“US Invest” LLC lawyer – Uladzislau Babitski
On December 21, 2017 the President of the Republic of Belarus signed Decree No. 8 "On the Development of Digital Economy" (hereinafter referred as “Decree No. 8”); the main provisions of the Decree enter into force in three months after its official publication.
In the article we will take a look at main issues addressed in Decree No. 8 in the field of corporate law and business organization.
The special legal status and the territory of the High Technology Park were approved within the framework of the Decree of the President of the Republic of Belarus of September 22, 2015 No. 12. The established validity period for special legal status was limited to 15 years from the date of the entry into force of Decree No. 12 of September 22, 2015. Decree No. 8 extends the validity period of special conditions for the High-Tech Park (hereinafter referred as “HTP”) until January 1, 2049.
The new decree is aimed at creating favourable conditions for the introduction of blockchain and other technologies based on the principles of decentralization and security of operations into the economy of Belarus.
Decree No. 8 makes it possible to work with payments in all types of non-classical currencies, such as electronic money, cryptocurrencies, if they are used for the activities permitted in HTP; provides the possibility to create cryptographic platform operators and cryptocurrency exchange operators.
Decree establishes financial criteria for cryptographic platform operators and cryptocurrency exchange operators. So, the operators of cryptographic platform and crypto currency exchange points shall keep 1 million Belarusian rubles and 200.000 Belarusian rubles on its banking accounts in Belarus accordingly.
Administrative legislation on the operations with foreign currency and banking activities shall not expand to relationships with the use of cryptocurrency, and as a consequence it is not required to obtain special additional permits:
- Mining, activity of a cryptographic platform operator, cryptocurrency exchange operator, other activity with the use of tokens shall not be recognized as banking activity;
- Effect of the currency legislation does not expand to natural and legal persons (except for banks and non-bank credit-and-finance organizations) that are residents of the Republic of Belarus, while they perform permitted activities with the use of cryptocurrencies; residents if HTP while they perform operations with the use of tokens.
According to Decree No.8, legislation on securities, requirements on licensing of professional and exchange activity on securities shall also not expand to relationships of residents of HTP.
The main innovation in Decree No. 8 in the field of corporate law is the reduction of the risk of founders to be subjects to subsidiary liability in the event of the bankruptcy of a HTP resident.
So, according to item 3.6 of Decree No. 8, in case of economic insolvency (bankruptcy) of a resident of HTP, subsidiary liability on obligations of such a legal person may not be imposed on the owner of its property, founders (participants) or other persons, including the head, having the right to give instructions mandatory for the legal person or a possibility to determine its actions otherwise, with the exception of cases when economic insolvency (bankruptcy) is caused by the actions of such persons that entailed their bringing to criminal liability.
This regulation will allow HTP residents not to be afraid to implement start-up projects that do not guarantee the initial profitability, if there is a risk of getting penalties when the project doesn’t work out.
According to item 5.1 of Decree No. 8, HTP residents are granted the right to conclude among them and (or) with third persons a convertible loan contract. (Under the convertible loan contract, one party (lender) transfers money to the other party (borrower) into ownership, and the borrower shall, upon occurrence of a circumstance defined by the contract, including that depending on the will of the borrower and/or lender, or upon performance of actions defined by the contract by the borrower or third persons, shall transfer to the lender shares, stake (part of the stake) in the statutory fund of the borrower, being on the balance sheet of the borrower, or increase the statutory fund by the sum of the convertible loan with transfer to the lender of shares issuer of which is the borrower or of a stake (part of the stake) in the statutory fund of the borrower.)
It is also worth noting that relationships of the parties arising out of the convertible loan contract are not covered by provisions of the legislation:
- on the pre-emptive right to purchase shares, stakes (parts of the stakes) in the statutory fund of an economic company, on the right of acquisition by the economic company of shares, stakes (parts of stakes) in its statutory fund and on the right of a close joint-stock company to offer to a third person to acquire shares of the given company not claimed as a result of exercise of its shareholders' pre-emptive right to acquire them;
- on formation of the statutory fund of the economic company in part of the inadmissibility of the exemption of the founder (participant) of the economic company from the duty to make a contribution to the statutory fund (payment of shares) by means of a setoff of demands toward the economic company.