Important changes in the civil legislation of the Republic of Belarus

Law No. 312-З dd. 13.11.2023 "On Amendments to the Codes" (hereinafter - the "Law") introduced a number of amendments to the Civil Code of the Republic of Belarus (CC RB). The new edition of the CC RB comes into force on 19.11.2024.

Corporate law

1.   Foreign companies are granted the right to open a branch to conduct business in Belarus.

Important: Foreign organisations that perform work and (or) provide services in Belarus on the basis of a contract and are registered with the tax authorities as of the date of entry into force of the Law in accordance with s-cl. 1.5 cl. 1 art. 70 of the RB Tax Code should choose the form of further business activity by 18 May 2025. The following options are available for this purpose: opening a branch, establishing a legal entity in the territory of the RB or participation in an existing legal entity registered in the RB.

2.   The prohibition for a legal entity to carry out entrepreneurial activities through a representative office is expressly stipulated in the Civil Code. The current wording of the Civil Code contains a definition of a representative office of a foreign organisation, specifies the possible purposes of its establishment and the scope of its powers. The new wording of Article 51-1 of the RB CC also contains a direct reference to the impossibility for a foreign organisation to conduct business activities in the territory of the RB by opening a representative office.

3.   Clarifications to the procedures for the reorganisation and liquidation of legal entities have been introduced.

The reorganisation procedure defines the grounds for joint and several liability after reorganisation. Joint and several liability arises when it is impossible to determine the legal successors from the separation balance sheet, as well as when the separation balance sheet shows unfair allocation of assets and liabilities, which resulted in violation of creditors' rights.

In the liquidation procedure, the maturity of obligations to creditors is determined from the moment of commencement of the liquidation procedure.

Important: The term of fulfilment of obligations to creditors does not change in case of termination of the liquidation procedure.

Commercial law:

1.   The spheres of application of legal institutions previously authorised for use only by Hi-Tech Park residents have been expanded. Among them:

• An option to conclude a contract is the right to conclude a contract in the future on the terms and conditions specified in the option;
• Option agreement is the right to demand fulfilment of an already concluded agreement. The option agreement may provide for a fee for the right to make a claim;
• Assurances of circumstances - in case of unreliable assurances of circumstances that are relevant for the conclusion, performance, termination of the agreement, the possibility of recovery of real damages and penalties and the right to unilateral cancellation of the agreement are provided for;
• Convertible loan agreement - under a convertible loan agreement, upon the occurrence of circumstances specified in the agreement, the borrower transfers shares / stakes in the authorised capital to the lender as repayment of the monetary loan or increases the authorised capital by the amount of the convertible loan with the transfer of shares / stakes in the borrower's authorised capital to the lender;
• Irrevocable power of attorney

Important: An irrevocable power of attorney may be issued only to secure the fulfilment of an obligation related to business activities.

An irrevocable power of attorney may be cancelled in cases provided for in the power of attorney itself, after the termination of the obligation for the fulfilment of which it was issued, as well as in case of misuse of powers by the representative. The issuance and cancellation of an irrevocable power of attorney must be notarised.

2.   The scope of application of factoring has been extended. Commercial organisations have been granted the right to act as a factor. Previously, only banks and non-bank financial institutions could act as a factor.

3.   Legislative regulation of an escrow bank account - a special account opened to record and block funds received by an escrow agent for the purpose of transferring them to a third party (beneficiary) upon the occurrence of certain grounds stipulated in the escrow account agreement.

Other issues of contractual obligations, procedure for issuing powers of attorney, enforcement of obligations

1.   A separate article is introduced to the Civil Code to regulate the law applicable to agreements the subject of which is intellectual property rights. The article defines the rules for selecting the applicable law in relation to a franchising agreement, a licence agreement and an agreement on the assignment of an exclusive right.

2.   The procedure for determining the applicable law to an agreement on the creation of a legal entity with foreign participation and to an agreement related to the exercise of the rights of a participant has been clarified. As before, the law of the country of establishment applies to the agreement establishing a legal entity. The same rule applies if there is no agreement between the parties on the applicable law. However, it has been clarified that the choice of law to be applied to an agreement on the exercise of a participant's rights may not affect the operation of peremptory norms of the law of the country of establishment on matters determined on the basis of the personal law of the legal entity.

3.   The requirement for notarisation of powers of attorney issued on behalf of legal entities in the order of substitution has been cancelled. The requirement is retained only for transactions involving a notarised form.

4.   The requirement to bring agreements into compliance with the requirements of legislation adopted after the conclusion of the agreement has been cancelled. It will only be necessary to bring the agreement into compliance if the legislative act explicitly states so.

5.   The right of the parties to enter into agreements not named in the legislation is legally established.

Important: The rules on separate types of agreements will not apply to unnamed agreements that are not mixed. Analogy of law may apply to certain relations of the parties.

6.   The mandatory requirement for foreign economic transactions to be in writing has been cancelled. Failure to comply with the written form of a foreign economic transaction will not be grounds for recognising such a transaction as invalid.

Thus, the general rules will apply to foreign economic transactions.

7.   Creditors of one debtor are granted the right to conclude an agreement on the order and amount of satisfaction of their claims, including disproportionate allocation of execution.

8.   The parties in the course of business activities are entitled to conclude an agreement on compensation not related to the breach of obligations. The amount of compensation determined by the parties may not be reduced by the court.

9.   The concept of "reasonable time" in determining the time limit for the fulfilment of liabilities is excluded. Liabilities for which the term is not determined must be fulfilled within 7 days of the creditor's demand.

10.   The priority of repayment of claims on monetary liabilities is divided into overdue and current.