Business forms

Setting up a company in Belarus

Source: http://www.belarus.by/en/business/companies

Important information about how to start up a business in Belarus, what your options are and how long the process takes

What are the options for setting up a company in Belarus?

The Belarusian government welcomes responsible foreign companies looking to set up in the country.

If you want to trade as a foreign or international company in Belarus, you need to set up in one of two ways:

  • as a representative office (RO)
  • as a legal entity

Both options require you to register with the Tax Authorities.

Traditionally representative offices in Belarus were just that – organisations operating as ambassadors for foreign companies, but without a taxable presence in the country.

Today you can have a taxable presence with a RO, and can sign contracts and carry out negotiations.

However, if you want to carry out long-term commercial activity within Belarus, setting up a legal entity may be a better option.

Belarusian laws provide for various organizational-legal forms of commercial organisations. Most legal entities choose the following types as the most convenient for business:

  • Joint Stock Companies
  • Limited Liability Companies
  • Unitary Enterprises

Joint Stock Companies in Belarus

Joint Stock companies are companies whose capital is divided into a definite number of shares. They fall into two categories:

  • Open Joint Stock Companies (Otkriytoe Aktsyonernoye Obshchestvo or OAO). These companies are allowed to offer an unlimited amount of shares and are the only type of legal entity that can be openly traded.
  • Closed Joint Stock Companies (Zakrytoe Aktsyonernoye Obshchestvo or ZAO). This is the most common type of Joint Stock Company in Belarus. Shares are limited to the founders or to pre-determined groups, and there is no obligation to publish accounts.

Limited Liability Companies

A Limited Liability Company (Obshchestvo s Ogranichennoy Otvetstvennostyu or OOO) is the most flexible type of company structure.

As it does not technically have shares, it is not liable to Belarusian securities legislation.

Unitary Enterprises(UE)

Unitary enterprises are a popular choice among foreign companies trading in the Belarus economy. With this structure, the company founder retains ownership of the assets.

How do you set up a representative office in Belarus?

Representative offices have the simplest set-up procedure. You must provide the following set of documents to the Ministry of Foreign Affairs of Belarus:

  • an application form,
  • copy of the parent company registration in the country of origin,
  • regulations of a representative office,
  • power of attorney for the head of the representative office,
  • power of attorney for the person authorized to conduct business on opening a representative office,
  • document confirming the payment of the registration fee.

The documents in foreign languages should be translated into Belarusian or Russian and notarised, or legalized (apostilled).

Representative offices must:

  • register with the tax authorities
  • keep accounts
  • pay taxes

How do you set up a legal entity in Belarus?

A new application-based registration procedure for legal entities has been in place since 1 February, 2009. The process involves:

  • state registration (including registration with tax authorities, the State Statistics Board, the Social Security Fund)
  • producing a company stamp
  • opening bank accounts

Commercial organizations can decide on the size of their authorized fund independently, which should be announced in the Belarusian rubles.

The minimum authorized fund is set only for joint stock companies. It is denominated in the Belarusian currency proceeding from the size of the base amount (on the day of submitting the documents to the registration body):

  • for private companies – 100 base amounts
  • for open joint-stock companies – 400 base amounts

How long does it take to set up a company in Belarus?

Each case is different, but for general guidance the timescales are as follows:

Representative offices: once all documents are ready, the process should not take more than 10 days

Legal Entities: 

  • on the day of documents submission the charter (the foundation agreement) of the company gets a state registration stamp;
  • within the working hours following the day of the submission of the documents the company receives a certificate of state registration;
  • within five working days the company gets automatic registration with the tax bodies, state statistics authorities, the Social Security Fund of the Labor and Social Security Ministry, and also the registration with the Belarusian national unitary insurance company Belgosstrakh.

The process is longer for joint stock companies, which need to register their share issue with the State Securities Register.

Remember that it can take some time to get the necessary documents together, and you should also allow time for notarization of official papers.

Setting up a company in Lithuania

Source: http://www.investlithuania.com/wp-content/uploads/2014/09/businessguide2016.pdf

Private limited liability company (UAB)

  • Separate legal entity (legal entity with limited
  • liability)
  • A shareholder may be held liable for the obligations  of a company only in the event of  failure to fulfil the obligations due to unfair  actions of the shareholder
  • May engage in any legitimate activities
  • May engage in licensed activities upon  obtaining the respective licence
  • Minimum amount of share capital is  EUR 2,500
  • Registration in 1-2 weeks
  • General meeting of shareholders (sole shareholder)  and general manager (single-member  management body) are mandatory bodies
  • Management board (min. 3 members) and  (or) supervisory council (3-15 members) are  optional bodies
  • No residence requirements to the general  manager, other members of other bodies
  • Employment contract must be concluded between  the general manager and the company
  • Audit required if certain criteria are met*
  • Comprehensive tax regulation
  • - Transfer pricing regulation is applicable
  • - Transfer pricing documentation is mandatory  when turnover is over EUR 2.9 million
  • Thin capitalisation rules apply (4:1)
Public limited liability company (AB)
  • Separate legal entity (legal entity with limited liability)
  • A shareholder may be held liable for the obligations of a company only in the event of  failure to fulfil the obligations due to unfair  actions of the shareholder
  • May engage in any legitimate activities
  • May engage in licensed activities upon obtaining the respective licence
  • Minimum amount of share capital is EUR 40,000
  • Registration in 1-2 weeks
  • General meeting of shareholders (sole shareholder and general manager (single-member  management body) are mandatory bodies
  • Management board (min. 3 members) or supervisory council (3-15 members) is a  mandatory body
  • No residence requirements to the general manager, other members of other bodies
  • Employment contract must be concluded between the general manager and the company
  • Audit required
  • Comprehensive tax regulation
  • - Transfer pricing regulation is applicable
  • - Transfer pricing documentation is mandatory when turnover is over EUR 2.9 million
  • Thin capitalisation rules apply (4:1)
Branch office
  • Structural unit of a foreign company (not a separate legal entity)
  • A founder is liable for the obligations of a branch
  • May engage in all or any part of the business activities of a founder
  • May engage in licensed activities with certain restrictions
  • No share capital requirements
  • Registration in 1-2 weeks
  • General manager is a mandatory management body
  • No additional corporate body may be formed
  • If the founder of a branch is a non-EEA company, at least one person acting on behalf of  the branch should reside in Lithuania
  • Employment contract must be concluded between the general manager and the  branch or the founder
  • Audit may be performed as a part of the founder’s audit
  • Less comprehensive tax regulation
  • - Transfer pricing regulation is applicable
  • - Transfer pricing documentation is mandatory when turnover is over EUR 2.9 million
  • No thin capitalisation rules apply
Representative office
  • Structural unit of a foreign company (not a separate legal entity)
  • A founder is liable for the obligations  of a representative office
  • May engage in limited-scope operations: act on behalf of the founder, etc.
  • No share capital requirements
  • Registration in 1-2 weeks
  • General manager is a mandatory management body
  • No additional corporate body may be formed
  • If the founder of a representative office is a non-EEA company, at least one person  acting on behalf of the representative office  should reside in Lithuania
  • Employment contract must be concluded between the general manager and the representative  office or the founder
  • Audit may be performed as a part of the founder’s audit
  • Less comprehensive tax regulation
  • - Transfer pricing regulation is applicable
  • - Transfer pricing documentation is mandatory when turnover is over EUR 2.9 million
  • No thin capitalisation rules apply
Operating as a foreign company
  • No registered presence (operations through a foreign company, without any corporate  registrations in Lithuania)
  • May engage in any legitimate activities
  • For licensed activities, registration of a company or a branch may be necessary
  • No share capital requirements
  • No corporate registration required, however, registration for tax purposes may be necessary
  • Bodies and their composition are regulated by the country of incorporation
  • Bodies and their composition are regulated by the country of incorporation
  • No residence requirements apply
  • No employment contracts are required
  • No audit is required
  • Less comprehensive tax regulation
  • - Transfer pricing regulation is applicable
  • - Transfer pricing documentation is mandatory when turnover is over EUR 2.9 million
  • No thin capitalisation rules apply

Setting up a company in Latvia

Source: http://www.liaa.gov.lv/trade/market-entry/business-forms-and-registration

The main forms of business stipulated in Latvia’s Commercial Law are individual merchants, limited liability companies, joint-stock companies and partnerships.

INDIVIDUAL MERCHANT
Natural persons are obliged to register as individual merchants with the Commercial Register if the annual turnover from their economic activities exceeds LVL 200 000 (approx. EUR 284 575) or the economic activities performed conform to those of a commercial agent or a broker, or the yearly turnover from performed activities exceeds LVL 20 000 (approx. EUR 28 457) and the natural person provides employment for more than five employees. The whole of individual merchants’ property is liable in terms of meeting their obligations.

LIMITED LIABILITY COMPANY
Limited liability companies (LLC) are closed business entities whose equity capital consists of the total amount of the par value of the shares, which cannot be traded publicly. Limited liability companies may be established by one or more natural or legal entities. Shareholders may simultaneously be the only member of the Board and the only employee. Permanent presence of shareholders in Latvia is not required, although the board must be reachable at the address of the registered office. The capital of a LLC is divided into shares and the liability of shareholders is limited to their investment in share capital. The minimum share capital of a LLC is LVL 2 000 (approx. EUR 2 845), but a LLC may have less share capital if it has no more than five members (all individuals) and certain conditions stipulated by the Commercial Law are met. Share capital can also be paid in the form of tangible or intangible property. Where the total value of property (tangible or intangible) contributions does not exceed LVL 4 000 (approx. EUR 5 691), and total property contributions are less than 50 % of the equity capital of a company, the valuation of the property may be made by the founders. The administrative institutions of a LLC are the shareholders’ meeting and the board of directors, also the supervisory council (if such has been formed). According to the Commercial Law, only shareholders’ meetings may amend the articles of association, increase or reduce share capital and perform other activities as per the Commercial Law of the Republic of Latvia.

The executive body of a LLC is the board of directors whose main duty is to submit quarterly reports to the council on the activities and financial status of the LLC.

It usually takes about one week to incorporate an LLC and it costs about LVL 124 (approx. EUR 175).

JOINT-STOCK COMPANY
Joint-stock Companies (JSC) are business entities whose equity capital consists of the total amount of the par value of shares in the company’s stock. Joint-stock companies can be closed or open with shares in public circulation. Minimum statutory capital for JSCs is LVL 25 000 (approx. EUR 35 570). JSCs performing the activities of banks, insurance companies or currency exchange require a higher amount of statutory capital. JSCs can issue ordinary and preference shares which can grant shareholders rights to receive dividends, rights to receive a liquidation quota and voting rights at shareholders’ meetings.

JSCs are managed by shareholders’ meetings, supervisory councils and boards of directors. Only shareholders’ meetings may make decisions concerning: annual accounts, use of the profit from previous year’s activities, election and recall of council members, auditors, JSC controllers and liquidators and perform other activities as per the Commercial Law.

The supervisory council represents the interests of shareholders between shareholders’ meetings; it appoints the board of directors and supervises its activities. The board of directors is the executive institution of JSCs which supervises and manages their activities. Boards of directors consist of one or more members, but if a JSC is publicly traded, the board of directors must have at least three members.

PARTNERSHIP
A partnership is a business entity in which two or more persons (members) have united, on the basis of a partnership agreement to perform commercial activities utilising a joint company name. The Commercial Law provides for two forms of partnership: general and limited partnerships. Both can be established by two or more persons. The main difference between the two forms is that all persons establishing a general partnership have unlimited liability for the partnership’s debts. On the other hand, limited partnerships are established by limited and unlimited partners, where the liability of limited partners is limited to the amount of capital contributed. Partnerships are established by partnership agreements and there are no requirements for minimum capital. Partnerships’ profit or losses are distributed at the end of the year in proportion to the amount of capital contributed by partners.

BRANCH AND REPRESENTATIVE OFFICE
According to the Commercial Law, local and foreign companies may establish branch offices in Latvia. A branch is an organisationally independent part of a company that can carry out economic activities, but is not treated as a legal entity. A branch is subject to the same reporting obligations as registered companies, and the head office of the branch is fully liable for activities carried out by the branch.

Representative offices, similar to branches, are not independent legal entities. Representative offices cannot perform economic activities and their functions are limited to market research, promotion of the parent company and other limited marketing activities.