Legal status of international business entity

The Federal Law №292-FZ from August 3, 2018 with the amendments to the article 1202 of part three of the Civil Code of the Russian Federation clarified the definition «personal law of the legal entity».

It was defined, that the personal law of the legal entity is the legal system of the country, where it was established, unless contrary to provisions of this Federal Law and the Federal law №290-FZ "On international business entities" which entered into force on August 3, 2018.

In turn, this Federal Law defined the legal status of business companies with the status of an international company registered in the Unified State Register of Legal Entities (EGRUL) due to the change of personal law in the procedure of replacement of the legal address from one jurisdiction to another, maintaining the legal status and corporate structure (redomiciliation), the rights and obligations of the participants, operation features, as well as due to the reorganization or liquidation.

Thus, according to the language of Law, an International business entity is a foreign legal entity, commercial corporate organization, that has changed its personal law in accordance with the established legislative procedure.

The location of international business entities is the territory of special administrative regions - the Russian island in Primorsky Territory and и the Oktyabrskiy island in Kaliningrad region. The development of such regions is regulated by the Federal Law №291-FZ from August 3, 2018 «On special administrative regions in the territories of Kaliningrad region and Primorsky Territory» and is carried out in order to create an attractive investment environment for Russian and foreign investors.

The conditions for obtaining the status of an international company are as follows:

  • establishment in the State – the member or observer of the Financial Action Task Force on Money Laundering (FATF) or the member of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL);
  • operating on the territory of several States, including Russia;
  • the adoption of investment obligations on the territory of the Russian Federation, with a minimum investment amount of 50 mln RUB for a period no less than 6 months from the date of state registration of an international company.

The short legal name of international business entity in Russian should include the full or short name of international business entity or the abbreviation «IBE» and for public joint stock companies the abbreviation «IBE public joint stock company».

The new Law also regulates the following:

  • results of changes in the personal law by foreign legal entities;
  • features of state registration in status of international entities and acquisition of this public status by joint-stock companies;
  • provisions on securities and other financial instruments;
  • registration features of rights on shares;
  • procedure for status termination without change of personal law or change of personal law under change of jurisdiction.

According to the Information and Analytical system Globas at the present time, a little more than 500 of active commercial entities and joint-stock companies are registered on the Russian island in Primorsky Territory and on Oktyabrskiy island in Kaliningrad. Detailed information about activities of the registered companies is available by subscription to the system Globas.

New order of proceedings for administrative cases is determined

Amendments to the Code of Administrative Offences of the RF (CAO RF) were made by the Federal Law from August 3, 2018 №298-FL.

In particular, arrest of property of legal entities that act as defendants in administrative cases on illegal gratification on behalf of legal entity that is provided by the Article 19.28 of the CAO RF.

Under arrest of property is implied embargo on property disposal or limitations on possession or disposal of property. In cases when legal entities do not have other property, monetary funds on deposits and banking accounts can be arrested. Besides, value of the arrested property cannot exceed maximum amount of administrative fine provided by the Article 19.28 of the CAO RF.

Arrest of property is implied by judicial procedure based on the decision on initiation of administrative proceeding and, provided with reasoned application of prosecutor.

Specific facts that were cause for making such a decision and limitations on property disposal should be determined in court decision on arrest of property.

Court decision on arrest of property is enforced in accordance to the legislation concerning enforcement proceedings.

Arrest of property can be annulled by the judge who took this decision, on presentation of prosecutor, bailiff and executor of justice or after considering of reasoned statement of defense (legal representatives) of legal entities.

Besides, according to the Addition to the Federal Law, made to the Article 19.28 of the CAO RF, legal entities can be released from administrative responsibility, with contribution made to detection of violation, administrative investigation, crime related to such violations, and in cases when these legal entities were subjected to blackmail. However, the Addition to the Article 19.28 of the CAO RF does not concern administrative violations regarding foreign authorities, including public international organizations while carrying out commercial transactions.

You can get more detailed information about decisions of arbitration courts and documents on enforcement proceedings of all companies of Russia, if subscribing for access to the Information and Analytical system Globas.