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News and Publications

Small and medium businesses development in Russia: legal updates

on .

In July and August 2018, the Federal Laws were signed aimed to expand:

- measures of property support for small and medium businesses;

- criteria to qualify as small and medium business entities.

  1. Participation in Buying Out State or Municipal Property and the Right to Lease Land Plots

Federal Law No. 185-FZ dated 3 July 2018 ('Law No. 185-FZ') introduced amendments to the Land Code of the Russian Federation, Federal Law No. 209-FZ dated 24 July 2007 'On the Development of Small and Medium Enterprises in the Russian Federation', and Federal Law No. 159-FZ dated 22 July 2008 'On the Specifics of Alienation of Immovable Property Being in the State Ownership of Constituent Entity of the Russian Federation or in the Municipal Ownership and Leased by Small and Medium Business Entities, and on Amending Certain Legislative Acts of the Russian Federation'.

The small and medium business entities (SME) are given the pre-emptive right to purchase real estate being in federal ownership by analogy with their pre-emptive right to buy out immovable property that is in the state ownership of a constituent entity of the Russian Federation or in municipal ownership.

The term of the pre-emptive right to buy out the leased property is abrogated (meaning that this right can be exercised without a limitation of a term), as well as the deadline (1 July 2015), as of which the leased property should be leased by SME under the lease agreement in order to exercise the pre-emptive right.

Legal owners of state and municipal property (state and municipal institutions, state and municipal unitary enterprises) may propose to include such property into the list of state property and municipal property intended for leasing to SME (hereinafter - the ²lists²) with the consent of the state authority of the Russian Federation, public authority of a constituent entity of the Russian Federation, or a local government that are authorised to approve transactions with the relevant property.

Auctions for the right to enter into lease agreements with respect to land plots included into the list can only be held among SME (except for those SME defined by law that cannot be subject to such support).

Where a person being not an SME or a person who cannot be granted such support, has applied for a land plot included in the lists without a tender, they shall refuse such person in granting a land plot being in state or municipal ownership.

The transfer rights and obligations under the lease agreements concluded with SME with respect to land plots included into the lists to third parties or sub-lease thereof is prohibited.

Information on the benefits for the rent in respect of the land plot included into the lists shall be indicated in the information given in the auction notices.

The amendments introduced by the Law No. 185-FZ became effective from 3 July 2018.

  1. Criteria to Qualify as Small and Medium Business Entities

The Federal Law No. 313-FZ dated 3 August 2018 amended the Federal Law 'On the Development of Small and Medium Businesses in the Russian Federation' ('SME Development Law').

It is clarified that SME can be not only economic companies, but also business partnerships that meet at least one of the requirements listed in the SME Development Law, in particular:

1)    the members of a business company or business partnership are the Russian Federation, constituent entities of the Russian Federation, municipal formations, public and religious organisations (associations), charitable and other funds (except for investment funds) that hold in aggregate not more than 25 per cent in the charter capital of a limited liability company (LLC) or contributed capital of a business partnership, and not more than 25 per cent of voting shares in a joint-stock company (JSC),

2)    members of a business company or business partnership - foreign legal entities and(or) legal entities that are not SMEs and hold in total not more than 49% of shares in the charter capital of an LLCS or the contributed capital of a business partnership, or not more than 49% of voting shares of a JSC.

The above limitation on the total share of participation of foreign legal entities and(or) legal entities that are not SMEs does not apply to:

1)    participants of business companies - foreign legal entities, whose income from business activity for the preceding calendar year does not exceed the limit set by the Government of the Russian Federation for medium businesses[1], and the average number of employees for the preceding calendar year does not exceed the limit value established by the SME Development Law[2] (except for foreign legal entities, whose permanent location is in the state included into the list of states and territories that provide preferential tax treatment and(or) do not provide for disclosure and provision of information in the conduct of financial transactions (offshore companies));

2)    business companies that meet the following criteria:

- JSC the shares of which are traded on the organised securities market and classified as shares of the high-tech (innovative) sector of the economy in the procedure established by the Government of the Russian Federation;

- business companies, business partnerships the founders of which are legal entities included into the list of legal entities that provide state support to innovation activities approved by the Government of the Russian Federation.

Confirmation of compliance by foreign legal entities (except for offshore companies) with the requirements established by the SME Development Law on the average number of employees and the amount of income from doing business is made on the basis of the relevant opinion of an audit organisation.

Thereat, for the purpose of maintaining the uniform register of SMEs, audit organisations shall annually submit to the FTS of Russia a list of LLCs with participants - foreign legal entities that meet the conditions established by the law as of 1 January of the current calendar year. Such a list is formed by audit organisations on the basis of analysis of the data contained in the reports submitted by the relevant foreign legal entity to the tax authority of the country where such a foreign legal entity was established.

The amendments also clarified the provisions regulating the procedure for the annual entering of information on JSCs into the uniform register of SMEs transferred to the FTS of Russia by registrars maintaining shareholders' registers.

Federal Corporation for the Development of Small and Medium Businesses JCS is granted the right to provide services for the development of SME (including the provision of information, marketing, financial and legal support), not only to existing SME, but also to individuals who plan to engage in business activities.

The amendments to the SME Development Law entered into force on 3 August 2018, except for certain provisions that come into force on 1 December 2018.

[1] 2 billion roubles in accordance with the Decree of the Government of the Russian Federation No. 265, dated 4 April 2016.

[2] Up to 100 employees for small businesses (for micro-enterprises - up to fifteen employees); from 101 to 250 employees for medium businesses, unless other limit of the average number of employees is established for medium businesses, except for medium businesses that are business companies or business partnerships engaged in business activities in the area of light industry (class 13 'Manufacture of textiles', class 14 'Manufacture of apparel', class 15 'Manufacture of leather and leather products' of Section C 'Processing industries' under the All-Russian Classifier of Economic Activities), for which the limit value of the average number of employees is 1,000 employees under the Decree of the Government of the Russian Federation No. 1412, dated 22 November 2017.

Consent to personal data processing: practice of Roskomnadzor and Russian courts

on .

On 31 July 2018, the Federal Service for Supervision in the area of communications, information technology and mass communications (Roskomnadzor) held a traditional Open Day coincided to the anniversary of adoption of the Federal Law No. 152-FZ 'On Personal Data' ('Personal Data Law').

The Deputy Head of Roskomnadzor Mr. Pankov told about Roskomnadzor's attitude to the General Data Protection Regulation (GDPR) that became effective on 25 May 2018 and presented some recommendations on compliance with the GDPR requirements for Russian personal data operators that are subject thereto.

One of such recommendations concerns the consent to personal data processing: a separate consent needs to be obtained for personal data processing for each purpose of such processing, specifying in the consent the list of personal data processed, the procedure and conditions for the consent withdrawal, as well as specifying provisions on third parties to whom the personal data are planned to be transferred to or who are supposed to be engaged under the assignment agreement.

The Deputy Head of the Office for Protection of Rights of Personal Data Owners Ms. Gafurova provided the review of the most frequent complaints of individuals to Roskomnadzor in connection with the actions or omission of operators that violate the Russian statutory requirements on personal data. The number of such complaints increased from 6 thousand in 2008-2011 up to 85 thousand in 2016-2018.

[1] The Resolution of the Eleventh Arbitration Appellate Court No. 11АП-19167/2017, dated 26 February 2018, on case No. А65-30342/2017;

[2] The Resolution of the Thirteenth Arbitration Appellate Court No. 13АП-34099/2017, dated 20 February 2018 on case No.А56-56720/2017; The Resolution of the Ninth Arbitration Appellate Court No. 09АП-66369/2017, dated 22 January 2018 on case No. А40-155310/17;

[3] The Resolution of the Eleventh Arbitration Appellate Court No. 11АП-8336/2018, dated 3 July 2018, on case No. А65-33540/2017;

[4] The Resolution of the Twentieth Arbitration Appellate Court No. 20АП-7785/2017, dated 11 January 2018, on case No. А09-12418/2017;

[5] The Resolution of the Fourth Arbitration Appellate Court No. 04АП-127/2018, dated 7 February 2018 on case  No. А19-17054/2017.

SOURCE www.gratanet.com  

Changes in the Russian Currency Law: Repatriation of Currency Proceeds

on .

On 29 July 2018 several Federals Laws were signed off amending the Federal Law 'On Currency Regulation and Currency Control' as follows:

  • Federal Law No. 246-FZ introduced additional cases when a resident (an individual or legal entity deemed as the resident of the Russian Federation for currency control purposes) is deemed to have fulfilled the duty to repatriate the currency proceeds;
  • Federal Law No. 247-FZ supplemented the list of currency transactions permitted between residents;
  • Federal Law No. 248-FZ extended the list of cases where residents are allowed not to credit foreign or Russian currency into their bank accounts with authorised Russian banks.
  1. Cases When a Resident Is Deemed to Have Fulfilled the Obligation to Repatriate Currency Proceeds

A resident is now deemed to have fulfilled the obligation to repatriate the currency proceeds if he/she ensures the receipt on his/her bank accounts with authorised banks and/or bank accounts with authorised banks of a resident who is a beneficiary under the transaction, of foreign currency or the currency of the Russian Federation under the transaction that secure the obligations of a non-resident under a foreign trade contract and is stipulated by the procedure established by the Government of the Russian Federation for carrying out activities on insurance of export credits and investments against business and/or political risks[1], provided that the amount received is equal to or exceeds the value established by the said procedure, within the terms provided for by the relevant transaction.

A resident is also recognised as have fulfilled the obligation to repatriate the foreign currency proceeds where restrictive measures (sanctions) have been imposed on the resident by a foreign state, state association and(or) a union and(or) state (interstate) institution of a foreign state or state association and(or) union and the resident is included in the list approved by the Federal Tax Service (FTS) agreed with the Ministry of Finance of Russia and published on the FTS official website.

A resident is included into the said list on the basis of his/her written application submitted to FTS that contains a reference to the regulatory act pursuant to which the restrictive measures have been imposed on such a resident.

The amendments introduced by Law No. 246-FZ came into force on 30 July 2018.

  1. Currency Transactions Permitted between Residents

The list of currency transactions permitted between residents is supplemented with transactions for payment of insurance premiums, payment of insurance compensation under contracts for insurance of export credits and investments against business and(or) political risks, transactions for payment of remuneration and payment of foreign currency under transactions that secure the obligations of a non-resident under a foreign trade contract and is stipulated by the procedure established by the Government of the Russian Federation for carrying out activities on insurance of export credits and investments against business and/or political risks.

Amendments introduced by Law No. 247-FZ, becoming effective from 30 August 2018, allow residents, who have personal accounts opened with the Federal Treasury, transfer foreign currency from accounts in the authorised bank to the accounts of the Federal Treasury opened in the authorised banks (in the currency of the respective account), as well as to accounts of federal public authorities that perform functions in the area of criminal proceedings, opened in authorised banks.

  1. Right Not to Repatriate Currency Proceeds

The list of cases when residents may not to credit foreign currency or Russian currency into their bank accounts in authorised banks is supplemented with operations for offsetting counter-claims on obligations arising from contracts for provision of international telecommunication services, including international roaming services, between a non-resident and a resident, who are operators of international telecommunications, in particular, where settlements between them involve specialised settlement organisations registered in the territories of the member-states of the International Telecommunication Union.

The amendments become effective on 10 August 2018.

SOURCE www.gratanet.com  

'Offshore zones' for international companies in the Kaliningrad region and Primorsky krai

on .

Federal Law No. 291-FZ dated 3 August 2018 (Law No. 291-FZ) provides for the establishment and operation of special administrative districts in the territories of the Russian Island (Primorsky Krai) and Oktyabrsky Island (Kaliningrad Region) to form an investment-attractive environment for Russian and foreign investors.

A number of other federal laws signed on 3 August 2018 provide for tax benefits and a special currency regime for international companies registered in the territory of the special administrative regions.

  1. Participants of the Special Administrative Districts

In a special administrative district they establish a management company - a Russian legal entity entrusted to ensure the functioning of the respective district. In the territory of the Russian Island (Primorsky Krai) such a company is a management company defined by the Government of the Russian Federation for ensuring functioning of territories of the advancing social and economic development in the territory of the Far East Federal district, or its subsidiary.

A participant of the special administrative district can be a foreign legal entity, except for a credit institution, non-credit financial institutions, operators of payment systems and operators of payment infrastructure services, which:

1)    entered into an agreement with the management company for the implementation of activities in the territory of the special administrative district (hereinafter - the 'agreement for implementation of activities') that establish types of activity of the participant of the special administrative district, conditions of implementation of such activities, rights, duties and liability of the parties;

2)    is registered as an international company in the re-domiciliation procedure and entered by the management company into the register of participants of the special administrative district.

The foreign legal entity needs to file an application for entering into the agreement for implementation of activities with the management company, accompanied by documents confirming the applicant’s compliance with the requirements for an international company, as well as other documents provided by the Federal law 'On International Companies' to obtain the status of an international company.[1]

The management company shall consider the application and within five business days from the date of the decision to enter into the agreement for implementation of activities send the draft agreement to the applicant.

The management company shall enter data on a participant of the special administrative district into the register of participants of the special administrative district within one day after the state registration of the respective international company in the respective special administrative district.

Thereat, the entity loses the status of a participant in the special administrative district, in case of termination of the agreement for implementation of activities.

The participants of the special administrative district may, in particular:

- get land plots and build infrastructure in the procedure provided by the land legislation and legislation on urban development;

- identify ancillary activities that are required to ensure operations of the participants of the special administrative district;

- engage persons to implement ancillary activities.

The agreement for implementation of activities may contain an arbitration clause on the transfer of disputes arising from such agreement to the arbitration tribunal administered by a permanent arbitration institution.

In order to enforce an arbitral award in such a case there is no need for the Arbitrazh court of the Kaliningrad region or the Arbitrazh court of Primorsky Krai to render a decision on the enforcement: if there is a respective direct agreement between the parties to the dispute, the respective Arbitrazh court shall adopt the ruling to issue a writ of execution for enforcement of the arbitral award within 14 days from the date of receipt of the application for the issue of the writ of execution without a court session.

Law No. 291-FZ, except for provisions on the powers of state authorities, bodies of the Social Security Fund of the Russian Federation in the territory of a special administrative district, entered into force on 3 August 2018.

  1. Tax Benefits for International Holding Companies

Federal Law No. 294-FZ dated 3 August 2018 amended the Tax Code of the Russian Federation (Tax Code) in terms of the specifics of taxation of international holding companies.

An international holding company is an international company registered in accordance with the Federal Law 'On International Companies', which simultaneously meets the following conditions:

1)    the international company is registered in the procedure of re-domiciliation of a foreign organisation, which was established in accordance with its personal law before 1 January 2018;

2)    the international company within 15 days after the registration submitted to the tax authority at a place of registration the necessary documents and information (financial statements for the fiscal year preceding the registration date, an audit report to the financial statements that does not contain a negative opinion or refusal to express an opinion, information on the controlling persons of the international company);

3)      as of the date of registration of the international company according to the procedure of re-domiciliation of a foreign organisation, its controlling persons became the controlling persons of such a foreign organisation before 1 January 2017.[2]

The controlling person of an international company, as well as a foreign organisation by way of re-domiciliation of which such an international company has been registered, is an individual or legal entity, whose share in this international company (for individuals - in conjunction with spouses and underage children) is more than 15%.

The changes made to Chapter 25 of the Tax Code that become effective from 1 January 2019 establish benefits on corporate profits tax for international holding companies.

The income of an international holding company in the form of profits of controlled foreign companies, for which such an international holding company is recognised as the controlling person, for tax periods ending before 1 January 2029, shall not be included into the tax base of the international holding company.

Specific features of the formation of value of property (property rights) by international companies and foreign organisations recognised as tax residents of Russia are established.

The following rates for corporate profit tax are established:

- 0% - for income received by an international holding company in the form of dividends provided that as of the date of the decision to pay dividends the international holding company continuously owns for at least 365 calendar days not less than 15% (stakes) in the charter (reserve) capital (fund) of the organisation that pays dividends, or depositary receipts entitling to receive dividends in the amount not less than 15% of the total amount of dividends paid by the organisation[3];

- 5% - for income received by foreign entities in the form of dividends on shares (interests) of international holding companies that are public companies as of the date of payment of dividends, before 1 January 2029.

When international holding companies simultaneously meet the following conditions, a tax rate of 0% shall apply to the tax base determined by income from sales or other disposal (including repayment) of interests in the charter capital of Russian and(or) foreign organisations, and shares of Russian and(or) foreign organisations:

1)    shares (interests in the charter capital) of a Russian or foreign organisation[4] as of the date of their sale or other disposal (including repayment) are continuously owned by an international holding company under the right of ownership or other proprietary rights for at least 365 calendar days and constitute not less than 15% contribution (interest) in the charter (share) capital (fund) of such organisation;

2)    shares (interests) constitute the charter capital of organisations no more than 50% of assets of which as of the last reporting date preceding the date of sale or other disposal (including repayment), directly or indirectly consist of immovable property located on the territory of the Russian Federation;

3)    shares (interests in the charter capital) of a Russian or foreign organisation were not contributed (transferred) into the charter capital of an international holding company and were not acquired by such a company as a result of reorganisation within 365 calendar days before or after the date of registration of such a company as an international company.

The first tax (accounting) period for international companies recognised as tax residents of the Russian Federation starts from the date of registration of the foreign organisation as an international company.

  1. Currency Regime for International Companies

Federal Law No. 293-FZ dated 3 August 2018 amended the Federal Law 'On Currency Regulation and Currency Control', which now provides for a special currency regime for international companies - foreign legal entities registered as a re-domicile in special administrative regons in the Kaliningrad Region and Primorsky Krai.

Foreign legal entities registered in accordance with the Federal Law 'On International Companies' are deemed non-residents for the purposes of currency regulation and currency control. This means that settlements in foreign currencies and other currency transactions between international companies and residents can be carried out without restrictions (except for the sale and purchase of foreign currency and checks with face value indicated in foreign currency, which may be effected in Russia only with authorised banks and state corporation 'Bank for Development and Foreign Economic Affairs (Vnesheconombank)').

It has been also clarified that non-residents may make between each other in the territory of Russia the transfers of foreign currency and the currency of the Russian Federation without restrictions and without opening bank accounts, settlements in cash foreign currency or the currency of the Russian Federation subject to the maximum amount of cash payments provided for by Russian legislation, as well as transfer and receive foreign currency and the currency of the Russian Federation from and in the territory of Russian without opening bank accounts.


[1] Details on obtaining the status of an international company can be found at: http://www.gratanet.com/en/publications/details/18815-alert-russia-international-companies.

[2] This condition does not apply to:

- international companies, which are public ocpanies as of 1 January 2018;

- international companies, which aggregate share of direct and (or) indirect participation of an international company specified in para 1 hereof is 100 percent.

[3] If the organisation that pays dividends is a foreign entity, the tax rate established by this clause shall apply to organisations, whose state of permanent location is not included in the list of states and territories approved by the Ministry of Finance of the Russian Federation.

[4] This rate shall apply if the state of permanent location of such foreign organisations is not included into the list of states and territories approved by the Ministry of Finance of the Russian Federation.

SOURCE www.gratanet.com  

International companies: a new way of doing business in Russia

on .

 

The Federal Law dated 03 August 2018 No. 290-FZ “On International Companies” (“Law No. 290-FZ”) defines the legal status of international companies - an economic organisation with the status of an international company registered in the Unified State Register of Legal Entities (USRLE) in connection with the change of a personal law by a foreign legal entity by way of redomiciliation, specific features of its activities, reorganisation and liquidation, as well as the recording and exercising of rights to its securities.

  1. The legal status of international companies

A foreign legal entity which is a commercial corporate organisation and which has decided to change its personal law in accordance with the procedure established by such personal law may become an international company.

Specific features of the legal status of an international company are as follows:

1)    the place of location of an international company is within the territory of a special administrative district which is determined in accordance with the Federal law “Regarding special administrative districts in the territory of the Kaliningrad region and Primorsky territory” (hereinafter referred to as an “administrative district”);

2)    the status of an international company is provided simultaneously with the state registration in the USRLE to a foreign legal entity that:

  1. a) is registered (established) in a state which is a member or spectator of The Financial Action Task Force on Money Laundering (FATF) and (or) Committee of Experts of the Council of Europe on Measures to Combat Money Laundering and the Financing of Terrorism (Manivel);
  2. b) through its direct or indirect controlled entities either through affiliates or representatives (other separate subdivisions) carrying out business activities on the territory of several states including the Russian Federation;
  3. c) applied for entering into a contract for carrying out of activities as a participant of the administrative district;
  4. d) has undertook to invest in the territory of the Russian Federation in the amount of no less than RUB 50 million during the period of no less than 6 (six) months from the date of state registration of the international company;

3)    an international company pays an annual registration fee in the amount and order established by the Tax Code of the Russian Federation;

4)    an international company has the right to place securities as well as to organise the circulation of securities, including by placing securities of foreign issuers in accordance with the foreign law, certifying rights in respect to securities of an international company, outside the Russian Federation without receiving a permission from the Central Bank of    the Russian Federation (Bank of Russia);

5)    the Russian legislation regarding limited liability companies, joint stock companies, the securities market is applied to international companies in the part, not contradicting the Law No. 290-FZ and the essence of relations arising from it.

An international company is deemed established from the date of registration (establishment) of the foreign legal entity. At the same time, in connection with the state registration of an international company, a relationship of succession does not arise between the foreign legal entity and the international company.

The personal law of the international company from the moment of its state registration in the Russian Federation will become Russian law.

An international company upon approval of the Government of the Russian Federation has the right to alter its personal law through registering in a foreign state whose legislation allows for such registration and subject to the absence of indebtedness on taxes, dues and other indebtedness of the international company to the budget of the Russian Federation.

Such registration of an international company in a foreign state by way of redomiciliation does not alter the title of the international company to its property, as well as the rights and obligations of the international company and persons having the rights and (or) duties in relation to such company which arose before the registration of the international company in the foreign state by way of redomiciliation.

  1. State registration of an international company

The Law No. 290-FZ provides expressly that for the state registration of an international company it is not required to obtain preliminary approvals provided by the Federal Law “On the Protection of Competition” and the Federal Law “On the Procedure for Making Foreign Investments in an Economic Company of Strategic Importance to Ensure the Country’s Defence and Security”, which significantly simplifies the process, in particular, in the event when the authorised capital of the relevant company is paid for by shares or interests of another commercial organization.

The procedure of state registration of an international company by way of redomiciliation has its own specifics: a foreign legal entity shall submit to a management company whose status is determined in accordance with the Federal Law “On the Special Administrative Districts in the territory of the Kaliningrad region and Primorsky territory” (hereinafter referred to as the “management company”):

- application for state registration in the prescribed form;

- information about the beneficial owners of the foreign legal entity;

- representation of a foreign legal entity on the absence of circumstances hindering the state registration of an international company;

- documents confirming compliance with the requirements provided for by Law No. 290-FZ;

- documents necessary for the registration of the issue of shares of an international company which is registered in the legal form of a joint-stock company;

- if the firm name of the international company contains an indication that it is a public joint-stock company, documents confirming compliance with the conditions provided for by the Law No. 290-FZ, and documents necessary to register the prospectus of shares of the international company;

- the approved charter of the international company and other necessary documents.

The management company considers the submitted documents within no more than 2 (two) business days and makes a decision to forward them on to a registering authority or the transfer of documents is refused. If an application is submitted for the state registration of an international company in the form of a joint-stock exchange company, the documents are forwarded on to the Bank of Russia.

Within no later than one business day following the day of the adoption of the relevant decision, the management company:

1)    sends documents for the state registration to the registering authority, in the form of electronic documents signed by an enhanced qualified electronic signature; or

2)    in the event that an application for state registration of an international company in the legal form of a joint-stock company is submitted, transfers the documents to the Bank of Russia and not later than within one business day following the day of receipt of the document from the Bank of Russia for the registration of the share issue of the international company, the documents are sent on to the registering authority; or

3)    in the event that the firm name of the international company contains an indication that it is   a public joint-stock company, transfers the documents necessary for registration of the prospectus of shares of the international company and others documents stipulated by the Law No. 290-FZ, transfers them to the Bank of Russia, and not later than the business day following the day of receipt from the Bank of Russia of the document on registration of the prospectus of shares of the international company, transfers the documents to the registering authority.

The registering authority carries out state registration of an international company within no more than 3 (three) business days from the date of receiving the documents from the management company

An international company might be registered in a legal form of a joint-stock exchange company simultaneously with obtaining the status of a public joint-stock company subject to compliance with the following conditions:

1)    shares of a foreign legal entity (securities of a foreign issuer certifying the rights to shares of a foreign legal entity) have passed the listing procedure in the Russian stock exchange or foreign stock exchange according to the list prescribed by the Federal Law “On Securities Market” (“Securities Market Law”);

2)    the Bank of Russia decided to register a prospectus of shares of an international company and a foreign legal entity entered into an agreement with the Russian stock exchange on the listing of shares of the international company.

To do this simultaneously with the submission of documents for the state registration of the issue of shares of an international company with the Bank of Russia, it is necessary to submit a prospectus of shares of the international company and a copy of the agreement with the Russian stock exchange on the listing of shares of the international company.

A foreign legal entity is subject to exclusion from the register of foreign legal entities in the state of its original personal law within 6 (six) months from the date of its registration in the USRLE by way redomiciliation, unless a longer period is established by the legislation of the state of the initial personal law of the foreign legal entity.

  1. Securities and other financial instruments of an international company

In the event that within one year from the date of adoption of the decision on the state registration of the issue of shares of an international company by the Bank of Russia, the state registration of an international company is not carried out, this decision of the Bank of Russia is annulled.

The nominal value of shares of an international company in the currency of the Russian Federation shall be, as the general rule, equivalent to the nominal value of shares of a foreign legal entity in foreign currency at the official exchange rate of the relevant currency as of the date of the decision to change the personal law of the foreign legal entity (to register as an international company).

At that, the nominal value of the preferred shares of an international company may exceed 25 per cent of its authorized capital (with is not applicable to ordinary joint stock companies in Russia).

Shares of an international company are owned by persons who, as of the date of state registration of an international company, are shareholders of a foreign legal entity, corresponding to the number of shares of a foreign legal entity owned by them.

The rights granted by shares of an international company must comply with the rights that are granted to its shareholders by the charter (constituent document) of a foreign legal entity or another document that determines the scope of shareholder rights in accordance with the personal law of the foreign legal entity.

Any change in the scope of rights granted by ordinary and preferred shares of an international company that, instead of and (or) in addition to the rights provided for by the legislation of the Russian Federation on joint-stock companies, grant their owners other rights, to bring such rights in compliance with the requirements of Russian legislation on joint-stock companies, may be made under the rules established by the Russian legislation for changing the scope of rights granted by preferred shares.

The performance under bonds and other financial instruments of an international company, with the exception of shares issued by a foreign legal entity, is exercised in accordance with the law under which such instruments are issued.

If a foreign legal entity that became an international company issued certificates of ownership of a certain number of shares, an international company may issue such certificates with respect to shares that are placed and/or circulated outside Russia.

The holder of the register of shareholders of an international company opens the following personal accounts:

- personal account of a foreign nominal holder;

- personal account of a foreign authorized holder;

- personal account of depositary programs.

It is not allowed to levy execution on the securities that are recorded in the personal accounts of the foreign nominal holder, the foreign authorised holder and the personal accounts of the depositary programs under the obligations of the persons who have opened these personal accounts.

  1. The termination of the status of an international company without changing the personal law

The management company performs annual inspections of compliance of the international company with the requirements provided for by Law No. 290-FZ, and in case of non-compliance of the company with such requirements, as well as in the event of the company failing to fulfil its investment obligations in Russia, the international company issues a notice to the company on the need to comply with these requirements.

The management company shall notify the registration authority of the termination of the status of an international company in the event of:

- if, after the expiry of 6 (six) months from the date of the submission of a presentation, the international company has not performed such representation,

- the loss by an international company of the status of a participant in a special administrative district.

The registering authority shall, within a period of no more than 5 (five) business days from the date of receipt of this notification, make an entry in the USRLE on the termination of the status of an international company.

The decision of the management company to terminate the status of an international company can be challenged in a court at the place of state registration of an international company (the Arbitrazh Court of the Kaliningrad Region or the Arbitrazh Court of the Primorsky Territory), and in the presence of an arbitration agreement with the management company in an arbitration tribunal administered by a permanent arbitration institution.

An international company has the right to file an application with the management company to voluntarily terminate the status of an international company at any time after the date of its state registration.

In addition, the status of an international company is terminated if a legal entity registered outside the territory of a special administrative district accesses it as a result of the reorganisation.

Law No. 290-FZ came into force from the date of its official publication.

SOURCE www.gratanet.com  

Vladimir Komarov on The ASEAN Law Conference 2018

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Vladimir Komarov, managing partner of Legal Studio, an associate office  of Grata International in St. Petersburg, has participated in the ASEAN Law Conference 2018, which has been held in Singapore in conjunction with the 13th ASEAN Law Association General Assembly.

The theme of The ASEAN Law Conference was “The Power of ONE: Unlocking Opportunities in ASEAN through Law”, and the vision for the Conference was for it to be a world-class legal conference focused on thought-leadership issues relevant to ASEAN, with particular emphasis on cross-border commercial and legal issues in the ASEAN Economic Community (“AEC”).

The list of speakers has included ministry officials, Supreme Court judges, law professors from various ASEAN universities, managing partners of international law firms and so on. Apart from eminent speakers and panellists from the ASEAN region, the Conference has  also featured speakers from non-ASEAN countries such as Professor J,H,H Weiler (Professor at NYU), Mr David W. Rivkin (Immediate Past President of the International Bar Association), and Ms Hilarie Bass (President of the American Bar Association).

After Conference Vladimir has continued the business visit to our partners: law firms in  Manila.