Why is this important
Shared construction directly affects the interests of thousands of citizens, as it involves investing personal funds in housing during its construction. The lack of transparent and strictly regulated mechanisms in this area increases the risk of fraud and unscrupulous fundraising. Strengthening regulation and introducing liability are intended to close legal gaps and improve the protection of shared construction participants.
What happened
- The Ministry of Justice of Uzbekistan has presented a draft law on shared construction aimed at strengthening regulation in the industry and introducing escrow accounts.
- The document provides for the introduction of criminal liability for violation of requirements for shared construction and conditions for raising funds.
- To this end, it is proposed to supplement the Criminal Code with a new Article 188-2 concerning the attraction of equity capital in a manner not provided for by law, including the conclusion of contracts without their registration in the state register of real estate rights.
- The draft also introduces grounds for exemption from liability for the first violation in the event of full compensation for damages within the specified period.
- Additionally, it is proposed to establish administrative liability for specially authorized organizations for failure to disclose information in the field of shared construction.
Numbers and facts
- For the first violation of shared construction requirements, a fine of 300 to 400 BCV, restriction of liberty, or imprisonment for a term of 1 to 3 years is provided.
- In case of a repeated violation, prior conspiracy, group actions or large amounts of damage, the sanctions will be 400-600 BCV, restriction or imprisonment from 3 to 5 years, as well as deprivation of certain rights.
- In cases of damage on an especially large scale or if violations are committed by an organized group, imprisonment from 5 to 7 years is provided.
- Persons who commit a violation for the first time and compensate for the damage within 30 days of its discovery are exempt from criminal liability.
- For officials of the Housing and Utilities Administration, a fine of 70 BCV is established for failure to post information in the Unified Housing Construction Information System.
- A fine of 100 BCV is provided for making illegal changes to the design documentation for shared construction projects.
Context
- The draft law increases penalties for the illegal raising of citizens’ funds and creates a more stringent legal framework for participants in the shared construction market.
- The introduction of escrow accounts and criminal sanctions limits the use of informal financing schemes.
- For developers and authorized organizations, this means increased requirements for transparency and compliance with procedures, and for equity holders, additional mechanisms to protect their investments.
