Approvals in M&A Transactions in Belarus

It is worth noting that for a successful M&A transaction, it is not only necessary to align the terms between the parties, develop a strategy for implementing the deal, and assess the target’s risks, but in some cases, the transaction must also be approved by certain government authorities. For example, in Belarus, several such approvals are required.

Council of Ministers’ Approval

The Presidential Decree of the Republic of Belarus No. 93 dated March 14, 2022, “On Additional Measures to Ensure the Stable Functioning of the Economy,” stipulates that the sale of shares or stakes in Belarusian companies requires consent formalized as a decree of the Council of Ministers (Council).

Obtaining such consent is not a straightforward process; it involves several stages:

1. Before seeking approval, the seller must conduct a valuation of the shares or stakes being sold by state appraisal organizations. Currently, these organizations are the “Real Estate and Valuation Institute” and the National Agency for State Registration and Land Cadastre. The valuation results in a report determining the market value of the stakes or shares, from which a budget fee is calculated.
2. The seller submits the necessary documents, including the valuation report, to the executive committee. The executive committee verifies compliance with formal requirements within five business days and proceeds with substantive review. It may request additional documents if necessary. Within 30 business days, the committee either approves the transaction, determining the budget contribution amount and its payment deadlines or denies approval if deemed necessary.
3. The executive committee’s decision is forwarded to the State Property Committee, which prepares a consolidated draft decree of the Council based on the committee’s decision. The draft is coordinated with the Ministry of Justice or the Ministry of Finance and then submitted to the Council. Once approved, the Council’s decree is sent to the appropriate state bodies, and within five business days of receipt, the executive committee sends a copy of the approval to the applicant. The approval is valid for one year.
4. Once the approval is obtained, the parties may finalize the transaction. The seller or buyer (or jointly) must pay the budget contribution specified in the decision. During the registration of changes to the company’s charter (if it is an LLC or JSC) or the transfer of shares (if it is a public or private JSC), proof of payment, the approval copy, and the valuation report will be required for administrative actions needed to close the transaction.

Executive Committee’s Preemptive Right to Acquire Shares or Stakes

In some cases, executive committees have a preemptive right to purchase stakes or shares of certain Belarusian companies. Presidential Decree No. 677 dated November 16, 2006, “On Certain Issues of Disposal of Property Owned by Municipalities and Acquiring Property into Administrative-Territorial Units’ Ownership,” establishes this right concerning:

• Stakes or shares in companies listed by executive committees if these were acquired from the state on preferential terms, such as shares acquired during the privatization of JSC “Komintern.”
• Stakes or shares in companies formed from the conversion of state enterprises, collective farms, or agricultural processing businesses.

In these cases, the seller is obliged to notify the executive committee about their intention to sell. The committee has 90 days from receiving the notification to decide whether to acquire the shares or stakes at the price proposed by the seller. If the committee declines, the seller may sell to any third party for a price no lower than that specified in the notification. If the committee decides to purchase, payment must be made within 30 days of the agreement’s conclusion.

Approval by MART

Another standard approval process in M&A deals worldwide involves the antimonopoly authority. In Belarus, M&A deals affecting market competition (referred to as “economic concentration”) require the approval of the Ministry of Antimonopoly Regulation and Trade (MART).

It is important to note that not all acquisitions of shares or stakes require approval, only those meeting specific conditions, such as:

• Acquiring shares or stakes in a monopoly company, or when a monopoly company acquires shares from competitors.
• Transactions where the buyer acquires more than 25% (significant stake) or more than 50% (controlling stake) of shares or stakes.

Approval is necessary if the buyer or target company is a major market player with assets exceeding 16 million Belarusian rubles or annual revenue of over 32 million Belarusian rubles.

When these conditions are met, MART’s approval must be sought, which is issued within one month and is valid for one year.

Authors: Alexander Galko and Mikita Talkanitsa

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