On 25 November 2020 Order of the Federal Tax Service of Russia (FTS) No. ED-7-14/[email protected] “On the approval of forms and requirements for the execution of documents provided to the registration body during the state registration of legal entities, individual entrepreneurs and farmer households (farms)” (Order) enters into force.

The Order approved new forms of applications and notices of state registration, which reflect amendments to the laws since 2014.

Below we summarise in brief material changes with respect to the state registration of legal entities.

1. Information on the existence of a corporate agreement or on restrictions on the disposal of participation interests

The new forms allow information to be indicated on the existence of a corporate agreement, which:

  • determines the scope of authorities of a business company's participants not in proportion to their participation interests in the charter capital of the company;
  • provides for restrictions on and terms and conditions of disposing participation interests (shares).

Furthermore, it is now possible to indicate information on the scope of authorities of a company's participant provided by the corporate agreement, ie on the number of votes attached to the participant's participation interest not in proportion to the amount of the participation interest belonging to it.

We remind you that on 12 November 2019 Federal Law No. 377-FZ (Law No. 377) was signed amending certain laws, inter alia Federal Law No. 129-FZ “On the State Registration of Legal Entities and Individual Entrepreneurs” dated 8 August 2001, as amended.

Law No. 377 established the presumption of third parties' knowledge of contractual restrictions, if information on such is published by legal entities in the Unified Federal Register of Legally Significant Information on Facts of the Activity of Legal Entities, Individual Entrepreneurs and Other Subjects of the Economic Activity (Register of Facts of the Activity). The fact of knowledge of the restrictions provided for by the corporate agreement is of importance when challenging a transaction performed in breach of the agreement, in accordance with paragraph 3 of clause 6 of article 67.2 of the Civil Code of the Russian Federation (Russian Civil Code).

It is necessary to note that entering such information in the Register of Facts of the Activity is a right but not an obligation of legal entities. Therefore, the Order formally solves a problem of challenging transactions performed in breach of a corporate agreement.

Nevertheless, we expect explanations from public bodies with respect to the necessity to register information on corporate agreements concluded before the date of the Order.

2. Information on the authorities of persons acting as a sole executive body

On 1 September 2020 provisions established by Law No. 377 stipulating that if authorities of the sole executive body of a corporation are provided to several persons, the Unified State Register of Legal Entities (USRLE) must contain information on whether such persons act jointly or independently of each other.

The forms approved by the Order require the provision of information on whether such persons act jointly or independently of each other. As an exception, it is provided that if there are several sole executive bodies, such information is not required when the limited liability company acts under a standard charter.

Before the Order was adopted, the possibility of observing such provisions was not implemented in practice, although the Russian Civil Code was supplemented by article 65.3, allowing the provision of authorities of a corporation's sole executive body to several persons, during the reform in 2014.

Therefore, third parties can no longer rely on their assumption that each of the persons stated in the USRLE as a sole executive body has unlimited authorities, regardless of whether they have reviewed the company's constituent documents or not.

3. Information that the company acts under a standard charter

The new forms approved by the Order also establish the possibility of indicating the number of the standard charter under which the company will act.

We remind you that 36 standard charters under which limited liability companies may act were approved by order No. 411 of the Ministry of Economic Development and Trade of Russia dated 1 August 2018.

In view of the foregoing, the Order has technically implemented material developments in the laws, the practical application of which was not previously possible.