The Government of the Russian Federation signed a Decree repealing over a thousand of regulatory acts adopted between 1917 and 2002 on a wide range of regulatory issues relating to industrial production and other sectors of the economy, and whose provisions have become outdated. New regulations are expected to be adopted to replace them.

According to the Government Decree, starting from 1 February 2020, 1259 regulatory documents containing outdated rules in different areas of the economy, in particular in housing and utility services, industry, construction, ecology, economic and land relations and in other areas, will lose force (see Decree of the Government of the Russian Federation dated 13.01.2020 No. 7).

After that, the Russian Government will not stop revamping Russian regulatory documents.
The Government announced its intention to additionally repeal over three thousand other regulations adopted back in the USSR and to develop new documents to replace them. These steps are planned to be complete by 1 January 2021.

In its recent digest of case law on corporate disputes, the Supreme Court confirmed a number of its earlier positions and provided several important clarifications relating to invalidity of shareholder resolutions and company transactions, adoption of shareholder resolutions, liability of company CEOs and on corporate conflicts.

In its Digest of Case Law, the Supreme Court provided a number of essential clarifications aimed at preventing bad faith conduct of company shareholders. In particular, the Supreme Court explained that the court may refuse to invalidate a shareholder resolution even if it was made without the required number of voices, provided that the shareholder whose vote had not been taken into account failed to attend the meeting without a valid reason and hindered the adoption of important business decisions (see Digest of Case Law approved by the Presidium of the Supreme Court on 25.12.2019).

As regards invalidation of transactions, the Supreme Court clarified that shareholders may seek invalidation of a company’s transaction even if the transaction does not cause direct losses to the company but nevertheless was not reasonably necessary, was made in the interest of only a part of the shareholders and caused damage to other shareholders of the company who did not express their consent to this transaction.

The Supreme Court also confirmed that a CEO is not obliged to comply with the instructions of a shareholder meeting if such instructions would harm the company’s interests. If the CEO nonetheless executes these instructions, he or she will be accountable for the losses caused to the company.

In order to protect a company’s counterparties, the Supreme Court once again confirmed that a company’s online publication of its corporate documents, including the articles of association, does not in itself mean that its business partners are expected to know the contents of relevant corporate documents. Therefore, the company ordinarily cannot shift to its business parties any risks associated with its corporate documents.

Moreover, the Supreme Court adopted a number of important clarifications on corporate conflicts. The Supreme Court reiterated that even a majority shareholder can be excluded from the company at the lawsuit of another shareholder if he or she causes damage to the company’s interests. However, to prevail, the claimant has to prove that the company will be able to continue its activities after repaying the monetary value of the majority shareholder’s shares in case of his or her exclusion. A corporate conflict or equal distribution of shares between the shareholders are also not grounds for rejecting the claim to exclude one of them from the company. In this case the court has to assess the conduct of each shareholder and the grounds for exclusion in respect of each of them.

This year, the notary system will be reformed in order to extend the options for electronic document management and allow notarization of documents without an in-person visit to the notary. The amendments will make it possible to interact with a notary through the Internet and remotely certify transactions with the participation of several notaries. Most of the amendments will come into force in December 2020.

In accordance with the new rules, notaries will be able to provide notary services remotely through the online portal of state services using enhanced qualified electronic signature. Remote notarization will be possible to certify a translation, for enforcement writs and notary examination of information in the Internet, as well as to perform a number of other notarial acts.

Moreover, it will be possible to certify transactions with the participation of two and more notaries without joint presence of the parties to the transaction at one place. For this purpose, each party can sign the contract in front of its own notary, and then each notary has to certify the document with his or her qualified electronic signature and include the transaction into the notary register.

Most of the amendments will come into force at the end of December 2020 (see Federal Law dated 27.12.2019 No. 480-FZ).

The Supreme Court allowed a company’s creditors to raise claims against a controlling person’s children within the value of property gifted by the controlling person. This is possible if a creditor proves that the children should have known that the gift was made to conceal this property from creditors. Moreover, the Supreme Court confirmed that it is possible to collect an insolvent company’s debts from heirs of controlling persons responsible for such bankruptcy to the extent of the value of the inherited property.

In one case recently considered by the Supreme Court, the creditors asked the courts to find that children of a company’s controlling person should bear secondary liability for an insolvent company’s outstanding debts. The lower courts rejected this claim, arguing that the respondents (children) were not the company’s controlling persons.  

However, the Supreme Court reversed these decisions, stating that the mere fact that the children cannot be considered controlling persons for the purposes of bankruptcy laws does not mean that general tort-based liability does not apply. In the view of the Supreme Court, a person commits a tort not only when it causes insolvency of a company, but also when it receives certain property as a gift, knowing that the purpose of these gifts was to conceal property from creditors (see Ruling of the Judicial Panel on Economic Disputes of the Supreme Court of the Russian Federation dated 23.12.2019 No. 305-ЭС19-13326 on case No. А40-131425/2016).

In another case the Supreme Court clarified that creditors may bring claims based on secondary liability of controlling persons responsible for a company’s bankruptcy against their heirs (where the controlling person has deceased). This claim may be satisfied only to the extent of the value of the inherited property. The mere fact that the heir was unaware about this liability at the time of inheritance does not prevent this claim (see Ruling of the Judicial Panel on Economic Disputes of the Supreme Court of the Russian Federation dated 16.12.2019 No. 303-ЭС19-15056 on case No. А04-7886/2016).

New amendments to the Labor Code came into force, allowing labor inspectors to order employers to pay salaries and initiate enforcement of these orders. If an employer has not complied with the order within a specified time period and has not challenged the same, a labor inspector will have the right to refer the debt to the bailiffs for out-of-court enforcement.

Changes in the labor legislation allow labor inspectors to collect salary debts without going to court. In case an employer’s salary debt is found, including based on a complaint of employees, the labor inspector is entitled to issue an order to eliminate the violation and establish a deadline for its execution (see Federal Law No. 393-FZ dated 02.12.2019).

If the employer fails to comply, the labor inspector will render a decision on forcible collection of the debt. The employer is entitled to appeal the relevant decision within 10 days. Once the deadline for appeal has expired, the decision of the labor inspector will be transmitted to bailiffs for enforcement without court involvement. In turn, bailiffs will be able to write off relevant funds from the employer’s bank accounts or use other forcible means.

Moreover, the labor inspectorate is entitled to penalize employers for non-payment of salaries by a fine of up to 50 thousand RUB for each offence and up to 100 thousand RUB for a repeated offence (Art. 5.27 of the Russian Code of Administrative Offences).