The government intends to act on behalf of minority shareholders

April 22, 2016 18:20

On October 26, 2012 Spartak and Kommunarka confectionaries were de facto nationalized. It is anticipated that the issue of minority shareholders’ protection by the state will be decided on default. If so, the rights of large investors and minority shareholders will be violated and the feasibility of shares’ ownership in Belarusian enterprises will become even more questionable.

On October 25th, 2012 a meeting about how to improve public shares management was held.

Private shareholder’s stake in “Spartak” has been reduced from majority to minority by issuing additional shares and transferring to the state’s balance. It has been proposed to simplify functions of the Supervisory Boards at enterprises with state’s share larger than 50%. Private minority stakeholders are supposed to be protected by the state, even if they have not expressed interest in such protection. At enterprises with state’s shares less than 50% it was proposed to nominate a person to carry out state policy.

In fact, it implies a double standard in the field of corporate management. If an enterprise is owned by the state by 50% or more, the state does not care about the minority shareholders’ interests. The state will ignore opinions of shareholders about dividends and management in the name of public interest. If a private owner has the majority stake, the state formally denies it the right to control the enterprise, based on the assumption that it will focus on investment return, rather than on serving public interests.

Superficial concern about private minority shareholders is an attempt to control additional shares concentrated in the hands of private individuals. Private person, in state’s view, is incapable to decide whom and how to transfer the management of his/her stake. The state can therefore obtain the right to dispose of additional shares, without additional costs.

Thus, an investor is faced with choice: either to purchase the enterprise entirely to get rid of the state and private shareholders, or to invest at own risk, bearing in mind the potential risk to lose investments and control over the company, even if he or she is a majority stakeholder, as stakes can be taken away on formal grounds in the future. In these circumstances, privatization of state enterprises makes no sense for the majority of shareholders unless 100% of shares are sold.

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The Belarusian authorities have launched a discussion on the moratorium or abolition of the death penalty under the pressure of Belarusian human rights activists and international community. Apparently, the authorities are interested in monitoring public sentiments and response to the possible abolition of the capital punishment. The introduction of a moratorium on the death penalty would depend on the dynamics in Belarusian-European relations, efforts of the civil society organisations and Western capitals.

In Grodno last week, the possibility of abolishing the death penalty in Belarus or introducing a moratorium was discussed.

The Belarusian authorities are likely to continue to support the death penalty in Belarus. During his rule, President Lukashenka pardoned only one person, and courts sentenced to death more than 400 people since the early 1990s. Over the past year, Belarusian courts sentenced to death several persons and one person was executed.

There are no recent independent polls about people’s attitude about the death penalty in Belarus. Apparently, this issue is not a priority for the population. In many ways, public opinion about the abolition of the death penalty would depend on the tone of the state-owned media reports.

That said, the Belarusian Orthodox Church and the Roman-Catholic Church stand for the abolition of the capital punishment, however their efforts in this regard only limit to public statements about their stance. Simultaneously, the authorities could have influenced public opinion about the death penalty through a focused media campaign in the state media. As they did, for example, with the nuclear power plant construction in Astravets. Initially unpopular project of the NPP construction was broadly promoted in the state media, and eventually, according to independent pollsters, was accepted by most population.