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Corporate

Acquisition

Reorganisation procedure whereby a legal entity takes over another one (the legal entity that is taken over is terminated, and its assets are transferred to the acquiring company).

Annual general meeting

Annual meeting of shareholders that makes essential decisions regarding the legal entity’s activities, such as the election of General Director.

Auditor (audit committee)

Body that performs revisory functions in a legal entity; it is an optional body in LLCs and JSCs with less than 50 shareholders.

Board of Directors

Collegial body responsible for serving the shareholders’ interests and securing their rights between the general shareholder meetings; it is an optional body in LLCs and JSCs with less than 50 shareholders.

Branch

Form of solitary subdivision of a legal entity (Head office), which is not a separate legal entity (i.e. is considered part of the Head Office’s legal entity), can perform all of the Head Office’s functions in the area of responsibility, generally treated as a permanent establishment from the tax viewpoint.

Break-up (Demerger)

Reorganisation procedure whereby a legal entity’s assets are demerged, and two new companies are created based on them. The former legal entity is terminated.

Charter

Consolidated constitution of a legal entity that includes information on the company name, charter capital etc.

Charter capital

Total value of all shares owned by shareholders of a legal entity, which is specified in its charter.

Collegial executive body

Optional body elected by the general shareholders meeting that is responsible for direct control over the legal entity; it is generally headed by the General Director,

Company name

Method of individualising a legal entity that is to be specified in its constitutional documents.

Constitutional documents

Documents that serve as the basis for activities of a legal entity. Commercial legal entities operate based on the provisions of their charter.

Dividend

Profits issued to the holders of shares in a LLC or JSC.

General Director

Sole executive body of a legal entity that is authorised to act on its behalf without a power of attorney. Russian law provides for the possibility of several General directors.

General shareholder meeting

Meeting of shareholders that makes decisions regarding the legal entity’s activities.

Head Office

A legal entity that opens a solitary subdivision, such as a Rep Office or Branch.

Incorporation procedure

Procedure for forming a new legal entity and its registration with the EGRYUL.

Interested-party transaction

Transaction involving an affiliate of a legal entity and generally requiring an approval by  the general shareholder meeting.

Joint venture

Legal entity operated by two or more partners, generally one or more being Russian residents and at least one foreign.

Joint-stock company

Type of a legal entity, distinct and separate from its members, its charter capital is divided into shares. There are two types of JSC: public and non-public. Shares of a public JSC can be listed on the stock market, and be publicly subscribed to.

Limited liability company

Type of a legal entity, distinct and separate from its members, its charter capital is divided into shares that can neither be listed on the stock market, nor be publicly subscribed to.

Liquidation

Termination of a legal entity’s registration, resulting in loss of its legal capacity.

Major transaction

Transaction with the value of at least 25% of the legal entity’s balance sheet, unless otherwise provided for in the charter, which generally requires a (qualified) approval by the general shareholder meeting or board of directors.

Merger

Reorganisation procedure whereby two legal entities consolidate into one (former legal entities terminate, and a new one is created based on joint assets).

Reorganisation

Termination or alteration of a legal entity’s status, resulting in the succession of legal entities, thereby creating and terminating one or more new legal entities (e.g. merger, acquisition, break-up, spin-off, transformation).

Representative Office

Form of solitary subdivision of a legal entity(Head Office), which is not a separate legal entity (i.e. is considered part of the Head Office’s legal entity), its functions are limited to representing the Head Office, and it can only engage in commercial activities of auxiliary and preparatory nature, generally not treated as a permanent establishment from the tax viewpoint.

Share

Unit for accounting the participation in a legal entity’s charter capital. In a JSC, a share represents a part of the legal entity’s stock; in an LLC shares refer to the percentage of the contribution (e.g. money) directly made to its charter capital. 

Shareholder

An owner of a legal entity and one who holds shares in a legal entity, and generally enjoys voting rights.

Shareholder agreement

Agreement between all or some shareholders of a legal entity regulating issues of its managing, dispute resolution, sale of shares etc.

Sole trader

Individual who conducts business activities without creating a legal entity and is registered in EGRYUL.

Spin-off

Reorganisation procedure whereby a section of a legal entity is split off as a separate business.

Trade name

Method of individualising a legal entity that is not specified in its constitutional documents. Trade names are not obligatory for legal entities.

Transformation (Identity change)

Reorganisation procedure whereby the legal entity remains structurally intact, but its type changes (e.g. from LLC to JSC).

Unified State Register of Legal Entities

Public register with information on the legal entity’s founders, General Director, charter capital, etc.

Voting rights

The rights enjoyed by shareholders to vote their shares.

Employment

Annual paid vacation

28 days of paid vacation time that can be used by every employee annually. Increased vacation durations is mandatory for certain categories of employees (working in harmful or dangerous conditions, in the Far North and equated territories, under irregular working hours etc.). 

Dismissal

Unilateral termination of employment contract by the employer due to employee’s fault or based on economic grounds.

Distance work employment contract

Employment contract for the performance of work by the employee outside employer’s premises.

Employment contract

Contract concluded between an employer and an employee for performance of job functions, which must contain obligatory provisions set forth in the Russian Labour Code. Employment contracts may be concluded for either an indefinite or fixed term (i.e. fixed-term employment contracts).

Federal Minimum Monthly Wage

The statutory minimum level of salary amount payable per month to employees, regardless of his occupation. It is established at the federal level in respect of the whole country, but increased minimum amounts may be established at the regional level.

Fixed-term employment contract

Employment contract concluded on an exceptional basis for a fixed term (no longer than 5 years) in occasions specifically provided for by the Russian Labor Code, e.g. for the purposes of fulfilment of a certain task determined in the employment contract. 

Highly-qualified specialist

An employee that stays in Russia on the basis of a work visa and work permit, receives an annual salary/ remuneration that is no less than RUB 2 million, or lower in certain cases, is employed under a Russian employment contract, and has particular experience or skills as determined by the employer. HQSs are eligible for the standard personal income tax rate of 13% on remuneration from their employment before becoming Russian tax residents. 

Internal order

An order signed by the employer determining that an employee is hired, transferred to a new job, granted vacation, disciplined or dismissed etc. under the Russian Labour Code.

Irregular working hours (open-end working day)

Type of working regime agreed upon in the employment contract under which the employer is permitted to occasionally engage employees to work beyond their regular working hours without their prior written consent, additional remuneration or special justification (cf. overtime work).

Labour book

Document containing a record of an individual’s employment history and related information. 

Maternity leave

Period of time of at least 70 days before and at least 70 days after an employee’s childbirth during which the employee is absent from work, subject to exceptions. The relevant monthly compensation is paid by the Russian Social Insurance Fund.

National public holidays

Days of the year when employees are generally absent from work (e.g. New Year holidays, Christmas, Day of the Defender of the Fatherland etc.), unless exceptions set forth in the Labour Code apply (e.g. in organisations with continuous operation).

Overtime work

Working time exceeding normal working hours, requested by the employer in extraordinary circumstances, subject to prior written consent of the employee. Overtime work shall not exceed four hours in two consecutive days and is limited to 120 hours per year. Employer shall pay for overtime work in addition to the basic salary/remuneration.

Permission to hire foreign nationals

Permission obtained by the employer in order to be entitled to hire foreign nationals.

Probationary period

Period of time specified in the employment contract (not exceeding 3 months for regular employees and 6 months for certain managerial positions, such as General Director), in course of which the employer is entitled to dismiss the employee without paying out a severance package.

Salary/remuneration

Monthly payment made to the employee every fortnight, which may not be set below the minimum wage established by Federal law (however higher rates may apply at a regional level). In addition, the employee may also receive statutory (e.g. for working in special climate conditions), or other benefits at employer’s discretion.

Severance package

Monies payable to the employee in the event of termination of his or her employment.

Sick leave

Period of time when an employee is unable to work due to illness, or the need to take care of a sick relative. Employees are entitled to a full or partial reimbursement of their salary during the sick leave, which is performed by the employer, at the expense of the Russian Social Insurance Fund.

Work permit

Permit obtained by a foreign national in order to be entitled to work in Russia.

Work visa

Visa obtained by a foreign national in order to be entitled to work in Russia.

Working hours

Regular working hours may not exceed 40 hours per week, however may have to be reduced depending on employee category (minors, working in hazardous or harmful conditions etc.) Overtime work is possible, but strictly regulated.

Customs Law

Customs classification

Classification of goods under the EACU Harmonised Commodity Description and Coding System by the declarant prior to filing a customs declaration, subject to verification by customs authorities.

Customs clearance

Procedure during which goods entering or exiting the EACU are declared, verified, inspected, paid for, and released in or outside the EACU customs territory.

Customs declaration

Declaration of information on imported/exported goods prepared on a prescribed form that contains information on the chosen customs procedure and other peculiarities necessary for the release of goods.

Customs duty

Compulsory payment collected by customs authorities upon import/export of goods alongside other customs payments, calculated based on either the customs value of goods, or their physical characteristics.

Customs payments

Import/export customs duties, VAT, excise duties, customs fees payable upon import/export of goods.

Customs procedure

Set of rules establishing the requirements for import/export, post-customs use of imported/exported goods.

Customs representative

Legal entity entered into a special register that carries out customs clearance of goods of behalf of the declarant.

Customs value

Value of imported/exported goods which serves as the base for the calculation of import/export customs duty.

Declarant

Person declaring the goods or in whose name the goods are declared by the customs representative.

EACU customs territory

The territory of EACU members including exterritorial artificial islands, installations, constructions and other objects over which EACU members have exclusive jurisdiction.

EACU Harmonised Commodity Description and Coding System (Tariff nomenclature)

Standardised system of names and numbers to classify goods in EACU based on the Harmonised System developed by the WTO and used in the EU used for customs classification.

EACU members

Russia, Armenia, Kazakhstan, Kyrgyzstan and Belarus.

Eurasian Customs Union

Trade bloc with a common customs policy and regulations comprised of EACU members with common customs borders and a common customs policy and regulations.

Export

Customs procedure under which goods are exported from the EACU customs territory.

Measures of non-tariff regulation

Non-economic methods of regulating import/export of goods (e.g. sanitary and phytosanitary, quality conditions, national security measures etc.).

Release for domestic consumption

Customs procedure under which goods are imported for use in the EACU customs territory permanently. 

Temporary export

Customs procedure under which goods (e.g. equipment for repair operations, exhibits) are temporary exported and used outside the EACU customs territory.

Temporary import

Customs procedure under which goods (e.g. equipment, exhibits)  are temporarily admitted into the EACU customs territory.

Sale and Purchase Agreements

Distribution agreement

Contract under which the distributor undertakes to regularly purchase goods from the manufacturer (seller), and market, promote and resell them at its own expense, usually in a pre-defined territory.

Framework Agreement

Contract between two parties comprising main contractual terms with further details to be agreed in the future.

General Business Conditions (Terms and Conditions)

Set of general rules that a buyer and seller agree upon when concluding a sale and purchase agreement.

International Commercial Terms

Set of three-letter standard trade terms (e.g. EXW, FCA etc.) commonly used in international sale of goods updated by the International Chamber of Commerce (the latest edition is as of 2010). Among other things, it allocates costs between the buyer and seller, and associated risks of damage or accidental loss of goods.

Purchase Order

Offer made by the buyer to the seller to enter into a SPA, indicating types, quantities, and agreed prices for goods or services.

Sale and Purchase Agreement

Contract between a buyer and a seller, under which the seller undertakes to transfer title for certain goods (with the given name and quantity) to the buyer, and the buyer is obliged to accept the goods and provide payments for them.

Vienna Convention on Contracts for the International Sale of Goods

International treaty ratified by over 80 Contracting States (including Russia) that applies to sale and purchase agreements between parties whose places of business are in different Contracting States, or when the rules of private international law lead to the application of the law of a Contracting State. The application of CISG can be excluded by the parties.

World Trade Organisation

Global international organisation which regulates international trade, with 162 members including Russia.

Taxation

Controlled Foreign Companies Rules

Rules on taxation of profits of controlled foreign companies imposing a duty on legal entities who are Russian tax residents to assess, report and pay taxes on undistributed profits of foreign legal entities and foreign unincorporated structures, where they own, directly or indirectly more than 25% of the charter capital; or more than 10% of the charter capital if Russian persons in total own more than 50%, or which they otherwise control, subject to certain exemptions and temporary rules. 

Corporate income tax

Tax payable by Russian and foreign legal entities carrying out activities in Russia through a permanent establishment or receiving income from Russian sources. The tax base is defined as total income received by a taxpayer minus related expenses and allowable deductions. The maximum corporate income tax rate is 20%.

Corporate property tax

Tax levied on both personal property and real estate. The tax base is the average annual residual value of taxable property or cadastral value of real estate. The tax rate is set at the regional level, but shall not exceed 2.2%.

Desk tax audit

Audit conducted at the tax authorities' own premises on the basis of tax returns filed by the taxpayer.

Double Taxation Treaty (DTT)

Agreement between two States aimed at eliminating double taxation of income or gains arising in one State and paid by residents of another State.

Excise duty

Indirect tax levied on mass-consumption products, such as tobacco, alcohol, petrol etc.

Field tax audit

Audit generally conducted at the taxpayer's premises, initiated by decision of the head (or deputy head) of the tax office at which the taxpayer is registered.

Land tax

Tax applicable to legal entities and individuals who have a right of ownership in land or a right of its permanent use. The tax base is the cadastral value of the land. The tax rate is set by local authorities, but shall not exceed 0.3% of the cadastral value (if the land is used for agricultural purposes, occupied by residential properties or utilities, or acquired for private farming) or 1.5% of the cadastral value of all other land.

Permanent establishment

Branch, representative office, division, bureau, office, agency or any other separate fixed place of activity, through which a foreign company regularly engages in business activities in Russia. The term is used exclusively for tax purposes and does not affect the entity’s legal status.

Personal income tax

Tax payable by Russian tax resident and non-resident individuals. The general tax rate is 13% for residents and 30% for non-residents. Taxable income is defined as gross income minus allowable deductions and exemptions. Personal income tax payable from salary/remuneration is computed and withheld by the employer.

Russian tax resident (individual)

An individual who is physically present in Russia for at least 183 calendar days during 12 consecutive months.

Social insurance contributions

Contributions payable in respect of individuals engaged under employment or civil-law contracts to the State Pension Fund, Social Insurance Fund and the Federal Medical Insurance Fund. The base for social insurance contributions is calculated based on the remuneration received by individuals in cash or in-kind under employment or civil-law contracts. They are payable in addition to the employees’ salary (and in total amount to approximately 30% of the employee’s salary).

State duty

Duty levied on an exhaustive list of services generally provided by state authorities, such as bringing a court action, incorporation of a legal entity, services of a notary public etc.

Thin capitalisation rules

Rules that restrict deductibility of interest charged on foreign controlled debt. The rules inter alia apply to loans to a Russian legal entity from a foreign legal entity if the foreign entity owns, directly or indirectly, more than 20% of the Russian entity’s charter capital. The deductibility of interest is restricted to the extent that the controlled debt exceeds net assets by more than three times, or 12.5 times in the case of banks and leasing companies. 

Transfer pricing

Procedure of determining the price of goods and services in certain cross-border and domestic transactions between related parties (e.g. a party is considered related to another party if the former owns more than 25% in the charter capital of the latter) in accordance with the transfer pricing methods set forth in the Russian Tax Code.

Transport tax

Tax applicable to legal entities and individuals who are registered owners of transport vehicles. The tax base depends on the type of the vehicle and its engine capacity, and are set forth in the Tax Code. Regional authorities have the authority to increase or reduce these rates by a multiple of no more than 10 for certain types of motorised transport vehicles.

Value added tax

Tax applicable to legal entities (including rep offices and branches of foreign legal entities), sole traders and any person importing goods into Russia. VAT is also charged on the majority of sales of goods, work and services supplied in Russia. There are three main VAT rates: 0% (e.g. applies to the sale of goods exported outside Russia), 10% (e.g. applies to children's goods, medical and pharmaceutical products etc.) and 18% (applies to all other taxable sales of goods, works and services).

Withholding tax

Tax withheld or deducted and payable by payer of income directly to the state, e.g. income received by a foreign legal entity and not attributed to a permanent establishment, employment income etc.

Currency regulation

Currency non-residents

Individuals whose permanent place of residence is located outside Russia; foreign legal entities; enterprises/organisations that are not legal entities, organised and located outside Russia; and rep offices or branches of foreign legal entities in Russia.

Currency residents

Russian citizens and other individuals whose permanent place of residence is Russia, except for individuals who permanently live outside Russia for more than one year; Russian legal entities; rep offices or branches of Russian legal entities outside Russia; diplomatic and consulate and other missions representing Russia, the Russian government, constituent entities of the Russian Federation, and municipal units.

Currency transaction (valyutnaya operaciya)

Transaction that is subject to Russian currency regulation rules (i.e. a certain transaction between a currency resident and a currency non-resident, provided that the its amount exceeds USD 50.000).

Repatriation of the foreign currency proceeds

Currency resident’s obligation to collect all payments due under a foreign trade contract within a prescribed period. Non-compliance with the obligation may result in payment of an administrative fine.

Transaction passport (passport sdelki)

form submitted to the client’s bank alongside with other documents in order to trigger the approval of a currency transaction.

Intellectual property (IP)

Copyright

Legal right granting the creator of an original work exclusive rights for its use and distribution, which are valid for the author’s lifetime plus 70 years after his decease, after which the product can be freely used by the general public.

Domain name

Unique name identifying a website, which cannot contain registered trademarks, company names, or other methods of individualisation of goods and services.

Industrial design

Artistic and construction solution that determines the outer appearance of a product of industrial or handicraft origin by its images. Starting from 1 January 2015 an industrial design is protected for 5 years, extendable 4 times (25 years in total).

Invention

Technical solution in any field related to a product or a method/process, which is granted patent protection, provided it is novel, inventive (non-obvious from prior art) and industrially applicable. Generally the maximum duration of patent protection for an invention is 20 years from the application filing date, subject to payment of annuities.

License agreement

An agreement between the licensor and the licensee under which the former grants to the latter the right to use intellectual property in Russia, subject to compulsory state registration.

Neighbouring rights

Rights to products of performing music, contents of databases, radio programs, implementation of an architect design, etc.

Patent

Set of exclusive rights granted to an inventor or assignee for a limited period of time in exchange for detailed public disclosure of an invention, utility model or an industrial design.

Trademark

Designation individualising goods or services of legal entities and sole traders, subject to state registration.

Utility model

Technical solution pertaining to a device, which is granted patent protection if it is novel and industrially applicable. The term of a utility model’s patent protection is 10 years from the application filing date, subject to payment of annuities.

Competition

Anticompetitive agreements

Agreements between business entities that may result in restriction of competition, such as cartels, vertical agreements and other anticompetitive agreements (e.g. including ‘tying provisions’, price discrimination, barrier to enter/exit market etc.)

Cartel

Agreement between competitors resulting in price fixing, bid rigging and (or) market sharing.

Dominant entity

An entity is presumed dominant if its market share exceeds 50%; an entity is deemed dominant if its market share is at least 35% but no more than 50%, provided its dominant position has been established by competition authorities; an entity is generally presumed non-dominant if its market share does not exceed 35%, save for a few exceptions.

Local effects test

Test that shall be met in order to trigger jurisdiction of Russian competition authorities, i.e. if the transaction applies to shares or control over a Russian legal entity; control over a foreign entity that supplied over 1 billion RUB worth of products/services to the Russian market, or assets located in Russia.

Merger control

Compulsory prior approval by Russian competition authorities of a merger, acquisition, incorporation of a legal entity or a JV, or certain transactions, provided that certain thresholds and the local effects test are met.

Vertical agreement

Agreement between a seller and a buyer of goods (non-competitors), e.g. between manufacturers and dealers. Certain vertical agreements are considered unlawful.

Law of contracts

Bank guarantee

Type of security, a promise by a bank to provide payment to the creditor from the debtor’s account under certain circumstances, e.g. in case of debtor’s default.

Civil-law contract

A contract between contractor and client as opposed to an employment contract between an employer and an employee. It is illegal to substitute employment contracts with civil-law contracts to escape from labour law regulations.

Construction contract

Civil-law contract between contractor and client under which the former undertakes to perform construction works for the latter for payment.

Cost estimate

Documentation setting forth the price of construction works’ stages to be performed under a construction contract.

Damages

Actual loss and lost profits claimed for breach of contract.

Fine

Type of liquidated damages, a one-time payment made in the event of breach of contract (e.g. RUB 100 or 20% of the total contract price upon a breach).

Lease agreement

Сontract under which the lessor provides his property for temporary use, and the lessee has to regularly pay for it.

Liquidated damages

Damages established by contract or statute that are payable to the aggrieved party in the event of breach of contract (e.g. late performance). 

Long-term lease agreement

Lease agreement concluded for a term exceeding 1 year and subject to compulsory state registration.

Penalty

Type of liquidated damages established for late performance (e.g. 0.1% of the total contract price for every day of delay).

Pledge

Type of security, that arises under a pledge agreement between the pledgee and the pledgor, under which the former is entitled to take possession/sell the pledged property in the event of default under the secured obligation.

Representation

Statement of fact made in order to induce another party to enter into, alter or terminate a contract. Provision of false information may entitle the other party to demand payment of damages, terminate the contract, or declare the contract void.

Security

Mechanism aimed at motivating the debtor to duly perform its contractual obligations.

Service contract

Civil-law contract between contractor and client under which the former undertakes to provide services to the latter for payment.

Suretyship

Type of security, where a legal entity or an individual undertakes to perform a third-party’s obligation if the latter is in default.

Technical documentation

Documentation setting forth the scope, contents and other requirements of construction works to be performed under a construction contract.

Work contract

Civil-law contract between contractor and client under which the former undertakes to perform works for the latter for payment.

Local court system & Arbitration

Ad hoc arbitration

International arbitration not administered by a specialised institution.

Arbitration agreement

Written agreement referring a dispute to arbitration, thereby depriving state courts of their jurisdiction. Parties can refer to arbitration a wide range of issues, save for disputes arising from administrative relations (e.g., tax and customs) and disputes that fall within the exclusive jurisdiction of commercial (arbitrazh) courts (e.g., disputes arising from bankruptcy proceedings). 

Arbitration award

Decision issued by a sole arbitrator or an arbitral tribunal in accordance with an arbitration agreement entered into by the parties.

Arbitrazh courts

Courts responsible for hearing a wide range of cases dealing with issues of commercial character, that have 4 levels: first instance court, court of appeal, cassation court, and court of supervisory appeal (Supreme Court). A ruling issued by the Supreme Court’s Presidium cannot be further appealed.

Astreinte

Form of financial liability for failure to execute a judicial decision. A party that won a court case may request that the court grant a relevant order obliging the losing party to pay monetary compensation for non-performance of the judicial decision.

Constitutional Court

Federal court generally responsible for deciding whether federal and some regional legal acts (including statutes) comply with the Constitution.

Court of Intellectual Property Rights

Specialised court dealing with intellectual property disputes, which is part of the system of commercial (arbitrazh) courts. It is a first instance court hearing disputes over the establishment and validity of IP rights and challenges to regulatory and non-regulatory acts in the IP field. 

Courts of general jurisdiction

Courts responsible for hearing civil, criminal and administrative cases, generally of non-commercial character, most often between citizens, that have 4 levels: first instance court, court of appeal, cassation court, and court of supervisory appeal (Supreme Court). A ruling issued by the Supreme Court’s Presidium cannot be further appealed.

Institutional Arbitration

International arbitration administered by a specialised institution (e.g. ICAC at the RF CCI.).

International Arbitration

Form of alternative dispute resolution (ADR) of non-governmental character, where parties to a dispute of international nature refer it to arbitrator(s) generally elected by the parties and agree to be bound by an arbitration award. Parties submit disputes to arbitration voluntarily, based on an arbitration agreement. 

Recognition and enforcement

Procedure whereby Russian courts recognise and enforce both, domestic and foreign arbitration awards in accordance with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958).

Supreme Court

Highest court within the judicial hierarchy, which heads the systems of both, courts of general jurisdiction and commercial (arbitrazh) courts, but may not interfere with the Constitutional Court.

The International Commercial Arbitration Court at the Russian Federation Chamber of Commerce and Industry

Leading arbitration tribunal in Russia and in East European countries which deals with resolving disputes of international nature.

Land law

Cadastral value

Value of real estate generally determined based on methods of mass assessment (as opposed to individual assessment of property value), recorded in the State Real Estate Cadastre and used for tax and land law purposes.

Designated purpose of the land plot

Category of land plot allocated depending on its prescribed use (e.g. agricultural land, residential land, commercial land, land located beneath a protected object, forestry land, water-front land, reserve land).

Easement

Limited proprietary right to use a neighbouring land plot (e.g. right of way, the laying of pipes or transmission lines, the disposal of sewage etc.)

Exclusive right to acquire a land plot into ownership or lease

Right of owners of buildings and structures located on land plots owned by the state or by a municipality to acquire the underlying land plots either into ownership or lease.

Expropriation of land plots

Taking of land by state or municipality authorities with compensation to the owner for the land plot.  

Lifetime right of ownership with hereditary succession

Limited proprietary right in state or municipal-owned land granted to individuals.

Mortgage

Type of security, that arises under a mortgage agreement between the mortgagee and the mortgagor, under which the former is entitled to take possession/sell the mortgaged property (i.e. real estate) in the event of default under the secured obligation.

Ownership certificate

Certificate confirming right of ownership in real estate.

Personal property

Movable property that is not classified as real estate.

Real estate

Land and other immovable property (such as buildings, structures, as well as aircraft, space objects, sea and river vessels etc.)

Right of economic management

Limited proprietary right enjoyed by a state- or municipal-owned enterprise over property owned by the state or municipality.

Right of ownership

Right to possess, use and dispose of land plots. Right of ownership in land by foreigners is restricted.

Right of perpetual (indefinite) use

Right to use a land plot granted to state and municipal institutions, federal treasury-owned enterprises, and state and local authorities. 

Special Economic Zone

Area within the territory of Russia subject to special legal regulations, which generally involve tax, customs and other benefits, created in order to attract foreign direct investment and develop such areas of economy as technology innovation, tourism, production etc.

State Real Estate Cadastre

Public register with information on real estate objects, including land plots, buildings, structures, premises and other facilities that have undergone cadastral registration.

State registration of real estate

Compulsory registration of the right of ownership, other proprietary interests and encumbrances (e.g. mortgage, long-term lease agreement, easement etc.).

Unified State Register of Real Estate Rights and Transactions

Public information resource, which contains data on the existing or ceased property rights for real estate, information on real estate objects, information on rightholders, encumbrances, arrests etc. in the Russian Federation.

Insolvency (bankruptcy)

Amicable arrangement (composition)

A settlement agreement that may be concluded at any stage of insolvency proceedings between the debtor, insolvency creditors and authorised bodies subject to approval by by the commercial (arbitrazh) court.

External administration (bankruptcy administration)

Optional stage of insolvency proceedings aimed at restoring the debtor to financial health, which includes an appointment by court of an external administrator, whose primary aim is to conduct an inventory of assets and prepare a plan for restoring solvency. The debtor’s management is dismissed.

Financial rehabilitation (financial sanation)

Optional stage of insolvency proceedings aimed at restoring the debtor to financial health  and satisfying the creditors’ claims in accordance with a debt repayment schedule, includes an appointment by court of an administrative manager, however the debtor’s management remains in place.

Insolvency (bankruptcy) criteria

Criteria that shall be met in order for insolvency proceedings to be initiated against the debtor (overall indebtedness of at least RUB 300.000 for legal entities, or RUB 500,000 for individuals, and signs of insolvency (bankruptcy) are present).

Insolvency officer (trustee in bankruptcy)

Key figure in the insolvency proceedings approved by court, whose powers and legal status vary depending on the stage of insolvency proceedings.

Liquidation procedure (bankruptcy proceedings)

Final stage of the insolvency proceedings during which a debtor is declared bankrupt and a liquidation manager is appointed, all of the debtor's assets are included in the pool of assets that comprise the insolvency estate, which is used to satisfy creditors’ claims.

Signs of insolvency (bankruptcy)

Inability to meet creditors’ claims within three months from the moment when they were due.

Stages of insolvency (bankruptcy) proceedings

(i) Supervision (nablyudenie),(ii) Financial rehabilitation (finansovoe ozdorovlenie),(iii) External administration (vneshnee upravlenie), (iv) Liquidation procedure (konkursnoe proizvodstvo), (v) Amicable arrangement (mirovoe soglashenie). 

Supervision (nablyudenie)

First compulsory stage of insolvency proceedings aimed at valuing the debtor’s assets and compiling a list of creditors, which includes an appointment by court of interim manager, whose primary aim is to preserve the debtor's assets while conducting its financial audit. The debtor‘s management remains in place with limited authority.

Corporate

Acquisition

— Corporate

Reorganisation procedure whereby a legal entity takes over another one (the legal entity that is taken over is terminated, and its assets are transferred to the acquiring company).

Annual general meeting

— Corporate

Annual meeting of shareholders that makes essential decisions regarding the legal entity’s activities, such as the election of General Director.

Auditor (audit committee)

— Corporate

Body that performs revisory functions in a legal entity; it is an optional body in LLCs and JSCs with less than 50 shareholders.

Board of Directors

— Corporate

Collegial body responsible for serving the shareholders’ interests and securing their rights between the general shareholder meetings; it is an optional body in LLCs and JSCs with less than 50 shareholders.

Branch

— Corporate

Form of solitary subdivision of a legal entity (Head office), which is not a separate legal entity (i.e. is considered part of the Head Office’s legal entity), can perform all of the Head Office’s functions in the area of responsibility, generally treated as a permanent establishment from the tax viewpoint.

Break-up (Demerger)

— Corporate

Reorganisation procedure whereby a legal entity’s assets are demerged, and two new companies are created based on them. The former legal entity is terminated.

Charter

— Corporate

Consolidated constitution of a legal entity that includes information on the company name, charter capital etc.

Charter capital

— Corporate

Total value of all shares owned by shareholders of a legal entity, which is specified in its charter.

Collegial executive body

— Corporate

Optional body elected by the general shareholders meeting that is responsible for direct control over the legal entity; it is generally headed by the General Director,

Company name

— Corporate

Method of individualising a legal entity that is to be specified in its constitutional documents.

Constitutional documents

— Corporate

Documents that serve as the basis for activities of a legal entity. Commercial legal entities operate based on the provisions of their charter.

Dividend

— Corporate

Profits issued to the holders of shares in a LLC or JSC.

General Director

— Corporate

Sole executive body of a legal entity that is authorised to act on its behalf without a power of attorney. Russian law provides for the possibility of several General directors.

General shareholder meeting

— Corporate

Meeting of shareholders that makes decisions regarding the legal entity’s activities.

Head Office

— Corporate

A legal entity that opens a solitary subdivision, such as a Rep Office or Branch.

Incorporation procedure

— Corporate

Procedure for forming a new legal entity and its registration with the EGRYUL.

Interested-party transaction

— Corporate

Transaction involving an affiliate of a legal entity and generally requiring an approval by  the general shareholder meeting.

Joint venture

— Corporate

Legal entity operated by two or more partners, generally one or more being Russian residents and at least one foreign.

Joint-stock company

— Corporate

Type of a legal entity, distinct and separate from its members, its charter capital is divided into shares. There are two types of JSC: public and non-public. Shares of a public JSC can be listed on the stock market, and be publicly subscribed to.

Limited liability company

— Corporate

Type of a legal entity, distinct and separate from its members, its charter capital is divided into shares that can neither be listed on the stock market, nor be publicly subscribed to.

Liquidation

— Corporate

Termination of a legal entity’s registration, resulting in loss of its legal capacity.

Major transaction

— Corporate

Transaction with the value of at least 25% of the legal entity’s balance sheet, unless otherwise provided for in the charter, which generally requires a (qualified) approval by the general shareholder meeting or board of directors.

Merger

— Corporate

Reorganisation procedure whereby two legal entities consolidate into one (former legal entities terminate, and a new one is created based on joint assets).

Reorganisation

— Corporate

Termination or alteration of a legal entity’s status, resulting in the succession of legal entities, thereby creating and terminating one or more new legal entities (e.g. merger, acquisition, break-up, spin-off, transformation).

Representative Office

— Corporate

Form of solitary subdivision of a legal entity(Head Office), which is not a separate legal entity (i.e. is considered part of the Head Office’s legal entity), its functions are limited to representing the Head Office, and it can only engage in commercial activities of auxiliary and preparatory nature, generally not treated as a permanent establishment from the tax viewpoint.

Share

— Corporate

Unit for accounting the participation in a legal entity’s charter capital. In a JSC, a share represents a part of the legal entity’s stock; in an LLC shares refer to the percentage of the contribution (e.g. money) directly made to its charter capital. 

Shareholder

— Corporate

An owner of a legal entity and one who holds shares in a legal entity, and generally enjoys voting rights.

Shareholder agreement

— Corporate

Agreement between all or some shareholders of a legal entity regulating issues of its managing, dispute resolution, sale of shares etc.

Sole trader

— Corporate

Individual who conducts business activities without creating a legal entity and is registered in EGRYUL.

Spin-off

— Corporate

Reorganisation procedure whereby a section of a legal entity is split off as a separate business.

Trade name

— Corporate

Method of individualising a legal entity that is not specified in its constitutional documents. Trade names are not obligatory for legal entities.

Transformation (Identity change)

— Corporate

Reorganisation procedure whereby the legal entity remains structurally intact, but its type changes (e.g. from LLC to JSC).

Unified State Register of Legal Entities

— Corporate

Public register with information on the legal entity’s founders, General Director, charter capital, etc.

Voting rights

— Corporate

The rights enjoyed by shareholders to vote their shares.

Employment

Annual paid vacation

— Employment

28 days of paid vacation time that can be used by every employee annually. Increased vacation durations is mandatory for certain categories of employees (working in harmful or dangerous conditions, in the Far North and equated territories, under irregular working hours etc.). 

Dismissal

— Employment

Unilateral termination of employment contract by the employer due to employee’s fault or based on economic grounds.

Distance work employment contract

— Employment

Employment contract for the performance of work by the employee outside employer’s premises.

Employment contract

— Employment

Contract concluded between an employer and an employee for performance of job functions, which must contain obligatory provisions set forth in the Russian Labour Code. Employment contracts may be concluded for either an indefinite or fixed term (i.e. fixed-term employment contracts).

Federal Minimum Monthly Wage

— Employment

The statutory minimum level of salary amount payable per month to employees, regardless of his occupation. It is established at the federal level in respect of the whole country, but increased minimum amounts may be established at the regional level.

Fixed-term employment contract

— Employment

Employment contract concluded on an exceptional basis for a fixed term (no longer than 5 years) in occasions specifically provided for by the Russian Labor Code, e.g. for the purposes of fulfilment of a certain task determined in the employment contract. 

Highly-qualified specialist

— Employment

An employee that stays in Russia on the basis of a work visa and work permit, receives an annual salary/ remuneration that is no less than RUB 2 million, or lower in certain cases, is employed under a Russian employment contract, and has particular experience or skills as determined by the employer. HQSs are eligible for the standard personal income tax rate of 13% on remuneration from their employment before becoming Russian tax residents. 

Internal order

— Employment

An order signed by the employer determining that an employee is hired, transferred to a new job, granted vacation, disciplined or dismissed etc. under the Russian Labour Code.

Irregular working hours (open-end working day)

— Employment

Type of working regime agreed upon in the employment contract under which the employer is permitted to occasionally engage employees to work beyond their regular working hours without their prior written consent, additional remuneration or special justification (cf. overtime work).

Labour book

— Employment

Document containing a record of an individual’s employment history and related information. 

Maternity leave

— Employment

Period of time of at least 70 days before and at least 70 days after an employee’s childbirth during which the employee is absent from work, subject to exceptions. The relevant monthly compensation is paid by the Russian Social Insurance Fund.

National public holidays

— Employment

Days of the year when employees are generally absent from work (e.g. New Year holidays, Christmas, Day of the Defender of the Fatherland etc.), unless exceptions set forth in the Labour Code apply (e.g. in organisations with continuous operation).

Overtime work

— Employment

Working time exceeding normal working hours, requested by the employer in extraordinary circumstances, subject to prior written consent of the employee. Overtime work shall not exceed four hours in two consecutive days and is limited to 120 hours per year. Employer shall pay for overtime work in addition to the basic salary/remuneration.

Permission to hire foreign nationals

— Employment

Permission obtained by the employer in order to be entitled to hire foreign nationals.

Probationary period

— Employment

Period of time specified in the employment contract (not exceeding 3 months for regular employees and 6 months for certain managerial positions, such as General Director), in course of which the employer is entitled to dismiss the employee without paying out a severance package.

Salary/remuneration

— Employment

Monthly payment made to the employee every fortnight, which may not be set below the minimum wage established by Federal law (however higher rates may apply at a regional level). In addition, the employee may also receive statutory (e.g. for working in special climate conditions), or other benefits at employer’s discretion.

Severance package

— Employment

Monies payable to the employee in the event of termination of his or her employment.

Sick leave

— Employment

Period of time when an employee is unable to work due to illness, or the need to take care of a sick relative. Employees are entitled to a full or partial reimbursement of their salary during the sick leave, which is performed by the employer, at the expense of the Russian Social Insurance Fund.

Work permit

— Employment

Permit obtained by a foreign national in order to be entitled to work in Russia.

Work visa

— Employment

Visa obtained by a foreign national in order to be entitled to work in Russia.

Working hours

— Employment

Regular working hours may not exceed 40 hours per week, however may have to be reduced depending on employee category (minors, working in hazardous or harmful conditions etc.) Overtime work is possible, but strictly regulated.

Customs Law

Customs classification

— Customs Law

Classification of goods under the EACU Harmonised Commodity Description and Coding System by the declarant prior to filing a customs declaration, subject to verification by customs authorities.

Customs clearance

— Customs Law

Procedure during which goods entering or exiting the EACU are declared, verified, inspected, paid for, and released in or outside the EACU customs territory.

Customs declaration

— Customs Law

Declaration of information on imported/exported goods prepared on a prescribed form that contains information on the chosen customs procedure and other peculiarities necessary for the release of goods.

Customs duty

— Customs Law

Compulsory payment collected by customs authorities upon import/export of goods alongside other customs payments, calculated based on either the customs value of goods, or their physical characteristics.

Customs payments

— Customs Law

Import/export customs duties, VAT, excise duties, customs fees payable upon import/export of goods.

Customs procedure

— Customs Law

Set of rules establishing the requirements for import/export, post-customs use of imported/exported goods.

Customs representative

— Customs Law

Legal entity entered into a special register that carries out customs clearance of goods of behalf of the declarant.

Customs value

— Customs Law

Value of imported/exported goods which serves as the base for the calculation of import/export customs duty.

Declarant

— Customs Law

Person declaring the goods or in whose name the goods are declared by the customs representative.

EACU customs territory

— Customs Law

The territory of EACU members including exterritorial artificial islands, installations, constructions and other objects over which EACU members have exclusive jurisdiction.

EACU Harmonised Commodity Description and Coding System (Tariff nomenclature)

— Customs Law

Standardised system of names and numbers to classify goods in EACU based on the Harmonised System developed by the WTO and used in the EU used for customs classification.

EACU members

— Customs Law

Russia, Armenia, Kazakhstan, Kyrgyzstan and Belarus.

Eurasian Customs Union

— Customs Law

Trade bloc with a common customs policy and regulations comprised of EACU members with common customs borders and a common customs policy and regulations.

Export

— Customs Law

Customs procedure under which goods are exported from the EACU customs territory.

Measures of non-tariff regulation

— Customs Law

Non-economic methods of regulating import/export of goods (e.g. sanitary and phytosanitary, quality conditions, national security measures etc.).

Release for domestic consumption

— Customs Law

Customs procedure under which goods are imported for use in the EACU customs territory permanently. 

Temporary export

— Customs Law

Customs procedure under which goods (e.g. equipment for repair operations, exhibits) are temporary exported and used outside the EACU customs territory.

Temporary import

— Customs Law

Customs procedure under which goods (e.g. equipment, exhibits)  are temporarily admitted into the EACU customs territory.

Sale and Purchase Agreements

Distribution agreement

— Sale and Purchase Agreements

Contract under which the distributor undertakes to regularly purchase goods from the manufacturer (seller), and market, promote and resell them at its own expense, usually in a pre-defined territory.

Framework Agreement

— Sale and Purchase Agreements

Contract between two parties comprising main contractual terms with further details to be agreed in the future.

General Business Conditions (Terms and Conditions)

— Sale and Purchase Agreements

Set of general rules that a buyer and seller agree upon when concluding a sale and purchase agreement.

International Commercial Terms

— Sale and Purchase Agreements

Set of three-letter standard trade terms (e.g. EXW, FCA etc.) commonly used in international sale of goods updated by the International Chamber of Commerce (the latest edition is as of 2010). Among other things, it allocates costs between the buyer and seller, and associated risks of damage or accidental loss of goods.

Purchase Order

— Sale and Purchase Agreements

Offer made by the buyer to the seller to enter into a SPA, indicating types, quantities, and agreed prices for goods or services.

Sale and Purchase Agreement

— Sale and Purchase Agreements

Contract between a buyer and a seller, under which the seller undertakes to transfer title for certain goods (with the given name and quantity) to the buyer, and the buyer is obliged to accept the goods and provide payments for them.

Vienna Convention on Contracts for the International Sale of Goods

— Sale and Purchase Agreements

International treaty ratified by over 80 Contracting States (including Russia) that applies to sale and purchase agreements between parties whose places of business are in different Contracting States, or when the rules of private international law lead to the application of the law of a Contracting State. The application of CISG can be excluded by the parties.

World Trade Organisation

— Sale and Purchase Agreements

Global international organisation which regulates international trade, with 162 members including Russia.

Taxation

Controlled Foreign Companies Rules

— Taxation

Rules on taxation of profits of controlled foreign companies imposing a duty on legal entities who are Russian tax residents to assess, report and pay taxes on undistributed profits of foreign legal entities and foreign unincorporated structures, where they own, directly or indirectly more than 25% of the charter capital; or more than 10% of the charter capital if Russian persons in total own more than 50%, or which they otherwise control, subject to certain exemptions and temporary rules. 

Corporate income tax

— Taxation

Tax payable by Russian and foreign legal entities carrying out activities in Russia through a permanent establishment or receiving income from Russian sources. The tax base is defined as total income received by a taxpayer minus related expenses and allowable deductions. The maximum corporate income tax rate is 20%.

Corporate property tax

— Taxation

Tax levied on both personal property and real estate. The tax base is the average annual residual value of taxable property or cadastral value of real estate. The tax rate is set at the regional level, but shall not exceed 2.2%.

Desk tax audit

— Taxation

Audit conducted at the tax authorities' own premises on the basis of tax returns filed by the taxpayer.

Double Taxation Treaty (DTT)

— Taxation

Agreement between two States aimed at eliminating double taxation of income or gains arising in one State and paid by residents of another State.

Excise duty

— Taxation

Indirect tax levied on mass-consumption products, such as tobacco, alcohol, petrol etc.

Field tax audit

— Taxation

Audit generally conducted at the taxpayer's premises, initiated by decision of the head (or deputy head) of the tax office at which the taxpayer is registered.

Land tax

— Taxation

Tax applicable to legal entities and individuals who have a right of ownership in land or a right of its permanent use. The tax base is the cadastral value of the land. The tax rate is set by local authorities, but shall not exceed 0.3% of the cadastral value (if the land is used for agricultural purposes, occupied by residential properties or utilities, or acquired for private farming) or 1.5% of the cadastral value of all other land.

Permanent establishment

— Taxation

Branch, representative office, division, bureau, office, agency or any other separate fixed place of activity, through which a foreign company regularly engages in business activities in Russia. The term is used exclusively for tax purposes and does not affect the entity’s legal status.

Personal income tax

— Taxation

Tax payable by Russian tax resident and non-resident individuals. The general tax rate is 13% for residents and 30% for non-residents. Taxable income is defined as gross income minus allowable deductions and exemptions. Personal income tax payable from salary/remuneration is computed and withheld by the employer.

Russian tax resident (individual)

— Taxation

An individual who is physically present in Russia for at least 183 calendar days during 12 consecutive months.

Social insurance contributions

— Taxation

Contributions payable in respect of individuals engaged under employment or civil-law contracts to the State Pension Fund, Social Insurance Fund and the Federal Medical Insurance Fund. The base for social insurance contributions is calculated based on the remuneration received by individuals in cash or in-kind under employment or civil-law contracts. They are payable in addition to the employees’ salary (and in total amount to approximately 30% of the employee’s salary).

State duty

— Taxation

Duty levied on an exhaustive list of services generally provided by state authorities, such as bringing a court action, incorporation of a legal entity, services of a notary public etc.

Thin capitalisation rules

— Taxation

Rules that restrict deductibility of interest charged on foreign controlled debt. The rules inter alia apply to loans to a Russian legal entity from a foreign legal entity if the foreign entity owns, directly or indirectly, more than 20% of the Russian entity’s charter capital. The deductibility of interest is restricted to the extent that the controlled debt exceeds net assets by more than three times, or 12.5 times in the case of banks and leasing companies. 

Transfer pricing

— Taxation

Procedure of determining the price of goods and services in certain cross-border and domestic transactions between related parties (e.g. a party is considered related to another party if the former owns more than 25% in the charter capital of the latter) in accordance with the transfer pricing methods set forth in the Russian Tax Code.

Transport tax

— Taxation

Tax applicable to legal entities and individuals who are registered owners of transport vehicles. The tax base depends on the type of the vehicle and its engine capacity, and are set forth in the Tax Code. Regional authorities have the authority to increase or reduce these rates by a multiple of no more than 10 for certain types of motorised transport vehicles.

Value added tax

— Taxation

Tax applicable to legal entities (including rep offices and branches of foreign legal entities), sole traders and any person importing goods into Russia. VAT is also charged on the majority of sales of goods, work and services supplied in Russia. There are three main VAT rates: 0% (e.g. applies to the sale of goods exported outside Russia), 10% (e.g. applies to children's goods, medical and pharmaceutical products etc.) and 18% (applies to all other taxable sales of goods, works and services).

Withholding tax

— Taxation

Tax withheld or deducted and payable by payer of income directly to the state, e.g. income received by a foreign legal entity and not attributed to a permanent establishment, employment income etc.

Currency regulation

Currency non-residents

— Currency regulation

Individuals whose permanent place of residence is located outside Russia; foreign legal entities; enterprises/organisations that are not legal entities, organised and located outside Russia; and rep offices or branches of foreign legal entities in Russia.

Currency residents

— Currency regulation

Russian citizens and other individuals whose permanent place of residence is Russia, except for individuals who permanently live outside Russia for more than one year; Russian legal entities; rep offices or branches of Russian legal entities outside Russia; diplomatic and consulate and other missions representing Russia, the Russian government, constituent entities of the Russian Federation, and municipal units.

Currency transaction (valyutnaya operaciya)

— Currency regulation

Transaction that is subject to Russian currency regulation rules (i.e. a certain transaction between a currency resident and a currency non-resident, provided that the its amount exceeds USD 50.000).

Repatriation of the foreign currency proceeds

— Currency regulation

Currency resident’s obligation to collect all payments due under a foreign trade contract within a prescribed period. Non-compliance with the obligation may result in payment of an administrative fine.

Transaction passport (passport sdelki)

— Currency regulation

form submitted to the client’s bank alongside with other documents in order to trigger the approval of a currency transaction.

Intellectual property (IP)

Copyright

— Intellectual property (IP)

Legal right granting the creator of an original work exclusive rights for its use and distribution, which are valid for the author’s lifetime plus 70 years after his decease, after which the product can be freely used by the general public.

Domain name

— Intellectual property (IP)

Unique name identifying a website, which cannot contain registered trademarks, company names, or other methods of individualisation of goods and services.

Industrial design

— Intellectual property (IP)

Artistic and construction solution that determines the outer appearance of a product of industrial or handicraft origin by its images. Starting from 1 January 2015 an industrial design is protected for 5 years, extendable 4 times (25 years in total).

Invention

— Intellectual property (IP)

Technical solution in any field related to a product or a method/process, which is granted patent protection, provided it is novel, inventive (non-obvious from prior art) and industrially applicable. Generally the maximum duration of patent protection for an invention is 20 years from the application filing date, subject to payment of annuities.

License agreement

— Intellectual property (IP)

An agreement between the licensor and the licensee under which the former grants to the latter the right to use intellectual property in Russia, subject to compulsory state registration.

Neighbouring rights

— Intellectual property (IP)

Rights to products of performing music, contents of databases, radio programs, implementation of an architect design, etc.

Patent

— Intellectual property (IP)

Set of exclusive rights granted to an inventor or assignee for a limited period of time in exchange for detailed public disclosure of an invention, utility model or an industrial design.

Trademark

— Intellectual property (IP)

Designation individualising goods or services of legal entities and sole traders, subject to state registration.

Utility model

— Intellectual property (IP)

Technical solution pertaining to a device, which is granted patent protection if it is novel and industrially applicable. The term of a utility model’s patent protection is 10 years from the application filing date, subject to payment of annuities.

Competition

Anticompetitive agreements

— Competition

Agreements between business entities that may result in restriction of competition, such as cartels, vertical agreements and other anticompetitive agreements (e.g. including ‘tying provisions’, price discrimination, barrier to enter/exit market etc.)

Cartel

— Competition

Agreement between competitors resulting in price fixing, bid rigging and (or) market sharing.

Dominant entity

— Competition

An entity is presumed dominant if its market share exceeds 50%; an entity is deemed dominant if its market share is at least 35% but no more than 50%, provided its dominant position has been established by competition authorities; an entity is generally presumed non-dominant if its market share does not exceed 35%, save for a few exceptions.

Local effects test

— Competition

Test that shall be met in order to trigger jurisdiction of Russian competition authorities, i.e. if the transaction applies to shares or control over a Russian legal entity; control over a foreign entity that supplied over 1 billion RUB worth of products/services to the Russian market, or assets located in Russia.

Merger control

— Competition

Compulsory prior approval by Russian competition authorities of a merger, acquisition, incorporation of a legal entity or a JV, or certain transactions, provided that certain thresholds and the local effects test are met.

Vertical agreement

— Competition

Agreement between a seller and a buyer of goods (non-competitors), e.g. between manufacturers and dealers. Certain vertical agreements are considered unlawful.

Law of contracts

Bank guarantee

— Law of contracts

Type of security, a promise by a bank to provide payment to the creditor from the debtor’s account under certain circumstances, e.g. in case of debtor’s default.

Civil-law contract

— Law of contracts

A contract between contractor and client as opposed to an employment contract between an employer and an employee. It is illegal to substitute employment contracts with civil-law contracts to escape from labour law regulations.

Construction contract

— Law of contracts

Civil-law contract between contractor and client under which the former undertakes to perform construction works for the latter for payment.

Cost estimate

— Law of contracts

Documentation setting forth the price of construction works’ stages to be performed under a construction contract.

Damages

— Law of contracts

Actual loss and lost profits claimed for breach of contract.

Fine

— Law of contracts

Type of liquidated damages, a one-time payment made in the event of breach of contract (e.g. RUB 100 or 20% of the total contract price upon a breach).

Lease agreement

— Law of contracts

Сontract under which the lessor provides his property for temporary use, and the lessee has to regularly pay for it.

Liquidated damages

— Law of contracts

Damages established by contract or statute that are payable to the aggrieved party in the event of breach of contract (e.g. late performance). 

Long-term lease agreement

— Law of contracts

Lease agreement concluded for a term exceeding 1 year and subject to compulsory state registration.

Penalty

— Law of contracts

Type of liquidated damages established for late performance (e.g. 0.1% of the total contract price for every day of delay).

Pledge

— Law of contracts

Type of security, that arises under a pledge agreement between the pledgee and the pledgor, under which the former is entitled to take possession/sell the pledged property in the event of default under the secured obligation.

Representation

— Law of contracts

Statement of fact made in order to induce another party to enter into, alter or terminate a contract. Provision of false information may entitle the other party to demand payment of damages, terminate the contract, or declare the contract void.

Security

— Law of contracts

Mechanism aimed at motivating the debtor to duly perform its contractual obligations.

Service contract

— Law of contracts

Civil-law contract between contractor and client under which the former undertakes to provide services to the latter for payment.

Suretyship

— Law of contracts

Type of security, where a legal entity or an individual undertakes to perform a third-party’s obligation if the latter is in default.

Technical documentation

— Law of contracts

Documentation setting forth the scope, contents and other requirements of construction works to be performed under a construction contract.

Work contract

— Law of contracts

Civil-law contract between contractor and client under which the former undertakes to perform works for the latter for payment.

Local court system & Arbitration

Ad hoc arbitration

— Local court system & Arbitration

International arbitration not administered by a specialised institution.

Arbitration agreement

— Local court system & Arbitration

Written agreement referring a dispute to arbitration, thereby depriving state courts of their jurisdiction. Parties can refer to arbitration a wide range of issues, save for disputes arising from administrative relations (e.g., tax and customs) and disputes that fall within the exclusive jurisdiction of commercial (arbitrazh) courts (e.g., disputes arising from bankruptcy proceedings). 

Arbitration award

— Local court system & Arbitration

Decision issued by a sole arbitrator or an arbitral tribunal in accordance with an arbitration agreement entered into by the parties.

Arbitrazh courts

— Local court system & Arbitration

Courts responsible for hearing a wide range of cases dealing with issues of commercial character, that have 4 levels: first instance court, court of appeal, cassation court, and court of supervisory appeal (Supreme Court). A ruling issued by the Supreme Court’s Presidium cannot be further appealed.

Astreinte

— Local court system & Arbitration

Form of financial liability for failure to execute a judicial decision. A party that won a court case may request that the court grant a relevant order obliging the losing party to pay monetary compensation for non-performance of the judicial decision.

Constitutional Court

— Local court system & Arbitration

Federal court generally responsible for deciding whether federal and some regional legal acts (including statutes) comply with the Constitution.

Court of Intellectual Property Rights

— Local court system & Arbitration

Specialised court dealing with intellectual property disputes, which is part of the system of commercial (arbitrazh) courts. It is a first instance court hearing disputes over the establishment and validity of IP rights and challenges to regulatory and non-regulatory acts in the IP field. 

Courts of general jurisdiction

— Local court system & Arbitration

Courts responsible for hearing civil, criminal and administrative cases, generally of non-commercial character, most often between citizens, that have 4 levels: first instance court, court of appeal, cassation court, and court of supervisory appeal (Supreme Court). A ruling issued by the Supreme Court’s Presidium cannot be further appealed.

Institutional Arbitration

— Local court system & Arbitration

International arbitration administered by a specialised institution (e.g. ICAC at the RF CCI.).

International Arbitration

— Local court system & Arbitration

Form of alternative dispute resolution (ADR) of non-governmental character, where parties to a dispute of international nature refer it to arbitrator(s) generally elected by the parties and agree to be bound by an arbitration award. Parties submit disputes to arbitration voluntarily, based on an arbitration agreement. 

Recognition and enforcement

— Local court system & Arbitration

Procedure whereby Russian courts recognise and enforce both, domestic and foreign arbitration awards in accordance with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958).

Supreme Court

— Local court system & Arbitration

Highest court within the judicial hierarchy, which heads the systems of both, courts of general jurisdiction and commercial (arbitrazh) courts, but may not interfere with the Constitutional Court.

The International Commercial Arbitration Court at the Russian Federation Chamber of Commerce and Industry

— Local court system & Arbitration

Leading arbitration tribunal in Russia and in East European countries which deals with resolving disputes of international nature.

Land law

Cadastral value

— Land law

Value of real estate generally determined based on methods of mass assessment (as opposed to individual assessment of property value), recorded in the State Real Estate Cadastre and used for tax and land law purposes.

Designated purpose of the land plot

— Land law

Category of land plot allocated depending on its prescribed use (e.g. agricultural land, residential land, commercial land, land located beneath a protected object, forestry land, water-front land, reserve land).

Easement

— Land law

Limited proprietary right to use a neighbouring land plot (e.g. right of way, the laying of pipes or transmission lines, the disposal of sewage etc.)

Exclusive right to acquire a land plot into ownership or lease

— Land law

Right of owners of buildings and structures located on land plots owned by the state or by a municipality to acquire the underlying land plots either into ownership or lease.

Expropriation of land plots

— Land law

Taking of land by state or municipality authorities with compensation to the owner for the land plot.  

Lifetime right of ownership with hereditary succession

— Land law

Limited proprietary right in state or municipal-owned land granted to individuals.

Mortgage

— Land law

Type of security, that arises under a mortgage agreement between the mortgagee and the mortgagor, under which the former is entitled to take possession/sell the mortgaged property (i.e. real estate) in the event of default under the secured obligation.

Ownership certificate

— Land law

Certificate confirming right of ownership in real estate.

Personal property

— Land law

Movable property that is not classified as real estate.

Real estate

— Land law

Land and other immovable property (such as buildings, structures, as well as aircraft, space objects, sea and river vessels etc.)

Right of economic management

— Land law

Limited proprietary right enjoyed by a state- or municipal-owned enterprise over property owned by the state or municipality.

Right of ownership

— Land law

Right to possess, use and dispose of land plots. Right of ownership in land by foreigners is restricted.

Right of perpetual (indefinite) use

— Land law

Right to use a land plot granted to state and municipal institutions, federal treasury-owned enterprises, and state and local authorities. 

Special Economic Zone

— Land law

Area within the territory of Russia subject to special legal regulations, which generally involve tax, customs and other benefits, created in order to attract foreign direct investment and develop such areas of economy as technology innovation, tourism, production etc.

State Real Estate Cadastre

— Land law

Public register with information on real estate objects, including land plots, buildings, structures, premises and other facilities that have undergone cadastral registration.

State registration of real estate

— Land law

Compulsory registration of the right of ownership, other proprietary interests and encumbrances (e.g. mortgage, long-term lease agreement, easement etc.).

Unified State Register of Real Estate Rights and Transactions

— Land law

Public information resource, which contains data on the existing or ceased property rights for real estate, information on real estate objects, information on rightholders, encumbrances, arrests etc. in the Russian Federation.

Insolvency (bankruptcy)

Amicable arrangement (composition)

— Insolvency (bankruptcy)

A settlement agreement that may be concluded at any stage of insolvency proceedings between the debtor, insolvency creditors and authorised bodies subject to approval by by the commercial (arbitrazh) court.

External administration (bankruptcy administration)

— Insolvency (bankruptcy)

Optional stage of insolvency proceedings aimed at restoring the debtor to financial health, which includes an appointment by court of an external administrator, whose primary aim is to conduct an inventory of assets and prepare a plan for restoring solvency. The debtor’s management is dismissed.

Financial rehabilitation (financial sanation)

— Insolvency (bankruptcy)

Optional stage of insolvency proceedings aimed at restoring the debtor to financial health  and satisfying the creditors’ claims in accordance with a debt repayment schedule, includes an appointment by court of an administrative manager, however the debtor’s management remains in place.

Insolvency (bankruptcy) criteria

— Insolvency (bankruptcy)

Criteria that shall be met in order for insolvency proceedings to be initiated against the debtor (overall indebtedness of at least RUB 300.000 for legal entities, or RUB 500,000 for individuals, and signs of insolvency (bankruptcy) are present).

Insolvency officer (trustee in bankruptcy)

— Insolvency (bankruptcy)

Key figure in the insolvency proceedings approved by court, whose powers and legal status vary depending on the stage of insolvency proceedings.

Liquidation procedure (bankruptcy proceedings)

— Insolvency (bankruptcy)

Final stage of the insolvency proceedings during which a debtor is declared bankrupt and a liquidation manager is appointed, all of the debtor's assets are included in the pool of assets that comprise the insolvency estate, which is used to satisfy creditors’ claims.

Signs of insolvency (bankruptcy)

— Insolvency (bankruptcy)

Inability to meet creditors’ claims within three months from the moment when they were due.

Stages of insolvency (bankruptcy) proceedings

— Insolvency (bankruptcy)

(i) Supervision (nablyudenie),(ii) Financial rehabilitation (finansovoe ozdorovlenie),(iii) External administration (vneshnee upravlenie), (iv) Liquidation procedure (konkursnoe proizvodstvo), (v) Amicable arrangement (mirovoe soglashenie). 

Supervision (nablyudenie)

— Insolvency (bankruptcy)

First compulsory stage of insolvency proceedings aimed at valuing the debtor’s assets and compiling a list of creditors, which includes an appointment by court of interim manager, whose primary aim is to preserve the debtor's assets while conducting its financial audit. The debtor‘s management remains in place with limited authority.