LEGAL BASIS FOR ORGANIZING A PRIVATE CAPITAL ACCOUNT

Аннотация

This article explores the concept of private equity (owner's equity), its economic essence, and the legal framework for organizing its accounting in the Republic of Uzbekistan. The study analyzes the main components of private equity, the relevant national legislation, and international standards that regulate its recognition and reporting. Furthermore, it discusses existing challenges in accounting practices and proposes practical recommendations for improvingthetransparency and efficiency ofprivate equity accounting in business entities. Keywords: Private equity, owner's capital, accounting, legal framework, financial reporting, International Financial Reporting Standards (IFRS), capital structure, Uzbekistan legislation, corporatefinance. Introduction. Private capital is one of the important factors in the formation of a competitive economy and ensuring the sustainable development of business entities. Private capital is the sum of funds invested by the owners of the organization and the profit received from their activities. Its correct and legal accounting plays an important role in ensuring financial transparency. Therefore, the correct organization and management of private capital in accounting must bestrengthened bylegal frameworks. Private capital consists of funds invested by the owners of the enterprise, profit received from activities and capital reserves, and is the main source of ensuring the financial independence and stability of the enterprise. It is defined as the difference between the assets and liabilities of the businessentity. That is: Equity= Assets –Liabilities This capital can be in various forms - in the form of money, material resources, intellectual property or services. The exact amount and composition of equity capital is reflected in the financial statements of the enterprise and serves as an important indicator of its development prospects. Equitycapital consistsof several components:  Authorized capital – the sum of funds invested by the founders when the enterprise was established. These funds are specified in thecharter and are subject to stateregistration.  Additional capital – this type of capital includes funds received from the difference between theissuepriceand thenominal price ofshares, theresults of property revaluation.  Reserve capital – is formed at the expense of allocations from profit and is used to cover accounting losses and pay dividends. https://ijmri.de/index.php/jmsi volume 4,issue4,2025 547  Retained earnings (or losses) – the undistributed part of the enterprise’s profits received in previous years. This capital is thebasis oftheenterprise’s internal investmentcapabilities. There are the following main regulatory and legal documents on accounting for private capital in Uzbekistan: a) Law “On Accounting” (2021, new edition). This law establishes a single legal framework for the organization of accounting, the preparation of financial statements and ensuring their reliability. The reflection of equity components in accounting is also carried out on the basis of thislaw. b) Civil Code. The organization of an enterprise, the formation of authorized capital, and the rights and obligations of the parties participating in them are regulated by the Civil Code. The Code determines the term for the formation of the authorized capital, its minimum amount, and theshares of participants. c) Resolutions of the President of the Republic of Uzbekistan and regulations of the Cabinet of Ministers. For example, the Resolutions “On the Introduction of National Standards of Accounting and Financial Reporting” are aimed at bringing equity accounting closer to international practice. d) IFRS – International Financial Reporting Standards. Most large enterprises and joint-stock companies are required to comply with the requirements of IFRS. IFRS has a separate standard foreachcomponent of equity (for example, IAS 1-Financial Statements). In many developed countries, approaches to accounting forequity differ as follows:  USA – is based on GAAP (Generally Accepted Accounting Principles). Each capital movement isdocumented in detail.  European Union – is based on IFRS, but is harmonized with national standards within the country.  Russia–integration ofnational accounting standards and IFRS has beenimplemented. In Uzbekistan, national accounting standards are being gradually introduced, aligned with IFRS requirements.This will help increase investorconfidence. Thefollowing problems are observed in practice:  Complexity and confusion of regulatory documents – small business representatives do notfully understand them;  Lack ofqualified accountants –especially in districts andrural areas;  Insufficient implementation of electronic accounting systems – this increases the risk of errors;  Incorrect reflection of capital changes in financial statements – this creates distrust for investors and tax authorities. Today, it is possible to automatically record private equity u