May 2014
Newsletter
Why this information letter might be of interest to you:
As a part of the reform of the Civil Code long-awaited amendments to corporate legislation, which will affect all companies
from September 2014, have finally been approved. If you conclude contracts with Russian corporations or operate through
a so-called accumulation account at a Russian bank prior to registration.
2. Submission of documents for registration with
the Unified State Register of Legal Entities
them, you will need to study these amendments and clarify
The representative of the applicant – a legal entity may person-
whether you need to take any action. Effective from May,
ally file and receive documents on its behalf. Consequently, if a
another less wide-ranging reform should simplify the procedure
general director is unable to file documents in person, they do not
for founding companies.
need to be sent by post, but can instead be submitted through a
representative. This novelty should facilitate the lives of directors,
who will not have to waste time by filing documents in person
On 5 May 2014 amendments 1 to the Federal Law “On Limited
with the registration authority. However, there is a shortcoming –
Liability Companies” and the Federal Law “On State Registra-
now the power of attorney of the representative should be
tion” 3 entered into force. Effective 1 September 2014 another law
notarised. The original or a notarised copy should be filed with
on introducing amendments will enter into force . This will affect
the registration authority among the other documents.
2
4
the rules governing the establishment, operation, reorganisation
and liquidation of legal entities.
I.Amendments effective
from 5 May 2014
II.Amendments effective
from 1 September 2014
Amendments to the activities of legal entities discussed as part
of the reforms of Russian civil legislation will enter into force on
1 September 2014.
1. Procedure for paying the charter capital of OOO
Effective 5 May 2014 part of the charter capital of an OOO (limited liability company) no longer has to be paid prior to its state
registration. The charter capital may be paid in full after registra-
1. New classification of legal entities
1.1 Public and non-public AO and OOO
tion. At the same time, the deadline for paying the charter capital
Joint Stock Companies (AO) and Limited Liability Companies
has been reduced from one year to four months after registra-
(OOO) are now commercial corporations, in other words legal
tion. From a practical perspective, this amendment will make it
entities, whose participants own membership rights therein and
possible to expedite significantly the foundation of a company.
form their supreme body. In turn AO may be public or non-public.
For example, in future the founders will no longer have to open
OOO are classified as non-public companies.
Introduced by Federal Law No. 129-FZ “On Amendments to Article 90 of Part One of the Civil Code of the Russian Federation and Article 16 of the Federal
Law “On Limited Liability Companies”, and Federal Law No. 107-FZ dated 5 May 2014 “On Amendments to the Federal Law “On the State Registration of
Legal Entities and Individual Entrepreneurs”.
1
Federal Law No. 14-FZ dated 8 February 1998 “On Limited Liability Companies”.
2
Federal Law No. 129-FZ dated 8 August 2001 “On the State Registration of Legal Entities and Individual Entrepreneurs”.
3
Federal Law No. 99-FZ dated 5 May 2014 “On Amendments to Chapter 4 of Part One of the Civil Code of the Russian Federation and on the Invalidation of
Certain Provisions of the Legislative Acts of the Russian Federation”.
4
Page 2
May 2014
The legislation provides more flexible rules for non-public com-
supervisory board and the collegial executive body (if its forma-
panies regarding the establishment of management bodies and
tion is allocated to the competence of the general meeting of
allocation of competence between them.
participants), the election of their members and termination of
In addition, the scope of shareholder rights of a public AO is determined proportional to their interests in the charter capital of the
company. The same rule applies to non-public companies, but
the charter may stipulate different scope of rights of their participants. Different scope of competences may be stipulated by the
corporate agreement (see Clause 1.4), provided that information
on the existence of such an agreement and the scope of authority
of the company participants stipulated thereby is entered in the
USRLE.
their authority;
– Determination of the number, nominal value, category (type) of
declared shares and rights granted thereby;
– Disproportionate increase in the charter capital of the OOO or
its increase through the participation of third parties;
– Approval of internal regulations or other internal documents of
the company that are not foundation documents.
Provisions regulating management at a non-public company that
differ from the law may not only be included in the charter, but
1.2 Non-public AO and OOO
may also be stipulated by the corporate agreement concluded by
The authorities of the meeting of general shareholders/meeting
all the participants of this company.
of general participants may be changed by the charter. Previously,
the authorities of the general meeting at AO could not exceed the
1.3 Public joint-stock companies
issues listed in the law.
A public company is a joint-stock company, whose shares and
The charter may establish a procedure that differs from the pro-
securities convertible into shares are publicly placed (through a
cedure for convening, preparing and holding general meetings
public subscription) or are publicly traded on the terms and condi-
of participants and adopting resolutions at the general meet-
tions established by laws on securities. Such public joint-stock
ings established by laws and other legal acts, provided that such
company is required to submit for inclusion in the USRLE infor-
amendments do not deprive its participants of the right to partici-
mation on the company name containing a reference to the public
pate in the general meeting and obtain information about it.
nature of the company.
The charter may establish requirements that differ from the ones
A company, which intends to place shares and securities convert-
established by laws and other legal acts on the numerical com-
ible into shares publicly for the first time, acquires such a right
position, establishment and holding of the meetings of the col-
from the date of registration in the USRLE of the company name
legial supervisory board (board of directors or other board) or the
containing a reference to the public nature of such a company.
collegial executive body (management committee or directorate).
Joint-stock companies established before 1 September 2014 and
The functions of the collegial executive body may be assigned
meeting the criteria of public joint-stock companies are recog-
to the supervisory board in full or in part. In general the collegial
nised as public joint-stock companies, regardless of a correspond-
executive body does not have to be established if its functions
ing reference in their company name.
are performed by the collegiate supervisory board. The functions
The exclusive authorities of the general meeting of shareholders
of the collegial executive body may also be assigned to the sole
executive body.
The new regulation makes it possible to transfer authorities
assigned by law to the general meeting of participants of a company to the collegial executive body or collegial supervisory board.
of public joint-stock companies are defined by the law and may
not be changed by the company charter.
In a public joint-stock company, the number of shares owned by
one shareholder and their aggregate nominal value, as well as
the maximum number of votes of one shareholder, may not be
The following authorities are an exception to this rule:
limited. The charter cannot stipulate the need to obtain anyone’s
– Introduction of amendments to the charter and approval of a
consent to the alienation of the shares of this company. Nobody
new version of the charter;
– Reorganisation or liquidation of the company;
–
Determination of the numerical composition of the collegial
may be granted the preemption right to acquire the shares of
the public joint-stock company, other than instances of shares
or securities convertible into shares additionally issued by the
Company.
Page 3
May 2014
In case the charter and company name of the joint-stock compa-
to acquire or alienate the interest). However, the difference is that
nies refer to their public nature, even if the companies itself do
creditors or other third parties may only conclude such contracts
not meet the criteria for public nature, the rules on public compa-
with the participants of the company for the purpose of securing
nies still apply to them.
the interest of said third parties protected by law.
1.4 Corporate agreement
1.5 Amendment of foundation documents
The participants’ agreements of business companies have been
Effective from 1 September 2014, foundation documents of the
consolidated in the Civil Code as “corporate agreements”. The
previously established legal entities should be brought into line with
parties to a corporate agreement are required to notify the com-
the new regulation at the time of the first change in their foundation
pany on its conclusion. However, there is no need to disclose its
documents. State duty will not be levied for such registration.
contents. If this obligation is not met, participants that are not
parties to the corporate agreement have the right to demand the
reimbursement of losses. Information on the contents of the corporate agreement of a non-public company is protected by law
The foundation documents remain in effect prior to the change in
the part that does not contravene the new regulation.
and is confidential.
2. Establishment of legal entities
Information on the corporate agreement concluded by the share-
2.1 Changes concerning the establishment of AO
and OOO
holders of a public joint-stock company should be disclosed
within the limits, pursuant to the procedure and on the terms and
conditions stipulated by the law on joint-stock companies.
In future, violation of the corporate agreement may serve as
grounds for invalidating the resolution of the body of AO or OOO
further to the claim of a party to this agreement, provided that all
participants of the company were parties to the corporate agreement at the time of the adoption of a corresponding resolution.
The invalidation of resolution of a company body does not result
in the invalidity of the transactions of the business company with
third parties concluded on the basis of said resolution. If the party
to the corporate agreement concluded a transaction in violation
The following material changes in the rules on the establishment
of companies need to be highlighted:
– Standard charters approved by the competent state authority
may be used to register legal entities (for the time being, there
has been no such approval). In this case, the information on the
name of the legal entity, its registered address, management
(the composition and authorities of its bodies, the decisionmaking procedure, inter alia in respect of issues adopted unanimously or by a qualified majority of votes), the subject and goals
of the activity (if the obligation to determine them is established
thereof, such transaction may only be declared invalid if the other
by the law) are not included in the charter, but are indicated in
party to the transaction knew or should have known about the
the USRLE.
restrictions stipulated by the corporate agreement.
The law establishes bans on binding participants under a corporate agreement to perform the following actions:
– To vote in accordance with the instructions of the company
bodies;
– To determine the structure and competence of the management bodies.
– When paying the charter capital of AO or OOO, the amount of
monetary funds to be contributed has to be no less than the
minimum amount of the charter capital. The minimum amount
remains the same as in the past: RUB 10,000 (approximately
EUR 200) for OOO and RUB 100,000 (approximately EUR
2,000) for AO.
– There has been formalised the procedure effective in court practice, whereby only the name of the municipality determines the
The most important novelty, previously not regulated by Russian
location of the legal entity. The location should be indicated in
legislation, establishes the right of the participants of business
the company charter. The address of the legal entity is not indi-
companies to conclude contracts with creditors of the company
cated in the charter (further to the request of the participants,
or third parties. Such contracts are subject to the rules stipulated
it may be included therein); however, such an address should,
in respect of corporate agreements. The contracts with creditors
as in the past, be indicated in the USRLE. Notices delivered to
or third parties may regulate the same issues as corporate agree-
the address indicated in the USRLE are deemed received by the
ments (for example, the waiver of corporate rights, the obligation
legal entity even if it is not located at this address.
Page 4
2.2 Goodbye to ZAO
Legal entities may no longer be established as closed joint-stock
May 2014
obligor under such a transaction, and not the company. Previously such transactions had been declared invalid.
companies (ZAO). There is no need to re-register existing closed
– A person may not conclude transactions between companies
joint-stock companies. In other words they retain the status of
if said person simultaneously exercises the functions of sole
a legal entity, the ability to independently participate on their
executive body at both companies. The same is also for trans-
behalf in economic turnover, conclude transactions, etc.
actions between said person and the company where the per-
Effective from 1 September 2014, a new version of the general rules on joint stock companies applies to closed joint-stock
companies. The provisions of the law on AO concerning closed
joint-stock companies apply to such companies up until the first
change to their charters. These provisions concern the amount
of the charter capital, the maximum number of participants, and
the preemption right to buy the shares sold by the other shareholder. Furthermore, the law does not stipulate the obligations
of former closed joint-stock companies to increase the charter
capital to RUB 100,000.
son is the general director. At the same time, however, such
transactions may be declared valid, but the said director shall be
liable for losses caused to the company by such actions.
3.2 Elimination or limitation of liability
The general director is liable if it can be proved that he acted in
bad faith or irrationally when exercising his rights and obligations,
inter alia if his actions (inaction) were not in compliance with the
standard terms of business or not within standard entrepreneurial
risk. The same liability is assumed by the members of collegial
bodies, with the exception of the members who voted against
Thus, the main reason for former closed joint-stock companies
the decision that caused the legal entity to incur losses, or, acting
to wish changing their corporate form can be the requirement
in good faith, did not take part in the voting.
on joint-stock companies regarding the mandatory certification
of resolutions by a notary public or registrar. In addition, all jointstock companies will have to undergo annual audit. In order to
become OOO, a former closed joint-stock company should be
reorganised through transformation. The procedure for the said
Agreements on the elimination or limitation of the liability of the
general director and members of the collegial bodies of the legal
entity for the commission of injudicious actions will be allowed.
However, such an agreement will be deemed null and void in the
case of a public company. Agreements on the elimination of liabil-
reorganisation has been simplified significantly (see Section 5
ity for bad faith actions are likewise not permitted for public com-
below).
panies in exactly the same way.
3. Activities of legal entities
3.3 Advance notice on a planned lawsuit
3.1 Sole executive body
New legislation makes it more difficult for a company to recover
losses from persons included on its management bodies or per-
A sole executive body (director, general director, chairman, etc. –
sons determining its actions, and also to have the transactions of
hereinafter also the “director”) is formed in a corporation. The
a company declared invalid. In such instances, the claimant – a
charter may stipulate several directors vested with sole or joint
participant or the company itself – should take reasonable meas-
representative authorities. Information on this fact should be
ures to provide advance notice to other participants and the com-
included in the USRLE. As in the past, both individuals and legal
pany of his intention to go to court, and also provide them with
entities may act as the sole executive body.
other information related to the case. The procedure for issuing
Previously a sole executive body of the legal entity was not rec-
ments of the company. Participants that do not join the lawsuit
ognised as its representative in accordance with court practice.
Now, by virtue of direct reference of the law, the regulations on a
such notice may be stipulated by laws and the foundation docuwill subsequently be unable to file a similar claim unless the court
finds the reasons for such claim justifiable.
representative office apply to the bodies of a legal entity (Clause
1 of Article 182 of the RF Civil Code). This has at least two important consequences:
3.4 Certification of the resolutions of general meetings
Effective from 1 September 2014 the resolutions of the general
– A transaction concluded by an unauthorised general director will
meeting of participants (shareholders) have to be certified. The
be deemed concluded on his behalf. The director will be the
forms of such certification differ, depending on the corporate form:
Page 5
May 2014
insignificant impact on the increase in the deadline for per-
− in public AO the resolution should be certified by the registrar;
forming the reorganisation (extension by approximately one
− in non-public AO – by the notary public or registrar;
month). The deadline for the reorganisation through affiliation
−
in OOO – by the notary public, unless another certification
will not be affected;
method is stipulated by the charter or resolution of the general
meeting of participants adopted unanimously.
■■
The transfer deed will become the sole document used to
identify the assets being transferred during the reorganisa-
In respect of OOO it is advisable that charters include provisions
tion. The separation balance sheet will no longer play any role.
on the procedure for certifying the minutes of general meetings
In the event of reorganisation through affiliation, merger or
of participants (for example the signing of the minutes by all the
transformation, preparation of the transfer deed will no longer
participants or some of the participants, using technical means
be required;
that makes it possible to reliably establish the fact of the adoption of resolution). If there are no such provisions, it is advisable
to include them in the charter. The adoption of a corresponding
resolution by the general meeting of participants is also possible.
4. Ability to determine the actions of the legal entity
■■
In the event of transformation, the rights and obligations of
the legal entity in respect of other persons will not change.
Only the rights and obligations of participants affected by
the reorganisation will constitute an exception to this rule.
Accordingly, there will be no obligation to notify the registration authority of the reorganisation, publish a notice on the
Civil legislation introduces the liability of persons, which de facto
transformation, and the creditors of the legal entity will have
determine the actions of the legal entity, for example, through
no right to demand the performance or termination of existing
the issue of instructions to the general director or members of
obligations ahead of schedule.
the collegial bodies of legal entities. Such persons are required
to act on behalf of the legal entity reasonably and in good faith,
and also to assume liability for the losses that they caused to the
legal entity. Agreements on the limitation of the liability of such
persons are inadmissible.
5. Reorganisation of OOO and AO
5.1 Main changes
Effective 1 September 2014 the procedure for reorganising OOO
and AO will change significantly.
In particular, the following new regulation should be noted:
■■
Effective from 1 September 2014 OOO and AO may be reorganised with the simultaneous combination of different forms
of reorganisation. Until now such option has only been stipulated for joint-stock companies on a restricted basis;
■■
The right of the creditors of a company, which is being reorganised, to demand the performance of obligations ahead of schedule will be restricted significantly:
1)In the event of transformation, the creditors of the company
will forfeit the right to demand the performance of obligations
ahead of schedule;
2)The right to early performance may be restricted on the basis
of the company’s agreement with the creditor;
3)The right to early performance will not be provided to creditors who have sufficient security. Previously such an option
was available at AO and only in the event of reorganisation
through merger, incorporation or transformation. At that,
“sufficient security” is deemed not the right of pledge, but:
■■
security to which the creditor agreed;
■■
independent irrevocable guarantee issued by the credit
Effective from 1 September 2014 OOO and AO may simultaneously participate in the reorganisation without a preliminary
transformation. Reorganisation and transformation are per-
■■
5.2 The right of creditors to early performance
institution (similar to a bank guarantee).
formed during one procedure;
These amendments have several drawbacks:
Registration of newly established companies is only allowed
1)Creditors’ claims on the early performance of obligations filed
on the expiration of the deadline for appealing the decision
by the established deadline should be satisfied before the
on the reorganisation. This deadline is three months from the
completion of the reorganisation procedure is duly registered.
date of an entry of a record in the USRLE on the start of the
The company, which is being reorganised, may provide suf-
reorganisation. It appears that this amendment will have an
ficient security to a creditor that demanded the performance
Page 6
May 2014
of the obligation ahead of schedule. In this case the comple-
Declaration of the reorganisation as null and void differs from the
tion of the reorganisation will be registered, regardless of the
invalidation of the decision on reorganisation in terms of legal con-
satisfaction of creditors’ claims. In addition, violation of the
sequences. As a result of the declaration of the reorganisation as
deadline for satisfying the claims will not serve as grounds
null and void:
for refusing to register the completion of the reorganisation.
Such violation of the deadline will only result in liability for late
(i)
the companies that existed prior to the reorganisation are
restored, including simultaneous termination of the compa-
performance;
2)If the creditor’s claim on early performance is not satisfied
or insufficient security is offered, the persons actually able
nies established as a result of the reorganisation;
(ii)the transactions of companies established as a result of the
reorganisation with persons, who relied on the legal succes-
to determine the actions of the reorganised legal entities,
members of their collegial bodies and the person authorised
sion in good faith, retain force for the restored companies;
to act on behalf of the reorganised legal entities assume joint
(iii)the transfer of rights and obligations is found null and void;
and several liability before the creditor together with the com-
(iv)the participants of the previously existing company are rec-
panies established as a result of the reorganisation, if they
ognised as the owners of the equity interests therein in the
caused damage to the creditor through their actions (inaction).
amount in which they owned the interests prior to the reorganisation.
5.3 Bad faith distribution of assets and liabilities
The assets and liabilities should be distributed between the reor-
6.Liquidation
ganised companies in good faith. If they are distributed in bad
The procedure governing the liquidation of OOO and AO has not
faith, and this resulted in a material violation of the interests of the
changed significantly. However, there have been some clarifica-
creditors, the reorganised company and companies established
tions:
as a result of the reorganisation assume joint and several liability.
■■
being liquidated, in a public auction, only the assets of a com-
5.4 Invalidity of the reorganisation and its declaration
as null and void
Effective 1 September 2014, the consequences of invalidating a
decision on the reorganisation of companies have been eased.
In the event of the sale of assets of the company, which is
pany worth more than RUB 100,000 should be sold. This simplifies significantly the procedure for holding auctions.
■■
The second novelty is significant for creditors, whose claims
were not satisfied during the liquidation or bankruptcy of the
For example, the invalidation by a court of a decision on reorgani-
company. Under the new regulation, the identified assets of
sation will not result in the liquidation of the company established
this company (including the company’s claims against third
as a result of the reorganisation. In addition, it will not serve as
parties) may be distributed within five years of the entry of
grounds for the automatic invalidation of transactions performed
information on the termination of the company in the USRLE.
by such company.
At present, creditors have no right to such assets, as their
Invalidation of the decision on reorganisation will have only one
consequence: the persons, who adopted the decision, could be
claims are deemed to be settled as of the time of registration
of the company’s termination.
held jointly and severally liable (in other words, first and foremost,
the participants of the companies concerned).
Please note
However, the reorganisation of the companies may be declared
This publication cannot replace consultation with a trained legal
null and void in two instances:
professional.
(i) If the decision on reorganisation was not duly adopted, in other
If you no longer wish to receive this newsletter, you can unsub-
words, either the quorum was not met, or the decision was
scribe at any time by e-mail (please send an e-mail with the hea­ding
adopted without receiving the necessary number of votes, or
“Unsubscribe” to [email protected]) or any other
was adopted by a body that did not have the authority to do so;
declaration made to BEITEN BURKHARDT.
(ii)
if documents containing patently false information on the
re­organisation were submitted for the registration;
© BEITEN BURKHARDT Rechtsanwaltsgesellschaft mbH.
All rights reserved 2014.
Page 7
May 2014
Imprint
This publication is issued by
BEITEN BURKHARDT Rechtsanwaltsgesellschaft mbH
Ganghoferstrasse 33, D-80339 Munich
Registered under HR B 155350 at the Regional Court Munich /
VAT Reg. No.: DE811218811
Anna Klimova, LL.M.
Lawyer, Associate
BEITEN BURKHARDT Moscow
E-mail: [email protected]
For more information see:
http://www.bblaw.com/index.php?id=840
Nikolay Potanin
Lawyer, Associate
BEITEN BURKHARDT Moscow
E-mail: [email protected]
Editor in charge
Vasily Ermolin
Vasily Ermolin
Attorney-at-law, Partner
BEITEN BURKHARDT Moscow
E-mail: [email protected]
Alexey Kuzmishin, LL.M.
Lawyer, Partner
BEITEN BURKHARDT Moscow
E-mail: [email protected]
Oleg Matyash
Lawyer, Associate
BEITEN BURKHARDT Moscow
E-mail: [email protected]
You will find further interesting topics
and infor­mation about our experience
on our website.
BEITEN BURKHARDT · RECHTSANWÄLTE (ATTORNEYS-AT-LAW)
ST. PETERSBURG · MARATA STR. 47-49 LIT. A · OFFICE 402 · 191002 ST. PETERSBURG · TEL.: +7 812 4496000 · FAX: +7 812 4496001
NATALIA WILKE · [email protected]
BEIJING · BERLIN · BRUSSELS · DUSSELDORF · FRANKFURT AM MAIN
MOSCOW · MUNICH · NUREMBERG · SHANGHAI · ST. PETERSBURG
WWW.BEITENBURKHARDT.COM
05/2014
MOSCOW · TURCHANINOV PER. 6/2 · 119034 MOSCOW · TEL.: +7 495 2329635 · FAX: +7 495 2329633
FALK TISCHENDORF · [email protected]