Economic optimism in the face of adversity, the introduction of English law instruments, and some new potential for growth are the highlights in Belarus, according to Aleinikov & Partners Senior Partner Denis Aleinikov.
“The current situation will blow over, in my opinion, as time goes by and when the dust settles business will grow,” Aleinikov says. “I do recognize that the commercial sector is struggling, due to both the pandemic and the sanctions, but I firmly believe that things will pick up.”
Aleinikov reports on significant updates with respect to commercial rules and regulations. “The parliament adopted in the first reading a draft law on amendments to the Civil Code which introduces some foreign law instruments into the domestic legal framework,” he says. Aleinikov points out that this is a crucial step forward, seeing how it opens the country up for more foreign capital flowing in. “Previously, a lot of M&A transactions were structured abroad, due to the availability of specific legal instruments – like options agreements, convertible loans, warranties and indemnities, among others,” he says. “Now, the parliament is about to approve these into our domestic legal framework.”
Aleinikov mentions that the firm’s previous work with the Belarusian High-Tech Park contributed to this. “In 2017, we developed draft legislation regarding the High-Tech Park which allowed for residents of the park to use certain instruments of foreign law in their activities, including, for example, entering into shareholders' agreements under English law,” he says. “This experiment turned out to be beneficial. Foreign IT companies now tend to structure their investment transactions into Belarusian companies inside of the country, instead of through their foreign parent companies as it was usually done before. Now the parliament intends to spread this practice to other sectors of the economy. This is a good decision.”
“According to the statistics, our economy is currently doing better than it was forecasted to a year ago,” Aleinikov reports. “The IT sector still continues to drive growth, with some major transactions for the acquisition of Belarusian R&D companies being registered in 2021.” And it's not only IT, he says. “The banking & finance sector shows good potential too. Like the recent, December 2021, Alfa-Bank acquisition of a local bank, which is evidence of trust in the domestic financial market,” Aleinikov reports. He says that these two sectors will remain key drivers of the economy. “I believe that our country has eventually exceeded expectations and that we are yet to see how far our economy can go,” Aleinikov concludes.