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Corporate Legal Addresses - New Rules


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Corporate Legal Addresses - New Rules

  1. 1. MOSCOW, ST.PETERSBURG, TVER, YEKATERINBURG, KYIV, HELSINKI WWW.HKUPARTNERS.COM FOLLOW US ON 02.09.2013 CORPORATE LEGAL ADDRESSES – NEW RULES A law came into force on 30 June 20131 , which changed the provisions of the Civil Code and the law on state registration of legal entities and individual entrepreneurs. This law deals with the legal addresses of organizations. In accordance with these amendments, legal entities bear responsibility for the validity of a company's stated legal address. If the absence of a representative of the legal entity at the legal address entailed losses for another party because it failed to receive a communication, that party must be compensated for such losses. The presumption introduced by the legislators that the data contained in the unified state register of legal entities is valid allows any party to rely on the register's data until otherwise is proven. The new law establishes an additional ground for refusing the state registration of a legal entity in the event that confirmed information exists as to the uncertain nature of the company's stated legal address. However, that said, the registration authority, as before, is not entitled to place on the applicant the burden of proving the credibility of the information provided, or to demand that additional documents be developed which are not mentioned in the law (for instance, a letter of guarantee of the owner of the real estate object). These amendments are not completely new. Earlier corresponding practices had been established in court practice approaches. However, previously judges lacked a unified formulated position, and practice regarding disputes involving the registration authorities differed in a serious way. 1 Federal Law of 28.06.2013 No. 134-FZ "On making amendments to individual legislative acts of the Russian Federation in regard to combating illegal financial operations"
  2. 2. MOSCOW, ST.PETERSBURG, TVER, YEKATERINBURG, KYIV, HELSINKI WWW.HKUPARTNERS.COM FOLLOW US ON In addition to that, new application forms are now used (as of 4 July 2013) to register Russian companies. In contrast to the forms used previously, the new forms presume that all participants in a company must sign the company registration form. As before, the signatories' signatures and powers must be notarized. However, a person signing the form cannot act on the basis of a power of attorney from a participant. The important particularity of the new rules is the possibility of submitting company registration documents through a representative under a power of attorney. Now, one may submit documents and obtain a certificate of state registration through an authorized person.2 The Supreme Commercial Court (SCC) has issued a resolution3 which specifies new legislative provisions for forming the unified court practice. In accordance with the position of the SCC, a registration authority is entitled to refuse state registration of an organization due to the uncertain nature of the submitted information in any of the following cases:  the stated address is the registered address of a large number of legal entities and it proves impossible to make contact with a significant portion of them;  the stated address does not exist, or the property has been destroyed;  the stated address is provisional and assigned to an construction in progress;  the stated address is known to be incapable of being used - for example, state authorities are located there, and so forth;  the owner of the property has declared that he does not allow that address to be used for registration. Given one of the above-mentioned reasons, the falsity of the information is assumed if the applicant has not proven otherwise. This list is not exhaustive. In accordance with the developed court practice, the SCC states that a refusal by the registration authority founded on an obvious lack of conformity of an company's stated type of activity with the address purported to be its location (for instance, registration of a factory for producing concrete as an office center) is unlawful. The court states that an company's management body or its representative may be situated at the stated address. Along with that, in order to register a legal entity at a residential facility, one needs the consent of the owner of the premises. In connection with the existence of previously varying positions, the SCC states that the owner of the property is entitled to file a claim in court against a legal entity to cease and desist using his address as a registration address. Moreover, the defendant may only be a legal entity and not a registration authority. After a court decision is handed down, the legal entity is granted a term during which it should change its legal address. Upon the expiration of this term, a fine may be 2 Order of FNS of Russia, 25.01.12 № ММВ-7-6/25@ 3 Resolution of Plenum of SAC RF №61, 30 July 2013
  3. 3. MOSCOW, ST.PETERSBURG, TVER, YEKATERINBURG, KYIV, HELSINKI WWW.HKUPARTNERS.COM FOLLOW US ON levied on the entity. Upon this decision, the registration authority is not entitled to make amendments to the register independently, but must add an appropriate comment to it. Failure to execute the relevant court decision constitutes a ground for liquidation of the company at the demand of the registration authority. Thus, the new standards on legal addresses of legal entities establish the stricter state control over the validity of the information presented. If a company uses a location that does not correspond to the actual address, losses may be recovered from it in favor of any entity that incurred them as a result of that violation. The new rules also contain a positive aspect: a court practice not previously unified will now be formed based on a single model. A change in the procedure for certifying and submitting new forms for applications for state registration of companies, on the one hand, may bring about difficulties with the requirement to have them signed by each participant. But on the other hand, this will make it easier for documents to be submitted to the registration authority body via an authorized person.