Starting from 16 September 2023, in accordance with the Presidential Decree No. 285 (available in Russian only) dated 13 September 2023, a new procedure for obtaining and distributing profits and dividends for foreign shareholders and owners of property from unfriendly countries* (hereinafter referred to as foreign participants) will enter into force in Belarus.
*The list of unfriendly countries is defined in the Annex to the Resolution of the Council of Ministers of the Republic of Belarus No. 209 dated 6 April 2022:
- Commonwealth of Australia
- EU states
- Canada
- Principality of Liechtenstein
- Kingdom of Norway
- New Zealand
- Republic of Albania
- Republic of Iceland
- Republic of North Macedonia
- United Kingdom of Great Britain and Northern Ireland
- United States of America
- Montenegro
- Swiss Confederation
Please note that this procedure will only be applied when implementing a special measure involving restrictions on financial transactions.
To fulfil obligations to pay distributed/accrued profits and/or dividends to foreign shareholders, Belarusian companies need to open a special resident’s account in Belarusian rubles with any Belarusian bank.
In turn, the foreign shareholder is entitled to open a special foreign shareholder’s account also in Belarusian rubles with a Belarusian bank to receive funds from the special resident’s account.
The account is opened regardless of the existence of decisions or resolutions in banks to suspend operations on accounts or impose arrest on funds held in these accounts. Enforcement actions on executive and other documents serving as grounds for the debiting of funds from accounts in an uncontested manner are not carried out, and no arrest is imposed on these funds, and operations on special accounts of residents are not suspended.**
**Except for cases provided for by legislation on preventing money laundering, financing of terrorist activities, and financing the spread of weapons of mass destruction and other activities harmful to national security.
The next step in receiving funds from a Belarusian company is for the foreign shareholders to send a request to the company, specifying the details of its special account. The Belarusian company, in turn, shall deposit the funds into the specified special account within ten business days of the date of receipt of the request.
It is important to note that the funds credited to special accounts have a specific purpose. Namely, the funds can be used for:
- financing investment projects within the territory of the Republic of Belarus
- prepaying debts on loans provided by certain banks
- acquiring certain state securities
- placing non-revocable bank deposits for a term of no less than one year in the bank where the special account has been opened
- other purposes approved by the Council of Ministers of the Republic of Belarus and the President of the Republic of Belarus.
Thereafter, if a specific term of validity of the special restrictive measure is defined, then 10 days prior to its termination, residents and foreign shareholders should submit a request to the bank to close the special accounts, specifying their current (settlement) bank accounts and payment instructions for transferring the remaining funds to them. If such a request is not submitted, such special accounts are closed on the terms provided for in the contract with the bank. In some cases (for example, freezing of funds as a measure in cases of identification of money laundering, financing of terrorist activities and other prohibited activities), special resident’s accounts and special foreign shareholder’s accounts are not closed at all.
Our Commercial & Regulatory and Corporate, M&A and Employment practice group teams would be happy to assist with any further questions with reference to the above:
Kirill Laptev, Partner
kirill.laptev@sorainen.com
+375 29 339 4590
Maksim Salahub, Partner
maksim.salahub@sorainen.com
+375 29 658 3151
Olga Haiduk, Associate
olga.haiduk@sorainen.com
+375 25 605 5455
Dzmitry Kovalenka, Associate
dzmitry.kovalenka@sorainen.com
+375 33 305 5394
