Restrictions are imposed on transactions with shares (equities) of foreign "unfriendly" investors

Earlier we have discussed restrictions which were set on transactions with shares in Belarusian legal entities for residents of foreign states which commit unfriendly actions against Belarusian legal entities (Ekaterina Logvinovich wrote about it in an article here).

A list of 190 companies, whose foreign participants (shareholders) are prohibited from disposal their shares (stocks) in the ownership funds of these companies, was set by the Resolution of the Council of Ministers of July 1, 2022 № 436 «On the List of Persons».

The list of companies includes, among others, CJSC «Euroopt», LLC «EUROTORG», LLC «LUKOIL Belarus», LLC «EPAM Systems», JSC «Lidskoe pivo», OJSC «Minsk Watch Plant», LLC «Game Stream», LLC «HENKEL BAUTECHNIK», JSC «Kommunarka», JV LLC «BELITA», JV JSC «SPARTAK».

The Resolution stipulates that in order to protect the interests of the Republic of Belarus the stocks belonging to the above-mentioned investors will be blocked on the depositary accounts of the owners on the basis of the order of the Ministry of Finance on the imposition of restrictions on the disposal of equities.

In the meantime, the Resolution does not specify the mechanism for implementing the ban on the disposal of shares that are not joint-stock companies.

We believe that in order to understand the mechanism of implementation of such a ban, it is necessary to consider the Resolution in conjunction with the Decree of the President of the Republic of Belarus dated 14.03.2022 № 93 «On additional measures to ensure the stable functioning of the economy». The presence in the Decree of an exhaustive list of business entities will not allow their participants (shareholders) to register changes in the constituent documents (we assume that the executive committees will refuse to accept documents to business entities included in the list). Moreover, sub-item 2.13. p. 2 of Decree № 93 will become an obstacle to the conclusion of contracts for the purchase and sale of shares/stocks (since such a transaction is void according to article 170 of the Civil Code of the Republic of Belarus).

Worth paying attention to the fact that the Resolution does not answer the question whether a member of a business company can withdraw from the membership of this company? Unfortunately, no clear-cut answer is possible.