On July 23, 2024, a new version of the Law “On Investments” came into force, which became a sign that Belarus is ready for a more reactive development of public-private partnerships.

However, with the entry into force of the new version of the Law, there remained instruments whose implementation mechanisms were not regulated. Practicing lawyers and investors expected more detailed explanations from the regulator.

On September 26, 2024, Resolution of the Council of Ministers of the Republic of Belarus dated September 4, 2024 No. 650 (hereinafter referred to as the Resolution) came into force, clarifying the procedures and criteria that Belarusian and foreign investors will encounter in practice.

Violetta Ludchik, co-head of the Corporate Law, Mergers and Acquisitions practice at GRATA International, Belarus and Diana Arabina, assistant lawyer at GRATA International, Belarus, commented on the innovations.

1. A number of new Regulations have been approved, establishing the procedure for implementing investment projects:

When making a decision to conclude a special investment agreement, the government body assesses the possibility and need for purchasing products produced under the investment agreement through the public procurement procedure. That is, if the purchase of products is inappropriate for the state, the conclusion of a special investment agreement will be refused;
the procedure for agreeing on a draft investment agreement by interested parties has been determined, as well as obtaining an opinion on the effectiveness and financial feasibility of the investment project.

2. A list of administrative-territorial units has been approved, on the territory of which the following are established:

features of concluding investment agreements, providing benefits and (or) preferences;
conditions (criteria) that an investment project applying for support in the form of budget transfers must meet. Among the conditions, as expected, issues of job creation and plans for the return on investment projects were included.

3. Provisions on the procedure for concluding, amending and terminating investment agreements were approved.

In particular, the regulation establishes a requirement for the investor’s solvency. Solvency must be confirmed by an audit report, information on account balances, letters of intent from banks or investors to provide borrowed funds.

4. It is provided that in the event of termination of investment agreements on grounds other than the execution of the investment agreement, a procedure for compensation of provided benefits and preferences is provided. It is important that reimbursement of benefits and preferences provided to the Republic of Belarus is a general rule. Investors may be exempted from this obligation on a declaration basis. Based on the application, the investor may also be provided with an installment plan (deferment) of compensation. The application, in particular, must be accompanied by information about the degree of readiness of the project and the volume of investments made by the investor.

This provision does not apply to investment agreements concluded before July 10, 2024 (inclusive).

5. Separate provisions are devoted to the conclusion of special investment agreements, as well as the inclusion of investment projects in the list of preferential investment projects.

An investment project is included in the list of preferential investment projects based on the decision of the executive committee to include such an investment project in this list. Decisions are made on the basis of statements from the investor, which must indicate the name of the project, data about the object whose construction is proposed, data about the land plot on which the project is planned to be implemented, as well as (if any) experience in implementing investment projects.

6. Particular attention is paid to the construction of real estate and infrastructure during the implementation of investment projects. The resolution establishes the following features:

the investor has the opportunity to reimburse costs or part of them for the construction of infrastructure facilities necessary for the implementation of the investment project; the minimum amount of reimbursable costs is at least 50% in relation to distribution infrastructure and 100% in relation to main engineering infrastructure;
compensation is possible if such a condition is present in the resolution of the Council of Ministers on the conclusion of an investment agreement, adopted in agreement with the President;
Reimbursable costs include actually incurred capital costs for the development of project documentation, construction of infrastructure facilities at the expense of the investor’s and (or) implementing organization’s own funds, including those made through loans (costs are included without VAT).
The deadline for submitting an application for reimbursement of costs (part of the costs) is no later than six calendar months from the date of signing the act.

Authors:

Ludchik Violetta, co-head of the “Corporate Law, Mergers and Acquisitions” practice at GRATA International, Belarus

Arabina Diana, legal assistant, GRATA International, Belarus