THE PROMISES AND CHALLENGES OF CROWDFUNDING FOR FINANCING SMALL BUSINESSES AND START-UPS IN UZBEKISTAN

• Salokhiddin Turdiyev

  Student at Tashkent State University of Law

This article examines three types of crowdfunding and their beneficial aspects in financing small businesses and start-ups Uzbekistan. It delves into the practical applications and challenges of legal regulation from both legal and economic perspectives

. J.Razzoqov.Biznesni moliyalashtirish manbalari tasnifi va ularning o‘ziga xos xususiyatlari. // “Iqtisodiyot va ta’lim” ilmiy jurnali, 4-son, 2023-yil, 135-b.

. Central Bank of the Republic of Uzbekistan. Information on credit and deposits of commercial banks as of June 1, 2024 // https://cbu.uz/uz/statistics/bankstats/1746716/

. Central Bank of the Republic of Uzbekistan. Interest rates on bank deposits and loans in national currency // https://cbu.uz/uz/statistics/rates/ as of 12.06.2024

. The total number of registered enterprises and organizations is 688,345, of which 485,024 are active, and 203,321 are inactive. State Statistics Committee information as of 2024 // https://stat.uz/uz/rasmiy-statistika/usreo-2

. In accordance with paragraph 43 of the Regulation on the Procedure for State Registration of Business Entities, approved by Resolution of the Cabinet of Ministers No. 66 dated February 9, 2017, the absence of one or more foreign investors holding at least fifteen percent of the authorized capital will be a basis for the refusal of state registration or re-registration of a joint-stock company.

. Paragraph 21 of the Rules for State Registration of Securities Issues and Equity Issues, approved by Order No. 2009-40 of the Director General of the Center for Coordination and Control of Securities Market Activities under the State Committee of the Republic of Uzbekistan dated July 16, 2009.

. Armour, John and Enriques, Luca, The Promise and Perils of Crowdfunding: Between Corporate Finance and Consumer Contracts (September 11, 2017). ECGI - Law Working Paper No. 366/2017, Oxford Legal Studies Research Paper No. 58/2017, Available at SSRN: https://ssrn.com/abstract=3035247 or http://dx.doi.org/10.2139/ssrn.3035247

. Alexander Popov, Venture Capital and Industry Structure: Evidence from Local US Markets, Review of Finance, Volume 18, Issue 3, July 2014, Pages 1059–1096, https://doi.org/10.1093/rof/rft018

. Armour, John and Enriques, Luca, The Promise and Perils of Crowdfunding: Between Corporate Finance and Consumer Contracts (September 11, 2017). ECGI - Law Working Paper No. 366/2017, Oxford Legal Studies Research Paper No. 58/2017, Available at SSRN: https://ssrn.com/abstract=3035247 or http://dx.doi.org/10.2139/ssrn.3035247

. According to the State Statistics Committee, 104,614 business entities were registered in the field of production in 2024. Of these, 39,188 organizations are not currently active, with the majority (39,175) being small businesses.

. Page 6 of Start-up Ecosystem Report Tashkent by Enpact Data Lab. October 2021

. Law No. LRU-308-II "On Business Partnerships," Article 30, Part 1, Paragraph 2.

. Page 15., Klöhn, Lars and Hornuf, Lars and Schilling, Tobias, Financial Contracting in Crowdinvesting: Lessons from the German Market (September 14, 2016). Available at SSRN: https://ssrn.com/abstract=2839041

. Section 230 of German Commercial Code (Handelsgesetzbuch – HGB) and Law No. LRU-308-II "On Business Partnerships," Article 29

. Section 230 of German Commercial Code (Handelsgesetzbuch – HGB) and Law No. LRU-308-II "On Business Partnerships," Article 30, Part 1, Paragraph 2

. Section 230 of German Commercial Code (Handelsgesetzbuch – HGB) 3

. Law No. LRU-310-II” On Limited and Additional Liability Companies " Article 7 Part 6

. In accordance with the Regulation on the Procedure for State Registration of Business Entities, approved by Resolution No. 66 of the Cabinet of Ministers dated February 9, 2017, changes in the composition of the founders of a legal entity must be registered with the state within 30 days from the date of approval of the relevant changes by the authorized person.

. Part 3 (30) of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 // https://www.legislation.gov.uk/uksi/2013/3134/contents

. For example, in the United States, a retail investor with an annual income of no more than $100,000 can invest up to 5% of their annual income in a single crowdfunding project, while an investor with an annual income of more than $100,000 can invest up to 10% of their annual income.

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