On main amendments in corporate legislation of Belarus
On January 27, 2021, the Law of the Republic of Belarus dated January 5, 2021 No. 95-Z "On Amendments to the Law on the Issues of Commercial Companies" (hereafter Law on Amendments) was published, which introduces a number of changes to the activities of companies (LLC, ALC, CJSC, OJSC). The changes will come into force on April 28, 2021. Below are the key amendments.
- Shareholders are allowed to make contributions to the property of a company without increasing the authorized capital and changing the shares size (value of shares). This allows the possibility of additional financing of the company by the shareholders .
- Introduced provisions that allow to implement the convertible loan mechanism by offsetting monetary claims when making additional contributions to the authorized capital (paying for shares of an additional issue).
- For all companies have been legalized the possibility of granting options to company’s employees, members of the executive body, the board of directors (supervisory board) through the issue of additional shares (acquisition by the company a share on the balance sheet) for the purpose of subsequent sale or free transfer to mentioned persons.
- It is allowed to execute shareholder’s agreements (agreements on the exercise of the rights of shareholders) between all the company’s shareholders at the same time (for example, earlier in an LLC with two shareholders, it was basically impossible to execute such an agreement).
- The number of Closed Joint Stock Company (CJSC) shareholders is not limited (now there is a limit, that the number of shareholders of a CJSC should not exceed 50), unless otherwise provided by the charter.
- The mandatory rules that provide for the preemptive right of CJSC shareholders to purchase shares, which are sold by other shareholders, have been canceled. At the same time, the preemptive right to purchase shares of a CJSC by its shareholders may be provided for by the charter of the respective company on an individual basis.
- Heirs of CJSC shareholders receive shares without the consent of the CJSC.
- The list of essential conditions to be agreed upon in the agreements on mergers and acquisitions was clarified, as well as the list of issues to be reflected in the decision on division, separation and transformation.
- The question of the quorum required for making decisions within the framework of the reorganization procedure has been detailed:
- on the approval of the charter of the newly created (reorganized) company, separation balance sheet / deed of transfer – at least 3/4 of the votes of the persons participating in the meeting; and
- election of governing bodies – at least 50% of the votes of the persons participating in the meeting.
- Only the shareholders owning in aggregate 10 or more percent of shares in the authorized capital (shares) of the company can get access to accounting and reporting documents, to the minutes of meetings of the board of directors (supervisory board).
- A company with one shareholder can create a company, where it will be the only shareholder.
- The remote form of participation in company meetings has been legalized.
- A meeting of the board of directors can be held at the initiative of the director, internal inspector, board member and auditor (previously only at the initiative of the chairman).
- The decision of the board of directors can be appealed in court if it is adopted:
- in violation of the requirements of the law or the charter; and
- violates the rights and (or) legitimate interests of a shareholder (former shareholder), a member of the board of directors.
- The board of directors has the right to suspend the powers of the executive body (director), if such a possibility is prescribed in the charter.
- The competence of the board of directors of JSC has been expanded in terms of:
- settle disputes between the management bodies of the joint stock company;
- define corporate rules;
- to monitor the effectiveness of corporate governance practices.
- The list of affiliated persons of the company has been clarified, to which, in particular, deputy directors and his relatives are additionally assigned, and from which representatives of the state in the governing bodies of business companies are excluded, shares in the authorized capitals (shares) of which belong to the Republic of Belarus or its administrative-territorial units.
Companies registered before the entry into force of the Law on Amendments, upon the first introduction of amendments and (or) additions to their charters, must bring them in line with Law on Amendments. Until they are brought into conformity with the Law on Amendments, the statutes of the companies are valid in the part that does not contradict the Law on Amendments.
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