Legal news in regulating the activities of companies and the securities market
On 18 July 2022, the Law of the Republic of Belarus “On Amendments to Laws on Securities Market Issues” was adopted (hereinafter – the “Law”). This law introduces amendments to the Law “On Companies” and the Law “On the Securities Market”:
- New exemptions from the scope of the Law “On Companies” are introduced: The President of Belarus may establish the legal status, peculiarities (other rules) of the creation, operation, reorganization and liquidation of companies. This provision has already entered into force after the official publication of the law.
- New ways to increase the statutory fund of a joint-stock company are added: not only through the issue of additional shares or the increase in the nominal value of the shares, but also through the issue of preferred shares, the type of which is not registered with the State Register of Securities.
- Additional guarantees for investors when issuing shares are established: monetary funds received by non-bank joint-stock companies in payment for the shares placed are to be credited to current (settlement) bank accounts opened in banks with a special mode of operation that is determined by the President of Belarus. Foreclosure, seizure of monetary funds credited to these special accounts, as well as suspension of operations on the accounts are not to be carried out.
- It is established that an irrevocable power of attorney may not be issued for making transactions with shares and (or) exercising the rights certified by the shares, except for cases established by the President of Belarus.
- New types of bonds are introduced: structured bonds, depository bonds, strip bonds, strips.
Structured bonds(in Russian – “структурные облигации”) are bonds that provide for the receipt of payments on them, including the payment of the nominal value, depending on the occurrence or non-occurrence of one or more circumstances specified in the prospectus. Structural bonds may be issued by banks, non-bank credit and financial organizations, professional securities market participants, and special financial organizations only. Placement of such bonds is only available for investors. The list of the investors will be determined further.
Placement ofdepository bonds (in Russian – “депозитарные облигации”) is available for qualified securities market investors, shareholders of the issuer, and some other entities. The issue of such bonds is to be registered with the central securities depository only.
Strip bonds (in Russian – “стрип-облигации”, from the English STRIPS - Separate Trading of Registered Interest and Principal) are bonds with a fixed interest income. The prospectus of such bonds provides for the possibility of separate placement and circulation in the form of (i) strips for the nominal value of strip bonds and (ii) strips for interest income on strip bonds. Accordingly, strips (in Russian – “стрипы”) are bonds created on the basis of strip bonds (the latter are canceled) as a result of the separation of the nominal value and interest income on strip bonds. The discount is the income from the strips.
- New terms/legal institutions are introduced: “beneficial owner”, “representative of bond holders”, “qualified securities market investor”. For example, when issuing bonds, as well as issuing shares through an open subscription (sale), in the prospectus it is necessary to additionally disclose data on the beneficial owners of the issuer.
Most of the provisions of the Law will come into force in a year after the official publication, i.e. on 23 July 2023.
In case you need additional information and/or comments on the mentioned above issues, we will be happy to advise you.
Please contact partner Svetlana Dashuk (svetlana.dashuk@vmp.by)
