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Business Entities in Belarus: forms, how to create, reorganize and liquidate

25 April 2014

There are no specific requirements for foreigners wishing to establish a business in Belarus. Investors, whether Belarusian or foreign, benefit from equal legal treatment and have the same right to conduct business operations in Belarus by incorporating separate legal entities. The procedure requires the fulfillment of certain legal formalities (registration in The Unified State Register of Legal entities and individual entrepreneurs.)

Companies are required to have their own name, authorized fund (the formation of which, unless otherwise is provided by the legislation, is allowed for one year from the date of the state registration of a legal entity, as well as the minimal amount of which is established for several forms of entities by law), management, registered offices and bank accounts.

Companies established in Belarus are subject to the Belarusian law, but agreements concluded by Belarusian companies can be governed by the law chosen by the parties.

The Belarusian legislation allows and defines the following legal forms of business entities:

– Individual entrepreneur;

– Peasant (farm) economy;

– Production cooperative;

– Unitary enterprise;

– General Partnership;

– Special Partnership;

– Additional-liability company;

– Limited-liability company;

– Open joint-stock company;

– Closed joint-stock company.

Other forms of doing business are representative offices and branches of foreign companies.

Attention should be paid to the fact that such distinction concerns the status only, as a set of the law rules determining the peculiarities of creation and activity of the legal entity but not the organizational legal form.

Most businesses in Belarus are legal entities, organized in forms of private unitary enterprise, limited-liability company, additional-liability company, closed joint-stock company, and open joint-stock company, as the above-mentioned forms are the most convenient to perform business activities.

1. Private unitary enterprise

Private unitary enterprise is a commercial organization not endowed with the right of ownership to property consolidated to it by the owner. The founder is the owner of the property of the private unitary enterprise. One individual or one legal entity can be a founder of the private unitary enterprise. It is allowed the establishment of a private unitary enterprise by the spouses. For the unitary enterprise set up by an individual it is allowed to use the word "private” in its name.

The founding document of private unitary enterprise is the Charter. The main body of private unitary enterprise is director, which is appointed by the owner. The owner of the unitary enterprise can be a director at the same time.

Powers of the director of the private unitary enterprise can be transferred under contract to another commercial organization (the management organization) or to an individual entrepreneur (managing director) under the decision of the owner.

Belarusian legislation does not provide minimal amount of share capital for private unitary enterprise. The size of share capital is determined by the owner himself.

A unitary enterprise shall be liable for its obligations with all of the property belonging to it and shall not be liable for obligation of its founder. The owner of the private enterprise has got subsidiary liability for obligations of enterprise if the economic insolvency (bankruptcy) of enterprise has been caused by him (her).

2. Limited-liability company

A Limited Liability Company is a company with a number of shareholders not less than two and no more than fifty, whose authorized fund is divided into shares of certain sizes that are stated in the founding documents.

Belarusian legislation does not provide minimal amount of the authorized fund for the Limited Liability Company; the size of authorized fund is determined by the founders themselves.

The founding document of the Limited Liability Company is the Charter approved by the founders.

Organizational structure of the Limited Liability Company includes:

– Shareholders General Meeting.

Shareholders General Meeting is the supreme authority of the Limited Liability Company that decides the most important questions of the company’s activity.

– Board of Directors or Supervisory Board.

The Board of Directors (Supervisory Board) is formed in case its formation is provided for by the company's Charter.

– Executive authority – Directorate or Director.

Powers of the executive authority can be transferred under agreement to another commercial organization (the management organization) or to individual entrepreneur (managing director) under the decision of Shareholders General Meeting of the company.

– Inspector or Inspection Commission – the control authority of the company.

3. Additional-liability company

Additional Liability Company is a business entity with the number of shareholders not less than two and no more than fifty, which authorized fund is divided into shares of certain sizes that are stated in the founding documents. With regard to the Additional Liability Company, the same rules and regulations provided for by the legislation for Limited Liability Company (the founding document, the number of participants, the size of authorized fund, organizational structure, etc.) are applied.

The only difference between the Additional Liability Company and the Limited Liability Company is that the shareholders of Additional Liability Company jointly bear subsidiary responsibility for the obligations of the Additional Liability Company with their property within the limits determined by the charter of the company, but not less than the amount provided for by the legislative acts, in proportion to the contributions of participants in the authorized fund of the Additional Liability Company. The Charter of the Additional Liability Company may provide for a different procedure for distribution of additional responsibility among its participants.

At present, the minimum size of the subsidiary responsibility of the Additional Liability Company shall be not less than the amount equivalent to 50 basic units.

The size of the basic unit is provided for by the legislation of the Republic of Belarus. From the first of October the basic unit amounts to 130 000 rubbles, which is approximately 10 Euro.

4. Closed joint-stock company

The number of shareholders in the Closed Joint Stock Company cannot be less than two and more  than fifty.

Minimal allowed size of authorized fund for the Closed Joint Stock Company is 100 base units.

Authorized fund is divided into a number of stocks having the same nominal value.

The only founding document of the Closed Joint Stock Company is the Charter.

The organization structure of the Closed Joint Stock Company includes the same elements as the Limited Liability Company.

Shareholders are not liable for its obligations and bear the risk of losses associated with its activities of society within the limits of the value of their stocks.

A shareholder may alienate its own shares only with the consent of other shareholders and/or to a limited number of individuals. Closed Joint Stock Company is not entitled to carry out an open subscription for stocks issued by it or otherwise offer for the purchase to unlimited number of persons.

5. Open joint-stock company

The number of shareholders in the open joint-stock company shall be no less than two. The maximum number of shareholders is not limited.

The minimum size of the authorized fund for open joint-stock companies is 400 basic units.

The authorized fund is divided into a number of shares of equal nominal value.

Founding document of the open joint-stock company is the Charter.

The organizational structure of the open joint-stock company includes the same all elements as the organizational structure of a limited-liability company. However, formation of the Board of Directors (Supervisory Board) in the open joint-stock company is obligatory, if the number of shareholders of such open joint-stock company is more than 50.

Shareholders are not liable for the obligations of the open joint-stock company and bear the risk of losses associated with the activity of the company within the value of their shares.

Shareholder may dispose of its shares to the unlimited number of persons without the consent of other shareholders.

Open joint-stock company has the right to conduct an open subscription of the shares issued by it and free sale of them on the conditions prescribed by the legislation.

6. Representative offices of foreign organization and branches of business entities

A representative office of a foreign company is its detached division of this foreign organization located in the territory Republic of Belarus, carrying out protection and representation of interests of the foreign organization and other functions that are not contrary to the legislation.

A branch of a foreign company is its detached division located on the territory of Belarus that can exercise all or part of its functions, including the functions of representation.

The property of the representative offices or branches of the legal person is accounted separately to the balance of the legal person, which has created these representative offices or branches.

Belarusian legislation does not allow foreign business entities to establish branches, that is why foreign organizations have the right to establish detached divisions only in the form of representative offices.

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Consultant

Anna Aniskevich

Head of construction subpractice, Attorney at law

+375 17 226 10 26

ava@revera.by