A director of a private trading company signs a supply contract at a price far above the market with a firm run by a friend. The company loses a large sum. The shareholders want more than the money back: they ask whether the director can be prosecuted.
Short answer: it is possible, but prison is not the default. The Criminal Code (art. 192-11) makes it a crime for an official of a private company to use their powers deliberately in a way that causes large harm or substantial damage. The penalty can be up to 2 years in prison, or up to 3 years if the harm is very large, the act was committed by an organized group or in its interests, or for selfish motives. Prison is one of four penalties the court can choose from, alongside a fine, community work and restriction of liberty. But if the material damage is repaid, the court cannot impose prison or restriction of liberty.
Who the article covers
The article is about an official (mansabdor shaxs) of a non-state commercial or other non-state organization. The Code defines an official as a person who holds organizational-management or administrative-economic functions in an organization of any form of ownership and is empowered to take legally significant actions. A director is the obvious case. A deputy director, a chief accountant or a branch head with signing powers can be one too.
An ordinary employee without such functions is not an official in the Code's sense. Bribing such an employee is a separate crime (art. 192-10); bribing an official of a private company is commercial bribery (art. 192-9).
A company with state participation is a different case. The Code treats a commercial company as one with state participation when the state holds more than 50% of its capital, or a larger share than any other shareholder. Its managers fall under the general abuse-of-office article (art. 205), which carries heavier penalties.
What has to happen
Three things together:
- Use of powers. The official uses their own powers: signs, approves, pays or orders.
- Intent. Deliberately, not by mistake. A bad business decision made in good faith is not this crime.
- Consequence. The act causes large harm (ko'p miqdorda zarar) or substantial damage to the rights or lawful interests of citizens, or to state or public interests.
The Code measures harm in multiples of the BRV, the base calculation amount set by the state:
| Harm | In BRV |
|---|---|
| Large | 300 to 500 BRV |
| Very large | 500 BRV and more |
"Substantial damage" (jiddiy ziyon) has no number. The Code text in our database does not define it, so it is judged case by case.
What it carries
| Basic offense (part 1) | Aggravated (part 2) | |
|---|---|---|
| Fine | 100–150 BRV | 150–300 BRV |
| Compulsory community work | up to 300 hours | 300–360 hours |
| Restriction of liberty | up to 2 years | 1–3 years |
| Prison | up to 2 years | up to 3 years |
Basic offense (part 1): large harm or substantial damage.
Aggravated (part 2): very large harm, by an organized group or in its interests, or for selfish motives.
The court chooses one of these penalties.
The rule that matters most: if the material damage is compensated, restriction of liberty and prison are not applied (art. 192-11, last part). The fine and community work remain possible.
Two further points:
- Selfish motive makes it a corruption crime. The Code lists the aggravated offense committed for selfish motives among corruption crimes.
- It is a crime of no great public danger. Both parts carry at most 3 years of prison for an intentional act, which the Code classes as a crime "of no great public danger" (art. 15). Two consequences: the limitation period is 2 years from the day of the act, counted to the day the judgment takes effect (art. 64); and a first-time offender who turns themselves in and confesses, sincerely repents, actively helps solve the crime and repairs the harm may be released from liability (art. 66).
Reconciliation with the victim (art. 66-1) is not available for this article: art. 192-11 is not on that list.
What a director can do
This part is practice, not law.
- Write down why. For any large or unusual deal, keep a short note of the reasons, the market check and who approved it. Intent is what separates a crime from a bad decision.
- Disclose conflicts. Deals with related firms go to the body that the charter names, before signing.
- Know your limits. Read the charter and the shareholders' decisions on your powers. Acting outside them weakens any good-faith defense.
- If harm has happened, repay early. Under the Code, repayment removes prison and restriction of liberty from the table, and it is one of the conditions for release under art. 66.
What shareholders can do
This is practice too, not law.
Check the director's powers in the charter and require board or shareholder approval for related-party and large deals. If you suspect abuse, get advice before you go to the police: the claim for damages and the criminal case follow different rules.
If you are setting up or restructuring a company, see our guide to entering the Uzbek market and the LLC formation pack. For a decision that carries personal risk, talk to us.
Sources
- Criminal Code of Uzbekistan of 22 September 1994: art. 192-11; art. 15 (classification); art. 64 (limitation); art. 66 (release on active repentance); art. 66-1 (reconciliation); art. 205; definitions of "official", "organization with state participation", amounts of harm and corruption crimes — lex.uz
Worried about a director's exposure?
We review a director's duties and the decisions that carry personal risk.
Book a call →Photo: Artem Korolev, Pexels