Case from practice. Contribution of the rights to shares of a Belarusian joint-stock company to the share capital of a foreign company

Once again faced with a deal atypical for the Belarusian legislation, we are glad to share our experience with you.

Foreign company "A" owned the shares of the Belarusian joint-stock company and decided to contribute the rights to these shares to the share capital of another foreign company "B". It is interesting that in exchange for the shares of the Belarusian joint-stock company, the foreign company "A" receives the shares of the foreign company "B". 

For clarity, we highlight two steps:

  • step 1 - contribution of the rights to the shares of the Belarusian joint-stock company to the share capital of the foreign company "B";
  • step 2 - transfer of shares of foreign company "B" to the foreign company "A".

Despite the fact that the transaction is carried out abroad, Step 1 is subject to the regulation of Belarusian legislation, and therefore the requirements for transactions with shares of joint-stock companies must be met. The transfer of rights to shares of a Belarusian joint-stock company is possible only after registration by the depository of the relevant document (in this case, an agreement on the transfer of shares), and upon submission of a number of documents in relation to the parties to the transaction.

Step 1 is subject to the requirements of the Belarusian antimonopoly legislation, according to which it may be necessary to obtain consent before the transaction or notification after (depending on the financial statements, as well as the structure of the group of companies).

When implementing such transactions, certain difficulties may arise. We recommend considering the following:

  • agreement with the depository and the parties to the transaction, which contains conditions and terminology atypical for the Belarusian legislation, may delay the process of the transaction;
  • documents in respect of non-resident parties to the transaction must be issued no earlier than 3 months before the date of their submission to the depository;
  • it is necessary to open a "depot" account of the acquirer (if the acquirer does not have such an account).
     

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