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Legal and Market Developments in Russia Spring 2012 Welcome to the First Issue of Russia Update: Legal and Market Developments in Russia

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Legal and Market Developments in Russia Spring 2012 Welcome to the First Issue of Russia Update: Legal and Market Developments in Russia Russia Update: Legal and market developments in Russia Spring 2012 Welcome to the first issue of Russia Update: Legal and market developments in Russia . The Russia Update is a new publication of Clifford Chance Moscow, and aims to summarise significant legal and market news relating to the Russian Federation which has taken place during the last quarter. You can access our key client briefings, alerters and other recent publications from this publication. Macro Updates . 3 Legal and Regulatory Update . 3 s t General . 3 Corporate . 4 Regulatory . 4 n Finance . 5 Capital Markets and Securities . 6 e Litigation and Dispute Resolution . 8 t Employment . 8 Tax . 8 n Russian Law Focus: The Strategic Investment Law . 11 Sector Update . 12 o Forthcoming Events . 15 c CC Moscow Update: News and People . 15 If you would like to know more about any of the subjects covered in this publication or our services, please use your usual Clifford Chance contact ([email protected]) or e-mail us at: [email protected] . © Clifford Chance CIS Limited, May 2012 Russia update: Legal and market developments in Russia 3 Spring 2012 Russia Update: Legal and market developments in Russia Spring 2012 MICEX-RTS provides a platform for market, banking activities and structured Macro Update trading equities, bonds, derivatives finance products (securitisation). n Presidential elections took place on and currencies. 4 March 2012, returning Vladimir There is much in the proposed changes Putin as President for a six year term. n The Russian Federation acceded to that is potentially helpful, and some that This is the third term of office for the World Trade Organisation (WTO) is potentially alarming. Among other President Putin, who also served two in mid-December 2011 and will things, this draft bill focuses on the duty consecutive terms as President in the become a member of the WTO to act in good faith and provides specific period from 1999 to 2008. Mr Putin 30 days after the State Duma ratifies consequences of the parties’ failure to do was Prime Minister of the Russian the accession package. so. It also introduces intercreditor Federation from 2008 to 2012. agreements, pledge over bank account Mr Putin officially took office on 7 May n At the end of 2011, Russia took up rights, irrevocable powers of attorney, 2012. Turn out for the Presidential the chairmanship of the APEC escrow accounts and other long-awaited elections was reported at around (Asia -Pacific Economic Cooperation) changes. For the first time, the concepts 60% of the population. organisation for 2012. The of indemnities, representations and organisation’s next summit will take warranties are introduced in the Russian n Former President Dmitri Medvedev place in September in Vladivostok. law. The draft bill also reconsiders the has been nominated as Prime The Russian Federation has stated concepts of security and its forms. It Minister by Mr Putin. The nomination that its priorities as chairman of APEC contemplates a wide range of changes in for Prime Minister must be confirmed will be the liberalisation of trade and the corporate law field and real estate by the State Duma. investment activity and a deepening regulation. of economic integration in the region, n In State Duma elections held on cooperation for purposes of The relevant draft bill was submitted to 4 December 2011, the largest party, innovative growth, the improvement of the State Duma by the Russian President United Russia, suffered electoral transport and logistical systems, and on 2 April 2012. The draft bill passed the losses (and lost its two-thirds majority) food security. first hearing in the State Duma on 27 April but ultimately held an absolute while further readings are yet to be majority with 238 (approximately 53%) n On 17 February 2012, Russia scheduled. If adopted in the current of the seats available. The Communist acceded to the Anti-Bribery version, the majority of the amendments Party ( KPRF ) now holds 92 seats in Convention of the Organisation for would enter into force as early as the Duma, the Just Russia party Economic Co-operation and 1 September this year. (Spravedlivaya Rossiya ) 64 seats and Development (OECD). Former the Liberal Democratic Party ( LDPR ) President Dmitri Medvedev also Clifford Chance issued a Briefing Note 56 seats. spoke in 2011 of his intention for on the most salient of the proposed Russia to progress full membership changes to the Civil Code in April 2012. n A programme for privatisation of state of the OECD following accession to As the Draft Bill passes the hearings in assets is expected to be a key focus the WTO. the State Duma, we will provide further for the office of the new President. In updates and briefings aimed at his post-election victory speech, unpacking these provisions and their Vladmir Putin expressed his intention Legal and potential impact on market activities to ensure state assets are sold at more fully. market prices. Regulatory Update New Procurement Rules for State- n In December 2011, MICEX-RTS was General Owned Companies created (from the merger of the The Civil Code Federal Law No 223-FZ “On the MICEX and RTS stock exchanges) as In the first months of 2012 the hottest Procurement of Goods, Works and the largest stock exchange in the topic in the Russian legal world is the Services by Certain Types of Legal Russian Federation. The merger is proposed amendments to the Civil Code. Entities” dated 18 July 2011 (the intended to simplify trading for both If adopted, these changes are expected to “Procurement Law ”) has introduced a traders and investors and forms part change significantly ‘ the rules of the game ’ new regime for public procurement of wider plans to develop Moscow as for all areas of business, from corporate applicable to state and state -controlled a global financial trading centre. relationships and M&A to the real estate companies, natural monopolies and utility companies. © Clifford Chance CIS Limited, May 2012 4 Russia update: Legal and market developments in Russia Spring 2012 The Procurement Law is more flexible than comply with the Procurement Law until Business partnerships may engage in any the pre-existing framework law on public 1 January 2013. type of business activities as long as they procurement (Federal Law No. 94 -FZ) as comply with the following prohibitions: no regards (i) the circumstances when tender Law on Electronic Signatures issues of bonds or other mass securities, procedures must be used, (ii) the The law on electronic signatures has no advertising of their activities and they procedures to be adopted for selecting recently been updated to clarify the may not own any shares of or participate in participants in the tender process (which circumstances in which electronic other companies (which means that they need not be a tender or auction) (iii) the signatures can be used in cross-border cannot serve as any holding companies). requirements for participants in the transactions. Onerous requirements procurement process and (iii) the timetable concerning encryption and regulatory The law allows the participants to agree and documents needed for the permits, which cast doubt on whether in the partnership management procurement project. messages sent via instant messaging agreement on a broad range of matters systems such as those operated by relating to the activities of the partnership Each company subject to the Procurement SWIFT, Bloomberg and Reuters would including: management of its affairs, Law is requried to adopt and publish comply with the law, have been relaxed. composition of its management bodies, details of the procurement procedure on its rights of the participants etc. official website by 1 April 2012 (or a later The basic position is now that any date for certain types of companies) or electronic message with a simple electronic Although the law creates rather flexible otherwise conduct its procurement signature will meet the requirements of the rules for the constitution and operation of activities in accordance with the more law on electronic signatures where the a business partnership, a few provisions restrictive Federal Law No. 94 -FZ. parties have previously agreed to use an in it (such as the requirement for the CEO electronic signature when using the to be a participant, restrictions on the Companies subject to the Procurement relevant messaging system and the partnership’s activities and others) raise Law must also adhere to certain parties have expressly agreed to keep the concerns as to the potential use of this principles during a procurement process. means of generating the electronic new form of entity in practice. Key among these are: transparency of signature confidential. information; equal treatment of Restriction on foreign ownership of competitors and a lack of arbitrary Clifford Chance issued a Briefing Note land close to the Russian border is requirements or restrictions; value for on changes to the law on electronic effective money, taking into account where signatures in April 2011. 20 January 2012 was the deadline for necessary the life cycle of the relevant foreign individuals and legal entities to product; steps to minimise the expenses Corporate comply with restrictions on foreign of the procuring entity; and equality of ownership of land in certain territories New Law on Business Partnerships access to the process, including close to the Russian border. The list of In December 2011, a new law on proportionate requirements particular territories close to the border business partnerships was adopted by for participation. was approved in 2011 and included, for the Russian parliament and will enter into example, some areas in the St. force on 1 July 2012. The law was The penalties applicable for Petersburg region. The framework originally intended to facilitate venture non -compliance are presently unclear.
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