M&A and Private Equity legal update - November 2015
  Dear clients and cooperation partners,

We are pleased to introduce this Corporate and M&A legal update with a special report on the Baltic M&A and Private Equity Forum held a few weeks ago in Tallinn. We will also present the nominees and winners of the Baltic M&A and Private Equity Awards 2015.

The year 2015 has been very busy for our Corporate and M&A Team as well as for our clients. We will bring you a selection of transactions advised by the team in recent months. In addition, you will find selected legal news from Europe, the Baltics and Belarus.

We wish you an interesting read and a successful close of the year.

Toomas Prangli
Toomas Prangli
Co-managing partner of SORAINEN and co-head of the Corporate and M&A Team in Estonia

Algirdas Pekšys
Algirdas Pekšys
Head of the SORAINEN Corporate and M&A Team in the Baltics and Belarus


Baltic M&A and Private Equity Forum gathered leading market players

Baltic M&A and Private Equity Awards 2015

  EU: Daily travel by employees to irregular work locations should be paid according to a recent decision by the Court of Justice of the EU (CJEU)  

ESTONIA: Provision of services vs employment relationship

Two partners with SORAINEN Estonia appointed to government-level committees


LATVIA: Court practice in Latvia in board liability cases – developing, but still unstable

Employers may recover work remuneration paid to an employee

An employee who returns from child care leave must be given either their previous or similar/ equivalent work


LITHUANIA: Specifics of selling shares of private limited liability company

Adoption of euro: required amendments to articles of association – half term almost passed


BELARUS: A company with only one shareholder may be established

Shareholders agreement


Baltic M&A and Private Equity Forum gathered leading market players

The 6th Baltic M&A and Private Equity Forum took place on 29-30 October 2015 in the Creative Hub Kultuurikatel in Tallinn, bringing together over 260 participants. The Forum was moderated by Toomas Prangli and Meelis Mandel, Editor-in-Chief of the Estonian business newspaper Äripäev.

The Forum opened with a keynote speech from the Ukrainian Minister of Economic Development & Trade, former investment banker Aivaras Abromavičius (pictured above), who told the Forum that major reforms by the new government have taken Ukraine first to stabilisation and now to a growth path. The Minister spoke of bold reforms in the police, banking and other key sectors, additionally announcing plans to start major privatisation. Based on the World Bank Group’s recently published Doing Business 2016 rankings, Ukraine has risen to 83rd position by ease of doing business compared with two years ago, when it occupied 112th place.

The Baltic private equity market has been revived by public initiatives, including that of the Baltic Innovation Fund. Laimonas Skibarka, Co-Managing Partner of SORAINEN, led a panel of new fund managers who have recently raised new funds. Livonia Partners was the first major fund manager to register a fund in the Baltics, where the transparent ecosystem allows this for much lower costs than in the financial hubs of Europe. Kimberly Romaine, the Director of Private Equity Communications Limited, led the panel of fund investors (limited partners), whose main message to fundraisers was to remain patient and persistent when speaking to investors.

James Oates, CEO of Cicero Capital, a specialist investment company in CEE, led two exciting panels of investment bankers and private equity investors from the Baltics and Poland. The first panel discussed trends in the Baltic M&A market, where we will continue to see consolidation in many sectors, but where companies face challenges to go across the border upwards in the value chain. The second panel, “Men Don’t Cry – Q&A Hard Ball”, provided the audience with an entertaining angle on everyday challenges in making deals in the Baltic markets.

This year’s Forum also focused on outbound investment from the Baltic region. Jor Law (pictured above), an Investment Committee Member at GF Investments in China, gave an overview of capital flow from China to Europe. Baltic success stories in Asia were moderated by Thomas Lagerqvist, a Swedish lawyer with over 20 years of experience in China. Eva-Maria Õunapuu, founder of Estonian cosmetics producer JOIK, explained the challenges of expanding to Japan, while Julen Laporte, CEO of Latvian cosmetics producer Stenders, presented a case study on entering the Chinese market. Joakim Helenius, Chairman and CEO of Trigon Capital, offered a different perspective of African markets, where the same investments can yield an infinitely greater upside, if successful.

The second day of the Forum started off with trends and the investment climate globally. An impressive panel of international experts was led by Michael Drury, Chief Economist at McVean Trading. In line with tradition, the Forum ended with a special session on human interests, moderated by Kristjan Kalda of BaltCap. Finally, Estonian sports biologist Kristjan Port explained the choices of a MAMIL (“middle-aged man in lycra”) and urged everyone to live and work in a balanced way.

The Forum is co-organised by Baltic business media leaders Äripäev (in Estonia), Dienas bizness (in Latvia), Verslo žinios (in Lithuania), and leading international business law firm SORAINEN, in co-operation with the Estonian, Latvian and Lithuanian Private Equity and Venture Capital Associations. This year, the co-organisers were also BaltCap, a leading private equity and venture capital investor in the region, and the Global Interdependence Center.

The co-organisers look forward to meeting everyone interested in Baltic M&A and private equity markets again in autumn 2016 in Riga.

To revisit the two-day event, see the presentation slides and photo gallery plus the video about Ukraine shown by keynote speaker Aivaras Abromavičius.



Baltic M&A and Private Equity Awards 2015

For the second year, the Baltic M&A and Private Equity Forum also featured the Baltic M&A and Private Equity Awards. Presented at the awards gala held on the eve of 29 October, the awards covered four categories – (1) the Baltic Private Equity/Venture Capital Deal of the Year 2015, (2) the Baltic M&A Deal of the Year 2015, (3) the Outbound Deal from the Baltics 2015 award, and (4) the Annual Achievement Award for the Baltic Private Equity & Venture Capital Industry.

M&A, private equity and venture capital transactions nominated for the awards were selected by a committee consisting of market participants and experts: Meelis Mandel, Editor-in-Chief at Äripäev, Kristjan Tamla, CEO at Swedbank Investment Funds, Arnis Sauka, Director of the Centre for Sustainable Business at SSE Riga, Kristīne Bērziņa, Founding Partner at Livonia Partners, Martynas Visockas, Partner at Alpha Advisors, and Jonas Jokštys, Chairman of Modus Group.

The committee selected the winning deals according to the following criteria:

  • Strategic importance of the deal for the Baltic market.
  • Value of the deal and turnover of the target.
  • Complexity and/or innovative nature of the deal.
  • Financing and payment structure of the deal.
  • Involvement of Baltic stakeholders (eg, buyer’s managers/target, advisers, financiers).

The nominees for the Baltic M&A Deal of the Year 2015 were:

  • Acquisition of a 99.1% stake in EG Võrguteenus by Elering from Fortum Heat and Gas, Gasprom PJSC and Itera Latvija.
  • Acquisition of Allegro Baltics by Eesti Meedia from Naspers Limited.
  • Acquisition of the retail banking business of Danske Bank in Latvia and Lithuania by Swedbank.
  • Acquisition of Cgates by Starman from SEB Venture Capital and Advanced Broadband.
  • Acquisition of Latgran by Graanul Invest from BillerudKorsnas and Baltic Resources.
  • Acquisition by Euromin S.A of a 43.25% stake in JSC Ventspils Nafta from JSC Latvijas Naftas tranzīts.

Acquisition of Latgran by Graanul Invest from BillerudKorsnas and Baltic Resources was named the Baltic M&A Deal of the Year 2015. The jury members described the deal as “an excellent example of how a company in domestic ownership is successfully utilising local timber resources and expanding its production to higher value added business activities”.

The nominees for the Baltic PE/VC Deal of the Year 2015 were:

  • Acquisition of Fits.me by Rakuten from Conor Venture Partners, Primary Venture Partners, Entrepreneurs Fund Management, SmartCap and Fostergate Holdings.
  • Acquisition of a 30.51% stake in Eco Baltia by EBRD.
  • Acquisition of BPT Real Estate by BaltCap from Northern Horizon Capital.
  • Acquisition of a 75% stake in Citadele Bank by Ripplewood Investments from Privatizācijas aģentūra VAS.
  • Closing of a USD 6.5 million Series A funding round by Trafi.
  • Closing of a USD 58 million Series C funding round by TransferWise.

The closing of a USD 58 million Series C funding round by TransferWise was awarded as the Baltic PE/VC Deal of the Year 2015. The jury members noted that TransferWise had also been awarded the EY Young UK Entrepreneur of the Year 2015 title this year.

The nominees for the Outbound Deal from the Baltics 2015 were:

  • Acquisition of business of VLT slot casinos from Pasquale Di Gaetano – Judica Concetta and sons.
  • Acquisition of Lantmännen Doggy by NDX from Lantmännen.
  • Joint venture by Food Union with Japfa in China.
  • Acquisition by Food Union of Premier Is from Erhvervsinvest.

The first award for Outbound Deal from the Baltics 2015 went to NDX for its acquisition of Lantmännen Doggy from Lantmännen. This was described as a “notably large deal opening up new export markets”.

Photo: Krišjānis Zariņš from EIF presenting an award to Kaido Veske from Livonia Partners

The nominees for the Annual Achievement Award for the Baltic Private Equity & Venture Capital Industry, established by the European Investment Fund (EIF), were chosen from among nominations from EstVCA, LitVCA, LVCA, Altum, Invega, KredEx, and the EBRD. The EIF’s aim was to highlight the event, activity or market participant that made the most significant contribution to the development of the Baltic private equity and venture capital industry last year. The award went to Livonia Partners for their active contribution to the Baltic private equity industry.

EU: Daily travel by employees to irregular work locations should be paid according to a recent decision by the Court of Justice of the EU (CJEU)

Spanish security system provider Tyco breached working time guarantees by refusing to pay its mobile workers for travelling to different work locations and back. Tyco operated a system where its workers did not have a regular office but would travel each day from home to client locations and back. According to the CJEU, the working time of such employees starts on leaving home, which may be before regular working hours. Thus travel hours should be paid additionally and may also qualify as overtime.

In the event of a dispute over working time or remuneration, the national courts of the Baltic States would rely on CJEU case law. The case of the Spanish company is likely to affect employers and employees in the communications, construction, sales, energy, instalment services and similar sectors, where employees’ work involves visiting different locations.

As an example, the Lithuanian Labour Code allows an employer and employee to agree on special compensation payable for work of a mobile nature. One can assume that companies offering such compensation would have better grounds against claims of this kind.

The full text of the court judgment is available here:

Estonia: Provision of services vs employment relationship

Significant recent judgments have created a serious tax risk for certain relationships where “one-man companies” are used to provide services to another company (also known as LLC-ism). In the past few months, the Estonian Supreme Court has handed the Tax and Customs Board three relevant victories and found that service fees paid to a company can, in principle, be reassessed as salary.

The Tax and Customs Board (TCB) has already announced its intention to actively pursue the opportunity of taxing service fees as salary and has published its views on the issue. It also promised to begin contacting companies apparently involved in LLC-ism in the near future. It is therefore reasonable to proactively review the characteristics of these relationships and assess the tax risks in order to avoid surprises from a possible future conversation with a revenue officer.

According to the judgments and TCB guidelines, a significant tax risk can arise in situations where:

  • services are invoiced monthly, usually in the same amount;
  • all or most of the services are provided to a single customer;
  • the same person belongs to the management board of both the service provider and the service recipient;
  • a service agreement has the characteristics of an employment contract (eg, fixed working hours, subordination, supervision by employer)

However, the TCB’s reassessment opportunities are not unlimited – each relationship must be assessed on a case-by-case basis and the fact of providing services does not automatically lead to taxation. The burden of proof is on the tax authority to show that the service contract was ostensible and the parties were in fact acting as if under an employment contract.

Providing services through a one-man company may legitimately be a regular business which cannot be subjected to salary taxes. In particular, intervention by the tax authority would be unjustified if the company providing services had other operations as well or provided services to many companies or if the relationship did not have the characteristics of an employment contract.

Estonia: Two partners with SORAINEN Estonia appointed to government-level committees

Recently, the Estonian Minister of Justice Urmas Reinsalu formed a lead group focusing on raising the competitiveness of the Estonian business environment and an advisory committee to assist the minister on issues related to the development of Estonian legislative policy. SORAINEN Partner Karin Madisson was appointed as a member of the lead group, while SORAINEN partner Allar Jõks was appointed as a member of the advisory committee.

The aim of the assembled lead group is to pinpoint areas that most inhibit entrepreneurship and which call for change and to put forward legislative proposals as to how the state can foster entrepreneurship and enliven the economy. Mr Urmas Reinsalu said that to raise Estonia’s competitiveness in the region, we must revise current rules and restrictions.

The primary task of the advisory committee is to provide an opinion on a plan to reduce the volume of legislation, which the Ministry of Justice prepared in August. In addition, the advisory committee is expected to formulate its opinion about reports on legislative development in Estonia prepared annually by the minister of justice, to discuss and decide on specific initiatives related to legislative policy or legislative drafting as well as to put forward recommendations to reinforce good legislative practice.

We are pleased to advise that SORAINEN clients and cooperation partners can make suggestions on improving the legislative and business environment in Estonia through Allar Jõks and Karin Madisson.

Karin Madisson
Karin Madisson


Latvia: Court practice in Latvia in board liability cases – developing, but still unstable

We have recently prepared a study on court practice in Latvia in board liability cases. A short summary of our main findings appears below.

The study covered second and third instance judgments of Latvian courts in board liability cases between 2010 and 2014. In most of the cases, claims against board members were brought by insolvency administrators. This is understandable as an insolvency administrator has a legal duty to review the possibility to bring a claim against board members of an insolvent company. However, compared to the situation before 2010, the amount of claims against board members brought by other persons (mainly shareholders) is steadily increasing.

A larger amount of court cases helps to increase the awareness of judges of legal concepts related to board liability. As a result, we may conclude that in general Latvian courts have sufficient knowledge about basic issues of board liability. On the other hand, as most of the cases reviewed by the courts are still quite primitive, for example, on claiming losses from a board member who has emptied the company’s bank account by transferring company funds to their own accounts without any justification whatsoever, Latvian courts still lack experience in more complicated cases. Therefore, unless the circumstances of the case are very simple, the result of a board liability case can still be quite unpredictable. Thus, we have found court cases where in three different instances with (in essence) the same circumstances the decisions in each case are very different (even by one and the same court). Another important issue is the length of the court process, since deciding a case in three instances takes between five to seven years on average.

As for substantive issues, the following conclusions by Latvian courts are important to note.

A claimant may freely elect to bring a claim against one or several board members

The Latvian courts have widely agreed that even if several board members might be responsible for losses caused to a company (and this is especially so if there is no internal division of responsibilities among the board members), the claimant enjoys full freedom to elect to bring a claim against one or several board members; moreover, the courts are rejecting board members’ complaints in this respect. At the same time, the court has also confirmed that joint and several liability may only apply to board members who have been in their positions simultaneously.

Strict approach to shareholders’ meeting decisions on releasing the board from liability

The Latvian Commercial Law (Section 173) provides that a shareholders’ meeting may resolve to release a board member from liability for losses caused to a company if the loss has occurred and the circumstances of the board member’s activities have been disclosed at the shareholders’ meeting. When evaluating a decision taken by shareholders’ meetings on releasing a board member from liability, in one instance the Supreme Court resolved that a decision by the shareholders’ meeting was not valid because on the date of the respective shareholders’ meeting not all of the losses up to the last cent were known to the company. In addition, the Supreme Court noted that from the minutes of the shareholders’ meeting it was not clear if the shareholders had actually discussed the issue in sufficient detail. Although this Supreme Court decision is disputable at least to some extent, nevertheless it confirms that any decision on releasing board members from liability should be treated very carefully. 

Board liable for additional losses caused to the company due to failure to file for insolvency

In general, the board members are of course not liable for normal business risks and therefore there is no general liability of board members in the case of insolvency of a company. However, in one case the Latvian court concluded that if the board had filed for insolvency of the company immediately after receiving a State Revenue Service decision on imposing a fine (which the company was not able to pay), the State Revenue Service would not have been able to calculate late payment penalties and therefore the board was liable to the company for calculated late payment penalties.

Latvia: Employers may recover work remuneration paid to an employee on the basis of a judgment executable with immediate effect if a higher instance court decides the case differently and rejects the employee’s claim

Under Latvian Civil Procedure Law, a court can rule that the judgment must be executed immediately even though it can be further appealed. This applies in certain cases, including claims related to payment of work remuneration. In practice, from time to time this leads to a situation when a higher instance court decides the case differently, ie in favour of the employer. So far the problematic issue for employers has been recovery of work remuneration paid to an employee on the basis of a mistaken lower court judgment. In essence, under the Civil Procedure Law, recovery was possible only if the judgment of the lower court was based on false information or forged documents submitted by the employee. 

In all other cases, including the situation where the judgment of the lower court has simply been mistaken due to incorrect interpretation of the law, the employer was actually made responsible for the mistake of the court, as it was not possible to claim back from the employee or anybody else any amounts paid under a mistaken judgment which had already been executed. Moreover, under Latvian law the term “work remuneration” is interpreted widely and includes an employee’s salary, various supplements, bonuses, severance pay, compensation for forced absence from work, and the like.

On 16 April 2015, the Latvian Constitutional Court (the Court) ended this problem by delivering judgment in case No. 2014-13-01, by which the Court ruled that Section 635 part 6 of the Civil Procedure Law does not comply with the first sentence of Section 92 of the Constitution of Latvia providing that “everyone has the right to defend his/her rights and lawful interests in a fair court”, to the extent that it relates to stringent rules with respect to reversal of enforcement of judgment in cases concerning recovery of work remuneration. The Court also ruled that this provision of the Civil Procedure Law is no longer in force starting from 1 November 2015.

Latvia: An employee who returns from child care leave must be given either their previous or similar/ equivalent work

Latvian Labour Law does not prohibit an employer from liquidating an employee’s position while the employee is on child care leave. However, in that case the employer must remember that under Section 156 part 4 of the Labour Law, they must still ensure the particular employee receives similar or equivalent work with not less favourable conditions and employment provisions on returning from leave. According to a judgment of the Latvian Supreme Court of 12 November 2014 in civil case No. SKC-2608/2014, the Labour Law does not make this obligation conditional on the employer’s actual possibilities.

In any event, this judgment is likely to change current practice when employers terminate employment contracts with employees who return from child care leave to find that their employers have no job for them. This approach is based on the assumption that all prohibitions for the employer not allowing them to terminate an employment contract with various categories of employees are stated in one Section of the Labour Law (ie Section 109) and employees who return from parental leave generally do not fall into any of these categories.

The judgment also raises other issues, for example, for how long a period the employer must keep an employee who has returned from child care leave and when it would be appropriate for the employer to terminate an employment contract with that employee due to a reduction in the number of employees (eg due to lack of work or restructuring). This is especially so in situations when both the employer and an employee returning from child care leave are aware from the very beginning that the employer is not able to ensure any work for the employee.

Eva Berlaus
Eva Berlaus
Office Managing Partner


Lithuania: Specifics of selling shares of private limited liability company – notarial approval vs accounting of shares by financial market professional

Until 2015, share sale agreements of private limited liability companies (in Lithuanian: uždarosios akcinės bendrovės) were concluded in simple written form. However, a new requirement in the Civil Code has come into force as of 1 January 2015 and has brought some changes to the deals market. The main change is that share sale agreements of private limited liability companies should be approved by a notary if (i) a shareholder sells 25% or more shares in the company or (ii) the price of shares under sale exceeds EUR 14,500. An exemption for a notarial deed is provided in cases when administration of securities accounts of the shareholders are transferred to securities account administrators. In that case, an accounting of company shares is performed by a financial market professional (eg a financial broker or a bank), though not by the manager of the company as was normally their function until the changes.

The main purpose of the new requirements is to ensure more transparency in the sale of shares of private limited liability companies, eg to make reliable records about the moment of transfer of title and to restrict possibilities to make backdated amendments to agreements. Practice has already shown that both ways of dealing with share sale transactions, either through a notarial deed or through the transfer of accounting of shares to a financial market professional, have their own specifics. These are briefly described below:

  1. Notarial deed:
    1. Normally,   notaries  charge   approx  0.4-0.5%   of   the  transaction   value   with  a  cap  on   the   notary’s   fee  up  to EUR 5,792.40. For this reason, it is important to assess in each case whether it is more beneficial to proceed with a notarial deed instead of transferring the accounting of securities to a financial market professional.
    2. Uncertainties arise as to implementing the right to an option (ie the right to acquire shares in the company from another shareholder under specified conditions), which is quite a common mechanism in a shareholders’ agreement. Practice on the right to an option has not yet been shaped, so it is still unclear whether agreements on the right to an option should be approved at the moment of conclusion (ie alongside the shareholders’ agreement) or at the moment of implementation (ie when the condition to exercise the right to the option arises). Another uncertainty is how to calculate the notary’s fee when the right to an option is approved by the notary at the moment of conclusion. Indeed, setting the price of shares to be purchased under an option arrangement is deferred to the future and is often linked to the financial results of the company or an independent valuation.
    3. Additional formalities may extend the sale process if, for example, a foreign seller or purchaser is not able to appear before a notary in person. They would need to issue their representatives a notarized power of attorney, have it apostilled (depending on the country of residence or establishment) and translated into Lithuanian.

  2. Transferring accounting of shares to a securities account administrator:
    1. Since the beginning of the year, more than 80* Lithuanian companies have transferred the administration of securities accounts to financial brokers or banks. Data on all these companies can easily be found on the website of the Lithuanian Central Securities Depository (LCSD). Information appears on the LCSD website when a financial broker or bank registers private limited liability companies with the LCSD as issuers, opens issuing registration accounts, assigns ISIN codes, and performs other formalities. Normally, transactions of large companies are confidential until the closing of a transaction, whilst the company data on the LCSD website appears until closing or even until the signing stage as the outcome of transferring shares to the securities account administrator. The foregoing data may trigger assumptions among third parties about intentions to sell the company, which may of course not always be the case. 
    2. Another point is that before making a record in the securities account, the financial broker or the bank requests some additional documents, eg instructions by the seller and the buyer to make records about the transfer of shares, extracts from the register about each party, the share sale agreement itself, and the like. These formalities may sometimes slow down the transaction process unless well organised by all participating parties.

*Lithuanian Central Securities Depository: November 2015

Lithuania: Adoption of euro: required amendments to articles of association – half term almost passed

As of 1 January 2015, alongside adoption of the euro, a special law was introduced imposing requirements on all companies (those established until 1 December 2014) to convert the nominal value of shares and the amount of their share capital from the old currency (litas) to euros in accordance with specific conversion procedures. Amended articles of association should be registered with the Register of Legal Persons within 24 months after the requirement entered into force, ie until 1 January 2017. One year of the grandfathering period is still left.

In practice, companies amend their articles of association to comply with conversion requirements alongside other amendments caused by other ongoing corporate reasons such as the need to increase share capital, forming the management board, and so on. If shareholders do not foresee changes in their corporate activity that could require amendments to the articles of association within one year onwards, it is advisable to put the currency conversion question on the agenda of the next annual general meeting of shareholders of the company to ensure the conversion requirements are duly complied with by 1 January 2017.

Detailed conversion procedures may be found here (available in Lithuanian only).

Karina Kuizinaitė
Karina Kuizinaitė
SORAINEN Lithuania


Belarus: A company with only one shareholder may be established

Under the amended Law on Companies, a company may be established by one founder or may have one shareholder (including in cases where a company with one shareholder has been established as the result of reorganisation). At the same time, a company with one shareholder may not establish another company where it remains the sole shareholder. These amendments should have a positive effect on establishment, management, and overall activity of companies in Belarus:

Simplified procedure for company formation

A decision on company formation is made solely by its founder. Hence, no need arises to hold a founders’ meeting, to conclude a special agreement on company formation, or to organise a founding meeting.

Simplified company management

Since the shareholders’ meeting acts as the supreme management body of a company, the need to call and hold a shareholders’ meeting no longer exists. These amendments allow to reduce the time needed for making decisions on key issues of company operation and to avoid time-consuming procedures of calling and holding shareholders’ meetings.
Simplified sale of a unitary enterprise

Currently, a unitary enterprise can be sold either by way of sale of a registered set of assets or as the result of reorganisation of a unitary enterprise into a limited liability company and subsequent sale of its shares.

Previously, the latter option has always required involvement of a second shareholder due to legislative restrictions on the minimum number of shareholders as well as subsequent sale of the second shareholder’s share. Nowadays, a unitary enterprise may be reorganised into a limited liability company without engaging the second shareholder and its 100% shares may be transferred to a third party.

At the same time, the amended Law on Companies made it impossible for a sole shareholder to exit from a limited liability company. The sole shareholder may terminate its shareholding only by disposing of 100% shares or liquidating a company.

Belarus: Shareholders agreement

Investors have long awaited the possibility to conclude a shareholders’ agreement. This has finally been allowed by the amended Law on Companies. Under the amended Law, a shareholders’ agreement may be concluded to specify how shareholders exercise (refrain from exercising) their shareholding rights.

A shareholders’ agreement may set the following obligations for the parties:

  • to vote in a certain way at a shareholders’ meeting or to agree on concurrent voting with other shareholders;
  • to purchase or dispose of shares at a pre-set price and (or) in certain circumstances to refrain from disposal of the shares before the occurrence of certain events; and
  • to carry out concurrent action connected with the management of a company,  its activities, its reorganisation and liquidation.

Overall, these amendments should have positive effects, although certain provisions may make their application more cumbersome, such as:

  • a company  itself cannot be a party to a shareholders’ agreement;
  • all shareholders cannot be parties to a shareholders’ agreement simultaneously;
  • a shareholders’ agreement should be concluded in relation to all shares that belong to a party to the shareholders’ agreement;
  • the obligations under a shareholders’ agreement arise only in respect to its parties, so that violating the agreement cannot be a ground for invalidating company decisions and transactions if these comply with the company articles and Belarusian law;
  • there is no clarity on the correlation and hierarchy of a shareholders’ agreement, special legislation, and the company articles.

We consider that the positive effect of a shareholders’ agreement as a means to regulate corporate governance will largely depend on the practice of its application. In any case, we hope that the possibility to conclude a shareholders’ agreement should make the corporate legal environment more understandable and predictable for investors.

Alesia Tsiabus
Alesia Tsiabus

Viktoryia Mikhnevich
Viktoryia Mikhnevich




For other recent transactions please click here.

The regional heads of the SORAINEN Corporate and M&A Team are Algirdas Pekšys and Toomas Prangli.
Local heads of the SORAINEN Corporate and M&A Team are:

Karin Madisson
Karin Madisson

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Toomas Prangli
Toomas Prangli

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Pärnu mnt 15
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Eva Berlaus
Eva Berlaus

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Kr. Valdemāra iela 21
LV-1010 Riga
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Algirdas Pekšys
Algirdas Pekšys

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Laimonas Skibarka
Laimonas Skibarka

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Jogailos 4
LT-01116 Vilnius
phone +370 52 685 040
Kiryl Apanasevich
Kiryl Apanasevich

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Maksim Salahub
Maksim Salahub

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ul Nemiga 40
220004 Minsk
phone +375 17 306 2102

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