Statutory fund in Belarus: size, formation rules, decrease and increase
The authorized capital of a legal entity determines the minimum size of its property, guaranteeing the interests of its creditors, and is formed when a legal entity is created.
A commercial organization independently determines the size of the authorized capital, with the exception of joint-stock companies for which the legislation establishes the minimum size of authorized capital:
100 basic units for closed joint stock companies;
400 basic units for open joint stock companies.
The authorized capital of a commercial organization is declared in Belarusian rubles. The minimum size of the authorized capital of joint-stock companies is also determined in Belarusian rubles, based on the size of the base value established on the day of the application to the registration authority.
When making a contribution to the authorized capital of a commercial organization in foreign currency, its translation is carried out at the official rate of the Belarusian ruble to the corresponding foreign currency established by the National Bank on the date of actual making this contribution.
What can be a contribution to the authorized capital
A contribution to the authorized capital of a commercial organization may be:
things, including money and securities;
other property, including property rights;
other alienable rights having an assessment of their value.
When making a non-monetary contribution to the authorized capital of a legal entity, an assessment of the value of such a contribution should be carried out, which in turn is subject to expert examination of the reliability of such an assessment. In the case of an independent assessment of the value of the non-monetary contribution made to the authorized capital, an examination of the reliability of this assessment is not carried out.
Legislative acts may also establish other restrictions on property contributed as a contribution to the authorized capital of a commercial organization. For example, it is forbidden to make the right to special use of wildlife objects and the right to carry out activities related to the use of wildlife objects as a contribution to the authorized capital of commercial organizations.
Formation order
As a general rule, the statutory fund declared in the charter (or the memorandum of association – for legal entities acting only on the basis of the memorandum of association) must be formed within twelve months from the date of state registration of the legal entity. The charter or constituent agreement may provide for a shorter period for the formation of the authorized capital.
Changing the size of the authorized capital of a commercial organization is within the competence of the general meeting of its participants.
Decrease in the authorized capital
The authorized capital of a commercial organization may be reduced, and in some cases this is a legal requirement.
So if a commercial organization within twelve months from the date of its state registration (provided that a shorter period for the formation of the authorized fund is not established) has formed a charter fund in a smaller amount than is provided for in its charter (constituent), it is obliged to reduce the size of the authorized fund declared initially, to its actually formed size. Joint-stock companies are obliged to reduce the size of their authorized capital to the actually formed amount, but not lower than the minimum amount established by law.
If, at the end of the second and each subsequent financial year, the value of the net assets of a commercial organization turns out to be less than the authorized fund, such an organization is obliged in the established manner to reduce its authorized capital to an amount not exceeding the value of its net assets. If the value of the net assets of the joint-stock company by the results of the second and each subsequent financial year decreases below the minimum size of the authorized capital, such a company is subject to liquidation in the prescribed manner.
Increase of the statutory capital
Commercial organizations can increase their authorized capital by:
funds of the revaluation fund balance sheet items (fixed assets, uninstalled equipment, construction in progress);
retained earnings of the reporting year and past years;
fund balances of accumulation and consumption funds;
fund balances replenishment of own working capital;
balances of reserve funds formed in accordance with constituent documents;
monetary and non-monetary contributions of founders (owners);
monetary and non-monetary deposits of other legal entities and individuals.
So, the decision to increase the authorized capital of a limited liability company at the expense of the company’s own capital is made on the basis of the accounting (financial) statements for the previous financial year by a majority (but not less than two-thirds) of the total votes of the company’s participants, if there are more votes to be adopted such a decision is not provided for by its charter. The amount by which the authorized capital is increased at the expense of the company’s equity should not exceed the difference between the value of the net assets of the company and the amount of the authorized and reserve funds of the company. In this case, the sizes of shares of all participants remain unchanged.
Decision to increase the authorized capital of a limited liability company:
due to making additional contributions by all its participants, it is adopted unanimously by the general meeting of participants.
by making additional contributions by one or more members of the company or by third parties, it is unanimously accepted by all members of the company on the basis of a statement by one or more participants or statements by third parties.
The decision to increase the authorized capital should determine the size of the increase in the authorized capital, as well as establish the procedure for calculating the cost of each participant’s additional contribution and the term for its contribution, if this period is not determined by the charter of the company.
All changes in the charter in terms of changes in the size of the authorized capital are subject to state registration.
