LEGAL brief: Changes to the Civil code of the Russian Federation

On September 1, 2014 amendments to part 1 of the Civil code of the Russian Federation (hereinafter: the civil code) concerning legal entities (Federal law of 05.05.2014 N 129-FZ "on amendments to article 90 of part one of the Civil code of the Russian Federation and article 16 of the Federal law "on limited liability companies") came into force.
Major change:

Decision to establish a legal entity

The provisions on the establishment of a legal entity through the decision of the founders remained the same. In case of establishment of a legal entity by one person, the decision on its establishment is made by the founder alone. In the case of establishment of a legal entity by two or more founders of the said decision is taken by all the founders unanimously.
The decision on the establishment of a legal entity shall contain information on the establishment of a legal entity, approval of its Charter, on the procedure, size, methods and terms of formation of the property of a legal entity, on the election (appointment) of the bodies of a legal entity.
New is that the decision on the establishment of a corporate legal entity (article 65.1 of the civil code) also contains information on the results of the voting of the founders on the establishment of a legal entity, on the procedure for joint activities of the founders to create a legal entity.

Authorized capital

The minimum amount of the authorized capital is regulated by the laws of business entities. Changed the order of making the share capital, and is now before the registration must be paid no less ? the authorized capital and the remaining amount during the first year of the company's activity (article 66.2 of the civil code).
Now it is established that the authorized capital of a limited liability company is paid in the manner prescribed by the law on LLC. The founders of the company are now obliged to fully pay their shares of the authorized capital within four months after the registration of the company, unless a shorter period is provided for in the agreement or decision on the establishment of the company.
The previous version of article 90 of the civil code provided that the authorized capital must be paid for at least half of the time of registration of LLC. The unpaid part was to be paid during the first year of the company's activity. These provisions were duplicated in the LLC Law.
Two General Directors in one legal entity

The constituent document may provide that the authority to act on behalf of a legal entity is granted to several persons acting jointly or independently of each other. Information about this shall be included in the unified state register of legal entities (article 53 of item 1 of the civil code).

Constituent documents of a legal entity

The Charter is recognized as the only constituent document of any legal entity (article 52, paragraph 1 of the civil code).

Responsibility of participants and governing bodies

A person acting on behalf of a legal person must act in the interests of the legal person represented by it in good faith and reasonably. The same obligation is borne by members of the collegial bodies of a legal entity (Supervisory or other Council, Board, etc.) (art. 53.1 of the civil code).
Also, the majority participant may be liable for the losses caused to the legal entity if they arise through its fault.
Name and address of legal entity

In the unified state register of legal entities must be specified the name and address of the legal entity (article 54 of the civil code).
Inclusion in the name of a legal entity of the official name of the Russian Federation or Russia, as well as words derived from this name, is allowed in cases provided by law, decrees of the President of the Russian Federation or acts of the Government of the Russian Federation, or by permission issued in the manner prescribed by the Government of the Russian Federation.
A legal entity bears the risk of consequences of non-receipt of legally significant messages (art.165.1 civil code), delivered to the address specified in the unified state register of legal entities, as well as the risk of absence of the body or representative at the specified address. Messages delivered to the address specified in the unified state register of legal entities are considered to be received by a legal entity, even if it is not located at the specified address.
If a foreign legal entity has a representative in the territory of the Russian Federation, the messages delivered to the address of such representative are considered to be received by the foreign legal entity.

Representative offices and branches of a legal entity

Representative offices and branches must be specified in the unified state register of legal entities (article 55 of the civil code).

Reorganization of a legal entity

In order to avoid doubts, the possibility of complex reorganizations involving more than two legal entities with a simultaneous combination of different forms of reorganization (article 57 of the civil code) is expressly provided.
The possibility of recognition of the decision on reorganization as invalid, and reorganization - failed at the request of participants of the reorganized legal entity or third parties (Art. 60.1 of the civil code) is established.
When converting a legal entity of one legal form into a legal entity of another legal form, the rights and obligations of the reorganized legal entity with respect to other persons shall not be changed, except for the rights and obligations with respect to the founders (participants), the change of which is caused by the reorganization (article 58 of the civil code).
Transfer act. Removed the dividing balance sheet.
The transfer act must contain provisions on succession to all obligations of the reorganized legal entity in respect of all its creditors and debtors, including obligations disputed by the parties, as well as the procedure for determining the succession in connection with changes in the type, composition, value of property, the emergence, change, termination of the rights and obligations of the reorganized legal entity, which may occur after the date on which the transfer act is drawn up (article 59 of the civil code).
Liquidation of legal entity

The list of grounds for liquidation of legal entities by court decision (article 61 of the civil code) has been expanded.
Article 64.1 has been added to protect the rights of creditors, according to which, in case of refusal of the liquidation Commission to satisfy the creditor's claim or evasion of its consideration, the creditor has the right to apply to the court for satisfaction of its claim to the liquidated legal entity before the approval of the liquidation balance sheet of the legal entity.
It is also possible to exclude a legal entity from the unified state register, if it is within twelve months preceding his removal from this register, did not represent the documents of the reporting provided by the legislation of the Russian Federation on taxes and fees, and have been no transactions for at least one Bank account (inactive legal entity) (article 64.2 of the civil code).
Corporate and unitary legal entities
Legal entities are now divided into corporate and unitary (article 65.1 of the civil code).

Corporate (corporations): legal entities whose founders (participants) have the right to participate (membership) in them and form their Supreme body in accordance with paragraph 1 of article 65.3 of the civil code. These include business partnerships and societies, peasant (farm) farms, economic partnerships, production and consumer cooperatives, public organizations, associations (unions), real estate owners ' associations, Cossack societies included in the state register of Cossack societies in the Russian Federation, as well as communities of indigenous small peoples of the Russian Federation.
Unitary: Legal entities whose founders do not become their participants and do not acquire membership rights in them are unitary legal entities. These include state and municipal unitary enterprises, foundations, institutions, Autonomous non-profit organizations, religious organizations, public law companies.
Rights and obligations of participants of the Corporation and management procedure

The rights and obligations of the participants of the Corporation and the management procedure (articles 65.2 and 65.3 of the civil code) are provided. Thus, the Supreme governing body of the Corporation is the General meeting of its members. It also provides for a single management body (Director, General Director, Chairman, etc.), which may consist of several individuals or entities. in addition, it provides for a collegial Executive body (Board or Directorate). In addition to the Executive bodies, a collegial management body (Supervisory or other Council) is envisaged, which controls the activities of the Executive bodies.

Public and non-public economic companies
The novelty is the division of business companies into public and non-public.

Public companies include a joint stock company whose shares and securities convertible into its shares are publicly placed (by open subscription) or publicly traded on the terms established by the securities laws (art.66.3 of the civil code). Now, the mandatory rule for the JSC will be the indication in the Charter and the company name that the company is public. An annual audit is mandatory for the JSC.
LLC and joint-stock companies that do not publicly place their shares are non-public.
Such a legal form as a closed joint stock company does not exist now.

Confirmation of decision - making in business companies
New rules of confirmation of the decisions made by the General meeting of participants of economic society and structure of its participants who were present at its acceptance (Art. 67.1 of civil code) are fixed, namely:

in a public joint-stock company, it is confirmed by a person who maintains a register of shareholders of such a company and performs the functions of an accounting Commission (paragraph 4 of article 97);
in a non-public joint-stock company by notarization or certification by a person who maintains a register of shareholders of such a company and performs the functions of an accounting Commission