Foreign owners of Belarusian companies are interested in having up-to-date information about the possibility of receiving dividends, part of the profit from their business in Belarus and receiving their money. For example, currently many Belarusian companies with foreign capital and their foreign participants are concerned about the new requirements of the Belarusian legislation on special accounts in Belarusian banks for transferring and receiving dividends and part of profits by foreign participants from countries unfriendly to Belarus. Such requirements have been in effect since 09/16/2023.
Features of payments to foreign owners of Belarusian joint-stock companies
The joint-stock company is obliged to distribute a part of the profit among the owners who own preferred shares. The owners of ordinary shares are entitled to a share of the profits when the joint-stock company decides so. The part of the profit that the owners of a joint-stock company receive is called “dividends”. In order for the company to send dividends, interim accounting data for the first quarter, half a year and 9 months are needed. Accordingly, the joint-stock company may pay dividends during these periods. At the end of the year, dividends are paid on the basis of annual accounting (financial) statements.
When a joint-stock company can pay dividends:
- The company’s authorized capital has been fully formed.
- The net assets of the company are estimated to be greater than the amount of the authorized capital and their value will not decrease after the payment of dividends.
- The company is solvent and this will not change after the payment of dividends. In order to confirm solvency for a possible tax audit, we recommend that you receive an opinion of the audit commission or auditor on solvency before deciding on the payment of dividends, when such a decision is not made at the annual general meeting.
- In case of share repurchase at the request of shareholders, the shares are fully repurchased.
- According to accounting data, the company makes a profit.
Features of the payment of part of the profit in limited and additional liability companies
A part of the profit can be paid to the participants of a limited liability company and an additional liability company. Limited and additional liability companies (LLC and ALC) make their own decisions on how often to pay their participants a part of the profit. The payment periods are prescribed in the company’s charter or decisions on the periods are made at the general meeting of the company’s participants. A maximum of two months may elapse between the decision on payment and the fact of payment of part of the profit to the owners. This rule works when the deadline for the payment of part of the profit is not defined in the articles of association or in the decision of the general meeting of participants.
When an LLC, an ALC can pay the owners a part of the profit
The main condition is that the company must have a profit that remains after paying taxes and mandatory payments, covering losses, and deductions to the company’s funds.
The general meeting of the participants of the LLC, ALC may decide not to distribute profits among the owners.
Features of payment of dividends in foreign currency to foreign owners of the company
It is possible to pay dividends to foreign owners of a Belarusian company in Belarusian rubles or in a foreign currency. The currency in which dividends are paid must be determined in the decision on their payment. Foreign owners can pay dividends in foreign currency only by bank transfer. An individual owner can pay dividends in foreign currency to an account with a foreign bank. A Belarusian company can use its accounts in a Belarusian or foreign bank for this purpose.
Why it is not necessary to open special accounts for transfers to foreign owners of Belarusian companies yet
According to the requirements of the Decree of the President of the Republic of Belarus dated 09/13/2023 No. 285 “On special accounts”, in order to pay dividends, part of the profit, foreign business owners from unfriendly states need to open special accounts in Belarusian banks. Please note that such special accounts should be opened only when the government of Belarus has applied a special restrictive measure and restricted the receipt of profits and dividends by foreign owners of Belarusian companies from unfriendly states. Until such a measure is taken, there is no need to open special accounts, dividends and part of the profit are transferred in the usual manner. If the Government takes such a measure, the Government decree will be published in the National Register of Legal Acts.
For reference: the list of unfriendly states includes 13 positions, among them are the member states of the European Union, the United States, Great Britain, Switzerland, etc.
How we can be useful in determining the procedure for paying dividends to foreign owners, part of the profit and calculating these amounts
Our lawyers are experienced specialists in the field of corporate relations and speak English. We can:
- Advise you on the issues of determining the procedure for paying dividends and part of the profit to foreign business owners, determining the currency of payments and exchange differences.
- Prepare corporate documentation on the payment of a portion of profits and dividends to foreign business owners.
- Advise on the audit before making a decision on the payment of dividends, part of the profit to foreign business owners.
- Analyze accounting documents in order to determine the possibility of paying dividends, part of the profit to foreign business owners.
Contact us
If you have any questions about the specifics of paying dividends, part of the profits to foreign owners of Belarusian companies, we will be happy to help you! Our long-term experience in the field of corporate relations and accounting and tax accounting of dividends, part of profits will help you in resolving any situations and disputes.
Phone and e-mail communication options are available for your convenience:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@ambylegal.by.
