Invalidation of Major Transactions
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.
Non-Major Acts
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.
Decision about making a major deal
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.
Major Deals
A major transaction can be challenged in court when it was concluded as usual without a decision of the general meeting, or when the company did not comply with the decision-making procedure and the decision was made solely by the head or one of the owners.
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 judicial review of major transaction invalidation
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.
The court may not invalidate a major transaction when:
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.
Our Services
Who Can Approve Major Transactions in a Belarusian Business Entity
Challenging the Validity of Contracts and Transactions in Belarus
Beyond Legal Capacity of Legal Entity
A contract is invalid if a legal entity enters into a transaction exceeding the scope of its legal capacity defined by its founding documents or law.
Exceeding Authority of the Representative
If a contract is signed by someone acting beyond the powers granted to them (e.g., without shareholder approval), it can be declared invalid.
Minor Aged 14–18 Without Consent
A deal concluded by a minor aged 14–18 without required parental or guardian consent is invalid unless permitted by law or legal practice.
Inability to Understand or Control Actions
A deal is invalid if made by a person unable to understand the meaning of their actions or control them due to mental or physical conditions.
Legally Restricted Legal Capacity
Transactions by individuals judicially limited in legal capacity may be annulled if made without the involvement or consent of their legal guardian.
Made Under Mistake
A contract made under a significant mistake regarding material terms or facts may be annulled upon proving the misunderstanding affected one party’s consent.
Made Under Deception, Threats, or Coercion
Deals signed under fraud, threats, abuse of trust, or due to extremely unfavorable circumstances can be invalidated to protect the exploited party.
Deals Prohibited by Law
Transactions explicitly prohibited by law are void. Funds or property involved may be confiscated in favor of the Republic of Belarus, depending on intent.
Sham and Simulated Deals
Fake (sham) deals intended to mislead (e.g., to avoid taxes or hide assets) and simulated contracts disguising true intent are legally invalid.
Invalid Due to Legal Incompetence
Contracts made by minors under 14, legally incapacitated persons, or others lacking full legal capacity are invalid without proper legal representative approval.
Deals Made Under External Pressure
If a person signed a contract under deception, abuse, undue influence, or severe life circumstances, the deal can be overturned in court.
Unauthorized Transactions by Legal Entities
If a director or other agent of a company concludes a deal against internal rules (e.g., without board approval), it can be challenged.
Violations of Legal Requirements
Contracts not complying with mandatory legal norms (e.g., in real estate or financial law) may be deemed void even without explicit statutory mention.
Unanimous Board Approval for Major Transactions
Transaction Parties
All parties involved in the transaction must be clearly identified to ensure transparency, accountability, and legal responsibility for each participant.
Subject of the Transaction
The object of the transaction — such as property, services, or rights — must be described in detail to avoid legal uncertainty or dispute.
ransaction Amount
The total monetary value of the deal must be stated precisely, as it directly affects the classification of the deal as “major.”
Statutory Terms
Key terms defined as essential by law (e.g., payment deadlines, responsibilities, penalties) must be included to meet legal and contractual requirements.
Other Conditions
Additional terms important to the parties — such as warranties, dispute resolution, or delivery timelines — should be clearly defined in the agreement.
Process
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LawyerLegal assistance is provided by advocate Anton Grinewich, Specialized Legal Bar No. 2 in Minsk.
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