The government intends to act on behalf of minority shareholders

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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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President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.

President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.

The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.

The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.

The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.

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