What to do to close down a company’s branch office in Belarus

Closure (liquidation)[1] of a branch begins, first of all, with taking a decision on its closure. Depending on the company’s body, to which competence this issue pertains to (according to the provisions contained in the Articles of Association of the Company), such a decision can be taken in the form of the Minutes (of the General Meeting of the Shareholders/Members or Resolution of the Supervisory Board) or the Order (issued by the Company Director). If the Articles of Association have no provisions governing the competence of the management bodies in establishing and closing the Company’s structural divisions, a decision to close a branch will pertain to the competence of the General Meeting of the Shareholders/Members. It is advisable to state in such a decision the precise intention of the Company to close its branch; name and location of the branch; date from which the branch is subject to closure; that it is necessary to make an inventory of its assets and liabilities; that it is necessary to notify the director of the branch of its closure; powers and authorities of the executive body and its obligation to take all necessary actions to close the branch.

Upon taking the decision on closing the branch the executive body issues the order on its closure, where it determines the arrangements for closing: the procedure for notification of state authorities of its closure; time limits and procedure for passing the property and obligations to the parent company; time limits and persons responsible for inventory; time limits and persons responsible for personnel matters; the date on which the branch regulations are to be cancelled, etc.

 Then the following actions need to be taken:                                                    

1.To notify state authorities of the branch closure:

The Company shall at least 10 (ten) days after the branch liquidation notify the tax authority, where the branch is registered, of its liquidation[2].  Deregistration with the tax authority takes up to 10 (ten) working days from receipt of the branch liquidation notice from the Company[3]. Upon liquidation of the branch the Payer's Identification Number is recognized as invalid and the payer is struck off the State Register of Taxpayers[4], whereof the appropriate entry is made in the State Register.

The Company’s branch is subject to deregistration with the inspections (bodies) of the Social Protection Fund of the Ministry of Labor and Social Protection on the ground of the received notice in any format. The date of deregistration with the Fund shall be the date on which the branch ceases its activity or the date on which the Company submits its application for deregistration with the Fund’s bodies[5].

The Company shall in writing notify the insurer of the branch, attaching documentary evidence, of revocation of the decision on granting the branch the right to pay insurance premiums, as well as of the branch liquidation, within 10 days from such a decision[6].

Obligation to notify state authorities of the branch liquidation is vested in the director of the branch.

2To make an inventory of the assets and liabilities being in the books of the branch:

The accounting and reporting laws provide for mandatory inventory when inventory custodians[7] are changed. Closure of the branch will most likely result in such a change. Inventory of the assets and liabilities in the books of the branch assigned to a separate balance sheet shall be made pursuant to the procedure and within the time limit specified by its Company[8]. Inventory is recorded in the form of the order issued by the Company Director, where the time limit for inventory is determined and inventory commission is appointed. Inventory is made in accordance with the Instruction on inventory of assets and liabilities approved by the Resolution of the Ministry of Finance of the Republic of Belarus of 30.11.2007 N 180 (as amended on 22.04.2010). Inventory results are recorded according to the procedure stipulated by the accounting and reporting laws and these results will be the ground for execution of the Certificate on passing the branch’s property to the Company.

3To notify employees of the branch closure and formalize further labor relations with them.

The branch director together with the personnel department shall decide on whether to terminate or reformalize labor relations with the branch employees.

The employer can offer the employees the following options:

- An employee can be transferred, with its consent, to another job and position at the same employer in accordance with the procedure stipulated by Article 30 of the Labor Code of the Republic of Belarus;

- An employee can be transferred, with its consent, to another employer;

- A labor contract concluded for an indefinite period, as well as a fixed-term labor contract can be terminated prior to its expiration in case the branch that ceases its activity is situated in another locality[9].

During dismissal of its employees the employer should turn attention to its rights and obligations:

- in writing to notify an employee of his/her dismissal not later than 2 (two) months prior to dismissal, unless longer time limit is stipulated in the collective contract/agreement.

- in case of mass layoff of employees, not less than two months prior to notify the employment and social protection authorities of such layoff, stating profession, specialization, qualification and salary of employees[10]. It is understood that mass layoff in a company occurs in case of liquidation of that company’s branch having 25 and more employees[11].  Failure of the duly authorized officer to notify the employment and social protection authorities, or untimely notification, or not fully implemented notification entails a fine in the amount of five to twenty base values[12];

- during the notice period, to provide an employee with one day off in a week without pay (upon an agreement with an employer – with pay) so that he/she can independently find another job;

- during dismissal of an employee due to cessation of activity of the branch situated in another locality, to pay an employee a dismissal pay in the amount of at least three-fold average monthly salary[13]. The amount of dismissal pay can be increased pursuant to the terms and procedures stipulated by the collective contract/agreement, or the employer. The dismissal pay is not paid to part-time employees[14].

- with consent of an employee to replace the notice of dismissal by payment of compensation in the amount of two months average salary. In this case, upon given an employee the notification of dismissal, the compensation is paid proportionally to the days left until the end of the 2-months notification period.

   4. To revoke the power of attorneys and the Branch Regulations:

Termination of employment relations with an employee, in particular, with the branch director, does not automatically terminate the power of attorneys issued by him/her. In case of early dismissal of an employee a power of attorney shall be revoked by the person who granted it[15]. The person who granted a power of attorney and then revoked it shall notify the person to whom such a power of attorney was granted of its revocation, as well as known to him/her third parties before which the attorney-in-fact represented interests under such power of attorney[16]. Revocation of power of attorneys shall be made in accordance with the local normative legal act that governs the procedures for issue and revocation of power of attorneys. If the Company has no such document, revocation procedure can be started by issuing an order or instruction. The order (instruction) shall state all the necessary details of such a power of attorney; identify an attorney-in-fact – employee (its full name, position, passport data, etc.), the date from which such a power of attorney is subject to revocation, the officer authorized to take all actions with regard to revocation. This order shall be brought to the notice of the employee against signature. It is also possible to notify the employee of revocation of the granted him/her power of attorney by sending him/her a notice of revocation. It is advisable to hand deliver the notice to the employee (attorney-in-fact) against signature or to send registered mail with list of enclosures and delivery confirmation. Procedure for notification of third parties of revocation of a power of attorney can be similar to that provided for the employee. Upon revocation of a power of attorney the employee to whom it was issued shall immediately return it[17]. It is advisable to make a revocation note on such a power of attorney (note "Revoked", another note indicating that a power of attorney is terminated and specifying the order details) signed by the person who issued it (the Company/branch director). If the employee fails to return a power of attorney to the employer, the employer shall record this fact in written form; for example, draw up an act of loss of such a power of attorney, or an act of refusal of the employee to return a power of attorney signed by this employee (former attorney-in-fact). If the employee refuses to sign this act, a record "refused to sign the act" shall be made and signed by witnesses.

The Branch Regulations shall be revoked by the Company/branch Director’s order by stating the date on which the Branch Regulations to be revoked (this date shall be the closest to the date of the branch liquidation) in the order of liquidation, or by issuing a separate order of revocation of the Branch Regulations (in such a case, the Regulations cease to be in force from the date of issue of the order). The original Regulations shall be handed over to the records of the Company.

 5. To close or use the bank account operated by the branch;

 6. To notify counterparties of the branch closure:

With regard to notification of the counterparties with whom agreements were concluded and payments under such agreements were made to the account of the branch: the current legislation of the Republic of Belarus provides for no obligation to notify counterparties of the branch closure. Also, the fact of the branch closure does not entail the obligation to introduce amendments to the existing agreements. However, it is well to bear in mind that the counterparties should be let know beforehand to which account further payments under the concluded agreements to be made. Therefore, in order to prevent any matters concerning transfer of money to the account of the liquidated branch, it is advisable to notify the counterpartiess of any changes in the bank details so that they can perform their payment obligations under the existing agreements.

 7. To destroy seals of the branch:

The seals of the branch, which the Company can’t use after the branch liquidation, shall be destroyed by the committee appointed by the order of the Company Director together with drawing up the respective certificate. The seal destruction certificate shall contain the following information: the date and place of the certificate, membership of the committee for the seal destruction, reference to whom the seal belongs, method of destruction, the specimen seal impression crossed out in a criss-cross manner, signatures of the committee’s members.

 8. To introduce amendments to the Company’s Articles of Association, as well as other documents of the Company:

Since the current legislation of the Republic of Belarus requires from a legal entity[18] to indicate in its Articles of Association the representative offices and branches it forms, the amendments are to be introduced to the Company’s Articles of Association in view of the branch closure. The legislation establishes no time frames for state registration of such amendments; we are of opinion that this procedure should be performed within a reasonable time. Furthermore, if the branch is mentioned in any licences, certificates, title deeds to real estate and other documents issued by the authorized government bodies, such documents shall be also amended under the current statutory procedure of the Republic of Belarus.

 9. To transfer property of the branch to the Company:

Transfer of property attached to the branch to the Company is made under the Deed of Transfer (the Delivery and Acceptance Certificate). Displacement of commodity and material valuables between the branch and the parent company is deemed to be internal displacement. To record transfer of property to the head company, a source accounting document shall be made. In case of internal displacement of commodities using public highways, which will take place if the property is transferred from the manufacturing branch located in Minsk region to the head company located in Minsk, ТТН-1[19] shall be completed.

 10. To keep documents of the liquidated branch:

Upon the branch closure its documents to be kept at the Company’s office. The keeping period for certain documents is established in the List of standard documents of the National Archive Fund of the Republic of Belarus being formed in the course of activities of state authorities, other organizations and individual entrepreneurs, approved by the Resolution of the Ministry of Justice of the Republic of Belarus of 24.05.2012 N 140 (as amended on 06.03.2018) "On certain measures for implementation of the Law of the Republic of Belarus from 25 November 2011 "On archive-keeping and records management in the Republic of Belarus". Many of such documents have a temporary keeping period with the condition that they will be destroyed after the inspection conducted by the tax authorities for compliance with the tax legislation. If no such inspection for compliance with the tax legislation was conducted by the tax authorities, a temporary keeping period is extended. Reduction of the keeping period provided for by the above said List is not allowed.

Prepared by:

Certified Lawyer of Collegia Law Firm Yuliya Ostreiko

Tel.: +375 (17) 287-80-88

E-mail: ostreiko@collegia.by 



[1] The current legislation of the Republic of Belarus does not establish the single definition in respect to the procedure for termination of branch activities. In this legal opinion definition «closure» and «liquidation» are used as interchangeable and synonymous.

[2] Sub-clause 1.9.4 of clause 1.9 Article 22 of the Code of the Republic of Belarus of 19.12.2002 N 166-З (as amended on 30.12.2018) "Tax Code of the Republic of Belarus (General part)";

[3] Clause 12 Article 69 of the Code of the Republic of Belarus of 19.12.2002 N 166-З (as amended on 30.12.2018) " Tax Code of the Republic of Belarus (General part)";

[4] Clause 10 of the Instructions on procedure and conditions on assignment, application, change of a tax identification number and its recognition as  invalid, approved by the Resolution of the Ministry for Taxes and Levies of the Republic of Belarus of 31.12.2010 N 96 (as amended on 29.09.2017);

[5] Clause 7 of the Resolution of the Council of Ministers of the Republic of Belarus of 10.07.2009 N 917 (as amended on 30.05.2018) "On approval of the Regulations on procedure for registration and deregistration of payers of mandatory insurance payments".

[6] Clause 16 of the Resolution of the Council of Ministers of the Republic of Belarus of 10.10.2003 N 1294 (as amended on 30.05.2018) "On approval of Regulations on registration (reregistration) with the Belarusian National Unitary Insurance Enterprise "Belgosstrakh" of policy holders for mandatory insurance against industrial accidents and occupational diseases"

[7] Clause 2 Article 13 of the Law of the Republic of Belarus of 12.07.2013 N 57-З (as amended on 17.07.2017) "On accounting and reporting";

[8] Clause 9 of the Resolution of the Ministry of Finance of the Republic of Belarus of 30.11.2007 N 180 (as amended on 22.04.2010) "On approval of the Instructions on inventory of assets and liabilities and recognizing the normative legal act of the Ministry of Finance of the Republic of Belarus void";

[9] Part 1 Article 42 of the Code of the Republic of Belarus of 26.07.1999 N 296-З (as amended on 13.11.2017) "Labor Code of the Republic of Belarus"

[10] Part 3 Article 43 of the Code of the Republic of Belarus of 26.07.1999 N 296-З (as amended on 13.11.2017) " Labor Code of the Republic of Belarus ";

[11] Sub-clause 1.2 of clause 1 of the Resolution of the Ministry of Labor and Social Protection of the Republic of Belarus of 02.04.2009 N 47 (as amended on 10.10.2016) "On criteria for mass layoff of employees";

[12] Part 3 Article 9.15 of the Code of the Republic of Belarus of 21.04.2003 N 194-З (as amended on 17.07.2018) " Code of Administrative Offences of the Republic of Belarus" (as amended effective of 01.12.2018);

[13] Part 4 Article 48 of the Code of the Republic of Belarus of 26.07.1999 N 296-З (as amended on 13.11.2017) "Labor Code of the Republic of Belarus";

[14] Part 6 Article 48 of the Code of the Republic of Belarus of 26.07.1999 N 296-З (as amended on 13.11.2017) " Labor Code of the Republic of Belarus";

[15] Sub-clause 2 of clause 1 Article 189 of the Code of the Republic of Belarus of 07.12.1998 N 218-З (as amended on 17.07.2018) "Civil Code of the Republic of Belarus of " (as amended effective of 01.08.2018);

[16] Clause 1 Article 190 of the Code of the Republic of Belarus of 07.12.1998 N 218-З (as amended on 17.07.2018) "Civil Code of the Republic of Belarus" (as amended effective of 01.08.2018);

[17] Clause 1 Article 190 of the Code of the Republic of Belarus of 07.12.1998 N 218-З (as amended on 17.07.2018) "Civil Code of the Republic of Belarus" (as amended effective of 01.08.2018)

[18] Part 4 of clause 3 Article 51 of the Code of the Republic of Belarus of 07.12.1998 N 218-З (as amended on 17.07.2018) "Civil Code of the Republic of Belarus" (as amended effective of 01.11.2018)

[19] Clause 1 of the Resolution of the Ministry of Finance of the Republic of Belarus of 30.06.2016 N 58 (as amended on 10.08.2018) "On establishment of forms of the consignment note and delivery note and approval of the Instruction on the procedure for filling in of the consignment note and delivery note, introduction of amendments and supplements to the Resolution of the Ministry of Finance of the Republic of Belarus of 22 April 2011 N 23"