Russian Legislation Update: November 2016 - January 2017

by White & Case LLP
Contact

White & Case LLP

Welcome to the most recent issue of our Russian Legislation Update, covering the period of November 2016 - January 2017.

In this issue…
Corporate Relations
Anti-Corruption Practices
Banking
Procurement

Corporate and secured financing

On 28 December 2016, the President signed Federal Law No. 471-FZ amending a number of legal acts.

In particular, under the amendments, the following information shall be included in the Unified Federal Register of Data on Certain Facts of Activity of Companies (www.fedresurs.ru):

  • Information on issuance of independent guarantees (with the exception for bank guarantees);
  • information on clients' entering into factoring agreements (including the date and parties to an agreement), other than information that constitutes state, commercial and other legally protected secrets (i.e., from now on, the information has to be disclosed by clients and not financial agents as was envisaged before; the scope of the data subject to disclosure was narrowed—in particular, it is no longer necessary to disclose the value of the assigned claims, and an exception for secret information was added).

In addition, the amendments abolished statutory provisions regulating the issuance and maintenance of so-called universal electronic cards. Therefore, a universal electronic card previously intended as a tool for providing state and municipal services to individuals was abolished.

The Law entered into force on 29 December 2016 (save for some provisions which entered into force on 1 January 2017).

On 28 December 2016, the President signed Federal Law No. 488-FZ amending certain Russian legislative acts.

Among other things, the amendments adjust the Law on the Sate Registration of Legal Entities and Individual Entrepreneurs (the "Registration Law") in accordance with Constitutional Court Resolution No. 10-P dated 18 May 2015, and establish that the Federal Tax Service may no longer resolve the exclusion of a company from the Unified State Register of Legal Entities (the "EGRUL") if it is aware that such company is under the bankruptcy proceedings.

According to the amendments made to the LLC Law, the creditor of the LLC may require that the LLC's CEO, members of the LLC's collective body and persons in a position to decide on the LLC's activities (Article 53.1 of the Civil Code) bear the subsidiary liability for the LLC's obligations to the creditor if the Federal Tax Service has excluded the LLC from the EGRUL as a non-operating company, and the LLC has failed to perform its obligations to the creditor due to such persons' bad faith or injudicious actions.

Also pursuant to the amendments, the LLC's liquidation term, as a general rule, may not exceed one year but the court may prolong it for six months maximum.

The Law will enter into force on 28 June 2017 (save for certain provisions which will enter into force on other dates).

On 28 December 2016, the Ministry of Justice adopted Order No. 323 "On Approving the Procedure for Interaction of the Federal Notary Chamber and Notaries in Connection With Registration of Notices of Pledge of Movable Property."

The Order was registered with the Ministry of Justice on 30 December 2016.

As of 1 January 2017, if a notice of pledge is sent in electronic (and not paper) form, it should be sent to the Federal Notary Chamber (FNС) rather than a particular notary; the FNС, in turn, will send it to the notary who first expresses his/her readiness to register the notice immediately.

Based on the Order, the notice of pledge must be registered by the notary no later than within one hour after he/she receives the notice (otherwise, the notice shall be again placed as the first one in the line of notices for registration).

The Order entered into force on 10 January 2017.

Anti-corruption

On 28 December 2016, the President signed Federal Law No. 505-FZ amending a number of legal acts, including Federal Law No. 79-FZ setting forth a ban for certain individuals to hold bank accounts abroad and own foreign financial instruments.

Law No. 79-FZ establishes a ban for a number of public officials to open and hold bank accounts (deposits), store cash and valuables in overseas banks, as well as own and use foreign financial instruments. As a rule, the ban also extends to spouses and minors of those officials.

The amendments introduce a definition of foreign financial instruments. In brief, they include: 1) securities and derivatives issued by non-residents, as well as equity interests in non-residents' charter capitals, 2) foreign law-governed trust management of assets settled or benefited from by the above persons, and 3) loan and credit agreements with non-residents.

Therefore, certain officials are not allowed not only to own foreign securities but also to attract loans from foreign parties.

The ban for ownership and use of foreign financial instruments means a ban for both direct and indirect (through third parties) ownership and use.

The Law will enter into force on 28 June 2017.

Banking

Mandatory ratios

On 17 November 2016, the Bank of Russia issued Directives No. 4203-U "On Signs of a Potential Relation of a Person (Persons) with a Credit Organization" and No. 4205-U "On the Procedure for the Banking Supervision Committee of the Bank of Russia Taking a Decision on Recognizing a Person as a Related Party of a Credit Organization […]".

The Directives were registered with the Ministry of Justice on 30 December 2016.

As of 1 January 2017, a new mandatory ratio (N25) applies: a maximum permitted exposure to related parties (group of related parties) of a bank, which may not exceed 20 percent of a bank's capital.

Directive No. 4203-U specifies signs of a potential relation of a person (persons) with a bank. Those signs include, for example, the following: a bank has powers to manage a person's business; the risks incurred by a bank under the transactions with a person largely exceed the risks incurred by third parties dealing with that person; transactions between a bank and a person are made at a non-market value and largely affect the amount of the bank's capital and compliance with mandatory ratios.

Directive No. 4205-U provides for the procedure under which the Banking Supervision Committee of the Bank of Russia decides to recognize a person as a related party of a bank based on a reasoned opinion, if it finds one of the signs of a potential relation. If so decided, the bank may be required to bring the maximum exposure to the related party in compliance with the value set by the Bank of Russia.

The Directives entered into force on 1 January 2017.

On 15 November 2016, the Bank of Russia issued Directive No. 4195-U amending Instruction No. 139-I "On Mandatory Economic Ratios for Banks."

The Directive was registered with the Ministry of Justice on 22 December 2016.

As noted above, as of 1 January 2017, the ratio of a maximum permitted exposure to related parties (group of related parties) of a bank applies.

The Directive amends the criteria for determining relation of parties with a bank; i.e., it excludes the criterion of "economic" relation. It also provides for decreased risk coefficients in relation to certain related parties (e.g., strategic companies or companies having a certain credit rating) in 2017 and 2018.

The Directive entered into force on 26 December 2016.

Mandatory reserves

On 25 November 2016, the Bank of Russia issued Directive No. 4217-U amending its Regulation No. 507-P "On Mandatory Reserves of Credit Organizations."

The Directive was registered with the Ministry of Justice on 22 December 2016.

Under the amendments, the "liabilities to non-resident legal entities" and "other liabilities," for which banks must deposit reserves with the Bank of Russia, shall include a separate sub-category of "long-term liabilities," i.e., liabilities to legal entities for no less than three years.

The reserves shall not be deposited for: 1) liabilities under subordinated instruments that meet the established criteria, and 2) liabilities related to the raising of funds for no less than three years through a bond offering, provided no early repayment is envisaged.

The Directive entered into force on 1 January 2017.

Note: the mandatory reserves ratios established with respect to the long-term liabilities (please see Directive of the Bank of Russia No. 4253-U of 27 December 2016) are the same as the ratios set for the relevant non-long-term liabilities.

Procurement

On 28 December 2016, the President signed Federal Law No. 474-FZ amending procurement laws.

Starting from 1 January 2017, as a general rule, state and municipal unitary enterprises shall procure goods, works and services in accordance with Federal Law No. 44-FZ "On the Contractual System for Procurement of Goods, Works and Services for State and Municipal Needs," rather than in accordance with Law No. 223-FZ "On Procurement of Goods, Works and Services for Certain Types of Legal Entities," as before.

According to the amendments, federal state unitary enterprises which have significant importance for securing rights and legal interests of Russian citizens, and the defense and security of the state and are included in the list approved by the Government (see Decree No. 2931-r of 31 December 2016), shall procure goods, works and services in accordance with Federal Law No. 223-FZ.

The Law entered into force on 1 January 2017.

Click here to download PDF (English and Russian).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© White & Case LLP | Attorney Advertising

Written by:

White & Case LLP
Contact
more
less

White & Case LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.