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BELARUS: Privatisation
2011, EnglishCOMPANIES FOR SALE
Following the start of the currency and economic crisis in 2011, the Belarus government has accelerated the privatization process. In particular, it promised to sell more than USD 7 billion worth of government property under the terms of the loan it received from the EurAsEC (the Eurasian Economic Community) Anticrisis Fund.
The government has approved a list of 244 enterprises for privatization in 2011–2013, of which 180 are planned for sale during this year. The list includes companies from various industries, including retail and construction companies (more information available here: http://www.gki.gov.by/).
PROCEDURE
As a rule the privatization takes place in the form of tenders or auctions, but first the relevant company must be included into the respective list and reorganized.
Pursuant to the Belarusian legislation, state authorities announce an auction/competition not later than 30 days prior to the date it is to be held. Then, a bidder files an application and the necessary documents within a period of time stated in the relevant notification and pays a deposit (should not exceed 10% of the initial price).
The standard package of the documents and data on the target is limited and includes the target’s annual balance sheet as of 1 January of the current year, information on real estate owned, main areas of business and draft sale purchase agreement. Once the auction is announced the bidder does not have the right (or time) to perform full legal due diligence and therefore the potential buyer should start the preparation for the privatization on a timely basis and approach the management way ahead of when the planned tender is scheduled to commence.
In practice, in many cases the management of the company opposes the privatization, for example, in the form of setting unreasonably high auction starting prices and investment conditions.
PRICE
Generally, the initial price of shares offered for sale is based on the balance sheet value of the company. However, if a company is located in Minsk or in any of the regional centers, the initial price of the shares is based on the market value.
Property under Belarusian law state has to be evaluated solely by the state-owned organizations. The prices are therefore not always determined in an entirely adequate way and the official data may differ from the realistic, market-based valuation of a company’s assets and liabilities. In addition it is necessary to take into account deviations of the local accounting standards from IAS.
Furthermore, in many cases the sale of a company is accompanied by certain conditions, for example, the minimum investment requirement, obligation to create workplaces, and issue loans to the target company.
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Following the start of the currency and economic crisis in 2011, the Belarus government has accelerated the privatization process. In particular, it promised to sell more than USD 7 billion worth of government property under the terms of the loan it received from the EurAsEC (the Eurasian Economic Community) Anticrisis Fund.
The government has approved a list of 244 enterprises for privatization in 2011–2013, of which 180 are planned for sale during this year. The list includes companies from various industries, including retail and construction companies (more information available here: http://www.gki.gov.by/).
PROCEDURE
As a rule the privatization takes place in the form of tenders or auctions, but first the relevant company must be included into the respective list and reorganized.
Pursuant to the Belarusian legislation, state authorities announce an auction/competition not later than 30 days prior to the date it is to be held. Then, a bidder files an application and the necessary documents within a period of time stated in the relevant notification and pays a deposit (should not exceed 10% of the initial price).
The standard package of the documents and data on the target is limited and includes the target’s annual balance sheet as of 1 January of the current year, information on real estate owned, main areas of business and draft sale purchase agreement. Once the auction is announced the bidder does not have the right (or time) to perform full legal due diligence and therefore the potential buyer should start the preparation for the privatization on a timely basis and approach the management way ahead of when the planned tender is scheduled to commence.
In practice, in many cases the management of the company opposes the privatization, for example, in the form of setting unreasonably high auction starting prices and investment conditions.
PRICE
Generally, the initial price of shares offered for sale is based on the balance sheet value of the company. However, if a company is located in Minsk or in any of the regional centers, the initial price of the shares is based on the market value.
Property under Belarusian law state has to be evaluated solely by the state-owned organizations. The prices are therefore not always determined in an entirely adequate way and the official data may differ from the realistic, market-based valuation of a company’s assets and liabilities. In addition it is necessary to take into account deviations of the local accounting standards from IAS.
Furthermore, in many cases the sale of a company is accompanied by certain conditions, for example, the minimum investment requirement, obligation to create workplaces, and issue loans to the target company.
« back to Belarus newsletter
