Month: March 2020

The Russian Ministry of Work has given explanations about work during the non-working “quarantine days” announced by president Putin. Remote working does require signature of a an addition to the employment contract by employer and employee.

The transition to remote working can temporarily be done via electronic exchange of employment documentation with the employees. If necessary, hard copies can be executed afterwards. This allows companies which did not organize remote working yet to continue work. At all times, the employees should respect the quarantine requirements implemented for the prevention of coronavirus infection.

Please contact us, if you have any questions how to organize the implementation of remote working in your Russian company.

Prime Minister Mikhail Mishustin gave the Russian Ministry of Finance one month to review all double taxation agreements (DTAs) for increase of dividend withholding tax to a minimum of 15%. This follows from President Putin’s speech on March 25 mentioning the increased rate.

Vladimir Putin took this decision with reference to a more fair distribution of incomes, and presumably as higher taxation would allow state support of those individuals and companies suffering from Covid-19.

Raising the rate to 15% is in conflict with agreements made between Russia and partner-countries in bilateral DTAs. Russia has more than a hundred DTAs. In case of refusal of DTA partner-country to make changes, Russia envisages to unilaterally withdraw from such DTA. The result would be that, a company paying dividends abroad will need to withhold and pay taxes for its shareholders at no less than 15%.

We urge you to contact us asap to review the issue of dividend distribution in your annual general meeting of shareholders which is due by April 30, 2020.

MIA of Russia: applications for work permits resumed and all categories of visas extended from March 19 due to the spread of COVID-19.

From 19 March, foreign nationals will be granted an extension of their temporary stay in the Russian Federation. All categories visas and temporary stays (for foreigners who don’t need a visa) can be extended. This is also true for those with visas that have already expired.

To do so, foreign citizens must apply to the nearest territorial body of the Ministry of Internal Affairs of the Russian Federation with a statement drawn up in an arbitrary form.

Temporary residence permits and residence permits can also be extended if they expire.

In addition, the Ministry of Internal Affairs of Russia (‘MIA’) resumes the receipt of applications for authorization to hire foreign workers and work permits for foreign nationals that are already on the territory of Russia. Applications for foreign citizens abroad are still suspended.

Also, migrant workers may apply for new patents without traveling outside Russia and without being liable if they fail to respect the deadline for submitting such applications.

For your reference: https://мвд.рф/contacts/presscenter/comments/item/19813472 (only in Russian) 

From March 18, 2020 until May 1, 2020 there will be very severe restrictions for entry of foreigners into the Russian Federation. This measure is taken to prevent the spread of Covid-19. It is set out in the Russian Government Order № 635-Р issued on March 16, 2020.

Foreign business travellers, tourists and foreign family members will not be permitted to enter the Russian Federation, and this also applies to entry via Belarus and to citizens of Belarus.

Also, the Ministry of Foreign Affairs of the Russian Federation temporarily suspends the acceptance of documents, execution and issuance of all categories of visas to foreign citizens and stateless persons.

Some categories of foreigners are exempted from the Order, such as diplomats, representatives of international organizations and their family members, people working in international road, rail, maritime and air transport and people visiting for the funeral of a close relative.

Persons with permanent residence in Russia can also return back home.

The Ministry of Internal Affairs of Russia and its territorial bodies likewise temporarily put on hold the acceptance of applications, execution and issuance of:

– invitations to enter the Russian Federation, and

– work permits for these citizens.

Please contact us if you require more information.

For your reference: Order 635-р (Russian only): http://publication.pravo.gov.ru/Document/View/0001202003170002

The coronavirus has a huge impact on trade between international parties. Closure of production facilities, logistical restrictions and unavailability of staff can make it difficult to fulfil your contractual supply obligations in time. You may then invoke the force majeure clause in your contract. Depending on the definition of force majeure, the coronavirus may or may not be considered a circumstance of force majeure. Contracts under Russian law almost standard include a force majeure clause. Dutch law contracts not always.

But even if you have no force majeure provision in your supply contract, there can be a way out. Contractual non-performance (e.g. non-delivery) is not always attributable to the debtor. A non-performance cannot be attributed to the debtor if he is not to blame for it nor accountable for it by virtue of law, a juridical act or generally accepted principles (common opinion) (Article 6:75 Dutch Civil Code). In principle, performance of a contractual obligation cannot be required from a party that is subject to circumstances of force majeure. Nor can compensation be claimed.
It is however required that the circumstances of force majeure are so serious that contractual performance is considered impossible for the non-performing party. This means that performance is absolutely / physically impossible, or that performance is so burdensome that it cannot reasonably be demanded from the non-performing party. The debtor will have to demonstrate this by appealing to all circumstances of the case. If the other party disagrees with this, the debtor will have to apply for a decision of an arbitration institution or court.

In Russia, too, the burden of proof lies with the debtor *. The Russian government has the right to recognize special circumstances as force majeure for state transactions and certain currency transactions**, but has not done this so far for the COVID-19 virus.

Would you like to know more about the obligations of a debtor and force majeure under Russian law? We can help you obtain a certificate from the Chamber of Commerce to proof that you are not liable for non-performance of obligations. This can save you a lot of money for damages and (in Russia commonly used) fines for non-compliance.

You may refer to the RVO website for other information (in Dutch) https://www.nederlandwereldwijd.nl/landen/rusland/reizen/reisadvies .

CONTACT

* Paragraph 5 of the Decision of the Plenum of the Supreme Council of the Russian Federation dated 24 March 2016, Nr. 7.

** Art. 111 of the Federal law of 5 April 2015 Nr. 44-FZ “On the contract system in the area of purchases of goods, works and services for state and municipal needs.

Dear clients and partners,

In the fight against the spread of the COVID-19 virus, the Moscow authorities have taken several precautionary measures (for more information: https://www.mos.ru/city/projects/covid-19/).

Juralink has also taken health and safety measures. That is why starting from today, we will mainly be working remotely. Therefore, please be advised that the signing of original documents will be held once a week – on Thursday.

We are doing everything we can to make sure that our availability and quality level will not suffer from this measure.

You can check our website for updates about our situation and any legal advice related to the circumstances.

We remain at your disposal for any questions.

Best regards,

Juralink  

Please be informed that due to a precedent ruling of the Supreme Court of the Russian Federation all meetings held by the shareholders and all decisions adopted must from now on be certified in the presence of a notary, unless the Charter of the company expressly provides for a possibility of certification via simple signatures of shareholders present at the Meeting. For more information, click on the link below.

In order to make use of the simplified certification procedure from now on, changes should be made to the company’s Charter, adding relevant provisions on simplified certification (unless already included), and registered with the Russian tax authority.

Please inform us if you are interested to keep the simplified certification procedure by making Charter amendments. We will be glad to assist you with the preparation and execution of documentation.

If you have any questions or need additional information, please do not hesitate to contact us.

Overview of Corona virus in Russia and measures taken by the Russian Federation against the spread of the virus

So far, Russia has reported 20 coronavirus infections*. A number of them are located in Moscow and St. Petersburg, but also Nizhny Novgorod, the Belgorod and Kaliningrad regions, among others. Most people have contracted the virus in Italy.

In the fight against the spread of the virus, Russia has closed most border crossings with China and temporarily does not allow Chinese citizens into the country. People returning from high-risk areas should go into “self-quarantine” for two weeks. An order to that effect was issued by the Mayor of Moscow on 7 March. He named China, South Korea, Iran, France, Germany, Italy and Spain as high-risk countries. He did not mention the Netherlands or Belgium.

The authorities of the city of Moscow have imposed a prison sentence up to five years for violation of the obligation of self-isolation. Similar sanctions may apply in other cities. Authorities actively exercise control, including through face recognition. A number of 88 foreigners from China who did not comply with the quarantine obligation were deported by the Moscow authorities.

On March 10, the Russian Service for Surveillance on Consumer Rights, Rospotrebnadzor, made the recommendation to avoid public transportation, shopping centers and other public places during rush hour.

Since March 1, the government has temporarily denied Iranian and South Korean citizens access to Russia, as a precaution. Other citizens who travel via Iran or South Korea cannot enter Russia either. The issuance of visas has been suspended. Chinese citizens have been banned from entering Russia since February 20.

Many Russian companies have cancelled trips abroad and participation in international conferences., following a recommendation from the Ministry of Healthcare in early March. A travel ban to Italy has been in place for some time. Aeroflot has discontinued flights to Hong Kong on 8 March. Earlier for Aeroflot and Aurora flights to South Korea were suspended.

Fruit and vegetable imports from China were suspended by a large Russian food retailer already in early February.

To ensure that sufficient protective equipment remains available in Russia, a ban came into effect on 4 March on the export of medical masks, gloves, bandages and protective suits.

All these measures are in addition to the first corona virus warning as issued by the Russian Service for Surveillance on Consumer Rights on January 31, 2020. The advice then was to simply observe personal hygiene. And this advice remains in place.

In this article you can read more about the measures taken to date:

https://www.themoscowtimes.com/2020/03/10/coronavirus-in-russia-the-latest-news-march-10-a69117

* https: //rg.ru/2020/03/09/hronika-koronavirusa-chto-proizoshlo-v-mire-7-9-marta.html

Photo: courtesy to: CDC/Dr. Fred Murphy

All Russian limited liability companies (‘LLC’- in Russian ‘OOO’) should hold Annual General Meetings before April 30, 2020.

A kind reminder to prepare for the meeting in accordance with the Articles of Association. In the light of on-going compliance checks, companies should be extra alert on the timely fulfillment of the AGM requirement.

The annual general meeting of shareholders must approve the annual results of the LLC’s activities, in particular the annual financial statements and the annual report of the LLC on the results of the previous year. The AGM can also decide on issues such as profit distribution, appointment of the external auditor and approval of transactions (major transactions, matters reserved for it according to the LLC’s charter etc.).

Violation of the above-mentioned deadline or requirements may lead to the imposition of administrative fines in the amount of:

RUB 20,000 – 30,000 for the General Director personally (appr. EUR 270 – 400 euro), and RUB 500,000 – 700,000 for the LLC (appr. EUR 6,800 – 9,500).

If you have any questions or need additional information, please do not hesitate to contact us, we will be glad to assist you with the preparation and execution of AGM documentation.