02.06.2017 — Russia And Turkey Lifted Trade And Business Restrictions

The vice premiers of Russia and Turkey signed joint agreement removing trade restrictions imposed in the economic affairs of both countries from January 1, 2016. The lifted restrictions concern fruits and vegetables, labor and sectoral restrictions for business.

The representatives of both countries reached an agreement on removing the restrictions concerning the import of fruits and vegetables, textiles, employment of labor, and so-called sectoral restrictions for arrears of business, including the construction. Still, Russia decided to remain certain restrictions in relations to certain products (for example, tomatoes) and in relation to visa-free travel. However, it is expected that these restrictions will be mitigated and gradually abolished soon.

Please let us remind you that Russia introduced restrictions against Turkey after Turkey shot down a Russian warplane Su-24 in November 2015.

01.06.2017 — Supreme Court to Decide Whether It Is Possible to Register Claims of Insolvent Company’s Shareholders on Loan Repayment in Register of Creditors’ Claims

The Economic Chamber of the Supreme Court will decide the matter whether the claims of the shareholders of an insolvent company, which have provided loan to the company, shall be registered in the register of the creditors’ claims. Previously the Supreme Court noted that the fact that the loan was provided by the shareholder of the insolvent company alone is not a ground to reject to include such a claim on loan repayment to the register of creditors’ claims. Shall the Supreme Court overrule its previous position? The outcome of the case will be availaible in the beginning of July.

The case No. А32-19056/2014 was transferred to the Economic Chamber of the Supreme Court. In this case the shareholders of the insolvent company claim that their claims on the repayment of loan and the company’s credit they paid back as sureties are included in the register.

The courts of three instances included such a claim to the register. Still, one of the company’s creditors in bankruptcy proceedings objected referring to the fact that in practice the shareholders provided the loan from the amounts received from the company as dividends, and therefore in fact their claims have arisen from corporate governance relations and shall not be included in the register in accordance with the provisions of bankruptcy law. The Supreme Court is to finally resolve this matter on 3 July 2017.

It shall be noted that previously the Supreme Court upheld a liberal view and as well as the lower courts decided that the shareholders’ claims arising out of intragroup loans may be included in the register of the creditors’ claims. Moreover, the Supreme Court did not regard it as evasion of bankruptcy law provisions, in accordance with which the shareholders’ claims shall not be included in the register and shall be satisfied after all others (see the Decision of the Supreme Court dated 6 August 2015 No. 302-ЭС15-3973).

31.05.2017 — Starting from July 1, 2017 Federal Tax Service Will Provide Expanded Information on Taxpayers on Its Website

In accordance with the latest tax legislation amendments the Federal Tax Service will provide additional information (except the information that constitutes tax secret) on the taxpayers on its website as open source data. In particular, the list of open source data will include the information on the number of the company’s employees, the company’s profits and losses, the taxes and duties paid and the tax arrears, unpaid tax penalties and fines.

This information will be available on the official website of the Federal Tax Service, online and for free.

Since the list of open source data on the companies will be expanded, the taxpayers will have additional opportunities to assess the risks and be diligent in selecting the counterparty in transactions. At that, the Federal Tax Service in its official explanations recommends the companies to review the publicly available information on the counterparty before the transaction is concluded, what will allow to minimize the risks of reassessment of tax liabilities to the company due to the fact that it was not diligent in choosing the counterparty.

30.05.2017 — Purchase of Asset At Low Price May Evidence that Purchaser Acted In Bad Faith

The Arbitrazh Court of Moscow Region ruled that the purchase of an asset, namely, immovable property at a rate below the fair market value may evidence that the purchaser acted in bad faith and may be a ground for invalidation of the transaction. Thus, the economic actors shall take into consideration the need to indicate the actual price of the asset in the sale and purchase agreement, and compare it with the fair market value.

In a case adjudicated by the Arbitrazh Court of Moscow Region No. А40-116004/2016 the court resolved whether the purchaser, which purchased an asset as a result of a suspicious transaction without the corporate approval, acted in good faith. The sale of the immovable property (non-residential premises in the center of Moscow) was challenged because the procedure for the approval of a major transaction had not been followed, the accounting documents were falsified, and the sale price was very low.

The courts of the first and the appellate instances dismissed the arguments of the claimant, who claimed for the invalidation of the transactions and referred to the fact that the property cannot be recovered from a good faith purchaser which did not know and could not have known that the transaction should had been approved as a major transaction, because that sale price was illegally set low in the accounting documents. Still, the Arbitrazh Court of Moscow Region rejected such a view. In the opinion of the court, the purchaser who acquired premises in the center of Moscow at a price substantially below its market value cannot enjoy legal protection of a good faith purchaser. Therefore, the decisions of the lower courts were revised and the case was sent back to the court of the first instance for rehearing.

29.05.2017 — Supreme Court: Expiry of Lease Term Before Construction Works Are Completed Is Not Reason for Demolition of Unfinished Construction

The Economic Chamber of the Supreme Court decided the fate of unfinished construction in case the lessee fails to finish the construction works on the leased land plot before the lease term expires. In the opinion of the Supreme Court, if the construction works were conducted on legal grounds, the developer is entitled to register his title to the unfinished construction despite the fact that the construction works were not completed during the lease term and the lessor refused to prolong the lease agreement.

In a case recently adjudicated by the Supreme Court No. А75-236/2016 the company (developer) leased a land plot for three years from local authorities. However, the construction was not completed during the lease term, and the developer became insolvent. The company did not manage to register its title to the unfinished construction, since the lease term had expired. The local authorities refused to prolong the lease term and claimed that the lessee returns the property in the condition in which he received it and filed the respective claim to the court.

The positions of the lower courts on whether the unfinished construction shall be demolished were varied. The court of the first instance satisfied the claim of the local authorities in full, but the appellate court rendered a different decision and noted that if a construction had been erected on the land plot, the provisions of Article 622 of the Russian Civil Code on the lessee’s duty to return the leased property in the condition in which he received it shall not be a ground for demolition of the unfinished costruction. Still, since the cassation court overruled the decision of the appellate court and agreed with the court of the first instance, the company had to file a claim with the Supreme Court.

The Supreme Court upheld the position of the developer and explained, that since the construction was conducted on legal grounds, in accordance with the construction permit and the terms of the lease contract, the registration authorities’ refusal to register the company’s title to the construction in dispute was illegal. Finally, the court declared the company’s title to the unfinished construction despite the fact that the construction works were not completed during the lease term.