Russian Federation: Overview Of Certain Amendments To The Russian Laws In April 2014

Last Updated: 12 May 2014
Article by Яна Дианова
BANKS AND FINANCE

The Federal Law No. 37-FZ, dated 2 April 2014 (as effective from 2 April 2014) provides for specific features of financial system in the Republic of Crimea and the city of federal status - Sevastopol, for the transition period (up to 1 January 2015). 

The Law is applicable to banks, non-banking financial institutions as well as to currency exchange offices registered and(or) operating in the Republic of Crimea and Sevastopol (hereinafter - the 'Financial Institutions').

Banks registered in the Crimea and(or) Sevastopol, the location of which are the said territories (hereinafter - the 'Registered Banks'), as well as banks operating in those territories through separate structural subdivisions (hereinafter - the 'Operating Banks') and holding a license of the National Bank of Ukraine effective as of 16 March 2014 may continue to operate on the territory of the Crimea and Sevastopol up to 1 January 2015 without obtaining a license issued by the Bank of Russia provided that they comply with the requirements established by the Law No. 37-FZ. In particular, up to 16 April 2014 inclusive, they should notify the Bank of Russia on the continuation of their operation, and fuher provide the Bank with the statements and other information on their activities in the procedure and terms established by the Bank of Russia, as well as properly perform their obligations under contracts.

Registered and operating banks may be registered as a credit institution with the Bank of Russia till 1 January 2015 and obtain a license to perform banking transactions by filling an application and other documents provided for by Article 6 of the Law No. 37-FZ (the list of which differs from the same provided by Article 14 of the Federal Law 'On Banks and Banking Activity').

If registered and operating banks fail to register under the Russian laws, they cease to operate no later than 1 January 2015.

From 2 April 2014, credit institutions newly-established in the Crimea and Sevastopol should be registered in accordance with the Federal Law 'On State Registration of Legal Entities and Individual Entrepreneurs' in view of specific features of registration of such institutions as provided by the Law No. 37-FZ and other acts.

The Law No. 37-FZ establishes:

-        requirements and procedure for the state registration with the Bank of Russia as a credit institution, obtaining the license to perform banking transactions as well as obtaining a permit by a non-credit financial institution and state registration of a private pension fund;

-        specific features of state registration of other financial institutions, obtaining licenses (other permits and accreditation) thereby, and activities termination;

-        specific features of circulation of equity securities issued by emitters located in the Crimea and Sevastopol;

-        procedure for the performance of obligations to creditors and consumers of financial services as well as to insurance companies (for certain types of obligatory insurance) operating in the Crimea and Sevastopol during the transition period (up to 1 January 2015). 

The Federal Law No. 39-FZ, dated 2 April 2014, 'On the Protection of Interests of Individual Depositors of Banks and Their Separate Structural Subdivisions Registered and (or) Operating in the Republic of Crimea and the City of Federal Status - Sevastopol'(as effective since 2 April 2014) provides for the guarantees to individuals residing in the Crimea and Sevastopol holding deposits and accounts in the registered and(or) operating banks as well as in their structural subdivisions.

Such persons and those, for whose benefit  a contribution was made (hereinafter jointly - 'Depositors'), as well as the heirs of deceased depositors shall have the right to receive compensation on deposits and accounts, where funds were placed under the bank deposit or bank account agreement before 2 April 2014 in cases stipulated by the Law No. 39-FZ :

-        if the bank fails to perform obligations to the depositors within three calendar days after the due date;

-        if the Bank of Russia decides to terminate activities of a separate structural subdivision of a bank operating in the Crimea or Sevastopol and registered outside of these territories.

The Law also establishes the types of funds, which will not be covered by the guarantees in the form of compensation: transferred by individuals for trust management; placed as bank contributions to a bearer or on accounts (deposits) opened to perform professional activities (e.g., by lawyers, private notaries); is electronic funds.

Compensation to depositors within 700 thousand rubles inclusive will be paid by the Fund of Depositor Protection formed by the Deposit Insurance Agency through acquiring their rights (claims) on deposits (accounts) in banks.

 

The Order of the Bank of Russia No. OD-640, dated 10 April 2014, establishes the specific features of the state registration of credit institutions, issue by the Bank of Russia of licenses to perform banking operations, and issue of equity securities by credit institutions formed in the Crimea and Sevastopol, in accordance with the Federal Law No. 37-FZ 'On the Specific Features of the Financial System in the Republic of Crimea and the City of Federal Status - Sevastopol During the Transitional Period', dated 2 April 2014.

Registered and(or) operating banks when obtaining a license from the Bank of Russia should complete the formation of equity capital of not less than 300 million rubles, not later than 1 April 2015.

For the state registration of a credit institution, its charter capital shall not be less than 100 million rubles. If at the submission of documents for the state registration and license obtaining the equity capital of the bank is less than 300 million rubles, in addition to the documents submitted to the Bank of Russia the bank should submit a schedule of equity capital formation with timelines and formation sources.

License application must contain, inter alia the list of banking operations, information on the property in payment of the charter capital, as well as official website of the credit institution.

Specific features of the securities issue provides for the requirements to the procedure for making decisions about their placement and procedure for the state registration of the shares issue and reporting on such an issue.

The Order of the Bank of Russia No. OD-658, dated 11 April 2014, establishes specific features of the submission of statements to the Central Bank of the Russian Federation by banks registered in the Republic of Crimea or in Sevastopol for supervisory purposes.

For supervisory purposes, the registered banks shall submit to the Bank of Russia financial statements drafted in the Russian language, as per the forms specified by the Rules for execution of statistical reporting to be submitted to the National Bank of Ukraine approved by the Board of the National Bank of Ukraine No. 124, dated 19 March 2003, as effective in the territory of the Republic of Crimea and Sevastopol until 16 March 2014.

Statements and reporting shall be submitted to the Department for the Republic of Crimea and Department for Sevastopol of the Central Bank of the Russian Federation on a monthly basis not later than 15th day of a month following the reporting month. The first such reports of the banks shall be submitted for March 2014.

PHARMACEUTICALS INDUSTRY

The Resolution of the Government of the Russian Federation No. 224 'On Amendments to Some Acts of the Government of the Russian Federation  Due to the Improvement of Control Over the Circulation of Narcotic Drugs and Psychotropic Substance', dated 22 March 2014, (effective from 8 April 2014) expanded the list of narcotic drugs and psychotropic substance, circulation of which is prohibited in the Russian Federation.

Moreover, for the purposes of prosecution under Articles 228, 228.1, 229 and 229.1 of the Criminal Code of the Russian Federation, the Resolution established a significant, large and especially large amount of the new narcotic drugs.

The Resolution of the Government of the Russian Federation No. 305, dated 15 April 2014, approved a new version of the State Program - 'Development of Pharmaceutical and Medical Industries' for 20132020 charged to the Ministry of Industry and Trade of the Russian Federation (hereinafter – the 'Program for 2013-2020) (effective from 2 May 2014 ).

The Program for 2013-2020 contains four sub-programs, including the federal target programs:

  1. 'Development of Medicines Production';
  2. 'Development of Medical Goods Production';
  3. 'Improvement of State Regulation in the Area of Circulation of Medicines and Medical Goods';
  4. federal target program - 'Development of the Pharmaceutical and Medical Industry of the Russian Federation for the period of up to 2020 and further'.

By 2020, the following results are expected to be achieved:

-        7-times increase of the share of high-tech products in total production of pharmaceutical and medical industry with respect to 2011;

-        up to 50% increase of the share of domestic medicines in total consumption (in monetary terms);

-        up to 40% increase of the share of domestic medical goods in total consumption (in monetary terms);

-        increase in exports of medicines and medical products up to at least 105 billion rubles;

-        50% increase of the share of enterprises engaged in technological innovation in the pharmaceutical and medical industry in the total number of producers.

The Program for 2013-2020 also provides for the creation and modernization of 20 thousand jobs.

Moreover, according to the Program for 2013-2020, a turnover of intellectual property rights in the pharmaceutical and medical industry shall become more intensive, in particular, a number of applications for patents and number of obtained patents, trademark certificates, license agreements and agreements for alienation of the exclusive rights shall be increased up to 1500.

The amount allocated from the federal budget for the implementation of the Program for 2013-2020 is almost 100 million rubles.

the Order of the Ministry of Healthcare of the Russian Federation No. 2n, dated 9 January 2014, (registered with the Ministry of Justice of the Russian Federation on 3 April 2014) approved the procedure for technical testing, toxicity study, and clinical trials of medical devices for the purpose of the state registration thereof.

The Order establishes forms of acts of testing results and report on toxicity studies of medical devices.

A producer/manufacturer of medical products or an authorized representative thereof shall independently determine the testing company engaged in the technical tests and toxicity studies in view of its accreditation sphere, as well as medical organization engaged in clinical trials of medical devices.

The Order of the Federal Service for the Supervision of Public Health and Social Development of the Russian Federation No. 1271, dated 3 March 2014, (registered with the Ministry of Justice of the Russian Federation on 11 April 2014) approved the form of documents used by the Federal Service for Supervision of Health in licensing activities in the area of production and maintenance (except if the maintenance performed for the own needs of a legal entity or individual businessman) of medical equipment, including an application for a license and application for the termination of the production and maintenance of medical equipment.

NATURAL RESOURCES

The Resolution of the Government of the Russian Federation No. 259 'On Amendments to the Regulations for Preparation, Coordination and Approval of Technical Projects to Develop Mineral Deposits and Other Project Documentation for Works Related to the Subsoil Use by Types of Minerals and Types of subsoil use', dated 2 April 2014 (effective from 4 December 2014).

Instead of the Committee of the Federal Subsoil Use Agency, the regional authorities shall agree upon:

A. the following types of documents for subsoil of local importance in respect of common minerals:

-        project of pilot development of mineral deposits;

-        technical project of development of mineral deposits;

-        technical project of liquidation or conservation of mine pits;

-        technical flow sheet of primary processing of common minerals;

B. documents by subsoil areas of local importance in respect of the following types of subsoil use:

-        geological study, including the search and evaluation of common minerals deposits, as well as geological exploration and evaluation of the suitability of subsoil areas for the construction and operation of underground facilities of local and regional importance not related to the minerals extraction;

-        exploration and extraction of minerals;

-        geological study, exploration and extraction of common minerals under a combined license;

-        construction and operation of underground facilities of the local and regional importance not related to the mineral extraction.

INTELLECTUAL PROPERTY

The Resolution of the Government of the Russian Federation No. 231 'On Amendments to the Resolution of the Government of the Russian Federation No. 252, dated 28 April 2006', dated 28 March 2014 (effective from 5 April 2014) amended the Regulation on licensing of production of audiovisual works, computer software, databases and phonograms (hereinafter - the 'Licensing Regulations') to simplify the overall requirements to applicants for appropriate licenses.

To obtain a license it is sufficient to comply with two obligatory conditions: availability of production equipment under the right of ownership and availability of industrial facilities, buildings under the right of ownership or other legal basis. Accordingly, reduction of licensing requirements involves reduction of the grounds for prosecution of licensees for violation of such requirements. However, the option to use production equipment used under any legal grounds (in particular, right to lease) other than ownership was excluded.

In addition, an unlimited duration of a license  (in accordance with the requirements of the Law on licensing of certain activities) was provided for.

TAXATION

The Federal Law No. 52-FZ 'On Amendments to Part One and Part Two of the Tax Code of the Russian Federation and Certain Legislative Acts of the Russian Federation', dated 2 April 2014, effective from 2 May 2014, establishes the duty of taxpayers applying the simplified taxation system (STS) and unified tax on imputed income (UTII) to pay the property tax for immovable property, tax base on which is defined as its cadastral value.

Besides, individuals, who did not receive a notice for payment of property tax shall be obliged to inform the tax authorities about the availability of immovable property and vehicles subject to tax until 31 December of the year following the expired tax period.

The failure (delay) to submit the said information entails tax liability:  a fine at a rate of 20% of the unpaid tax amount.

LABOR LAWS

The Federal Law No. 56 -FZ 'On Amendments to the Labor Code of the Russian Federation in Terms of the Limitation in Sizes of Compensation, Severance Payments Related to the Termination of Employment Contracts for Certain Categories of Employees', dated 2 April 2014 (effective from 13 April 2014) limited the sizes of 'golden parachutes' paid to heads, their deputies and chief accountants of public corporations, state enterprises and economic entities with state participation of over 50%in the event of termination of employment relations with them.

The compensation of three average monthly salaries shall be paid in case of:

-        termination of employment contracts with the said employees in connection with the change of owner of the company's property;

-        termination of an employment contract with a head of the company in accordance with Article 278.2 of the Labor Code of the Russian Federation (based on the employment termination decision made by the authorized body of a legal entity) in the absence of guilty actions (omission) of the head.

Furthermore, respective termination agreements cannot contain provisions on the payment of severance, compensation, and(or) any other benefits.

All terms and conditions of employment contracts signed before the entry of the Law No. 56-FZ  into force, which are contrary to its requirements, are deemed expired from the date of the Law enactment.

INTERNATIONAL LAW

The Protocol on Application of the Treaty on Free Trade Area, dated 18 October 2011 between the parties thereto and the Republic of Uzbekistan (signed in Minsk on 31 May 2013) ratified by the Federal Law No. 48-FZ, dated 2 April 2014.

 Under the Protocol, provisions of the Treaty on Free Trade Area, dated 18 October 2011 becomes applicable to the relationships between the CIS and Uzbekistan in view of a number of assumptions (to unify trade regimes of member-states of the Customs Union with Uzbekistan).

The Protocol provides, inter alia:

-        non-application of import duties in mutual trade between the Customs Union states and Uzbekistan;

-        release of Uzbekistan and the parties to the Treaty from the obligation to provide national regime in mutual trade, in accordance with Article III of the General Agreement on Tariffs and Trade, dated 30 October 1947 (GATT, 1947) for the period up to 31 December 2020 or up to the accession of Uzbekistan to WTO (whenever is earlier);

-        application of the Rules for determination of origin state of goods, dated 24 September 1993, between the parties to the Treaty and Uzbekistan (unless otherwise agreed by the parties).

 

LEGAL STATUS OF FOREIGNERS

Pursuant to the Federal Law No. 74-FZ 'On Amendments to the Federal Law 'On Legal Status of Foreigners in the Russian Federation', dated 20 April 2014, migrants must prove the Russian language skills, knowledge of the Russia history and fundamentals of laws of the Russian Federation to obtain permits to work and temporary residence permits.

Compliance with these requirements can be supported by one of the following documents:

-        a certificate of the Russian language skills, knowledge of the Russia history and fundamentals of laws of the Russian Federation issued by authorized Russian educational institutions for a period of five years;

-        a national certificate of education (at least of basic general education) issued by an educational institution in the state being a member of the USSR before 1 September 1991;

-        document of education and(or) of qualification issued to persons who have successfully passed the state final certification in Russia since 1 September 1991.

This requirement is not applicable to highly qualified specialists and their family members, persons under age of eighteen, men of over sixty-five years, women of over sixty years, and incapable persons.

This Law enters into force on 1 January 2015, except for certain provisions, which will take effect from 1 September 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Яна Дианова
 
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