BelaPAN: Investing in Belarusian Brewery industry may by risky. Joint Study of Sorainen and EnterInvest.

 Investments in brewery manufacture might be rather risky in the near future. It is suggested by Brewery market overview prepared in June by investment and consulting company EnterInvest together with law firm Sorainen, reports BelaPAN.

“Investments in brewing may be at high risk in the near future due to the expected changes to Belarusian privatization law, which will allow the state to exert control over used-to-be state-owned enterprises,” states the review.

The experts remind that there are draft amendments to the Law on Privatization of Public Assets and Transformation of State Unitary Enterprises into JSCs in the Parliament. “The amendments affect corporate governance in business entities set up on the basis of state enterprises (virtually all brewery companies in the country belong to this group),” ascertain the authors of the review.  

Owing to the amendments, the state “can appoint to such entities its representatives”, who “will have the right to vote at the general meeting of shareholders on behalf of minority shareholders (they own less than 2% of company’s shares) that have not registered to participate in the meeting.”

Moreover, the experts note that the state representatives will be able to block a great many of crucial decisions regarding functioning of stock companies. The amendments also introduce specific restoration procedures of violated in course of privatization rights of the state. In case such infringements of rights are detected the state can require that the company issued additional shares and transferred them to the state. Therefore state ownership interest can be increased without any investment,” the review says.

In June the House of Representatives passed in their first reading amendments and additions to Privatization law. Georgy Kuznetsov, chairman of the State Committee on Property, professed that the document is aimed at securing minority shareholders’ rights. The experts consider that the amendments would aggravate country’s investment climate. “In essence it brings the so-called possessory supervision of officials on behalf of minority shareholders. It is a bad decision: the government unreasonably intrudes into private interests; freedom of will principle is violated. Provided minority shareholders have not empowered anybody, then who has the right to vote on behalf of them?” stated Valery Fadeev, Honored Lawyer of Belarus.

According to BelaPAN, representatives of business and international financial organizations have applied many a time to the Government while the draft law was prepared.  Members of Foreign Investment Advisory Council of the Council of Ministers, in particular, addressed in February a letter to Prime-Minister Mikhail Miasnikovich which said: “The officials’ capability to set a veto on numerous decisions of the general meeting of shareholders means a reverse to the situation which is similar to the “golden share” rule abolished in 2008.”


The representatives of World Bank, International Finance Corporation and European Bank for Reconstruction and Development also showed concern about the ready draft law.