Liability of the CEO of a company in Belarus

1) Can a CEO of a private company be personally liable for the acts/omission and / or obligations of the company?

The company’s CEO may bear personal liability to the company for losses caused by the CEO’s wrongful acts (or omissions), in accordance with the company’s charter and applicable law (Part 7, Article 33 of the Law on Business Entities).

The company's CEO is also fully financially responsible for the actual damage caused to the company's property.

2) In which cases may a CEO incur civil liability in connection with performance or a failure to perform his duties?

The CEO may also be held subsidiarily liable for the company’s obligations if it is proven that the company’s bankruptcy was caused by the CEO’s culpable (intentional) actions (Part 2, Clause 3, Article 52 of the Civil Code; Clause 1, Article 9 of the Law on Insolvency Settlement).

3) What violations may trigger administrative liability of a CEO as a company official?

The company’s CEO bears administrative liability, as an authorized official of the employer, for labor law violations where fault is established. 

Such violations include:

• refusal to hire a person with whom the conclusion of an employment contract is mandatory (Part 1, Article 10.12 of the Code of Administrative Offenses);
• violation of occupational health and safety requirements (Article 10.13 of the Code of Administrative Offenses);
• non-payment or partial payment of wages and other amounts due to an employee within the установлен time limits (Part 3, Article 10.12 of the Code of Administrative Offenses), and others.

In addition, the CEO bears administrative liability for failure to take necessary measures to properly organize the company’s activities in compliance with statutory requirements, if such failure results in harm to state or public interests, the environment, life, health, rights, or lawful interests of citizens, provided that the act does not constitute another administrative offense (Article 24.58 of the Code of Administrative Offenses).

In practice, when wrongful actions related to the company's activities are committed (for example, tax evasion), it is most often the CEO who bears the responsibility.

4) Under what circumstances may a CEO face criminal liability?

In the field of labor relations, the CEO may incur criminal liability for unjustified refusal to hire or dismissal of a woman due to her pregnancy, as well as for knowingly unlawful dismissal (Article 199 of the Criminal Code), violation of occupational safety rules (Article 306 of the Criminal Code), and other offenses.

The Criminal Code also establishes liability for specific offenses committed by executives through abuse of official powers, including:

• misappropriation through abuse of official authority (Article 210 of the Criminal Code);
• falsification of a securities issuance decision or prospectus (Article 227 of the Criminal Code);
• unlawful obtaining of a loan or subsidy (Article 237 of the Criminal Code).

In practice, when wrongful actions related to the company's activities are committed it is most often the CEO who bears responsibility.

5) Can a CEO be held liable for the actions of subordinates, in particular, if he delegates a part of his authorities?

A CEO may also be held liable for the actions of subordinates if it is established that the CEO failed to ensure proper production and technological discipline, performance discipline, labor discipline, adequate working conditions, and other statutory requirements under Belarusian law.

It is important to note that the CEO can not delegate powers that, under the company’s charter and applicable law, fall within the exclusive competence of the director.

6) Does the business judgment rule apply to a CEO?

Belarusian legislation does not recognize the concept of the business judgment rule.

7) Can a CEO be held liable for his actions or omission after termination of their office?

A CEO may be held liable for actions (or omissions) committed during their term of office if such actions result in losses to the company or third parties.

8) Can a CEO’s liability be limited by an employment contract, articles of association or internal corporate documents?

Certain conditions and procedures regarding the CEO’s liability may be established; however, limitation or exemption from liability is permitted only within the bounds established by Belarusian law.

9) Is a CEO liable for failure to comply with the tax, accounting and other reporting requirements?

The CEO is responsible for compliance with requirements relating to the submission of tax, accounting, and other statutory reporting.

Delegating bookkeeping duties to an accountant does not release the CEO from the obligation to supervise tax, accounting, and other reporting processes.

10) What practical steps can a CEO take to mitigate the risks of his criminal, administrative and civil liability?

Practical measures:

1. Clearly define duties in job descriptions and describe all business processes in local internal regulations.
2. When delegating authority, ensure proper supervision and control over its execution.
3. Monitor legislative changes on an ongoing basis and promptly update internal documents.
4. Periodically engage external specialists to conduct audits or assist in resolving complex issues.

Authors: Diana Arabina, Yuliya Stefanovich