Insight

An Overview of Russia

The approval is only required if it is requested by a member of the supervisory board, a member of the executive board, a CEO, or a 1 percent shareholder.

Overview of Russia
AN

Anton Novoseltsev

September 12, 2017 10:09 AM

Russia continues to play an important role in the world as the sixth largest economy (GBP purchasing power parity). Russian authorities manifest their commitment to modernization of the economy and making it more attractive for investors from all over the world. The key instrument thereof is changing the economy’s structure through the legislation and making the economy more transparent, easy-to-use, and friendly to business. As the recent developments in the legislation appear to follow this regulatory trend we dedicate this article to review the most important of the recently made legislative amendments.

One of the key changes in the business legislation is the modification of the related-party transactions’ procedure approved in limited liability companies and joint stock companies.

According to the new legislation, there is no need to approve every related-party transaction. The approval is only required if it is requested by a member of the supervisory board, a member of the executive board, a CEO, or a 1 percent shareholder.

The new legislation introduced the notion of a controlling person—a person who owns 50 percent or is entitled to appoint a CEO or a half of the executive board/supervisory board, whereas before the amendment the threshold of control was 20 percent. The new legislation also introduced amendments to the approval of the major transactions. As per the amendments, the approval of the major transactions is only required if such transactions go beyond the ordinary course of the company’s business and at the same time value of the transaction exceeds 25 percent of the company’s balance sheet asset. The novel is that not only the balance value of the assets is considered but also the selling price: the threshold can be triggered either by the balance value or by selling price depending on whichever of them is higher. The new amendments to the legislation have eased the regulatory pressure as a considerable number of transactions no longer require a preliminary approval.

Amendments to insolvency laws indicate a variety of trends. Since July 2016, a secured bankruptcy creditor may ask the court on certain stages for enforcement if there are risks of material decrease of collateral’s price due to damage of collateral and risks of its loss. On the other side, persons controlling a company may be held subsidiary liable if the bankruptcy proceedings cannot be exercised due to the insufficiency of funds for covering the bankruptcy costs. As from June 28, 2017, it has become possible to hold controlling persons of the company subsidiary liable within three years from the completion of the bankruptcy proceedings if the respective creditor has learned of relevant grounds of subsidiary liability after the completion of the bankruptcy proceedings.

The other significant legislative measure is the modernization and merger of the two real estate registers—the Register of Real Property Titles and Transactions and the Cadaster Register—into one real estate register: the Unified State Register of Real Property (EGRN). Since 2017, an applicant can register its real property within seven business days (instead of 10) or apply for cadastral records that will be made within five business days (instead of 10). An applicant can also file its application with any EGRN office, irrespective of the region of Russia the real property is located in. The companies that have many premises all over the country and are headquartered, for instance, in Moscow will appreciate these changes.

The most important case of the year is the Supreme Court ruling on challenging corporate decisions by a beneficiary owner (No. А40-104595/14 and А40-95372/14). In this case, the Supreme Court confirmed that a person, who can claim to challenge decisions of shareholders’ meetings and disposals of assets, might be not only the company’s direct shareholder, but also a beneficiary; i.e., a person who ultimately controls the company through a chain of legal entities, including offshores.

The recent legislation developments play a significant role in setting the positive trends in the national economy, attracting investors and creating new business opportunities.

-----------------------------

Anton Novoseltsev is a senior associate in corporate and M&A practice at Lidings. He has an extensive experience in advising Russian and international companies across a wide range of corporate and commercial issues, establishment of joint ventures, corporate reorganization, and providing thorough legal support of investment projects in Russia.

Related Articles

Q&A with Florian Schneider, Managing Partner of Dentons Russia


by Best Lawyers

A question and answer session with Florian Schneider, the managing partner of "Law Firm of the Year," Dentons Russia.

Florian Schneider – Dentons Russia

Changes in the Legal Regulation of Foreign Investment in Russia


by Artem Zhavoronkov and Oleg Lovtsov

Introducing significant changes in the legal regulation of foreign investment in the Russian Federation.

Foreign Investment Russia

Russia's Evolving Legal Environment and the Next Economic Upswing


by Andrey Goltsblat

Russia's Legal Environment

A Message From Best Lawyers Regarding Ukraine and Russia Listings


by Best Lawyers

Best Lawyers is pausing all research efforts in Ukraine and Russia for 2023.

Ukraine and Russian Research Update

All Doped Up


by Howard Rapke

Keeping elite international sporting events free of banned substances is an endless game of cat and mouse. Here’s an overview of the legal efforts set up to do, in theory, exactly that.

Legal Efforts Against Drugs at Olympics

Russian Rubles are Going Digital


by Rebecca Blackwell

Russia is moving toward the ever-expanding trend of digital currency.

Russian Rubles are Going Digital

Announcing the 2022 Best Lawyers™ in Russia


by Best Lawyers

The results include an elite field of top lawyers and firms.

Announcing the 2022 Best Lawyers™ in Russia

From Russia, With Law


by Best Lawyers

The bite of U.S. sanctions aside, Cleary Gottlieb partner Yulia Solomakhina sees great promise for commerce and the law as Russia increasingly embraces markets and technology.

An Interview With Cleary Gottlieb

How Technological Advances Can Help Corporate Law


by Best Lawyers

Dieter Gericke and Benjamin Leisinger discuss how being aware of technological advances helps them provide corporate financial advice.

An Interview With Homburger

How Russia's Global Policy Is Impacting Mergers and Acquisitions


by Best Lawyers

Alexei Zakharko and Mathieu Fabre-Magnan disscuss how they are preparing for emerging trends in the next couple of years.

An Interview With Dentons Russia

An Interview With ALRUD Law Firm


by Best Lawyers

Russia’s 2020 “Law Firm of the Year” in Labor and Employment Law

An Interview With ALRUD Law Firm

The Economic Landscape Changing Capital Markets Law in Mexico


by Best Lawyers

Michell Nader discusses his firm's 2019 "Law Firm of the Year" award for Capital Markets Law in Mexico.

Nader, Hayaux & Goebel Interview

How Dentons Russia Dominates the Global Market


by Best Lawyers

Florian Schneider of 2019 "Law Firm of the Year" winner Dentons Russia discusses his career accomplishments.

Dentons "Law Firm of the Year" Interview

In the News: Washington, D.C.


by Compiled by Nicole Ortiz

A summary of newsworthy content from Washington D.C. lawyers and law firms.

Washington, D.C. In the News 2018

Russian Law of Contracts


by Alexander Khrenov

Russian Law of Contracts

Employers Now Face Greater Liability for Violations of Legislation on Employee Compensation


by David Denisenko and Alexei Dingin

Employee Compensation

Trending Articles

Announcing the 2023 The Best Lawyers in America Honorees


by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

Announcing the 2022 Best Lawyers® in the United States


by Best Lawyers

The results include an elite field of top lawyers listed in the 28th Edition of The Best Lawyers in America® and in the 2nd Edition of Best Lawyers: Ones to Watch in America for 2022.

2022 Best Lawyers Listings for United States

2021 Best Lawyers: The Global Issue


by Best Lawyers

The 2021 Global Issue features top legal talent from the most recent editions of Best Lawyers and Best Lawyers: Ones to Watch worldwide.

2021 Best Lawyers: The Global Issue

The U.S. Best Lawyers Voting Season Is Open


by Best Lawyers

The voting season for the 31st edition of The Best Lawyers in America® and the 5th edition of Best Lawyers: Ones to Watch® in America is officially underway, and we are offering some helpful advice to this year’s voters.

Golden figures of people standing on blue surface connected by white lines

How To Find A Pro Bono Lawyer


by Best Lawyers

Best Lawyers dives into the vital role pro bono lawyers play in ensuring access to justice for all and the transformative impact they have on communities.

Hands joined around a table with phone, paper, pen and glasses

The Best Lawyers in Australia™ 2024 Launch


by Best Lawyers

Best Lawyers is excited to announce The Best Lawyers in Australia™ for 2023, including the top lawyers and law firms from Australia.

Australian Parliament beside water at sunset

How Palworld Is Testing the Limits of Nintendo’s Legal Power


by Gregory Sirico

Many are calling the new game Palworld “Pokémon GO with guns,” noting the games striking similarities. Experts speculate how Nintendo could take legal action.

Animated figures with guns stand on top of creatures

What the Courts Say About Recording in the Classroom


by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?

Inflation Escalation


by Ashley S. Wagner

Inflation and rising costs are at the forefront of everyone’s mind as we enter 2023. The current volatile market makes it more important than ever to understand the rent escalation clauses in current and future commercial lease agreements.

Suited figure in front of rising market and inflated balloon

The Upcycle Conundrum


by Karen Kreider Gaunt

Laudable or litigious? What you need to know about potential copyright and trademark infringement when repurposing products.

Repurposed Products and Copyright Infringemen

8 Different Types of Criminal Defenses in Law


by Best Lawyers

Learn about the different types of criminal defenses available in law, including innocence, self-defense, insanity and more. Protect your rights today.

Silver handcuffs laying on finger printed papers

Best Lawyers: Ones to Watch in America for 2023


by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

A Celebration of Excellence: The Best Lawyers in Canada 2024 Awards


by Best Lawyers

As we embark on the 18th edition of The Best Lawyers in Canada™, we are excited to highlight excellence and top legal talent across the country.

Abstract image of red and white Canada flag in triangles

Wage and Overtime Laws for Truck Drivers


by Greg Mansell

For truck drivers nationwide, underpayment and overtime violations are just the beginning of a long list of problems. Below we explore the wages you are entitled to but may not be receiving.

Truck Driver Wage and Overtime Laws in the US

Choosing a Title Company: What a Seller Should Expect


by Roy D. Oppenheim

When it comes to choosing a title company, how much power exactly does a seller have?

Choosing the Title Company As Seller

The 2024 Best Lawyers in Spain™


by Best Lawyers

Best Lawyers is honored to announce the 16th edition of The Best Lawyers in Spain™ and the third edition of Best Lawyers: Ones to Watch in Spain™ for 2024.

Tall buildings and rushing traffic against clouds and sun in sky