Corporate

Intellectual property

Overview of changes to corporate names in the Russian Federation
Changes in intellectual law effective since 1 January, 2008

Labor

Concluding and terminating labor contracts
Personal data in Russia
Labor law defiances

Migration

Liability for violating migration laws
Business vs work visas
Changes to Russian Federation migration laws
Migration recording
Acquiring Russian citizenship
Foreign nationals working in Russia
News on Russian visas

Dispute resolution

Pros and cons of solving international Disputes in Russian State Arbitration Courts and in the International Commercial Arbitration Court of the Russian Chamber of Commerce and Industry

Establishing business in Russia

Choosing which type of legal entity to register is one of the most important stages before undertaking business activity in Russia. The type of legal presence will influence all activity, including financial and tax reporting, customs and currency control. Therefore, an investor should pay special attention to determining the appropriate corporate form which will help him achieve his goals while meeting all legal requirements.

A foreign investor may act through one of several legal forms:

As a representative or branch office of foreign legal entity
As a Russian legal entity
As a foreign investor

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Declaring medicines. Is it a challenge?

Since 1 January 2007, mandatory certification of medicaments has been replaced by declaration of compliance. Participants on the pharmaceutical market are transferring to declaration of medicaments in accordance with Resolution of the Government of the Russian Federation and methodological recommendations of the Ministry for Industry and Power of Russia. On 1 April, 2007, in accordance with Resolution of the Government of the Russian Federation dated 28 December, 2006, “On Introduction of Amendments into Resolution No. 72 of the Government of the Russian Federation, dated 10 February, 2004”, the period expired during which the declare could (was entitled to) choose independently the form of mandatory confirmation of compliance – mandatory certification or declaration of compliance.

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Registration Changes for Affiliated Offices of Foreign Non-Profit Non-Governmental Organizations

A revised version of the Federal Law "On non-profit organizations" № 7-FZ dated January 12, 1996 came into effect on April 18, 2006. According to the revised law, representative offices and branch offices (hereinafter referred to as Affiliated Offices) are registered by the Federal Registration Service under the Ministry of Justice of the Russian Federation (hereinafter referred to as FRS). Previously registered Affiliated Offices of foreign companies acting in the Russian Federation must have registered under the new law before October 17, 2006. After that date representative offices or branch offices that did not register, must discontinue their activities until they are registered in accordance with the new regulations.

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Overview of changes to corporate names in the Russian Federation

On 1 January, 2008, Part IV of the Civil Code of the Russian Federation comes into effect. The new part of the Civil Code unifies and systematises the legislation of the Russian Federation in the sphere of legal protection of the results of intellectual activities and means of individualisation, one of which is recognised as the corporate name of an organisation.

The corporate name of a legal entity shall not include:

• Full or abbreviated names of the Russian Federation, foreign states, as well as words derived from such names;
• Full and abbreviated official names of federal state authorities, state authorities of constituent entities of the Russian Federation and local government bodies;
• Full or abbreviated names of international and inter-governmental organisations;
• Full or abbreviated names of public associations;
• Designations counter to the public interests, as well as humane and moral principles.

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Changes in intellectual law effective since 1 January, 2008

A special focus on Part 4 of RF Civil Code is accounted for by the fact that since 1 January 2008, all laws currently regulating the sphere of intellectual property will cease to be effective. The laws to become ineffective include RF Patent Law, RF Law “On Trademarks, Service Marks and Appellations of Origin”, RF Law “On Author’s Rights and Related Rights”, and many other related laws and legal regulatory acts. The Civil Code will take the power of regulation over intellectual property in full. The idea of laws absorption by the code creates an extremely unpleasant precedent contradicting both the Civil Code itself and the legal doctrine, in general. The Code has basic provisions further disclosed in laws approved in relation thereto. Nowhere in the world is the intellectual property included into the Civil Code: this sphere is regulated by independent laws. The only exception to the rule may be countries where special laws are joined in a uniform code. However, this code is not called the Civil Code, but the Intellectual Property Code.

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Concluding and terminating labor contracts

The latest changes to the Labor Code of the Russian Federation came into effect on Oct. 6, 2006. Despite the number of changes made, none were revolutionary or conceptually new. The changes were aimed at correcting problems with the Labor Code, which was adopted in 2002. The standards for all labor law institutions, including labor contracts, have been revised. This article will discuss the main changes in concluding and terminating labor contracts.

Revised Article 57 of the Labor Code obliges parties to include the following additional information in labor contracts: details of the identification documents (ID), the name of the employer’s representative signing the contract and the basis on which this representative acts, and where and when the contract was signed. Legal entities also have to provide their Taxpayer Identification Number (INN).

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Personal data in Russia

The Russian Federation’s Personal Data Law came into effect on Jan. 26, 2006, and followed on the heels of Russia’s ratification of the European Convention for the Protection of Individuals with Regard to Automatic Processing of Personal Data. The need for such a law had been evident for quite some time prior to its adoption.

The law creates uniform requirements for processing individual personal data and the security measures surrounding the storage of such personal data.

Personal data is defined as any information associated with an individual allowing that person to be specifically identified. Such information includes: full name; date and place of birth; home address; information about marital, social, property and official status; education; profession; income; etc.

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Liability for violating migration laws

The State Duma has adopted the Federal Law “On Alterations to the Russian Federation Code of Administrative Offences (Regarding Reinforcement of Liability for Infringement of the Order of Employing Foreign and Stateless Persons in the Russian Federation).” The changes put forth in the law significantly toughen penalties for violating migration law, which governs foreign and stateless persons’ entry, residency and engagement in labor activities in the country. It also lengthens the time period – from two months to one year – during which violators are liable for administrative punishment.
Fines on Foreign Nationals and Stateless Persons
The fine on foreign or stateless persons for violating entry or residency rules of the Russian Federation, including entering the country on visas which do not accurately reflect intentions of visits to Russia, amounts to 20-50 times of minimum monthly wage , with the possibility of deportation.
A foreign national or stateless person working in Russia and not holding a work permit is in danger of being fined at a rate from 20 to 50 times minimum monthly wage, with the possibility of deportation.

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Changes to Russian Federation migration laws

Migration problems face all modern states, including Russia. During the past 10 years, illegal migration has become a significant problem in the country and continues to increase with no sign of slowing. According to experts, there are more than 1.5 million illegal foreign nationals in the country, many of whom are also working.

In light of the growing problem, Russian migrations laws are being reviewed and changed. Over the course of several years, the State Duma examined proposed changes to federal statutes, and finally during its 2006 spring session approved bills in their third readings to modify migration policy, including registration and work permits.

On July 19, Russian Federation President Vladimir Putin signed into law changes affecting the registration and residency of foreigners in the Russian Federation. The new laws (No. 109-FZ and No. 110 - FZ of July 18, 2006) will come into effect on Jan. 15, 2007. Duma deputies say the new regulations will considerably liberalize migration policy and will simplify the legal regime for foreigners seeking to reside temporarily or permanently in the Russian Federation.

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Foreign nationals working in Russia

On identifying of instances when foreign nationals or stateless persons temporarily staying (temporarily resident) in the Russian Federation perform work outside region of the Russian Federation in which they were issued a work permit (temporary residence permit)

In accordance with article 13, paragraph 6 of Federal Law “On the legal status of foreign nationals in the Russian Federation” Government of Russia has established instances when foreign national (stateless person) temporarily staying or temporary residing in Russia can perform work outside region of the Russian Federation in which they were issued work permit or temporary residence permit.

Business trip

If foreign national temporarily staying in Russia is sent on a business trip, the total duration of work outside the stated region can not exceed 10 calendar days within the validity of work permit.

If foreign national temporarily residing in Russia is sent on a business trip, the total duration of work outside the stated region can not exceed 40 calendar days within 12 calendar months.

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Migration recording/Migration registration

On Jan. 15, Federal Law №109-FZ “On the Migration Records of Foreign Nationals and Stateless Persons in the Russian Federation” dated July 18, 2006, took effect.

The stated law establishes the new order of registration which establishes a notification form for registration and not of an application for permission, as it used to be.

In accordance with the order, foreign nationals have to register within three business days from the day of arrival in the Russian Federation. Foreign nationals temporarily staying in Russia must present to the inviting party copies of a passport with a valid visa (if the visa regime is established) and a migration card. The inviting party (a national of Russia, foreign national with permanent residency in Russia, a legal entity, or a branch or representative office) shall submit notification to the corresponding executive authorities (bodies of Federal Migration Service) and provide the foreign national with tear-off coupon. The mark on the tear-off coupon of notification (with stamp) is the confirmation that his or her presence has been recorded.

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Acquiring Russian citizenship

The current procedure for receiving citizenship of the Russian Federation is regulated by the Constitution of the Russian Federation, Federal Law No. 62-FZ, dated 31 May, 2002, “On Citizenship of the Russian Federation” and a number of other regulatory legal acts.

According to the statistics, the number of people desiring to receive citizenship of the Russian Federation has been steadily increasing since the Federal Law “On Citizenship of the Russian Federation” came into effect in 2002.

The Fundamental Law of the Russian Federation (the Constitution of the Russian Federation) envisages freedom to choose citizenship of the Russian Federation. There are various ways to acquire citizenship, each of which has its own specifics affecting, to one degree of another, the people entitled to take advantage of each given method.

In contrast to the Law regulating the procedure for receiving citizenship, the methods have become fewer and, correspondingly, the requirements made on persons striving to become citizens of the Russian Federation have become stricter. This law recognises the following ways of receiving citizenship:

• By birth;
• As a result of acceptance into citizenship of the Russian Federation;
• As a result of being reinstated to citizenship of the Russian Federation;
• On other grounds.

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News on Russian visas

On October 18th, Decree of the Government of the Russian Federation dated October 4, 2007 #635 “On the alteration of the regulation on the establishment of visa form, order and conditions of its obtaining and issue, prolongation, reissue in case of its loss as well as order of its cancellation” took effect.

The above Decree establishes the following changes:
1) Total period of a foreign nationals stay in Russia under multiple visa cannot exceed 90 days within each 180-day period. This order is applied to visas which are issued after 18th October, 2007

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Pros and cons of solving international Disputes in Russian State Arbitration Courts and in the International Commercial Arbitration Court of the Russian Chamber of Commerce and Industry

The changes and potential in Russia’s economy have attracted many companies to the Russian Federation in search of business opportunities.

As Russia actively integrates into the global economy, the number of international contracts is continually increasing, making the legal protection of both domestic and foreign commercial interests ever more important. In Russia, the rights of foreign trade partners are protected by two main jurisdictional bodies: the state arbitration courts of the Russian Federation (hereinafter referred to as arbitration courts) and the International Commercial Arbitration Court of the Russian Chamber of Commerce and Industry (hereinafter referred to as the ICAC).

For companies and businessmen, it is difficult to determine the difference between the two and system is more appropriate for their claims.

Having analyzed the theory and practice surrounding business disputes involving foreign entities in Russia, one can conclude that neither state arbitration courts nor the ICAC is the sole recommended juridical body. Both alternatives have pros and cons. The fundamental distinctions between the two are reviewed below.

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