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On 1 January 2012 the Federal law "On Investment
Partnership", passed by the State Duma and approved by the
Federation Council on 25 November 2011 ("the Law") came
into force. The Law was developed on the instruction of the
President of the Russian Federation issued at the end of the
meeting of the Modernization Committee on 27 July 2010, which
emphasised the necessity to "develop legislation
regulating the means of organizing pooled investments without the
necessity to form a legal entity".
The Law is aimed at the creation of legal conditions to attract
investment in the Russian economy and the realization of investment
projects on the basis of investment partnership contracts.
The Law specifies a new type of a partnership contract
– an investment partnership contract, on the basis of
which partners can jointly acquire and/or alienate stock (shares)
not publicly traded, bonds of business entities and partnerships,
financial instruments of futures, and shares of business
partnerships in joint-stock capital.
In accordance with the Civil Code of the Russian Federation, the
Law regulates the particulars of investment partnership contracts,
including the legal status and liability of the parties to such
contracts, the procedure for establishment, change or termination
of their rights and obligations.
According to the investment partnership contract stipulated by
the Law, two or more persons undertake to pool their investments
together and carry out a joint activity without the formation of a
legal entity.
The Law determines the rights and obligations of partners under
investment partnership contracts, requirements of the form and
content of such contracts, settles the issues related to fees paid
to a managing partner for conduct of partners' common business,
sets out the requirements to partners' contributions and common
property, regulates the procedure for conduct of partners'
common business, sets out partners' responsibility for shared
obligations, and determines the procedure and consequences of
amendment, termination and cancellation of investment partnership
contracts.
Both commercial and non-commercial partnerships can become
parties to an investment partnership contract. Individuals can join
an investment partnership only if they are individual
entrepreneurs. According to the law, the same persons can be
members of several investment partnerships. The law stipulates that
one partnership cannot have more than 50 members.
Also according to the Law, one or several partners (managing
partners) may conduct common business on behalf of all the other
partners. The Law specifies the different scope of rights and
obligations for managing partners and ordinary partners, and also
determines the relevant scope of responsibility.
The Law establishes that an investment partnership contract and
amendments, additions and attachments to it (including the policy
for conduct of common business/ investment policy statement) and
powers of attorney for conduct of common business, must be
notarized. A contract validity term cannot exceed fifteen
years.
Terms and conditions of investment partnership contracts are
confidential and are not subject to disclosure in accordance with
the general rule and are preserved in accordance with the law on
commercial secrets. Parties to an investment partnership contract
and other persons are not entitled to advertise the common
investment activity carried out in accordance with an investment
partnership contract or involve new people in the common investment
activity by means of public offer.
According to experts, the Law creates a legal mechanism for
pooling funds of several investors in order to carry out different
business projects, which can be especially important in the field
of innovation-driven economy.
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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