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.