RS Law digest Main changes in the Law of the Russian Federation from August 1, 2011 to September 30, 2011

Main changes in the Law of the Russian Federation from August 1, 2011 to September 30, 2011

1. A list of what constitutes insider information has been compiled

The instruction of the Federal Service for Financial Markets of the Russian Federation approving the List of Information that Qualifies as Insider Information came into effect on July 31st, 2011.

The Federal Law on Countering Illegal Use of Insider Information and Market Manipulation defines insider information as follows: it is any specific and accurate information that has not been disseminated or made available to the market and whose dissemination or availability may have a significant impact on the price of financial instruments, foreign currencies and/or the goods of one or several business entities that dominate relevant markets in the Russian Federation, or the market for one or several financial instruments, foreign currency and/or goods. Insider information includes, inter alia, confidential information, business, banking, official or communications secrets (such as information about postal transfers of funds) as well as other protected information.

The list of insider information also includes information about various events occurring inside corporations, including negative events, information about issues of securities, financial statements, and performance of obligations, bankruptcy, antitrust procedures, information about customers, instructions issued by customers and other similar information.

The regulation on the procedure and deadlines for disclosure of insider information (to avoid a situation in which only a select number of people have it) stipulates that insider information must be published in the news media within 1 day of the date on which the fact/event in question takes place (except for the insider information of trade organisers, clearing companies, depositaries and credit institutions participating in stock exchange clearing) and within 2 days on the Internet.

The procedure for access to insider information contained in documents is now strictly regulated (this involves publishing of the text of the document on the Internet and making a copy of the document available).

Information about any resolution of the boards of directors of securities issuers does not have to be disclosed if it constitutes confidential information. Neither do companies have to disclose information about some transactions conducted by their management companies, information from registries of transaction requests submitted to the trade organiser, information about some specific operations of brokers, clearing companies and depositaries, as well as some other information.

2. New forms for registration and de-registration with tax authorities

New application forms have been approved for registration with tax authorities and for notices about the registration and de-registration with tax authorities. In addition to that, requirements have been defined for how these documents have to be filled out; rules have been developed for preparing these documents in electronic format and submitting them via telecommunications channels.

3. Advance payment first, shipment later…

From July 1st, 2011 a new excise payment procedure is to apply to some types of excisable goods. Thus, among other things, manufacturers of alcoholic beverages and products containing alcohol must now pay excise on their merchandise in advance.

Because of this the legislation regulating the production and sales of ethanol, alcoholic beverages and products containing ethanol has been amended to include new provisions under which, inter alia, purchasers of ethanol or cognac spirit must have an excise payment receipt in hands (a bank guarantee that it has been or will be paid). It should be noted that only companies obligated by law to pay excise in advance are required to have such documents.

Manufacturers of perfumes, cosmetics and household chemicals in the form of spraypacks, which do not have to pay excise in advance, are not subject to this requirement.

From August 1st, 2011 ethanol is to be sold to such companies, as well as to companies that have confirmed advance payment (or a notice saying they do not have to pay excise in advance) at an excise rate of 0%.

4. Insurance rates depending on the type of business

If a large corporation has a department that engages in business operations different from the core operations of the company, the department in question may have its own risk class and insurance rate for each type of insurance bought by the company.

Clarification has been made for the conditions that must be met for a department of a larger business to be recognised as a separate classification unit, for the deadlines for the submission of documents to confirm the main business line, and the procedure that must be followed by the Social Insurance Fund of Russia when making a decision about whether a specific department of a larger business organisation should be treated as a separate classification unit.

5. New migration benefits for highly skilled professionals

Highly skilled professionals will no longer have to register with the migration authorities at their place of residence if they only stay within the Russian Federation for a period of up to 90 days.

Highly skilled professionals and members of their families registered at their place of residence (with the local migration service) in the Russian Federation will no longer have to register at a new location they move to within the Russian Federation if their stay in the other location does not exceed 30 days.

Once the stay of a highly skilled professional has exceeded 90 or 30 days, a notice of their arrival must be submitted to the local branch of the Russian Federal Migration Service in accordance with the applicable Rules either personally or by mail within 7 business days.

A foreign national entering Russia at the invitation of an employer as a highly skilled professional will be entitled to a multiple entry work visa. The law now stipulates that a multiple-entry work visa is to be issued to:

  • Foreign nationals qualifying as highly skilled professionals and entering Russia to perform a job at the invitation of a Russian employer; the visa is to be issued by an embassy or consulate of Russia;
  • Foreign nationals qualifying as highly skilled professionals already employed as such in Russia; in this case the visa must be issued by the local branch of the Federal Migration Service of Russia in the location where the foreign national in question is staying.

A multiple entry work visa shall be issued for the period of the employment agreement or the contract under which the foreign national is to perform a job or provide services, however, such visas cannot be issued for a period of more than 3 years, after which they may be extended for 3 more years.

Family members of the foreign nationals qualifying as highly skilled professionals will also be issued multiple entry work visas for the same period as the visas issued to the foreign nationals.

For more about the new benefits for highly skilled professionals see the article ‘Hospitality’ of Russian taxes’, section ‘Main’.

6. Protecting the Rights of Lenders

Amendments have been made to revise the ways in which the rights of lenders can be protected in the event of authorised capital reduction; including amendments to the requirements imposed on businesses if their authorised capital exceeds the net assets value.

Under the new revision of the law, if the net assets value of a company is less than the company’s authorised capital at the end of the financial year following the second financial year (formerly it was at the end of the second financial year) or at the end of each subsequent financial year when the company’s net assets value was less than its authorised capital, the company must reduce its authorised capital to match its net assets value within six months after the financial year in question, or liquidate, otherwise.

A new procedure has been introduced for the publication of an authorised capital reduction notice, along with a new procedure that lenders can now follow to demand early performance of their debtor’s obligations; the law now also defines grounds on which a court may refuse to satisfy such a demand.

The annual report of a company must now include data on evolution of the net assets value and authorised capital as well as analysis of the causes of any decrease in net assets and a list of measures the company has taken or plans to take to ensure its net assets value is no less than its authorised capital.

A standard procedure has been introduced that limited liability companies must follow when appraising their net assets value as well as when disclosing the value of their net assets to any interested party.

7. Work permit certificates get a new form

A new form has been approved for certificates permitting performance of a specific type of work that can affect the safety of capital construction projects. The instruction of the Federal Service for Environmental, Technological and Nuclear Supervision (Rostekhnadzor) approving the new form went into effect on September 6th, 2011.

Certificates permitting performance of a specific type of work that can affect the safety of capital construction projects, issued prior to the effective date of the Instruction, will remain valid until January 1st, 2013.