THE ROLE OF MEZZANINE CAPITAL IN FINANCING ENTREPRENEURIAL ACTIVITY AND ITS LEGAL REGULATION

Abstract

This article is aimed at studying the role of such a non-traditional, hybrid tool as mezzanine financing in the context of insufficient flexibility and risk acceptance in innovative projects of traditional methods of financing entrepreneurial activity (bank credit, leasing). Mezzanine, combining elements of debt and capital, allows companies to attract large amounts of capital without reducing the existing share of shareholders and occupies a middle position among the top creditors and shareholders in terms of priority in the event of bankruptcy. The main part of the research consists of a comparative analysis of the legal regulation of the criterion. In the USA, this mechanism is regulated within the framework of the Uniform Commercial Code and the Securities Act of 1933, the most important of which is the criterion — the creditor’s right to immediate and out-of-court confiscation of the pledge of shares/stakes. In Great Britain, the “Companies Act 2006,” “Insolvency Act 1986,” and “FSMA 2000” rules confirm the structural subordination of the criterion and exclude its professional activity from licensing. The article details the relationship between the main participants of the mezzanine transaction — the borrower, senior creditor, and mezzanine creditor — their sequence, collateral object (shares/stakes), and income requirements. In conclusion, based on the similarities of the criterion with traditional types of financing in Uzbekistan, the need to implement relevant norms into national legislation, including the prompt introduction of collateral and providing legal clarity for private investments, is substantiated.