Business restructuring and M&A in Belarus

1) In what forms can the reorganization of a legal entity be carried out?

A legal entity may be reorganized in the following forms:

• merger;
• acquisition;
• split-up;
• spin-off;
• reconstruction.

2) What are the procedures for the division or merger of a company?

In case of splitting off a legal entity, the general meeting makes a resolution on splitting off, which determines the conditions of such splitting off. The rights and obligations are transferred to the newly established legal entities (2 or more) in accordance with the split-off balance sheet approved by the resolution of the general meeting. A legal entity reorganized in the form of a split-up terminates its activities.

In case of merger of legal entities (2 or more), the general meetings of such legal entities make resolutions on reorganization, approve and sign a merger agreement that defines the main terms of the merger. The rights and obligations of each of them are transferred to the newly established legal entity in accordance with the transfer deed. Legal entities reorganized in the form of a merger terminate their activities.

3) How to separate a separate type of activity into a separate company?

If it is necessary to separate a separate type of activity of a legal entity into a separate company, the legal entity may:

• establish a subsidiary company;
• reorganize in the form of a spin-off.

When a legal entity is reorganized in the form of a spin-off of one or more legal entities, the rights and obligations of the reorganized legal entity are transferred to each of them in accordance with the spin-off balance sheet. Thus, a new legal entity (several legal entities) is established, which will carry out one of the types of activity that was carried out by the reorganized legal entity. At the same time, the reorganized legal entity itself continues its main activity. However, it is important to separate a separate type of  activity, different from the main activity of the company, in order to exclude the risks of so-called “corporate breakups”.

4) Is it possible to reorganize a company in case of bankruptcy?

Reorganization of a company may be a measure to prevent insolvency or bankruptcy. However, it is important to bear in mind the possible liability of the reorganized legal entity to creditors. However, after the introduction of the protective shield proceedings, reorganization of a debtor company is not possible.

5) Which government agencies' approvals should be obtained for mergers and acquisitions?

M&A transactions are the type of economic concentration and are subject to the control of antimonopoly authorities.

The general conditions triggering the merger clearance (the consent of the Ministry of Antimonopoly Regulation and Trade for economic concentration).

If the Seller under the transaction is a person from a foreign state committing unfriendly actions against Belarusian legal entities and (or) individuals, or such a person is a shareholder (stockholder) of the legal entity being reorganized, it will also be necessary to obtain the permit of the Government.

Authors: Violetta Liudchyk, Associate 

                Kristina Panchenko, Paralegal