State can “legally” seize any business

The “parliament” has adopted the law allowing the authorities to interfere with the activity of any joint stock company.

According to chair of the State Property Committee Heorhy Kuzniatsou, the draft law is intended to “protect the rights and liberties of citizens of Belarus, including minority shareholders”. The document, in particular, gives representatives of the state the right to use the votes of minority shareholders at shareholders' meetings. For joint stock companies with the state's stake of 50% or less, representatives of the state can use the votes of minority shareholders who have the right to participate in the meeting but failed to register for participation, BelaPAN reports.

The draft law gives the right to appoint state representatives to the joint stock companies without the state's stake that were founded in the process of privatisation. Under the document, such state representatives can be appointed by regional executive committees or the Minsk city executive committee.

In accordance with the draft law, state representatives can suspend the implementation of decisions of the general stakeholders' meeting “if the implementation of such decisions stays in conflict with public interests and safety, harm the environment, restrict the rights and interests of other persons”. A decision to suspend the implementation of the decisions of the shareholders' meeting can be made by the state representative not later than the day following the general meeting by sending it by fax, email or other means. Within a month after the general shareholders' meeting, the executive committee, which appointed the state representative, must file a suit to the economic court asking to find invalid the suspended decision of the general shareholders' meeting.

The business community thinks that the surveillance institution proposed by the draft law will lead to resuming the golden share rule cancelled in 2008.

Aliaksandr Shvets, the chairman of the Belarusian Scientific and Industry Association, supposes the main mechanisms of the “golden share rule” will work again if the draft law is adopted.

“It will allow to block deals both at the stage of discussion and after the deal has been settled. The most horrible thing is that a deal can be cancelled a few years later,” he comments on the draft law.

Representatives of the business and international financial organisations have repeatedly appealed to the government in connection with the draft law. Members of the Consultative Council on Foreign Investments under the aegis of the Council of Ministers appealed to the prime minster in February expressing their concern about the draft law. Representatives of the World Bank and the International Financial Corporation (IFC) are said to have sent letters to the Belarusian PM with the same concerns.