Federal Law No. 166 dated 2 October 2012 (the “Law”) amends the existing Law on Pledge and laws on public notaries. On 10 January 2014 a Unified notary information system comes into effect that shall include a Register for notifications on movable property pledges (the “Register”).
According to the Law Russian public notaries will be in charge of the registration of notifications on pledge of movable property (the “Notification”).
A public notary registering the Notification does not perform accuracy check of information contained therein. He is responsible only for correct and timely entry of the information contained in the Notification into the Register. The Law requires the public notary to register the Notification and reflect the relevant information in the Register within one hour of the receipt of an application.
Statutory obligation to register the Notification arises only with respect to those agreements on pledge of movables that are subject to notarization. Both a pledgor or a pledgee may apply for registration of Notification to a Russian public notary.
The Register will contain a range of information about the pledge agreements for which Notifications are registered. This information will include the date and number of the relevant movable property pledge agreement, the due date for performance of obligations set out in the pledge agreement, a description of the pledged property and information about the pledgor. No information on pledgee is being disclosed.
In the first year, from 10 January 2014 to 10 January 2015, the Register will exist for information purposes only. From 10 January 2015 onwards the registration of Notifications in the Register will have the following legal consequences:
a person who acquires pledged property and who did not know or could not have known of the existence of such pledge (either from the Register or from any other source), will be considered to be an acquirer in good faith. Accordingly, it will not be possible to levy execution over such property;
the subsequent pledge over the property reflected in the Register will have priority over any subsequent pledge of such property not reflected in the Register;
the priority for satisfaction of claims secured by subsequent pledge will be determined according to the Register.
Information about all registered Notifications will be made publicly available on the Internet. In addition, any individual will be able to request from a notary an extract from the Register concerning (i) a specific pledge, (ii) all pledges established over specific property or (iii) a specific pledgor.
The rules on the registration of Notifications will apply to legal relations established upon the entry of the Law into force as well as to the pledges of movable property still in force after 10 January 2015.
In order to avoid risk of prioritization of newly executed pledges of movable property Notifications on which are included into the Register over those created before the regulations on the Register come into force, it is recommended that Notifications of any pledges of movable property which will expire after 10 January 2015 be registered before 10 January 2015, and that the pledge agreement should require such Notifications to be registered between 10 January 2014 and 10 January 2015.
New Register of Legal Entities
On 1 January 2013 certain provisions of Federal Law No. 228 dated 18 July 2011 introducing a Unified Federal Register of Data on the Activities of Legal Entities (“ERSFDUL”) enters into force. This register will operate in conjunction with the existing Unified State Register of Legal Entities (“EGRUL”).
The ERSFDUL will be open to the public and available on the Internet. It will contain the following information:
a record on the creation of a legal entity;
records on reorganization of a legal entity;
records on any increase or decrease of a legal entity’s charter capital;
records on the appointment or termination of authority of a legal entity’s sole executive body;
records on changes to a legal entity’s official address;
information on the net value of a legal (with respect to a joint stock or limited liability company);
information on the registration of any notifications on the creation of a pledge of movable property owned by a legal entity, including information on any changes to or the termination of the pledge;
An obligation to provide relevant information will be imposed on the tax authorities responsible for maintaining the EGRUL and the legal entity in question. An applicant of information will be liable for its accuracy.
Currently, the law does not specify a penalty for failure to enter the required information in the ERSFDUL. However, it is likely that the penalties will be specified in the Code on Administrative Violations, which lists the penalties for failure to comply with the rules relating to the registration of legal entities.
The body responsible for the creation of and the reflecting the data into the ERSFDUL will be a legal entity with the appropriate technical resources. As of 5 December 2012 no relevant legal entity has been identified.
Please feel free to contact Dmitry Gubarev or Victoria Bryxa if you have any questions.