Analytics and brochures

Russian law recognizes an acquisition of stock or of another ownership interest (a share deal) as well as an acquisition of the assets and liabilities of a business.

The latter type takes the form of the acquisition of what Russian law terms ‘an enterprise as a property complex` (further referred to as an ‘enterprise’). However, it is poorly regulated both in civil law and in tax law, and is extremely rarely used in practice, so it cannot be recommended. One example of the rules applicable to the acquisition of an ‘enterprise’ is that, if the contractual purchase price of the ‘enterprise’ is less than the book value of its net assets, the difference is recognized as income on the part of the buyer, regardless of the circumstances that led to such difference. In other words, this rule applies even if the losses could reasonably have been anticipated, which is a valid commercial reason for the contractual price to be lower than the net assets. This rule effectively makes buyers pay tax for acquiring an ‘enterprise’ with an anticipated loss, which is contrary to underlying economic essence of such transaction.

Electronic payment systems are gaining popularity, and clients often ask us whether they can use electronic money to pay salaries to their employees. This question is of particular interest to companies engaging teleworkers and temporary or part-time staff.

The Pepeliaev Group has announced the opening of its office in Sakhalin, the large Russian island in the North Pacific Ocean that is about one fifth the size of Japan. Attorney Andrey Mikulin — who practices in the areas of administrative, financial, customs, and civil law — has been appointed as the head of the Yuzhno-Sakhalinsk office, and Moscow-based Partner Pavel Kondukov, who head's the firm's Offshore Projects and PSA Group and whose practice includes a number of Sakhalin-based clients, has been appointed the Manager of the Pepeliaev Group's practice in the Far East (which also encompasses an alliance office in Vladivostok operated in unison with with Russin & Vecchi).

The ongoing reform of Russian civil law has distracted many of us from giving enough consideration to a new law that came into force September 1, 2015. Although it changes only one Article of the Russian Civil Code (Article 222 of the Russian Civil Code), it is likely to have a great impact on the rules for the demolition and recognition of title to an unauthorized construction (Federal Law No. 258-FZ of the Russian Federation dated 13 July 2015 "On amending Article 222 of Part One of the Russian Civil Code and the law "On bringing Part One of the Russian Civil Code into force" ("Law No. 258").

In view of the new requirements to localize personal data in Russia, which came into effect September 1, 2015, virtually all companies that process personal data are concentrating their attention and resources (both technical and economic) on ensuring that they comply with these obligations. What is causing companies one of the greatest concerns is whether they will be able to use foreign databases in future to process the personal data of Russian citizens.

When it comes to fostering foreign trade relationships with the BRICS countries, Russian companies are most attracted to China and India. Around two years ago, a published OECD forecast suggested that, by 2060, these two countries will account for 46 percent of the world's GDP. These are the countries that need to be put at the heart of the measures to be planned and implemented with a view to attracting foreign capital to Russia.