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Belarus: negative net assets will be the ground for liquidation of LLC

The New Companies Law details rules on providing company capital with net assets.

As before, all companies should tend to maintain the value of their net assets at the level of their share capital. If this fails, the share capital should be reduced to the amount of net assets (based on the results of the second and following years of activity). If the amount of net assets falls below the minimal share capital established for the company (minimal share capital is established for stock companies, banks, insurance companies), the company should be liquidated. For the first time the New Company Law sets forth the deadline for a resolution on company liquidation. From now on, a resolution on liquidation should be taken within 6 (six) months after the end of the financial year in which those circumstances took place. Note that according to the Regulation on liquidation (termination of activity) of business entities adopted by the Decree of the President of the Republic of Belarus No. 1 of 16 January 2009, if in such cases a resolution on liquidation is not taken by company shareholders in the manner prescribed by legislation, a decision may be taken by the court subject to a lawsuit filed by competent state authorities.

The New Company Law provides the most significant amendments related to provision of company capital with net assets for limited liability companies. Thus, if the amount of net assets is equal to zero or negative as of the end of a financial year (each year apart from the first one), a resolution should be taken on LLC liquidation within 6 (six) months from the date of the end of that year, unless this ground has disappeared by the indicated date.

Furthermore, it is provided for the first time that the dynamics of changes in net assets is one of the most important indicators of a company's activities, about which the company director should inform the general shareholders’ meeting at least on an annual basis.

The new rules come into legal force on 28 April 2021.

Source: National Internet portal of the Republic of Belarus (NLIP) 27.01.2021, 2/2815.