A new company can be registered as either a commercial or a non-commercial entity. Here we will cover the nuances of incorporation of commercial entities, as this business legal structure is primarily sought-after today. During registration, a commercial entity declares that its main goal is making profit.
Registering a new legal entity in Belarus. Harmonizing the corporate name correctly
From the legal point of view, there are three ways to register a company name:
on the website of the Unified State Register of the Republic of Belarus;
by corporal appearance at a local government agency authorized to register new legal entities.
During the procedure, any of the founders can confirm the correctness of the name. Belarus has fairly strict legal rules for choosing a company name. Therefore, before making an application, it is worth carefully studying this issue.
Business legal structure is an equally important nuance when registering a legal entity. There are several options, but in recent years, most new enterprises have preferred to open a company in Belarus in the form of an LLC. This is because an LLC doesn’t have to have more than one founder. For many, this feature significantly streamlines business. But an LLC has more advantages, from the legal point of view. Detailed information is provided in specialized articles, as well as in regulatory documents.
If an entity has been established in the territory of another state, it is worth considering the possibility of registering a new representative office of a foreign entity. In this case, you will be allowed to run a small office without receiving revenue. You should also remember that not all foreign persons are allowed to be registered as an individual entrepreneur.
How to choose and register a legal address?
First of all, to register a legal entity in Belarus, you need to determine the place of work. Remember that only private unitary enterprises have the right to be located in a residential building. All other entities must be domiciled in a non-residential building with an administrative status.
On the Internet, you can find many offers for providing a legal address with an established postal service. But can such ads be trusted? If considered from the legal viewpoint, the corporate law does not have any requirements to the floor area. It also doesn’t matter whether the owner will be permanently located at the legal address. But still, sometimes tax authorities have a negative attitude to such a way of domiciling companies.
How to get out of such situation? If there are no options, you can use a third-party address to register a legal entity. However, in this case, it is worth spending a bit more time checking the premises and making sure the mail can be received properly. Also make sure that the legal entity or individual who rents out the office has all the required documents.
On the Internet, you can see a lot of negative reviews in regard to nominal addresses. Often, a negative opinion about cooperation is left by persons who have paid only for one month. In such a way they were able to register a new company, and then did not see it fit to continue paying fees.
Why is a meeting held before business registration?
Whatever business legal structure you’ve chosen, before starting the registration procedures, a meeting must be held with all the founders. The following issues are usually discussed at the meeting:
- business name
- distribution of equity shares among all participants
- calculation of the authorized fund
Thereafter, a second meeting is held at which:
- the company charter is being drawn up;
- members of the company’s management body are elected.
Those planning to register a legal entity for the first time often underestimate the importance of holding meetings. Remember that you cannot start a business without this step. If you register a legal entity in the form of a private unitary enterprise or a limited liability company with one participant, then all issues are to be resolved and documented solely by the founder. When registering a closed joint-stock company, the deed of incorporation functions as the company meeting.
Rules for determining CEO
Often novice businessmen are asking whether it is necessary to appoint a duly authorized CEO before registering a legal entity. It should be noted right away that appointment of CEO is mandatory. The only nuance is that you can appoint a CEO either before registration or after processing all documents. The responsibility for electing the CEO will be borne by the shareholders, and in the case of sole management, this issue will be within the competence of the sole participant of the legal entity.
This opportunity gives a certain freedom, but there is the other side of the coin. As long as a company does not have a lawful CEO, it cannot settle the following issues:
- opening a bank account
- registration of an electronic digital signature, and other matters
Is it possible to appoint a foreign person as CEO?
Foreign persons functioning as CEOs are not uncommon. But in this situation, it is most crucial to properly formalize the documentation. First of all, you’ll need to use a concrete wording in the minutes of your regular meeting. The wording must be: “subject to the issue of a permit to conclude a contract.”
The permit mentioned is the one that allows a person to hold a managerial position. However, not all foreigners are required to obtain such a permit when registering a legal entity. This type of certificate is not required for citizens of the member states of the Eurasian Economic Union.
Entrepreneurial activity in Belarus involves some other benefits for foreign persons. For example, residents of the Belarusian Hi-Tech Park are not required to obtain the above-mentioned permit.
Preparation of the charter
The company charter (articles of association) is the sole constituent document regulating company’s entrepreneurial activity. It contains legal data as prescribed by the law of the Republic of Belarus. There are two ways of compiling statutory regulations when registering a legal entity. You can describe the rights and obligations of individuals as fully as possible. Or, on the contrary, you can briefly highlight all the norms, making the charter most comprehensible.
As experienced lawyers, we recommend you to find a middle ground. It is not necessary to load legal documents with complex terms that will not be grasped by employees lacking appropriate education. On the other hand, if you remove some significant norms from the charter, you may later regret it.
Remember that it is not always possible to alter company’s statutory documents. Therefore, make sure you are most serious about this stage of registration of a new legal entity.
Is it possible to use a charter provided free of charge?
We mean charters that are freely available on various sites on the Internet. Theoretically, you can open them, download and add them to your armory.
Some services even offer to fill in the documentation with your corporate data. When applying for such services, remember that the persons who draw up the charter do not bear any responsibility. Moreover, some portals overtly indicate that the provided templates do not comply with the latest versions of the Belarusian legislation. Therefore, make sure you’ve double-checked everything even written in small print, and also be sure to thoroughly work out every clause of the new charter.
The most important stage of company registration: submission of documents to the executive committee
Registration of any legal entity involves a mandatory submission of documents to the local registering authority. The following documents must be submitted to the executive committee:
- Application for registration. Founder’s personal data shall be attached here. A sample application can be found on the website of the Ministry of Justice. Strictly observe all the requirements and do not amend the form, otherwise the document will not be accepted. Signatures of persons opening a new legal entity must be affixed at the bottom. Where there are more than 3 founders, one envoy may be elected to assume this responsibility.
- Charter. The company must provide two printed versions and another copy in electronic form.
- A receipt confirming the payment of the state duty. Legal details and amount will be communicated by the registering authority.
Where founders’ representative office includes a foreign person, you’ll need to formalize two more certificates:
- A copy of foreign person’s identity document. Where the passport has been issued in a foreign language, you’ll need to attach a notarized translation.
- Duly formalized data from the commercial register of the home state. This document has an expiration date – 1 year. After the expiry of this period, you’ll need to have the extract re-issued.
Unfortunately, sometimes a person intending to incorporate a new entity is not able to be present during the registration procedure. In this case, a power of attorney can be drawn up for the purpose of registration of a legal entity. A sample document can be found on the websites of state agencies of the Republic of Belarus. It is important that the power of attorney be attested by a notary. Where a business is being registered by a foreign citizen, certain nuances must be taken into account.
After receiving the package of documents, the registering authority will first check the completeness and accuracy of all certificates. If everything is correct, the applicant will obtain a charter with an official stamp and an incorporation certificate. Sometimes, the incorporation certificate will be issued on the second working day after the approval of the application.
What are the legal obstacles for founders and why they must be checked?
Already at the stage of preliminary meeting, it is important to make sure that none of the founders faces any obstacles that might impede the creation of a business entity. Otherwise, any of such obstacles may cause a refusal of registration of a legal entity. For example, if you have an incomplete entity liquidation or bankruptcy procedure, your application will be rejected. Founders can inspect all possible obstacles when reading the questionnaire attached to the application.
If a person is not legally authorized to register an entrepreneurial activity, the approval of such person’s application will be annulled. Any income will be withdrawn in favor of the budget, regardless of offender’s status (whether he/she is a minority or majority owner). These nuances of the Belarusian legislation once again remind you to make sure you don’t start a joint business with unfamiliar persons.
Registering a legal entity in Minsk electronically
This method of opening a legal entity has been gaining popularity lately. To carry out this procedure, you don’t need paper documents, just copies in electronic format. In particular, the to-be CEO must submit an application and a company charter. Furthermore, other certificates and extracts that require signatures and seals of other persons must also be translated into electronic form. For example, a notarized copy of foreign citizen’s identity document. To secure acceptance of all legal information in electronic documents, each page must be authenticated by applicant’s digital signature. As in the case of regular submission of a paper application, either the founder himself/herself or his/her representative may act as the applicant.
Today, not all lawyers have acquired electronic digital signatures. However, those who have boast a significantly larger scope of capabilities. Now, such specialists can register entities using electronic copies only. This procedure is very swift. You can get an incorporation certificate within one working day, provided that all certificates and extracts have been correctly compiled. Furthermore, with this method you can forget the tedious wandering about various legal offices. Also, it saves your budget, as the state duty is not charged for the electronic procedure.
What happens after registration of a new company?
As soon as you have received the approval and you have a registered charter in your hands, you can contact an engraver to order a company seal. You don’t need to obtain an additional permission for this. In Belarus, you can have more than one corporate seal at once, in order to facilitate your business activities. Just make sure that substitute seals are different from the original seal.
Please note: 2 years ago, the authorities announced that residents of the Republic of Belarus are not required to have a corporate seal. However, in some situations, they will not be able to legally conduct business without this attribute. For example, when they open an office to conduct foreign economic activities.
Opening a bank account
All enterprises operating in the territory of Belarus are required to have an account in Belarusian currency opened in a local bank. If desired, you can open additional accounts in dollars, euros or Russian rubles. A single rule applies for different currencies: if you plan to register abroad, you will need a permit from the National Bank of the Republic of Belarus.
An account may be opened on the basis of company charter and documentation confirming CEO’s powers. Sometimes banks will request the provision of other legal information, certificates/statements and extracts. Therefore, it is better to first find out all the information by way of a personal visit.
It is up to you to choose a bank. Belarusian government-run banks are renowned for their stability and reliability. Belarusian private banks have also shown good performance in recent years. It is better to consider different offers before making a decision.
The final stage of business registration
Once completing all the above stages of registration, you can proceed to carrying out your business activities. However, it is worth remembering about a number of formal nuances:
- prepare a book of complaints and suggestions and a book of inspection records
- issue an electronic key for accounts transfer
- submit necessary documentation to the local tax service (we recommend contacting your inspector and clarifying what certificates are required to form a taxpayer’s file)
In Belarus, the Simplified Taxation System (STS) can be used. To enjoy it, a new legal entity must start using the system no later than 20 working days after the incorporation.
Also, explore the possibility of using preferential tax regimes. For example, when concluding an investment agreement with the Republic of Belarus, you can enjoy significant privileges in regard to construction/modernization activities.
You can register and open a company in Belarus with Borius Consulting LLC.