Companies sometimes enter into transactions for amounts that are higher than in normal business processes. Certain signs indicate that the deal is a major one for the company. And for such transactions, the Belarusian legislation has defined a special procedure when they are planned in a limited liability company, an additional liability company and joint-stock companies. When a company makes a major transaction by passing a certain order, the transaction can be invalidated. Our lawyers can analyze the client’s activities, determine whether the transaction will be major and prepare documents for such a transaction. We can determine the probability of invalidation of an already completed transaction and represent the interests of the client in case of a dispute in court.
What is a major deal?
Before signing any contract, you need to determine whether the transaction will be major for your company. Let’s list what it is important to pay attention to in order to qualify a deal as a major one:
- First of all, a major transaction differs from other transactions of the company in its amount. The amount of a major transaction is 20 percent or more of the value of the company’s assets. It is desirable to correlate the value of the transaction with the value of the company’s assets before the transaction. This cost is determined based on the accounting statements for the reporting period that precedes the day of the transaction.
- A major transaction can be a single transaction or several interrelated transactions. A loan and a pledge can also be a major deal. Interrelated transactions can include transactions with the same obligations, for example, transactions with the same pledgee, which are concluded, for example, during the last year or another period, which is defined in the company’s articles of association. Interrelated transactions include transactions with property that can be used as a whole. Interrelated transactions do not relate to major transactions from the first transaction, but starting with the one that, in total with previous transactions, will amount to 20 percent or more of the value of the company’s assets.
- According to the transaction, the company acquires or alienates money, other property, or gets the opportunity to buy or sell.
Which deals of the company do not belong to the major ones
Sometimes a transaction can be defined as a major one, since all the signs of a major transaction are available. But it will be a regular company deal when:
- The transaction is made by the company in the ordinary course of business. For example, the purchase by a company of raw materials, materials for the production of goods, works and services. The terms of such transactions should be ordinary and not differ from the terms of other transactions.
- Transactions involving affiliated entities. When there is an interest of affiliated persons in making a transaction that corresponds to the characteristics of a large one, but relates to the ordinary activities of the company, the transaction is made in accordance with the procedure established for transactions with the interest of affiliated persons.
How to make a decision about making a major deal
The company makes major transactions by decision of the general meeting of participants. The company’s articles of association may specify another body that makes decisions on such transactions: the board of Directors (supervisory board).
The General Meeting has the right to make decisions binding on the company when the participants (shareholders) present have more than 50% of the total votes of all owners of the company.
To make a decision on a major transaction, you need a qualified majority of votes. The number of participants in the general meeting who decide on the transaction depends on how many percent of the value of the company’s assets is the amount of the transaction. This may be at least 2/3 or 3/4 of the votes of the participants in the general meeting.
In the company’s articles of association, it is possible to define the types of transactions or the amounts of transactions on which decisions are made in accordance with the procedure established for major transactions.
When a company has only one participant, it does not need to follow the procedure for making a major transaction.
Invalidation of a major transaction
A major transaction can be challenged in court when:
- a major transaction was concluded as usual, without a decision of the general meeting;
- the company did not comply with the decision-making procedure: the decision to make a major transaction was made solely by the head or one of the owners of the company.
Only the court recognizes the transaction as invalid. If the court finds the transaction invalid, the transaction will be like that from the moment it was made.
Features of the judicial review of the case on the recognition of a major transaction as invalid
A statement of claim for invalidation of a major transaction can be sent to court by: the owners of the company, the company itself, members of the board of directors (supervisory board), and the collegial executive body. Our lawyers are ready to study the documents, prepare a package of documents for the court and represent the interests of the client in court proceedings.
There are circumstances when the court does not invalidate a major transaction:
- When there is no evidence that the transaction caused losses to the company or its owners, who went to court.
- When the owners of the company, who were not at the general meeting, demand that the transaction be declared invalid, however, they received invitations to the meeting and their vote could not affect the results of voting for a major transaction.
- By the time of the trial, the company had already completed the procedure for making a decision on a major transaction.
- That is, the court does not invalidate a major transaction only because the company did not adhere to the procedure for making a decision on its commission.
What we can do for you if necessary to invalidate a major transaction
Corporate relations is one of the specializations of our company. We can:
- Advise you on whether the transaction is major and whether the decision on the transaction was made correctly;
- Prepare the documents for making a decision on making a major transaction;
- If necessary, we can challenge a major transaction that violates the interests of the client;
- Prepare a package of documents and a statement of claim to the court;
- Represent your interests in court.
Contact us
If you have any questions or disputes regarding the invalidation of major transactions in the Republic of Belarus – we will be happy to help you! Our long-term experience in the field of corporate law and corporate conflicts will help you in resolving any disputes in this area.
Phone and email communication options are available for your convenience:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@ambylegal.by.
