On Denationalization and Privatization of State Property in the Republic of Belarus

In order to improve the process of denationalization and privatization of state property in the Republic of Belarus, in accordance with the interests of citizens of the Republic of Belarus and considering Main Guidelines of Social and Economic Development of the Republic of Belarus for 1996-2000 and part three of Article 101 of the Constitution of the Republic of Belarus, I decree:

1. To establish that:

1.1. Transformation of state unitary enterprises established on the right of economic management (hereinafter - state unitary enterprises) and leaseholding enterprises into open joint-stock companies shall be carried out on the basis of proposals of collectives of workers of these enterprises approved:

for objects being in the republican ownership – by respective republican bodies of state administration, other state organizations subordinate to the Government of the Republic of Belarus, National Bank, Administration of the President of the Republic of Belarus, Administration of Affairs of the President of the Republic of Belarus, other stare bodies and other state organizations subordinate to the President of the Republic of Belarus, National Academy of Sciences of Belarus (hereinafter -- the bodies of state administration and other state organizations), as well as by regional (oblast and Minsk City) executive committees;

for objects being in municipal ownership – by respective local executive and administrative bodies.

Decisions on submission of suggestions of transformation of the enterprises, mentioned at the indent 1 of the present clause, into open joint-stock companies and decisions on creation of status of a legal person shall be taken by simple majority of votes at general meetings or conferences of workers of these enterprises.

Head of the enterprise and a body authorized for representing the interests of workers of the enterprise shall organize holding of the meeting (conference);

1.1¹. privatization of state property shall be carried out in accordance with plans of state property privatization, approved:

concerning the objects being in the republican ownership, by the Council of Ministers of the Republic of Belarus;

concerning the objects being in municipal ownership, by respective local executive and administrative bodies.

The plan of privatization of objects being in the republican ownership shall be drawn up, for a three year period, by the State Committee on Property according to proposals of the bodies of state administration and other state organizations, and of objects being in the municipal ownership, in the order established by local Councils of deputies;

1.2. In the absence of proposals of collectives of workers, the Council of Ministers of the Republic of Belarus may initiate denationalization or privatization of enterprises owned by the Republic in order to improve their financial position. Privatization of enterprises being in municipal ownership may be initiated by the corresponding local executive and administrative body.

1.3. In case of disagreements between collectives of workers of enterprises owned by the Republic, or between privatization units, the bodies of state administration and other state organizations, as well as regional (Oblasts and Minsk City) executive committees on expediency of denationalization and privatization of concrete objects, decisions shall be taken:

for enterprises with number of workers over 4000 – by the President of the Republic of Belarus;

for enterprises with number of workers from 2000 to 4000 – by the Council of Ministers of the Republic of Belarus;

for enterprises having number of workers up to 2000 – by the State Committee on Property.

1.4. In case of disagreements between collectives of workers of enterprises being in municipal ownership, or between privatization entities and local executive and administrative bodies on expediency of denationalization and privatization of the given enterprises, decisions shall be taken by these bodies in order set forth by local Councils of deputies.

1.5. The State Committee on Property or regional (Oblast), Minsk City territorial funds of state property shall on behalf of the State be founders of open joint-stock companies being established during denationalization or privatization. Objects being in municipal ownership shall be founded by local executive and administrative bodies according to procedure set forth by local Councils of deputies.

Apart from the mentioned bodies, legal persons or individuals, including foreign ones, may be founders of such joint-stock companies upon making contributions (their own money or property) into statutory funds of these companies. Selection of other founders of joint-stock companies (apart from the State) shall be carried out during preparatory works on subjects of republican property by the State Committee on Property in coordination with the bodies of state administration and other state organizations and on subjects of municipal ownership – by the appropriate local executive and administrative bodies.

1.6. State trading enterprises, catering enterprises and utility services, comprising of structural subdivisions, may be restructured during privatization by agreement with local executive and administrative bodies.

1.7. The State Committee on Property shall hold and dispose shares belonging to the Republic of Belarus, transfer the said shares to the management of other bodies of state administration and other state organizations, which shall appoint specially trained persons as representatives of the State in the bodies of management of the newly founded open joint-stock companies in accordance with the legislation.

The State Committee on Property, on a competition basis and in accordance with regulations set forth by the Council of Ministers of the Republic of Belarus, shall have a right to transfer shares owned by the Republic of Belarus of open joint-stock companies founded during denationalization and privatization of state-owned enterprises to the management of legal and natural persons.

Local executive and administrative bodies shall hold and command shares of open joint-stock companies founded during privatization of objects of municipal ownership in accordance with the procedure set up by respective Councils of deputies.

1.8. Sale of state-owned enterprises at tenders and auctions shall be made for monetary means only.

1.9. During free-of-charge privatization, up to 50% of state-owned shares of the newly founded open joint-stock companies created in the process of transformation of state unitary enterprises and leaseholding enterprises shall be exchanged for inscribed privatization checks "Imuschestvo" in accordance with the established order for:

workers of enterprises and persons equated to them – by the top-priority order within 5 months from the moment of state registration of shares on the basis of lists made by the commission on reorganization of enterprise into open joint-stock company;

citizens of the Republic of Belarus – through structural subdivisions of the open joint-stock company “Savings Bank "Belarusbank" in the established order;

other subjects of privatization – on specialized check auctions.

The State Committee on Property shall take a final decision on the number of shares to be exchanged for inscribed privatization checks "Imuschestvo" (for objects owned by the Republic) and local executive and administrative bodies shall be responsible for taking a final decision with regard to objects being in municipal ownership on the basis of necessity to create conditions for each citizen of the Republic of Belarus to realize the right to receive part of the state-owned property free-of-charge.

1.10. During the exchange of inscribed privatization checks "Imuschestvo" for shares of open joint-stock companies, workers of enterprises and persons equated to them have the right to use inscribed checks issued to themselves, as well as checks received by donation agreements and/or inherited from close relatives (parents, children, husbands, wives, brothers, sisters, grandchildren, grandmothers, grandfathers, fathers-in-law and mothers-in-law), provided that the checks donated (inherited) are those received by close relatives only. All other checks shall be used by the mentioned persons along with other subjects of privatization in compliance with indent four of the clause 1.9 of this Decree.

1.11. Sale of the state-owned shares of open joint-stock companies founded in the process of nationalization and privatization of objects being in the republican ownership shall be carried out by the State Committee on Property, and of objects being in municipal ownership shall be sold by respective local executive and administrative bodies in accordance with the procedure set up by respective Councils of deputies to:

workers of enterprises and persons equated to them – within 5 months from the moment of state registration of the first emission of shares, but not later than 8 months from the day of taking decision on establishment of the open joint-stock company, at the price 20% lower than the nominal value and for the amount not exceeding 100 base units per one buyer. The number of shares of the first emission allocated for these purposes shall be determined on the basis of the applications of workers of enterprise and persons equated to them;

legal and natural persons at the auctions;

legal and natural persons who submitted investment projects on the development of the open joint-stock company – at competitive biddings;

by other ways stipulated by the legislation.

The sale of shares, belonging to the Republic of Belarus, of open joint-stock companies founded in the process of nationalization and privatization of objects being in the state ownership, for monetary funds at auctions and tenders shall be carried out by the State Committee on Property in accordance with the list of such joint-stock companies the shares of which belong to the Republic of Belarus, approved by the Council of Ministers of the Republic of Belarus.

When an application for participation in the competitive bidding has been submitted by one person and its terms comply with the terms of the competitive bidding, the sale of shares to that person may be performed:

according to the decision of the State Committee on Property, in relation to shares being in the republican ownership;

according to the procedure set up by respective Councils of deputies, in relation to shares being in the municipal ownership;

1.11¹. The procedure for determining the starting price of stakes (shares) being realized at the competitive bidding, auction, as well as the value of shares being exchanged for inscribed privatization cheques "Imuschestvo" is determined:

by the Council of Ministers of the Republic of Belarus, in relation to stakes (shares) being in the republican ownership;

by respective Councils of deputies, in relation to stakes (shares) being in the municipal ownership;

1.12. Shares in statutory funds of commercial organizations, established during transformation of leaseholding and collective (people's) enterprises and shares in property of mentioned enterprises belonging to the citizens of the Republic of Belarus, shares purchased by to citizens of the Republic of Belarus by monetary means on favorable conditions from the State (for the price 20 percent lower then the nominal price) or exchanged to inscribed privatization checks "Imuschestvo" as well as received in exchange for their shares in property of leaseholding and collective (people's) enterprises during their transformation into joint-stock companies may not be expropriated, except for:

donation of such stakes (shares) to close relatives (parents, children, spouses, brothers and sisters, grandchildren, grandparents), as well as parents of spouse;

transfer of the right of ownership for these stakes (shares) in connection with death of a participant of appropriate legal person. At that shares (parts) are subject to re-registration in favour of heirs inherited them in the established order, and in case of absence of heirs – become the property of the Republic of Belarus;

alienation of such stakes (shares) in favour of the Republic of Belarus (its administrative and territorial units) including in connection with depart of a participant of appropriate legal person for permanent place of residence outside the limits of the Republic of Belarus;

alienation of such stakes (shares) in the statutory funds of the legal persons of legal persons to those legal persons including for reduction of their statutory funds, unless otherwise set forth by the Head of State;

exchange of stakes (shares) in the statutory funds of the legal persons at reorganization;

alienation of stakes (shares) in the statutory funds of the legal persons (except for open joint-stock companies) to the participants of those legal persons;

levy of execution upon these stakes (shares) by the court ruling;

other cases set forth by the President of the Republic of Belarus.

Stakes (shares) mentioned in indent one of part one of the given subclause may be given for trust management in cases provided by the President of the Republic of Belarus.

New owner of the stakes (shares) acquired in accordance with paragraphs two-nine of part one of the present subclause has the right to alienate these stakes (shares) under the grounds provided by part one of the present subclause. Given restrictions are not applied to the Republic of Belarus and its administrative and territorial units.

The rights attested by the shares acquired by the citizens of the Republic of Belarus from the state under the conditions mentioned in indent one of part one of the given subclause may be transferred by letter of trust. Such letters of trust are subject to registration at the republican body of state management of market of securities in order specified by the Council of Ministers of the Republic of Belarus in agreement with the President of the Republic of Belarus. Till this registration the right of the person, to whom the letter of trust is issued, to participate in management of joint-stock company can not be realized.

Amounts (number) and cost of stakes (shares) acquired in cases provided in indent four of part one of the present sub-clause:

in ownership of the Republic of Belarus are specified by the President of the Republic of Belarus under presentation of the Government of the Republic of Belarus, unless otherwise provided by the Head of the State;

in ownership of administrative and territorial units is determined by local executive and administrative bodies in order established in accordance with legislation of local Councils of deputies.

Stakes (shares) received as a result of exchange in accordance with indent six of part one of the present subclause may be alienated under the grounds established in part one of this subclause.

Restrictions for disposal of shares established in indent one of part one, parts two-four of this subclause do not cover shares of open joint-stock companies 9whe the exception of open joint-stock companies which ensure functioning of strategically important economy branches and/or other important state needs, according to the list approved by the Council of Ministers of the Republic of Belarus in agreement with the President of the Republic of Belarus), in the which the stake of the state in the statutory fund as of March 31, 2008:

absent or makes 75 percent and more, from June 1, 2008;

makes more than 50 percent, from January 1, 2009.

Open joint-stock companies have the preemptive right to purchase shares in relation to which, in accordance with part seven of this subclause, do not extend the restrictions on disposal of those shares. To exercise that right the general meeting of shareholders shall take the decision about the purchase by the open joint-stock company of its shares being alienated by the shareholders in the period till 31 December 2010, with determining of the price of their purchase and a respective information shall be placed on the Belarusian quoting automated systme of the Open Joint-Stock Company "Belarusian Currency and Funds Exchange" (hereinafter -- the Funds Exchange). According to a decision of the general meeting of shareholder, the determining of the purchasing price of of the said shares may be referred into the competence of the board of directors (supervisory board) of the open joint-stock company. If within 5 working days from the day of receipt by the open joint-stock company of the notice of the shareholder about the intention to sell shares owned by the latter or from the day of placing the selling order in relation to those shares at the Funds Exchange the shares have not been purchases by the said company, they may be sold by the shareholder to any third person.

Restrictions for disposal of stakes (shares) established in parts one -- eigth of this subclause are effective till December 31, 2010.

1.12¹. [Excluded]

1.12². [Excluded]

1.13. The second and any further emissions of shares of open joint-stock companies founded during privatization and denationalization of objects owned before by the Republic shall be allowed by consent of the State Committee on Property before sale of the shares of the first emission and objects that were in municipal ownership – by consent of local executive and administrative bodies, with the exception of cases when the second and further emissions of shares are carried out in accordance with decisions of the President of the Republic of Belarus.

1.14. [Excluded]

1.15. Upon termination of the lease contract on leased property of a state enterprise, the leased enterprise shall be transformed into an open joint-stock company in accordance with the legislation on denationalization and privatization or return the property to the lessor in compliance with the established procedure.

Prolongation (renewal) of terminated lease contracts, the terms of validity of which have expired, shall be performed in order set forth by President of the Republic of Belarus.

1.16. when selling at auctions with conditions and (or) tenders of the enterprises with up to 100 working places and indebtedness by financial obligations equal to or exceeding assets of the balance sheet, the initial price for such object shall be set at the rate of one base unit. The owner of thus privatized object shall repay indebtedness before the state and other creditors, reserve the specified number of working places, ensure industrial and economic activity of the enterprise and fulfill other conditions of the purchase and sale contract.

1.17. It’s not admitted to use borrowed assets, including credits, for acquirement of state-owned shares by workers of enterprises, persons equated to them and legal persons created by workers of enterprises.

1.18. In case of untimely transfer to the respective budget of money received from sale of shares on favourable terms to workers of enterprises or persons equated to them, or money received from sale of state property at auctions and (or) tenders, and directed in the established order at reconstruction, technical re-equipment and modernization of production, assimilation of new technologies and manufacture of new products, as well as dividends on state-owned shares, the tax bodies shall collect by uncontested proceeding on the basis of information provided by privatization bodies from the payer the principal of the payment, a fine in the amount of 10% of the due principal payment and a penalty fee at the rate envisaged by the tax legislation.

1.19. Statutory funds of open joint-stock companies being established during denationalization and privatization shall be formed in accordance with legislation on denationalization and privatization. Open joint-stock company, which statutory fund is less than minimal amount determined by legislation, shall increase its statutory fund to the proper amount within five years from the moment of its state registration.

1.20. If a legal person of state form of ownership or with a stake of state in its statutory fund withdraws or is excluded from a membership of an economic partnership or a company, the cost of stake in property, which is due to the given legal person, shall be calculated in the order established for evaluation of state property during its alienation (sale), and share of profit, which is due to the given legal person, shall be calculated in accordance with balance worked out on the date of withdrawal (excluding).

1.21. Shareholders of open joint-stock companies, established during denationalization and privatization, shall bear no subsidiary responsibility of founders (participants) and owners of property of legal persons for its liabilities, except for the cases envisaged by legislative acts.

2.The Council of Ministers of the Republic of Belarus shall within 3 months:

take measures to harmonize the legislation with this Decree;

set a procedure of transferring, through tender, state shares of open joint-stock companies created during denationalization or privatization of objects owned by the Republic to the management of legal and natural persons.

3. Local Councils of deputies, executive and administrative bodies shall within 3 months harmonize decisions of local bodies of administration and self-administration with this Decree.

4. [Not given]

5. This Decree enters into force from the day of its publication, shall be temporary and shall, in conformity with part three of Article 101 of the Constitution of the Republic of Belarus, be submitted for consideration of the National Assembly of the Republic of Belarus.

President of the Republic of Belarus A.Lukashenko