The Federal State Statistics Service published the consolidated data for the year 2016 on the amount of per capita income in Russia. At last year end cash income on average per head of population on a year-on-year basis in absolute terms increased by 1%. However, real disposable income decreased by 5,9% in comparison with 2015.

According to the Federal State Statistics Service data in 2016 annual per capita income in Russia amounted to RUB 30,775 (approx. USD 520), a 1% rise over the same period in the previous year. Nevertheless, in the end of the previous year this index begun to drop and in December 2016 annual per capita income dropped by 0,6% in comparison with the same period in 2015 and amounted to RUB 46 233 (approx. USD 780).

Average monthly total salary due at the year-end 2016 amounted to RUB 36,703 (approx. USD 620), what is 0,6% more than a year ago. However, real disposable income of Russians decreased by 5,9% over the previous year.

The Supreme Court held that the satisfaction of the claim on declaring the transaction invalid and initiation of enforcement proceeding with respect to recovering everything received under the transaction from the counterparty does not preclude recovery of losses from the director, suffered by the company as a result of the execution of such a transaction. Nevertheless, for the avoidance of double recovery the claim against the director for compensation of losses may be dismissed if the company has managed not only to initiate enforcement proceeding, but also the losses have already been actually recovered by means of other remedies (by declaring the transaction invalid, vindication, etc.).  

In a case, resolved by the Supreme Court, in the course of bankruptcy procedures the insolvency officer at first managed to challenge the transaction, entered into by the company and filed a claim against the counterparty for recovery of everything received under this transaction. However, he did not succeed to get this decision executed and filed a claim against the director for the compensation of losses. Lower-level courts dismissed the claim with reference to the argument that the insolvency officer’s claims have already been satisfied by means of declaring the transaction invalid, therefore the recovery of losses from the director will lead to double recovery. However, the Supreme Court overruled this position and annulled the decisions of the lower-level courts and filed the case for further examination to the first instance court (case № А56-12248/2013).

In the opinion of the Supreme Court, uncompleted executory process does not preclude recovery of losses from the director. In this respect the Supreme Court upheld the position, previously expressed by the Supreme Commercial (Arbitrazh) Court, according to which the claim against the director for compensation of losses may only be dismissed if the company not only won the case and instituted the enforcement proceeding by means of other remedies (by declaring the transaction invalid, vindication, recovery of losses from the trespasser itself), but also managed to actually make use of these remedies and get them executed (Ruling of the Plenum of the Supreme Commercial (Arbitrazh) Court No. 62 dated July 30, 2013, para. 8).

In this case for the avoidance of double recovery it should be noted that if the company has received two judicial acts, as a result of which two enforcement proceedings have been instituted, then after the company will get one of them executed, the executory processes with respect to another one should be terminated, and if it has been executed already, then the execution of the act, which has been executed later, shall be overturned (Ruling of the Plenum of the Supreme Commercial (Arbitrazh) Court No. 63 dated December 23, 2010, para. 16).

Currently the Russian Government is considering the draft resolution that suggests limiting the scope of regulatory bodies’ inspections to certain “questionnaire forms” According to the draft, in the course of inspections controlling authorities will be empowered to ask only those questions, which have been included in advance into the “questionnaire form”, the content of which will differ depending on the risk category of the regulated company. Furthermore, at the present moment the State Duma is considering a draft law that provides for prohibition to conduct extraordinary inspections of those companies, where no violations were detected in the course of the previous planned inspection.

To implement the Russian President’s instruction regulatory bodies proceed with tabling initiatives aimed at lowering squeeze on business. Draft resolution of the Russian Government developed by the Ministry of Economic Development concerning the limitation of scope of control inspections by the “questionnaire forms” is one of these initiatives. The content of such “questionnaire forms” will depend on the risk category of a regulated company, which will predetermine the depth and the intensity of the investigation in accordance with the recent legislative amendments.

“Questionnaire forms” will concern only compliance with mandatory requirements. Furthermore they will include references to a regulatory document, which establishes such requirements. Should a regulatory body exceed the “questionnaire forms” in the course of control inspection, the results of the inspection may be annulled, and the regulatory body may be subjected to administrative liability. It is planned that the “questionnaire forms” will be used in practice in the first half of 2017 for certain types of control inspections of small business enterprises, namely, for fire and sanitary and epidemiological investigations, and control in the sphere of telecommunications and healthcare.

Moreover, right now the State Duma is considering a draft law, which further limits the powers of the regulatory bodies in the course of control inspections. The draft suggests that it should be prohibited to conduct extraordinary control inspections of those companies, where no violations have been detected as a result of the previous control inspection, included into the plan for the current year.

On December 21, 2016 amendments to the legislation on money laundering control that require companies to keep the information on their ultimate beneficiaries and update it at least once a year, entered into force. Violation of these requirements may result in a fine up to 500,000 RUR (approx. 8,400 USD). However, sometimes it is impossible for a company to identify its ultimate beneficiaries. Consequently, the Federal Financial Monitoring Service explained what will help a company to avoid fines in such a case.

In accordance with the new legislative requirements on money laundering control companies must hold information about their beneficiaries and take all the reasonable and available measures to identify their ultimate beneficiaries. Exceptions are only available for companies partially owned by the government, international organizations, issuers of securities that are publicly traded or are listed on the exchange, and foreign structures with no corporate status and legal identity, where absence of beneficiaries and a sole executive body is due to their form of incorporation.

Therefore, almost all companies with certain rare exceptions are required to keep the information on their ultimate beneficiaries and update it on a regular basis. Law defines “beneficiary” as an individual who either directly or indirectly (through third parties) owns an interest in the capital exceeding 25% or otherwise controls company’s operations. Companies must provide this information on request of the tax authorities or the Federal Financial Monitoring Service. A company’s failure to provide such information will result in a fine from 100 000 RUR (approx. 1700 USD) up to 500 000 RUR (approx. 8,400 USD).

Should it be the case that it is impossible for the company to identify its ultimate beneficiary (e.g. due to a complicated shareholding structure), it should take all the available steps to get this information. In its information notice the Federal Financial Monitoring Service explained that documents evidencing that reasonable steps have been taken include company’s inquiries addressed to its shareholders (other controlling persons) and the corresponding answers received (for more detail please see http://www.fedsfm.ru/news/2375). If a company provides these documents on request of the regulatory bodies instead of information of beneficiaries, it will help to prove that the company has taken all the steps to identify its beneficiaries, and, consequently, it may help to avoid imposition of fines.

The amendments to the procedural legislation, which provide for arbitrability of corporate disputes of certain types have entered into force. To enjoy this legal improvement the parties should conclude an arbitration agreement. In this connection, as the law expressly provides that all the arbitration agreements with respect to corporate disputes, concluded before February 1, 2017, should be deemed ineffective, it is recommended to bring them in line with the new legal requirements.

Until now the arbitrability of corporate disputes has been a controversial issue for a long time. Despite the lack of an expressly provided statutory prohibition, the Russian state commercial courts, including the former Supreme Commercial (Arbitrazh) Court, treated such disputes as non-arbitrable and falling within the exclusive jurisdiction of Russian state commercial courts, what forced the arbitrators to hold that they do not have jurisdiction over corporate disputes, because the future judgment would not be enforceable.

The recent amendments to the procedural legislation provide for arbitrability of corporate disputes of certain types. In particular, in accordance with the amendments, corporate disputes that may be submitted to arbitration include disputes relating to the creation, reorganization and dissolution of a company; disputes arising out of the claims of the shareholders concerning the compensation of losses, caused to the company by the actions of its management bodies, and some other issues. At the same time, the law stipulates which disputes fall within the exclusive jurisdiction of Russian state commercial courts and are not arbitrable (namely, disputes relating to the expulsion of participants of a legal entity, disputes regarding convocation of general shareholders meetings, and some others).

Certain requirements should be observed to refer a corporate dispute to arbitration. In particular, all of the shareholders of the legal entity and any other party involved in the dispute must be parties to an arbitration agreement. Furthermore, corporate disputes may only be submitted to arbitration administered by a permanent arbitration institution, on condition that such an arbitration institution has approved the rules concerning resolution of corporate disputes and has published them on its website in accordance with the procedure, provided by law. It is also should be taken into account that as the law expressly provides that all the arbitration agreements with respect to corporate disputes, concluded before February 1, 2017, should be deemed ineffective, it is recommended to bring them in line with the new legal requirements.