14.10.2015 — Ministry of Justice to Fill Loopholes in Enforcement Procedures
A joint committee directed by the Ministry of Justice will start working at a bill introducing a new Enforcement code. Among other things, the new code will include detailed provisions setting forth the debt recovery procedure, as well as the limits of bailiff’s actions. The adoption of a new Enforcement code has been discussed among lawyers for quite a long time.
A joint committee directed by the Ministry of Justice will start working at a bill introducing a new Enforcement code. Among other things, the new code will include detailed provisions setting forth the debt recovery procedure, as well as the limits of bailiff’s actions.
The joint committee is comprised of representatives of numerous state departments and legal scholars. The adoption of a new Enforcement code has been discussed among lawyers for quite a long time. Chances are, the government will finally pass from words to deeds.
Experience of other countries in the field will be taken into account when developing the code. For example, it has been suggested to ban bad debtors from driving, and the relevant bill is currently being considered in the State Duma. A similar provision could be included into the new Enforcement code as well.
14.10.2015 — Constitutional Court: Debtor’s Liquidation Does Not Prevent Appeals
The Russian Constitutional Court has recently ruled that arbitrazh courts should not refer to clarifications issued by the Supreme Arbitrazh Court (now replaced by the Supreme Court) on termination of proceedings in cases involving bankruptcy trustees after company liquidation. The Ruling of the Supreme Arbitrazh Court dated 15.12.2004 No.29 sets forth that arbitrazh courts shall terminate proceedings after a record of the debtor’s liquidation has been made in the State Register. According to the Constitutional Court, such an interpretation of Article 150 of the Arbitrazh procedure court deprives bankruptcy trustees of their right to appeal.
Denis Tatarnikov, a bankruptcy trustee, has asked the Constitutional Court to rule whether Article 150 of the Arbitrazh procedure code complied with the Russian Constitution. Tatarnikov’s claim had been triggered by a complaint filed against him by the tax authority due to his actions during insolvency proceedings of OOO “Upravlyayushchaya kommunalno-khozyaystvennaya kompaniya” (hereinafter - “Company”) with the Arbitrazh court of the Ivanovo Oblast.
Tatarnikov appealed against the decision of the Arbitrazh court of the Ivanovo Oblast, however the appeal court terminated proceedings due to the fact that the Company was liquidated and this had been recorded in the Unified State Register of Legal Entities (hereinafter - “State Register”). Tatarnikov decided to address the Constitutional Court, alleging that the appeal court had violated his right to appeal.
The Constitutional Court held that the relevant provisions of the Arbitrazh procedure code are in full compliance with the Constitution, and as such do not preclude appellants from availing of their right to appeal.
Nevertheless, the Constitutional Court also noted that arbitrazh courts generally refer to the Ruling of the Supreme Abitrazh Court dated 15.12.2004 No.29 that clarifies provisions of the Federal law “On insolvency (bankruptcy)”. Among other things, this Ruling interprets Article 150 of the Arbitrazh procedure code, setting forth that arbitrazh courts shall terminate proceedings after a record of the debtor’s liquidation has been made in the State Register.
According to the Constitutional Court, such an interpretation of Article 150 of the Arbitrazh procedure court deprives bankruptcy trustees of their right to appeal.
Tatarnikov’s claim will be retried subject to the Ruling of the Constitutional Court.
12.10.2015 — Vladivostok Free Port Invites Foreign Investors and Offers Tax Benefits
The Federal law establishing Vladivostok and the surrounding area as a free port came into force on October 12, 2015. This law, alongside with the Federal law “On the territories of advanced social and economic development”, is an important means to improve the investment climate in Russia. The law is aimed at attracting foreign investors to the Russian Far East and establishes numerous benefits for residents of the free port.
The Federal law No.212-FZ establishing Vladivostok and the surrounding area as a free port came into force on October 12, 2015. Those investors that decide to open a representative office and run a business within the territory of the free port of Vladivostok will receive a number of benefits. They will enjoy a special regulation and state support, control and management treatment.
The free port area covers 15 large municipalities in the South of the Primorsky Krai, including the territory of the Vladivostok city district. Thus, the free port comprises the most economically and socially developed districts of the Primorsky Krai, and more than two thirds of the Primorsky Krai population live there.
Notably, during the Eastern Economic Forum, that took place at the beginning of September 2015, the Russian President proposed to expand the free port area by including other territories of the Russian Far East. The Russian Government is planning to discuss this proposal in the nearest future.
Among other things, residents of the free port will receive the following benefits:
- Taxes and other obligatory payments: residents of the free port will enjoy a preferential tax treatment. Thus, the corporate income tax shall not exceed 5% during the first 5 years. The total social contributions rate shall not exceed 7.6% as opposed to the standard 30% rate.
- Customs treatment: The territory of the free port shall be considered a free customs zone. In practice that may result in a zero customs duty rate imposed on goods and equipment.
- Simplified administrative procedures: time frames of administrative procedures shall be reduced, a single point of contact service will be provided thereby facilitating relations with state authorities.
- Simplified visa requirements, as well as simplified rules of foreign labour engagement are provided for by the new law.
- Control and monitoring: a special procedure of state inspections will be effective within the free port area. The supervisory board of the free port will be in charge of protecting the free port residents from excessive attention of controlling state authorities.
The new law also provides for the possibility of special regulation of medical and educational activity, however the relevant secondary legislation is yet to be developed.
The free port of Vladivostok is a significant event not only for the Primorsky Krai, but also for Russia as a whole. Establishing a representative office and running business in the Far East may open new opportunities and growth prospects. However, it is advisable that all possibilities and risks are assessed before the relevant decision is made.