22.07.2016 — The Russian Ruble is recovering

In July ruble has strengthened as compared to the dollar by 1.7%, and to euro by 2%, which is the maximum since the end of 2015.

This positive trend is taking place against the background of serious macroeconomic talks concerning the perspectives of the Russian economy and currency among the elites. Thus, the President and the Prime Minister of the Russian Federation have recently discussed the strategy for developing and strengthening the national currency. The main strategic solutions of the plan are aimed at the development of small and medium sized businesses, supporting real economy and promotion of non-oil export.

Interestingly, however, that the Central bank does not plan on rejecting the floating ruble rate or controlling the exchange rate. At the same time, Russia is quite capable to strengthen the ruble exchange rate, but only if the Central bank and the Government collaborate.

21.07.2016 — Businesses Welcome to Comment on Proposed Model Charter for LLC

The Ministry of Economic Development has finalized and published the draft of the model charter for limited liability companies for public consultations. The public discussion of the draft will last until August 2, 2016.

The Ministry is confident that introduction of the standard-form charter will be beneficial for more than 4 million companies, which will no longer need legal consultants for developing their charters. Using model charters may further make the process of registration with the tax authorities easier, as the Federal Tax Service will not have to verify the legality of non-model (customized) charters.

Be reminded that the changes in the Civil Code that came into force on September 1, 2014, among other matters, provide for a possibility for joint-stock companies and limited liability companies to use standard-form charters, which are under development. Within the specified term, businesses may present their comments on the contents of such model charters proposed by the Ministry.

20.07.2016 — The Government will Inform Landowners on Land Use Restrictions

The Government of the Russian Federation has approved a clear procedure for notification of land plots owners about relevant restrictions on use of land located within special use zones. In particular, if a land plot is located near gas-distributing networks, power lines, public roads or other similar objects, the owner’s opportunities to develop such a land plot are essentially limited, including limitations on construction works. Such restrictions and limitations must be made known to landowners so as to enable them to comply.

Owners of the land plots will be notified of restrictions on their use within 15 days from entering the data on restrictions into the State Real Estate Cadastre. The notification will be sent to the postal address or via e-mail. Such practice will add transparency to the owners’ situation as the notification will contain the exact list of restrictions on use of land plots. However, as demonstrated by these developments, it is becoming increasingly more important to accurately present such contact information to authorized state bodies and update it when necessary. 

19.07.2016 — Supreme Court Tightened the Standard for Real Estate Qualification

Separate ownership rights cannot be registered in respect of auxiliary objects created solely for servicing a land plot. The Supreme Court included this position into the digest of case law, and therefore widespread reliance on this approach can be expected from other Russian courts in the future. This in turn will likely prevent certain abusive practices with real estate.

The legal position in question was based on a lessee’s claim against the Russian Federation challenging the government’s ownership rights in respect of engineering facilities located on the leased land plots (a number of excavated trenches with metal valves controlling the flow of water into the trenches). The Court found that usage of the engineering facilities separately from the land plot is impossible, meaning that the facilities are merely an improvement to the land plot rather than a separate real estate object.

As a result of this view being supported on the highest level, it can be expected that the extent of abusive practices with real estate will decrease. Previously, parties at times attempted to register trenches, ditches and other objects that are not separate real estate in order to be eligible for priority buy-out of land plots on which they are situated. The courts will now likely block this practice more actively.  

18.07.2016 — Parties to One of the Landmark Foreign Currency Lease Cases Are To Settle

Having gone through two judicial instances in the attempt to solve a dispute concerning currency rental payments that have become overbearing for the lessee as a result of significant ruble devaluation, Vympelkom (the lessee) and Tizpribor (the lessor) have presented their amicable settlement agreement to the court of the third (cassation) instance. The amicable settlement was, however, rejected by the cassation court.

According to the publicly available information, the main conditions of the amicable settlement included the right of the lessee (Vympelkom) to partially stop leasing the premises and to conclude sub-lease agreements. At the same time, the agreement did not specify the amount of rent, which was the subject matter of the dispute.

This failure to address the issue of rent as well as the imprecision in wording led to the rejection of the presented amicable settlement agreement by the Federal Arbitrazh Court of Moscow District’s panel of judges. It was noted that the presented document was too broad, did not solve the dispute on its merits and would prevent the court from issuing an enforcement order in case of need. The representatives of the parties insisted on their right to include any provisions into such agreements by virtue of freedom of contract. Nevertheless, the court did not support these arguments. The court hearing was postponed yet again for preparation of a new amicable settlement agreement.