Agronews: State officials will keep watch over OAO (JSCs) in Belarus. Comments by Oleg Andreyev, EnterInvest

The House of Representatives of the National Assembly of the Republic of Belarus passed in its first reading the bill introducing amendments and additions to the Law on Privatization of Public Assets and Transformationof State Unitary Enterprises into JSCs, BELTA reports.  The new document allows for the appointment of state representatives to the established in course of the transformation JSCs, the shares of which neither Belarus nor its administrative-territorial units own.  Appropriate representatives will be appointed by regional executive committees and Minsk city executive committee. These people will be present at the general meeting of shareholders. They have the right to suspend the implementation of the decisions adopted by the general meeting of shareholders on many issues in case the implementation of those decisions contravenes common good and public safety, harms the environment or infringes on rights and legally protected interests of citizens. Such issues include: the liquidation and reorganization of the company, change of the authorized capital size andIntroduction of amendments and supplements to the Companies' Charters, distribution of JSCs’ profits, issue of new shares,dividend payment and establishment of other legal entities or participation in them. Within a month following the date of the general meeting of shareholders which decision was suspended, the appropriate executive committee files a claim to economic court to hold the suspension of the decision invalid.

State representatives will agree upon their position on general meeting agenda of such companies with the executive committee which appointed them.
However, in case 50% of shares or less belong to Belarus or/and its administrative-territorial units, state representatives vote at the general meeting of shareholders also by votes of minor shareholders that have the right to take part in the general meeting but does not register in accordance with the established procedure.

AGRONEWS asked the expert -- Oleg Andreyev, Managing director of EnterInvest Investment Banking Department, to comment on it: «If the bill is adopted it will not have a profound effect on JSC’s functioning and investment climate in Belarus.  It is quite clear that it is a return to the so-called golden share. Besides, the investors are well-informed about the complicacy of privatization processes in Belarus and the latter are unlikely to influence their investment decisions regarding JSCs’ shares. 

It is also worth noticing that appropriate changes to Economic Companies Act or adoption of Minority Shareholders' Protection Act would have been more than enough to defend the rights of minority shareholders. There are similar mechanisms in all developed countries. 

This throwback to the old system is deliberate; the government aims at controlling processes associated with the disposition of state property. Though it is quite evident that the state if necessary can use certain tools to manage or restore control of companies even without the decisions taken.   The mechanism of carrying out new functions by state representatives in JSCs is also of the last importance because in any case it will be time consuming and draw the state officials from their core duties».