In order to protect national economy and basing on world state practice, a member of the Parliament proposes that foreign legal entities, as well as legal entities with substantial foreign involvement, are barred from handling court cases as part of arbitrazh and civil proceedings. However, these companies will still be able to carry out consultative work in such spheres as international law.

A Member of State Duma proposed a bill forbidding foreign legal entities, states and organizations, as well as Russian legal entities with foreign involvement, from handling cases in Russian courts within civil and arbitrazh proceedings. As a means of justification, the bill’s author refers to the practice of such countries as China, India and Brazil, where an analogous prohibition is in place. Moreover, the documents submitted alongside with the bill underline that the prohibition is proposed primarily with regard to US-based law firms due to the “anti-Russian sanctions” enacted by a large number of foreign states and the negative economic background. In the absence of the right to participate in national court proceedings, the bill supposes that the affected international law firms will still serve as consultants on matters of international law in effort to secure entrepreneurs’ right to professional legal advice. 

According to the latest explanations of the Federal Tax Service (FTS), controlled foreign companies recognized as such prior to December 31, 2016 inclusively will have to notify tax authorities of this development and provide necessary documents no later than March 20, 2017. The FTS also notes that this procedure will have to be followed annually.

The Tax Code of Russia obliges taxpayers to notify the tax authorities on all foreign companies controlled by them. A person is not regarded as controlling a foreign company if he or she participates in the company exclusively through one or more Russian-based public companies.

Recently, on April 1, 2016, an updated “black list” of countries, which was created pursuant to the law on controlled foreign companies, entered into force. It establishes rules for collection of profit tax from such controlled foreign companies.

According to the Constitutional Court of Russia, recalling of enforcement orders after they had been presented for execution should not extend the overall time limit for enforcement of the respective court decision. Otherwise the creditors’ unlimited ability to extend the time limit for enforcement by recalling the enforcement order and submitting it to the bailiffs again would violate the debtors’ rights and create a situation of ongoing legal uncertainty.

Prior to this decision, the creditor could recall the enforcement order from the bailiff responsible for enforcement or from the bank on its own initiative without prejudicing her or his right to consequently present it for forcible execution again. However, doing so interrupted the three-year time limit established for enforcement proceedings, while the time that had passed prior to the interruption was not counted into the new time period. Thus, creditors could prolong the time limit for enforcing court decisions an unlimited number of times to the extent that the enforcement process could in reality become infinite.

The Constitutional Court recognized that such a situation violated debtors’ rights and forced them into a prolonged situation of legal uncertainty. As a result, the Court prescribed that the legislator must accordingly amend the Law on enforcement proceedings (Ruling of the Constitutional Court of the Russian Federation dated 10.03.2016 no. 7-П). 

The Supreme Court of the Russian Federation recognized the right to challenge decisions made at the general shareholders meetings not only by the official shareholders of the company, but also by its beneficial owners, who control the company through a chain of foreign legal entities. According to the Court, such a right should be granted to company beneficiaries, as decisions of the general shareholders meetings may impact their legal rights and interests in the same way as interests of official (formal) shareholders.

Invalidation of the general shareholders meeting decisions used to be the privilege of the immediate shareholders of the company not granted to the foreign beneficiaries controlling them. However, the Constitutional Court of the Russian Federation explained that invalidation of such decisions was not only aimed at protection of the corporation’s shareholders, but also at securing the rights of other persons facing legal consequences as a result of the said decisions.

The Supreme Court, in line with this position, reversed the decisions of lower courts, which rejected the beneficial shareholder’s claim for invalidation of the general meeting’s decision to appoint a new general director on the grounds of the former’s excess of powers, and remanded the case to the court of the first instance. Upon remand, the lower court was instructed to take into account that the right to file the claim is also enjoyed by the persons actually controlling the company (Ruling of the judicial panel for economic disputes of the Supreme Court of the Russian Federation dated 31.03.2016 no. 305-ЭС15-14197).

The Federal Law N 103-FZ dated 05.04.2016, which will enter into force on 06.05.2016, amended the Administrative Court Procedure Code of the Russian Federation. From now on public authorities will have an easier way of collecting due and indisputable payments from individuals, as the writ is an enforcement document that may be presented for enforcement once it is executed.

According to the new law, this kind of claims will now be adjudicated without a court hearing and summons of parties by issuing a writ. The Law sets forth requirements to the form and contents of a motion for issuing a writ, and the public authority shall serve such motion and accompanying documents with the debtor.

Motions for issuing a writ shall be considered under administrative procedure rules by magistrates' courts that will be obliged to send a copy of the writ to the debtor within three days once the writ is executed, while the debtors will have only 20 days as from its sending to present their statement of defense. If the debtor fails to file the statement within this term, the writ shall enter into force and may be immediately presented for enforcement to enforcement officers or the debtor’s bank.