Types of Enterprises

The most wide-spread form of cooperation with foreign partners in the Republic is a joint venture. The activities of joint ventures are regulated by the Law "On Foreign Investments on the Territory of the Republic of Belarus". An enterprise based on foreign investments has the right to set up prices on its products, works and services, to establish the order to sell them, and to choose suppliers of products, works, services.

Liquidation of an enterprise with foreign capital may be executed only in cases envisaged by the legislation. In this case the foreign investor has the right to return his share in monetary or cost value of goods at the moment of liquidation. The Law guarantees the foreign investor the right to transfer dividends abroad in free convertible currencies.

Joint ventures which have a foreign investor's share in the Statute Fund in excess of 30%, are granted preferences in profit taxes (complete liberation from the tax for three years, and a possibility to pay 50% of the tax rate for another 3 years if the enterprise is manufacturing socially important products).

The question of increasing the "tax vacations" for joint ventures from three to five years, and liberation from customs duties and value-added tax on goods imported by a foreign participant with the aim to form the Statute Fund of enterprises with foreign investments is under consideration.

The minimum contribution of a foreign investor into Statute Funds is USD 20,000. The Statute Fund of the enterprise being established may be contributed both in monetary and in non-monetary forms. The Law also stipulates that the declared Statute Fund of the enterprise with foreign investments shall be formed to at least 50% within one year since the moment of state registration, and in full volume - by the end of the second year since the moment of state registration. The Law assumes a possibility to change the terms of the Statute Fund formation only upon consent of the Council of Ministers.

Procedure to register an enterprise with 100% foreign capital is not different from that for a joint venture except the procedure to form the Statute Fund. Prior to state registration of an enterprise with 100% foreign capital, a sum equal to 25% of the value of the Statute Fund as declared in the statutory documents shall be deposited to its account. By the end of the first year the Statute Funs must be formed by at least 50%, and by 100% - by the end of the second year.

If an enterprise with 100% foreign capital establishes its affiliates on the territory of the Republic of Belarus, the latter will enjoy all the preferences envisaged for enterprises with foreign investments. Such preferences shall not cover the affiliates established by joint ventures.

According to the Law "On Enterprises in the Republic of Belarus", an enterprise with foreign investments may execute any types of economic activities unless banned by the legislative acts of the Republic of Belarus, and responding to the aims envisaged by the Statute of the enterprise.

Joint ventures are established in the form of Joint-Stock Societies and Limited Liability Societies (Companies), or in other organizational and legal forms not contradictory to the legislation.

A joint-stock society (corporation) is the most wide-spread organizational form of establishing a capital-demanding economic activity assuming the possibility of international integration. It may be open or closed. At least two parties are needed to establish a joint-stock company. Shares may be nominal or preferential (the portion thereof must not exceed 10% of the Statute Fund). A notary certified Statute is necessary to register shares of a joint-stock company (corporation). The founders must make their complete contributions into the Statute Fund within two months since the moment of state registration. Establishment of an open type of a joint-stock company assumes conclusion of an agreement on joint activities, subscription to the shares, holding a statutory conference, state registration of shares.

A limited liability society is a corporate legal entity whose capital is limited to share participation. It may be established by at least two share-holders. A limited liability company stands close in its specifications to a closed joint-stock company.

Setting up of branch enterprises (with the right to open separate accounts) or subsidiaries, as well as voluntary associations of enterprise (unions, concerns, etc.). A branch enterprise is established by transfer to it of a founder's property portion. The founder does not respond for liabilities of his branch enterprise. Affiliates are not legal entities. Their property is run by a separate balance sheet making a part of the legal entity's balance sheet.