08.12.2016 — Federal Tax Service to Assess Banks’ Reliability
The Federal Tax Service can independently evaluate the economic position of the banks on the market, making the decision to transfer the banks to a specialized “bank” tax office (MI FTS № 9).With high probability, it can be assumed that the license of a bank which has not been transferred into MI FTS № 9 will be revoked soon. In order to find out the FTS’s opinion in respect of bank’s reliability it is sufficient to know the bank’s details, which indicate the inspection number, where the bank is registered.
At the end of 2014, it was decided to register the main banks depending on their financial performances with MI FTS № 9. Currently 352 of 643 existing banks are registered at the said tax office (according to the Central Bank on November, 1 2016).
Thus, FTS when making the decision to transfer a bank to a specialized tax office provides a signal to the participants of the market regarding the stability of the said bank. It is possible to know the FTS’s opinion regarding a bank’s reliability by finding out the tax office number where the bank is registered. For this purpose, it is sufficient to find the registration reason code (RRC) of the bank, which is usually published in the “Bank details” section on banks’ websites. The first two digits of the RRC contain information about the region of registration, whereas the second two digits represent the tax office of registration.
However, only the Central Bank of Russia can make a decision to revoke the license of any bank. That’s why potentially unreasonable assessment of the FTS, based only on publicly available information, such as bank statements and ratings, may lead to the fall of the bank’s financial stability and provoke reputational risks. The time will show the FTS’s competence in this matter and the reasonableness of its forecasts, but the banks which have not been listed on the new “bank” tax list are under threat of high reputational risks.
07.12.2016 — Procedure for Selling State Property Improved
The Government of Russia has adopted a new decree, improving the procedure of selling property acquired into the state’s ownership through confiscation, inheritance or other mechanisms. It is clarified, in particular, that property that costs less than 100.000,-- rubles will be sold to the first applicant directly, without holding an auction. Property that costs more than 100.000,-- rubles will be sold by way of electronic auction, as opposed to in-person open auctions that were obligatory before.
Initially, sale of movable property that was acquired by the state through confiscation, inheritance, etc. was excluded from the sphere of application of privatization laws. As a result, the Government implemented a simpler procedure for alienation of such property aimed at facilitating this process.
In particular, for this purpose, it was established that if a certain item is not sold for a long amount of time, its price will periodically drop by 30% and up to 90% overall. Apart from that, it was decided to shift from usual auction procedures towards a more simplified regime, such as electronic auction. The Government also specified in details the procedure for such electronic auctions.
06.12.2016 — Supreme Court: Early Termination Fee Can Be Reduced In Court
Supreme Court of Russia has issued a number of clarifications in the field of contract law. Among other matters, it clarified that a contractual early termination fee can be reduced if its amount is manifestly higher than the losses caused by contract termination.
Earlier, the Supreme Arbitrazh Court emphasized that early termination fees can be reduced only to protect a weak party to the contract (such as a consumer in relation to an entrepreneur in b2c contracts). The Supreme Court, on the other hand, makes no such distinction. As a result, reduction of early termination fee can be expected to be widespread in entrepreneurial contracts as well.
Supreme Court also does not clarify whether courts may reduce the early termination fee at their own initiative, or only if requested to do so by a party. In light of the principle of adversariality and by analogy with Art. 333 of the Russian Civil Code on reduction of contractual penalties, it is highly likely that the respective request of a party will be necessary for reduction of early termination fee amount by court.
05.12.2016 — Protection of Private Investors into Russian Residential Real Estate to Be Improved
The Government of Russia has adopted a decree, under which a compensation fund for protection of residential real estate investors is to be created. The fund will be formed through obligatory payments from residential real estate developers, and the finances will be used in the event of the developer’s bankruptcy to finish construction or to pay compensations to the investors.
The idea of creating a compensatory fund was first expressed by President of Russia Vladimir Putin. The Ministry of Construction will act as the fund’s founder. Starting from 1 January 2017, each real estate developer will have to pay to the fund 1% of the planned price of residential property specified in the project declaration. The payment has to be made before the first investor is engaged into the project.
This fund is a form of bankruptcy insurance for residential real estate developers. For Russia, such compensation fund in the sphere of construction is a novelty. At the same time, this practice is relatively widespread in the Western countries.