How to Structure an Investment in Central Asia: Holdcos and Protections
The right structure for an investment in Central Asia is the one that lets a foreign investor own, govern and exit the business under rules it can enforce. In practice that means a holding company in a jurisdiction investors already know, an operating company in the country where the business runs, and a shareholder agreement whose governing law and dispute forum will hold up when something goes wrong.
Most deals we review in the region do not stall on valuation. They stall on structure: a local LLC with no room for share classes, a charter written for a different purpose, no documented route for dividends to leave the country. The fix is rarely exotic. It is a sequence of decisions made in the right order, ideally before the first term sheet.
This guide walks through that sequence for Kazakhstan, Uzbekistan and Kyrgyzstan. It is a framework, not legal or tax advice, and every choice below should be confirmed with counsel in each jurisdiction involved. For the wider case for the region, start with our Central Asia investment thesis.
Key takeaways
- A Central Asian deal usually has three layers: an investor-facing holdco, a local operating company, and the contracts that connect them.
- The holdco choice is a trade-off between investor familiarity, treaty access, substance cost and distance from local courts.
- Kazakhstan's AIFC and Uzbekistan's new TIFC now offer English common law inside the region, which changes the case for staying local.
- Governing law and the dispute forum matter more than the headline jurisdiction, because enforcement is where protections get tested.
- Repatriation and treaty access must be modeled before signing and confirmed with tax counsel in every country involved.
The three layers of a Central Asian structure
Think of the structure as a stack. Each layer answers a different diligence question.
| Layer | What it is | The investor question |
|---|---|---|
| Holding company | The entity investors buy shares in | Can I own this under rules I know? |
| Operating company | The local LLC or JSC with licenses and staff | Is the business real and licensed? |
| Intercompany contracts | IP licenses, service agreements, loans | How does value move between layers? |
| Shareholder agreement | Rights, vetoes, transfers and exits | What happens when we disagree or sell? |
The common mistake is to treat the holdco as the whole answer. A clean parent on top of an operating company with undocumented IP or licenses held in a founder's name is not a clean structure. It is a clean wrapper on a messy one. If ownership underneath is unclear, fix the cap table first and restructure second.
Choosing the holdco jurisdiction
There is no universally right answer. There are four realistic families of options, and each fits a different investor base, market and stage.
Staying with a local entity
Investors buy into the operating LLC or JSC itself. This works for early rounds with local angels, regional strategics, state programs and mainly domestic businesses.
The limits show up later. Many foreign funds will not hold shares in a local LLC directly, local law may limit share classes and option pools, and disputes default to local courts.
Using a regional financial center
The Astana International Financial Centre (AIFC) in Kazakhstan runs its own legal framework, with a court and an International Arbitration Centre whose procedures are modeled on English common law. The AIFC Court reported in December 2025 that the two bodies had completed more than 4,600 cases since opening in 2018, with parties from 36 countries. We cover the wider AIFC ecosystem in our Kazakhstan market map.
Uzbekistan is building a parallel option. The Tashkent International Financial Centre (TIFC) was established by presidential decree in March 2026, applies English common law and equity, and has its own Tashkent International Commercial Court, according to a June 2026 briefing by Rödl & Partner. Its rules and practice are still forming, so treat it as an option to watch, not a default.
Using an international holdco
Cyprus, the UAE and Delaware appear most often on term sheets for regional deals.
- Cyprus is an EU jurisdiction with a long treaty network. It raised its corporate income tax rate from 12.5% to 15% from 1 January 2026, according to KPMG. Its treaty with Kazakhstan has applied since 1 January 2021, according to EY. The Cyprus Ministry of Finance still lists the 1982 treaty with the former Soviet Union as in force for Uzbekistan and Kyrgyzstan, and Cyprus and Kyrgyzstan signed a new tax agreement in June 2026, as Cyprus Business Now reported. When it starts to apply is a question for counsel.
- The UAE is close to the region, familiar to founders and Gulf investors, and has signed tax treaties with countries in the region. Confirm that each treaty is in force and how it treats dividends and gains.
- Delaware is the default for US venture investors and companies expecting US follow-on rounds or a US exit. It adds a layer of US tax and reporting, and its treaty position with each Central Asian country needs checking.
Comparing the options
| Option | Best fit | Watch for |
|---|---|---|
| Local LLC or JSC | Domestic revenue, local investors | Fewer share classes, local courts |
| AIFC entity | Kazakhstan focus, common-law framework | Eligibility, substance, tax position |
| TIFC entity | Uzbekistan focus, common-law framework | New regime, practice still forming |
| Cyprus holdco | European investors, treaty access | 15% rate from 2026, substance |
| UAE holdco | Gulf investors, regional base | Which treaties are in force |
| Delaware company | US funds, US exit path | US tax layer, treaty position |
The shareholder agreement is where protections live
The jurisdiction gets the attention. The shareholder agreement does the work. Where courts are slower and public information is thinner, investors rely on contractual rights more than statutory ones.
A workable agreement for a regional deal covers at least:
- Information rights: periodic management accounts, audited annual statements and data room access.
- Reserved matters: investor consent for new share issues, related-party deals, large debt or a change of business.
- Pre-emption and anti-dilution: the right to keep a stake in later rounds, and the rule for a down round.
- Transfers: right of first refusal, tag-along and drag-along.
- Founder commitments: vesting, IP assignment and enforceable non-compete terms.
- Exit mechanics: what happens if no exit has happened within an agreed period.
Two regional points matter. First, rights must sit where the value sits: vetoes at the holdco mean little if the operating company can issue shares without holdco approval, so mirror key reserved matters in its charter. Second, ask local counsel which document prevails if the charter and the agreement conflict.
Governing law and dispute resolution
Protections are only as good as the forum that enforces them. The question is not which law sounds familiar. It is this: if a founder or co-investor breaches the agreement, where do we go, and will the result be enforced against assets in the country?
Arbitration is usually the answer. Kazakhstan acceded to the 1958 New York Convention on foreign arbitral awards in 1995, and Uzbekistan and Kyrgyzstan in 1996, according to the Convention's list of contracting states. Foreign court judgments are generally harder to enforce than awards, so a clause pointing only to a foreign court can be a weak protection.
Two mistakes come up repeatedly.
What it looks like: an English-law agreement with disputes sent to the London courts. Why it hurts: a London judgment may be slow or difficult to enforce against assets in Bishkek or Tashkent. The fix: international arbitration with a seat and institution counsel confirms are enforceable, or a regional common-law forum such as the AIFC.
What it looks like: an arbitration clause in the shareholder agreement, but not in the IP license or loan agreements. Why it hurts: a dispute splits across forums and the weakest document decides the outcome. The fix: consistent dispute clauses across every contract, coordinated by one counsel.
Currency, repatriation and tax treaties
Investors measure returns in hard currency. Most Central Asian businesses earn in tenge, sum or som. The structure has to show how money gets out, and at what cost. We cover how investors price this in our framework for currency, country and exit risk.
History explains why investors still ask. Until Uzbekistan's September 2017 currency liberalization decree let companies buy foreign currency at market rates for current payments, including profit repatriation, getting profits out was the core obstacle there.
Local incentives also interact with structure. Kyrgyzstan's High Technology Park regime, which exempts qualifying residents from profit tax, VAT and sales tax, was made open-ended in late 2024, according to The Times of Central Asia. Check that such benefits survive when the local company becomes a subsidiary of a foreign holdco.
Before signing, model these items with tax counsel in both jurisdictions:
- The dividend path to the holdco, including withholding tax, any treaty rate and the paperwork to claim it.
- The exit path, including how a share sale is taxed at holdco level versus operating level.
- Currency conversion, including limits, reporting duties and the share of revenue earned in hard currency.
- Substance: real directors, decisions and records where the holdco is registered.
- Incentive regimes, such as HTP, IT Park or AIFC status, and whether a change of ownership affects them.
A staged sequence for structuring a deal
Stage 1: Map the investors. List who will likely invest in this round and the next two. Their requirements decide the holdco more than any tax table.
Stage 2: Clean the base. Confirm corporate history, IP assignments, licenses and the cap table.
Stage 3: Build the holdco. Compare two or three options with counsel and model tax and repatriation for each.
Stage 4: Paper the protections. Draft the agreement, align the charter and keep dispute clauses consistent.
Stage 5: Maintain it. Hold board meetings, keep records where the holdco is registered and report on schedule.
A clean holdco on top of a messy operating company is a wrapper, not a structure.
This sequence is the core of the legal investment structuring work GETVISION ASIA does with founders and business owners in the region, alongside data rooms and investor materials.
Frequently Asked Questions
Not always. Local investors and some state programs work with local entities, but most foreign funds prefer a holdco in a jurisdiction they know, so plan for one before an international round.
It can be, especially for businesses focused on Kazakhstan that want a common-law framework and a local forum with a published track record. Eligibility, substance and tax treatment should be confirmed with AIFC-qualified counsel.
Cyprus raised its corporate tax rate to 15% from January 2026 but remains an EU jurisdiction with a wide treaty network. Fit depends on your investors, the relevant treaty and the substance you can maintain.
Usually as dividends from the operating company to the holdco, subject to withholding tax that a treaty may reduce. Confirm the full path with tax counsel in both countries before signing.
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