Doing Business in Russia - Baker McKenzie

1 Doing Business in Russia2016 Doing Business in Russia 2016 Baker & McKenzie - CIS, Limited Moscow Office White Gardens, 10th Floor 9 Lesnaya Street Moscow 125047, Russia Telephone: +7 495 787 27 00 Fax: +7 495 787 27 01 St. Petersburg Office BolloevCenter, 2nd Floor 4A Grivtsova Lane St. Petersburg 190000, Russia Telephone: +7 812 303 90 00 Fax: +7 812 325 60 13 All of the information included in this document is for informational purposes only, and may not reflect the most current legal developments, judgments, or settlements. This information is not offered as legal or any other advice on any particular matter. The Firm and the contributing authors expressly disclaim all liability to any person in respect of anything, and in respect of the consequences of anything, done or not done wholly or partly in reliance upon the whole or any part of the contents of Baker & McKenzie s Doing Business in Russia brochure.

2 No client or other reader should act or refrain from acting on the basis of any matter contained in this document without first seeking the appropriate legal or other professional advice on the particular facts and circumstances. Baker & McKenzie CIS, Limited is a member of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a partner means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an office means an office of any such law firm. Doing Business in Russia Baker & McKenzie i Table of Contents 1. Russia An Overview .. 1 Geography .. 1 Population .. 1 Political System .. 1 International Relations .. 4 Economy .. 5 2. The Russian Judicial 7 Introduction .. 7 Courts of General Jurisdiction .. 7 State Arbitrazh 9 Administrative Judicial Proceedings.

3 17 International Arbitration .. 21 Enforcement of Judgments and Arbitral Awards .. 22 Alternative Dispute Resolution and Mediation .. 23 3. Promoting Foreign Investment in Russia .. 24 General Provisions Regarding Foreign Investments .. 24 Restrictions on Strategic Companies .. 26 Controlled Transactions .. 28 Special Restrictions for Foreign States, International Organizations and Organizations under Their Control .. 31 Consequences of Violation of the Law on Strategic Companies .. 32 4. Establishing a Legal Presence .. 33 Representative Office and Branch of a Foreign Legal Entity .. 33 Forming a Russian Legal Entity .. 34 Limited Liability Companies .. 37 Joint Stock Companies .. 40 5. Issuance and Regulation of Securities .. 45 Introduction .. 45 ii Baker & McKenzie Securities in General .. 45 Placement and Circulation of Foreign Securities in Russia .. 46 Equity Securities.

4 47 Debt Securities .. 47 Securitization .. 51 Russian Depositary Receipts (RDRs) .. 54 Investment Units of Mutual Investment Funds ( Investitsionniy Pai ) .. 55 Infrastructure of the Securities Market .. 55 Organizers of Trade, Stock Exchanges, and Clearing Organizations .. 58 Regulation of the Securities Market .. 59 Regulation of Certain Securities Transactions .. 61 Placement and Circulation of Russian Shares Overseas .. 62 Regulations of Derivatives in Russia .. 63 Inside Information .. 65 6. Competition Protection Law .. 67 Abuse of Market Dominance .. 68 Anticompetitive Agreements, Concerted Actions and Actions of State Bodies Limiting Competition .. 71 Requirements for Tenders and Price Quotations .. 75 State Aid .. 76 Establishment of Companies, Mergers & Acquisitions and Joint 77 Procedures and Timing .. 84 Unfair Competition and Advertising .. 84 Agreement on the Eurasian Economic Union.

5 85 7. Corporate Compliance .. 87 Overview of the Key Provisions Anti-Bribery Laws of Russia .. 87 Administrative Offenses .. 88 Criminal Offenses .. 90 Doing Business in Russia Baker & McKenzie iii 8. Taxation .. 95 Introduction .. 95 Types of Tax .. 96 Tax Audits .. 97 Transfer Pricing Rules .. 99 Corporate Profits Tax .. 102 Taxation of Foreign Companies .. 111 Double Taxation Treaties .. 119 Value Added Tax ( VAT ) .. 131 Mineral Extraction Tax .. 135 Taxation under Production Sharing Agreements .. 139 Corporate Property 139 Social Security Contributions .. 141 Individual Income Tax .. 143 Tax Amnesty .. 144 Regional and Local Taxes .. 145 9. Customs, Trade and WTO Aspects .. 147 Introduction .. 147 Accession to the World Trade Organization .. 147 CIS Free Trade Agreement .. 155 Eurasian Economic Union and Customs Union .. 157 Unified Tariff Regulations of the Customs Union.

6 159 Preliminary Classification Decisions .. 159 Sanitary-Epidemiologic Measures .. 160 Technical Regulations (Confirmation of Compliance) . 161 Phytosanitary and Veterinary 163 Import and Export Licensing .. 164 The new Customs Code of the EAEU .. 165 The Russian Customs Authorities .. 167 Declarant (Importer of Record) .. 169 Registration of Importer of Record with Local Customs 170 Customs Brokers (Representatives/Agents).. 170 Authorized Economic Operator .. 171 Customs 172 iv Baker & McKenzie Electronic Declaration .. 173 Customs Regimes .. 174 Customs Valuation Rules .. 179 In-Kind Contribution .. 183 Customs Inspection and Liability .. 184 Safeguard Measures .. 188 Export Control .. 189 10. Sanctions .. 191 Introduction .. 191 Sanctions targeting individuals and legal entities (SDN and DP Lists) .. 191 Sectoral 191 How to comply .. 192 Russian response to sanctions.

7 192 Russian sanctions against Turkey .. 193 11. Currency Regulations .. 195 Introduction .. 195 Currency Operations .. 195 Resident vs. Non-resident Status .. 196 Special Currency Control Rules .. 196 Repatriation of Currency Proceeds .. 197 Transaction Passport .. 198 Foreign Bank Accounts of Russian Residents .. 199 Liability for Violation of Russian Currency Regulation .. 200 12. Employment .. 202 Introduction .. 202 Employment-related Orders .. 204 Labor Books .. 204 Mandatory Policies and Procedures .. 205 Probationary Period .. 205 Minimum Wage .. 206 Working Time .. 206 Holidays and Non-working Days .. 207 Doing Business in Russia Baker & McKenzie v Vacations .. 208 Sick Leave .. 209 Maternity Leave .. 210 Dismissal .. 211 Compensation .. 212 Employment of Foreigners in Russia .. 212 Trade Secrets (Know-how) .. 215 Personal Data .. 217 13. Property Rights.

8 218 Introduction .. 218 Other Real Estate .. 230 State Registration of Rights to Real Estate .. 235 Classification of Real Estate .. 239 Payments for Real Properties .. 240 Residential Real Estate .. 240 Mortgage of Real Properties .. 241 Amendments to Part I of the Russian Civil Code in 2013 2015 .. 247 14. Privatization .. 250 History of Privatization .. 250 Current Status .. 251 Recent developments .. 254 15. Language 255 16. Civil 258 17. Intellectual Property .. 263 Regulatory Environment .. 263 Patents .. 264 Trademarks, Service Marks, Trade Names and Appellations of Origin of Goods .. 267 Company Names and Trade Names (Commercial Designations) .. 270 Domain Names .. 271 Copyrights and Neighboring Rights .. 273 vi Baker & McKenzie Software Programs and Databases .. 274 Topologies of Integrated 274 Trade Secrets (Know-How) .. 274 Employee s Developments.

9 276 License and Franchise 278 IP Enforcement. IP Court .. 279 Russia s New Anti-Piracy Legislation .. 281 18. Insolvency .. 284 Overview .. 284 Legislation .. 284 Procedure .. 285 Challenging transactions .. 292 Priority of Claims .. 294 Treatment of Secured Creditors .. 295 Liability of Controlling Persons .. 296 19. Natural Resources (Oil and Gas/Mining) .. 299 Introduction .. 299 Subsoil 299 Subsoil Users .. 300 Licenses .. 300 Transfer of Subsoil Rights .. 301 Strategic Deposits .. 302 Production Sharing Agreements .. 303 Export of Gas and LNG .. 303 Precious Metals and Gem Stones .. 304 20. Banking .. 306 Introduction .. 306 Banking and Banking Operations .. 306 Legal and Regulatory Framework .. 312 21. Insurance in Russia .. 320 Introduction .. 320 Licensing 320 Restrictions on Foreign Investments .. 321 Doing Business in Russia Baker & McKenzie vii Regulation of the Insurance Market and Products.

10 322 Types of Insurance in Russia .. 323 22. The Pharmaceuticals and Healthcare Industry .. 324 Legal Framework .. 324 Regulatory Bodies .. 326 Clinical Trials of Medicinal Preparations and Clinical Studies of Medical Devices .. 328 Registration of Medicinal Preparations and Medical Devices .. 331 Manufacturing .. 339 Importation .. 341 Wholesale .. 342 Retail Sale .. 344 Price Regulation .. 345 Interchangeability .. 346 Technical Maintenance of Medical Equipment .. 348 Government-run Programs for Medicinal Supply .. 348 Promotion .. 351 23. Telecommunications .. 356 Applicable Laws and Competent State Bodies .. 356 Telecommunications Licenses .. 358 Rights to Use Radio Frequencies .. 360 Registration of Radio Frequency Emitters .. 362 Broadcasting of Mandatory Public TV Channels and Radio Stations .. 362 SORM Issues .. 363 Technical Regulation Requirements .. 363 Internet Communications 365 Bloggers.