On 6 January 2023 the Belarusian government published laws regarding new restrictive measures in connection with the political and economic situation. The measures are referred to:
- Transfer of companies to temporary external management;
- Seizure of property;
- Intellectual property (IP) restrictions.
Transfer of companies to temporary external management
Commercial companies in Belarus may be transferred to temporary external management upon the decision of the local executive committee. This is the case when shareholders of the commercial company are persons from foreign states (the law does not specify the percentage of ownership, and therefore, it may be interpreted in a way that even 1% is enough to satisfy this condition; it refers to all foreign shareholders, not only shareholders from so-called “unfriendly” countries).
- Conditions (at least one of) which must be satisfied for the decision to be adopted:
- executive and/or other management bodies of the company have stopped managing it
- executive and/or other management bodies of the company have taken economically unjustified actions which may lead to the actual termination of activities of the company, its liquidation and/or bankruptcy, damaging the company (The law does not provide any details regarding “not currently managing the company” or “economically unjustified actions”; these may be further specified by the Council of Ministers or through enforcement practice)
- other cases determined by the Council of Ministers.
2. The purpose of external management: to avoid the unjustified termination of the activities of the commercial companies, damaging their workforce, and to ensure break-even operation of the commercial companies.
3. The term of external management should be not more than 18 months.
4. External manager
The external manager is appointed by the local executive committees. His/her/its services are paid for at the expense of the commercial company. The total and procedure for the payment should be determined by the Council of Ministers.
Functions performed by the external manager: functions of the executive body of the commercial company (i.e. executive director). The external manager may also perform functions of other bodies of the company if this is determined by a decision of the relevant local executive committee. In any case, the external manager cannot decide regarding the reorganisation and liquidation of the company.
Some decisions which may be adopted by the external manager should be agreed as a preliminary by the local executive committee. This is the case with decisions regarding major and affiliated transactions, and issue of securities.
The external manager is overseen by the local executive committees.
Kindly note that external management cannot be appointed for companies which are undergoing liquidation and/or economic insolvency (bankruptcy) procedures.
The provisions of the law regarding external management described above enter into force on 17 January 2023 and expire on 31 December 2025. The Council of Ministers must adopt resolutions to further specify the application of the law within a month. In general, it seems that the Council of Ministers has just been provided with this option for cases when it is necessary to quickly adopt the relevant decisions.
Seizure of property
The Council of Ministers of the Republic of Belarus may now take decisions on compulsory seizure of property owned by:
- countries that have taken unfriendly actions against the Republic of Belarus, its legal entities and/or individuals per the list determined by the Council of Ministers. As of the date, there are 39 states on the list, including all EU member states, the USA, the UK and some others;
- persons from “unfriendly” countries, including:
(i) persons associated with “unfriendly” countries (e.g. citizens of an “unfriendly” country; legal entities registered in, located at, having their main business activity in, or receiving their main income from an “unfriendly” country)
(ii) persons controlled by persons mentioned in (i) above, regardless of the place of their registration or main business activity
- affiliated persons, including:
(i) legal entities and/or individuals that directly and/or indirectly (through other legal entities and/or individuals) determined decisions on taking unfriendly actions against the Republic of Belarus, its legal entities and/or individuals by the “unfriendly” countries, or that had influence on such decisions being taken
(ii) llegal entities and/or individuals that are subject to or affected by the decisions of the “unfriendly” countries per the list determined by the Council of Ministers.
The seizure may be applied to any types of property located in the territory of Belarus, including movable and immovable assets, monetary funds, securities and property rights.
Decisions on the seizure of property may be taken in response to unfriendly actions against the Republic of Belarus, its legal entities and/or individuals, and based on the principles of proportionality, objectivity, publicity, strategic importance and effectiveness, and compliance with the goal of seizure.
Once the Council of Ministers takes a decision on seizure, the State Committee on Property of the Republic of Belarus shall apply to the economic court of the city of Minsk for seizure of property. If it is seized, the property shall be transferred to the ownership of the Republic of Belarus. All state organisations and other entities shall perform all necessary actions to procure the seizure of the property.
Compensation for the seizure of property may be paid taking into account whether any compensation was paid when unfriendly actions against Belarus, its legal and/or natural persons were taken.
The law further sets detailed procedures and principles relating to compulsory seizure.
Provisions of the law regarding seizer of property enter into force on 17 January 2023. The Council of Ministers must adopt measures to implement its provisions within six months following adoption of the law.
Use of IP without its owner’s consent
The law allows the use of IP without the permission of its rightsholder or collective management organisation, provided that the following conditions are satisfied:
- the rightsholder or collective management organisation with respect to this IP is from an “unfriendly” country, which means that they are:
(i) related to the “unfriendly” countries (e.g. citizens of an “unfriendly” country; legal entities registered in, located at, having their main business activity in, or receiving their principal income from an “unfriendly” country)
(ii) controlled by persons mentioned in (i) above, regardless of the place of their registration or main business activity
- this rightsholder or collective management organisation has forbidden or has not permitted use of the IP in Belarus
- the rightsholder or collective management organisation is included in the list compiled by the Belarusian state authorities appointed by the Council of Ministers.
The provision of the law described above relates to legally released IP, including computer programmes, audio-visual works (e.g. films), music, and TV and radio broadcasts. New regulation may concern businesses such as those related to software provision, companies providing films for local cinemas, and providers of content for local TV. However, it is still not clear how it will work in practice for technical software support, cloud services, app stores, streaming platforms and OEM, dealing with technical means that restrict access to foreign software from certain jurisdictions.
Users still have to pay in Belarus for the use of IP originating from “unfriendly” countries. The remuneration will be credited to the account of the Belarusian patent authority and kept there for three years until there is a demand by the rightsholder. Subsequently, if the funds have still not been demanded, they will be directed to the budget of the Republic of Belarus. The procedure payment, its total and currency will be established.
Parallel import is allowed
The law essentially allows parallel import of specific goods in certain circumstances. Namely, import and circulation in Belarus of goods with the use of IP (e.g. trademarks) is allowed without the consent of IP rightsholders from foreign states, including “unfriendly” ones. This is applicable subject to the following condition: these goods should be included in the list of goods which are essential for the domestic market. The described use should not be considered as IP infringement.
Lists of goods will be compiled by the Belarusian state authorities appointed by the Council of Ministers. Another peculiarity is that goods must not be included in these lists if the rightsholders or other entities (with rightsholders’ consent) have trade and economic cooperation with Belarusian legal entities or individuals and this cooperation “prevents a critical shortage of these goods in the domestic market”.
Finally, if goods are included in the list of goods which are essential for the domestic market, the relevant IP must be temporarily excluded from the Belarus IP customs register. The law defines the procedure for such exclusion.
The most important provisions of the law regarding IP restrictions
enter into force on 17 January 2023 and will remain in force till 31 December 2024.
Should you have any further questions with reference to the above, please do not hesitate to contact us:
Partner, Head of Corporate and M&A practice, co-head of Intellectual Property practice
Partner, co-head of Finance&Insurance practice
Partner, Head of TMT sector group