Problems relating to Trade and Investment on Russia
24. Indigested legislation, abrupt changes |
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Issue |
Issue details |
Requests |
Reference |
| (1) Inadequacy, Frequent Amendments, and Nebulous Interpretation of Various Laws and Regulations | - The lead time is too short to practically implement the tax laws, legislation relative to import, safety regulation, etc. from the publication date to enforcement date. On the other hand, practical instructions from GOR for implementation in many cases have not reached the governmental personnel in charge at the window so that they are unable to cope with the changes. Example: Energy Efficiency Law (requiring test by Third Party Test Institution designated by GOR) has been enforced. However, TPTI has not yet been designated by GOR, while the Law authorises import of only the products that have passed the TPTI Test. |
- It is requested that GOR provides opportunities for exchange of dialogues with industries representatives when deliberating establishment of new laws and regulations. | |
| (2) Nebulous Legislation and Legal System concerning Company Law | - Company laws (joint stock company law and limited liability company law) have been revised, enabling conclusion of merger agreement based on the Russian governing laws. However, in the absence of judicial precedent, its implementation details are nebulous. The situation continues whereby foreign funded enterprises investing in Russia are compelled to establish special purpose companies (SPCs) in the Netherlands, Cyprus, etc. |
- It is requested that GOR expressly disseminates its policy on the validity of merger agreement based on the Russian governing laws. | - Civil Code - Joint Stock Company Law - Limited Liability Company Law |
| (3) Discrepancies between Civil Code, and Specific Acts | - While Specific Acts (Company Act, Limited Liability Company Act, Company Registration Act, Hypothec Act, Fixed Assets Registration Act, Mortgage Act, Security Right Act, etc.) have gone through frequent amendments, the Civil Code has remained without amendments. The mismatching areas between them that have arisen over the years have been the cause for the complexity in various procedural matters, including Installation of the Lien Right. | - Amendment of the Civil Code is anxiously awaited. - It is a great expectation of all that the amendment results in appropriate implementation and expedited processing at Ministries and Agencies, and Courts. |
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| (4) Domestic Storage of Personal Data | - By adoption of Federal Law on "information, information technologies, and information protection," it is possible GOR requires server installation inside Russian Federation Area, with a possibility of having to make double investment in the event another server is already set in a third country. - As legal entity providing information via internet, member firm' subsidiary (MFS) is required by law to store for 6-months the specified data (IP address, Email, etc.) - All legal entity has been under obligations since 1 September 2015 to store, within the domestic Russian Federation Area, personal data acquired via internet, including without limitation, HR, dealer, ultimate purchaser, etc. This provision can be adopted when collecting overseas personal data within Russian Federation. - The New Law (Bill No. 596277-6, passed the 2nd reading at the state Duma, the lower house of the federal assembly in January 2015, and already approved by President Putin) is due for enforcement on 1 September 2015. The problems of this bill include, without limitation: (1) empowering Russian Federation, pursuant to court order, to discontinue access to violators' website(s), (2) ambiguity of tax consequences in the case where a data base set up within Russian Federation is used, and if such use constitutes PE, attracting the tax liability in Russian Federation, etc. The severe impact of this legislation, it is expected, will spread to information on the employees of group enterprises, distribution of game/video/music contents via internet, on-line sales, direct marketing, etc. with additional enormous expenses, exceeding the estimated business revenue, materially affecting business operation. |
- It is requested that GOJ takes step to exchange dialogues with personal data protection agencies of other countries to see rationality in its introduction and to consider if other alternatives less burdensome to enterprises are available. - MFS, as firm providing information via internet, has started lobbying now, although, it had refrained from lobbying to federal security service, as this issue involves a political aspect). - It is possible to lobby via Roskomnadzor advisory committee, through which amendment will be sought in personal data protection law. - It is requested that GORF repeals the New Law, if not, at least postpone its implementation indefinitely. |
- Federal Law Bill No. 596277-6 Federal Law "On Information, Information Technologies, and Information Protection" - Federal Law "On Information, Information Technologies, and Information Protection" - Federal law No. 97-FZ as of 05/05/2014 - Federal law No. 242-FZ |
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