Relations between Belarus and investors are newly regulated

Belarus: Significant changes concerning investor activity in Belarus are introduced by Presidential Decree no 8 of 13 November 2015.

The new regulation affects projects carried out on the basis of an investment contract with the Republic of Belarus. In the future, these contracts will be concluded only when an investment project that is submitted corresponds to priority state activity for investment implementation.

One important change is removal of the prohibition on pledging property relevant to an investment object at the investment project stage. This amendment will significantly simplify security for borrowings and will provide more opportunities for investment project financing.

From now on, selection of contractors and project documentation development contractors, suppliers of goods and service providers in investment projects will not be subject to legally established procedures for tenders and negotiations. Previously, this opportunity was available only to projects fully funded by foreign investment. At the same time this benefit does not abolish the general procedure for public procurement.

The changes concern subject matter of investment contracts with the Republic of Belarus: the list of mandatory conditions is amended and extended. Contracts must specify not only the terms of investment, contract performance and contract validity but also the terms of performing each stage of a project and liability of investors for breach of time-limits. The rights and duties of the parties are clarified. In the case of contract termination on grounds other than performance of duties by the investor, the latter will have to pay a penalty in addition to return of benefits. It is unlawful to require the investor to pay both benefits and a penalty in the case of breach of the conditions for executing an investment project on the grounds of an unlawful act or omission by office holders where fault by the investor is absent.

In addition, not only actual damage but also the full amount of material losses (including loss of profit) on the grounds of unlawful acts / omissions by official bodies that are parties to the contract will be compensated to the investor.

Another substantial novelty is the requirement that a party to an investment contract must notify the corresponding official body about any reorganization, change of ownership, or composition of participants. Notification must be given within two months beforehand. However, undue notification or objection by a state body to reorganization or change of composition of participants may become a ground for the Republic of Belarus to refuse to exercise its obligations, with a duty on the investor to repay benefits and privileges. In this way, control over reorganization and change of participants’ composition will be established by the State. Besides, the Decree itself does not prohibit reorganization or sale of shares in a company which has concluded an investment contrast.

The Decree comes into force on 15 May 2016. Amendments to an investment contract concluded before then may be introduced at the investor’s option. If the amendments are not included in an investment contract, the provisions of the new Decree will not be imposed.

You may find information on actual investment projects of the Republic of Belarus with a search for potential investors at our website in the section Media > Surveys > bnt Baltic-Belarus-Business-Opportunity-Survey or follow the link.

We will be pleased to support you on all legal issues connected with implementing investment projects in Belarus, amending investment contracts, and preventing investment risks.

For more information, please follow the link.

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


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