Decree on use of foreign depositary receipts adopted

Belarus: Foreign companies will be able to buy Belarusian company stocks on foreign exchange markets.

The Decree “On issue and turnover of stocks through foreign depositary receipts” regulates the procedure for selling stocks of Belarusian companies on foreign exchange markets.

According to the Decree, open joint-stock companies (OJSC) will be able to transfer their stocks to foreign companies (issuers of depositary receipts) under an agreement to trade them through foreign depositary receipts.

A foreign company issues foreign depositary receipts on such stocks. These can be sold on the international financial market.

At the same time the depositary institution records the stocks placed by means of depositary receipts in a special “depo” account opened with a Belarusian custodian bank.

An OJSC can sell no more than 25 % of shares in its share capital under this procedure.

An OJSC may issue additional shares, buy its own stocks or purchase stocks from its shareholders, in order to transfer stocks with a view to selling them through depositary receipts. The issue of stocks through depositary receipts requires registration. Moreover, the Decree provides certain restrictions, especially, concerning Belarusian banks.

Additionally, the Decree introduces certain tax benefits. In particular, dividends on income from sales of stocks through depositary receipts before redemption of the latter and in some other cases will not be taxed until 2020.

The Decree enters into force on 11 September 2016.

Source: National legal Internet portal of the Republic of Belarus (NLIP) 14.11.2015, 1/16099

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