Earlier we informed you that on 08.09.2022 the President of the Russian Federation issued the Decree No. 618 (hereinafter referred to as “Decree”).

This Decree establishes the requirement to obtain permission fr om the Government Commission for Control of Foreign Investment in the Russian Federation (“Government Commission”) for transactions with shares in limited liability companies (“OOO”), if the parties to such transactions are persons from foreign countries that commit unfriendly acts against the Russian Federation.

On 19.09.2022 the Government of the Russian Federation issued the Resolution No. 1651 “On Amendments to Resolution No. 295 of the Government of the Russian Federation of 6 March 2022“ (the “Resolution”) that regulates the procedure for obtaining the respective approval of the Government Commission.

The list of cases wh ere the Government Commission is authorized to issue permits includes transactions resulting directly and/or indirectly in the establishment, modification or termination of rights to own, use and (or) dispose of shares in the authorised capital of OOOs or other rights allowing to determine the management conditions of such OOOs and (or) the conditions for their entrepreneurial activities.

According to the Resolution, in order to carry out the abovementioned transactions involving persons from foreign countries that commit unfriendly acts against the Russian Federation, the rules previously issued in relation to loans and credits with persons from unfriendly countries by Resolution of the Government of the Russian Federation No. 295 of 6 March 2022 will be fully applied.

It is envisaged that a permit to carry out a transaction or a group of transactions (“permit”) can be obtained by applying to the Ministry of Finance of the Russian Federation with an application and accompanying documents, the list of which is established by the Resolution of the Government of the Russian Federation No. 295 of 6 March 2022.

Please note that the Ministry of Finance of the Russian Federation can also be approached by federal executive bodies and (or) the Bank of Russia in order to issue a permit. In this case, the application and accompanying documents must be submitted to the relevant federal executive body and (or) the Bank of Russia.

The application and accompanying documents must be drawn up in Russian. If the original documents are in a foreign language, a duly certified translation into Russian (with an apostille of the competent authority of the state in which the document was drawn up) will be required.

The application and accompanying documents may be submitted both in hard copy and electronically, including in the form of electronic documents signed with a digital signature.

We will be happy to answer your questions and assist you in preparing the package of documents required to obtain the permit.

Dear colleagues,

We would like to wish you a happy New Year!
May the coming year be peaceful, prosperous and successful!
Thank you for your trust and collaboration.

With deep respect,
Your team of swilar

We hereby inform you that Federal Law No. 287-FZ of August 08, 2024 introduced a number of important changes affecting both limited liability companies (OOO) and joint-stock companies (AO). The changes come into effect at different times. In this message, we would like to talk about changes in relation to OOO that will be in effect from September 01, 2024.

From this date, the resolution on the election (appointment) of the sole executive body of the OOO – for example, the general director – will need to be necessarily certified by a notary. Also, when registering such changes in the Unified State Register of Legal Entities, a notary will be the applicant.

Thus, the procedure for changing the general director in an OOO has been significantly changed. Previously, participants could make such a resolution without a notary (if an alternative procedure was stipulated in the articles of association), and then the new director would sign the application for registration himself. Now the participants or their representatives will be required to be present at the Russian notary to make a resolution (with the issuance of the appropriate certificate), after which the notary will sign an application sent by him to the registration authority.

For foreign participants in Russian OOO, such changes mean the presence of two options:

• arrival in the Russian Federation and visiting a Russian notary to make a resolution on changing the director of a controlled Russian company;
• issuance of a power of attorney to Russian representatives for carrying out such actions (please note that the power of attorney must be properly legalized and translated into Russian).

At the moment, we are awaiting clarification regarding whether notarization will be mandatory for participants to make resolutions on extending the powers of the general directors of OOO, as well as the beginning of the liquidation of controlled companies.

With regard to the liquidation of an OOO, from September 01, it is legislatively confirmed that the notary submits to the Federal Tax Service (FTS) a notification about the formation of a liquidation commission/appointment of a liquidator. Such a notification is usually sent simultaneously with the message that the legal entity is entering into the process of liquidation. The notification shall be submitted to the Federal Tax Service by the notary who certified the liquidator’s signature on it, no later than the end of the working day on which the notification was signed.

According to another change, from September 01, the list of information on shares in the authorized capital of OOO, which is contained in the Unified State Register of Legal Entities, is being expanded. The Register will contain information about the arrest of the share imposed by the court or enforcement officer. So far, the Unified State Register of Legal Entities includes information on the size, nominal value of shares and shareholders.

In the future, we will inform you about other significant changes to corporate legislation introduced by Federal Law No. 287-FZ dated August 08, 2024.

We will be happy to answer your questions and, if necessary, support you in the preparation, signing and submission of relevant documents to the authorized bodies.

Please note that all representative offices and branches of foreign companies are required to submit information about the members and beneficiaries of their parent structures to the tax authority by 28.03.2024.

According to the clause 3.2 of the article 23 of the Tax Code of the Russian Federation, foreign organizations (FO), as well as foreign structures without formation of a legal entity (FSWFLE), are obliged annually no later than March 28:

• to submit information about the members of such a FO (for FSWFLE – information about its founders, beneficiaries and managers) as of December 31 of the year preceding the year of submission of the specified information to the tax authority at the place of their registration, as well as
• to disclose the procedure for indirect participation (if any) of an individual or public company in the event that the share of their direct and/or indirect participation in the FO (FSWFLE) exceeds 5%.

This obligation does not apply to foreign companies that are registered with the Russian tax authorities only because of the provision of services in electronic form, as well as to subsidiaries (OOO) with foreign participation.

The form of communication about the members of a FO (for a FSWFLE – about its founders, beneficiaries and managers), the format of its submission in electronic form, as well as the procedure for filling in the form are approved by the Order of the Federal Tax Service of Russia dated 01.12.2021 No. ED-7-13/1046@.

Wrongful failure to submit (untimely submission) by a foreign organization (foreign structure without formation of a legal entity) of the above information to the tax authority entails a fine of 50,000 RUB (clause 2.1 of the article 129.1 of the Tax Code of the Russian Federation).

You can find information previously published by us on this topic here.

We will be happy to answer your questions and offer our assistance in creating the report.

Since Russia has been closely interacting with China in various fields over the past decades, many Russian representatives of small and medium-sized businesses are beginning to actively cooperate with Chinese partners. Russian businessmen who are not aware of the peculiarities of the Chinese mentality may encounter serious difficulties when signing contracts with Asian partners.

In this review we would like to draw your attention to the important features of concluding contracts between partners from Russia and China, which will help you to avoid a number of mistakes:

1. The only official language in China is Chinese. Thus, it is advisable to sign the text of the contract not in Russian and English, but in Russian and Chinese (the official languages of Russia and China).

If the Chinese partners do not insist on this, this can only mean that they do not intend to register the contract with the Chinese government authorities.

2. The name of a Chinese company registered in China can only be in Chinese, and the English name of the company is not legally valid to the full extent Chinese, as well as Russian, courts do not consider claims if the documents do not indicate the real (registered) company names.

3. It is necessary to check the registration of the Chinese company by requesting from the partner a certificate of registration of a legal entity, and also make sure that its representative has the appropriate authority.

It should be kept in mind that only the legal representative of the company has the right to sign a contract without a power of attorney. This may not always be the CEO of the company. The legal representative must be indicated in the certificate of registration of a legal entity.

If someone else signs the contract on the Chinese side, they are required to present a power of attorney. Therefore, when concluding a contract with a Chinese company, it is worth asking the future partner for a power of attorney confirming the authority of the signatory.

4. It is important to check the registration (legal status) of the Chinese seal.

Each Chinese company generally has one main seal, which is strictly controlled. However, to support various types of activities, companies often produce additional types of seals, including “contract seals.” Having produced such seals, Chinese companies often do not amend the registration documents accordingly or otherwise register their legal status.

In this regard, it is recommended to check whether the Chinese partner’s seal is registered by requesting a certificate from the State Commerce and Industry Administration of the government at the place of registration of the Chinese company. It is quite easy to obtain such a certificate, and falsifying it is dangerous for a Chinese partner.

5. To protect yourself, it is recommended to check the company’s website. The site must have a Chinese version, otherwise there is a high chance of encountering scammers. You should check the domain name registration date and ownership.

6. In order to avoid difficulties with the recognition and enforcement of decisions of Russian courts in China, it is recommended to introduce an arbitration clause and include in it one of the well-known institutional arbitration centers in China, for example, the China International Economic and Trade Arbitration Commission (CIETAC), the Beijing Arbitration Commission (BAC), etc.

On the one hand, this will require additional costs for contacting Chinese lawyers or Russian specialists with experience in representing the interests of parties in Chinese arbitration. On the other hand, this will simplify the issue of recognition and enforcement of the decision under the New York Convention of 1958.

If the Chinese partners do not want to resolve the dispute in arbitration due to the high cost of the procedure, then, in order to avoid difficulties with the recognition and execution of decisions of Russian courts in China, it is better to establish a clause for those disputes, for which this is possible, regarding their resolution in a Chinese state court, since Russian courts readily recognize decisions of Chinese courts.

On 01.09.2022 clause 3 of the article 1 of the Federal Law dated 02.07.2021 No. 347-FZ came into force, which amended the Federal Law dated 13.03.2006 No. 38-FZ “On Advertising” (hereinafter referred to as the “Law on Advertising”) and obligated participants in the Internet advertising placement market to transfer data about it to a unified information system created by Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications (Roskomnadzor) – the Unified Register of Internet Advertising (hereinafter referred to as “URIA”).

Important: the new requirements apply to internet advertising that is displayed only in the Russian Federation.

Distinguishing between advertising and other information of a non-advertising nature

According to the article 3 of the Law on Advertising, advertising is information distributed in any way, in any form and using any means, addressed to an indefinite number of persons and aimed at drawing attention to the object of advertising, creating or maintaining interest in it and promoting it on the market.

On 14.11.2023, in order to clarify the concept of advertising and eliminate ambiguities, as well as to distinguish advertising fr om other information of a non-advertising nature, the Federal Antimonopoly Service of Russia approved the Guidelines for compliance with mandatory requirements “The Concept of Advertising” (Order No. 821/23).

Additionally, the Federal Antimonopoly Service of Russia has provided answers to frequently asked questions about advertising, and also provides examples of advertising on the Internet that are subject to marking, which can be found here.

Important: each case is unique and is considered individually.

What exceptions are there?

All advertising on the Internet is subject to marking, with the exception of:

• social advertising;
• announcements on the websites of TV channels and radio programs that are duplicated on the Internet without changes compared to the original sources;
• mailings via own database of e-mail addresses and push notifications.

What must be done to carry out Internet advertising marking?

1. Familiarize yourself with the register of advertising data operators (hereinafter referred to as “ADO”) on the official website of Roskomnadzor, register on the website of one of the ADOs, read the terms of service, tariffs and accept the offer agreement.
2. After activating access in your personal account of ADO, fill in the information about the counterparties participating in the placement, about the agreement, about the advertising creative. Download a sample advertisement.

Immediately after registering the creative, ADO will assign it an advertising identifier (token) – erid, which looks like a set of numbers and Latin letters (for example, 5UGfwMukZ4).

Important: one token is given per creative; any change in the creative requires obtaining a new token.

1. Include in your advertisement:

• the mark “advertising”, other expressions cannot be used (for example, “sponsored material”, etc.);
• information about the advertiser – the full name of the company or a link to the website (website page) with information about the advertiser;
• advertising identifier (erid).

1. Enter in your personal account of the ADO service on any day, starting from the date of completion of placement, but no later than the 30th day of the month following the month of displaying advertising on the Internet, the information:

• about the platform(s) wh ere the creative was shown;
• on statistics of shows;
• on the fulfillment of obligations under the agreement.

1. Check the information in URIA. Access for Russian users without registration, with a State Services (Gosuslugi) portal account.

Important: not only you, but also your counterparty can receive an advertising identifier and transfer information about placement, if you provide for the corresponding obligations in the agreement. In this case, the same person must receive the advertising identifier and transmit statistics of shows.

You can find out more details about these stages here.

Who exercises control?

The controlling government authorities are the Federal Antimonopoly Service of Russia (issues of classifying information as advertising; control over the presence of the mark “advertising”; control over the indication of information about the advertiser) and Roskomnadzor (presence of an identifier (token); transmission of information about advertising to URIA through ADO).

What is the liability for violation of requirements?

On 01.09.2023, the Federal Law dated 24.06.2023 No. 274-FZ “On Amendments to the Code of the Russian Federation on Administrative Offenses” came into force, which establishes measures of administrative liability for violations in the field of marking of Internet advertising:

• Failure to provide, or untimely provision of information about distributed Internet advertising to URIA, or provision of incomplete, unreliable, irrelevant information (part 15 of the article 14.3 of the Code of the Russian Federation on Administrative Offenses):
• citizens: 10.000 – 30.000 rubles;
• officials: 30.000 – 100.000 rubles;
• legal entities: 200.000 – 500.000 rubles.
• Distribution of Internet advertising without an advertising identifier or violation of requirements for its placement when distributing Internet advertising (part 16 of the article 14.3 of the Code of the Russian Federation on Administrative Offenses):
• citizens: 30.000 – 100.000 rubles;
• officials: 100.000 – 200.000 rubles;
• legal entities: 200.000 – 500.000 rubles.

It should be noted that administrative liability applies to offenses identified after 01.09.2023. At the same time, the new rules apply, among other things, to Internet advertisements that were placed before that date, continue to be displayed after that date, and the transaction for them has not been closed.

For archived advertisements, the placement of which ended before 01.09.2022 (i.e. transactions for them have been closed) and which are currently available for reading, obtaining and placing an identifier is not required. However, it is recommended to indicate the date of their publication (see Recommendations of Roskomnadzor).

In October 2023, the Russian Ministry of Finance published two updates at once on the conditions for obtaining permissions from the Government Commission for Control of Foreign Investments in the Russian Federation (hereinafter referred to as the “Government Commission”) to carry out transactions with shares of LLCs with the participation of persons from unfriendly countries included in the list, approved by the Order of the Government of the Russian Federation dated 05.03.2022 No. 430-р.

It concerns, first of all, the Extract from the minutes of the meeting of the sub-commission of the Government Commission dated 26.09.2023 No. 193/4, which states that now one of the conditions for obtaining permissions from the Government Commission to carry out such transactions is:

• the presence of an obligation to make a voluntary contribution to the federal budget in the amount of at least 15% of the market value of the relevant assets, indicated in a report on independent assessment of the market value of the assets.

Let us remind you that previously this condition sounded as follows[1]:

• the presence of an obligation to make a voluntary contribution to the federal budget within three months from the date of the transaction in the amount of:
• at least 10% of half of the market value of the relevant assets – if the assets are sold at a discount of less than 90% of the market value of the relevant assets, or
• at least 10% of the market value of the relevant assets – if the assets are sold at a discount of more than 90% of the market value of the relevant assets.

In addition, on 16.10.2023, the Application Form for granting permission to carry out (execute) a transaction (operation) or a group of transactions (operations) was updated. The application must now disclose the beneficial owners of all parties to the transaction, not just the applicant’s party.

The remaining conditions for obtaining permissions from the Government Commission to carry out transactions with shares of LLCs with the participation of persons from unfriendly countries can be found here.

We will be happy to answer your questions!

[1] Subclause 4 of clause 1 of the Extract from the resolution of the sub-commission of the Government Commission dated 07.07.2023 No. 171/5 is declared invalid.

Earlier, we provided you with an overview of the current situation with the liquidation of LLCs in Russia.

In addition to the previous review, we would like to further draw your attention to this year’s innovation: a simplified liquidation procedure.

A simplified liquidation procedure is available for SMEs (for the latest information on the status of SMEs, see here and here) and allows you to reduce the time and cost of the liquidation procedure, as well as reduce possible risks of improper liquidation (for example, restrictions on participation and management in new companies within three years).

However, not all SMEs are eligible for simplified liquidation by default. To do this, the company must comply with a list of certain additional criteria.

What conditions must be met to be eligible for simplified liquidation?

1. All founders (members) of the company made a resolution to terminate activities unanimously.
2. The company is included in the unified register of small and medium enterprises (SMEs).
3. The company is not a VAT payer (it is on a simplified tax system) or is exempt fr om VAT.
4. The company does not have debts to creditors, including debts to employees and the state budget.
5. There are no marks in the Unified State Register of Legal Entities about the inaccuracy of data and about the initiation of bankruptcy proceedings.
6. The company has no real estate and vehicles in the property.
7. The organization is not in the process of liquidation, reorganization or in the process of forced exclusion from the Unified State Register of Legal Entities by decision of the Federal Tax Service.

How to implement simplified liquidation?
To start a simplified liquidation, you must submit an application to the tax service on form P19001. At the moment, the paper and electronic formats of this form have not yet been approved, at the current stage, you can familiarize yourself with the draft form.

In the application, the founders (members) of the company confirm that:

• All financial obligations to counterparties have been fulfilled.
• All payments due to dismissed employees have been made.
• No later than one business day before exclusion from the Unified State Register of Legal Entities, all taxes have been paid and final tax reporting has been provided.

The application can be submitted electronically (using an enhanced qualified electronic signature of each participant), directly to the tax service on paper (notarization of signatures will be required) or through a notary public.

What is the time lim it for simplified liquidation?
The tax service will check the application and within 5 business days will make a decision on the upcoming exclusion of the company from the Unified State Register of Legal Entities or refusal.

In case of a positive decision by the tax service, information about the upcoming exclusion of the company from the register will be published in the Unified State Register of Legal Entities and in the State Registration Bulletin.

Within 3 months from the date of publication in the bulletin, the creditors of the company will be able to send their objections, if any.

If there are no objections from creditors within 3 months, the liquidated company will be excluded from the register.

It is important to know:
The initial conditions for simplified liquidation must be met at the time of exclusion. If during this period the company accumulates debts or assets, or fails to submit reports, simplified liquidation will not take place.