How to open a subsidiary in Belarus?
In order to carry out commercial activities in the territory of the Republic of Belarus, a foreign company is entitled to open a subsidiary. The founder of a subsidiary may be both a foreign legal entity and an individual.
A subsidiary in Belarus can be registered in the form of a unitary enterprise and business entity: LLC or CJSC.
A subsidiary unitary enterprise owns the property of the main enterprise under the right of economic management, that is, it is not entitled to dispose of the property of the owner in any way without his consent.
The property of CJSC and LLC is owned by this company.
The decision to establish a subsidiary is made by the head of the main company by making a decision or issuing an order.
Subsidiary – what is it?
Subsidiary enterprise – a separate division of a legal entity created on his initiative in the territory of a foreign state with the involvement of the property of the organization.
How does a subsidiary operate?
In carrying out activities, the subsidiary company represents its governing bodies, but is controlled by the parent company and acts on the basis of the Charter developed by the founder. The head of the subsidiary acts by proxy issued by the parent company.
The charter of the subsidiary, the power of attorney of the head contain the amount of authority and functions that the main company gives them.
Difference from branch and representative office
The subsidiary is legally independent of the parent company. He can take part in court hearings on his own behalf, has separate property in his charge and is not liable for the debts of the main company with his property.
Whereas the branch and representative office are completely dependent on the main company. The branch independently carries out financial and economic activities on behalf of the main company, has its own settlement accounts, a seal, that is, it performs all or part of the functions of the main company. The representative office is also located separately from the main company, represents its interests, makes transactions on behalf of the main company. Assets placed in the branch and representative office can be attracted to repay the debt of the parent company. Branches and representative offices cannot independently participate in court hearings
Decision making power
In legal relations with third parties, the subsidiary represents its governing bodies and independently makes decisions in personnel, marketing, and production matters. Whereas branches and representative offices enter into legal relations with third parties on behalf of the main company and obeying its charter.
Recognition and fulfillment of obligations
The subsidiary is not liable for the debts of the main company, while the assets assigned to the branch or representative office can be attracted to repay the obligations of the main company.
Pros and cons of opening a subsidiary
Management of a subsidiary
The subsidiary is managed independently by the head of this company, however, in strict accordance with the strategy developed by the parent company. The head of the subsidiary and his authority are approved by the parent company.
Legal status and rights of a subsidiary
The creation and legal status of subsidiaries in the Republic of Belarus is regulated by the Civil Procedure Code, the Law “On Business Companies”, as well as other regulatory legal acts.
The scope of rights of a particular subsidiary is contained in the Articles of Association developed by the parent company of such an enterprise.
Influence of the parent company on the subsidiary
The subsidiary is controlled by the parent company. Such relations may be based on a controlling stake, as well as on the basis of an agreement. The control of the subsidiary is carried out by conducting inspections, audits, audits, as well as by providing the head of the subsidiary with the reports of the parent company.
Responsibility of the parent and subsidiary
The parent company is jointly and severally liable for the obligations of the subsidiary arising from the execution by such company of binding instructions to it. Also, the parent company bears subsidiary liability in case of economic insolvency of the subsidiary (through the fault of the parent company) in case of insufficient property.
The subsidiary company is not liable for the debts of the main company.
Procedure for opening a subsidiary in Belarus
Preparation of the Charter and development of Regulations on activities
The parent company approves the Charter of the subsidiary, as a result of which a corresponding decision is made. The charter, among other things, should contain information that the newly created company is a subsidiary of the main company, the name of the company and its location.
Making decisions at the meeting of shareholders and preparing documents for opening a “daughter”
If the main company has more than one shareholder, the decision to establish a subsidiary is made at a meeting of shareholders. An authorized person of the parent company prepares a package of documents for submission to the registration authority.
Registration of a subsidiary
The registration authority must provide:
Application for state registration.
Charter in 2 copies.
Electronic copy of the charter.
A document confirming the payment of state duty.
The registration and registration deadline is 5 working days.
Appointment of the head and chief accountant of a subsidiary
The head of the subsidiary is appointed by the parent company by issuing a decision and issuing an appropriate power of attorney. The chief accountant of the company is appointed by its head.
Opening a branch of a foreign company in Belarus
The decision to create a branch is made by the founder of the organization, about which an appropriate decision or order is made. Based on this decision, amendments to the charter of the enterprise are introduced and recorded. The name and location of the branch must be entered into the Charter.
Further, the head of the enterprise approves the regulations on the branch, the registration of which is not required.
The head of the enterprise approves the head of the branch and a power of attorney is issued.
Following this, it is necessary to be registered with the IMNS, BRUSP “Belgosstrakh”, FSZN (if the branch is allocated to an independent balance sheet).
If necessary, the branch has the right to open a bank account in Belarus.
Opening accounts to foreign legal entities in Belarus
To open an account with a bank of Belarus, the head or another authorized representative of a foreign company needs to prepare, translate and certify the entire package of required documents and apply to the bank with a statement on opening a current (settlement) account.
identity document – for an individual representing the interests of the company to open an account;
a copy of the certificate / certificate of state registration or other document confirming the registration of a legal entity;
copy of the charter (with a seal confirming registration);
a card with specimen signatures of persons entitled to sign documentation;
documents confirming the right to sign the above persons.
All documents required to open an account must be translated into one of the state languages (Belarusian or Russian), in which the translator’s signature, as well as a card with sample signatures, and copies of the identification card must be certified by a notary. All documents must be certified with the Apostille stamp.
Accounting is carried out independently by a subsidiary. Accounting can be carried out both as a full-time accountant, and with the involvement of a specialized organization that provides services in this area.
In order to avoid double taxation, dividends transferred by a subsidiary of a parent company located outside the Republic of Belarus are not taxed in Belarus.