or preferential basis in the manner prescribed by law;

the provision of benefits for the rental of buildings, premises and other property owned by the state;

assistance in strengthening the material and technical base of sponsorship organizations;

encouraging sponsors, volunteers, and charities.

The state may support sponsorship in other forms in accordance with the law.

Article 15. Privileges granted to sponsorship subjects

Sponsorship subjects are provided with privileges in accordance with the law.

Article 16. Control over the activities of a sponsorship organization

The justice bodies, within their competence, monitor compliance with the provisions of the charters of the sponsorship organization.

State control over the sources of financing and income of a sponsorship organization, payment of taxes and other obligatory payments is carried out by the state tax service in accordance with the law.

A report on the activities of a sponsorship organization is submitted to the justice bodies and the state tax service in the manner prescribed by law.

Sponsors transferring property, including money, to a sponsorship, are entitled to demand from it a report on the intended use of this property.

A sponsorship organization provides access to its annual reports.

Information about the size and structure of the income and expenses of a sponsorship organization, property, number of employees, their remuneration and the involvement of volunteers are not a trade secret.

Justice bodies have the right to send representatives to participate in events held by a sponsorship organization, to receive explanations from members of this organization and other citizens on issues related to compliance with the charters of the sponsorship organization.

Article 17. Implementation of international charitable activities

Sponsors, volunteers and sponsorship organizations have the right to carry out international charity activities in the manner prescribed by law and international treaties of the Republic of Uzbekistan.

International charitable activities can be carried out by participating in international sponsorship projects, in the work of international sponsorship organizations, interacting with foreign partners in the field of sponsorship activities, as well as in any other form accepted in international practice and not contradicting the principles and norms of international law, the Constitution of the Republic of Uzbekistan and legislation of the Republic of Uzbekistan.

A sponsorship organization has the right to receive sponsorship charities from foreign citizens, stateless persons, international and foreign organizations in accordance with the legislation of the Republic of Uzbekistan.

Article 18. Sponsorship activities of foreign citizens, stateless persons, international and foreign organizations in the territory of the Republic of Uzbekistan

Foreign citizens, stateless persons, international and foreign organizations may carry out activities as sponsors and volunteers in the Republic of Uzbekistan in accordance with this Law.

Monitoring and control over the targeted use of sponsorship charities from foreign citizens, stateless persons, as well as international and foreign organizations are carried out in the manner determined by the Cabinet of Ministers of the Republic of Uzbekistan.

Chapter 4. Final provisions

Article 19. Conflict of interest

Conflicts of interest in this Law are transactions and (or) operations carried out between a sponsorship organization and interested parties (employees, including officials, members of the sponsorship organizationʼs governing bodies, their close relatives or creditors, as well as legal entities and individuals who as a result of their relationship with a sponsorship organization, they may affect the organizationʼs property management and which interact with the organization in person or through their representatives in order to obtain private benefits) regarding the management of the property of a sponsorship organization that do not coincide or may not coincide with the interests and sponsorship purposes.

The conclusion of transactions by a sponsorship organization with interested parties, as well as the commission by a sponsorship organization of other actions in favor of interested parties, is permitted with the consent of the supreme governing body of the sponsorship organization.

Disputes arising in the event of a conflict of interest shall be resolved by the supreme governing body of the sponsorship organization, and upon failure to reach agreement, by the court.

Article 20. Dispute resolution

Disputes arising in the field of sponsorship are resolved in the manner prescribed by law.

Article 21. Responsibility for violation of the law on charity

Persons guilty of violating the law on sponsorship are liable in the prescribed manner.

Article 22. Bringing legislation in accordance with this Law

The Cabinet of Ministers of the Republic of Uzbekistan:

to bring government decisions in line with this Law;

to ensure the review and annulment by government bodies of their normative legal acts that contradict this Law.

Article 23. Entry into force of this Law

This Law shall enter into force on the day of its official publication.

President of the Republic of Uzbekistan I. KARIMOV

Tashkent city,

May 2, 2007

№ LRU-96