Pledging an LLC Ownership Interest in Uzbekistan: A Notary's Guide

A pledge agreement over an LLC ownership interest is a security arrangement whereby a member of the company transfers their interest — or a portion of it — to a creditor as collateral. If the debtor fails to perform their obligation, the creditor is entitled to enforce against that interest. In my notarial practice, I regularly see this structure used when raising loans from co-founders, when structuring transactions between business partners, and when securing external financing.

One point is non-negotiable: under Uzbek law, a pledge agreement over an LLC ownership interest must be notarially certified. An agreement executed without a notary has no legal effect whatsoever.

Key takeaways:

• Notarial certification is mandatory — verbal agreements or simple written contracts are not valid for this purpose.
• Only a current, paid-up member of the LLC may act as pledgor.
• The company's charter (articles of association) may contain restrictions on pledging interests — these must be reviewed before proceeding.
• After certification, the notary transmits the relevant information to the competent registry authority on the parties' behalf.

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The Notarial Certification Process

Certifying a pledge agreement over an LLC interest involves several distinct stages.

• Document preparation. Both parties — the pledgor (LLC member) and the pledgee (creditor) — gather the required document package.
• Title verification. The notary confirms that the pledgor genuinely holds the interest, that it has been fully paid up, and that the charter contains no prohibition on pledging.
• Drafting and reviewing the agreement. I strongly recommend preparing a draft agreement in advance or discussing its terms with the notary at a preliminary consultation.
• Certification and registration. Once the parties sign, the notary certifies the agreement and transmits the encumbrance details to the authorised registry.

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Documents to Bring

The pledgor (LLC member) provides:

• Government-issued identity document
• Constitutional documents of the LLC (charter, certificate of state registration, or extract from the legal entities register)
• Documents confirming title to the interest (incorporation resolution, share purchase agreement, notarially certified certificate of ownership, etc.)
• Documents confirming that the interest has been fully paid up
• Spousal consent to the pledge, where the interest forms part of jointly acquired marital property (if applicable)
• Consent of the other LLC members to the pledge, if required by the charter

The pledgee provides:

• Government-issued identity document (for an individual) or constitutional documents (for a legal entity)
• Documents evidencing the underlying obligation (loan agreement, credit facility agreement, etc.)

Please verify the exact document list and current notarial fees directly with the notary on the date of your appointment, as requirements and tariff rates are periodically revised.

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Frequently Asked Questions

Can an interest be pledged without the consent of the other LLC members?

This depends on the company's charter. If the charter does not prohibit pledging and does not require member consent, the pledgor may act independently. Where the charter does impose such restrictions, consent must be obtained and documented before notarial certification.

What rights does the pledgor retain during the pledge period?

The pledgor retains their membership rights — they may vote, receive dividends, and otherwise participate in the company's activities, unless the pledge agreement expressly provides otherwise.

Must an out-of-court enforcement agreement also be notarially certified?

Yes. If the parties agree on an out-of-court (extrajudicial) enforcement procedure, that agreement must also take notarial form.

Is it possible to pledge only part of an interest?

Yes. The law permits a pledge over the entire interest or any defined portion of it. The key requirement is that the subject matter of the pledge be precisely identified in the agreement.

What happens if the underlying obligation is not performed?

Upon default, the pledgee is entitled to enforce against the pledged interest — through court proceedings or, where the agreement so provides, through an out-of-court procedure. The mechanics and consequences of enforcement should be set out in detail in the pledge agreement itself.

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Consult a Notary Early

*This article is for general informational purposes only and does not substitute for individual notarial advice. Every situation has its own specifics that affect both the procedure and the documents required.*

If you are planning to execute a pledge agreement over an LLC ownership interest, I recommend beginning your preparation without delay. You are welcome to book a consultation at my notarial office in the Yunusabad district of Tashkent — together we will review your situation, check your documents, and structure the transaction correctly and without unnecessary delays.