Handbook «DOING BUSSINESS IN RUSSIA»

Lex est norma recti

Law is a rule of right

DOING BUSINESS IN RUSSIA ST. PETERSBURG

BRIEF LEGAL GUIDE2012

Edited by Vladimir Kilinkarov, PhD and Maxim Avrashkov

Doing Business in Russia: Brief Legal Guide / edited by Vladimir Kilinkarov, Maxim Avrashkov. – St. Petersburg: Russian Collection, 2012. - 184 p.

Written by:

General information, Business restructuring (with Natalia Zelentsova)

Regulation of business activity (with Vladimir Kilinkarov and Artur Osipov); Real Estate & Construction (with Ksenia Melnikova); Insolvency

Joint ventures, Acquisition of a business, Protection of competition, Intellectual Property; Legal status of foreign nationals. Immigration Issues, Setting up a new business, Employment, Contract law issues (with Natalia Zelentsova); Regulation of business activity (with Sergey Bakeshin and Artur Osipov), Russia and the WTO (with Artur Osipov)

Taxation, Customs regulation (with Artur Osipov)

Real Estate & Construction (with Sergey Bakeshin)

Regulation of business activity (with Sergey Bakeshin and Vladimir Kilinkarov); Russia and the WTO (with Vladimir Kilinkarov); Taxation, Customs regulation (with Elena Kilinkarova)

General information, Business restructuring (with Maxim Avrashkov); Legal status of foreign nationals. Immigration Issues, Setting up a new business, Employment, Contract law issues (with Vladimir Kilinkarov); Judiciary System

Maxim Avrashkov

Sergey Bakeshin

Vladimir Kilinkarov

Elena Kilinkarova

Ksenia Melnikova

Artur Osipov

Natalia Zelentsova

ISBN 978-5-901440-82-7

© Group of authors, 2012© Maxima Consulting & Law LLC, 2012

65.9(2)09 + 67.404(2 ) 334(470+571) + 347.1(470+571)

D65

This is the 2nd edition of the Maxima Consulting & Law guide to the principal legal aspects of conducting business in Russia. The handbook offers a brief overview of key elements of the Russian legal regulation covering corporations, tax, customs, immigration, contracts, real estate & construction, public regulation, WTO, insolvency, intellectual property, protection of competition and dispute resolution. The book is recommended to foreign businessmen working or planning to develop their business in Russia, lawyers, and anybody who would like to know more about the Russian legal system and relevant requirements for doing business in Russia.

All information presented in the handbook has been thoroughly revised and updated to re ect the last amendments to the Russian legislation (up to the 01 May, 2012) as well as the most actual draft amendments, acts and trendlines in certain areas of Russian law.

This book is copyright. No reproduction or other usage of any part may take place without written permission of Maxima Consulting & Law LLC.

Published with support of Maxima Consulting & Law LLC.

ISBN 978-5-901440-82-7

f

Doing Business in Russia

Brief Legal Guide

Edited by Vladimir Kilinkarov and Maxim Avrashkov Maxima Consulting & Law LLC, Russia

2012

Dear Friends!

This is the 2nd edition of the guide to the principal legal aspects of conducting business in Russia. It has been written by practicing lawyers of Maxima Consulting & Law LLC for foreign businessmen working or planning to develop their business in Russia, lawyers, and anybody who would like to know more about the Russian legal system and relevant requirements for doing business in Russia.

The guide offers a brief overview of key elements of the Russian legal regulation covering corporations, tax, customs, immigration, contracts, real estate & construction, public regulation, WTO, insolvency, intellectual property, protection of competition and dispute resolution. We recommend this information to anybody who has business in Russia or plans to do so in future.

All information presented in the handbook has been thoroughly revised and updated to reflect the last amendments to the Russian legislation (up to the 01 May, 2012) as well as the most actual draft amendments, acts and prospects in different areas of Russian law. Should you have any questions or wish to obtain additional information on any issue, please feel free to contact us. Our contact information is listed at the end of this brochure.

We hope you will find this information interesting and useful. Our

With kind regards,

Maxim Avrashkov and Vladimir KilinkarovMaxima Consulting & Law

Contents

1 General information

9 Legal status of foreign nationals

15 Setting up a new business

41 Joint ventures

51 Acquisition of a business

57 Business restructuring

Insolvency

Regulation of business activity

84 Protection of competition

91 Russia and the WTO

99 Contract law issues

110 Real estate & construction

125 Intellectual property

Employment

Taxation

151 Customs regulation

Judiciary System

170 Our contacts

1GENERAL INFORMATION | DOING BUSINESS IN RUSSIA

General Information

* by Maxim Avrashkov, Natalia Zelentsova

Background information:

etc.

GENERAL INFORMATION | DOING BUSINESS IN RUSSIA

Fundamentals of the Constitutional System

Constitution of the Russian Federation. RF Constitution


State Structure

Local government

President of Russia


Legislative authority

Executive authority

Judicial authority


Federal Form of Government

Foreign Policy

7GENERAL INFORMATION | DOING BUSINESS IN RUSSIA

Investment Policy

LEGAL STATUS OF FOREIGN NATIONALS | DOING BUSINESS IN RUSSIA

Legal Status of Foreign Nationals. Immigration Issues

Temporary Stay in Russia


staying temporarily

Immigration Registration

11LEGAL STATUS OF FOREIGN NATIONALS | DOING BUSINESS IN RUSSIA

immigration registration


etc.

Temporary and Permanent Residence in Russia

A temporary residence permit

etc.

residence permit


political asylum

Employment

employed

SETTING UP A NEW BUSINES | DOING BUSINESS IN RUSSIA

Setting up a New Business

Business AcquirementJoint Ventures

Legal Forms

individual entrepreneur, or to company

etc.


Individual Enterprises

individual entrepreneur

17SETTING UP A NEW BUSINES | DOING BUSINESS IN RUSSIA

i.e.


Legal Forms of Legal Entities


Business partnerships

Business entities

Business Partnerships

A partnership general


limited partnership (special partnership)


Business Entities

limited liability company

etc.

etc.


A

an


stock company


LLC CJSC OJSC Economic Partnerships

other items or Monies, items or

interests or other


on the assessment

shares +

have a

shares in the

alienation in

has the

alienate their shares

her share in share


interest may be

the shares

or not the other


shall have one vote,

etc.


into the share

on interests the event that no

Agreements of Participants of an LLC and Shareholders of a JSC


Economic Partnership


Intellectual Property


State Registration


etc.

JOINT VENTURES | DOING BUSINESS IN RUSSIA

Joint Ventures


etc.

joint activity agreement


corporate cooperation model


Starting-up a new business

Business restructuring

Acquisition of a business

Investment Partnership

Investment Partnership Law

The Principal Advantages and Restrictions of an Investment Partnership


Particular Features of an Investment Partnership

What distinguishes an investment partnership from an ordinary partnership?

ACQUISITION OF A BUSINESS | DOING BUSINESS IN RUSSIA

Acquisition of a Business

Acquisition of Interest/Shares in a Russian Entity. Merger with a Russian Entity

etc.


Employment Aspects

inter alia

Acquisition of Certain Assets of a Company


Selection of the Executive of an Acquired Company


Employment

BUSINESS RESTRUCTURING | DOING BUSINESS IN RUSSIA

Business Restructuring

* by Maxim Avrashkov, Natalia Zelentsova


consolidations, mergers and transformations

Business Restructuring and Protection of Competition


Guarantees of the Rights of Creditors

INSOLVENCY | DOING BUSINESS IN RUSSIA

Insolvency

General Description of Legal Regulation

Parties to Bankruptcy Proceedings


Bankruptcy Procedures


supervision

i.e.

external management


Receivership proceedings


into a settlement agreement

Special Characteristics of the Bankruptcy of Certain Parties

REGULATION OF BUSINESS ACTIVITY | DOING BUSINESS IN RUSSIA

Regulation of Business Activity

Setting up a new business

Customs regulationTaxation

Licensing


etc.

Accreditation


etc.

etc.

etc.

Technical Regulation

71REGULATION OF BUSINESS ACTIVITY | DOING BUSINESS IN RUSSIA

etc.


etc.

etc.

of conformity

is a mark of conformity


Foreign Trade Regulation

foreign trade

Customs and tariffs regulation

Customs Regulation


without a license

etc.

national legal treatment

i.e.


bans and restrictions on the foreign trade in goods, services and intellectual properties

Temporary restrictions

retorsion

Currency Control

77REGULATION OF BUSINESS ACTIVITY | DOING BUSINESS IN RUSSIA

etc.

Instruction

A passport of transaction passport sdelki

passport of transaction is


Criminal and administrative liability


Opening of Bank Accounts in Banks Located Outside the Russian Federation by Residents of the Russian Federation


Export Control

etc.

i.e.


Trade Regulation

etc.


Protection of Consumer Rights

etc.

Special Trade Regulations Relating to Certain Types of Commodities

PROTECTION OF COMPETITION | DOING BUSINESS IN RUSSIA

Protection of Competition

Abuse of a Dominant Position


etc.

Agreements or Concerted Actions on Limiting Competition


Unfair Competition

i.e.


Acts and Actions (Omissions) of Authorities Restricting Competition

Government Control of Economic Concentration


Consequences of a Breach of the Antimonopoly Law

RUSSIA AND THE WTO | DOING BUSINESS IN RUSSIA

Russia's Accession to the WTO


Effects of Russia's Accession to the WTO

several ways of bringing national legislation into line with WTO legal regulations

has decided to make national laws which would include the WTO regulations, sometimes verbatim


the emergence of a sui generis

principles and rules

etc.


law enforcement


Effects of Russia's WTO entry for the Consumer

imported drugs

chemical market

processing, building, scientific and metering equipment

computers, their means of production and hardware components

consumer electronics

vehicles

new automobiles

used cars

milk, cream powder and concentrated cream and butter

animal foodstuffs


deficient raw materials for the food industry

beef, pork and poultry

CONTRACT LAW ISSUES | DOING BUSINESS IN RUSSIA

Contract Law Issues

A contract

liberty of contract, i.e.

Formation of a contract

a person or a legal entity must be legally capable


general or special legal capacity

must agree on all substantial terms of the contract


i.e.

unfair practice in the course of negotiations


representation on the circumstances

Form of Contracts.


Real Estate and Construction

invalid


Performance of a contract


Contract remedies

compensation for damages

i.e.


Penalties

performance of the obligation

Special liability


performance in kind


limited liability

Amendment and Cancellation of Contracts

REAL ESTATE & CONSTRUCTION | DOING BUSINESS IN RUSSIA

Real Estate & Construction

Draft Amendments to the RF Civil Code

111REAL ESTATE & CONSTRUCTION | DOING BUSINESS IN RUSSIA

etc.

Real Estate Rights

Right of ownership


means the

Lifetime inheritable possession


Easement

Real estate leasing

Free property use

A mortgage


Amendments to be Introduced to the System of Rights in Rem

competence of ownership

right of ownership and restricted rights in rem

Emphyteusis

Development right


Usufruct

right to acquire another person's object

Right to proprietary consideration

elimination of economic management right


Acquisition of Real Estate Title

State Registration of Real Estate Rights and Transactions Therewith

etc.

117REAL ESTATE & CONSTRUCTION | DOING BUSINESS IN RUSSIA

etc.

Characteristics of the Purchase of Real Estate by Foreign Nationals


Construction in Russia


Sale and Purchase of Real Estate


Lease of Real Estate

Real Estate Pledges (Mortgages)


Protection of Objects of Cultural Heritage

INTELLECTUAL PROPERTY | DOING BUSINESS IN RUSSIA

Intellectual Property


State Registration of Intellectual Property


Intellectual Property Transactions

Exclusive Right Alienation Agreement


Licensing Agreement


Patent Attorneys


Law on Arbitration Courts

Court for Intellectual Property Rights shall be

jurisdiction

challenging of normative acts issued by the federal executive authorities

EMPLOYMENT | DOING BUSINESS IN RUSSIA

Employment

employeeemployer

The regulation of labor relations


personnel records

sheets etc.

Labor relationsemployment agreement

Social Partnerships in the Labor Sphere


Employment Agreement

Working Time and Time Off

working time


right to time off

Salary

Labor Discipline

i.e.


Damage Liability

damage liability

Protection of Labor Rights and Liberties


Liability for a Breach of Labor Law

TAXATION | DOING BUSINESS IN RUSSIA

Taxation

The Tax System and the Procedure for Discharging Tax Obligations

B. Regional Taxes:

C. Local Taxes:


the environment, etc.


Transfer Pricing


i.e.

etc.


Value Added Tax (VAT)


Excises

Corporate Property Tax


Transport Tax

Land Tax

is

CUSTOMS REGULATION | DOING BUSINESS IN RUSSIA

Customs Regulation

The Customs Union of the Republic of Belarus, the Republic

Regulations in the Russian Federation

CUCC


Customs Clearance

Declaration of Commodities


Customs Payments


www.tsouz.ru

Consequences of Russia's accession to the WTO

Russia and the WTO section.

JUDICIARY SYSTEM | DOING BUSINESS IN RUSSIA

Judiciary System

* by Natalia Zelentsova

three independent judiciary system branches


are binding throughout

Jurisdiction


System of Courts of General Jurisdiction


System of Arbitration Courts


etc.

Constitutional Proceedings


i.e.

Civil and Arbitration Proceedings

RF APC


i.e.


Proceedings on Cases Involving Foreign Nationals (Entities)

etc.

Enforcement of Court Decisions


Administrative Proceedings

RF AOC

Criminal proceedings


etc.

Arbitration Courts


International Commercial Arbitration Court


Mediation Procedure

OUR CONTACTS | DOING BUSINESS IN RUSSIA

Our Contacts

Maxima Consulting & Law LLC.

Moscow

171 NOTES | DOING BUSINESS IN RUSSIA

NOTES | DOING BUSINESS IN RUSSIA

DOING BUSINESS IN RUSSIA

Maxim Avrashkov

Handbook «DOING BUSSINESS IN RUSSIA»

Economy & Finance

Transcript of Handbook «DOING BUSSINESS IN RUSSIA»