On 7 February 2011 the President signed Federal Law No. 7-FZ "On Clearing and Clearing Activity."
The Law establishes a unified legal framework for clearing activities and is expected to contribute to development of the financial market in Russia. It targets clearing for various obligations, such as those with respect to monetary funds or securities.
Clearing services (i.e. defining contractual obligations subject to execution, including as a result of netting, and preparing documents/ information underlying termination/ execution of such obligations) are to be rendered by licensed clearing organizations. The Law sets out a number of requirements to be met by clearing organizations and "central counterparties" that may take part in clearing, and provides a number of guarantees and risk management tools for ensuring effectiveness of the clearing system.
The Law will enter into force on 1 January 2012.
On 7 February 2011 the President signed Federal Law No. 8-FZ amending the Securities Market Law, the Bankruptcy Law and certain other legislative acts in connection with the Law on Clearing.
The Law introduces, among other things, the possibility of close-out (liquidation) netting in bankruptcy under derivative, repo or other transactions with respect to securities or foreign currency. Close-out netting arrangements will be recognized provided, in particular, that the transactions (i) are documented under eligible master agreements based on standard documentation either developed by a Russian self-regulated organization of professional participants on the securities market and approved by the FSFM, or developed by international organizations included on the list to be approved by the FSFM, and (ii) are made between eligible counterparties listed in the Law.
We will soon issue a Special Update discussing the Law in more detail.
The Law entered into force on 11 February 2011 (save for a few provisions that will enter into force on the different dates: in particular, the rules allowing close-out netting will enter into force on 11 August 2011).
On 29 December 2010 the Central Bank issued Directives Nos. 2556-U and 2557-U amending its Regulation No. 258-P and Instruction No. 117-I regarding submission by residents to authorized Russian banks of documents under currency operations.
The Directives were registered by the Ministry of Justice on 11 and 8 February 2011, respectively.
The amendments allow Russian companies not to file a transaction passport for a foreign trade contract worth not more than the equivalent of USD 50,000 (as opposed to USD 5,000 previously). Transaction passports filed previously may be closed if a foreign trade contract's value does not exceed the new threshold as of the effective date.
The amendments also extend the term for submitting documents, providing that a Russian company must submit a currency certificate and documents underlying a currency operation to an authorized Russian bank within 15 business days of foreign currency being credited to its bank account (as opposed to 7 days before).
The Directives will enter into force on 27 February 2011.
Employment/ Foreign Citizens
On 24 January 2011 the Ministry of Public Health and Social Development ("MHSD") issued Order No. 22n approving the list of jobs for foreign citizens who can be issued a work permit irrespective of the quota.
The Order was registered with the Ministry of Justice on 9 February 2011.
Foreign citizens, save for certain exceptions, may be employed in the Russian Federation provided they have obtained work permits within the annual quota set by the Government. However, according to the Federal Law on Foreigners, the quota does not apply to foreigners who are qualified specialists for the jobs included on a list approved by the MHSD. The Order now approves the list of jobs for 2011.
For example, company directors, heads of representative offices, information protection engineers may obtain work permits irrespective of the quota.
The Order entered into force on 15 February 2011.
On 9 December 2010 the Presidium of the Supreme Commercial Court issued Information Letter No. 143 regarding unauthorized construction facilities (Article 222 of the Civil Code).
According to the Civil Code, a building, structure or other immovable property is considered an unauthorized construction facility if it is built (i) on a land plot not allocated for such purposes, (ii) without the required approvals, or (iii) in material violation of town-planning and construction regulations.
Recognition of ownership rights to an unauthorized construction facility
Generally, an unauthorized construction facility is subject to demolition. In certain cases, the holder of a land plot underlying such a facility - its owner, the holder of perpetual unlimited use right or the holder of lifelong inheritable possession - can register ownership rights to it. VAS clarified that
- ownership rights to an unauthorized construction facility can be acquired pursuant to acquisitive prescription if (i) the absence of the required permits constitutes the only basis for recognizing the facility as unauthorized, and (ii) the facility neither threatens human life and health nor violates anyone's rights and lawful interests;
- ownership rights to an unauthorized construction facility cannot be acquired if it was created in material violation of town-planning and construction regulations, since such a facility threatens human life and health; and
- if a construction permit is recognized as illegal, it does not entail recognition of a facility as unauthorized if (i) the person who built the facility acted in good faith and undertook all the necessary measures to obtain such a permit, and (ii) there are no other grounds for demolishing the facility.
Demolition of an unauthorized construction facility
VAS clarified that an unauthorized construction facility can be demolished only on the basis of a relevant court decision. Persons whose life and health are threatened by the facility can claim its demolition in court.
Pursuant to the Information Letter, the limitation period does not apply to a claim for demolition of an unauthorized construction facility if such a claim is submitted by the land plot holder in order to rectify violations of his/her right not relating to dispossession.
The Information Letter also restates certain positions regarding an unauthorized construction facility covered in the joint Resolution of the Plenum of the Supreme Commercial Court and the Plenum of the Supreme Court No. 10/22, dated 29 April 2010 (discussed in our weekly legal update for 10-16 May 2010).
The Information Letter will serve as a guideline for lower commercial courts when considering similar issues.
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