Protecting Private Clients in Share Deals

Expert legal support for buying or selling shares, safeguarding private clients’ interests.

The shares of Belarusian and foreign companies are of interest to private investors as a source of investment and income. To purchase and sell shares on the stock exchange market, a representative is needed who will make transactions on behalf and at the expense of a private client or on his own behalf and at the expense of the client. In some cases, transactions with shares are possible outside the exchange.

Understanding Closed and Open JSCs and Their Shares

A joint-stock company (JSC) is a profit-driven legal entity where ownership is divided into shares. In an open JSC (OJSC), shares can be sold to anyone, helping raise capital from the public. A closed JSC (CJSC) restricts share transfers, keeping ownership within a set group.

Owning shares gives investors property rights, voting power, and a claim on dividends. Common shares allow participation in management, while preferred shares typically secure fixed dividends and extra protections. Understanding these differences is vital for private clients looking to invest, sell, or protect business interests. Professional legal support helps ensure transactions align with both goals and regulations.

Types of Share Deals and Key Legal Aspects

Transactions involving shares in closed or open joint-stock companies grant new owners specific rights tied to those shares. These deals include purchase agreements, share gifts, or exchanges of shares between companies. All such transactions must be documented in writing. Shares may be owned by individuals, businesses, or sole proprietors. Holding shares provides not only a financial stake but also certain rights to participate in company decisions.

In Belarus, the Belarusian Currency and Stock Exchange oversees the issuance and regulation of securities. Any agreement involving shares requires registration with this authority. Shares exist in non-certificate form, recorded in special accounts. These accounts also reflect any restrictions or encumbrances on the shares, ensuring transparency and legal compliance.

What are promotions

Shares are registered securities that represent a shareholder’s contribution to the authorized capital of the issuing joint-stock company. They are issued for an indefinite period in non-documentary form, meaning they exist as entries in the shareholder register rather than as physical certificates. A share defines the scope of its holder’s rights based on its category — ordinary or preferred. Preferred shares have the types defined in the charter of the joint-stock company (paragraph 2 of Article 1 of the Law of the Republic of Belarus dated 05.01.2015 No. 231-Z “On the securities market”).

Types of Shares and Associated Rights

A simple (ordinary) share certifies the following rights of the owner:

– Receive a part of the profit of the joint-stock company in the form of dividends.

– Participate in the general meeting of shareholders with the right to vote.

– Receive a part of the property or its value upon liquidation of the JSC.

The preferred share certifies the following rights of the owner:

– Receive a part of the profit of the JSC in the form of a fixed amount of dividend.

– Receive a part of the property or its value upon liquidation of the JSC.

A preferred share does not give the owner the right to participate in the general meeting of shareholders with the right to vote, except in cases provided for by legislative acts. The types of preferred shares differ, for example, in the size of the dividend, the timing of its payment, etc.

The joint-stock company is obliged to distribute a part of the profit in the form of dividends among the owners of preferred shares, except for some exceptions. The joint-stock company has the right to distribute dividends among the owners of ordinary shares.

Share Purchase and Sale Deal Features

Owners of shares can buy and sell shares only on the stock exchange. To do this, representatives are needed at different stages of transactions: brokers, trust managers.

Typical Share Transactions on the OTC Market

On the OTC market (outside the stock exchange), various types of share transactions are carried out. These include transactions for the repurchase of shares by a joint-stock company at the request of shareholders, as well as the purchase of shares by the company based on a decision of the general meeting of shareholders.

Additionally, shares may be sold by the company to members of the board of directors (or supervisory board), executive bodies, or employees. Another common transaction involves the sale of shares by the issuing joint-stock company to an investor under the terms of the issuer’s business plan.

Role of the Shareholder’s Authorized Representative

The owner of the shares may give the broker the right to be an authorized representative of the owner of the shares:

– to conclude an agreement with the depository on behalf of the owner of the shares,

– to transfer to the depository orders to block the shares for their sale on the stock exchange.

Dispose of the “depo” account or a section of this account under a separate agreement that the owner of the shares enters into with the broker. In this case, the broker becomes the operator of the “depo” account (a section of this account).

When the Broker Becomes an Authorized Representative

A broker becomes the authorized representative of a shareholder once the shareholder issues a power of attorney. This document does not always require notarization, though it may be notarized if desired. Alternatively, it can be certified by the shareholder’s employer, educational institution, housing association, homeowners’ association, or the administration of a medical facility where the shareholder is receiving treatment.

Selling Shares in a CJSC

Selling shares in a closed joint-stock company (CJSC) is strictly regulated. Shares can only be sold to the company or existing shareholders. To sell to outsiders, you must first offer the shares in writing to current shareholders, who have a preemptive right to buy. After notification, you wait for their response—acceptance, refusal, or no reply within the deadline—before finalizing the sale with a purchase agreement.

These rules, including the notice process and transfer conditions, must be clearly outlined in the company’s charter to ensure all transactions comply with corporate governance standards.

Selling Shares in an OJSC

Buying or selling shares in an Open Joint-Stock Company differs from Closed Joint-Stock Companies due to regulatory and procedural requirements. Investors must open a depo account with a licensed depository, which maintains securities records and charges fees. After setting up the account, the buyer signs a share issuance agreement and pays. Legal entities often need board approval, and the OJSC’s Supervisory or Board of Directors may require notification. Sometimes, antitrust clearance is needed to comply with competition laws. These rules ensure transparency and protect the integrity of public company share transactions.

Share Swap Transactions

A share exchange agreement is a contract where parties swap property, acting as both seller and buyer. In joint-stock companies, shares may be exchanged for assets, real estate, privatization vouchers, or equity. In CJSCs, preemptive rights require offering assets first to shareholders or the company. A common example is exchanging privatization vouchers for OJSC shares, where individuals visit a bank to check available companies and open a depo account to record the shares.

These steps protect ownership rights and ensure compliance with corporate rules and national laws.

Gifting Shares

Gifting shares in a closed or open JSC means transferring ownership without payment. Such transactions are formalized through a gift agreement, which must state that the transfer is without compensation and outline the rights, duties, and liability of each party.

In Belarus, these agreements require registration with the Belarusian Currency and Stock Exchange. Tax obligations also arise for the recipient. By law, gifting company shares is limited: shares may be donated only to the state or to close relatives. Close relatives include spouses, parents, children, grandparents, grandchildren, and siblings. These rules safeguard corporate structures and help prevent unintended shifts in ownership.

Inheritance of Shares

Inheritance of shares is not a transaction but transfers ownership upon a shareholder’s death. Heirs may be family members or individuals named in a will.

For a closed joint-stock company (CJSC), heirs must file an inheritance application with a notary within six months, paying a set fee. They provide share and company details; if missing, the notary requests this from the company, which must reply within 14 days. After six months, the notary issues a certificate of inheritance, enabling registration of shares in the heir’s name. This process ensures lawful transfer and protects corporate records and ownership transparency.

Dealing with a Troubled Company Stake

Start by reviewing the purchase agreement to see if it includes provisions for adjusting the price or canceling the deal under such circumstances. Next, examine the reasons behind the company’s financial difficulties to determine if they stem from inaccurate or concealed information. If it turns out the problems existed earlier but were hidden through false accounting or misleading financial reports, you may have grounds to challenge the transaction in court. This aligns with principles similar to those found in Article 180 of the Civil Code of Belarus, which addresses transactions completed under fraud.

Keep in mind that each party must prove the facts they rely on. In this case, the buyer bears the burden of showing that the seller intentionally misled them.

Our Services

Share Advisory

We provide clear guidance on managing your shares, explaining your rights and obligations so you can make informed decisions about holding, transferring, or protecting your investments.

Off-Exchange Transactions

We draft and review all required documents to help you securely buy or sell shares on the over-the-counter market, ensuring full legal compliance and risk management.

Broker Selection Support

We assist in finding a qualified stock broker to handle your exchange trades, verifying credentials and matching you with professionals suited to your investment goals.

Broker Document Review

We prepare or examine contracts and paperwork supplied by brokers, checking for risks and protecting your interests before you commit to buying or selling shares.

Representation in Broker & Depository Deals

We act on your behalf when entering agreements with brokers or depositories, negotiating terms and making sure your rights are fully safeguarded throughout the process.

Client Transaction Support

We accompany you through every stage of buying or selling shares or business interests, handling negotiations, paperwork, and ensuring your position is secure.

Negotiation & Documentation

We lead negotiations and prepare precise legal documents for your transactions, aiming to secure the most favorable terms and minimize future disputes.

Legal Consultation

We offer strategic legal advice on structuring, purchasing, or selling shares and business assets, tailored to your specific objectives and market conditions.

Business Due Diligence

We conduct thorough audits of businesses you plan to acquire, uncovering liabilities or compliance issues so you can proceed with confidence and protect your investment.

Buying and Selling Shares on the Stock Exchange

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Step 1. Concluding a contract with a broker

For share purchase and sale transactions, a contract is concluded with a broker. The contract specifies the number of the bank account for crediting money when selling shares. The broker can pay the amount from the sale of shares in cash or make a bank transfer to his or another bank. In this case, the seller of shares does not need to open a bank account. When buying shares, a commission agreement is concluded with the broker.

Step 2. Opening a bank account

After concluding a commission agreement with the broker, an account is opened at a bank where the amount for purchasing shares is deposited, and this amount is transferred to the broker’s bank account. Bank transfer operations and cash withdrawals may incur fees for the seller of the shares. After concluding a commission agreement with the broker, an account is opened at a bank where the amount for purchasing shares is deposited, and this amount is transferred to the broker’s bank account. Bank transfer operations and cash withdrawals may incur fees for the seller of the shares.

Step 3. Conclusion of a contract with the depositary

The seller or buyer of shares enters into an agreement with the depository, where a savings account “depot” is opened in the name of the owner of the shares to account for the shares. To conclude a contract with a depository, you need to write a written application for opening a depot account, bring the passport of the owner of the shares and fill out a card with signature samples. When selling shares, the depository is given an order to block shares for trading on the stock exchange, where information about the broker participating in the exchange trades is indicated.

Buying or Selling Shares in an OJSC for Individuals

Open a Bank Account

Set up a personal bank account to receive or pay funds tied to your share transaction. This account will be listed in your broker agreement for secure settlements.

Sign a Brokerage Commission Agreement

Enter into a commission contract with a licensed broker to handle buying or selling your shares on the exchange, ensuring compliance with market and regulatory standards.

Open a Depository “Depo” Account

If you don’t already have one, sign a contract with a depository. Your shares will be credited here. Provide a written application, valid ID, and signature card.

Instruct the Depository to Block Shares for Sale

If selling, issue a depo order to block shares for trading on the Belarusian Currency and Stock Exchange. This ensures only your chosen broker can handle the transaction.

Transfer Funds to Broker for Purchases

If buying, deposit the required amount into your bank account, then transfer or pay directly to your broker’s account as specified in the commission agreement.

Broker Executes the Trade on the Exchange

Once all accounts and agreements are in place, the broker submits your buy or sell order to the exchange system. This completes the market transaction.

Settlement and Payment or Share Transfer

Sale proceeds are transferred to your bank account or paid in cash by the broker. If buying, acquired shares are credited to your depo account in the depository.

Cover Transaction Costs

Your broker may deduct fees for banking, depository services, and exchange charges from the transaction amount or bill you separately, as outlined in the commission contract.

Why Us

Unwavering Professionalism

We maintain the highest standards of legal practice, handling your matters with precision, discretion, and full dedication to your best interests in every situation.

Recognized Excellence

Our proven track record and strong reputation reflect consistent success, trusted by clients and respected by peers across complex legal and business matters.

Strategic Counseling

We provide clear, tailored legal strategies that anticipate risks and align with your long-term objectives, helping you make confident, informed decisions.

Focused on Clients

Your needs drive our work. We prioritize understanding your goals to deliver solutions that protect and advance what matters most to you.

Delivering Tangible Outcomes

We go beyond advice, ensuring concrete results that safeguard your assets, resolve disputes efficiently, and support your business or personal growth.

International Reach

Our experience extends across borders, enabling us to handle multi-jurisdictional issues with ease and represent your interests globally.

FAQ

Does Selling Shares Require Amending the Charter?

Selling shares in a joint-stock company does not by itself require charter changes. Updates are only needed if the charter lists shareholders. This is optional but allowed. If shareholders are named, the charter must be amended to add or remove them. Unlike LLCs, these changes can show new owners or simply delete prior details. Remember, listing shareholders in the charter makes their information less confidential.

Buying a Company Stake vs. Buying the Business

Legally, you acquire shares or interests in the company, not the business assets directly. Your stake gives rights to profits and voting. Usually, these match ownership size, unless the charter sets other rules. This way, you own part of the company that runs the business, not the business by itself.

What Is a Preemptive Right to Buy a Company Share?

A preemptive right means existing LLC members and the company itself have priority to buy a stake before it’s sold to outsiders. The seller must notify the general director and all members with a notarized offer stating the price and terms.

They have 30 days to accept, unless the charter sets another period. If no one agrees, the seller may proceed with a third-party sale. Often, members buy in proportion to their current shares, though the charter may allow other splits.

If this right is violated, the deal can be canceled in court, forcing the share transfer to rightful members and requiring the seller to cover related costs.

Do I Need My Spouse’s Consent to Sell an LLC Share?

Yes. If the share was acquired or the LLC was formed during marriage, your spouse’s consent is required.

Can I Sell My Share Only to Other Members, or to Third Parties Too?

By default, other LLC members have a preemptive right to buy your share. If they decline and the general meeting approves (as often required by the charter), you may sell to a third party.

What Is Special About Buying or Selling an LLC?

LLCs make up most legal entities, so such transactions are very common. Ownership typically transfers through a share purchase agreement. Alternatively, deals may involve buying company assets like property or equipment. Each option has different legal steps. Our lawyers ensure all charter and legal requirements are met, protecting the interests of all parties involved.

What Pitfalls Can Arise When Buying or Selling a Company Share?

Key rules on transferring ownership are set in the company’s charter, so reviewing it is essential. We also check whether the capital contribution was properly made, confirm spousal consent for the sale, verify how the share value is determined, and handle staffing or financial matters. These steps help avoid disputes and protect your interests throughout the transaction.

Who Can You Sell a Business Share To?

Usually, the company’s charter governs this. Most often, existing members or the company itself have priority to buy. If the charter allows, you may sell to third parties. If not, it may require amending the charter before proceeding with an outside sale.

Contact us

Lawyer

Legal assistance is provided by advocate Anton Grinewich, Specialized Legal Bar No. 2 in Minsk.
E-mail

info@ambylegal.by
Address

Office: 1 Krasnaya str., Minsk, Republic of Belarus Postal address: 1 Krasnaya str., Minsk, Republic of Belarus
Working hours

Monday-Friday 9:00-19:00

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