The issue of creating a business in Belarus is connected with the issue of choosing the organizational and legal form of a commercial organization. Belarusian corporate law provides a wide range of relevant forms. Some of them, such as a full and limited partnership, are a kind of legal atavism, others, such as a limited liability company and a private unitary enterprise, are widely used by both large and medium-sized businesses.
The choice of the organizational and legal form depends on such factors as the type of activity, the size of investments, as well as the number of founders. So, creating an organization planning to engage in foreign economic activity, it will be impractical to create a private unitary enterprise. Since this organizational and legal form is absent in a number of jurisdictions, which may cause distrust among counterparties. The size of the authorized capital of a private unitary enterprise and LLC is not limited by either the minimum or maximum parameter. The same cannot be said about a joint-stock company.
Registration of a joint-stock company is possible for businesses of any investment category. However, the expediency of creating this business company with a small planned amount of investment is small, since it will entail only additional costs with a minimum of advantages. In general, the use of such an organizational and legal form as an open joint-stock company in Belarusian realities is limited due to the relatively low level of development of the securities market. Therefore, this form is mainly used in the field of privatization.
The number of founders no longer has such an impact on the choice of organizational and legal form as it had earlier during the ban on the establishment of an LLC with one participant. However, a private unitary enterprise can still be established only individually. This is worth remembering if there are prospects for alienating the business or investing through the inclusion of new partners with an additional contribution. The maximum limitation of the participants of LLC, ODO and CJSC by fifty persons is still valid. However, in the Belarusian realities, this rarely causes problems in the field of private business.
An additional liability company is currently not in demand among Belarusian business entities due to the fact that there are currently no benefits when creating this legal entity. However, the form in question may become more in demand over time, since it secures an increased level of trust among some counterparties. While the responsibility of the founders in any case is high due to the established practice of bringing them to subsidiary liability in the bankruptcy procedure.
The influence of the organizational and legal form on the taxation regime is currently practically absent, despite some entrenched myths, in particular, related to the fact that for a long time only a private unitary enterprise had the right to assign the functions of an accountant to the director. Thus, the interconnectedness of the costs of doing business and the choice of organizational and legal form can only be discussed in the light of the issue of current costs for performing certain procedures (for example, deposit servicing of a joint-stock company).
All organizational and legal forms of a commercial organization, except for a unitary enterprise, require the presence of a legal address in a non-residential premises. However, when deciding on the registration of a commercial organization in a residential premises at the place of registration of the founder, it should be remembered, firstly, about the conditions of such registration regarding the consent of persons authorized in relation to this premises, and secondly, about the increase in utility tariffs following such registration. In certain cases, it would be more appropriate to register a commercial organization at a legal address in a non-residential premises with a minimum allowable area (4 square meters).
Choosing an organizational and legal form, it is necessary to take into account a number of factors. Such factors as the size of the authorized capital, the type of activity, the number and structure of planned investments are decisive in this case. Not the last place is also occupied by such a question as the number of founders and the legal address. A qualified corporate lawyer will help you avoid mistakes in solving this issue based on ignorance of the law. However, the final choice is yours.
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The disadvantages of the PMC as an organizational and legal form include the inability to have more than one participant in its composition. However, as practice shows, often such a task is not worth it in the field of small and medium-sized businesses. Also, as a subjective disadvantage of the use of PMCs in the field of foreign economic activity, a low level of trust in this organizational and legal form on the part of foreign counterparties is called. And indeed, in many jurisdictions such an organizational and legal form does not exist. In addition, many counterparties may be confused by the fact that the PMC is not the owner of the property belonging to it, but owns it on the right of economic management. The institution of economic management is incomprehensible to many foreign persons, especially those originating from countries that use the Anglo-Saxon legal system.
The last circumstance (Institute of economic management) just the same is the main advantage of the PMC in some situations. So, in order to replenish the payment account of the PMC, it is not necessary to give loans or increase the authorized capital, without which, unfortunately, it is impossible to do in business companies. The founder of the PMC has the right to transfer additional property to the PMC within the framework of one owner without issuing a loan or making changes to the charter, which is convenient. In addition, loans burden the balance of payments of the enterprise.
Also, the founder of the PMC has the right to withdraw the property of the PMC from its economic management. At the same time, it is recommended to define in detail in the charter the procedure for such withdrawal. However, the right to withdraw should not be abused, since in the event of bankruptcy, the founder will be held vicariously liable for the obligations of the PMC. However, the risk of subsidiary liability has recently become very high for the founder, regardless of the organizational and legal form and even the model of his behavior (not counting inaction as a model of behavior).
The alienation of the PMC is possible either by registering the property complex in the cadastral agency with its subsequent sale, or by the so-called two-stage reorganization (PMC-LLC-PMC). The advantage of the first method is the legal purity of the transaction, and the disadvantage is significant time costs (up to one month). The second method is not much inferior in speed to the purchase and sale of a share of an LLC, but it should be avoided when alienating large enterprises with a significant amount of property. Anyway, when opening a commercial organization, few people think about the convenience of its subsequent alienation.
A common myth is that the PMC is simpler than the LLC in terms of accounting and tax accounting. However, there is currently no difference on this issue. Both the taxation rates and the grounds for applying the simplified taxation system are uniform. There is now no norm that the director can assume the functions of an accountant in the PMC. There is a similar possibility in the current Law "On Accounting and Reporting", but the criteria are completely different, independent of the organizational and legal form.
In conclusion, we can conclude that despite the obvious disadvantages, the opening of a PMC continues to be a good option for small and medium-sized businesses, even in the era of LLC with one founder. The main advantage of the PMC is a special ownership regime that allows the founder to regulate the size of the property without resorting to burdensome structures.