Doing.business.in.st.petersburg.2012

Doing business in St. Petersburg
2 Enterprise Europe Network - Russia, Module A Regional Center – St. Petersburg | www.doingbusiness.ru

Enterprise Europe Network - Russia, Module A Regional Center – St. Petersburg | www.doingbusiness.ru 3

Doing business
in St. Petersburg
Guide for exporters, investors and start-ups
Current publication was developed by and under supervision of the Enterprise Europe Network -
Russia, Gate2Rubin Consortium, Module A Regional Center – St. Petersburg operated by St.
Petersburg Foundation for SME Development with the assistance of the relevant legal, human
resources, certification, research and real estate firms.

© 2012 The Enterprise Europe Network - Russia, Gate2Rubin Consortium, Module A Regional
Center – St. Petersburg operated by St. Petersburg Foundation for SME Development. All rights
reserved. International copyright.
Any use of materials of this publication is possible only after written agreement of St. Petersburg
Foundation for SME Development and relevant contributing firms.


Table of contents
Welcome to St. Petersburg ............................................................................................... 7
1. The city ...................................................................................................................... 8
1.1. Geography ............................................................................................................................. 8
1.2. Public holidays and business hours ....................................................................................... 9
1.3. Population ............................................................................................................................. 9
1.4. Political system .................................................................................................................... 10
1.5. Economy .............................................................................................................................. 13
1.6. Foreign trade ....................................................................................................................... 15
1.7. Foreign investments ............................................................................................................ 17
2. Key business sectors................................................................................................. 19
2.1. Overview of St. Petersburg’s industry ................................................................................. 19
2.2. Automotive industry ........................................................................................................... 22
2.3. Food and beverage production ........................................................................................... 25
2.4. Information and communication technology (ICT) ............................................................. 30
2.5. Pharmaceutical industry...................................................................................................... 37
2.6. Shipbuilding industry ........................................................................................................... 42
2.7. Transport and logistics ........................................................................................................ 46
3. Business solutions .................................................................................................... 55
3.1. Headquarters....................................................................................................................... 56
3.2. Research & Development.................................................................................................... 58
3.3. Production сenter................................................................................................................ 61
3.4. Distribution сenter .............................................................................................................. 68
3.5. Test market ......................................................................................................................... 70
4. Doing business ......................................................................................................... 72
4.1. Establishing a legal presence............................................................................................... 72
4.2. Foreign investments ............................................................................................................ 80
4.3. Taxation ............................................................................................................................... 85
4.4. Contracts ............................................................................................................................. 92
4.5. Employment ........................................................................................................................ 95
4.6. Product conformity assurance in Russia ........................................................................... 102
4.7. Intellectual property rights and franchising ...................................................................... 108
4.8. Special economic zones (“SEZ”) in St. Petersburg............................................................. 114
4.9. Public private partnerships and infrastructure development........................................... 116
4.10. Obtaining rights to state-owned land in St. Petersburg .................................................... 120
4.11. Buyout of land plots in St. Petersburg............................................................................... 129
4.12. Regulatory issues. Antimonopoly compliance .................................................................. 133
5. Costs of doing business ...........................................................................................142
5.1. Costs of starting a company .............................................................................................. 142
5.2. Human resources .............................................................................................................. 144
5.3. Office, retail and warehouse market ................................................................................ 148
5.4. Communication ................................................................................................................. 154
5.5. Utilities .............................................................................................................................. 155


6. SME support ...........................................................................................................157
6.1. Overview ........................................................................................................................... 157
6.2. Definition of SME – EU vs. Russia ...................................................................................... 157
6.3. Statistics ............................................................................................................................ 158
6.4. SME support and development programs ........................................................................ 160
7. Contacts of the business support infrastructure .......................................................164
7.1. Overview of the business support infrastructure in St. Petersburg ................................. 164
7.2. Authorities ......................................................................................................................... 164
7.3. Investment support ........................................................................................................... 166
7.4. SME business cooperation support ................................................................................... 167
7.5. SME support ...................................................................................................................... 168
7.6. Financial support ............................................................................................................... 170
7.7. Techno parks and business incubators ............................................................................. 172
7.8. Educational programs and internships ............................................................................. 174
7.9. Chambers of commerce and industry ............................................................................... 175
7.10. Business associations ........................................................................................................ 175
7.11. Audit, tax and consulting firms ......................................................................................... 176
7.12. Banks ................................................................................................................................. 177
7.13. Certification and testing .................................................................................................... 177
7.14. Exhibitions ......................................................................................................................... 178
7.15. Law firms ........................................................................................................................... 178
7.16. Real estate ......................................................................................................................... 179
7.17. Recruitment....................................................................................................................... 179
7.18. Transport and logistics ...................................................................................................... 180
8. Authors and contributors ........................................................................................182


Welcome to St. Petersburg
I would like to welcome you to St. Petersburg - the city of
enormous business opportunities and development potential. It
is the second largest economic, transport, academic, cultural,
and tourism center in Russia as well as a growing economy with
a thriving private sector and an attractive business
environment.
Whether you want to start your business or invest in Russia, St.
Petersburg is the best place to do it. Favorable economic and
geographical location in the European part of Russia,
developed infrastructure, extensive scientific, research and
educational potential, highly skilled workforce as well as broad
market and competitive operating costs facilitate the
development of efficient, safe and stable business.
St. Petersburg is an attractive location for business and trade
which has an established and effectively operating system
aimed at supporting investment activity in the city. The
Government of St. Petersburg takes every measure to make St.
Petersburg a business-friendly environment by reducing
administrative barriers and simplifying the procedures required for business and investment
activities, including issuance of building permits and registration of property rights.
During the recent years many international companies have already implemented investment
projects in St. Petersburg, including such leading companies as Coca-Cola, Pepsi, Gillett, Wrigley,
British American Tobacco, Bosch Siemens, General Motors, Hyundai and many others. All of them
considered St. Petersburg an ideal location for their business needs, whether it is an R&D center,
test market, production center or distribution hub. Foreign businesses can benefit from government
investment incentives aimed at boosting the local economy.
This publication was developed by Enterprise Europe Network (EEN) - St. Petersburg in
collaboration of professional legal, human resources, certification, research and real estate firms
with the aim of providing start-ups, potential exporters and investors with the relevant information
on starting and running business in St. Petersburg.
The EEN branch in St. Petersburg focuses on providing business support to Russian companies and
provides free services to foreign companies to foster small business cooperation. In 2011 Enterprise
Europe Network (EEN) - St. Petersburg processed about 200 foreign requests and provided
information on about 1,000 potential partners from St. Petersburg.
Exporters, investors and businesses are also encouraged to use a special online tool – portal “Doing
business in St. Petersburg” (www.doingbusiness.ru) which contains extensive interactive
information in English on advantages and key issues of pursuing business in St. Petersburg as well as
a regularly updated database of cooperation profiles and export products from St. Petersburg.
Deputy chairman
Committee for Economic Development,
Industrial Policy and Trade Kirill Soloveychik
Government of St. Petersburg


1. The city
1.1. Geography

Coordinates: Latitude: 59° 57' North
Longitude: 30° 19' East
Area: 1,439 sq.km.
Climate: Maritime, with warm damp summers and moderately cold long winters
Average temperature: July: + 25 C
January: - 2 C
Time: MSK ( UTC+4)
Dialing codes: International country code: + 7 (Russia)
Area code: 812


1.2. Public holidays and business hours
Official holidays:  January 1-5 - New Year holidays
 January 7 – Russian Orthodox Christmas
 February 23 - Armed Forces Day
 March 8 - Women’s Day
 May 1 - International Labor Day
 May 9 - Victory Day
 June 12 - Day of Russia
 November 4 - National Unity Day
Business hours:  Offices: Mondays through Fridays - 9.00-18.00 (9 a.m. till 6 p.m.),
lunch break – 13.00-14.00 (1 p.m. till 2 p.m.)
 Banks: Mondays through Fridays - 9.00-18.00 (9 a.m. till 6 p.m.)
 Stores: Mondays through Saturdays - 10.00-19.00 (10 a.m. till 7
p.m.), most stores are also open on Sundays
 Restaurants: Mondays through Sundays – 12.00-23.00 (12 p.m. till 11
p.m.), many restaurants and cafes are open 24 hours

1.3. Population
Population 4,868,500 people
(2011):
Labor force (2010): 2,660,500 people
Unemployment rate 0.6%
(2010):
Population density 3,288.3 per sq. km.
(2010):
Gender ratio male: 44.8%
(2011): female: 55.2%
Population age Male and female (0-15) Male (16-59); Male
composition: female (16-54) (60 and above);
(2010): female
(55 and above)
12.9% 61.6% 25.5%
Median age Total: 41.3 years
Male: 38.2 years
(2010):
Female: 43.9 years
Birth rate 12.1
(per 1,000 people, 2010):
Death rate 14.2
(per 1,000 people, 2010):
Ethnic groups Russian (84.7%), Ukrainian (1.9%), Belarus (1.17%), unspecified (7.89%)
(2002 Census):
Official language: Russian


1.4. Political system
City day: May 27. The city was founded on May 27, 1703
City name:  Conventional long form: Saint-Petersburg
 Conventional short form: St. Petersburg
 Local long form: Sankt-Peterburg | Санкт-Петербург
 Local short form: С.-Петербург | Петербург
 Former names: St. -Petersburg (1703-1914), Petrograd (1914-
1924), Leningrad (1924-1991), St.-Petersburg (1991 till present)

Administrative division: While the city is divided into 18 districts (rayons), each district is
divided into municipal formations. At the moment there are 111
municipal formations (munitsipalnye obrazovaniya).

1. Admiralteysky District 10. Kurortny District
2. Vasileostrovsky District 11. Moskovsky District
3. Vyborgsky District 12. Nevsky District
4. Kalininsky District 13. Petrogradsky District
5. Kirovsky District 14. Petrodvortsovy District
6. Kolpinsky District 15. Primorsky District
7. Krasnogvardeysky District 16. Pavlovsky and Pushkinsky
Districts
8. Krasnoselsky District 17. Frunzensky District
9. Kronshtadsky District 18. Central District


Political system:

Source: Business Support Structure in St. Petersburg

Executive branch: The City Administration (www.gov.spb.ru) is the superior executive body
of St. Petersburg headed by the Governor. The St. Petersburg
Administration is formed of the Governor, the Government, the
Governor's Chancellery, the city committees and the subordinate
administrative-territorial departments of the Administration.
Legislative branch: The Legislative Assembly of St. Petersburg (www.assembly.spb.ru) is
the standing effective supreme and sole legislative (representative) body
of the state authority in St. Petersburg.
Judicial branch: Charter Court of St. Petersburg (www.spbustavsud.ru), Judges of the
Peace of St. Petersburg, City Court of St. Petersburg
(www.gs.courts.spb.ru), Arbitration court of St. Petersburg and
Leningrad region (www.spb.arbitr.ru) and Leningrad Military Circuit
Tribunal (www.lvo.courts.spb.ru).
Suffrage: 18 years of age; universal


Symbols
of St. Petersburg:

Coat of arms Flag
Diplomatic 55 consular offices, including 34 consulates, 1 embassy office, 3 honorary
representations: consuls general, and 19 honorary consuls are accredited in St.
Petersburg.


1.5. Economy
GRP of
St. Petersburg 1,901.9
(billion roubles): 1,642.1
1,431.8 1,473.3

1,119.7
825.1
666.4

2005 2006 2007 2008 2009 2010 2011
(estimate) (forecast)

Source: Committee for Economic Development, Industrial Policy and Trade

GRP per capita
in St. Petersburg
(roubles): 389,595
341,683
310,567 320,914
245,023
180,315
145,174

2005 2006 2007 2008 2009 2010 2011
(estimate)

Source: Federal State Statistics Service; Committee for Economic Development, Industrial
Policy and Trade

GRP sectoral
composition Industrial production
(2010):
Other
19% 24%
Real estate
7%

Transport and
21%
10% communications
Construction
18%

Wholesale and retail trade



City budget
(billion roubles): 399.5
339.1 315.6 347
358.6 404
278.1 355.8
322.2
259.3
179.9
120.3 186.2
129.9

2005 2006 2007 2008 2009 2010 2011
Revenues Expenditures


City debt Total: 6,614.2 million roubles, including
(01.01.2011): Internal: 6,614.2 roubles
External: 0 roubles
Credit ratings : Long-term credit international scale ratings in foreign currency:
 Standard&Poor’s – BBВ (December 2009), forecast – stable
 Moody’s Investors Service – Baa1 (May 2011), forecast – stable
 FitchRatings – BBВ (September 2011), forecast – positive
Long-term credit national scale ratings:
 Moody's Interfax – Aaa.ru (July 2005)
 FitchRatings – AAA(rus) (September 2011), forecast – stable
Leading industries: Machinery, vehicle and equipment manufacturing, electronic and optical
equipment, food, including beverages and tobacco; metallurgy and
metalworking; chemical production.

Priority sectors/clusters: Automotive, pharmaceutical, shipbuilding, power plant engineering,
information technology, radiology, electronic engineering.


1.6. Foreign trade
Foreign trade turnover
(million USD): 25,734
23,643 24,524
20,685
17,786 17,839
14,177
12,658 13,437
11,817
10,116

4,914

2005 2006 2007 2008 2009 2010
Export Import

Source: Territorial branch of the Federal State Statistic Service (Petrostat)

Main trade partners
(2010): Czech Republic 2.1%
France 2.3%
South Korea 2.4%
Brazil 2.4%
UK 2.5%
Japan 3.1%
Turkey 3.4%
USA 3.7%
CIS 4.2%
Italy 4.3%
Finland 4.7%
Netherlands 8.6%
Germany 9.1%
China 17.5%


Currency (code): Russian rouble (RUB)

Exchange rates: RUB per EUR – 41.66 (November 2011), 40.3 (2010), 43.4 (2009), 41.40
(2008), 35.90 (2007), 34.70 (2006)
RUB per USD – 30.29 (November 2011), 30.48 (2010), 30.24 (2009), 29.38
(2008), 24.55 (2007), 26.33 (2006)
Source: Bank of Russia, Ministry of Finance of the Russian Federation

Fiscal period: calendar year


1.6.1. Export
Export volume (2010): 11,817 million USD (12.1% decline in comparison with 2009)
Largest exporters JSC Gazprom Neft, JSC Admiralty Shipyards, LLC Novatek Severo-Zapad,
(2010): CJSC PNT-GSM, Vneshtorgbank
Export structure (2010):
3% 4% Food products,
agricultural raw materials
Mineral products

15% Chemical products,
natural rubber
Leather and fur products
8%
0,2% Timber, pulp and paper
products
65% Textile goods and
3%
footwear
Metal and metal products
0,4%
2%
Machinery, equipment,
vehicles
Other


1.6.2. Import
Import volume (2010): 24,524 million USD (37.8% increase in comparison with 2009)
Largest importers LLC Nissan Manufacturing Rus, LLC General Motors Auto , LLC Petro,
(2010): Northwestern branch of JSC MegaFon, branch of CJSC Russian Fish
Company
Import structure (2010):
7% Machinery, equipment,
vehicles
Metals and metal products

Mineral products

Timber, pulp and paper
36% products
27%
Chemical products, natural
rubber
Textiles, textile goods,
footwear
0.4% Leather and fur products
7%
12% Food products, agricultural
7%
raw materials
1% Other
3%



1.7. Foreign investments
Volume of foreign
6,284
investments 5,928
(million USD): 5,525
5,255 5,231

1,160 1,417
1,171 881 985
706 696

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


Structure of foreign 4
investments (0.1%)
538
(million USD, 2010):
(10.3%) Foreign direct
investment (FDI)

Foreign portfolio
investment (FPI)

4,689
(89.6%) Other foreign
investment


Foreign investments by Construction
sector of the economy (71)
(million USD, 2010):

Wholesale and Motor vehicles
and equipment
retail trade
(766)
(181) Manufacturing
(4,764)
Food, including
beverages and
Other (35) tobacco
(550)

Real estate
(181)



Major countries
(million USD, 2010): France

Belarus

18% South Korea
2.5%
Belgium
2.9% 34.3%
Kazakhstan
3.8%
Cyprus
4.1%
Sweden
4.4%
11.6%
8.4% Switzerland
10.2%
Germany

Other



2. Key business sectors
2.1. Overview of St. Petersburg’s industry
2.1.1. Structure and main indicators
St. Petersburg’s industrial complex represents the basis of the regional economic growth,
accounting for the major source of budget.
In the conditions of the global financial crisis, St. Petersburg’s industrial sectors showcased sufficient
resilience and fast recovery following the recession. Initially sharp decline in economic growth was
relatively quickly followed by renewed economic growth.
Today, St. Petersburg’s industry, which employs approximately the fifth of the working population,
accounts for 27% of the gross regional product and 36% of the total amount of tax revenues.
Efficient operation of the industrial complex significantly affects the development of other sectors
of the economy, including transportation, construction, communication, trade and provides real
opportunities for the solution of socio-economic goals of the city.
Industrial complex of the city is represented by almost all industries. 700 large and medium
enterprises, a number of which represent the leading industrial enterprises of the Russian
Federation, constitute the basis of the city’s industrial complex. More than 18 thousand small
enterprises, including microenterprises, also contribute to the development of the local economy.
Large and medium enterprises, 2010
Manufacturing (total) 675
Electronic equipment, electronic and optical equipment 148
Machinery and equipment 91
Food, including beverages and tobacco 86
Metallurgy and metal products 66
Pulp and paper, publishing and polygraphic products 62
Motor vehicles and equipment 48
Non-metallic mineral products 47
Chemical products 39
Rubber and plastics 20
Textiles and clothing 19
Timber processing and timber products 14
Leather, leather and footwear products 7
Petroleum coke and petroleum products 3
Other 25
Electricity, gas and water production and distribution 50
Mineral resources extraction 2

Source: Committee for Economic Development, Industrial Policy and Trade, 2011

In 2010 the volume of industrial production increased by 8.9%. This fact is attributed to the
significant increase in the volumes of production of motor vehicles and equipment (2.4 times
increase), metallurgy and metal products (26% increase), chemical products (24% increase).


In 2010 the industry shipments of St. Petersburg’s enterprises constituted 1,461 billion roubles which
represents 124% to the level of 2009. Manufacturing enterprises determine operation of the local
industry. Such enterprises account for more than 90% of the total volume of industrial products
produced in St. Petersburg (1,343 billion roubles). Machinery (144%), metallurgy and metal products
(124%) and chemical products (126%) manufacturing enterprises contributed the most to the
growth of production volumes in 2010.
Structure of the volume of industry shipments, 2010

Mineral resources
extraction
0.4%

Manufacturing
91.9%

Electricity, gas and
water production
and distribution
7.7%

2.1.2. Profitability
In 2010 industrial complex accounted for 251 billion roubles in profit, including 228 billion roubles
from manufacturing industries. While the share of profitable enterprises within the total number of
manufacturing enterprises constituted 80% (77% in 2009), the volume of profit in the industrial
complex increased by 37% in comparison with 2009. The most significant growth in profit in
comparison with the previous year is reported in the production of motor vehicles and equipment
(1.7 times) as well as metallurgy and metal products (1.6 times). In 2010 a high level of profitability
remained in the production of food, beverages and tobacco (26%), chemical products (22%),
machinery and equipment (17%).
Profitability of manufacturing enterprises, 2010

Russian Federation 14.3%
St. Petersburg 16.7%


2.1.3. Budget receipts
Industrial complex accounts for major budget revenues in comparison with other sectors of the city’s
economy. In 2010 the tax revenues from industrial enterprises constituted 125 billion roubles (more
than 36% of the total amount), including 116 billion roubles received from manufacturing


enterprises. Food production, including beverages and tobacco, motor vehicle and other types of
equipment production accounted for more than 85% of all budget receipts from the manufacturing
sector.
Structure of receipts into the budget of the Russian Federation from St. Petersburg's
manufacturing enterprises, 2010

2% 5%
2%

7%
Food, including beverages
Tobacco
8% 28% Chemical production
Electronic and optical equipment
Machinery and equipment
8%
Metallurgy and metal products
Motor vehicles and equipment

37% Non-metallic mineral products
3%
Other



2.2. Automotive industry
2.2.1. General overview
Automotive industry and automotive parts manufacturing play an important role in St. Petersburg’s
transport machinery complex. The city locates production facilities of the world’s leading car
manufacturers, including Nissan, Toyota, General Motors, Hyundai and Scania.
Leading car manufacturing plants in St. Petersburg, 2011
Brand name Opening Production Volume of Employees Model range
volume, investment
th.units/year
Toyota 2007 50 133 mln USD 600 Toyota Camry
General Motors 2008 60 303 mln USD 1,300 Chevrolet Cruze,
Chevrolet Captiva,
Opel Astra, Opel
Antara
Nissan 2009 50 200 mln USD 1,500 Teana, X-trail,
Murano
Hyundai 2010 150 650 mln USD 2,400 Solaris

Scania 2010 6,5 10 mln Euro 600 all types of trucks


2.2.2. Industry in numbers
Development of automotive clusters is one of the prerequisites of successful development of
automotive industry. St. Petersburg has one of the fastest-growing and promising automotive
clusters, which makes the city a leading center of Russian car manufacturing industry.
During the first stage of cluster development from 2005 to 2010 Nissan, Toyota, General Motors,
Hyundai, Scania built their car assembling facilities in the city. With the total area of allocated land
lots of 686.3 hectares and more than 6 thousand workplaces created, the volume of investment into
the construction of new car manufacturing facilities constituted 1.3 billion dollars. The total volume
of budget spendings directed towards the implementation of investment projects constituted 6.6
billion roubles.
Volume of car manufacturing in St. Petersburg, thousand units, 2011

2011F 225
2010 69.4
2009 19.9
2008 47.5



2.2.3. Companies
Light motor vehicles
General Motors
General Motors opened its automobile factory in St. Petersburg in 2008.
Global car making giant became the second foreign carmaker to open a
factory in St. Petersburg. Investment in the project totalled 300 million
dollars with up to 1,700 jobs created, followed by the opening of a second
production line in 2010.

Hyundai Motor Company
Hyundai officially launched its full-cycle manufacturing plant in St.
Petersburg in 2010. St. Petersburg’s plant is Hyundai’s sixth production
facility outside its home market of South Korea. The facility is expected to
roll out 105,000 vehicles in its first year of operation with the rise to
150,000 in 2012. Hyundai plans to create 5,300 jobs by 2012 in St.
Petersburg together with eleven parts suppliers from Korea.

Nissan
Nissan Manufacturing Rus was established in St. Petersburg in 2009. The
plant currently represents approximately a 150 million euro investment
with the total volume of 28,500 units since the start of production. The
plant currently employs 2,000 employees.

Toyota Motor Corporation
Toyota became the first Japanese carmaker to start production in Russia
with its car assembly plant opened in St. Petersburg in 2007. The plant,
with an annual output capacity of about 50,000 vehicles, initially built
20,000 Camry sedans per year while gradually expanding its production
since then.
Trucks
Scania
Scania opened its industrial facility for assembling and bodyworking
trucks for the Russian market in St. Petersburg in late 2010. This Russian
facility is Scania’s sixth delivery center. From the new Delivery Center in
St. Petersburg, Scania supplies complete trucks that are adapted to the
requirements and operating conditions that apply in Russia. St.
Petersburg’s facility has a technical assembly capacity of about 5,000
truck chassis and 1,500 superstructures per year. It employs about 70
employees.

Yarovit Motors
Yarovit is a Russian manufacturer of cargo trucks, dump trucks, bolster
trucks and concrete mixers. Yarovit’s manufacturing facility was set up in
St. Petersburg in 2003. In 2012 ë-Auto, a joint venture of Yarovit and the
Onexim investment group, will start the production of a hybrid electric car
yo-mobile.


Components suppliers
Magna International
A global automotive supplier currently operates five production sites in
Russia, three of which are located in the St. Petersburg region since 2010.
The Cosym stamping and assembly plant in Shushary has 170 employees
and produces body, chassis and energy-management systems for OEM
customers such as Hyundai, General Motors, Nissan and Volkswagen. The
Cosym assembly and sequencing plant in Kamenka is a Hyundai-
dedicated production site that employs 50 employees. Magna announced
the opening of a Magna Exteriors and Interiors facility in Kolpino which
has approximately 25 employees producing exterior and interior
components for OEM customers, including Ford and Nissan.

2.2.4. Supporting institutions
2.2.4.1. Associations
 St. Petersburg Association of Manufactures of Automotive Components (SPbAPAC)
St. Petersburg Association of Manufactures of Automotive Components is the largest
professional association of automotive components manufacturers in Russia which functions on
the principle of a cluster. At present the association unties more than 60 enterprises which
manufacture over 1,500 products. Active participation in regional, interregional and
international exhibitions and conferences as well as support of the Government of St.
Petersburg and the Union of Industrialists and Entrepreneurs makes the association one of the
key players at automotive and automotive components market of the Russian Federation.


2.3. Food and beverage production
Food complex in St. Petersburg is represented by 11 major industries, which include more than 80
large and medium as well as 180 small enterprises. Brewing and tobacco manufacturing are the two
most developed sectors of the local food industry.
High investment activity of St. Petersburg’s enterprises is one of the major factors accounting for
the successful development of food industry in the city. Increased automation and production
improvements allowed companies to significantly diversify the assortment of produced food
products and improve their consumer appeal. Continuous renewal of assortment is one of the
characteristics of the food industry in St. Petersburg. St. Petersburg’s enterprises develop at least
100 new sorts of various bakery and pastry products, including bread and rolls, dried bread and
biscuits, pies and cookies. Assortment of the produced bakery products totals more than 400 items
which makes it the most diversified assortment present in Russia.

In 2010 the volume of food industry shipments, including beverage and tobacco, constituted 14.6%
of the total manufacturing industry in St. Petersburg. The shares of tobacco and confectionery
production industries in St. Petersburg represent more than 50% in the total Northwestern Federal
District output volume.
Structure of industry shipments, 2010 Investment in fixed assets by industry, 2010

21%

77% 15%
49% 11%

8%

7%
12%

Other manufacturing industries Electric power, gas and water production
Motor vehicle and equipment manufacturing
Food manufacturing, including beverages and tobacco Food manufacturing, including beverages and tobacco
Metallurgy and metal product manufacturing
Electric power, gas and water production
Other industries


As of 2010, the food and beverage industry employs more than 11% of the total number of employees
occupied in the St. Petersburg industrial complex and pays higher wages than any other industry in St.
Petersburg (35.4 thousand roubles).


As of 2010, food industry, including beverage and tobacco, is the most profitable industrial sector in
St. Petersburg (26%), followed by chemical (22%) and machinery and equipment production (17%).
These industries account for more than 85% of all revenue receipts from the local manufacturing
sector. More than 10% of all investment into industrial sector accounts for the production food,
beverages and tobacco.1

2.3.3. Companies
Bakery
Hlebny Dom
JSC Hlebny Dom has operating at the Russian market for more than 70
years and is one of the largest baking enterprises in Russia. The company
became a part of the Fazer Group in 1997. It is represented by 4
production sites in St. Petersburg as well as one in Moscow. Hlebny Dom
produces bakery and confectionery products, long term storage foods as
well as frozen and flaky dough products.

Karavay
JSC Karavay was established in St. Petersburg more than 80 years ago.
Today, it is a modern fully-equipped bakery which produces more than
170 items of fancy and bakery products. Karavay is one of the leaders of
baking industry in St. Petersburg. It currently possesses 4 baking plants.
Beverage production
Carlsberg Group
Baltic Beverages Holding, a leader at the Russian beer market which
manages Baltika, became a part of the Carlsberg Group in 2008. Carlsberg
currently owns 89.01% of Baltika stock. Today, Baltika Brewery, founded
in 1990, is the largest brewery in Eastern Europe and the second-largest
brewery in Europe after Heineken Brewery.

Coca-Cola Company
Coca-Cola’s plant, opened in St. Petersburg in 1995, produces Coca-Cola
products for more than 13 million customers in St. Petersburg and
Northwestern Russia. It employs more than 1,000 people, while creating
up to 200 additional seasonal workplaces during the peak seasons.

Heineken
Heineken has been operating in Russia since 2002 when it acquired the
Bravo plant in St. Petersburg. St. Petersburg’s Heineken brewery also
produces and distributes Budweiser beer, having signed a licensing
agreement with Bud’s brand owner Anheuser-Busch.

Pepsi Bottling Group, Inc. (PBG)
PepsiCo drinks are produced by Pepsi Bottling Group at its four plants in
Russia. One of the top global FMCG companies in Russia opened its St.
Petersburg’s plant in 1992. PBG produces and distributes all PepsiCo
products, including carbonated soft drinks, water, snacks, juices, teas.

1
Committee for Economic Development, Industrial Policy and Trade


Russian Standard Company
A leading Russian premium vodka producer opened its distillery in St.
Petersburg in 2006. Total investments into the facility amounted to 60
million dollars. The distillery produces 3.6 million dekaliters of vodka
annually. A 30,000 square meter facility handles the production of the
company's entire vodka portfolio, including Russian Standard Original,
Russian Standard Platinum and Imperia.
Candy
Chupa Chups S.A.
The Spanish candy maker launched its St. Petersburg’s production facility
in 1991. Neva Chupa Chups produces Chupa Chups caramel lollipop
candies of various flavors and colors not only for the Russian market but
also for export to CIS countries. St. Petersburg’s factory has the capacity
of making up to 200 million 200-gram rolls per year.

Confectionery factory named after N.K. Krupskaya
The history of the Confectionery factory began in 1938. In 2006 the
factory was acquired by the Norwegian Concern Orkla which is one of the
leading suppliers of branded consumer goods to Nordic food retailers as
well as Central and Eastern Europe and Russia. Today, the factory is a
modern industrial complex with capacity to produce more than 20
thousand tons of confectionery products per year. It produces more than
130 confectionery products, including chocolate of different sorts,
diabetic products, chocolate semi-finished products for food industry.
Chewing gum
Wm. Wrigley Jr. Company
The world’s largest maker of chewing gum has been operating a 70 million
dollar plant in St. Petersburg since 1999. Wrigley is planning to expand its
St. Petersburg plant with an investment of 100 million dollars. The
company also announced that it might build a second factory in Russia
and acquire local producers to tap its growth at the Russian market.
Dairy
Petmol dairy plant, Unimilk
St. Petersburg dairy plant Petmol launched the production of dairy
products in 1934. In 2003 LLC Unimilk became the main shareholder of
the company. Today, Unimilk is one of the leading manufacturers of dairy
products in Russia and CIS. Established in 2002, the company employs
more than 14 thousand people and unites 28 enterprises in Russia,
Ukraine and Belarus specialized in the production of dairy products and
baby food.
Baltic Milk, Wimm-Bill-Dann
Baltic Milk Dairy Factory was launched in 1987. The factory became a part
of the Wimm-Bill-Dann production and trade group in 2000. Will-Bill-
Dann is the leader at the Russian market of dairy products and baby food
as well as one of the leading producers at the soft drinks market in Russia
and CIS. The company operates more than 35 processing plants in Russia,
Ukraine and Central Asia and employs more than 18 thousand people.


Tobacco
British American Tobacco (BAT)
BAT’s plant in St. Petersburg operates 13 production lines producing five
premium brands. It provides about 25% of BAT’s production volume in
Russia. The company completed the construction of new production
facilities at its plant in St. Petersburg in 2007 with the total investment of
110 million dollars, thus increasing St. Petersburg plant’s production
capacity to 40 billion cigarettes a year.

Japan Tobacco International (JTI) Petro
JTI Petro's cigarette making facility in St. Petersburg is the company’s
biggest worldwide plant with the total of 400 million dollars invested. The
brand portfolio includes over 30 brand names, both international and
local. It supplies the firm's Russian and Ukrainian plants with main
tobacco components used for cigarette production.

Philip Morris International (PMI)
Philip Morris Inc. officially opened its third Russian cigarette factory in St.
Petersburg in 2000. The total investment of 335 million dollars made this
project the company’s largest cigarette plant in Europe. The plant, which
employs 750 workers and operates 15 conveyer belts, produces the
Marlboro, Parliament, Virginia Slims, L&M, Chesterfield and Bond Street
brands. In 2002 the company began construction of a new processing line
and a warehouse with the total investment estimated at 240 million
dollars.

2.3.4.1. Universities
 St. Petersburg Institute of Management and Food Technology
St. Petersburg Institute of Management and Food Technology is an institute of continuing
professional education and professional development, international information, scientific
research, analysis, exchange of experience, which has been operating for more than 43 years.
Every year more than 3 thousand specialists from bread and baking pasta, yeast, brewery and
other food industry enterprises undergo training, career and professional development at the
Institute.
 St. Petersburg State University of Refrigeration and Food Engineering
With more than 6 thousand students enrolled, St. Petersburg State University of Refrigeration
and Food Engineering is the leading higher educational institution in refrigeration engineering
and food processing in Northwest Russia. The University has educated more than 25 thousand
engineers who continue to actively contribute to the development of refrigerating and cryogenic
engineering, technology and equipment for food processing. The University is actively involved
in research, scientific and innovative activities. Technopark has been operating on the basis of
the University since 2000. It unites the University engineering departments as well as business
structures and small innovative enterprises. During the period of 5 years Technopark carried out
more than 300 projects, which have been implemented at the largest food enterprises across
Russia.
2.3.4.2. Research Institutions
 All-Russia Scientific and Research Institute of Fats
All-Russia Scientific and Research Institute of Fats is the largest scientific and research center in
Russia specialized in oil and fact industry. The institute carries out fundamental and applied


scientific research and introduces the best research practices aimed at technological, economic
and social development of agro-industrial complex. The institute carries out research of
vegetable oil production and processing, vegetable food protein as well as margarine and
mayonnaise production, etc.
 State Scientific Research Institute of Baking Industry, St. Petersburg branch
State Scientific Research Institute of Baking Industry is the leading scientific center of bread and
baking pasta industry in the Russian Federation and CIS. St. Petersburg branch specializes in the
field of developing new technologies for baking. The priority research areas are the
development and improvement of biotechnological processes and assortment of rye, rye and
wheat bread as well as pastry.
2.3.4.3. Professional associations
 St. Petersburg Union of Food Enterprises
The Union is a non-profit organization established in 2005 by baking, meat processing, dairy, oil
and fat, confectionery, alcohol and other food industry enterprises. The organization aims to
coordinate business activities of its members and actively participate in the effective state
regulation in the sphere of food industry.


2.4. Information and communication technology (ICT)
Information and communication technology (ICT) sector is one of the most rapidly growing sectors
of the Russian economy. 60% of all Russian IT companies are based in St. Petersburg, including 49
centers of leading international and Russian ICT companies. The development ICT cluster is a
priority policy implemented by the Government of St. Petersburg. Availability of a developed IT
infrastructure, including a technopark, business incubator, modern research and scientific
institutions, as well as highly qualified IT-personnel facilitate the development of St. Petersburg as a
Russian leader in information and communication technology.

Today, ICT cluster is one of the youngest and most competitive sectors of innovation policy
implemented in St. Petersburg. The cluster represents not only an independent sector but also a
trigger facilitating effective development of other sectors of the regional economy. As of 2009, the
sector’s annual turnover constituted not less than 3.5 billion dollars. The amount of people
employed only in software development constitutes more than 36 thousand employees with almost
100% of them possessing higher education degrees.
Most of the companies and institutions comprising ICT cluster have the highest competitiveness
rating, including Reksoft, Exigen Services, PROMT, Speech Technology Center, Spb Software,
SPEEREO, Solvo and others.2
Russian cities by number of head offices and remote development centers of IT companies, 2010
Ranking City Number of offices
1 Moscow 67
2 St. Petersburg 49
3 Moscow region 10
4-5 Novosibirsk 8
4-5 Voronezh 7
6 Rostov-on-Don 7
7 Tomsk 6
8-9 Yekaterunburg 5
8-9 Veliky Novgorod 4
8-9 Kazan 4
10-12 Nizhniy Novgorod 3
th
Source: Russian software developing industry and software exports, 7 annual review, Russian Software Developers
Association (RUSSOFT), 2010

2
Russian Software Developers Association (RUSSOFT)


2.4.3. Companies
Suppliers of software development services
Astrosoft
Astrosoft is a premium level IT-services supplier with more than 10-year
expertise in implementing projects all over Europe. The company is
headquartered in St. Petersburg and provides a wide range of services in
software development and integration, consulting and training. The key
service areas include business applications development, business
solutions development, business in Russia for start-up solutions,
embedded systems development, legacy system re-architecture.

Arcadia
Arcadia is an innovative offshore software development based in St.
Petersburg. The company provides a wide range of software development
outsourcing services to customers worldwide. Today, Arcadia unites team
of more than 170 software professionals with over 18 years of experience in
custom development of business applications.

AT Software
AT Software is a leading software and hardware development company in
Russia/CIS with customers in Europe, USA and Russia. AT Software was
formed in 2008 as the result of merger of two leading Russian software
development companies - Lanit-Tercom (St. Petersburg) and Artezio
(Moscow). Today, its primary areas of expertise include
telecommunications, industrial electronics, healthcare, banking and
finance as well as education. The company offers a wide range of services,
including software and/or hardware development outsourcing/offshoring
(ODC), managed product development, enterprise services (custom
applications development, audit, testing, customization, re-engineering,
integration), IT consulting and research, IT staffing and out-staffing.

DataArt
DataArt is a custom software development company that provides
advanced solutions for financial services, healthcare, hospitality and other
industries. Founded in 1997, DataArt’s services include application
development, quality assurance, team completion, reengineering and
R&D. The company has been consistently named one of the top or fastest
growing IT outsourcing providers worldwide by BusinessWeek.
Headquartered in New York, DataArt runs R&D centers in Russia, including
the center in St. Petersburg, Ukraine and maintains offices in London, UK.

DevExperts
DevExperts is a provider of professional software systems for on-line
brokerage, exchange, and financial activities mostly on stock, options, and
Forex markets. The company is specialized in the development,
implementation, and support of financial systems intended to handle
complex business activities, including a full set of advanced tools to meet
both a trader's and a broker's requirements. DevExperts is based in St.
Petersburg and provides its services operating in the US, Great Britain,
Russia, Japan as well as other countries.


Digital Design
Headquartered in St. Petersburg, Digital Design is an IT consultancy which
offers a full range of IT services to clients in Russia and all over the world.
The company’s services include customs software development, corporate
portals, software plus services enabling, application maintenance and
legacy migration, enterprise application integration, data warehousing and
analysis, nearshore development center, rail fleet management system.
Founded in 1992, the company has become one of the largest IT services
providers in Russia.

Exigen Services
Exigen Services is an Inc. 5,000 global IT company that provides
application outsourcing services. The company has been delivering its
services to clients operating in the field of financial services (banking,
brokerage and insurance markets), media and entertainment, healthcare,
and industries for 17 years. Today, it employs more than 1,700 highly
skilled developers and application outsourcing experts within its global
delivery network. Headquartered in San Francisco, USA, the company has
one of the largest development centers in St. Petersburg.

Reksoft
Reksoft is a nearshore software engineering services provider established
in 1991. The company is headquartered in St. Petersburg and has delivery
offices across Europe. Reksoft specializes in supplying software
development services, products and solutions to enterprises, ISVs, and
system integrators operating in a variety of industries. Reksoft’s major
services include software product engineering, enterprise application
services, including consulting, custom application development, enterprise
application integration, application management, migration and
customization, as well as dedicated centers.
Software product developers
Doctor Web
Doctor Web is a developer of highest-grade anti-virus protection Dr.Web®.
The company is headquartered in Moscow with the Department of AV-
Research and Development located in St. Petersburg. Doctor Web unites
the team of more than 230 specialists with over half of them engaged in
R&D. Dr. Web’s security products are distributed through its network of
partners.

Eureca
Eureca has been operating at the Russian market since 1990. Today, the
company offers a variety of services, including development of complex
information systems, development and supply of integrated network
solutions, development, production and supply of high-efficient servers
and working stations, organization of automated data entry, storage,
access and search systems and many others. The company has offices in
St. Petersburg, Moscow and Kursk as well as a training center in St.
Petersburg.


PROMPT
PROMT is a leading Russian developer of linguistic IT solutions for business
and private users. The company has been successfully operating at the
market of innovative linguistic technologies for 20 years and, today, offers
translation systems for twelve languages. PROMT has 4 worldwide offices,
including the corporate office in St. Petersburg, and provides its services to
more than 10 thousand client companies all over the world.

SPB Software
SPB Software Inc. is a global company which develops mobile solutions for
OEM mobile device manufacturers and mobile carriers as well as
smartphone and tablet end users. With dozens of industrial awards and
millions of customers worldwide, SPB provides a unique line of popular
consumer products, ranging from mobile games to usability and
productivity applications, business, communication, and multimedia
software for mobile phones. Founded in St. Petersburg in 1999, the
company retains its development headquarters in the city and has offices
in USA, Brazil, Taiwan, and Thailand.

Speech Technology Center
Speech Technology Center is a leading provider of cutting-edge voice-
based solutions in speech recording, processing and analysis. Founded in
1990, Speech Technology Center has over 20 years of experience in speech
technology development. STC provides competitive solutions across a
range of fast-growing technology sectors, including multi-channel and
hand-held digital recording, noise cancellation, speech enhancement and
biometric authentication and identification. STC is also a leading developer
of speech recognition and synthesis engines for the Russian language.

Speereo
Speereo Software UK Ltd. was founded in 1998 and has a head office in
London, UK as well as a R&D center in St. Petersburg. The company
specializes in the development of its own proprietary speech recognition
system as well as mobile and PC solutions based on Speereo Speech
Recognition (SSE) Technology.

Software development centers of international companies
Alcatel-Lucent
Alcatel has been operating its R&D center in St. Petersburg since 2005. Its
main objectives lie in the development and integration of innovative
telecommunications software systems, and adaptation of existing
company’s products to the specific requirements of the regional market.
The center covers three fields of applications, including fixed, mobile and
enterprise networks, and employs 150 specialists trained at the specialist
R&D centers in Europe and the US.


EMC
Opened in 2007, EMC R&D center in St. Petersburg is an important part of
the global EMC R&D investment program. The center focuses on rendering
support and continuous development of a wide range of world’s leading
software products. St. Petersburg’s center currently employs more than
170 program engineers specialized in data management and data storage
systems.

HP Labs
HP Labs Russia is the newest member of the international HP Labs
community, and the third new research lab created by the company in the
last five years. Opened in St. Petersburg in 2007, it focuses on information
management and development of new technologies linked to the
explosion of information access brought about by the World Wide Web.
The only Russian HP research lab delivers breakthrough technologies and
technology advancements that provide a competitive advantage for HP
and create business opportunities that go beyond HP's current strategies.

Intel
Opened in St. Petersburg in 2004, the Intel R&D center currently employs
more than 100 specialists. The center focuses on conducting research and
development of innovative software solutions for Internet-related
technologies, including Dynamic Runtime Layer (DRL), communication
technologies that enhance wireless communication, grid computing to
optimize programming environment. St. Petersburg center works in close
collaboration with the city universities with the aim of creating a solid
academic foundation for information.

Oracle Development
Following the Sun Microsystems’ acquisition by Oracle in 2009, the Sun
Microsystems’ center of high technologies in St. Petersburg has been
functioning as Oracle Development LLC.
System integrators
BCC Group
Founded in 1994, today, BCC Group is one of the leading companies
providing IT-services and systems integration at the Russian market. The
company’s major activities include enterprise management and business
consulting, IT-consulting, software integration and installation services,
telecom solutions for mobile and fixed communication networks, IT and
telecom solutions for production and manufacturing and others. The
company has 5 offices in Russia, including the office in St. Petersburg.

Nienschanz
Nienschanz is one of the largest IT-oriented holdings in Russia and an
experienced solution provider. CJSC Nienschanz was founded in St.
Petersburg in 1991 and since then has developed into a multi-profile group
of companies. The major services include system integration, IT-
consulting, fabrication, integrated supplies and service maintenance of
computer facilities and peripheral units, integrated supplies of copying-
and-duplicating machines, manufacture, integrated supplies, distribution
and service maintenance of office furniture.


SOLVO
SOLVO Ltd. is a St. Petersburg based leading vendor of high-end logistics
automation and control systems. The company provides solutions for
automating the entire complex of business and technology processes
within warehouses and container terminals. SOLVO offers its customers a
wide range of services, including project customization, training and
consulting, system implementation and deployment assistance, and
technical support.

 St. Petersburg State Electrotechnical University
St. Petersburg State Electrotechnical University is one of the world’s largest education and
research centers specializing in radio engineering, electrical engineering, electronics and
computer science. The University has a staff of more than 1,000 highly-qualified specialists and
scientists, including the Nobel Prize Winner in physics Zhores Alferov. Electrotechnical
University is alma mater for over 70 thousand students and over 3 thousand international
students.
 St. Petersburg State Polytechnical University
St. Petersburg State Polytechnical University was founded in 1899. It has recently become the
National research University, thus recognized as a leading Russian and international center in
the field of higher engineering and economics. The University attracts students form 96
countries of the world and provides education programs in the field of engineering, physics,
economics, humanities and IT. Today, the University has 20 departments and institutes and 120
R&D labs and offers more than 150 concentrations.
 St. Petersburg State University
Founded in 1724, St. Petersburg State University is the oldest institution of higher education in
Russia. The University’s Department of Mathematics and Mechanics together with its
comprising scientific institutions is one of the largest mathematical centers in the world. The
Department offers 23 concentrations and also includes the Research Institute of Mathematics
and Mechanics, a computer center and astronomy observatory.
 St. Petersburg State University of Information Technologies, Mechanics and Optics
The National Research University of Information Technologies, Mechanics and Optics is one of
the oldest higher education institutions in Russia. The school has been training specialists in
cutting-edge technologies directed to science and technical development for more than 100
years. Today, the University has 10 departments offering 49 concentrations and enrolls more
than 9,000 full-time students.
 St. Petersburg Institute for Informatics and Automation, Russian Academy of Sciences
(RAS)
St. Petersburg Institute for Informatics and Automation of the Russian Academy of Sciences was
founded in 1978 and has since then grown into a large scientific research organization which
gave rise to a new Center of Ecological Security of the St. Petersburg Scientific Research Center
of RAS. Today, the Institute is engaged in fundamental research of informatization of society
and information security, information and computer systems and networks, theoretical basics of
development of soft- and hardware complexes for information real-time processing, IT for
intelligent systems of research automation, control, manufacturing and other fields.


 St. Petersburg Department of Steklov Institute of Mathematics, Russian Academy of
Sciences (RAS)
The Institute was established in 1940 as a department of the Steklov Institute located in
Moscow. Today, it is an independent research institute specializing in fundamental research on
theoretical mathematics and mathematical models of theoretical physics, including
mathematical logic and theory of algorithms, theory of numbers, geometry and topology,
mathematical analysis, theory of probability, mathematical statistics and many other.
2.4.4.3. Associations
 RUSSOFT
RUSSOFT is a multinational association of software companies from Russia and Belarus. The
association was founded in 1999 and is headquartered in St. Petersburg. Today, RUSSOFT
unites more than 70 companies which employ more than 20 thousand highly-qualified
programmers and software engineers. The association was created to represent Russian
software development companies at the global market, enhance marketing and PR activities of
its members, and lobby their interests in their countries' governments. RUSSOFT is a part of the
Russian Information and Computer Industry Association (APKIT) where it plays a role of
Software Development and Export Committee.
 SPb CIO Club
St. Petersburg CIO Club is a professional community uniting IT directors of leading companies of
the Northwestern region of the Russian Federation. The organization’s major objectives lie in
providing support and strengthening the development of professional community of IT
directors. Established in 2004, the Club is at present the largest professional IT community in
Russia.


2.5. Pharmaceutical industry
The development of pharmaceutical cluster is one of the priorities of the Government of St.
Petersburg. According to Pharmexpert Market Research Center, St. Petersburg is the most
investment-attractive region of the Russian Federation as well as a launch pad for successful
implementation of pharma and medical equipment projects.3
The effectiveness of the pursued government policies is revealed in the increased interest of
international businesses in St. Petersburg as well as the results achieved. 11 projects on the
localization of pharmaceutical facilities and creation of modern research infrastructure are being
implemented in the framework of the cluster. The total volume of investments constitutes
approximately 30 million roubles. The projects are implemented with the participation of the leading
research and education centers, which play a pivotal role in establishment of joint modern research
centers and labs.

The volume of pharmaceutical market in St. Petersburg constituted more than 20 billion roubles in
2009. This fact represents a significant trigger for development of competitive industry in the
region. The average per capita consumption of pharmaceuticals in St. Petersburg constitutes more
than 133.5 dollars, which is significantly higher than the average Russian consumption (82.1 dollars,
respectively).4
Nine investment projects with the volume of total investment of 25.12 billion roubles aimed at
constructing new pharmaceutical plants were launched in 2010. In addition to production
operations, almost each project involves the construction of research labs for development of new
pharmaceuticals.
Major pharmaceutical investment projects, 2010
Company Investment Production site Lab complex
Samson-Med 1.5 bln RUB Industrial zone "Pushkin"
Greopharm 2.3 bln RUB Industrial zone "Pushkin" SEZ "Noidorf"
Neon 0.9 bln RUB Industrial zone "Pushkin"
Pharm-Holding 0.7 bln RUB Industrial zone "Pushkin"
Biokad 1.07 bln RUB SEZ "Noidorf" SEZ "Noidorf"
Pharmasintez 1.7 bln RUB SEZ "Novo-Orlovskoe" SEZ "Novo-Orlovskoe"
Vertex 1 bln RUB SEZ "Novo-Orlovskoe" SEZ "Noidorf"
Immuno-Gem 0.6 bln RUB SEZ "Novo-Orlovskoe" SEZ "Novo-Orlovskoe"
Novartis 15.35 bln RUB SEZ "Novo-Orlovskoe" SEZ "Novo-Orlovskoe"


3
4


2.5.3. Companies
The key pharmaceutical cluster projects in St. Petersburg:
Biocad
Biotechnological company Biocad is planning to construct a new research
and pharmaceutical manufacturing plant on the territory of the Noidorf
industrial zone within 2010-2017. The project aims to create an import
substituting production of more than 40 essential pharmaceuticals in
accordance with the GMP standards as well as scientific and research
complex on oncology/hematology, gynecology/urology, neurology, viral
infections and diabetes. The project will be implemented on the territory
of 5 hectares and will include pilot production lab, 10 production lines for
the production of substances, liquid and solid pharmaceuticals with the
annual capacity of up to 60 million packages and storage facilities.

GalenoPharm
The company intends to construct a scientific center for the supply of
respiratory pharmaceuticals. The project will be realized within 2010-2014
and will include a complex base for the development of pharmaceutical
products to treat bronchial allergy, chronic wheezing illnesses as well as
biologically active supplements and beauty products.

Gem-standard
Gem-standard became the resident of the Novo-Orlovskaya Special
Economic Zone (SEZ) in 2011. The company is planning to construct a
research and production complex for the development of innovative blood
plasma pharmaceuticals. The project with the total budget of 865 million
roubles will be implemented in 2011-2015 on the territory of 4 hectares and
will use unique complex technology for deep and complete plasma
processing.

Geropharm
Geropharm aims to create a modern high-tech industrial complex in
compliance with the GMP standards to produce original Russian as well as
generic pharmaceuticals. The project includes the construction of two
complexes, including suppository manufacturing on the territory of 1.6
hectares with the total investment of 800 million roubles and injection
drug manufacturing on the territory of 2.8 hectares with the total budget
of 1.3 billion roubles. Both projects will be implemented on the territory of
the Pushkinskaya industrial zone within 2010-2014.

Neon
Neon aims to launch the production of high quality effective Russian
pharmaceuticals to address the demands of the Russian healthcare
system. The project will be implemented within 2010-2014 on the territory
of 2.9 hectares within the Pushkinskaya industrial zone. It envisages the
establishment of a high-tech production in accordance with the GMP
standards with the annual capacity of 960 million units.


Novartis
The world’s leading pharmaceutical company operating in more than 140
countries around the world held a ground breaking ceremony to mark the
launch of construction of a pharmaceutical manufacturing plant in St.
Petersburg on June 16, 2011. The construction of this facility represents
the most significant Novartis investment into Russia to date. The new
greenfield facility will be located on the territory of the Novo-Orlovskaya
Special Economic Zone (SEZ) and will manufacture innovative patented
pharmaceuticals and modern high quality generic medicines. The project
with the total investment of 15.3 billion roubles will be implemented on the
territory of 10 hectares within 2010-2014. It will include the construction of
research complex for the development of new medicines, modern
production operations organized in accordance with the GMP standards
with the annual capacity of 1.5 billion solid peroral pharmaceutical as well
as scientific and educational activities, including participation in Russian
innovative projects. The plant will manufacture therapeutic
pharmaceuticals to counter socially significant diseases, including
cardiovascular, oncologic, immunologic diseases and diabetes.

Pharmasyntez
Pharmasyntez plans to construct a scientific and manufacturing complex
for the development and production of oncology pharmaceuticals on the
territory of 4.5 hectares located in the Novo-Orlovskaya Special Economic
Zone (SEZ) within 2010-2015. The project with the total budget of 2 billion
roubles envisages the development and transfer of pharmaceutical
manufacturing technologies for the production of antitumor products to
combat oncological diseases. The company will localize the production of 5
pharmaceuticals from the list of strategically significant pharmaceuticals.

Pharm-Holding
Pharma-Holding announced its plans to build a science research and
production complex in St. Petersburg within 2010-2014. The project is
aimed at increasing the availability of essential pharmaceuticals as well as
establishment of effective scientific and production base. The total budget
of the project which will be implemented on the site of 2.9 hectares
located in the Pushkinskaya industrial zone constitutes 800 million roubles.
The plant will manufacture C-peptide, cortagen and prostamax.

Polysan
Polysan aims to construct a modern pharmaceutical plant in accordance
with the GMP standards within 2010-2012. The total investment of the
project constitutes 2 billion roubles. The plant will produce high quality
infusion pharmaceuticals.

Samson-Med
Samson-Med intends to construct a bio-substances and pharmaceutical
manufacturing facility on the territory of 2.7 hectares in the Pushkinskaya
industrial zone within 2010-2014. The project with the total budget of 1.5
billion roubles envisages organization of a complete technological cycle for
the production of active pharmaceutical substances and pharmaceuticals
in accordance with the GMP standards, including cardiology, neurology,
pulmonology, ophthalmology, gastroenterology and genecology products.


Vertex
Vertex aims to construct a new scientific and manufacturing complex for
the development and production of innovative pharmaceuticals. The
project with the total investment of 1.6 billion roubles will be implemented
within 2010-2014 on the territory of the Novo-Orlovskaya Special
Economic Zone (SEZ). The complex will include research as well as pilot
production labs.

 St. Petersburg State Chemical-Pharmaceutical Academy
St. Petersburg State Chemical-Pharmaceutical Academy is a leading Russian center in educating
high qualified process engineers occupied in industrial production of pharmaceuticals of various
origin. The academy participates in TEMPUS program realized by the EU and Russian
Federation in the sphere of training of GMP experts.
 St. Petersburg State Institute of Technology
St. Petersburg State Institute of Technology is an acknowledged world’s center of chemistry,
chemical and biotechnologies, nanotechnologies, cybernetics and engineering. The Institute
possesses a vast range of methods of active pharmaceutical ingredients synthesis as well as pilot
production of substances in accordance with the GMP requirements. It is a major center
dedicated to training of personnel for scientific centers and industrial enterprises.
 St. Petersburg State Pavlov Medical University
One of the leading medical schools in Russia carries out preclinical research, including study of
new molecules and dosage forms, translational studies, clinical research,
pharmacoepidemiological and pharmacoeconomic research as well as training of GLP, GCP,
GSP and evidentiary medicine specialists.
 St. Petersburg State Polytechnical University
St. Petersburg State Polytechnical University conducts a world top-level bioanalytical research
in accordance with the FDA and GLP requirements. The oldest pharmaceutical institution of
higher education in Russia carries out high-tech research projects on the development and study
of active pharmaceutical substances of natural and synthetic origin and educates highly
qualified specialists in the sphere of molecular biology.
 Institute of Cytology of the Russian Academy of Sciences (RAS)
Institute of Cytology is the leading institution of the Russian Academy of Sciences within the
field of modern cell biology. The institute is tasked with studying the structural organization and
expression of nuclear genome, structure and function of cell organelles, investigation of
intracellular processes and intercellular contacts.
 Institute of Toxicology
The scientific center focuses on fundamental and applied research in the field of toxicology,
pharmaceutical chemistry and pharmacology. The Institute specializes in the study of
mechanisms of action of potential dangerous chemical and natural substances as well as
development of novel antidotes and therapies.
 Research Institute of Influenza
Research Institute of Influenza is involved in solving fundamental and applied tasks in the field of
virology, epidemiology and infectious pathology, thus serving a goal of protecting and
augmenting human health, developing healthcare and medical science. The institute is engaged
in epidemiologic and etiologic influenza/ARI surveillance improvement, molecular genetic and


phylogenetic analysis of influenza viruses, genetic classification of existing and newly emerging
viruses, studies on molecular mechanisms of viral pathogenesis, nanotechnology-based
diagnostic reagents generation, exploration of new ways for next-generation vaccine production
as well as other relevant research areas.
 State Research Institute of Highly Pure Biopreparations
The Institute is a biotechnological center specialized in novel therapeutics and diagnostics. The
main scientific areas include elucidation of mechanisms of therapeutic activity of endogenous
mediators for the development of new biopharmaceuticals, development of new drug delivery
systems for targeted and sustained release of drugs as well as medicine manufacturing.
 St. Petersburg State Mechnikov Medical Academy
The oldest and one of the most prestigious institutions of higher medical education in Russia
represents a scientific and research center which includes morphology, genetics, biochemistry,
immunology, physiology, mathematical modeling and epidemiological analysis labs.
 St. Petersburg Institute of Pharmacy
St. Petersburg Institute of Pharmacy functions on the basis Adaptogen Interregional Center and
St. Petersburg State Mechnikov Medical Academy. It is occupied in carrying out preclinical
studies of new pharmaceuticals, specific food products, biologically active substances and
beauty products.
2.5.4.3. Life Sciences Park in St. Petersburg
On June 18, 2011 the Government of St. Petersburg signed the memorandum of intent with Life
Science Park STP BP stipulating mutual cooperation in the development of Life Sciences Park in St.
Petersburg. Life Sciences Park is the largest project in Russia aimed at establishing a complex
infrastructure for the development of pharmacy, biotechnology and medical industry. The project
aims to create comfortable and competitive environment for the innovative development of life
sciences in St. Petersburg, strengthen cooperation between Russian and international businesses
and research organizations, provide favorable conditions for the operation of companies engaged in
R&D, diagnostic studies, product licensing, private clinic management, etc.


2.6. Shipbuilding industry
Shipbuilding is one of the leading industrial sectors in St. Petersburg’s economy. For centuries the
city served as the sea capital of Russia as well as a recognized center for shipbuilding, naval science
and education. Today, shipbuilding industry is undergoing major reorganization. High concentration
of industrial and scientific sectors as well as unique port infrastructure stipulates the development of
shipbuilding industry and provides new opportunities for pursuing effective forms of cooperation
within the city.
In September 2010 the Government of St. Petersburg signed an agreement with the United
Shipbuilding Corporation on the establishment of a shipbuilding cluster in the city. The priority lies
in construction of a new shipbuilding complex on the island of Kotlin. While the development of a
modern complex in the Northwestern region of the Russian Federation will benefit not only
shipbuilding but also a number of related sectors, it will facilitate the social and economic
development of the city. The project envisages the development of a modern high-tech production,
as well as facilitation of social and economic development of Kronshtadt.
One of the first steps includes establishment of the engineering center on design and production of
marine equipment, which will be used for Arctic exploration. As a result of the project’s
implementation, St. Petersburg’s shipbuilding cluster will accommodate 200 shipbuilding
enterprises engaged in manufacturing of import substituting equipment and components.
Basic information on the shipbuilding complex on the Island of Kotlin, St. Petersburg
Main products tankers, LPG tankers, offshore ice-resistant fixed
platforms, ice-breakers, floatable nuclear heat and
power plants, first rate ships, aircraft carriers, diesel-
electric submarine
Annual gross receipts 38 billion roubles
Volume of investment 35 billion roubles
Total number of employees 6,500 people
City tax revenue 3.5 billion roubles a year
Implementation period 8 years


The Northwestern region is often referred to as a shipbuilding capital of Russia. High concentration
of scientific and industrial shipbuilding potential accounts for more than 80% of R&D and over 70%
of all domestic industrial production. The region locates about 39% of all Russian shipbuilding
enterprises as well as 58% of all personnel occupied in the industry. Today, the region accounts for
72% of the total volume of production within the shipbuilding industry.5
43 shipbuilding organizations which employ more than 50 thousand specialists are located in St.
Petersburg. Shipbuilding accounts for more than 50% of all products produced by the defense
industry complex in St. Petersburg.6 St. Petersburg and Severodvinsk are the only two Russian
cities, which locate shipbuilding facilities for the production of large-capacity ships and vessels.

5
Ministry of Industry and Trade of the Russian Federation
6


Number of shipbuilding enterprises across the federal districts of the Russian Federation, 2011

Northwestern Federal District

2% 18% Urals Federal District

Central Federal District
39%
Southern Federal District
15%
Far Eastern Federal District

Siberian Federal District
10%
14%
Volga Federal District
2%

Note: Total number of shipbuilding enterprises in Russia - 167, including 113 industrial enterprises and 54 scientific and
research organizations
Source: Modern state and perspectives of development of Russian shipbuilding industry, Department of Shipbuilding
Industry and Marine Equipment, Ministry of Industry and Trade of the Russian Federation, 2011

2.6.3. Companies
United Shipbuilding Corporation
United Shipbuilding Corporation is a government-owned company, which
unites shipbuilding, repair and maintenance subsidiaries located across
Russia. Today, the corporation has 3 subsidiaries, including the Western
Shipbuilding and Repair Center in St. Petersburg, the Northern
Shipbuilding and Repair Center in Severodvinsk and the Far Eastern
Shipbuilding and Repair Center in Vladivostok. The shipbuilding
enterprises united under the corporation are engaged in both commercial
and naval shipbuilding and account for 80% of all shipbuilding projects in
Russia. The Western Shipbuilding and Repair Center unites the following
St. Petersburg-based shipbuilding enterprises:

Admiralty Shipyard
Admiralty Shipyard is one of the oldest and largest shipyards located in St.
Petersburg. Founded in 1704 by Peter the Great, the shipyard is one of the
major Russian enterprises engaged in design, manufacturing and
modernization of civil and naval vessels of various types, including such
naval warships as nuclear and diesel-powered submarines and large
auxiliaries.

ALMAZ
Almaz Shipbuilding Company has been for many years specializing in
manufacturing of high-speed ships and boats. The major products include
hovercrafts, patrol boats, multi-purpose crafts as well as high-speed motor
boats. Almaz also offers services in production of shipbuilding ways, metal
processing, assemble-welding and mechanical engineering.


Baltiysky Zavod (Baltic Plant)
Baltiysky Zavod is one of the leading shipbuilding enterprises in Russia.
Founded in St. Petersburg more than 150 years ago, the shipyard
specializes in manufacturing of ice-breakers and ice-classed vessels, large
commercial vessels intended for various types of cargo, as well as naval
ships. The shipyard also develops a wide range of marine propulsion
equipment and machinery as well as head exchanges for nuclear power
plants, non-ferrous and core-mould castings.

Kronstadt Marine Plant
Founded in 1858, Kronstadt Marine Plant is one of the oldest shipbuilding
plants in the world specialized in manufacturing of marine steel vessels
with power systems.

Severnaya Verf (Northern Shipyard)
Established in St. Petersburg in 1912 originally only for military
shipbuilding, today Severnaya Verf is one of the major shipyards
manufacturing both naval and civilian ships. It is the only enterprise in
Russia which has experience in manufacturing ships and vessels using a
three-dimensional mathematical model developed in the specialized
shipbuilding system.

Sredne-Nevskiy Shipyard
Sredne-Nevskiy Shipyard is one of the leading shipbuilding enterprises in
Russia. Founded in 1912, the shipyard has since then manufactured more
than 500 ships and vessels working for the Russian Navy as well as export
contracts.

 St. Petersburg State Marine Technical University
St. Petersburg State Marine Technical University is the only institute of higher education in
Russia which educates world class marine engineers specialized in design, manufacture and
maintenance of marine vessels, surface ships and submarines, technical equipment for
exploration and extraction of oil, gas and other undersea mineral resources. Founded in 1902,
today the University offers educational programs at 5 departments, including natural and social
sciences and humanities, naval architecture and ocean engineering, marine engineering, marine
electronics and control systems, business and management.
 Avrora
Avrora is a scientific and production association established in St. Petersburg in 1970. Today, the
company is engaged in the development and manufacturing of control systems and devices for
commercial and naval vessels, including automated control systems of technical facilities,
automated combat information and control systems, complex control systems, training systems
and simulators, development and manufacturing of control systems for industrial, technological
and power generation objects, transportation and port facilities, automated control systems of
technological processes of oil and gas extraction, processing and transportation as well as other
industrial, medical and technical products.


 Elektropribor, Central Scientific and Research Institute
Elektropribor is the leading Russian research institute located in St. Petersburg. The Institute
carries out a full cycle of work, including fundamental research as well as product
manufacturing. Main products include integrated satellite/inertial navigation systems, mobile
airborne marine gravimeter, periscope complex. The institute supplies its products not only to
the Russian Navy but also foreign companies from China, Finland, Germany, India, Japan,
Norway and the Republic of Korea.
 Krylov Shipbuilding Research Institute
Krylov Shipbuilding Research Institute is the leading scientific institution of the national
shipbuilding industry and has a status of the Russian Federation State Research Centre for naval
commercial ships. This status comes due to both high qualifications of the staff researchers and
experts who have established their own world-recognized schools of learning and a unique
complement of experimental facilities combined with innovative in-house research methods
and tools. The Institute is engaged in performing naval ship conceptual design studies,
hydrodynamics, commercial ship and offshore engineering conceptual design studies, structural
mechanics, marine power plants and power generation as well as other marine-related
technologies.
 Shipbuilding and Ship Repair Technology Center
Shipbuilding & Ship Repair Technology Center is one of the major research institutions in St.
Petersburg and a leading center of shipbuilding technologies in Russia. The Center carries out
fundamental and exploratory research in the field of creation of modern technologies for
shipbuilding and engineering sectors and participates in the development and implementation
of large-scale investment projects. Today, the Center incorporates research laboratories, design
and construction divisions engaged in the development and modernization of shipbuilding
yards, water-development facilities and engineering enterprises, on-shore bases for marine
objects, design and manufacturing of ship fittings, design of fishing and fish-processing vessels,
special-purpose vessels, as well as production facilities for manufacturing of designed
equipment.


2.7. Transport and logistics
St. Petersburg is a major transport hub of Russia, which handles international freight and passenger
operations via all means of transportation. All types of transport infrastructure, including car roads,
railway network, river and sea transport, airport, oil and gas pipelines, are present on the territory of
the city.

2.7.2.1.1 Water Transport
Inland water transport plays an important role in the transport complex due to the wide
continuation of the Neva – Ladoga Lake system. While the Svir-Onega Lake system provides access
to the Republic of Karelia, the Belomor-Baltic canal provides access to the White Sea. Another
waterway, Volga-Baltic Waterway, connects St. Petersburg with the European North of the country,
Central Russia, Volga-Vyatka region, Cis-Ural region, Volga region as well as ports on the Caspian
Sea. The Volga-Don canal connects St. Petersburg with the Caucasus, Cis-Azov region as well as the
Baltic Sea ports.
 Cargo operations
In 2010 approximately 8 million tons of cargo was shipped on St. Petersburg’s part of the Volga-
Baltic Waterway, including 7.7 million tons in the Volga-Baltic direction and 0.2 million tons in
the Baltic-Volga direction. Up to 80% of all inland waterway operations is carried out in
cooperation with the Large Port of St. Petersburg. Transit to other ports represents
approximately 20% of all shipments.7
 Passenger operations
Total passenger turnover on St. Petersburg’s inland waterways constituted 2,122.4 thousand
people in 2010. Approximately 290 thousand people were transported in 2010 in the framework
of the water fixed-route taxi program. High-speed transit operations increased by 15% in 2010.8

7
Transport and logistics complex of St. Petersburg in 2010, Union of Industrialists and Entrepreneurs of St. Petersburg
8


Structure of cargo turnover on the Volga- Structure of passenger traffic flow, 2010
Baltic Waterway, Blagoveschensky bridge
point, 2010
2%
6% 1%
7%

28%
38%
18%
66%

34%

Oil products Operations along rivers and canals
Metal products
Timber Local transit operations by high-speed
Fertilizers fleet
Construction materials Operations along the Neva River with
General cargoes the exit to the Gulf of Finland
Source: Transport and logistics complex of St. Petersburg in 2010, Union of Industrialists and Entrepreneurs of St.
Petersburg

2.7.2.2. Rail Transport
St. Petersburg’s railway hub includes 423 km of railroads. Railways and stations in St. Petersburg
occupy approximately 4 thousand hectares. Annual cargo turnover of St. Petersburg’s railway hub
constitutes more than 110 million tons. Today, the city’s railway hub mainly functions as a sorting
center for foreign cargo and companies from other regions directed towards Finland, the Baltic and
Baltic Sea ports.
The node includes 5 stations (Baltic, Vitebsk, Moscow, Ladoga, Finland), 2 yards (St. Petersburg,
Moscow Sorting, Shushary), 1 Port Station (New Port), 10 passenger destinations (Oranienbaum,
Gatchina, Luga, Pavlovsky, Malovisherskoe, Volhovstroevskoe, Irinovskoe, Priozersk, Vyborg, and
Sestroretsk).
A new high-speed train Allegro was launched on route St. Petersburg - Helsinki (Finland) - St.
Petersburg in December 2010.9
In 2010 the volume of cargo turnover at St. Petersburg’s railway hub constituted 108.6 million
tons. Within the structure of cargo operations transit operations prevail over local cargo
shipments.10
60.6 million people departed from railway stations located in St. Petersburg in 2010, including
4.21 million people on long-distance direct connections, 4.31 million people on long-distance
local connections and 52,15 million people on local connections. The total number of passengers

9
St. Petersburg Open City, Committee for Investment and Strategic Projects
10


departing from St. Petersburg stations decreased by 35% within the period of 5 years (2006-
2010) mainly due to the decrease in the number of passengers travelling on local connections. 11
Dynamics and structure of cargo and passenger turnover of St. Petersburg railway hub, 2010

Passenger turnover, million people 52.15 8.42
Cargo turnover, million tons 59.6 49
Transit Local cargo turnover
Local connections Long-distance connections
Petersburg

2.7.2.3. Air Transport
Air transport has been actively developing in St. Petersburg. The city has adopted a master plan for
the development of air transport till 2025. St. Petersburg is served by Pulkovo International Airport,
which is the fourth busiest airport in Russia. The airport handled 9,610,767 passengers in 2011
which represents a 14% increase in comparison with 2010.
Pulkovo Cargo Terminal is one of the five leading cargo terminals in Russia and is the largest cargo
terminal in the Northwest Russia. It has the annual cargo handling capacity of 30 thousand tons.
Pulkovo has been undergoing a major 1 billion euro modernization since 2007. The first phase of
reconstruction, which includes the construction of a new passenger terminal and other airport
infrastructure improvements, is scheduled for completion in 2013.12
Today, 85% of all cargo shipments is handled by passenger airplanes. In 2010 Pulkovo Airport
handled 25.3 thousand tons of cargo operations. The share of foreign air companies and charter
flights in the structure of cargo operations has increased. 30-40% of all cargoes shipped by
Russian air companies accounts for JSC Rossiya Airlines.13
In 2010 passenger turnover at Pulkovo Airport constituted 8.4 million passengers, which
represents a 25% increase in comparison with the previous year. 14 As of 2009, Pulkovo handles
regular aircraft operations along 59 international and 46 domestic routes as well as 25 routes to
the CIS. 31 international air companies, 29 Russian air companies and 11 companies from the CIS
have regular flight operations from Pulkovo Airport.15
Dynamics and structure of cargo and passenger turnover at Pulkovo Airport, 2010

Cargo turnover, thousand tons 2.5 16.2 6.7
Passenger turnover, thousand people 7,674 770

Regular flights Charters Russian airlines Foreign airlines

Petersburg

11
12
Pulkovo St. Petersburg Airport official website
13
14
15
Pulkovo Airport, 2009 Annual Report


2.7.2.4. Large Port of St. Petersburg
The Large Port of St. Petersburg is the largest port in the Northwest Russia and one of the most
important components of St. Petersburg’s transport complex. The water area of the port constitutes
approximately 164.6 square kilometers. The port has 200 berths with the length of berthing line of
31 kilometers. Most of the berths are capable to process different kinds of cargoes as well as accept
vessels with a draft of up 11 meters and length of up to 320 meters.
28 stevedoring companies perform cargo handling operations on the territory of the Large Port of
St. Petersburg.16
Cargo turnover of the Large Port of St. Petersburg constituted 58 million tons which is 15% more
than in 2009.17

Structure of cargo turnover in the Large Port of St. Petersburg, 2010

4%
Containers
4% 9%
Oil products
5%

33% Mineral fertilizers

Ferrous metals
8%
Refrigerated cargoes

11% Coal, coke
28%
General cargoes

Other

Petersburg

Recent years have seen a significant growth in passenger traffic. The number of cruise
passengers has increased by 38.5%, while the number of ferry passengers has increased 4 times
since 2008. Passenger traffic in 2010 constituted 604 thousand people.
The opening of St. Petersburg – Helsinki ferry line in April 2010 as well as introduction of
amendments into the Russian legislation, which allows foreign tourists travelling by ferry to be
present on the territory of the Russian Federation visa free for 72 hours, played a major role in
the growth of ferry traffic in St. Petersburg.18

16
Administration of the Sea Port “Large Port of St. Petersburg” official website
17
18


2.7.2.5. Road Transport
St. Petersburg has a well-developed road network with major highways and national roads,
connecting Northwest Russia with the rest of Russia as well as Nordic and Baltic countries.
St. Petersburg and the surrounding Leningrad region have the highest density of roads with a road
network covering approximately 1,300 km. Railroad network which is one of the most efficient and
dynamic forms of transport in the region is also connected to the Large Port of St. Petersburg and
other port complexes in the region.
The major highways connect the following routes in Russia (St. Petersburg - Moscow), Kola (St.
Petersburg – Murmansk), Scandinavia (St. Petersburg - Vyborg - State border with Finland), Narva
(St. Petersburg - Ivangorod - State border with Estonia) as well as other routes, including St.
Petersburg – Pskov, St. Petersburg – Vologda and St. Petersburg - New Ladoga.
In 2010 large and medium-sized organizations registered in St. Petersburg transported 12.5
million tons of cargo, including 80% by non-general purpose transport. 21 million tons of cargo
was transported in connection with the Large Port of St. Petersburg.
The volume of operations carried out within the city is significantly higher due to the large
number of carriers from other regions operating in the city.19

Structure of motor park of trucks registered in St. Petersburg, 2010

Motor park of trucks, thousand units 72.6 56.4

Legal entities Physical entities

Petersburg

As of 2010, 506 legal and physical entities possess certificates authorizing passenger operations.
Their motor car park constitutes more than 7,500 buses. Inner city passenger operations
constituted 430 million people in 2010.
121 regular routes between St. Petersburg and other regions of the Russian Federation as well as
32 regular international routes operate in St. Petersburg.20
2.7.2.6. Terminal and Storage Facilities
Development of logistics, terminal, storage and distribution facilities on the territory of St.
Petersburg is a major priority in the development of transport and logistics complex of the city. In
2010 the total area of terminal and storage infrastructure constituted 6.4 million square meters,
including 1.52 million square meters of A and B class facilities. In 2010 the total of 66.9 thousand
square meters of storage space was constructed.21
The year 2010 marked a gradual revival of the physical volume of cargo turnover since the crisis.
Cargo turnover of terminal and storage facilities constituted 105.7 million tons in 2010, which is
23 million tons more than in the previous year.22

19
20
21
22


Cargo turnover of terminal and storage facilities, million tons, 2010

Logistics terminals 4.4
A and B+ class storage facilities 15.52
B, C and D class storage facilities 27.72
Port terminals 58.05

Petersburg

2.7.3. Companies
Water Transport
North Western Shipping Company
The company was established 88 years ago and is one of the largest water
transport companies present at the Russian market. The North Western
Shipping Company is a successor of the North-Western River Shipping
Company established in 1923. Today, the company provides a variety of
cargo and passenger operations, shipping and ship repair services and
incorporates 6 subsidiaries, including a shipping company ”North-Western
Fleet”, a passenger port and shipbuilding and ship repairing yards.
Rail Transport
Russian Railways (RZhD)
The Russian Railways is a government-owned national rail carrier
headquartered in Moscow. The company has the world’s second largest
network with over 86 thousand kilometers of common carrier routes as
well as a few hundred kilometers of industrial routes. The company,
established in 1992, is responsible for more than 42% of total Russia’s
cargo traffic, including pipelines, and more than 32% of passenger traffic.
Every year the Russian Railways transports more than 0.95 billion
passengers and 1.2 billion tons of cargo across 11 time zones.
Sea Transport
Large Port of St. Petersburg, Administration of Sea Port
The Large Port of St. Petersburg is a state enterprise which provides the
organization of trading navigation in the sea port of St. Petersburg as well
as behind its limits in established zones of responsibility of the Russian
Federation. It is the largest port in the North-Western Russia located on
the islands of Neva Delta, in the Neva Bay in the eastern part of the Gulf of
Finland of the Baltic Sea. The Large Port of St. Petersburg includes
moorings of sea trading, wood, fish and river ports, an oil terminal, ship-
building, ship-repair and other yards, a sea passenger station, a river
passenger port, and also moorings of Kronstadt, Lomonosov, Gorskaya,
Bronka.


Marine Facade
The Marine Facade is a project of additional expansion of St. Petersburg on
Vasilievsky island at the Neva River’s mouth with the view of creating a
new sea passenger port. The project is implemented within the framework
of a public-private partnership between the City of St. Petersburg and
Marine Façade Company. The Russia’s first and only passenger port was
constructed and officially transferred into the ownership of St. Petersburg
in May 2011. Since the start of its operations, the Marine Facade has
become an important feature of the cruise and ferry industry, thus turning
St. Petersburg into one of the most attractive centers for international
tourism.

Rosmorport, St. Petersburg branch
The federal state unitary enterprise Rosmorport aims to contribute to the
development of sea transport infrastructure as well as higher
competitiveness of Russian seaports. St. Petersburg branch is engaged in
maintenance, operations and development of federal property assigned to
the branch, providing services in the Large Port of St. Petersburg,
Passenger Port of St. Petersburg and the seaport of Primorsk as well as
implementation of federal target programs of marine transport
development.

Sea Port of St. Petersburg, Group of companies
Sea Port of St Petersburg is the largest group of stevedoring companies in
St. Petersburg port and Northwestern Russia. Today, it provides a full
range of stevedoring services to more than 2,000 companies from Russia,
CIS and foreign countries accepting all types of cargoes, including heavy-
lifts and out-of-gauge cargoes. In 2010 the companies of the group
handled over 12.1 million tons of cargoes. The share of the group in the
total turnover of the Large Port of St. Petersburg constitutes
approximately 17 %.
Road transport
Gorelektrotrans
Gorelektrotrans is a state enterprise engaged in the organization of
passenger operations by electric transport, development of route network,
improvement of transportation fleet and facilities efficiency, facilitating
sustainable functioning of city electric transport operations. The enterprise
includes 5 tram parks, 3 trolleybus parks, a combined tram and trolleybus
park, a trolleybus yard and motor transport base and other subsidiary
services.

Passazhiravtotrans
Passazhiravtotrans is a St. Petersburg state enterprise of passenger motor
transport and is one of the largest passenger bus carriers in the
Northwestern region of Russia. It operates 5 bus parks and carries out
regular urban, suburban, intercity and international passenger bus
operations along 11 urban, 8 suburban and 32 intercity routes.


Piteravto
Piteravto was founded in 1993 to provide a full range of transportation
services to passengers. Founded initially as a small transport company, it
gradually grew into the group of companies. Today, the holding includes a
managing company, a central transport company with three divisions and
three regional transport companies. The company’s bus fleet includes over
2.2 thousand buses of different varieties with over 3 thousand drivers
employed.
Air Transport
Pulkovo Airport
Pulkovo Airport is one of the fastest developing air transport hubs in
Russia. Infrastructure of the airport includes airfield with two runways, two
terminals, cargo terminal, fuel-supply complex, parking complex and other
infrastructure objects. The airport handled more than 9.5 million
passengers in 2011 which represents a 14% increase in comparison with
2010. Since April 2010 the operation of the Pulkovo airport is managed by
the Northern Capital Gateway in the framework of public-private
partnership agreement. The priority of consortium lies in reconstruction of
the airport building and new international passenger terminal,
modernization of the domestic passenger terminal, reconstruction of
technical airport facilities as well as development of commercial
infrastructure.

Rossiya, Russian Airlines
Rossiya Airlines is one of the biggest Russian airlines and the leading air
carrier in the Northwestern region of the Russian Federation. Rossiya
Airlines is headquartered in St. Petersburg and operates up to 40% of its
flights from Pulkovo Airport. Formerly known as Pulkovo Airlines, the
company changed its form of ownership and was transformed into Rossiya
Airlines in 2006. Today, the fleet of Rossiya Airlines includes 29 modern
liners. The company is a full member of IATA and is a registered member
of the Multilateral Interline Traffic Agreements (MITA). Rossiya works with
over 100 Russian and foreign partners which enables the company to take
passengers nearly anywhere in the world.

2.7.4.1. Government Institutions
 Committee for St. Petersburg Transport Infrastructure Development, Government of St.
Petersburg
The Committee is engaged in implementing the state policy and managing the development of
road and bridge complex and transport infrastructure of St. Petersburg, including roads, tunnels,
elevated road, bridges and other road facilities, hydraulic facilities, airfields, airports and other
aviation infrastructure and capital development facilities.
 Committee on Transport and Transit Policy, Government of St. Petersburg
Committee on Transport and Transit Policy is a governmental agency which supervises the
development of transport complex in St. Petersburg. It aims to increase freight traffic and
passenger traffic within the St. Petersburg transport complex, maximize the city role as an
international transport and transit center, increase volume of transport services in export-import
operations and improve environment for state and private investments directed towards
transport infrastructure development.


 Coordination council on the development of transport system of St.-Petersburg and
Leningrad region under the direction of the Minister of transport of the Russian Federation
The Coordination council on the development of transport system of St.-Petersburg and
Leningrad region is an important mechanism established with the view of facilitating
coordinated development of transport infrastructure of St. Petersburg and Leningrad region and
abolishing infrastructural restrictions in adjacent territories of the specified subjects of the
Russian Federation.
 External Transport Agency
St. Petersburg State Institution External Transport Agency is a subdivision of the Committee on
Transport and Transit Policy tasked with the development and implementation for cargo traffic
management measures aimed at improvement of road safety and road capacity, organization of
public transportation services by water and air transport, detention of vehicles subject to state
registration, material and technical support as well as other measures aimed at reducing adverse
environmental consequences of water transport.
 Marine Board under the Government of St. Petersburg
Marine Board under the Government of St. Petersburg was established 2004 with the aim of
providing concerted actions by the federal executive bodies, executive bodies of the
Government of St. Petersburg, companies and organizations in the field of maritime activities.
 Transport Board under the Government of St. Petersburg
Established in 2006, the Board is an advisory body under the Government of St. Petersburg
which is tasked with providing proposals and recommendations for the Governor of St.
Petersburg and the Government of St. Petersburg on the issues related to state policy in
transport and logistics sphere.
 Transportation Committee, Government of St. Petersburg
The Transportation Committee is an executive body of state authority tasked with
implementing the governmental policy of St. Petersburg in the sphere of urban and suburban
transport as well as intercity passenger motor transport, organization of road traffic and
coordination of activities of other executive bodies functioning in this area.


3. Business solutions
St. Petersburg is an ideal location for the following business needs:
 Headquarters
Favorable economic and geographical position, highly educated, efficient and motived
workforce as well as developed infrastructure make St. Petersburg an ideal location for Russian
headquarters of any international business.
 Research & Development center (R&D)
St. Petersburg is an acknowledged scientific and educational center as well as a Russian leader in
information technology, which possesses all necessary innovative infrastructure and extensive
government support to accommodate your R&D activities.
 Production center
One of Russia’s most important production centers provides you with developed logistics,
innovative and flexible business environment as well as highly efficient and motivated workforce
to accommodate your production facilities in the city.
 Distribution center
St. Petersburg’s westernmost mainland location in Russia and well-developed transport
infrastructure makes it an ideal location for your Russian and European distribution center.
 Test market
St. Petersburg is an ideal test market in the European part of Russia, which will allow you to
assess the demand for your new products and improve your technology and business models.


3.1. Headquarters
St. Petersburg is the second largest city in the Russian Federation. It is a major European cultural
center and an important Russian port on the Baltic Sea. A close proximity to Europe, developed
infrastructure and favorable investment climate make St. Petersburg an attractive location for
Russian headquarters of numerous international corporations, banks and other businesses.
Russian rating agency Expert ranked St. Petersburg among the most attractive regions of the
Russian Federation for trade and investment (1A) characterized by high investment potential given
minimum risks. St. Petersburg is also ranked as the most business-friendly city in the Russian
Federation (A+) characterized by favorable business climate and excellent conditions for pursuing
business in the city.23

3.1.1. Advantages
 Favorable economic and geographical position
St. Petersburg is the world’s northernmost city with over one million population. It is the largest
westernmost city of the Russian Federation conveniently located along the shores of the Neva
Bay of the Gulf of Finland. A complex system of river ports is interconnected with the system of
seaports, thus making St. Petersburg the major link between the Baltic Sea and the rest of
Russia through the Volga-Baltic Waterway. St. Petersburg is a major trade gateway as well as a
financial and industrial center of the Russian Federation specialized in power plant engineering,
machine tool technology, shipbuilding and instrument engineering. The city boasts a highly
developed iron steel and nonferrous metal industry, chemical industry as well as consumer
goods, food and printing industries.
 Highly educated, efficient and motived workforce
Flexible and highly educated labor market provides excellent conditions for establishing your
headquarters in St. Petersburg. St. Petersburg is the fourth most populated city in Europe with
more than 40% of residents having higher education degrees. Destined by the European
location and close proximity to the European markets, residents of the city possess foreign
language skills which makes them an ideal workforce for any headquarter located in the city.
 Developed infrastructure
St. Petersburg has a well-developed infrastructure which connects European part of Russia with
the Nordic and Baltic regions, thus conveniently suiting the business needs of your headquarter.
Moreover, the ongoing development of a major strategic investment transportation project will
determine further development of the city as a major world transport hub. The Western High-
Speed Diameter (WHSD) envisages construction of a motorway which will link passenger and
freight transport along the busiest traffic lines and St. Petersburg transport hub, including the
Large Port, to the national road network. By 2013 the totally new Pulkovo Airport will provide
fast and efficient connections to major destinations around the world.

23
Investment rating of Russian regions 2010-2011, Expert RA Rating Agency


3.1.2. Cases
The following national and international companies have already registered, located or announced
their plans to relocate headquarters to St. Petersburg:
Gazprom Neft
One of the largest oil producing and refining companies in Russia, which is
an oil arm of Gazprom, has a fully operational head office in St.
Petersburg since December 2011.

Rostelecom
Russia’s national telecommunications operator with the largest domestic
backbone network has its de jure headquarters in St. Petersburg.

Russian Standard
One of the leading banking and alcohol beverage groups which holds the
stock of Russian Standard Company, a producer and distributor of Russian
Standard Vodka, as well as Russian Standard Bank, announced its plans to
register to St. Petersburg in 2007.

Sovcomflot
Russian state-owned maritime shipping company specialized in
petroleum and LNG shipping relocated its headquarters to St. Petersburg
in 2006.

Transaero
The first private company and one of the largest airline companies in
Russia operating since 1991 registered to St. Petersburg in 2006.

Transneft
Russian state-owned company which transports about 93% of all oil
produced in Russia and owns the largest oil pipeline system in the world,
announced its plans to register to St. Petersburg in 2005.

VTB Bank
VTB Bank is one of the largest banks in Russia, a backbone financial
institution with over 85% of the lender’s securities held by the state. VTB
Bank moved its headquartered to St. Petersburg in 2005.

X5 Retail Group
The largest retail chain in Russia announced its plans to relocate to St.
Petersburg in 2007.


3.2. Research & Development
Due to its unique scientific and educational base, St. Petersburg plays a major role in the
development of nanotechnology industries in Russia, thus making it an ideal location for your R&D
activities. The majority of Russian R&D centers and facilities of international companies are based in
St. Petersburg. As a result of innovation activity in 2011 St. Petersburg was included in the list of the
most innovative regions of the Russian Federation.24

3.2.1. Advantages
 Largest scientific and educational center
St. Petersburg is a leading scientific and educational center of the Russian Federation which
possesses 10% of all intellectual potential of the country. The city is home to 252 scientific
institutes and organizations with more than 170 thousand scientific workers employed. 8% of all
Russian students and 15% of all Russian post graduate students pursue their studies in St.
Petersburg. St. Petersburg is home to more than 100 higher education institutions, including St.
Petersburg State Electrotechnical University (ETU) which along with the National Research
Nuclear University functions as the coordinator of educational activities within the National
Nanotechnology Network.
 Extensive government support
The Government of St. Petersburg applies systematic approach to the development of
innovation and technology. The city adopted a complex program aimed at developing and
supporting a modern competitive regional innovation system. The government views the
development of the following industrial clusters as a priority in sustaining innovative climate in
the city: automotive industry, pharma and biotechnology, shipbuilding, information and
communication technologies, radiology and power plant engineering. In addition, every year the
city hosts the St. Petersburg International Economic Forum (SPIEF), a flagship event which
serves a major platform for economic talks between Russian and CIS leaders as well as the
world’s business elite.
 Innovative special economic zone
A special economic zone of technical-implementation type has been functioning in St.
Petersburg since 2010. The zone focuses on rendering tax, customs and other type of
concessions to the companies engaged in the development of high-tech solutions. Simplified
customs regime facilitates the development of export/import activities, thus creating favorable
conditions for promoting foreign economic activities.25
 A leader in information technology
60% of all Russian IT companies are based in St. Petersburg, including 49 centers of leading
international and Russian ICT companies. Availability of developed IT infrastructure, including a
technopark, business incubator, modern research and scientific institutions, as well as highly
qualified IT-personnel facilitate the development of St. Petersburg as a Russian leader in
information technology.

24
Rating of innovation activity in the Russian Federation in 2011, St. Petersburg Policy Fund, Russian Presidential Academy
of National Economy and Public Administration, RBC daily
25
For more information, please see Section 4.8 Special economic zones (“SEZ”) in St. Petersburg


3.2.2. Cases
The following national and international companies have already located their R&D facilities in St.
Petersburg:
Alcatel-Lucent
main objective lies in the development and integration of innovative
telecommunications software systems and adaptation of existing Alcatel
products to the specific requirements of the regional market. The center
covers three fields of applications, including fixed, mobile and enterprise
networks, and employs 150 specialists trained at the specialist Alcatel

AstraZeneca
AstraZeneca is planning to establish a Predictive Science Center in St.
Petersburg within 2012. It is the company’s first Predictive Science Center
in Russia which will focus on the development of bioinformatics, data
analysis methods, software and systems to better predict the safety and
efficacy of potential new medicines. The center will employ around 30
specialists who will work in close collaboration with local companies and
organizations as part of a related agreement with the St. Petersburg
government.

Corning
Corning scientific center was founded in 1996 in St. Petersburg and is
specializing on mathematic and computer modelling of materials,
products and technological processes.

EMC
Opened in 2007, EMC R&D center in St. Petersburg is an important part of
the global EMC R&D investment program. The center focuses on
rendering support and continuous development of a wide range of world’s
leading software products. St. Petersburg’s center currently employs
more than 170 program engineers specialized in data management and
data storage systems.

Google
Google opened its second R&D center in Russia in 2006. Today, Russia is
only the second country outside the US in which Google has two R&D
centers, including Moscow and St. Petersburg. St. Petersburg division
focuses on the development of security software and its adaptation to the
needs of Russian users. It employs around 10 software engineers engaged
in the development of Chrome Developer Tools as well as improvement
of V8 virtual machine.


HP Labs
HP Labs Russia is the newest member of the international HP Labs
community, and the third new research lab created by the company in the
last five years. Opened in St. Petersburg in 2007, HP Labs Russia focus on
information management and development of new technologies linked to
the explosion of information access brought about by the World Wide
Web. The only Russian HP research lab delivers breakthrough
technologies and technology advancements that provide a competitive
advantage for HP and create business opportunities that go beyond HP's
current strategies.

Intel
Opened in St. Petersburg in 2004, Intel R&D center currently employs
more than 100 specialists. The center focuses on conducting research and
development of innovative software solutions for Internet-related
technologies, including Dynamic Runtime Layer (DRL), communication
technologies that enhance wireless communication, grid computing to
optimize programming environment. St. Petersburg center works in close
collaboration with the city universities with the aim of creating a solid
academic foundation for information.

LG MC Russia R&D Lab
LG MC Russia R&D Lab (LGERP), opened in St. Petersburg in 1997, is a
central LG division in CIS. The Lab plays a key role in the development of
innovative high tech solutions for LG Electronics. LG MC Russia R&D Lab
focuses on three major directions, including mobile communications,
digital television and household appliances.

Microsoft
In June 17, 2011 the Government of St. Petersburg and Microsoft signed
the cooperation agreement stipulating the development of education and
training system for IT specialists and introduction of modern technologies
into the public management system. Microsoft has already been working
and launching a number of educational programs in St. Petersburg. The
new agreement involves the establishment of Microsoft Information
Center within Ingria Technopark located in St. Petersburg as well as the
company’s participation in the development of St. Petersburg IT cluster.

Sitronics
Sitroninics opened its 5th international R&D center in St. Petersburg in
June 2011. Investment into the R&D center operating in
telecommunications sector constituted 177,000 dollars. The center which
is to employ 120 specialists will specialize in the development and testing
of convergent billing decisions, including highly-productive rating
systems for tariffs in real-time mode. In the future the center plans to
carry out research in the field of self-service systems, including web-
portals, terminals, pad-computers and communicator applications, CRM-
decisions.


3.3. Production сenter
Today, St. Petersburg is Russia’s second most important production center, specializing in the
production of complex machinery and equipment. Leading industries in this sector include
shipbuilding, instrument manufacture as well as production of electrical generators and turbines,
machine tools and machines for printing, textile, paper, food, automotive and leather industries.
During the recent years St. Petersburg turned into the Russia’s automobile manufacturing center,
which already hosts the production facilities of the world’s largest automakers and automobile parts
manufacturers, including Hyundai Motor Company, Toyota Motor Corporation, General Motors
Company, Nissan Motor Company and Scania.

3.3.1. Advantages
 Highly qualified and motivated workforce
St. Petersburg is a major scientific and educational center of the Russian Federation, which
possesses 10% of all intellectual potential of the country. The city is home to a number of
leading technical universities, including St. Petersburg State Electrotechnical University (ETU)
which along with the National Research Nuclear University functions as the coordinator of
educational activities within the National Nanotechnology Network. St. Petersburg boasts a
diverse pool of technical specialists given the city’s reputation as a Russian IT center.
 Innovative and flexible business environment
The city’s innovative business environment provides production companies with access to a
diverse pool of talented specialists who can help you innovate and improve your production
processes. The fact that 20% of all Russia’s advanced technologies are created in St. Petersburg
indicates a high degree of production process development and automatization, which
significantly enhances the value of your production processes as well as end product. Moreover,
the flexibility of existing labor market provides an ideal environment for flexible production,
which can be easily scaled up and down.
 Acknowledged R&D center and test market
St. Petersburg is one of the most innovative regions in Russia and an acknowledged R&D center
and test market on the territory of the Russian Federation. Excellent framework conditions,
open and fast-adopting market as well as high purchasing power of the population will help you
assess the demand and improve your new products as well as research and development efforts,
technology implementations and business models.
 Developed logistics
Due to the ideal geographical location and scarcity of Russian ports on the Baltic Sea, St.
Petersburg is Russia’s foremost logistics hub. The city’s transport infrastructure with highly
developed motor transport network, railway, air, river and sea transport, including Russia’s main
port of foreign trade and sea gate to Europe, might serve as a key asset in your decision to
locate your production center in the city. In addition, the city has a number of modern
multifunctional logistics complexes and parks (Pulkovo, Kolpino, Yanino) suitably located to
address storing, processing and customs clearance needs of your business.


3.3.2. Cases
The following international and leading Russian companies have already located their production
facilities in St. Petersburg:
Bakery
Fazer Group
Fazer Group started operating on the food catering and services market in
Russia in 2006, and has invested 204.78 million dollars in its operations in
Russia during the last ten years.

Beverage production
Carlsberg Group
Baltic Beverages Holding, a leader at the Russian beer market which
manages Baltika, became part of the Carlsberg Group in 2008. Carlsberg
currently owns 89.01% of Baltika stock. Today, Baltika Brewery, founded
in 1990, is the largest brewery in Eastern Europe and the second-largest
brewery in Europe after Heineken Brewery.

Coca-Cola Company
Coca-Cola opened its plant in St. Petersburg in 1995. The facility produces
Coca-Cola products for more than 13 million customers in St. Petersburg
and Northwestern Russia. It employs more than 1,000 people, while
creating up to 200 additional seasonal workplaces during the peak
seasons.

Heineken
Heineken has been operating in Russia since 2002 when it acquired the
Bravo plant in St. Petersburg. St. Petersburg’s Heineken brewery also
produces and distributes Budweiser beer, having signed a licensing
agreement with Bud’s brand owner Anheuser-Busch.

Pepsi Bottling Group, Inc. (PBG)
PepsiCo drinks are produced by Pepsi Bottling Group, Inc. (PBG) at its four
plants in Russia. One of the top global FMCG companies in Russia opened
its St. Petersburg’s plant in 1992. PBG produces and distributes all
PepsiCo products, including carbonated soft drinks, water, snacks, juices,
teas, and sports and energy drinks.

Russian Standard Company
A leading Russian premium vodka producer opened its distillery in St.
Petersburg in 2006. Total investments into the facility amounted to 60
million dollars. The distillery produces 3.6 million dekaliters of vodka
annually. A 30,000 square meter facility handles the production of the
company's entire vodka portfolio, including Russian Standard Original,
Russian Standard Platinum and Imperia.


Candy
Chupa Chups S.A.
The Spanish candy maker launched its St. Petersburg’s production facility
in 1991. Neva Chupa Chups produces Chupa Chups caramel lollipop
candies of various flavors and colors not only for the Russian market but
also for export to CIS countries. St. Petersburg’s factory has the capacity
of making up to 200 million 200-gram rolls per year.
Car assembly
General Motors
General Motors opened its automobile factory in St. Petersburg in 2008.
Global car making giant became the second foreign carmaker to open a
factory in St. Petersburg. Investment in the project totalled 300 million
dollars with up to 1,700 jobs created, followed by the opening of a second
production line in 2010.

Hyundai Motor Company
Hyundai officially launched its full-cycle manufacturing plant in St
Petersburg in 2010. St. Petersburg’s plant is Hyundai’s sixth production
facility outside its home market of South Korea. The facility is expected to
roll out 105,000 vehicles in its first year of operation with the rise to
150,000 in 2012. Hyundai plans to create 5,300 jobs by 2012 in St.
Petersburg together with eleven parts suppliers from Korea.

Nissan
Nissan Manufacturing Rus was established in St. Petersburg in 2009. The
plant currently represents approximately a 150 million euro investment
with the total volume of 28,500 units since the start of production. The
plant currently employs 2,000 employees.

Scania
Scania opened its industrial facility for assembling and bodyworking
trucks for the Russian market in St. Petersburg in 2010. This facility is
Scania’s sixth delivery center. From this new delivery center, Scania
supplies complete trucks that are adapted to the requirements and
operating conditions that apply in Russia. St. Petersburg’s facility which
employs about 70 employees has a technical assembly capacity of about
5,000 truck chassis and 1,500 superstructures per year.

Toyota Motor Corporation
Toyota became the first Japanese carmaker to start production in Russia
with its car assembly plant opened in St. Petersburg in 2007. The plant,
with an annual output capacity of about 50,000 vehicles, initially built
20,000 Camry sedans per year while gradually expanding its production
since then.


Chewing gum
Wm. Wrigley Jr. Company
The world’s largest maker of chewing gum has been operating a 70 million
dollar plant in St. Petersburg since 1999. Wrigley is planning to expand its
St. Petersburg plant with an investment of 100 million dollars. The
company also announced that it might build a second factory in Russia
and acquire local producers to tap its growth at the Russian market.

Components suppliers
Magna International
A global automotive supplier currently operates five production sites in
Russia, three of which are located in the St. Petersburg region since 2010.
The Cosym stamping and assembly plant in Shushary has 170 employees
and produces body, chassis and energy-management systems for OEM
customers such as Hyundai, General Motors, Nissan and Volkswagen. The
Cosym assembly and sequencing plant in Kamenka is a Hyundai-
dedicated production site that employs 50 employees. Magna announced
the opening of a Magna Exteriors and Interiors facility in Kolpino, which
has approximately 25 employees producing exterior and interior
components for OEM customers, including Ford and Nissan.
Electronics
HP – Foxconn
Hewlett-Packard and component maker Foxconn opened a pilot assembly
line to make computers in St. Petersburg in 2010. A pilot production line
on a rented 10,000-square-meter facility in Shushary produces HP, HP Pro
and Compaq models. It currently employs 100 workers, although the staff
is expected to grow as production increases. A 32,000-square-meter main
facility is expected to cost 50 million dollars and have an annual capacity
of 500,000 personal computers.
Elevators
Otis Elevator Company
The world's largest manufacturer of vertical transportation systems has
three manufacturing plants in Russia, including the one operating in St.
Petersburg since 1994. Otis St. Petersburg was established in 1991 to
meet the elevator need for new construction as well as for the
replacement market. With 470 employees, Otis St. Petersburg is the only
company that manufactures European standard elevators in Russia. Since
the opening of the production line, St. Petersburg’s plant has shipped
more than 3,000 elevator units to CIS countries and other Russian regions.
FMCG
P&G
P&G opened its Gillette razor manufacturing plant in St. Petersburg in
2000 with an investment of 40 million dollars and 500 people employed. It
has soon become one of the major razor manufacturing plants in the
world with a capacity of 860 million blades a year. In 2004 the facility was
expanded with an investment of 502 million roubles and several Gillette
factories’ productions moved to St. Petersburg.


Unilever
Unilever has been operating in Russia since 1992 and has 7 manufacturing
and production sites, including the one located in St. Petersburg. The
plant was opened in 1994 and currently focuses on the production of
home care, personal care and tea products. In 2009, the company
acquired the sauces business of Baltimor Holding, a leading ketchup
business in Russia. The acquisition included ketchup, mayonnaise and
tomato paste business, accounting for annual turnover of around 70
million euros, as well as a production facility at Kolpino, near St.
Petersburg.
Home Appliances
Bosch and Siemens
The largest manufacturer of home appliances in Europe and one of the
leading home appliances companies in the world opened its
manufacturing plant in St. Petersburg in 2007. St. Petersburg’s plant
manufactures Bosch and Siemens cooling appliances. In 2007 the
company laid the foundations for a washing machine factory with the
capacity of 300,000 machines per year, which is due to be built by 2012. In
2010 the company launched a new line of washing machines and a second
line of refrigerators at its existing plant in Strelna. It has also announced
about the expansion of its logistics center. The Strelna factory currently
employs 420 people and is to create 100 additional workplaces with the
expansion of the production line.
IT
NEC Corporation
One of the world's leading providers of Internet, broadband network and
enterprise business solutions established NEC Neva Communications
System, a public switching system manufacturing facility, in 1997. It was
the first high-tech alliance between a Japanese and Russian company.
NEC delivers tailored solutions in the key fields of computer, networking
and electron devices, by integrating its technical strengths in IT and
networks, and by providing advanced semiconductor solutions through
NEC Electronics Corporation.
LED manufacturing
OptoGan Group
A vertically integrated European LED & luminaire manufacturer acquired
the Russian subsidiary of Elcoteq together with its industrial facility and
infrastructure in St. Petersburg in 2010. Elcoteq started the production of
electronic devices and telecom equipment in St. Petersburg in 2006.
OptoGaN has already invested over 9.5 million euros in new production
lines. The first line with the capacity of 30 million LEDs per month was
launched in fall 2010.


Packaging
Amcor Tobacco Packaging
Originally built by Alcan Packaging in the Krasnoselskaya industrial zone
of St. Petersburg in 2005, a tobacco packaging plant started operating
under Amcor Tobacco Packaging brand after Amcor acquired Alcan
Packaging from Rio Tinto in 2010. With the original investment of 40
million euros, the plant’s current capacity constitutes 3 billion units per
year.

Pharmaceuticals
Novartis
In 2010 Novartis started a construction of a new greenfield
pharmaceutical manufacturing plant in St. Petersburg, as part of 500
million dollar five-year investment into the Russian healthcare
infrastructure. The facility will be constructed in the Novoorlovskaya
Special Economic Zone (SEZ) located to the north of the St. Petersburg
city center. Once completed and approved for commercial production,
which is expected in 2014, the facility will produce approximately 1.5
billion units of both innovative pharmaceuticals and generics per year.
Pipe products
Severstal
One of the Russia’s largest steel and mining industry companies opened
its Izhora Pipe Mill at Kolpino outside St. Petersburg in 2006. The plant
with the capacity of 600 thousand tons per year specializes in
manufacture of large diameter pipes from strip made by Cherepovets
Steel Mill. The plant produces unique products for Russian domestic pipe
industry which allow to expedite the process of pipeline construction as
well as lower the costs and enhance reliability.

Telecommunication
Alcatel-Lucent
main objective lies in the development and integration of innovative
telecommunications software systems, and adaptation of existing Alcatel
products to the specific requirements of the regional market. The center
covers three fields of applications, including fixed, mobile and enterprise
networks, and employs 150 specialists trained at the specialist Alcatel
Tobacco
British American Tobacco (BAT)
BAT’s plant in St. Petersburg operates 13 production lines producing five
premium brands. It provides about 25% of BAT’s production volume in
Russia. The company completed the construction of new production
facilities at its plant in St. Petersburg in 2007 with the total investment of
110 million dollars, thus increasing St. Petersburg plant’s production
capacity to 40 billion cigarettes a year.


Japan Tobacco International (JTI)
JTI's cigarette making facility in St Petersburg is the company’s biggest
worldwide plant with the total of 400 million dollars invested. The brand
portfolio includes over 30 brand names, both international and local. It
supplies the firm's Russian and Ukrainian plants with main tobacco
components used for cigarette production.

Philip Morris International (PMI)
Philip Morris Inc. officially opened its third Russian cigarette factory in St.
Petersburg in 2000. The total investment of 335 million dollars made this
project the company’s largest cigarette plant in Europe. The plant, which
employs 750 workers and operates 15 conveyer belts, produces the
Marlboro, Parliament, Virginia Slims, L&M, Chesterfield and Bond Street
brands. In 2002 the company began construction of a new processing line
and a warehouse with the total investment estimated at 240 million
dollars.


3.4. Distribution сenter
St. Petersburg’s westernmost mainland location in Russia as well as well-developed infrastructure
and logistics makes it an ideal location for your Russian and European distribution center. St.
Petersburg is an administrative center of the fourth largest federal district in Russia. With a
distribution center located in St. Petersburg your business will be able to directly cover 1.7 million
square kilometers of the northern part of European Russia and reach more than 13 million
consumers within short-term delivery.

3.4.1. Advantages
Existing transport infrastructure supported by extensive rail and road network, one of the busiest
Russian airports, developed port infrastructure and efficient inland water transportation system
make St. Petersburg an ideal location for your Russian and European distribution center.
 By air
St. Petersburg is served by the Pulkovo International Airport, which is the fourth busiest airport
in Russia. The airport handled 9,610,767 passengers in 2011 which represents a 14% increase in
comparison with 2010. Pulkovo Cargo Terminal is one of the five leading cargo terminals in
Russia and the largest cargo terminal in the Northwest Russia. It has the annual cargo handling
capacity of 30 thousand tons. Pulkovo has been undergoing a major 1 billion euro modernization
since 2007. The first phase of reconstruction, which includes the construction of a new
passenger terminal and other airport infrastructure improvements, is scheduled for completion
in 2013.26
 By land
St. Petersburg has a well-developed rail and road network with major highways and national
roads, connecting northwest Russia with the rest of Russia as well as Nordic and Baltic countries.
St. Petersburg and the surrounding Leningrad region have the highest density of roads with a
road network covering approximately 1,300 km. Railroad network which is one of the most
efficient and dynamic forms of transport in the region is also connected to the Large Port of St.
Petersburg and other port complexes in the region.
 By river
Inland water transportation is one of the largest and most unique logistical competitive
advantages of St. Petersburg and northwest Russia. St. Petersburg and the Neva River serve a
major terminal point for the Volga-Baltic Waterway, which is a part of the Unified Deep Water
System (UDWS) of European Russia, providing inland water connection from the Baltic Sea to
the Caspian Sea, the Black Sea and onwards to the world oceans.
 By sea
Sea transport is one of the most important transport modes in St. Petersburg. Today’s
northwest Russian port infrastructure is concentrated on the eastern end of the Gulf of Finland,
mainly in St. Petersburg. The Large Port of St. Petersburg connected to the Baltic Sea through a
channel is Russia’s main port of foreign trade and the country’s main sea gate to Europe.

26
Pulkovo St. Petersburg Airport official website


3.4.2. Cases
The following international and leading Russian companies have already located their distribution
centers in St. Petersburg:
LaserPLY
American company’s product line includes flat dieboards, rotary
dieboards and platforms. The company’s platforms are used in birch
core/maple face and back flat dieboards, flat dieboards with a wood and
polymer veneer combination, as well as core material for rotary dieboard
production. Today, the company operates two international distribution
centers, including the one strategically located in St. Petersburg.

Lenta
One of the Russia’s largest hypermarket chains operating on the market
since 1999 opened its 20 thousand square meters distribution center in St.
Petersburg in 2007. Total investments into the project constituted 20
million dollars. Distribution warehouse utilizes the latest processing
technologies, thus allowing to reduce costs in shelf storage, cross-docking
as well as packaging arrangement and dispatching.

Onninen
The Finnish company provides comprehensive materials’ services,
including complex electrical, lighting, heating and plumbing as well as
other engineering products and services for contractors, industry, public
organizations and technical retailers in nine countries. Onninen officially
opened its Russian headquarters and distribution center in St. Petersburg
in 2007. The company’s distribution center serves all northwest Russia and
has the capacity of 9,000 pallets, including 18,000 products from 200
suppliers.

Static Control Components
The world's largest manufacturer and global distributor of parts and
supplies supporting the laser toner remanufacturing industry is
headquartered in Sanford, USA. Static Control operates 20 separate
manufacturing plants and operates through the network of global
distribution partners. The company’s distribution partner in Russia
operates several distribution centers, including the one strategically
located in St. Petersburg to ensure fast product delivery all across Russia.


3.5. Test market
St. Petersburg’s market is a perfect test market for new products and technologies. It is an ideal test
market in the European part of Russia for high-tech companies longing to assess the demand and
improve their new products as well as research and development (R&D) efforts, technology
implementations and business models.

3.5.1. Advantages
Excellent framework conditions, open and fast adopting market as well as high purchasing power
make St. Petersburg an ideal test market located in the European part of Russia. It will allow you to
assess the demand for your new products and improve your technology and business models.
 Excellent framework conditions
St. Petersburg is conveniently located in the northern part of European Russia, which can be
reached from the capital city of Moscow within an hour by plane. It is the second largest city in
Russia as well a major European cultural center. Destined by its geopolitical location as well as
historical development, St. Petersburg is often described as the most western city of the Russian
Federation. It is characterized by homogeneous population, which is highly receptive to new
ideas and products.
 Open and fast-adopting market
St. Petersburg has one of the most advanced information societies in Russia with the most
innovative, motivated and critical consumers. Given St. Petersburg’s open, receptive and fast-
adopting market, the decision to test your business models, technologies or products in St.
Petersburg will allow you to effectively improve and adjust your solutions before entering all-
Russian or European markets.
 High purchasing power
Given the existing variations in population’s income and buying power across different regions
of the Russian Federation, the most well-to-do population is concentrated in Moscow, St.
Petersburg and large regional centers. St. Petersburg’s population is characterized by high
income and purchasing power, thus facilitating the growth of demand for high quality and
innovative products, technologies and solutions.


3.5.2. Cases
The following international companies chose St. Petersburg as a test market for their products as
well as technology and information sharing:
AstraZeneca
AstraZeneca is planning to establish a Predictive Science Center in St.
Petersburg within 2012. It is the company’s first Predictive Science Center
in Russia, which will focus on the development of bioinformatics, data
analysis methods, software and systems to better predict the safety and
efficacy of potential new medicines. The center will employ around 30
specialists who will work in close collaboration with local companies and
organizations as part of a related agreement with the St. Petersburg
government.

Google
Google opened its second R&D center in Russian in 2006. Today, Russia is
only the second country outside the US in which Google has two R&D
centers, including Moscow and St. Petersburg. St. Petersburg division
focuses on the development of security software and its adaptation to the
needs of Russian users. It employs around 10 software engineers engaged
in the development of Chrome Developer Tools as well as improvement
of V8 virtual machine.

Microsoft
On June 17, 2011 the Government of St. Petersburg and Microsoft signed
the cooperation agreement stipulating the development of education and
training system for IT specialists and introduction of modern technologies
into the public management system. Microsoft has already been working
and launching a number of educational programs in St. Petersburg. The
new agreement involves the establishment of Microsoft Information
Center within Ingria Technopark located in St. Petersburg as well as the
company’s participation in the development of St. Petersburg’s IT cluster.


4. Doing business
4.1. Establishing a legal presence
Information for the current chapter was developed and kindly provided
by DLA Piper
Establishing a legal presence in Russia and choosing the appropriate corporate form to register is
one of the most important stages before undertaking business activity in Russia. The corporate form
chosen will influence all activities, including financial and tax reporting, customs and currency
control. Therefore, any foreign investor should give careful consideration as to which type of
corporate form will best fit its investment goals, whilst at the same time meeting all the legal
requirements.
In Russia, a foreign investor may either establish a representative office or branch of a foreign legal
entity, or establish a Russian registered legal entity.

4.1.1. Establishing a representative office and/or a branch of a foreign legal
entity
A representative office is an officially recognized extension of a foreign legal entity, which
represents that foreign legal entity’s interests in Russia. According to the effective legislation of the
Russian Federation (hereinafter - RF), representative offices are officially not allowed to undertake
commercial activity under the Civil Code of the Russian Federation (hereinafter - Civil Code).
Instead, their main purpose is generally to promote commercial relations between the foreign legal
entity, which they represent, and Russian enterprises, and to gather information about the Russian
market. Given that a representative office does not, in theory, undertake commercial activity, it will
not be subject to profits tax, unless its activities give rise to a "permanent establishment" for tax
purposes (for example, if a foreign legal entity engages in regular commercial activity (such as
selling goods or providing services) through a representative office). The advantages of operating
through a representative office, compared to a Russian registered legal entity are as follows:

 it has fewer administrative, tax and accounting obligations;
 foreign employees may obtain personal accreditation, which confers some practical benefits;
 it is considered to be a non-resident for currency control purposes;
 and it is possible to benefit from a relevant double tax treaty (if applicable).
A branch is a subdivision of a foreign legal entity, which may undertake commercial activity and
fulfill all or part of the functions of its founding foreign legal entity. This may inter alia include the
employment of a sales force and conduct of sales activity.
The representative office or branch must have a manager or head of the office/branch, who acts on
the basis of a power of attorney that is granted by an officer of the founding foreign legal entity.
Since a representative office or branch does not have a separate legal identity, the founding foreign
legal entity will bear full liability for the actions and obligations of the representative office or
branch.


4.1.2. Establishing a Russian legal entity (subsidiary)
There is no special legal form of legal entity for foreign investment in Russia. Typically subsidiaries
of foreign companies are established in Russia either in the form of a Limited Liability Company
("LLC") or in the form of a Joint Stock Company ("JSC"). Joint stock companies may be either of a
closed type (i.e. Closed Joint Stock Companies) or of an open (public) type (i.e. Open Joint Stock
Companies). The latter (OJSC) are designated mainly for large number of shareholders and
generally are intended to be utilized for the public placement of shares.
LLCs and JSCs are able to engage in all types of commercial activities not prohibited by the laws of
the Russian Federation. Certain types of activities may be conducted only upon the receipt of a
special permission (license). LLCs and JSCs are liable for their obligations with all of the assets and
property belonging to them. Generally, the founders, participants or shareholders of LLCs or JSCs
are not liable for the obligations of the companies and bear the risk of losses related to company
activities only to the extent of the value of their contributions (share value). The founders,
participants or shareholders may however be held liable for the obligations of an LLC or JSC if they
had the right to give mandatory instructions to such companies, and caused the insolvency of, or
losses to, the latter.

All Russian legal entities are subject to state registration and are considered as created from the
date of the relevant entry in the Unified State Register of Legal Entities. The Federal Tax Service of
the Russian Federation has authority for the state registration of legal entities and for their
registration as tax payers in Russia. In St. Petersburg this is an Interdistrict Inspectorate of the
Federal Tax Services of the RF No. 15.

Generally, the submission of the following documents is necessary for registration purposes:
 a standard form application (the signature of the person signing the application has to be
notarized);
 the protocol of the founders' meeting or, if the LLC or JSC has only one founder, the resolution
of the sole founder on the establishment of the company
 the charter of the LLC or JSC;
 confirmation of the legal status of the founder(s) (e.g. an extract from the state register, trade
register and/or certificate of good standing); and
 confirmation of payment of the state registration fee.
All documents from a foreign legal entity must be notarized and apostilled/legalized in the country
of execution and any documents supplied in a language other than Russian must be accompanied by
a translation which has notarized certification.
In the process of preparation to the registration of a legal entity the founders shall decide upon:
 what will be the name of a new company;
 what will be the registered (legal) address of the company;
 determine the amount of charter capital and how the shares will be split between the founders;
 decide on the management structure of a new company;
 decide on the bank in which the temporary account for the payment of charter capital shall be
opened.
The following issues have to be taken into account when preparing for the registration of a legal
entity:
 Russian corporate law does not have national limits on who can be the general director of a
company or the member of the board of directors. That said, though, there are work permit and
visa requirements for a foreign national. This process takes a few months and cannot begin until


the company is already registered. In this context, if it is planned to have a foreign executive in
the role of general director, it is probably best to appoint a local employee as the initial general
director while the work permit and visa applications are processed for the permanent general
director. Alternatively, in case it is decided to have the local employee to take this role on a
permanent basis, there will be no need to deal with the work permit or visa at all.
 Despite the fact that this is not directly provided by the law, the board of directors cannot
consist of one person. Moreover, in order to prevent deadlocks the quantity of the board of
directors should be odd.
 Under the Russian law, the sole founder of a Russian legal entity cannot be a one-shareholder
company itself, i.e. the sole founder as such must consist of at least two shareholders. It is not
necessary that these shareholders should be independent. It may be the companies of the same
group.
Upon gathering and preparation of all the documents required for registration, the package of
documents shall be filed with the registration authorities. In practice, the process of state
registration usually takes about 5-10 business days.
The legal entity must also be registered with the Russian non-budgetary funds (Social Insurance,
Medical and Pension). Currently, registration with these funds is performed automatically: the
registration body sends the necessary details to the respective funds and, based on this information,
the funds allocate registration numbers and issue registration certificates. The registration
certificates thereafter shall be sent to the legal address of the company. However, in practice it is
advisable to visit the non-budgetary funds and obtain the certificates in person (generally it is done
by an accountant of a company, if any).

4.1.3. Limited Liability Companies
The establishment and operation of LLCs is governed by the Civil Code and the Federal Law On
Limited Liability Companies dated 8 February 1998 (as amended) ("LLC Law").
Key features of LLCs:
 May be established by one or more persons (the "participants"), but not more than 50.
 The charter capital is divided into "participation interests". Information about the participants
and their participation interests is recorded in a list of participants maintained by the LLC and in
the Unified State Register of Legal Entities.
 All transactions in connection with the transfer or pledge of participation interests in LLCs have
to be notarized.
 Participants have certain rights (e.g. to participate in the management, to share distributed
profits, to sell their interest, etc.) which are set out in the LLC Law and the company charter.
 Participants have certain obligations (e.g. to contribute to the charter capital, to maintain
confidentiality, etc.), which are set out in the LLC Law and the company charter.
 The minimum charter capital is RUB 10,000.
 At least 50 per cent of the charter capital must be paid in by the date of the LLC's registration
and the balance must be paid in full within the first year of its operation.
4.1.3.1. Management structure
The typical management structure of an LLC includes either three levels, as described below, or two
levels when no board of directors is created in the company:
 General Participants' Meeting - the highest body of an LLC.
 Board of Directors (optional) - matters delegated from the General Participants' Meeting.
 Executive Body - day-to-day management of the LLC.


The General Participants' Meeting has the right to amend the charter; define the basic goals and
directions of the LLC; to delegate to a commercial organization or to an individual entrepreneur the
authority reserved to the LLC's Executive Body and approve the conditions of any agreements with
such organizations or persons (this is commonly referred to as appointing an "external"
management company or manager); assign supplemental rights and duties to the participants in the
LLC; approve the annual financial report and distribution of profits; alter the amount of the charter
capital; approve regulations governing the internal activities of the LLC; and reorganize or liquidate
the LLC, appoint a liquidation commission and approve the liquidation balance sheet of the LLC.
An LLC charter may provide for the establishment of a Board of Directors. The competence of the
Board of Directors should be set out in the charter and can include such issues as the determination
of the basic goals and directions of the LLC, the appointment of the executive bodies and early
termination of their powers, decisions on major and interested party transactions, the establishment
of representative offices and branches, the approval of internal regulations and other issues.
The Executive Body is responsible for all matters which do not fall within the competence of the
General Participants' Meeting (or the Board of Directors if there is one). Generally this comprises the
day-to-day management of the LLC. Usually, the day-to-day management of the LLC is carried out
by a general director, but sometimes this may be in conjunction with a collective executive
management board (in Russian "правление", or "pravlenye"), in which case the general director
becomes the chairman of the management board. Alternatively day-to-day management may be
delegated to an external commercial organization (management company) or to an external
individual manager, in both cases on a contractual basis.
An LLC charter may also provide for the establishment of an Auditing Commission (or Internal
Auditor). The creation of the Auditing Commission is mandatory if the LLC has more than 15
(fifteen) participants.
4.1.3.2. Rights of participants
The participants in an LLC have the right, amongst other rights granted by the LLC Law and any
additional rights set forth in the company charter, to:
 participate in the management of the LLC in accordance with the procedures established by the
LLC Law and the company charter;
 obtain information concerning the activities of the LLC and have access to its accounting and
other documents in accordance with the procedures established by the company charter;
 participate in the distribution of profits;
 sell or transfer their participation interests in the LLC charter capital, or a part thereof, in
accordance with the procedure established by the LLC Law and the company charter;
 receive a portion of the assets left after settlement with creditors in the event of the liquidation
of the company;
 demand the expulsion of any participant who grossly violates his obligations as a participant, or
whose actions (or lack thereof) substantially hinder the LLC or make its activity impossible27;
 withdraw from the LLC by selling its participation interest back to the company (if this right is
expressly stipulated in the charter), or to require the company to buy-out their participation
interests where such right is set out in the LLC Law; and

27
Available to participants who either individually or collectively hold at least a 10 per cent interest in the LLC's charter
capital.


 enter into binding shareholders' agreements in which they are able to agree on the exercise of
voting rights, the sales of participatory interests and other matters that may be regulated in
such agreements.
4.1.3.3. Obligations of participants
The LLC participants also have various obligations, which include, amongst other obligations
contained within the LLC Law and any additional rights set forth in the company charter, the
following:
 to make contributions to the charter capital as specified in the LLC Law and the foundation
agreement (or in the decision on the establishment of the LLC, if there is only one participant in
the LLC) and within the time period specified in the LLC Law; and
 to keep confidential all information concerning the activities of the LLC.
4.1.3.4. Charter capital
The charter capital of an LLC consists of the nominal value of the participation interests of the
participants and should be denominated in Russian Roubles. The initial charter capital may not be
less than RUB 10,000.
At least 50 per cent of the charter capital must be paid by the date of the LLC's registration and the
balance must be paid in full within the first year of its operation. Contributions may be in cash or in
kind and certain customs benefits may be available for in-kind contributions made by foreign
investors. The charter capital may be increased only after the original charter capital has been paid
in full.
4.1.3.5. Participation interests
A participation interest in an LLC is not considered a security under current Russian legislation and
therefore, unlike shares in a JSC, no registration with the securities regulator is required.
Transactions in connection with the transfer or pledge of participation interest in LLCs have to be
notarized. The Federal Tax Service of the Russian Federation has to be informed of any transfer of
the participation interest. Information on the participants and their participation interests is
recorded in the list of participants maintained by the LLC and in the Unified State Register of Legal
Entities.

Participation interests may be sold to third parties, but are subject to the right of pre-emption of the
existing participants on the same terms upon which the participation interests are offered to third
parties.

4.1.4. Joint Stock Companies
The establishment and operation of a JSC is governed by the Civil Code, the Federal Law 'On Joint
Stock Companies' dated 26 December 1995 (as amended) ("JSC Law") and the Federal Law 'On the
Securities Market' dated 22 April 1996 (as amended).

Key features of JSCs:
 Issues shares to raise capital for its activities.
 The founders of the JSC must pay in 50 per cent of the JSC charter capital within three months
following its state registration, with the balance payable in full within the first year.
4.1.4.1. Management structure
 General Shareholders' Meeting - almost exclusive competence for all matters set out in the JSC
Law.


 Board of Directors (optional for CJSCs and OJSCs with less than 50 shareholders, but
compulsory for OJSCs with 50 or more shareholders) - the authority defined in the charter.
 Executive Body (general director, sometimes in conjunction with a collective executive
management board, - "правление" or "pravlenye") - for day-to-day management.
 Internal Auditing Commission or an Internal Auditor - oversees the JSC's financial and economic
activities, members of which must be elected by the shareholders.
The General Shareholders' Meeting is the highest governing body of the JSC, whose authority is
outlined in the JSC Law and cannot be substantially altered. Each common share carries one vote at
the General Shareholders' Meeting (except for cases of cumulative voting where provided for in the
JSC Law). Most decisions are made by a simple majority vote, although for certain key decisions a
super-majority of 75 per cent is required.
The daily management of the JSC is the responsibility of the Executive Body. The most standard
Executive Body is a general director, however sometimes this will be in conjunction with a collective
executive management board (in Russian "правление", or "pravlenye"), in which case the general
director becomes the chairman of the management board. Alternatively the General Shareholders'
Meeting may (by majority vote) choose to delegate the powers of the Executive Body to an external
commercial organization (management company) or to an external individual manager, in both
cases on a contractual basis (however, this decision may be taken only pursuant to a proposal from
the Board of Directors if the company has a Board of Directors).
4.1.4.2. Two types of JSC
OJSCs (open joint stock companies):
 May have an unlimited number of shareholders.
 Shareholders are freely entitled to dispose of their shares.
 Shareholders have pre-emptive rights to acquire newly issued shares that are to be privately
placed in proportion to their existing shareholding.
 Shareholders have pre-emptive rights to acquire newly issued shares that are to be publicly
placed in proportion to their existing shareholding.
 Shareholders have no pre-emptive rights to acquire shares offered by other shareholders for
sale to third parties.
 The initial charter capital at the date of this publication is RUB 100,000.
CJSCs (closed joint stock companies):
 The number of shareholders may not exceed 50 (a CJSC must be transformed into an OJSC
within one year should the number exceed 50).
 Shareholders have pre-emptive rights to acquire shares offered for sale by other shareholders to
third parties.
 Shareholders have pre-emptive rights to acquire newly issued shares that are to be privately
placed, in proportion to their existing shareholding.
 The initial charter capital at the date of this publication is RUB 10,000.
4.1.4.3. Incorporation of a JSC
Individuals or legal entities may be founders of a JSC. A JSC's foundation document, the charter,
must include the following information:
 the name, legal address and type of JSC (i.e. OJSC or CJSC);
 the amount of the charter capital;
 the quantity, nominal value, categories (common or preferred) of shares and classes of preferred
shares issued and distributed by the JSC;
 the rights of the holders of shares of each category;


 the structure and competence of the governing bodies of the JSC and their decision making
procedures;
 the procedure for preparing and holding the General Shareholders' Meeting, including a list of
issues requiring either unanimous consent or a resolution adopted by a qualified majority of
votes;
 information on branches and representative offices;
 information on the existence of any special right of participation in the management of the
company (a "golden share") vested in the Russian Federation, a constituent entity of the Russian
Federation or a municipality of the Russian Federation; and
 other provisions required by law.
The charter may include other provisions, provided that they comply with the applicable Russian
legislation.
The rules on the incorporation of JSCs are generally similar to those described above in connection
to LLCs. The only additional requirement in respect of JSCs is the registration of the issuance of the
JSC shares with the Federal Service for the Financial Markets of the Russian Federation, which is
obligatory upon the establishment of the JSC.

4.1.4.4. Shares and other types of securities
A JSC can issue securities in the form of shares, bonds and issuer's options. Generally, the issuance
of securities must be registered with the competent regulatory body, which is the Federal Service
for the Financial Markets of the Russian Federation. A JSC can issue common shares and/or several
classes of preferred shares, however the total value of the preferred shares must not exceed 25 per
cent of its charter capital.

A fractional share can come into existence when it is not possible to acquire the whole share during
the consolidation of shares, when a shareholder exercises its pre-emptive right or in the course of
acquiring additional shares. A fractional share grants its owner the same rights that are granted by
the whole share of the corresponding category or class, on a pro rata basis.

4.1.5. Choosing between LLC and JSC
Historically, the LLC has been the preferred form of legal entity for foreign investors looking for the
establishment of a wholly owned subsidiary in Russia. This is because the procedure for establishing,
operating and transferring participation interests in an LLC were simpler than for a JSC. However,
the 2009 amendments to the LLC Law have imposed greater administrative regulation of LLCs, for
example LLCs are now obliged to maintain and update a register of participants, and share purchase
agreements and pledge agreements connected with participation interests in LLCs must now be
notarized in Russia.

Both the shareholders of a JSC and the participants of an LLC can enter into binding shareholders'
agreements in which they are able to agree on the exercise of voting rights, sales of shares
(participatory interests) and other matters.

Other aspects of the LLC, which may be a benefit or a hindrance depending on the aims of the
foreign investor, are that:

 Participants (members) of an LLC who either individually or collectively hold at least a 10 per
cent interest in the LLC's charter capital may apply to a court seeking the expulsion of another
participant. To succeed the participant(s) seeking the expulsion must prove that the other


participant substantially hindered the company's operations or materially breached its
obligations;
 If this right is expressly stipulated in the charter, participants may withdraw from the LLC by
selling their participation interest back to the company; and
 The LLC Law sets forth a significant number of matters which require a unanimous voting
decision of all of the LLC participants. This could be a disadvantage for a joint venture partner
with a majority participation in the LLC.


4.2. Foreign investments
by BEITEN BURKHARDT

4.2.1. Legislative basis
The document regulating foreign investments in the Russian Federation is Federal Law No.160-FZ
dated July 9, 1999 “On Foreign Investments in the Russian Federation” (hereinafter the “Law on
Foreign Investments”). In accordance with this law, which determines and guarantees the
fundamental rights of foreign investors, there are other documents that are also both directly and
indirectly aimed at regulating investment-connected relations, such as, for instance, Federal Law
No.225-FZ dated December 30, 1995 “On Production Sharing Agreements”, and Federal Law No. 57-
FZ dated April 29, 2008 "On Procedure of Making Investments in Economic Entities of Strategic
Importance for National Defense and State Security".
Investors may be granted certain extra guarantees under bilateral international agreements
concluded by the Russian Federation. In particular, assistance agreements on the encouragement
and mutual protection of capital investments have been concluded with the governments of such
states as Switzerland, Norway, Italy, USA, Japan, and China. Besides, the Russian Federation is the
legal successor to the former USSR under similar agreements concluded with the governments of
Germany, France, Great Britain, Austria, and Finland.

4.2.2. Main provisions
Foreign investments in the Russian Federation may be carried out in any form not expressly
prohibited by legislation of the Russian Federation.
The legal structure provided for foreign investors in the Russian Federation is identical to the one
provided for Russian organizations. Any restrictions on rights of foreign investors may be imposed
only by federal laws and only to the extent necessary to protect the fundamentals of the
constitutional regime, morals, health, rights and lawful interests of other persons, and ensure
national defense and state security.
Any property belonging to foreign investors or commercial organizations, in which foreign investors
participate, may not be seized. Exceptions to this rule may only be established by a legislative
procedure and must provide for compensation for losses.
Upon payment of taxes and charges stipulated by the Russian Federation legislation, foreign
investors are entitled to freely use revenues and profits in the Russian Federation and to transfer the
same outside Russia.
Foreign investors may transfer their rights and obligations to another party on the basis of an
agreement. Additionally, foreign investors are indemnified against losses inflicted by unlawful
actions (or omissions) of state or local authorities or officials of such authorities.

4.2.3. Priority investment projects
When foreign investors make direct investments or implement priority investment projects they
may be granted certain concessions and additional guarantees.
Direct investments carried out by a foreign investor are construed as:
 a foreign investor’s acquisition of no less than 10% of the shares in the charter capital of an
already existing or newly established commercial organization in the Russian Federation in the


form of an economic partnership or a company in accordance with the Russian Federation civil
legislation;
 contribution of funds to the fixed assets of a foreign legal entity’s branch to be established in the
Russian Federation;
 acting as a lessor in the Russian Federation with respect to particular types of equipment, whose
customs value amounts to no less than 1 million rubles.
A priority investment project is an investment project that meets all of the following conditions:
 The total amount of investments in the project equals no less than 1 billion rubles (or its
equivalent in a foreign currency at the exchange rate of the Central Bank of the Russian
Federation quoted on the date when the Law on Foreign Investments came into force –
approximately EUR 40,000,000), or the share of foreign investments in the charter capital of the
commercial organization implementing the project equals no less than 100 million rubles (or its
equivalent in a foreign currency at the exchange rate of the Central Bank of the Russian
Federation quoted on the date when the Law on Foreign Investments came into force –
approximately EUR 4,000,000);
 The investment project is included in the list of priority investment projects to be approved by
the Government of the Russian Federation. However, it should be noted that at the time of
drafting this brochure, the list of priority investment projects was not approved.
The Law on Foreign Investments provides foreign investors with a guarantee, widely used in
international practice, of protection from negative changes in legislation of the host country
(“grandfather clause”). In accordance with Article 9 of the Law on Foreign Investments, new federal
laws and other legal regulatory acts of the Russian Federation that increase the total tax burden on
the activities of an investor and commercial organization with foreign investments or establish a less
advantageous regime with respect to foreign investments shall not be applied during the payback
period of the project, but for no longer than seven years as of the date of commencement of the
financing of this project by means of foreign investments.
The guarantee of protection from negative changes in the Russian Federation legislation is applied
to investors and commercial organizations with foreign investments that implement priority
investment projects (regardless of the amount of the share of foreign investments in the charter
capital) as well as to commercial organizations with the share of foreign investments in charter
capital exceeding 25%. The guarantee is valid with respect to the following taxes:
 import customs duties (with the exception of customs duties that were imposed as a result of
measures aimed at protecting the economic interests of the Russian Federation in terms of
foreign trade according to the Russian Federation legislation);
 federal taxes (with the exception of excise taxes and VAT on commodities produced in the
Russian Federation);
 payments to state extra-budgetary funds (with the exception of payments to the Pension Fund
of the Russian Federation).
Currently, Russian tax legislation does not provide protection for investors from negative changes in
legislation, which makes this guarantee difficult to implement in practice.

4.2.4. Investments in St. Petersburg. Strategic investment projects
In St. Petersburg investment activities are governed by Law of St. Petersburg No. 185-36 dated July
08, 1998 "On State Support of Investment Activities on the Territory of St. Petersburg" which
establishes the legal framework for state support for investors (including foreign investors) carrying
out their activities on the territory of St. Petersburg. The respective support measures may include,
inter alia, granting the city's sureties, tax benefits, deferred rent rates for lease of the city's property,
etc.


An investment project to be implemented on the territory of St. Petersburg may be recognized as
strategic in cases stipulated by the Law of St. Petersburg No. 742-136 dated December 03, 2008"On
Strategic Investment Projects, Strategic Investors and Strategic Partners of St. Petersburg". In
particular, the investment project can be recognized as strategic if the following criteria are met:
 improvement of socioeconomic and cultural living conditions of citizens of St. Petersburg;
 increase of investment attractiveness of St. Petersburg;
 development of an important sector of the national economy in St. Petersburg;
 promotion of development of certain territories of St. Petersburg.
A strategic investment project shall also conform to the following requirements:
 economic efficiency of the investment project in terms of its payback period and profitability;
 the aggregate amount of investments in development of the production sector or transport and
logistics hub of no less than 3 billion roubles, in other investment projects – 15 billion roubles;
 use of high-tech, energy-conservative, resource-saving and other high-efficiency technologies
(if the investment project is connected with industrial production).
Decision on recognition of a strategic investment project is adopted by the Government of St.
Petersburg. Strategic investment projects are implemented on the basis of an agreement entered
into between St. Petersburg and respective investor.

4.2.5. Restriction on foreign investors' activities
Normally, foreign and local investors in the Russian Federation have equal status subject to certain
exceptions. For instance, there are restrictions on investments made by foreign parties in the
banking and insurance sectors as well as businesses that are strategically important.
4.2.5.1. Banking sector
Federal Law No. 395-I dated December 2, 1990 “On Banks and Banking Activities” sets forth
additional requirements for the foundation and commercial activities of credit institutions with
foreign investments and branches of foreign banks in the Russian Federation.
Pursuant to Article 18 of the mentioned Federal Law, the admissible share of foreign capital in the
banking system of the Russian Federation shall be established in accordance with a legislative
procedure. The admissible share of foreign capital in the banking system of the Russian Federation
is calculated as a ratio of the total amount of stakes belonging to foreign investors in the charter
capitals of credit institutions and the amount of stakes belonging to foreign banks to the total
amount of capital of all credit institutions registered on the territory of the Russian Federation. The
Central Bank of the Russian Federation is entitled to prohibit an increase in the charter capital or
alienation of shares in the charter capital of credit institutions if as a result of such actions the
admissible share of foreign capital in the banking system of the Russian Federation is exceeded.
However, to date the federal law that sets forth the share of foreign capital in the banking system of
the Russian Federation has not been adopted.
4.2.5.2. Insurance services sector
The basic legal act regulating the insurance services sector is Federal Law No. 4015-1 dated
November 27, 1992 "On Organization of Insurance Business in the Russian Federation", which
establishes certain restrictions on foreign insurance organizations’ activities through their
subsidiaries and associated companies on the territory of Russia.
According to Article 6 of the mentioned law, subsidiaries of foreign investors (foreign insurance
companies) and insurance organizations, in which foreign investors’ share exceeds 49%, may not
provide obligatory insurance or life insurance. They also may not provide obligatory state insurance


or issue property insurance related to making deliveries or performing works for state needs or
insure property interests of state and municipal organizations.
An insurance organization, being a subsidiary of a foreign investor, has the right to carry out
insurance activities in Russia provided that the foreign investor has been an insurance company for
at least 15 years, is performing its activities in accordance with legislation of the state of
incorporation, and has been participating in activities of insurance companies established on the
territory of Russia for at least 2 years.
It should be noted that these restrictions do not apply to cases where foreign investors are
companies from EU countries.
The share (quota) of foreign capital in the charter capitals of all insurance companies registered in
Russia may not exceed 25%. When the indicated maximum allowable shareholding is either reached
or exceeded, the controlling authority supervising the insurance sector stops issuing permits for the
performance of insurance activities to subsidiaries of foreign insurance companies and insurance
organizations, in which foreign investors’ share exceeds 49%.
Permission (prior consent) of the insurance supervisory authority is required for transferring shares
in the charter capitals of Russian insurance companies to foreign investors and their subsidiaries.
Increase in the capital of an insurance company with funds from foreign investors and their
subsidiaries also requires prior permission from the insurance supervisory authority.
4.2.5.3. Ownership rights to certain categories of land plots
In Russia, foreign investors are not allowed to own certain categories of land plots.
Article 3 of the Federal Law “On Turnover of Land for Agricultural Purposes” provides for that
foreign citizens, foreign legal entities, stateless persons as well as Russian legal entities, in which
more than 50 percent of the share capital belongs to foreign citizens, foreign legal entities or
stateless persons may not hold ownership rights to agricultural land.
Pursuant to Clause 3 of Article 15 of the Russian Land Code, foreign citizens, stateless persons and
foreign legal entities may not hold ownership rights to land plots located in border territories (the
list of respective territories is approved by the Decree of the President of the Russian Federation No.
26 dated January 09, 2011) and other special territories mentioned in federal laws.
Such entities may only lease land plots of the said categories.
4.2.5.4. Investments in economic entities of strategic importance
Federal Law No. 57-FZ dated 29 April, 2008 "On Procedure of Making Investments in Economic
Entities of Strategic Importance for National Defense and State Security" (hereinafter the "Law On
Foreign Investments in Economic Entities of Strategic Importance") establishes the restrictions on
foreign investors when purchasing shares in businesses, which are strategically important for
national defense and state security, as well as when making other deals with foreign investors
entailing establishment of control over such businesses.
A business that is strategically important for national defense and state security (hereinafter a
"business of strategical importance") is a company established in the Russian Federation in the form
of a limited liability company or an additional liability company or a joint stock company, which
carries out at least one type of activity, which is strategically important. The Law on Foreign
Investments in Economic Entities of Strategic Importance outlines forty two types of such activities,
which can be consolidated into several groups:
 activity connected with nuclear materials or radioactive substances;
 development, production, distribution, renovation, or usage of military technology, weapons,
ammunition and explosive materials;


 space activity, activity related to aviation security, development, production, testing and
overhaul of aviation technology;
 mass information activity;
 development, production, distribution or technical service of encoded (cryptographic) assets;
 development, production, distribution and identification of electronic machinery intended for
secret collection of information;
 surveying and extracting useful substances from subsoil of land plots of federal importance and
catching of biological water resources;
 activity connected with the use of infectious disease agents;
 executing work influencing hydrometeorological and geophysical processes and phenomena.
The issue of establishing control over an acquisition target is a decisive criterion that determines
whether such acquisition shall be subject to the Law on Foreign Investments in Economic Entities of
Strategic Importance. The table below shows the cases when approval of acquisition is required:

Investor

Private foreign investor State foreign investor

Company – General enterprise Approval is required if over 50% is Approval is required if over
acquisition of strategic acquired (also in certain 25% is acquired, while
target importance circumstances if a lesser interest is acquisition of over 50% is
acquired) prohibited
Enterprise, which Approval is required if 10% or more is Approval is required if 5% or
develops subsoil acquired (other than in cases when more is acquired, while
plots of federal the Russian Federation owns over acquisition of over 50% is
importance 50%) prohibited

It is important to note that other transactions resulting in control of foreign investor over a business
of strategical importance (such as agreements on a foreign investor carrying out the functions of a
manager of a company, transactions resulting in the possibility to elect more than 50% of the
composition of the board of directors (or supervisory board) or to appoint the sole executive
authority or more than 50% of the composition of the collective executive body of such a business,
etc.) also require prior approval for their execution.
A foreign investor intending to conduct any of the said transactions or establish control over a
business of strategical importance must submit to the authorized state body a respective petition
for prior consent to such transaction or a petition for consent to establishment of control. The
consideration of a petition takes approximately three months.


4.3. Taxation
by DLA Piper

The following table summarizes Russian taxes in general and in St. Petersburg.
Tax To be paid to the To be paid to the budget of Total tax rate
federal budget St. Petersburg
(standard rates)
Profits tax 2% 18% 20%
VAT 18% - 18%
General 13% - 13%
personal
income tax
Mineral 0-17.5% - 0-17.5%
extraction tax (depending on the type of
mineral)
28
Water tax RUB 4-1,700 - RUB 4-1,700
(depending on the type of
waters)
Property tax - 2.2% 2.2%
Transport tax - RUR 24-1,000 RUB 2.5-200
(depending on the engine
power of vehicle)
Land tax - 0.004-1.5% 0.3-1.5%
(depending on the type of land)
At a regional level, the authorities are authorized to grant a reduction in the profits tax rate (in the
part payable to the regional budget) by 4.5 per cent (i.e. down to 13.5 per cent from 18 per cent of a
regular rate) for any period they consider necessary.
As far as property tax, transport tax and land tax is concerned, the regional authorities also have a
right to reduce the tax rates.

4.3.1. Special tax regimes in Russia
Under the Tax Code of the Russian Federation, there are two different tax regimes: a common one
and a special one. If a taxpayer applies the common tax regime, he/she is obliged to pay such taxes
as corporate profit tax, VAT, personal income tax, social insurance contributions, excise duties,
property tax, land tax, transport tax, mineral extraction tax and water tax.
In addition, the Tax Code of the Russian Federation envisages special tax regimes pursuant to which
a taxpayer is obliged to pay only one specific tax instead of a number of taxes. Such special tax
regimes include a simplified tax system, a tax on imputed income, a unified agricultural tax and a tax
on production sharing agreements.
The simplified tax, the unified agricultural tax and the tax on imputed income replace profits tax for
organizations, income tax for individual entrepreneurs, VAT (except for imports) and property tax.
A taxpayer can apply a particular special tax regime if certain requirements are met.

28
1 EUR appr. equals 42 Russian Roubles; 1 USD appr. equals 32 Russian Roubles.


4.3.1.1. Tax on imputed income
Tax on imputed income is a federal tax established by the Tax Code and which is in force by the local
tax authorities. In St. Petersburg the tax on imputed income is constituted by the Law of St.
Petersburg N299-35 dated 17 June, 2003.
Specific types of business activities mainly performed by small or medium sized legal entities are
subject to tax on imputed income. Such types of business activities include consumer domestic
services, veterinary services, vehicle maintenance, repair and washing, catering, retail trade,
transport advertising and passenger and cargo transportation.
A taxpayer can apply a tax on imputed income if he/she satisfies the following requirements:
 less than 25 per cent of company’s capital is owned by other organizations;
 the average annual staff headcount is less than 100 people.
The tax on imputed income has a rate of 15 per cent and is imposed on the amount of the "imputed
revenue" established for each specific type of activity per month adjusted by special coefficients.
Usually it involves a very immaterial tax base and is advantageous to taxpayers operating on the
basis of the imputed income tax system.
Payable imputed income tax could be reduced by deducting insurance contributions for mandatory
pension insurance, medical insurance and social insurance for temporary disability or maternity
leave.
4.3.1.2. The simplified tax system
A company and individual entrepreneurs can apply the simplified tax system if the following
conditions are met, inter alia:
 the company's annual turnover does not exceed a certain threshold (RUB 60 million from 1
January 2010 until 2013), and
 the company employs less than 100 people.
Some entities may not apply the simplified tax system. Such companies are:
 foreign legal entities;
 Russian legal entities with branches;
 Russian legal entities with more than 25 per cent of the capital owned by other organizations;
 insurance agencies, banks and investment funds, parties of production sharing agreements,
taxpayers of unified agricultural tax, etc.
The simplified tax rate is:
 6 per cent if a taxpayer selects revenue as a tax base; or
 15 per cent if a taxpayer selects "income less deductible expenses" as the tax base.
Taxpayers are subject to quarterly advance payments, whereas the annual final payment is due by 31
March of the following calendar year. Advance tax estimates and annual tax returns are due during
the same terms as the corresponding payments.
4.3.1.3. The unified agricultural tax
Under article 346.1 of the Tax Code, agricultural producers are allowed to apply the unified
agricultural tax. As mentioned, this tax replaces profits tax for organizations, income tax for
individual entrepreneurs, VAT (except for import) and property tax.
For the purposes of the unified agricultural tax the term "agricultural producers" denotes
organizations, (individual) farms and individual entrepreneurs producing agricultural products on
agricultural lands and selling these products, in particular, products resulting from the processing


thereof, if the portion of proceeds from the sale of the products make up at least 70 per cent of the
total proceeds from the sale of the goods (works, services) of these organizations, (individual) farms
and individual entrepreneurs.
The unified agricultural tax is levied on income minus deductible expenses. Income and expenses are
calculated in accordance with general profits tax rules.
The unified agricultural tax rate is 6 per cent.

4.3.2. Tax concessions in St. Petersburg
Under the Russian tax legislation, profits and property tax incentives and exemptions can be inter
alia provided through regional legislation. At a regional level, the authorities have limited powers to
grant profits tax incentives and are only authorized to grant a reduction in the profits tax rate (in the
part payable to the regional budget) by 4.5 per cent (i.e. down to 13.5 per cent from 18 per cent of a
regular rate) for any period they consider necessary. As far as the property tax is concerned, the
regional authorities also have a right to reduce the maximum 2.2 per cent property tax rate or to
provide a full exemption from the property tax at their discretion.
Thus, when a foreign investor is considering investing in a particular Russian region, it is important
to examine not only the relevant federal laws, but also the relevant regional laws. As the various
regions of Russia compete to attract foreign investors, each have passed numerous laws, regulations
and other legal measures aimed at improving the particular social and economic conditions in their
region, including favorable tax conditions.
Such incentives are generally granted to major investors or entities operating in a particular
industry. However, given that the criteria for the application of such incentives can be discretionally
set by the regional authorities, the reduction in profits tax can be potentially available to any group
of investors (taxpayers).
In St. Petersburg, a number of additional tax concessions (the "Concessions") have been introduced
by the St. Petersburg Law On Tax Concessions No. 81-11 dated 14 July, 1995 (the "Law").
4.3.2.1. General rules for the application of the Concessions
Scope of the Concessions:
Under the Law, a legal entity paying profits tax and property tax to the budget of St. Petersburg and
making capital investments (the "Investment") on the territory of St. Petersburg may be entitled to
the following Concessions:
1. a full exemption from property tax (from the maximum tax rate of 2.2% to 0%) in relation to
respective fixed assets, and
2. a reduction in the regional part of the profits tax rate from 18% to 13.5% if the sum of the
qualifying Investment equals RUB 800 million or more.
The Concessions are granted for a period of 5 tax periods in a row starting from the date when the
right for the Concessions arose in accordance to the provisions of the Law.
Types of qualifying investment activities:
The Law limits the scope of the Concessions only to manufacturing companies engaged in specific
economic sectors to be determined in accordance with the All-Russia Classifier of Economic
Activities. In particular, the following main types of activities qualify for the Concessions29:

29
The full list of qualifying activities is listed under section D "Production and services of the manufacturing industry", E
"Electricity, gas and water production" and I "Transportation and connection" of the All-Russia Classifier of Economic
Activities (although there are some exemptions).


Production and services of the manufacturing  Food and beverages;
industry  Tobacco and tobacco products;
 Clothing and textiles;
 Wood pulp;
 Chemical products (rubber, non-mineral products
etc.);
 Metal products;
 Machinery and equipment;
 Equipment for the media;
 Medical equipment;
 Transportation vehicles;
 Furniture;
 Scrap metal;
 Cars and auto components;
 Ships and other transportation vehicles;
 Others.
Electricity, gas and water production  Electrical energy produced by thermoelectric
plants, gas / diesel / nuclear / turbines;
 Electrical energy, gas, steam and hot water;
 Water and ice.
Transportation and communications  Land transport;
 Water transport;
 Air transport;
 Additional transportation services:
o Terminals (airport etc.) activity,
management of airports;
o Management of air traffic;
o Operation of takeoffs and landings,
runways etc.;
o Activities on the overland services of air
transport.
At the same time, some particular economic activities
are excluded from the qualifying list. Please find a list
of such activities below:
 Lease of cargo automobiles / sea / internal waters
/ air transport with crew;
 Additional transport activity (including
forwarding, storage services etc.);
 Communications.
However, according to the Law, the application of the Concessions by companies engaged in retail
trade, real estate lease (even if they have met other criteria) is directly restricted.
Definition of qualifying investment:
The Law provides that when determining the required sum of the Investment (i.e. RUB 800 million -
the "Threshold") only the net investment shall be taken into account, i.e. the sum of the investment
made in the respective year must be reduced by the net book value of fixed assets which were used
by the taxpayer in St. Petersburg but were alienated (written off) during the same year.


For the purposes of the Law, the Investment means (a) the acquisition30 of fixed assets and (b)
placing those fixed assets into operation.
In order to qualify for the Concessions, the Investment must be made:
1. to the fixed assets which were not previously used on the territory of St. Petersburg and which
are intended for production purposes (i.e. for the production of goods (work, services) and/or for
management purposes),
2. in the required Threshold,
3. on the territory of St. Petersburg, and
4. within a period of no longer than three consecutive calendar years starting from 2010.
Investment in the form of land is clearly excluded from the qualifying investment.
Additional requirements for the application of the Concessions:
The Law provides certain additional requirements for the application of the Concessions which
include:
 A "claw back" rule which stipulates that if the fixed assets subject to the Concessions are
alienated (or relocated from St. Petersburg) by the taxpayer before the expiration of a 5 year
period (after the right for the Concessions appeared), the taxpayer automatically forfeits his
right to the Concessions claimed in relation to the alienated assets and must restore and pay to
the budget the respective profits tax and property tax.
 "Actual payment of the investment" requirement
The Law also leaves open the question as to whether the investments should be actually paid
during the investment period or not. In this respect, a conservative position would be to make
sure that the required sum of the investment has actually been paid during the period of putting
the fixed assets into operation.
 Reorganization issues
The question of whether the successor has a right for the Concession or not, remains
unregulated directly by the Law. However, according to the Tax Code the obligations and the
rights of the reorganized company (including a right for the concessions) are transferred to the
legal successor.
4.3.2.2. Concessions for the companies engaged in the innovative sector
A legal entity that is involved in the manufacturing and selling certain innovative products (that are
listed in the Law), may be entitled to a reduction of the regional part of the profits tax from 18% to
13.5% under the following conditions:
 it fulfills the above-mentioned conditions for the qualifying investor;
 it makes the Investment in the amount of RUB 50 million or more;
 80% of the total taxable profit must be derived from selling of the said innovation products.
4.3.2.3. The Concessions for the strategic investors (until 2013)
The Law also provides that a qualifying legal entity paying profits tax and property tax to the budget
of St. Petersburg and making the Investment to the amount of RUB 3 billion or more on the territory
of St. Petersburg may be entitled to the following Concessions:
1. a full exemption from property tax (from the maximum tax rate of 2.2% to 0%) in relation to the
respective fixed assets, and

30
Including the acquisition by way of construction, reconstruction, modernization, in-kind contribution of fixed assets into
the charter capital or obtainment of fixed assets under the lease agreement (if under such agreement the leased fixed
assets are accounted at the lessee's accounts).


2. a reduction in the regional part of the profits tax from 18% to 13.5%.
The conditions for the application of the Concessions described in this section slightly differ from
the general conditions which were described above. In particular, the Investment of RUB 3 billion or
more must be made starting from 2007 within three calendar years.
Acquisition of the qualifying fixed assets under the lease agreement is directly restricted.
Furthermore, the Law contains the so-called minimum "tax test" rule. This means that the qualifying
investor forfeits his/her right to apply the Concession if the total amount of taxes due to the budget
of St. Petersburg for one calendar year is less that the said amount of taxes for the year preceding
the first year when the Concessions were applied.
The Concession may be granted only to the investors performing qualifying types of activities
(please see Section "Types of qualifying investment activities": Production and services of the
manufacturing industry) above. The Concessions may be provided for a period of 5 years starting
from the first month of the calendar year following the year when the qualifying investment was
made.
The above Concession is available for the qualifying investors that meet the above-mentioned
criteria until 2013 for a period of 5 years as indicated in the previous paragraph.

4.3.3. Tax administration in Russia
One of the main purposes of the tax administration reform which has been implemented in the
Russian Federation lies in the creation of a more transparent and predictable tax control
mechanisms. On the one hand, this mechanism must protect taxpayers from official pressure; on
the other hand, it must ensure an effective control over the observation of tax legislation by the
state.
4.3.3.1. Tax audits
Russian law provides for two types of tax audits that may be conducted by the tax authorities:
 In-house tax audits (the review of tax returns filed by taxpayers). These audits are carried out
solely on the basis of such tax returns and other documents submitted by a company, and
 On-site tax audits (the review of the three calendar years preceding the period in which the tax
audit is being performed). Generally, an on-site tax audit covers all taxes. The duration of an on-
site tax audit is limited by law to a maximum of two months.
As a result of both in-house tax audits and on-site tax audits the tax authorities are obliged to issue
an act reflecting the results of the respective audit. According to the Russian law, the audited
company is entitled to object to the act in writing and to defend its position at the proceedings held
by the tax authorities. Based on the act and on the proceedings, the tax authorities then issue a
decision, which, in practice, generally repeats the wording of the act issued by the tax authorities.
According to the Russian law, a company may challenge the decision of the tax authorities through
an appellate procedure by filing a petition with the higher tax authority. From 2009, such
administrative proceedings have been obligatory before the company may go to court. The higher
tax authority has to issue its decision within one month from the date of receiving the petition, this
period may be prolonged for 15 business days. Only as of this moment will the decision of the higher
tax authority come into force.
If the decision is endorsed by the higher tax authority, the company may challenge the decision by
filing a court claim with the relevant State Arbitration Court. The claim may be accompanied by an
application requesting an injunction from the court which, if granted, shall disallow the tax
authorities from unilaterally withdrawing the amounts equal to the sum of the charges from the
bank accounts of the company.


4.3.3.2. Reclassification of transactions for tax purposes
The tax authorities have recently changed their focus from reviewing mainly defects in accounting
business operations for tax purposes to disregarding the legal form of a contract when making a tax
re-assessment. In its Ruling No. 53 of 12 October, 2006, the Plenum of the High Arbitrazh Court
specifically stated that the courts should take into account that transactions not compliant with the
law or other legal acts, as well as sham and fictitious transactions, are to be deemed void with tax
implications arising therefrom regardless of their recognition by courts. The same ruling has also
formulated a different concept that if the court has decided, on the basis of evidence submitted by
the tax authorities and the taxpayer itself, that the taxpayer has accounted for business operations
not in accordance with its actual economic meaning, then the court "shall define the scope of the
rights and obligations of the taxpayer based on the true economic content of the business
transaction". In such a case, the court can find a tax benefit unjustified and disallow such a benefit
received by the taxpayer if the transaction concerned:
 is lacking economic substance and legitimate business reasons other than obtaining a tax
benefit ("business purpose principle"); or
 was recorded for tax purposes not in accordance with its actual economic substance ("form over
substance principle").
4.3.3.3. Tax penalties
The carrying out of business activities without registration with the tax authorities is subject to a fine
to the amount of 10 per cent of the respective income, but not less than RUB 40,000.
Late submission of a tax return is subject to a fine equal to 5 per cent of the tax due under such a tax
return per calendar month (full or partial).
Non-payment of a tax as a result of a reduction in the tax base is subject to a fine to the amount of
20 per cent of the unpaid tax. The fine may be increased by up to 40 per cent if the violation is
intentional.
Late payment of tax is subject to an interest equal to 1/300 of the effective rate per day of the
Central Bank of the Russian Federation.


4.4. Contracts
by BEITEN BURKHARDT
Reasonable actions on the part of foreign companies in the Russian market can lead them to
extremely impressive financial results. However, thorough preparation and maximum awareness are
a prerequisite for such results. Several principal aspects that should be kept in mind when
establishing contractual relations with counterparties in Russia are briefly covered below.

4.4.1. Analyzing counterparties prior to signing contracts
When taking a decision on whether to enter into a partnership with a Russian company, it is
necessary to verify its solvency and reliability. Thus, it is possible to distinguish between reputable
and solvent partners and doubtful or newly established fly-by-night companies, which reduces
counterparty default risks under agreements.
The most simple and fast way to obtain information about a potential partner is to review open
official data sources, in particular the Unified State Register of Legal Entities, the Unified State
Register of Rights to Immovable Property and Transactions Therewith, the Land Cadastre, Registers
of Intellectual Property (Rospatent), and the websites of federal courts, services and agencies.
Furthermore, information on various organizations can be requested from special information
agencies.

4.4.2. Recommendations for entering into contracts
The main criteria for the "reliability" of a signed agreement are its validity and enforceability.
Moreover, it should be noted that subordination of an agreement to any foreign law cannot preclude
possible problems related to subsequent performance of the agreement.
 Form of contract
According to the Russian Civil Code, foreign trade transactions shall be executed in a written
form under pain of invalidity. This means that dispatch of goods (rendering of services,
performance of works) to or by foreign entities without entering into a written contract (e.g., on
the basis of invoices) is not allowed.
 Choice of governing law
Normally, foreign counterparties would like the provisions of an agreement to be executed
thereby to be governed by the national law. However, such choice of law may adversely affect
the validity of the agreement as any terms and conditions contradicting imperative provisions of
the Russian law are deemed null and void and cannot be judicially protected or enforced in
Russia. Like in many countries, a number of issues in Russia are subject to exclusive regulation
by the Russian law, in particular transfer of rights to real estate, shares and interests in Russian
companies, protection of consumer rights as well as matters related to establishment and
operations of Russian companies.
 Jurisdiction
As a general rule, the parties to a contract may select a competent court for considering disputes
that may arise in connection with the contract. Like the choice of the governing law, in certain
cases the choice of jurisdiction is limited. For example, disputes over rights to immovable
property located (registered) in Russia may be settled by a Russian state court only.
It should also be mentioned that only court decisions of the countries, with which Russia has
treaties on mutual recognition and enforcement of court judgments, are enforceable in Russia.
In particular, there are such treaties with Italy, Spain, the Baltic States, and certain countries of


the Central and Eastern Europe. In the absence of such treaty, a judicial act may prove to be
useless.
A common method of avoiding such risks is to enter into an arbitration agreement providing
that all disputes fall within the jurisdiction of Russian or foreign international arbitration. Aside
from the confidentiality, an undeniable advantage of international arbitration is the
enforceability of its awards in more than 140 countries, including Russia. At the same time, it is
important to remember that to be enforceable in Russia foreign international arbitration awards
shall be recognized by a Russian state court at the place of location of a debtor (in St. Petersburg
– the Arbitration Court of St. Petersburg and Leningrad Oblast).
 Liability of parties
Generally, the grounds for and limits of liability for improper performance of contractual
obligations are stipulated by the parties to the contract. However, certain restrictions of "free
will" should be born in mind: Russian law does not permit limiting liability given premeditation
of the breaching party. For harm caused by a defective product within its established lifespan,
liability of the seller (producer) ensues regardless of fault of the seller or the presence of
contractual links. At their option, victims may file a lawsuit for damages against either the seller
(importer) or the manufacturer of the product. The only basis for a release from liability is a
proven fact of improper product use.

4.4.3. Securing contract performance
For the purposes of protecting business interests it is necessary to consider in advance effective
means of securing a counterparty's performance of its obligations. The most common means of
security under the Russian law include pledge/mortgage, surety and a bank guarantee.
1. Pledge/mortgage: A pledge is one of the most reliable means of security and, in the event the
debtor does not fulfill its contractual obligations, it entitles the creditor to satisfaction of his/her
claims out of the debtor's property being the subject of pledge. Moreover, a pledge lender has
the preferential right to satisfaction of its claims in priority over all other creditors of the debtor.
One type of pledge is mortgage – pledge of land, buildings (including buildings under
construction) and other real estate. The law establishes considerably strict requirements for
mortgage agreements as well as the obligation of state registration.
2. Surety: Oftentimes Russian companies have quite modest charter capitals and assets, which are
not enough for satisfying claims which could arise in the future. Consequently, a popular form of
securing obligations is a personal surety of company founders – individuals or companies
affiliated with the debtor and owning assets. The surety and the debtor bear joint liability for
performance of the secured obligation.
3. Bank guarantee: A distinct feature of a bank guarantee is its independence from the main
(secured) obligation. This means that within the period established by the bank guarantee
agreement the creditor is entitled to satisfaction of its claims from the guarantor bank even if
the secured obligation is invalid (unenforceable). A bank guarantee is one of the most reliable
means of securing obligations. When executing one it is necessary to very precisely formulate,
which documents the creditor must present to the bank along with a claim for payment, as well
as to consider the requirements of current court practice on the execution of guarantees
(including validity periods).

4.4.4. Currency control
In accordance with the Federal Law “On Currency Regulation and Currency Control”, when
implementing cross border transactions, residents (Russian citizens and companies incorporated
pursuant to the Russian laws) shall comply with special requirements stipulated by the law and
normative acts of currency regulation authorities. The most important regulatory acts related to


making payments to foreign recipients are issued by the Bank of Russia. Pursuant to the general
rule, residents shall provide authorized Russian banks with special documents when making
payments within the framework of foreign trade activities. Responsibility for violating the currency
legislation of the Russian Federation and the acts of the currency regulation authorities is specified
in the Administrative Offences Code (KoAP). In accordance with currency control regulations, some
operations (e.g., an offset of mutual claims) may be prohibited.

4.4.5. Specific features of supply agreements containing conditions on
equipment installation
If within the framework of a supply agreement a foreign supplier also undertakes to provide services
associated with installation or supervision of installation of the equipment supplied, it is necessary to
take into consideration a number of aspects of Russian tax and migration legislation as well as
provisions on regulation of construction activities.
Should a foreign company render services associated with supply, it is recommended that the
respective relations in regard to supply and services be formalized by separate agreements. First of
all, this is due to tax consequences – on the one hand, when determining the contract price including
the cost of goods and services without dividing it into respective parts, customs payments shall be
charged on the entire contract price; on the other hand, in some cases services rendered by a foreign
company in Russia may be subject to VAT (depending on the type of services) and corporate profits
tax (if a permanent establishment is formed in accordance with the criteria set forth by legislation).
In the above cases if a foreign company does not have its own divisions, through which activities in
Russia are performed, a Russian company being a party to the respective agreement and acting as a
tax agent of the foreign company shall calculate and withhold VAT and corporate profit tax on the
amount payable to the foreign counterparty as remuneration for its services.
Any issues related to formation of permanent establishments of foreign companies are regulated by
bilateral international double taxation treaties and the Tax Code of the Russian Federation. As a
general rule, a permanent establishment of a foreign company is deemed to have formed if
representatives of the foreign company perform regular commercial activities in Russia. Moreover, a
foreign company shall be mandatorily registered with Russian tax authorities if such activities are
performed for more than 30 days during one calendar year. However, some double taxation treaties
establish special rules with respect to construction (building areas) and installation works
(installation objects). Pursuant to general rules, the activity of a foreign company that performs
construction or installation works on the territory of the Russian Federation is not taxable in Russia if
such activity is performed for no longer than 12 months. For example, such provisions are set forth in
Subclause 3 of Clause 5 of the Double Taxation Treaties with Germany dated 29.05.1996, the
Netherlands dated 16.12.1996 and Great Britain dated 15.02.1994.
Also, it should be taken into consideration that in certain cases in order to perform installation works
a company may have to obtain a permit to perform construction works and join a self-regulating
organization (SRO) registered in Russia. It is necessary to check whether a permit is required with
respect to each particular type of works to be performed. In accordance with the current rules,
performance of installation supervision works usually does not require a permit of a member of SRO.
As a work permit is not required foreign citizens performing installation (supervision) works, service
and warranty maintenance as well as post-warranty repairs in Russia, they usually stay in Russia on
the basis of a multi-entry business visa. However, it should be noted that the aggregate period for a
foreign citizen to stay in Russia on the basis of such visa may not exceed 90 days during each period
of 180 days. If the above works are performed for more than 90 days, the foreign company must
review other options – e.g. replace the personnel each 90 days, obtain new business visas or
respective work permits.


4.5. Employment
by BEITEN BURKHARDT
Labor relations and other relations directly connected therewith are regulated by labor legislation
which consists of the Labor Code of the Russian Federation (hereinafter the "Labor Code"), other
federal laws and laws of the constituent territories of the Russian Federation, as well as by other
regulatory legal acts containing labor law regulations. Requirements of the Russian labor legislation
are also applicable to foreign citizens and foreign company employers participating in relations
involving the performance of labor activities in Russia.

4.5.1. Employment agreement
An employment agreement is the basic document regulating the relations between the employer
and the employee. It is mandatory that an employment agreement be concluded between the
employer and the employee in writing prior to the commencement of work. Given actual
admittance of the employee to work, the employer must execute an employment agreement with
him/her in writing within 3 business days after the employee was actually admitted to work.
The following conditions must be included into an employment agreement:
 information on the employer and the employee;
 place of employment;
 date of commencement of work;
 position (labor function);
 conditions determining the nature of the work (mobile, connected with travel, in transit, etc.);
compensation, and benefits to the employee for working in severe, detrimental, and dangerous
conditions;
 work and holiday time;
 terms of remuneration of labor (salary, possible premiums, bonuses, etc.);
 provision on mandatory social insurance in accordance with legislation.
An employment agreement may also include other conditions not contradicting the effective
legislation.
The conditions of an employment agreement may be amended by an agreement of the parties
executed in writing. In certain exceptional cases the labor legislation allows the employer to
unilaterally change the conditions of an employment agreement (without the employee's consent).

4.5.2. Term of an employment agreement
Employment agreements may be concluded for an indefinite term (unlimited agreements) or for a
fixed term not exceeding 5 years (fixed-term agreements).
Generally, employment agreements are concluded for an indefinite term. A fixed-term employment
agreement may be entered into only in cases stipulated by the Labor Code and other federal laws,
for instance: for the time of performing the obligations of an absent employee, for whom the
workplace is preserved; for the time of performing temporary (up to 2 months) or seasonal work; for
the time of carrying out work beyond the employer's usual activities; etc. By agreement of the
parties, a fixed-term employment agreement may also be concluded with executives, deputy
executives and chief accountants of an organization; persons combining jobs; persons studying full
time and other persons specified by the Labor Code. Entering into a fixed-term employment
agreement in cases not stipulated by the Labor Code or other federal laws is not allowed.


It must be noted that if neither party has requested termination of a fixed-term employment
agreement upon expiration of its term and the employee continues to work after expiration of the
employment agreement, the agreement is deemed concluded for an indefinite term.

4.5.3. Probation period
Russian labor legislation provides for the possibility of establishing probation for an employee in
order to verify his/her suitability for the job entrusted. Probation may be established for a period of
up to 3 months. For executives and their deputies, chief accountants and their deputies, executives
of separate structural subdivisions (branches, representative offices) the maximum probation period
is 6 months. Probation may not be established for certain categories of employees specified by the
Labor Code (pregnant women; women with children up to 1.5 years of age; persons under 18 years
of age; young specialists; etc.).
During the probation period the employer has the right to terminate the employment agreement
with the employee who failed to pass probation, under a simplified procedure. In such case, the
employer must notify the employee of the termination of the employment agreement in writing at
least 3 days in advance. Moreover, the employer must state the reasons, for which the employee is
deemed to have failed to pass probation.

4.5.4. Salary
The amount of the salary shall be specified in the employment agreement and may not be less than
the federal minimum wage established for the entire territory of the Russian Federation (4,611
rubles on the date of preparation of the brochure) and the regional minimum wage established by
regional laws annually. In St. Petersburg the regional minimum wage is established in the amount of
7,781 rubles for the year 2012.
Salaries must be paid at least every half-month in the currency of the Russian Federation, i.e.
Roubles.

4.5.5. Working hours
In the Russian Federation the normal duration of working hours may not exceed 40 hours per week.
By agreement between the employee and the employer, part-time work may be established. The
employer must establish a part-time working day for certain categories of employees upon their
request. Such employees include: pregnant women; one of the parents having a child aged up to 14
years or a disabled child up to 18 years; persons caring for a family member who is ill. In case of part-
time work the employee's labor is paid pro rata to the time worked by him/her or the amount of
work performed.
Russian labor legislation provides for the possibility to establish various working schedules by the
employing company, i.e. various means of distributing work within a certain period (week, month,
quarter, etc.), including: standard working day, non-standard working day, flexible working hours,
record of cumulative hours worked.
The Labor Code also allows engaging an employee in overtime work subject to the employee's
written consent. The maximum duration of overtime work is 4 hours within 2 consecutive days and
120 hours per year. Overtime work shall be compensated for by granting the employee additional
days-off or paying the employee at least one and a half times the regular hourly rate for the first 2
hours and at least twice the regular hourly rate for any subsequent hours.

4.5.6. Leave
Each employee shall be granted at least 28 calendar days of paid leave per annum (basic paid leave).
An employment agreement, collective agreement, or internal documents of the employer may also


provide for granting the employee an additional paid leave, the duration of which is not limited by
law.
As a general rule, leaves are granted to employees in calendar days .Upon agreement between the
employee and the employer the annual leave may be divided into parts. At least one part of the
leave shall not be less than 14 calendar days.
The employee may be granted a short-term unpaid leave, the duration of which shall be agreed by
the employee and the employer. Such leave shall be granted due to family circumstances or other
valid reasons upon the employee’s written application.

4.5.7. Statutory holidays
Russian labor legislation establishes 12 statutory holidays per year, which are: January 1, 2, 3, 4, and
5; January 7; February 23; March 8; May 1 and 9; June 12; and November 4. If a holiday falls on a day-
off, the following business day becomes a day-off. The statutory holidays coming for the paid leave
period are not included in the number of calendar days of the leave and are not paid.
Work on holidays and days-off is prohibited, except for the cases provided by law, and, as a rule,
requires the employee’s written consent. Such work shall be paid at least twice the regular rate.

4.5.8. Secondary employment. Prohibited competition
During the time free from the main work an employee is entitled to perform another regularly paid
work for the same employer (internal secondary employment) or for another employer (external
secondary employment). Working hours at a secondary job may not exceed 4 hours per day. It is
permissible to conclude secondary employment agreements with an unlimited number of
employers.
In accordance with the Russian legislation, an employment agreement may not stipulate that the
employee is prohibited for the term of the employment agreement from performing work or
business activities that compete with the employer’s activities. No employee may also be prohibited
from competing with his/her employer following the expiration of the employment agreement.

4.5.9. Termination of employment agreements
An employment agreement may be terminated only on the grounds stipulated by the Labor Code or
other federal laws. Dismissing an employee on other grounds is not allowed.
The Labor Code provides for the following grounds for termination of employment agreements:
1. Termination of an employment agreement by agreement of the parties
Any employment agreement – whether concluded for an indefinite term or fixed term – may at
any time be terminated by agreement of the parties. This procedure for terminating labor
relations is widely used in practice as it is connected with minimal potential risks for the
employer.
The labor legislation does not obligate an employer to pay any compensation to an employee;
however, it is possible if provided for by the conditions of the agreement between the employee
and the employer. The amount of and procedure for paying compensation are determined by
mutual consent of the parties.
2. Resignation of an employee
An employee is entitled to terminate the employment agreement at any time upon his/her own
initiative. Such employee must notify the employer of the resignation in writing at least 2 weeks
in advance.
Prior to expiration of the resignation notification period the employee is entitled to withdraw
the letter of resignation at any time. In such case dismissal does not occur.


If upon expiration of the resignation notification period the employment agreement is not
terminated and the employee does not insist upon resignation, the employment agreement
remains valid.
3. Termination of a fixed-term employment agreement
A fixed-term employment agreement terminates upon expiration of the term stated therein. If
upon expiration of the term of the employment agreement neither the employee nor the
employer has requested termination of the labor relations, the provision regarding the term of
the agreement loses effect and the agreement becomes indefinite.
In case of termination of a fixed-term employment agreement due to expiration of its term the
employer is obligated to notify the employee thereof in writing three calendar days prior to
dismissal, otherwise the agreement will also be deemed prolonged for an indefinite term.
4. Termination of labor relations due to circumstances beyond the parties control
In some cases an employment agreement is subject to termination due to circumstances beyond
control of the employer and the employee. The list of such circumstances is stipulated by the
Labor Code and, in particular, includes the employee being called to military service;
reinstatement of the employee that previously performed the respective job duties; recognition
of the employee as completely incapable of working; disqualification of the employee; the
employee being sentenced to punishment under a court verdict, and other circumstances.
5. Termination of an employment agreement on the initiative of the employer
Dismissal upon the employer's initiative always requires certain substantiation directly stated in
the Labor Code, as well as compliance with the mandatory procedure and careful execution of
all required documents.
The Labor Code contains a relatively broad list of the grounds for dismissal of an employee upon
the employer’s initiative. The most important of them are:
 Dismissal for reasons connected with the employee's conduct, including: repeated
nonperformance of employment duties resulting in disciplinary sanctions; single gross
breach of employment duties; presentation by the employee of falsified documents when
being hired, and other grounds.
 Dismissal for reasons associated with the employee's insufficient professional qualifications.
 Dismissal for production reasons: liquidation of the organization or a separate subdivision
thereof; staff reduction. In these cases the employees must be notified at least two months
prior to dismissal and paid a severance pay in the amount established by the Labor Code.
It is prohibited in all cases to dismiss an employee on the employer's initiative during the
employee's temporary incapacity to work or leave, as well as pregnant women, other than in
case of liquidation of the organization.
Should any legislative requirements be breached, the dismissal of an employee may be deemed
unlawful. In such case the employee may be reinstated at work and the employer may be
obligated to compensate for the emotional distress caused to the employee by the unlawful
dismissal.

4.5.10. Specific features of employment of company executives
Company executives are individuals vested by virtue of law, other regulatory legal acts and/or the
company foundation documents with the right to manage the company, in particular, to perform
the functions of its single-member executive body. The term "executive" used in Russian legislation
is of general character and when applied to a company of a particular type may be replaced with
other terms, for example "director", "general director", "president", "chairman of the board", etc.


An executive is considered to be a company employee. Due to this, an employment agreement shall
be entered into by the executive and the company, and relations between them are regulated not
only by civil legislation and the company corporate documents but also by labor legislation.
Employment of company executives has the following specific features:
 An executive is employed on the basis of either an indefinite employment agreement or a fixed-
term employment agreement, which is established by the foundation documents or the
employment agreement.
 The employment agreement with an executive may stipulate a longer probation period: up to 6
months.
 An executive may occupy paid positions in other companies (i.e. have secondary employment)
only subject to permission of the employer's authorized body (general meeting of participants /
shareholders, board of directors, etc.).
 An executive bears full material liability for direct actual damage caused to the employer and is
obligated to compensate for losses, including lost profit, caused to the company by his/her
wrongful acts, in cases established by Russian legislation.
 Along with the general grounds for terminating an employment agreement with a company
executive, legislation also provides for additional grounds, for example:
o The authorized body of the employing company taking a decision to prematurely terminate
the employment agreement with the executive. In the absence of wrongful acts (omissions)
by the executive, he/she is paid a compensation in the amount determined by the
employment agreement, but not less than three times the executive's average monthly
salary.
o Bankruptcy of the employing company.
o Other grounds agreed upon by the parties in the employment agreement.
 Federal laws and company foundation documents may extend the above specific features of
employment to the members of the company's collective executive body, who entered into an
employment agreement with the company.

4.5.11. Financial liability of employees and employers
Financial liability of an employee is limited to the amount of direct actual damages incurred as a
result of a wrongful act or omission by the employee. Pursuant to the law, the employer may not
claim lost profits from the employee.
Russian labor legislation distinguishes between limited and full financial liability of an employee. As
a general rule, an employee who has caused losses to an employer shall be held liable within the
limits of his/her average monthly salary (limited liability). Full financial liability means that an
employee is obligated to compensate for all losses that he/she has caused to the employer, even if
such losses significantly exceed his/her average monthly salary. The employee shall bear full
financial liability only in the cases directly stipulated by the Labor Code, in particular, malicious
damage; damage caused while inebriated; damage caused as a result of the employee's criminal
offence; damage caused while not fulfilling employment duties; damage caused as a result of
disclosure of a legally protected secret, including a trade secret; and other cases.
Labor Code provides for 4 main cases of financial liability of the employer:
 Compensation for damages caused to the employee due to illegal deprivation of the possibility
to work, including unfair dismissal, illegal transfer to another job, delays in obeying a court
ruling to reinstate employment and other cases. The compensation shall be paid in the amount
equal to the employee's average salary for the entire period of deprivation of the possibility to
work.
 Compensation for damages to the employee’s property. The damage shall be compensated for
in full at the current local market prices. Compensation (interest) for delaying payment of salary,


leave allowances or other sums due to an employee are calculated at the rate of at least 1/300th
of the current Central Bank refinancing rate for each day of delay.
 Compensation for the emotional distress caused to the employee by the employer's unjust
actions in the amount determined by the agreement between the employee and the employer
or by court.
 The employment agreement or written agreements attached thereto may provide for the
liability of the parties to such agreement(s). However, such contractual liability of the employer
may not be lower, and employee’s liability may not be higher than that stipulated by the Labor
Code or other federal laws.

4.5.12. Employment of foreign citizens
Employers have the right to engage foreign employees provided that respective permitting
documents and a special Russian visa are obtained by the employer and the foreign employee.
Depending on the status of the foreign citizen, the following documents shall be obtained:
 Employment of highly qualified foreign specialists, i.e. foreign employees who have work
experience, skills or achievements in a particular area of activities and are paid salaries of at least
2 million rubles per year, requires obtaining a work permit and a work visa for the said specialist.
Both documents are issued for up to 3 years.
 Employment of other foreign citizens is possible provided that the employer obtained a permit
to engage and use foreign employees and the employee obtained a work permit and a work
visa. These permits and the work visa are issued for the period of up to 1 year.
The said procedure does not apply to foreign citizens holding residence permits; foreign citizens
employed by diplomatic missions and consular establishments of foreign countries in the Russian
Federation, international organizations; journalists accredited in Russia; employees of foreign legal
entities performing assembly works, service and guarantee maintenance as well as follow-up service
for technical equipment installed in Russia, and other categories of foreign citizens specified by the
Russian legislation.

4.5.13. Taxation of employees' income
Employees' income (salary and other payments under employment agreements) is subject to the
personal income tax at the following rate:
 13% – for Russian tax residents (i.e. persons staying on the territory of the Russian Federation for
more than 183 days per year irrespective of their citizenship) and highly qualified foreign
specialists (irrespective of their tax residency);
 30% – for other employees not considered Russian tax residents.
Although employees are taxpayers of the personal income tax, in accordance with tax legislation it is
employers acting as tax agents that are obligated to calculate, deduct from the remuneration
amount, and pay to the budget the personal income tax.

4.5.14. Social insurance of employees
Pursuant to the Labor Code, employers are obligated to ensure mandatory social insurance for their
employees. Russian legislation establishes the following types of mandatory social insurance:
 medical insurance;
 pension insurance;
 social security insurance, which provides for insurance against such cases as temporary
incapacity to work, industrial accidents, occupational diseases, maternity and other cases.
Insurance contributions are made on the basis of remuneration of and other payments to employees
under employment agreements. Remuneration of and other payments to foreign employees, who


entered Russia on the basis of a visa and are not granted a temporary or permanent residence
permit, are not subject to insurance contributions, except for contributions towards insurance
against industrial accidents and occupational diseases.
Contributions towards mandatory social insurance are paid by employers to the state insurance
funds (the Pension Fund of the Russian Federation, the Social Security Fund of the Russian
Federation, the Federal Mandatory Medical Insurance Fund) at the rates established by the federal
legislation.


4.6. Product conformity assurance in Russia
by SGS Vostok Limited, Russian subsidiary of the SGS Group

4.6.1. What is the acting legal framework for product conformity assurance
in Russia?
Back in 1993, the Russian Government enacted legislation obliging to certify a number of consumer
and industrial products and introduced the GOST R system of mandatory certification with the
intention of protecting health and safety of Russia’s population. GOST R certification implies
assessment of product conformity against applicable GOST R standards with regard to safety and
quality characteristics by an independent properly accredited certification body. The GOST R
system has been complemented by other conformity assurance systems relating to sanitary
regulations, phitosanitary and veterinary aspects, industrial safety etc.
The Russian Federal Law No.184 on Technical Regulating dated on 27.12.2002 introduced dramatic
changes to the former conformity assurance system with the objective to harmonize Russian
technical barriers to trade with international practices. It established new rules of state regulatory
requirements for industrial and consumer goods, buildings, related business processes, as well as for
consumer services. According to this Law, a Technical Regulation (in Russian: Tekhnicheskiy
Reglament) has been the primary document, which stipulates the obligatory requirements for
various goods to be sold and/or consumed in Russia, whereas standards and norms should be used
as a supportive base only. Apart from mandatory certification another form of conformity assurance
has been introduced called “declaration of conformity”. However, until new Technical Regulations
are adopted, the GOST R conformity assurance system has been still valid.

In view of the Agreement signed on October 6, 2007 Belarus, Kazakhstan and Russia have
established the Customs Union in the framework of the Eurasian Economic Community (EAEC or
EurAsEC). In December 2009, the Agreement on the circulation of products liable to mandatory
conformity assurance within the Customs Union was signed, followed by a number of more specific
regulatory documents. As a result, the national legal framework in the area of conformity assurance
and supervision over product safety has to be gradually replaced by the Customs Union legal
framework.

By January 2012, the first 24 Technical Regulations out of the 47 top-priority Technical Regulations
of the Customs Union have been passed. The first 10 Technical Regulations should come into force
in July 2012. In 2012, the remaining top-priority Technical Regulations of the Customs Union should
pass according to the agreed schedule. Those 47 Technical Regulations would cover over 60% of the
goods circulating within the Customs Union. During the period from 2013 to 2015, unified
requirements should be adopted towards all significant product categories marketed in the Customs
Union. As soon as a Technical Regulation of the Customs Union comes into force, the relevant
national requirements are abolished.
A Technical Regulation can be either generic or specific. Example of a generic document can be the
Technical Regulation on Electromagnetic Compatibility, which concerns a number of industries.
Specific Technical Regulations relate to specific product categories like, for example, the Technical
Regulation on Safety of Toys or the Technical Regulation on Juice Products from Fruits and
Vegetables.
To summarize, by early 2012, three major co-existing conformity assurance regulatory frameworks
in Russia are as follows:


 Technical Regulations of the Customs Union;
 Technical Regulations of the Russian Federation – applied only when there is no relevant
Technical Regulation of the Customs Union;
 GOST R system – applied only when there are no relevant Russian or Customs Union Technical
Regulations.
In addition, there are special requirements from Russian and Customs Union authorities with regard
to conformity assurance against veterinary, phitosanitary, sanitary and industrial safety norms.

4.6.2. How to find out whether the product is liable to mandatory
conformity assurance in Russia?
Starting from July 1, 2010 the Single list of products liable to mandatory conformity assessment
(verification) in the framework of the Customs Union resulting in unified document issuance has
been enacted. The unified document implies either the Certificate of Conformity or the Declaration
of Conformity drafted according with the same unified template in Russia, Belarus and Kazakhstan.
This list has been updated on a regular basis.
The other documents to refer to are:
 the Single list of products liable to sanitary-epidemiological supervision on the customs border
and in the customs territory of the Customs Union approved by the Decision of the Customs
Union Commission No.299 dated on 28.05.2010;
 the Single list of products liable to veterinary supervision in the Customs Union approved by the
Decision of the Customs Union Commission No.317 dated on 18.06.2010;
 the List of products liable to quarantine phitosanitary supervision on the customs border and in
the customs territory of the Customs Union approved by the Decision of the Customs Union
Commission No.318 dated on 18.06.2010.
If the product is not included in the Single product lists of the Customs Union, then one should
consult two national regulatory documents: the Single list of products liable to mandatory
certification and the Single list of products whose conformity verification is to be made in the form
of a declaration of conformity (both approved by the Decree of the Russian Government No. 982
dated on December 1, 2009 and since then regularly updated).
Besides, one should consult the acting Technical Regulations of the Customs Union and the Russian
Federation, and if there are any relevant regulations pertaining to the product category in question,
then one should check the scope of the Technical Regulation to find out whether the specific
product is liable to mandatory verification of conformity.
If the product is not mentioned in any of the product lists and any of the acting Technical
Regulations either of the Customs Union or the Russian Federation, then the product is not subject
to mandatory verification of conformity in Russia.

4.6.3. What kinds of permissive documents are there in Russia?
There are two forms of conformity assurance in Russia: declaration of conformity (by the
manufacturer) and certification of conformity (by a properly accredited certification body being
independent from the manufacturer). Declaration of Conformity and Certificate of Conformity have
equal legal status and are valid throughout the whole territory of the Russian Federation. The
appropriate form of conformity assurance is stipulated by regulatory documents applicable to the
product in question. Sometimes, both forms are possible.
The following types of approvals are usually required to prove product compliance in Russia:
 Declaration of Conformity with Technical Regulations or Certificate of Conformity with
Technical Regulations;


 GOST R Declaration of Conformity or GOST R Certificate of Conformity.
For some measuring instruments the so-called Pattern Approval Certificates need to be obtained.
These are issued by a state authority called Rosstandart based on results of tests performed by
accredited State Scientific Metrological Centers.
When the product is liable to sanitary and epidemiological regulations of the Customs Union,
Certificate of State Registration may be required. For products subject to veterinary and
phitosanitary supervision there may be a requirement to obtain Veterinary Certificate, Phitosanitary
Ceritificate and/or Import Quarantine Permit.
Some other documents may be required at the stage of commissioning for industrial equipment,
such as Technical Passports or Permits to Use.

4.6.4. When are Russian permissive documents required?
Mandatory verification of conformity is conducted before the product has been launched to the
Russian market. This concerns both locally produced and imported goods.
Approving documents are required at different stages of doing business in Russia, such as:
 Concluding a sales deal;
 Customs clearance at the Russian border;
 Advertising and PR activities;
 Placing a product in retail;
 Commissioning of equipment.

4.6.5. What labelling/marking requirements are there in Russia?
According to the Russian Law No.2300-I “About Consumer Rights protection” dated 07.02.1992, all
consumer goods, both food and non-food, exported to and distributed in Russia require Russian
language labelling and the sale of imported products without consumer information in Russian
language is illegal.
Russian labelling has to cover the following items:
 Name of a product;
 Country of origin;
 Name and address of manufacturer or any other contact information for consumers;
 How and where the product is to be used;
 The main characteristics and description of the product;
 Safety requirements;
 Conformity assurance and licensing information (relevant Mark of Conformity);
 Expiration date, if applicable ;
 Other information required by the applicable Technical Regulations.
This information can be contained on a box, label, or any other appropriate material concerning the
product such as technical brochures or manuals.


The following marks demonstrate to the consumer the product’s compliance to the applicable
mandatory requirements:

Mark Symbol Definition
GOST R Mark of The product is compliant with GOST R standards
Conformity

TR Mark of The product is compliant with Russian Technical
Conformity Regulations (TR)

CU TR Mark of The product is compliant with Customs Union (CU)
Conformity Technical Regulations (TR)

4.6.6. How long does it take to get certified?
The conformity verification process in Russia can take from a few hours up to several months. Its
duration depends on the following factors:
 The type of certificate you opt for (e.g. verification process for a 3-year validity Certificate of
Conformity for serial production normally takes longer than a certificate valid for just one
shipment);
 The need to make tests, number and complexity of the tests;
 Number of certificates you have to obtain prior to the targeted permissive document;
 Your ability to quickly collect the internal documents needed for verification;
 Time spent upon translation of required documents into Russian language;
 Your previous experience with Russian certification (i.e. obtaining a permissive document for the
very first time commonly lasts longer than subsequent similar applications).
As a result, you are able to speed up the process by means of manipulating the above-mentioned
factors.

4.6.7. Which international certificates are accepted in Russia?
Many procedures in the conformity assurance system of Russia and the Customs Union were copied
from the West (especially the EU), and foreign manufacturers face similar requirements for
operation in their local market. Still, there are some discrepancies.
The reason for that partly lies in the Russian specific climate conditions, partly in the historical
background (many of the Russian standards have not been re-viewed since the Soviet times). Quite
often, verification methods considerably differ from those applied in the Western Europe or the US.
To cite some examples: in Russia, testing of toys includes verification of formaldehyde and phenol
content, although not checked in the EU; transformers have to be tested at -40°C temperature, i.e.
in twice as cold conditions as in Europe; steel pipes might be subject to 100% testing as opposed to
10-20% sampling in Europe.
Therefore, even if your products are well-known throughout the world and recognized as safe in the
EU or any other country, you still have to prove that they comply with Russian/Customs Union


requirements in accordance with locally accepted methodology. However, availability of an
international certificate might facilitate the procedure of obtaining the appropriate Russian
approvals.

4.6.8. Does it matter whether exporter or importer handles product
conformity assurance?
When negotiating sales contracts with Russian partners, exporters need to raise issues related to
conformity assurance expenses, namely which party bears the costs, procedures and
responsibilities. In some cases, exporter and importer alike are able to carry out certification and
obtain proper permissive documents. However, a declaration of conformity can be signed only by a
Russian legal entity. For an international company it means that the declaration of conformity can
be signed either by their Russian distributor representing the foreign manufacturer on the basis of a
formal contract for conformity assurance purposes, or by their Russian agent, or by their subsidiary
located in Russia.
Exporters should bear in mind that in case the certificate or declaration is issued under the name of
their importer, the latter will become their exclusive distributor in the Russian market during the
whole validity term of the certificate. Therefore, those exporters who wish to keep control over their
Russian marketing strategy and preserve their independence from any local partner are
recommended to take care of their products’ conformity assurance on their own.

4.6.9. How much would it cost to get certified?
The cost for conformity verification services is very much dependable on such factors as complexity
of a product, complexity of manufacturing process and type of required permissive document.
Relevant expenses would usually consist of the following elements:
 Cost of samples selected for destructive tests;
 Expenses for packing, storage, freight handling and transportation of samples to the testing
laboratory;
 Cost of product tests in accredited laboratory;
 Audit expenses, including travel costs;
 Translation services;
 Labor expenses of the certification body (man-days * daily rate) over processing of your inquiry,
verification of documents, issuance of certificate;
 Overheads.
You may be offered discounts in case you wish to obtain a relatively large number of certificates or if
you are applying for the same service repeatedly. Such cost reduction is due to decreasing
overheads, number of required samples and number of tests.

4.6.10. How to make the certification cost-effective?
To make the certification process cost-effective, we recommend correlating the type of certificate
with anticipated volume of exports and range of exported goods. Thus, if you are planning to
regularly ship your goods to Russia, and their range is quite wide, it might be wiser to opt for a serial
certificate valid for a few years. Although it will require higher single payment versus shipment
certification, in the long-term such scheme can save both your time and money. In fact, whole
product line will have to be sampled and tested in the framework of a shipment certification,
whereas only a limited number of samples will be tested for serial certification since production
audit will certify conformity of the rest.
Be prepared that the certification cost might appear not proportional versus cost of the product to
be certified. Therefore, if your company intends to take part in a tender for a project in Russia, the


advice is to plan ahead and ask preliminary quotation for certification from a professional body so as
to include the cost to your bidding. Otherwise, there is the risk that once the project wins the bid not
taking into account real certification cost, your anticipated profit will not be sufficient to cover actual
expenses. In some cases, your certification body might suggest slight modifications of initial design
for a machine or industrial unit in order to lower your certification expenses.

4.6.11. Whom to address for Russian conformity assurance?
Any approving document is to be issued by an accredited body. There are about 1500 certification
bodies and 3550 testing facilities accredited within GOST R system, not counting other certification
systems. In July 2010, the Single Register of Certification Bodies and Testing Laboratories of the
Eurasian Economic Community (EurAsEC) Customs Union was established. Only organizations
included in this Register (1010 certification bodies and 2114 test laboratories by the end of 2011) are
allowed to issue Certificates of Conformity and Declarations of Conformity recognized in three
member countries of EurAsEC, namely Russia, Belarus and Kazakhstan.
Often, certification bodies focus on a specific type of approvals or on a specific industry (e.g. textile
or telecom). It is reflected in their accreditation scope. Only the largest ones provide integrated
services assisting in getting a range of approvals in one place.
While selecting a certification body, request for the accreditation certificate and for the reference
list, consider whether the future partner is experienced in the kinds of approvals you need and able
to guide you in the Russian regulatory environment. Unprofessional or fraudulent service might
cause headache in the future such as arrest of the shipment at the customs border or costly delays in
delivery schedule.


4.7. Intellectual property rights and franchising
by BEITEN BURKHARDT

4.7.1. General information on the legal regulation of intellectual property
4.7.1.1. Regulation of intellectual property in Russia
The institution of intellectual property in Russia is governed by Part 4 of the Civil Code of the Russian
Federation (hereinafter the “Civil Code”), which entered into force on January 1, 2008, replacing a
multitude of specialized laws and subordinate legislation.
A foreign legal entity or individual may exercise and seek protection for IP rights in Russia, provided
that the relevant legal requirements are satisfied. Russia is a party to numerous international
treaties on IP rights, including:
 the Patent Cooperation Treaty;
 the Paris Convention for the Protection of Industrial Property;
 the Madrid Agreement on the International Registration of Trademarks;
 the Protocol to the Madrid Agreement;
 the Universal Copyright Convention (UCC);
 the Berne Convention for Protection of Literary and Artistic Works (Berne Convention);
 the Convention for the Protection of Producers of Phonograms against Unauthorized
Duplication of their Phonograms (Geneva Convention);
 the International Convention for the Protection of Performers, Producers of Phonograms and
Broadcasting Organizations (Rome Convention).
4.7.1.2. Types of protected objects
Part 4 of the Civil Code uses the following classification of intellectual properties and equivalent
means of individualization:
 copyright (literary, scientific, and artistic works, including computer programs and databases);
 rights related to copyright (performance right, recording right, on-air and cable broadcast right,
right of a database producer, publisher’s right to a scientific, literary, or artistic work);
 patent right (patents for inventions, industrial designs, and utility models);
 right to the results of selective breeding;
 right to semiconductor topographies;
 right to a production secret (know-how);
 rights to means of individualization of participants of legal entities, goods, works, services, and
enterprises (corporate name, trademark, denomination of origin of goods, brand);
 right to use intellectual properties as part of an integrated process.
4.7.1.3. Transactions with intellectual property
A system of agreements for administration of IP rights is unified for all types of protected objects
and includes the following types of agreements:
 agreement on alienation of the exclusive right;
 license agreement (exclusive or non-exclusive license).
Under an agreement on alienation of the exclusive right to intellectual property, the right holder
transfers to the acquirer its exclusive right to the respective object. That being said, the original right
holder loses the right to independently use the object.


Agreement on alienation of the exclusive right shall be executed in a written form. If intellectual
property is subject to state registration, respective agreement shall also be registered with the
Federal Service for Intellectual Property, Patents, and Trademarks (hereinafter, “Rospatent”) under
pain of invalidity.
Pursuant to a license agreement, the owner of the exclusive right to IP (licensor) grants the licensee
the right to use such IP within the limits established by the agreement, with or without indication of
the territory, in which use is permitted.
The licensee under a license agreement may use respective IP only within those scope of rights and
means of use that are stipulated by agreement. The right to use IP, which is not directly specified in
the license agreement, is not deemed to be granted to the licensee.
A license agreement shall be executed in a written form and, if intellectual property is subject to
compulsory state registration, be registered with Rospatent under pain of invalidity.
License agreements are divided into two types:
 ordinary (non-exclusive) license: the licensee is granted the right to use IP, and the licensor
reserves the right to issue licenses to other parties;
 exclusive license: the licensee is granted the right to use the trademark, and the licensor does
not reserve the right to issue licenses to other parties.
The licensee may grant a third party the right to use IP (a sublicense agreement) only with the
licensor’s written consent.
Under a sublicense agreement, the sublicensee may be granted rights to use IP only to the extent of
such rights and means of use that are contemplated by the license agreement for the licensee.
In all other respects, a sublicense agreement is subject to the same rules as a license agreement.

4.7.2. Trademarks and service marks
Part 4 of the Civil Code defines a trademark as “a symbol serving to individualize the goods of legal
entities or individual entrepreneurs” and a service mark as “a symbol serving to individualize the
works performed by legal entities or individual entrepreneurs or the services rendered by them”.
Trademarks may be represented by words, pictures, three-dimensional signs and other designations
(or combinations thereof). The Civil Code does not provide for the exhaustive list of types of
trademarks and allows for the existence of other types of trademarks, provided they meet the
criteria for registration stipulated by law. The criteria for registration of a symbol as a trademark are:
distinctiveness (possibility to identify products (services) among similar ones) and novelty
(trademark shall not be identical or confusingly similar to existing means of individualization).
Legal protection of a trademark in the Russian Federation is provided on the basis of its state
registration in accordance with the procedure established by law or under international treaties of
the Russian Federation. The registration of symbols as trademarks in Russia is performed by
Rospatent.
The owner of a trademark acquires the exclusive right to use the trademark only for those goods and
services, for which the trademark has been registered. Trademarks are registered with the use of the
International Classification of Goods and Services, in accordance with which the applicant may
select the desired classes of goods and services.
The initial term of the trademark registration is equal to 10 years, at the end of which the trademark
owner may renew the registration an unlimited number of times.
The owner of a registered trademark is granted the exclusive right to use it within the Russian
Federation. Without the owner’s consent, no one is entitled to use in civil turnover the trademark


itself or an identical or confusingly similar trademark. The rightholder is able to use the symbol ®
notifying of that respective trademark is protected on the territory of Russia.

4.7.3. Copyright and related rights
Scientific, literary, and artistic works that are the result of creative activity and exist in some
objective form are protected in Russia as copyright objects. The key criteria for granting legal
protection are as follows:
 presence of a creative component in the work;
 objective form of expression of the work, e.g., written or oral form (in the form of a public
utterance, public performance and other similar form), in the form of an image, audio or video
recording, in three-dimensional form.
At the same time, a work is protected by copyright irrespective of its artistic value, purpose, and
means of expression.
Part 4 of the Civil Code contains an open-ended list of the types of works that are protected by
copyright (literary works, musical works, audiovisual works, etc.). Copyright objects also include
computer programs (protected as literary works), derivative works (translations, staging's, etc.) and
composite works (including databases, anthologies, encyclopedias, etc.).
Official documents and their official translations, state symbols and marks, folklore works and
informative reports on events and facts are not protected as copyright objects.
Unlike trademarks and properties protected by a patent, copyright protection is granted by virtue of
the very fact of creation of the work as of the moment when the work takes on an objective form.
No additional formalities must be observed to obtain the right to protection.
Use of the symbol of copyright protection – “©” – in conjunction with the name of the author and
the year of creation of the work is not a condition for granting legal protection, but it may serve as a
notice that the work is protected.
Programs and databases can be registered with Rospatent. Such registration procedure is voluntary
and does not give rise to rights to the computer programs or databases, but rather it is intended to
facilitate proving authorship and time of creation. At the same time, agreements on alienation of
the exclusive right to registered programs and databases must also be registered with Rospatent.
In accordance with the traditions of the countries of continental Europe, it is customary in Russian
copyright law to divide copyrights into personal non-property and exclusive (property) rights.
Personal non-property rights (e.g., right of authorship, right of integrity in a work, right of
withdrawal) are closely related to the author’s identity and, therefore, cannot be transferred to third
parties. An exclusive (property) right (e.g., distribution of a work, public performance of a work, on-
air broadcasting), on the contrary, can be alienated by the author in favor of third parties.
As a general rule, copyright protection lasts for the author’s lifetime plus 70 years after his/her
death. Upon the expiration of a copyright, the copyright object is considered to be in the public
domain and may be freely used by all interested parties.
The exclusive right of a database producer originates as of the completion of its creation and is
effective for 15 years. With every update of the database, the effective term of the producer's
exclusive right is renewed.

4.7.4. Industrial property
Another institution in Russian intellectual property law is patent law, in the context of which
protection is granted to technical achievements and new industrial developments. In contrast to
copyright law, which protects the form of an author's works, including scientific and artistic works,


patent law aims to protect the essence and content of technical industrial solutions. Part 4 of the
Civil Code identifies inventions, utility models, and industrial designs as patentable objects.
A technical solution in any area relating to a product or method is protected as an invention. The
following may be patented as inventions relating to a product:
 a device;
 a substance;
 a microorganism strain;
 a plant or animal cell culture.
Processes acting on a tangible object with material resources are protected as method-related
inventions. Exclusive rights to a method are complemented by rights to the product directly
manufactured by the patented method (indirect protection), with the new product being deemed
manufactured by the patented method, unless proven otherwise.
An invention is granted legal protection if it meets the criteria of novelty, level of invention, and
industrial applicability.
A utility model is a technical solution relating to a device. In essence, a utility model is similar to an
invention, but differs in that the level of invention requirement does not apply to it. The criteria for
registration of a utility model are only novelty and industrial applicability.
An artistic design solution for an industrial or artisanal product that defines its outward appearance
is protected as an industrial design. This category is largely similar to shape trademarks, which
means that the author of the intellectual property is able to choose between these two types of
protection.
Industrial designs may be either three-dimensional or flat, as well as being a combination of two-
and three-dimensional elements. An industrial design must meet the criteria of novelty and
originality.
The following may not be covered by patent rights:
 methods of cloning a human being;
 methods of modifying the genetic continuity of cells of human embryos;
 use of human embryos for industrial and commercial purposes;
 other solutions contradicting public interests or humane and moral principles.
Legal protection of inventions, utility models, and industrial designs is provided on the basis of
patents issued by Rospatent. A decision to register an invention, industrial design, or utility model is
taken based on an examination of the application. Number of stages of examination and content
thereof depends of type of industrial property being registered.
A patent certifies the exclusive right of the party, to which the patent has been issued, to use the
patented object. The exclusive right of a patent holder means that third parties are not entitled to
use the patented object without the patent holder’s consent.
The effect of a patent is limited in time and space.
The terms of patents are as follows:
 a patent for an invention – 20 years from the date of submission of the application;
 a patent for a utility model – 10 years, with right of renewal for 3 years;
 a patent for an industrial design – 15 years, with right of renewal for 5 years.
The exclusive right from a patent issued by Rospatent is valid only within the Russian Federation.
Each year, the patent holder must pay the state fee to maintain the patent in force. If the fee has not
been paid on time, the patent is canceled, although it may be reinstated within three years after the


expiration of the deadline for paying the fee. At the same time, a party that has started using the
patented object during the period between the cancelation of the patent and its reinstatement
retains the right to continue using it free of charge.

4.7.5. Right to a production secret (know-how)
Relationships arising in connection with the creation and use of production secrets are governed by
Part 4 of the Civil Code (Chapter 75). In addition, the articles of Federal Law No.98-FZ of July 29,
2004 “On Trade Secrets” governing the procedure for establishing trade secret protection remain in
force.
Production secrets are understood as information of any kind, including information about
intellectual properties in the scientific and technical sphere and information on methods of
performing professional activities, that has current or potential commercial value by virtue of being
unknown to third parties, that is not freely accessible to third parties by legal means, and for which
the owner of such information has established trade secret protection.
Relationships relating to the establishment, alteration, and cancelation of trade secret protection
are governed by the Federal Law “On Trade Secrets”. Trade secret protection is deemed established
after the following measures have been taken by the owner of the information:
 compiling a list of the information that constitutes a trade secret;
 limiting access to the information that constitutes a trade secret by implementing procedures
for handling the information and monitoring the compliance with such procedures;
 listing the individuals receiving access to information that constitutes a trade secret and/or the
parties to which such information has been disclosed or transferred;
 regulating relationships with regard to the use of information that constitutes a trade secret by
employees on the basis of employment contracts and by contracting parties on the basis of civil
law contracts;
 marking tangible media (documents) containing information that constitutes a trade secret with
the words “Trade Secret” and the name of the owner of this information.
The law rules out the necessity of registering a production secret with state authorities. Therefore,
the exclusive right to a production secret arises for the right holder as of the establishment of trade
secret protection.
The exclusive right to a production secret may also arise directly at the time of obtaining the
information, if the obtained information qualifies as information for which trade secret protection
has already been implemented.
The law allows for the possibility of several right holders possessing the exclusive right to one and
the same production secret, if each of the right holders has obtained the information constituting
such production secret independently of the others. Honesty and independence in obtaining a
production secret means that the party that has become a new owner of the production secret
obtained the respective information as a result of entirely independent intellectual activities without
the knowledge and use of information belonging to other owners of the production secret.
The exclusive right to a production secret remains valid as long as the confidentiality of the
information constituting such secret is maintained. As soon as the respective information is no
longer confidential, the exclusive right of all right holders to the production secret shall lapse.

4.7.6. Franchising
According to the Civil Code, under a franchise agreement (Russian name "commercial concession
agreement" [договор коммерческой концессии]) the franchisor (rightholder) grants to the
franchisee, for a consideration, a set of territorially exclusive rights, including the right to conduct


business using the franchisor's trademark or service mark. A franchise agreement may also apply to
other IP rights, such as the right to use a trade name or the right of access to trade secrets.
As every franchise in Russia involves a trademark, the respective trademark must be valid in Russia
when the franchise agreement is submitted for registration. Such validity can be based either on
Russian trademark registration or on World Intellectual Property Organization trademark
registration with Russia as a designated registrant country.
A franchise agreement shall be registered with Rospatent. Equally, no amendment to or early
termination of a franchise agreement shall be valid until registration has been performed.
A franchise agreement may be concluded for the term agreed by the parties thereto or for an
indefinite term. In the latter case, each party is able to unilaterally terminate the agreement by
sending a written notice at least six months prior to termination.
Provided that the franchisee duly performed its obligations while the franchise agreement was in
effect, once the franchise agreement expires, the franchisee has the statutory right of first refusal to
renew the agreement for a new term. However, in this case the franchisor may change the terms, on
which the agreement is renewed, in accordance with current market demands.
A franchisor and franchisee are jointly and severally liable for defects in goods and services produced
under the franchise agreement. The franchisor is secondarily liable for defects in goods provided to
the franchisee pursuant to the franchise agreement, even if the franchisor has no direct control over
the franchisee's actions.
The parties to a franchise agreement may agree upon restrictions of their rights thereunder. In
particular, such agreement may provide for:
 obligation of the franchisor not to grant to third parties the same exclusive rights for their use on
the franchisee's territory or to refrain from own similar activities in such territory;
 obligation of the franchisee not to compete with the franchisor on the territory covered by the
franchise agreement;
 refusal of the franchisee from entering into franchise agreements with regard to similar
exclusive rights with the franchisor's competitors;
 obligation of the franchisee to distribute goods (perform works, render services) at prices set by
the franchisor as well as obligation of the franchisee not to distribute similar goods (works,
services) with the use of trademarks or trade names of other holders;
 obligation of the franchisee to distribute goods (perform works, render services) only within the
agreed territory;
 obligation of the franchisee to negotiate places of location of commercial premises used in the
course of exercising of exclusive rights as well as their external and internal design.
It should be noted that franchise agreements in terms of the Federal Law "On Protection of
Competition" are deemed to be so-called vertical agreements, which are not subject to the most of
restrictions relating to concerted practices established by the said Federal Law.


4.8. Special economic zones (“SEZ”) in St. Petersburg
by DLA Piper
The SEZ Law31 states that an SEZ is a Russian territory, which benefits from a preferential regime for
conducting business on that territory, thereby encouraging investment in the territory. SEZs are
selected by the Russian Government on a tender basis from proposals submitted by the regional
authorities. The term for which a territory will benefit from a SEZ status depends upon the type of
business activity for which the SEZ status was granted; this may be for up to 20 years for the high-
tech industry and health and recreation industry or up to 49 years in respect of investment in
transport infrastructure.
There are various types of SEZ in Russia:
 High Technology Incubation Zones ("TIZs");
 Industrial Production Zones ("IPZs");
 Zone of Tourism and Recreation ("ZTR");
 Port Zones ("PZs").
In addition to the SEZs considered above, other legislation has been enacted with respect to specific
free economic zones. An example of such legislation is the Federal Law On the Special Economic
Zone in the Kaliningrad Region of 10 January 2006 and the Federal Law On the Special Economic Zone
in the Magadan Region of 31 May, 199932.

4.8.1. TIZ in St. Petersburg
In general, existing TIZs in Russia are located in the Moscow region (Dubna (nuclear technology,
energy saving, aerospace and civil engineering) and Zelenograd (microelectronics,
nanotechnologies and medical studies), Tomsk (new materials, micro- and nanoelectronics) and St.
Petersburg (computer programs, databases, complex equipment, medicine).
The territory of the TIZ "St. Petersburg" will benefit from SEZ status until 2025. According to the
SEZ Law, this term cannot be extended.
The TIZ "St. Petersburg" consists of two platforms which are “Noidorf” and “Novo-Orlovsky”.
4.8.1.1. General requirements for the resident of the TIZ in St. Petersburg
The benefits of the TIZ only apply to foreign investors upon the creation of a Russian subsidiary
registered on the territory of the TIZ "St. Petersburg", as only Russian legal entities may make an
application to become a TIZ resident. Russian legal entities interested in participating in the TIZ
should make an application to obtain the status of a TIZ resident. The application should be
supported by a business plan.
A special SEZ Council decides on whether the applicant qualifies as a TIZ resident based on a scoring
system that takes into account, amongst other things, the prior expertise of the applicant or its
founder in the relevant industry, the investment recoupment period envisaged, competition in the
relevant market, etc.
The qualifying applicant enters into an investment agreement with the Russian ministry. The TIZ
resident is entitled to perform innovation activities inside the TIZ only under the conditions
envisaged in such agreement.

31
Federal Law On Special Economic Zones in the Russian Federation dated 22 July 2005.
32
More information on SEZ development can be found at www.rosez.ru.


4.8.1.2. Tax incentives for the TIZ residents in St. Petersburg
TIZ residents in St. Petersburg benefit from a number of tax concessions with regard to property tax,
land tax, corporate profits tax and other taxes.
Profits tax rate paid to the budget of St. Petersburg is reduced from 18% to 13.5% for the TIZ
residents in St. Petersburg. The reduced tax rate is applicable during the period when the TIZ "St.
Petersburg" exists (i.e. till 2025).
The TIZ residents in St. Petersburg enjoy full exemption from property tax in respect to the property
located inside the TIZ which is used inside of the TIZ and accounted for on the balance of the TIZ
resident.
The TIZ residents are exempt from the transport tax for a period of 5 years starting from the date of
the transport vehicle registration in St. Petersburg. The said exemption does not apply in relation to
water and air transport vehicles.
The TIZ residents in St. Petersburg also benefit from an exemption from the land tax for the period
of 5 years starting from the registration of the property rights for that land plot.
Unlike other SEZ residents, the TIZ residents also benefit from a low rate of social insurance
contribution rates (14% (till 2017) and 28% (starting from 2019) compared to the general rate of
34%).
4.8.1.3. Other tax and customs incentives for the TIZ residents in St. Petersburg
In addition to the above tax benefits, the customs regime of the free economic zone functions on
the territory of TIZ "St. Petersburg". The said customs regime envisages an exemption from customs
VAT, customs duties and non-tariff regulation in respect to foreign goods (equipment, raw
materials, components, construction materials) imported to the territory of the TIZ. Goods
produced within the Customs Union (Russia, Kazakhstan and Belarus) that are imported into TIZ are
also exempt from export duties, any exclusions and limitations.
Until the 1st of January, 2017 TIZ residents (registered before 2012) are allowed to import their
products, which were manufactured within the TIZ using imported raw materials, into the territory
of the Customs Union free from duties and taxes conditional upon the sufficient processing of the
goods.
The TIZ residents have a right to apply accelerated depreciation in relation to their own fixed assets
by setting a multiplier (maximum of 2).
R&D costs (including those that were not successful) may be deducted in the tax (accounting) period
when they were actually incurred without any limitation in size.
The tax position of TIZ residents cannot be worsened by any Russian tax laws, including regional tax
laws or any tax laws of the municipal districts during the term of the investment agreement.
4.8.1.4. Other benefits for TIZ residents in St. Petersburg
Apart from tax incentives St. Petersburg is highly attractive for the investors because of the other
benefits it may offer to investors. Specifically, the Government of St. Petersburg supports investors
by providing the state guarantees of St. Petersburg, providing tax deferrals and low land rent rates.
The TIZ territory in St. Petersburg contains all the necessary infrastructure.
The TIZ residents who have built any real estate on the rented land plot have a right to buy the land
plot lying under the real estate at discounted rates.


4.9. Public private partnerships and infrastructure
development
by DLA Piper
A public private partnership (hereinafter - "PPP") is a cooperation of a public authority and private
investor through a long-term agreement in areas of services traditionally provided by the public
sector. PPPs are aimed at increasing the quality of the public services/infrastructure and efficiency of
private gains through the combination of public and private financial and management instruments.
As the need for the improvement of public infrastructure and services in Russia is enormous, public
authorities show a constant growth of interest in PPPs.
Unlike many European countries where PPP legislation is well established and numerous PPP
projects have been successfully implemented, the Russian PPP legislation is still evolving. In
practice, the lack of experience implies the intention of the public authorities to have a greater
control over the PPP projects, than is usually expected in Europe. To reap the full benefits of PPP
(particularly, through increasing foreign investment) the authorities need to be prepared to
relinquish greater control of the procured public services/infrastructure to the private sector.
A series of high-profile PPPs have already been launched in Moscow, St. Petersburg and other
regions of Russia. The largest number of projects carried out relate to transport infrastructure (e.g.
the Western High Speed Diameter Motorway and Pulkovo Airport in St. Petersburg, the Road
interchange between Moscow ring road and High speed motorway "M-1: Belarus" in Moscow).
Within the last few years more and more PPP projects have been launched in the following sectors:
water treatment (e.g. the Northern Water Treatment Plant in St. Petersburg, the Water Treatment
Station in Rostov-on-Don), waste treatment (the Waste treatment facility in St. Petersburg),
education (the construction and operation of buildings for educational purposes in the Pushkinskiy
district of St. Petersburg).

4.9.1. Legal Framework
PPP projects that involve the federal authorities are implemented on the basis of the Federal Law
No FZ-115 'On Concession Agreements' of 21 July 2005 as amended ("Concession Law"), together
with a series of model concession agreements for different types of infrastructure.
Regional and local PPP projects may also be carried out on the grounds of the Concession Law or
special regional laws on PPPs that usually provide more flexibility and comfort to investors. Regional
laws on PPPs are adopted in the majority of the regions of Russia. In particular, the Law of St.
Petersburg No 627-100 'On the Participation of St. Petersburg in Public Private Partnerships' of 25
December 2006 ("St. Petersburg PPP Law") was among the first regional laws on PPP, and is
considered to be the most effective one.

4.9.2. Concession Law
The Concession Law applies to thirteen types of infrastructure including, amongst others,
motorways, roads, railways, the underground, pipelines, sea ports, airports, communal services, and
various cultural, sporting and tourism facilities.
The Concession Law includes provisions on:
 entities involved in the concession granting process;
 concession facilities;
 tender and selection procedure;
 concession agreements; and


 certain guarantees for the private entities and public bodies.
Generally, the Concession Law is flexible and does not impose rules on how relations between the
public and private bodies will be conducted during the concession period, these relations are to be
governed by the detail of the concession agreement itself once concluded. However, the Concession
Law contains numerous shortcomings, the main ones are summarized below:
 Ownership of the Facility
The Concession Law only relates to the PPP projects constructed as Build-Operate-Transfer
("BOT") and Rehabilitate-Operate-Transfer ("ROT") models. Under these models, the private
entity builds/rehabilitates the facility and upon completion transfers the ownership of the facility
to the public body. Thereafter, the private entity takes over the operation and maintenance of
the facility under a lease back from the public body for the contract period. Other PPP models
that incorporate the ownership of the real estate object by the private entity (for example,
BOOT33) are not provided for under the Concession Law.
 Security
As a general rule the Concession Law provides against the possibility of a concessionaire to
pledge rights under the concession agreement or to assign the rights during the construction
stage of a concession. Based on the practical needs of the investors and financing institutions an
exception to this rule was introduced with regard to the concessions on social facilities and
amenities (such as water and waste treatment plants, energy supply facilities, street lightning
and others). The concessionaire is entitled to pledge his/her rights under the concession
agreement to a lender, who provides financing for the fulfillment of the concessionaire's
obligations under the concession agreement. In compliance with the Concession Law the rights
under the concession agreement may be pledged only to a single lender (independent of the
existence of any other financing parties). The lender, concessionaire, and the grantor of the
concession enter into a direct agreement stipulating the rights of each party in case the
concessionaire does not meet his/her obligations under the financial or concession agreement.
Alternative security instruments are available in Russia, but the aforementioned restrictions are a
significant hindrance when it comes to structuring the security package and finding lenders.

4.9.3. Negotiation of the contract
Concession agreements are granted through the tender procedure which is defined in the tender
documentation. Usually the tender documentation contains a draft of the concession contract that
is supposed to be executed with the winner of the tender. According to the Law on Concessions
within 5 days from the date of announcement of the winner of the tender the organizer of the
tender provides the winner of the tender with the concession contract that shall be signed by the
winner of the tender within a certain time specified in the tender documentation. The Law on
Concessions does not provide for the possibility for the winner of the tender to negotiate changes in
the concession agreement. With reference to the above, even if bidders are requested to present as
a part of their bids a mark-up of a concession agreement, the winner of the tender may be still
bound to the published version of the concession contract and exposed to potential liability if
unwilling to sign it in its published form with very limited carve-outs.

33
In a Build-Own-Operate-Transfer ("BOOT") project the private entity carries out the capital investment in construction of
the facility, which it then owns and operates for a period specified in the contract. Following the expiration of that period
the facility is returned to the public body.


4.9.4. St. Petersburg PPP Law
The St. Petersburg PPP Law was enacted in response to the shortcomings of the Concession Law
and is aimed at better facilitating the St. Petersburg administration's pipeline of PPP projects, which
is regarded as one of the most advanced in Russia. The principal features of the St. Petersburg PPP
Law, which improve on the Concession Law, are as follows.
 There is no restriction on the use of PPP models under which the private entity retains
ownership of the facility.
The St. Petersburg PPP Law directly establishes 8 forms of PPP, among which are Build-Own-
Operate-Transfer ("BOOT"), Build-Own-Operate ("BOO"), Rehabilitate-Own-Operate-Transfer
("ROOT") and others. In addition to the greater variety of forms of PPP directly stipulated, the
St. Petersburg PPP Law entitles the Government of St. Petersburg to establish other forms of
PPP if required.
 There is no legal prohibition to pledge the project's assets, or to pledge or assign the rights
under the PPP agreement as part of the security package. Usually the conditions under which
the private partner is entitled to pledge/assign its rights under the PPP agreement, as well as the
rights to the project assets, are stipulated in the project agreement and lenders direct
agreement. These conditions underlie negotiations between the public authority, the private
partner, and the financing organizations.
 There is greater flexibility for the private entity to negotiate and mark-up the PPP agreement,
provided as a part of the tender documentation. The St. Petersburg PPP Law directly provides
for negotiations between the city and the winner of the tender to discuss possible amendments
to the draft of the PPP agreement. Limitation of possible amendments shall be established in
the tender documentation, and in any case shall not change the provisions of the bid of the
winner of the tender. The law states that in the case where the tender documentation does not
provide for a larger period of time, negotiations shall be commenced and the PPP agreement
signed within 20 days. In practice the period for negotiations and the execution of the PPP
agreement, as usually established in the tender documentation, is 6 months.

4.9.5. Other Issues/Risks in PPP field
Notwithstanding the notable limitations of the Concession Law, there are additional issues that
differ from project to project. The most common ones that shall be considered by an investor are
listed below:
 Market volatility and currency risk;
The risk is usually taken by the investor.
 Political risk and state intervention;
According to the legislation and general practice, the authorities usually undertake the
obligation to indemnify the investor in case such a risk arises.
 Provisions of laws governing budget, tax, licensing and antimonopoly regulation;
These provisions usually imply additional obligations on the investor in the course of the
implementation of the PPP project.
 Geographical concentration of major projects;
 The potentially negative attitude of consumers being charged for services that used to be free,
for example through the introduction of toll roads;
 Dispute resolution procedure.
Russian policy favors the jurisdiction of the Russian courts for the resolution of contractual
disputes. However, for various reasons, most international PPP participants would prefer
dispute resolution to be conducted through recognized international arbitration institutions.


Also, it may be noted that in a number of current projects the public body did opt for
internationally recognized arbitration.

4.9.6. PPP Finance Institutions
In November 2005 the regulations on the State Investment Fund ("SIF") were adopted by the
Russian government, signalling another move towards PPP. The SIF is intended to be one of the
federal primary PPP funding sources and to act as a catalyst in attracting private investment. The
planned volume of the SIF in 2012 exceeds RUB 65 billion (which is approx. USD 2.1 billion). The
maximum amount of investment to be made from the SIF is limited with the amount established in
the federal budget for the corresponding year and shall not exceed 75 per cent of the project capital
costs for federal projects, and 50 per cent of the project capital costs for regional projects.
To qualify for SIF support, an investment project must:
 be performed through concessions, or in the sectors of transport, energy, or engineering
infrastructure;
 have a value in excess of RUB 5 billion (which is approx. USD 166 million) for federal projects,
and RUB 500 million (which is approx. USD 16.6 million) for regional and local projects;
 comply with public sector priorities;
 generate social benefits, and
 breakeven.
In addition to the above, regional investment project must also be financed from the regional
budget to an amount not less than that estimated for the regional/municipal co-financing of
investment projects by the Ministry of Regional Development.
The investor, qualifying for SIF support, shall prove that the implementation of the project is
impossible without SIF investments.
In May 2007, the Federal Law No FZ-82 'On the Russian Bank of Development' of 17 May 2007 set
rules and principles of the activities of Vnesheconombank ("VEB"). VEB is a state owned banking
institution tasked with promoting Russian infrastructure and in particular, with supporting and
developing PPP projects. VEB is currently considered as one of the institutions that will play a key
role in the further development of Russian PPPs. In this regard a PPP task force has recently been
created within VEB to study, standardize and promote PPP practices in Russia.
The European Bank for Reconstruction and Development and VEB have agreed to explore the
possibility of co-financing the projects in certain areas and in February 2008 a memorandum of
understanding in this regard was signed. The priority sectors under the agreed arrangements
include transport infrastructure, energy and municipal services and those with significant
environmental and energy efficiency potential. With the help of other interested organizations, the
two institutions will also consider setting up a unit to help manage the project preparation process
for PPPs in infrastructure, a move that could be extremely beneficial in attracting investors.
In August 2009, VEB signed a formal agreement with a private infrastructure fund to become the
fund's joint manager and cornerstone investor with a commitment of USD 200 million. Other
investors in the fund include the IFC (USD 100 million), the EBRD (USD 100 million) and the Kazakh
development institution Kazyna Capital Management (USD 30 million) as well as private sector
investors. The fund expects to invest in PPP projects such as Pulkovo Airport, and the Moscow to St.
Petersburg toll road.


4.10. Obtaining rights to state-owned land in St. Petersburg
by DLA Piper

An entity interested in receiving rights to state-owned land in St. Petersburg (hereinafter - the
Entity) may acquire the rights to the land (a) owned by the Russian Federation (hereinafter - the
Federal land) and (b) owned by St. Petersburg or the land not delimited between St. Petersburg and
the Russian Federation (hereinafter - the City land).

The rights to the land plots from the state-owned land can be granted:
 at a tender, and
 without a tender.

The choice of the procedure depends on the following principal issues:

 Type of rights
o Subsequent to the results of a tender, the person can be granted either ownership or
lease rights to the land depending on what has been put up to tender.
o If the land plot is allocated without a tender then only the lease rights to the land plot
can be acquired unless otherwise stipulated by an international agreement ratified by
the Russian Federation. In both the cases when the land plot is granted for lease, after
the commissioning of the building and the state registration of the title of ownership to
it, the Entity may acquire the long-term lease rights or the title of ownership to the land
plot under the building erected.
 Initiative
o The tender is initiated by the authority. The choice of the land plot, its formation, and
the preparation of the documentation is done by the competent authorities and no
action is required from the Entity before applying for the participation in a tender.
o If the land plot is granted without a tender, the procedure is initiated by the Entity and
the land plot is chosen during the prior approval of the allocation of the object as a part
of the procedure for the allocation of the land plot.
 Determination of the price or the amount of the lease payment
o The price or amount of the lease payment in the contracts is concluded as a result of a
tender and is the highest price which has been proposed during the conduct of the
tender but not less than the initial price.34
o The amount of the lease payment, if the land plot is allocated without a tender, is
determined on the basis of the valuation report prepared during the procedure of the
allocation. We would like to draw your attention to the fact that the lease payment in
the contracts concluded as a result of the allocation of the land plot without a tender is
regarded also as an investment condition. In practice this means that the lease payment
for the whole period of time indicated in the lease agreement should be paid as a full
sum even if the construction has been realized earlier than was stated in the contract
and therefore the lease period was shorter.

34
The price or the amount of the lease payment is determined either by choice of the highest bid proposed in closed
envelopes or by increasing the initial price or lease payment by announcing the new price (which is not more that 1 to 5 per
cent from the previous price) during a tender until only one participant is left who is ready to buy or lease the land plot at
the newly announced price.


 Establishment of the boundaries and cadastral registration of the land plot
o The land plot that is put up to tender is already formed, meaning that the land plot has
fixed boundaries, has undergone State Cadastral Registration in the Real Estate State
Cadastre and has been assigned a cadastral number. The preparation of the land plot for
tender is carried out by the appropriate state authorities.
o Establishment of the boundaries of the land plot, if the land plot is allocated without a
tender, and the State Cadastral Registration in the Real Estate State Cadastre are
undertaken by the Entity which is a time-consuming procedure.
 The existence of town-building documentation and other limitations
The land plot is granted only at a tender if the drafts of the territory planning and the drafts of
the territory survey have been elaborated in regard to the territory where the requested land
plot is located.35 Besides, the land plot is granted only at a tender in the event there is more than
one application (i.e. at least two or more) from investors regarding a specific land plot.

4.10.1. Acquisition of ownership or lease rights to the land at a tender
The acquisition of the rights to state-owned land at a tender is regulated mainly by the Land Code of
the Russian Federation and the Rules on the Organization and Conducting of the Tender on Sales of
the Land Owned by the State or Municipals and on the Rights for the Conclusion of the Lease
Agreement in Regard to the Same Land approved by the Decree of the Government of the Russian
Federation dated 11 November 2002 No.808, as well as by the Regulation on the Order of
Cooperation of the Executive Authorities of St. Petersburg when Making Decisions on the Allocation
of the Immovable Property for the Construction, Reconstruction and Adaptation for Modern Use,
approved by the Decree of the Government of St. Petersburg dated 30 December 2010 (last
amended 2 August 2011) No. 1813.
The tender may be held in the form of an auction or a competition. A distinctive feature of the
competition is the fact that the state sets certain conditions (obligations) on the use of the land plot.
Unlike at auction, the winner of the competition should not only make the highest bid, but should
also undertake the obligations to meet the conditions of the competition. An auction is a more
widespread form of tender.

The major steps for the acquisition of a land plot at a tender are the following:

1. Address plan
For the purposes of the preparation of documents required for the allocation of the land plot for
construction at a tender (without preliminary approval of the place of the property allocation),
each year the Investment Department of St. Petersburg (during the last month of each calendar
year) prepares and provides to the Committee on Construction the Address Plan for the
preparation of documents for the tender procedures. This Address Plan must be approved by
the Chair of the Construction Committee and the Vice-Governor of St. Petersburg responsible
for such matters. The Address Plan contains a list of land plots (sites) which shall be put for
tender.
2. Procedure for adopting a decision on the allocation of the land plot for construction at a
tender
The land plots available for tender procedures may, among others, include both the land plots
located within the territories for which the drafts of territory planning and drafts of territory
survey have already been developed and approved, and the land plots located within the

35
Item 11 article 30 of the Land Code of the Russian Federation.


territories for which the drafts of the territory planning and territory survey have not been
approved yet.
 For the purpose of the preparation of documents regarding the land plots, for which the
drafts of territory planning and territory survey have not been approved, the Investment
Department of St. Petersburg directs a request to the Committee on Town-Planning and
Architecture. The latter issues a report which shall include information on the permitted use
of the land plot and functional purpose of the property to be constructed on such a land plot,
taking into account the applicable town-planning limitations, as well as the time terms for
the issuance of a town-planning map of the land plot.
 The Investment Department of St. Petersburg directs inquiries to a number of government
authorities in order to obtain their reports. For instance, such inquiries are sent to:
o the Committee on Land Resources and Land Development (which reviews factual
information about the land plot, its address, total area, data on any real estate
objects located on the land plot, allocation of zones with special regime of
treatment on the land plot, etc.),
o the Committee on City Property Management (which reviews encumbrances of the
land plot and the properties located on it, if any, as well as information on the
registration of ownership title of St. Petersburg to the land plot and real estate
located on it, etc.),
o the Committee on State Control, Use and Protection of Cultural Properties (which
reviews whether the land plot or real estate on it, if any, are regarded as cultural
heritage properties or whether such properties are located within the borders of the
protection zone of properties of cultural heritage, as well as a review of the
applicable limitations to construction and other works on such properties),
o the Committee on Energy (which reviews the technical conditions for connection to
utilities, etc.),
o and several other committees of the St. Petersburg Government.
 The Investment Department of St. Petersburg also directs a notification to the Construction
Committee of St. Petersburg on the necessity to obtain information from the Department of
Rospotrebnadzor for St. Petersburg. Upon the receipt of such a notification, the
Construction Committee shall direct an inquiry to the Department of Rospotrebnadzor for
St. Petersburg on the compliance of the planned use of the targeted land plot with the
sanitary rules established by the Federal Law "On sanitary-epidemiological wellbeing of the
population", and submit the received response to such an inquiry to the Investment
Department of St. Petersburg.
 Upon the obtainment by the Investment Department of St. Petersburg of the reports of all
the government authorities mentioned above (which shall be prepared by the relevant
government authorities within 10-14 business days in accordance with applicable
legislation), the Investment Department procures the performance of cadastral works and
state cadastral registration of the land plot, and the evaluation of the market value of the
real estate or complex of rights to the real estate, as well as requests from the Committee on
Town-planning and Architecture issuance of the town-planning map of the land plot.
 All of the documents gathered by the Investment Department of St. Petersburg regarding
the land plot and reports are then transferred to the Construction Committee for the
purpose of the preparation of the draft Decree of the Government of St. Petersburg on the
allocation of the real estate for construction purposes at tender proceedings.
 Upon the adoption by the Government of St. Petersburg of the Decree on the sale of the
land plot at tender or sale at tender of the right to execute the lease agreement of the land


plot for construction purposes, the Construction Committee directs a package of documents
required for the organization and performance of the tender to the organizer of the tender.
3. Results of the tender
The results of the tender (auction or competition) are formalized in the minutes on the results of
the tender which shall be signed by the tender organizer, the auctioneer (when the tender is
held in the form of an open auction) and the winner on the date of the tender.
4. Conclusion of a land sale-and-purchase contract or a land-lease contract
The signed and effective minutes on the results of the tender serves as the grounds for the
conclusion of the land sale-and-purchase contract or the land-lease contract between the winner
and the appropriate authority.36
5. State registration of the lease or ownership rights in the Unified State Register of Rights to
Immovable Property and Transactions Thereof by the Department of Federal Services on state
registration, cadastre and cartography in St. Petersburg.

4.10.2. Acquisition of lease rights to the land without a tender
The procedure for the acquisition of City Land37 is regulated in detailed form under the following
major acts:
 the Law of St. Petersburg dated 26 May 2004 (last amended 04 July 2011) No. 282-43 “On the
procedure of the allocation of immovable properties owned by St. Petersburg for construction
and reconstruction” (hereinafter - the St. Petersburg law);
 the Regulation on the Order of cooperation of the Executive authorities of St. Petersburg when
making decisions on the Allocation of Immovable Properties for the Construction,
Reconstruction and adaptation for modern use, approved by the Decree of the Government of
St. Petersburg dated 30 December 2010 (last amended 2 August 2011) No. 1813 (hereinafter -
the Decree).
The principal stages for providing land plots from the City land for construction without a tender in
accordance with current legislation are the following:
1. The Investor applies to the Construction Committee of St. Petersburg with an application for the
allocation of a land plot.
2. If there are no grounds for denial of the application, the Construction Committee of St.
Petersburg forwards the application to the Investment Department of St. Petersburg within 5
(five) business days.
3. The Investment Department of St. Petersburg directs inquiries to a number of government
authorities in order to obtain their reports on the possibility of the allocation of a land plot. For
instance, such inquiries are sent to:
 the Committee of Town-Planning and Architecture (which reviews various town-planning
limitations, the permitted use of the land plot, functional purpose of the object of planned
construction, etc.),
 the Committee of Land Resources and Land Development (which reviews factual
information about the land plot, its address, total area, data on any real estate located on
the land plot, allocation of zones with special regime of treatment on the land plot, etc.),

36
In regard to City land it is the local agency of the Committee on City Property Management; and in regard to the Federal
land - the appropriate Territorial department of the Federal Agency for State Property Management of St. Petersburg.
37
Although the possibility of allocation of the land plot without tender is established in the Land Code, the procedure can
be factually realized only in regard to the City land as soon as there is no competent authority for Federal land.


 the Committee of City Property Management (which reviews encumbrances of the land plot
and the real estate located on it, if any, as well as information on the registration of
ownership title of St. Petersburg to the land plot and real estate located on it, etc.),
 the Committee on State Control, Use and Protection of Cultural Properties (which reviews
whether the land plot or the real estate located on it, if any, are regarded as cultural heritage
properties or whether such properties are located within the borders of the protection zone
of cultural heritage properties, as well as a review of applicable limitations to construction
and other works on such properties),
 the Committee on Energy (which reviews technical conditions for connection to utilities,
etc.),
 and several other committees of St. Petersburg Government.
Upon the obtainment of reports from the abovementioned committees (which shall be prepared
by relevant government authorities within 10-14 business days in accordance with applicable
legislation), the Investment Department of St. Petersburg directs such reports to the
Construction Committee.
4. The Construction Committee, within five business days from the receipt of the above-
mentioned reports, adopts a decision on the denial of the allocation of the land plot or on
preparation of the memorandum to the attention of the Vice-Governor of St. Petersburg on the
possibility of the preparation of the draft Decree of St. Petersburg on the allocation of the land
plot for construction under investment conditions.
5. The Vice-Governor solicits the approval of the Governor of St. Petersburg.
6. The Governor of St. Petersburg may issue an approval and give orders regarding further action
to be implemented by authorized government authorities. In pursuance of such orders the
Investment Department of St. Petersburg:
 directs an inquiry to the Committee on Land Resources and Land Development for the
issuance of the plan of allocation of the land plot on the cadastral map of the territory;
 sends to the competent authorities of St. Petersburg a notification on the necessity to
inform the population on the possible provision of the land plot for construction (this is done
in accordance with the requirements of the law of St. Petersburg No. 400-61 dated 5 July
2006 “On the order of organization and conduct of public hearings and informing the
population of construction/town-planning activities in St. Petersburg”);
 directs to the Construction Committee the plan of allocation of the land plot on the
cadastral map and notifies about the necessity to obtain information from the Department
of Rospotrebnadzor for St. Petersburg. Upon the receipt of such notification the
Construction Committee shall direct an inquiry on the ecological conditions of the use of the
land plot to the Department of Rospotrebnadzor for St. Petersburg in accordance with the
Federal Law “On the sanitary-epidemiological wellbeing of the population”.
7. Upon receipt of the replies to the abovementioned inquiries, the Construction Committee
provides for the signing of the Act on the allocation of the land plot by representatives of the
Committee on Land Resources and Land Development, the Committee on State Control, the
Use and Protection of Cultural Properties and the Committee on Town-planning and
Architecture and approves the Act on allocation of the land plot itself. The Act on allocation of
the land plot is subject to official publication. The Act is regarded as a decision on the
preliminary approval of the place of allocation of the property and serves as the basis for the
further adoption of the decision on the provision of the land plot for construction and stays in
effect for 3 years.
8. On the basis of the issued Act on the allocation of the land plot, the Investor shall perform the
requirements of effective legislation, including cadastral works and state cadastral registration


of the land plot, the evaluation of the market value of the real estate or complex of rights to the
real estate and obtainment of reports from a number of Committees of St. Petersburg
Government (including the Committee of Land Resources and Land Development, the
Committee of City Property Management, the Committee of State Control, the Use and
Protection of Cultural Properties, and several others as listed in the Decree of St. Petersburg
Government No.1813 dated 30 December 2010).
9. Having fulfilled all the requirements listed in item 7 above, the Investor applies to the
Construction Committee for the issuance of a Decree of St. Petersburg on the allocation of the
land plot for the construction under investment conditions.
10. Unless there are grounds for denial of the Investor's application, the Construction Committee
prepares a draft Decree of St. Petersburg on the allocation of the land plot for construction
under investment conditions and refers it to the St. Petersburg Government for enactment.
11. Upon adoption of the Decree on the allocation of the land plot for construction under
investment conditions by the St. Petersburg Government, the Construction Committee submits
the necessary documents to the Committee of City Property Management for execution with
the Investor of the lease agreement under investment conditions. The contract on the land plot
lease is concluded for the period of construction.
12. Upon the signing of the lease agreement, the lease rights to the land shall be registered in the
Unified State Register of Rights to Immovable Properties and Transactions Thereof by the
Department of Federal Service on state registration, cadastre and cartography in St. Petersburg.

4.10.3. Requirements on the location (zoning)
When investor considers to obtain rights to a land plot for the purpose of construction, it is
necessary to take into account the applicable zoning requirements which are contained in the
following documents:
 The Master Plan of St. Petersburg approved by the St. Petersburg Law dated 22 December 2005
No. 728-99 (hereinafter referred to as "the Master Plan").
This determines the directions for the town-planning development of St. Petersburg and bases
the arrangement and distribution of the functional zones.
 The Rules on Land Use and Territory Development in St. Petersburg approved by St. Petersburg
Law dated 16 February 2009 No. 29-10 (hereinafter referred to as "the Rules").
These clarify the function of a territory determined by the Master Plan and establish the types of
permitted use and the ultimate parameters of the permitted construction/reconstruction for
land plots that are located within the boundaries of territorial zones.
 The drafts of territory planning (hereinafter referred to as "the DTP") and the drafts of territory
survey (hereinafter referred to as "the DTS") to be elaborated with regard to the parts of a
territory of St. Petersburg and to be approved by the Decree of the St. Petersburg Government.
The DTPs determine the density and the parameters of development of territories of quarters,
the total area of the sites for capital construction for specified designated purposes, and the
characteristics of development of social, transport maintenance and technical-engineering
systems required for the development of the territory.
The DTSs are elaborated to establish the sizes and boundaries of the built-on and vacant land
plots and clarify the design solutions valid in DTPs for specific land plots.
As of today, only a part of the territory of St. Petersburg is covered by the elaborated DTPs and
DTSs. When there is no elaborated DTP and DTS in regard to the territory in the frames of which the
considered land plot is situated, the DTP separately or together with the DTS is elaborated by the


Entity. The DTP (together with DTS) is developed on the basis of the statement of work received
from the Committee of Town-Planning and Architecture.38 The development of the DTP (together
with DTS) is carried out by a specialized organization under a contract within the time periods
agreed on in the contract. In actual practice, on average, the overall period for the DTP (and DTS)
development, coordination and approval by the Decree of St. Petersburg Government, takes from
half a year to 8 months.
In certain cases, construction plans shall meet and comply with the requirements stipulated in the
effective legislation on the protection of items of cultural heritage.39
Such requirements are regarded for items of cultural heritage (newly founded cultural heritage
properties), their territories and zones for the protection of items of cultural heritage, and provide
the following peculiarities to be taken into account while locating the construction on the territory
of the historically formed districts of St. Petersburg:
1. The zones for the protection of items of cultural heritage (the protective zone and the zone of
regulated development of the central regions of St. Petersburg) represent the territories
adjacent to the land plots on which the items of cultural heritage are located. For the purpose of
the safety for the items of cultural heritage a special order of use for land plots located within
the boundaries of such zones has been established (the regime of the zone).
The boundaries of the protective zone and the zone of regulated development of central
regions of St. Petersburg and their regimes are described in the St. Petersburg Law dated 19
January 2009 No. 820-7 “On the boundaries of zones for the protection of items of cultural
heritage on the territory of St. Petersburg and the regimes of land use within the boundaries of
such zones and on amending the St. Petersburg Law “On the Master Plan of St. Petersburg”.
The above law specifies the following material conditions for land plot use and the limitations
within the zones for protecting items of cultural heritage:
 new construction is prohibited in the protective zone and limited in the zone of regulated
development in the central regions of St. Petersburg;
 reconstruction and refurbishment in both zones is limited by the height of the buildings,
façade configuration, color and other parameters and requires special approval from the
Committee on State Control, the Use and Protection of Cultural Properties and the St.
Petersburg Committee on Town-Planning and Architecture;
 all town planning, construction and ground work shall be approved by the Committee on
State Control, Use and Protection of Cultural Properties.
2. The information on items of cultural heritage (including the subject of the protection) is
contained in the state register: in the federal register with regard to items of cultural heritage of
federal meaning, in the regional register with regard to items of cultural heritage of regional
meaning and in the register of newly founded items of cultural heritage with regard to such
properties.
The demolition of items of cultural heritage is prohibited. Only the following work may be
performed with regard to items of cultural heritage (all of these are intended for the safety of

38
Item 4 of the Instruction on the order of elaboration, structure and content of the documentation of territory planning
approved by the Order of the Committee of Town-Planning and Architecture of St. Petersburg Government dated 22 May
2006 No. 515.
39
St. Petersburg Law No.29-10 “On the Rules on Land Use and Territory Development in Saint-Petersburg” dated 16
February 2009; St. Petersburg Law No.820-7 “On the boundaries of zones of protection of items of cultural heritage on the
territory of St. Petersburg and regimes of use of lands within the boundaries of such zones and on amending the St.
Petersburg Law “On the Master Plan of St. Petersburg” dated 19 January 2009; St. Petersburg Law N.333-64 “On the
defense of items of cultural heritage” dated 12 July 2007; Federal Law No. 73-FZ “On items of cultural heritage for the
people of the Russian Federation” dated 25 June 2002.


the items of cultural heritage and cannot lead to changing the features that constitute the
subject of the protection of the properties):
 repairs;
 restoration;
 conservation;
 adaptation to modern use. Please note that only in the course of adaptation to modern use
reconstruction of the item of cultural heritage is deemed possible.

4.10.4. Construction permit documentation
Performance of the construction work on the land plot requires the receipt of certain permit
documentation under the town-building legislation so that the safety and the legitimacy of the
process is controlled.
Fulfilling construction work does not require the obtainment of a license any more as it was required
in 2005. At the same time the state system of licensing was replaced with a system of admissions
that are issued by the self-regulated organizations. Under the town-building legislation a self-
regulated organization is a non-commercial partnership that unites a particular number of legal
entities and entrepreneurs fulfilling the survey or design or construction works and has the
compensation fund to cover the harm (damages) caused in the result of the defaults of the survey,
design and construction work done by the united members of such a self-regulated organization.
A precise list of the work that requires admissions of the self-regulated organizations is approved by
the order of the Ministry of Regional Development of the Russian Federation dated 30 December
2009 No. 624. Each self-regulated organization may issue only the admissions to those works that
have been approved as the sphere of activities of the relevant self-regulated organization at the
general meeting of the members of the self-regulated organization.40 The admissions are issued
only to the legal entities and entrepreneurs who answer the requirements established by the
relevant self-regulated organization and the minimum requirements of the Town-Building Code of
the Russian Federation.
We would like to draw your attention to the fact that the work that requires admission of the self-
regulated organization includes such works as organization of design documentation preparation
(function of a general designer), organization of construction works (function of a general
contractor), control over the construction process implementation of which is imperative under the
town-building legislation.
Before starting the construction of a building on a land plot the subject also requires that the
following major documents are received: (a) a town-planning map; (b) a positive conclusion of the
state expertise on the results of survey work and on the design documentation and (c) a construction
permit.
1. A town-planning map41 is the document, which contains significant town-building information
such as boundaries of a land plot, permitted use etc. The town-planning map is prepared by the
Committee of Town-Planning and Architecture based on the application of the subject filed with
the necessary documents (e.g. materials of topographic mapping, cadastral passports of the
land plot).42 The normative term for the preparation of the town-planning map is 30 days from
the date of application.
2. The positive conclusion of the state expertise on the results of the survey work and on the design
documentation is given if the elaborated design documentation answers the requirements of

40
Item 5 of article 55.8 of the Town-Building Code of the Russian Federation.
41
Item 1 of article 44 of the Town-Building Code of the Russian Federation.
42
The order of the Committee on the Town-Planning and Architecture of St. Petersburg dated 11 June 2009 N 96.


the technical regulations and the requirements to the content of the design documentation. The
state expertise is conducted by the St. Petersburg state autonomous agency "Center of State
expertise"43 subject to the Service of State Construction Supervision and Expertise of St.
Petersburg. In regard to a technically complicated or unique property the state expertise will be
conducted by the Federal State Agency Glavgosexpetisa of the Russian Federation.44 The term
of the state expertise depends on the complexity of the building but should not exceed three
months. 45
3. After the receipt of the positive conclusion from the state expertise on the results of the survey
work and on the design documentation, the subject applies for the obtainment of the
construction permit attaching all the required documentation in accordance with the Town-
Building code of the Russian Federation. The construction permit is given in the name of the
person who enjoys the rights (lease or ownership) to the land plot.
The construction permit is issued if the design documentation is in conformity with the town-
planning map. Currently, the construction permit is granted by the Service of State Construction
Supervision and Expertise of St. Petersburg. In regard to the technically complicated or unique
property - the permit will be issued by the Ministry of the Regional Development.46 The normative
term for issuing of the construction permit is 10 days from the date of application.47

43
The Decree of the Government of St. Petersburg dated 23 October 2009 N.1177 On creation of St. Petersburg state
autonomous agency "Center of State expertise"; item 4.2, 6.1 of article 49 of the Town-Building Code of the Russian
Federation.
44
The order of the Federal agency on construction and housing and communal services dated 16 March 2007 N 64; item
4.1 of the Town-Building Code of the Russian Federation.
45
Item 7 article 49 of the Town-Building Code of the Russian Federation.
46
Decree of the Government of the Russian Federation dated 23 May 2009 N 441.
47
Item 11 article 55 of the Town-Building Code of the Russian Federation.


4.11. Buyout of land plots in St. Petersburg
by DLA Piper

According to Article 36 of the Land Code of the Russian Federation, citizens and legal entities which
own real estate (buildings and constructions) located on state land have an exclusive right to the
privatization or lease of the land plots on which such real estate is located.
Therefore, if a citizen or a legal entity owns real estate located on a state land, such citizen or legal
entity may choose to:
1. acquire the land plot on which the real estate is located under ownership, or
2. execute a long-term lease agreement of the land plot for 49 years.
In order to obtain either of the above-mentioned rights to the land plot, the citizen or the legal
entity (hereinafter – the Investor) shall apply to an authorized government authority with an
application. In St. Petersburg such authority is vested in the Committee for City Property
Management.

4.11.1. Procedure for the buyout of land plots
The list of documents, which shall be submitted to the Committee for City Property Management
with an application on the buyout, has been recently revised and is currently established by the
Order of the Ministry of Economic Development of the Russian Federation dated 13 September 2011
No. 475 “On the adoption of the list of documents required for the acquisition of rights to the land
plot”. Such documents include the following:
1. Copy of the document, confirming the identity of an applicant.
2. Copy of the certificate of state registration of the individual as an entrepreneur or a copy of the
certificate of state registration of a legal entity or an extract from the state register regarding
the legal entity or the individual entrepreneur applying for the buyout of land.
3. Copy of the document confirming the authority of the representative of an individual or a legal
entity, in the event the applicant appoints a representative.
4. Extract from the Unified State Register of Rights to Real Estate Property and Transactions
Therewith regarding the rights to real estate (buildings and constructions) located on the
targeted land plot, or notification on the absence of such data in the Unified State Register of
Rights to Real Estate Property and Transactions Therewith (or copies of documents confirming
rights to such real estate if such rights are considered as existing irrespective their registration at
the Unified State Register of Rights mentioned above).
5. Extract from the Unified State Register of Rights to Real Estate Property and Transactions
Therewith regarding the rights to the targeted land plot, or notification on the absence of such
data in the Unified State Register of Rights to Real Estate Property and Transactions Therewith
(or copies of documents confirming rights to the land plot if such rights are considered as
existing irrespective their registration at the Unified State Register of Rights mentioned above).
6. Cadastral passport of the land plot.
7. Copies of documents entitling the Investor to acquire the land plot, unless the grounds for the
right to acquisition of the land plot are evident from the above-mentioned documents.
8. Reference from the applicant, containing the list of all buildings and other constructions located
on the targeted land plot, with an indication of the cadastral numbers and addresses of such real
estate.
According to clause 2 of the Order of the Ministry of Economic Development of the Russian
Federation dated 13 September 2011 No.475, the documents listed in items 2, 4, 5 and 6 above


cannot be requested (demanded) from the applicant by the authorities, however, the applicant has
the right to submit these documents together with an application. This provision comes into force
within the following timeline:
 from 1 October 2011 (but not earlier than upon expiration of 10 days from the date of the official
publication of the Order) – for documents required for the acquisition of rights on federal land
(land plots which are currently under federal ownership);
 from 1 July 2012 – for documents required for the acquisition of rights on other land plots of
state or municipal property.
According to item 5 of Article 36 of the Land Code of the Russian Federation, the government
authorities (i.e. the Committee for City Property Management in St. Petersburg) cannot demand
from the applicant to submit any additional documents other than those indicated in the Order
No.475.
Upon the submission of documents by the applicant, the Committee for City Property Management
has one month for the adoption of the decision on provision of the land plot into ownership as per
the buyout request of the applicant. Within one month from making a decision on provision of the
land plot into ownership, the competent government authorities shall prepare a draft of the sale and
purchase agreement regarding the targeted land plot and provide it to the applicant for review and
signing.
Please note that in the event that the cadastral registration of the targeted land plot has not been
performed before the submission of an application by the applicant for obtainment of rights to such
land plot, the respective cadastral works shall be performed by the applicant at its own cost, and the
rights to the land plot will be granted only subject to the completion of such cadastral works and the
cadastral registration of the land plot.
Please note that the total area of the targeted (for buy-out) land plot shall be balanced with the total
area of the real estate located on it. The law provides for the possibility of buy-out of the land plot
which is necessary for operation of the real estate located on it. Therefore, in the event small real
estate located on a very large land plot, the Investor will be able to buy-out not the whole land plot,
that, for example, was provided for construction purposes, but only a part of the land plot which is
required for the operation of the real estate (unless the Investor proves that there are sufficient
reasons for a buyout of the whole land plot for further operation of the real estate located on it).
According to Article 8 of the Civil Code of the Russian Federation the rights to the land plot have to
be registered in the Unified State Register of Rights to Real Estate and Transactions Therewith.
Therefore, upon signing the sale and purchase agreement regarding the targeted land plot, the
respective documents shall be filed for registration. The Investor will formally obtain his/her
ownership title to the land plot only after registration of the transfer of rights at the Unified State
Register of Rights to Real Estate and Transactions Therewith.

4.11.2. Local legislation influencing the procedure of land plots buyout
On 31 August 2006 the Decree of the Committee for City Property Management of St. Petersburg
No.262-р “On the order of cooperation of the structural subdivisions of the Committee for City
Property Management and Open joint stock company “The Property Fund of St. Petersburg" in the
process of the sale of state-owned land plots to the owners of real estate located on such land plots”
was adopted. The decree remains effective (as amended) as of the present time.
According to the Decree, the application and package of documents submitted by the Investor for
buyout of a targeted land plot are accepted by the Department on the disposal of state property of
the Committee for City Property Management (hereinafter - the Department of the Committee).
The Department of the Committee registers submitted applications on the date of their submission
and no later than within two business days from the date of registration of the application sends the


inquiries regarding the targeted land plot and the real estate located on it to a number of other
government authorities, including the following:
 Committee of State Control, Use and Protection of Cultural Properties;
 Committee of Land Resources and Land Development;
 Department (agency) of real estate property of St. Petersburg District, on the territory of which
the targeted land plot is located (hereinafter - the Agency);
 Department of the Federal Service for State Registration, Cadastre, and Cartography for St.
Petersburg; etc.
Upon gathering of the information from various government authorities, confirmation that a
targeted land plot can be disposed of to Investor's ownership, the Department of the Committee
prepares a Transfer Order on the transfer of the targeted land plot into the Investor's ownership.
The Transfer Order serves as an assignment to the Property Fund of St. Petersburg to conclude the
Sale and Purchase agreement of the targeted land plot with the Investor.
Upon the execution of the Sale and Purchase agreement of the targeted land plot, the documents
are filed for the registration of the transfer of rights to the land plot with the Unified State Register
of Rights to Real Estate and Transactions Therewith, upon completion of which the Investor
formally obtains its ownership title to the land plot.

4.11.3. Buyout price of the targeted land plot
According to Article 36 of the Land Code of the Russian Federation, the buyout price for state-
owned land shall be determined by the government authorities as follows:
 with respect to federal land – by the federal government authorities;
 with respect to the land owned by the subjects of the Russian Federation – by government
authorities of the subject of the Russian Federation;
 with respect to municipal land – by municipal authorities.
In any case, the buyout price shall not exceed the cadastral price of the land plot. In the event that
the mechanism for the calculation of the buyout price is not determined, the buyout price shall equal
the cadastral price of the land plot.
According to the Federal Law dated 25 October, 2001 No. 137-FZ “On entering into force of the Land
Code of the Russian Federation”, there are two categories of potential acquirers of land plots, for
which different rules for the calculation of the buyout price are established.
The first category of potential acquirers of land plots includes the following:
1. legal entities which own real estate located on targeted land plots and are acquiring the land
plots in the course of re-registration of their right of permanent perpetual use;
2. citizens and non-commercial organizations, which acquired ownership title to real estate
located on the targeted land plots before the Land Code of the RF came into force and for which
no special procedure for acquisition of ownership title to the land plots was established by the
federal law;
3. legal entities and entrepreneurs which own real estate located on targeted land plots, if such
real estate was privatized (disposed of from state or municipal property), including when real
estate was constructed or reconstructed on the land plots;
4. legal entities and entrepreneurs which own real estate located on targeted land plots, if such
real estate was constructed on targeted land plots instead of destroyed or earlier privatized and
currently demolished real estate.
The second category of potential acquirers of land plots includes persons, which own real estate
located on targeted land plots and are not included in the first category.


In St. Petersburg the calculation of the buyout price is regulated by the St. Petersburg law dated 15
February 2010 No. 59-19 “On the establishment of the price of the land plots in St. Petersburg”,
taking into account the rules for the determination of the buyout price established by the Federal
Law dated 25 October 2001 No. 137-FZ “On entering into force of the Land Code of the Russian
Federation”.
According to the St. Petersburg law dated 15 February 2010 No. 59-19 “On the establishment of the
price of the land plots in St. Petersburg”, the buyout price for the first category of potential acquirers
as described above shall be calculated as follows:
 15% of the cadastral value of the land plots – when the land plots are being bought-out by the
owners of real estate constructed on such land plots and when such land plots were provided for
performance of investment activity in accordance with the laws of St. Petersburg, or when such
land plots are used for the purposes of allocation of industrial property and at least 70% of the
land plot is occupied by such industrial property;
 19.5% of the cadastral value of the land plots – when the land plots are sold to other owners of
real estate located on the land plots.
The buyout price for the second category of potential buyers shall be calculated as follows:
 10-fold rate of the effective land tax –- when the land plots are being bought-out by the owners
of real estate constructed on such land plots and when such land plots were provided for
performance of investment activity in accordance with the laws of St. Petersburg, or when such
land plots are used for the purposes of allocation of industrial property and at least 70% of the
land plot is occupied by such industrial property;
 13-fold rate of the effective land tax – when the land plots are sold to other owners of real estate
located on the land plots.
The St. Petersburg Law No. 59-19 also provides for a 9-fold rate of effective land tax for calculation
of the buyout price for the land plots which were provided to strategic investors of St. Petersburg or
investors implementing strategic projects on the territory of St. Petersburg for the purposes of
construction on such land plots of the plants producing cars and/or automobile components.
However, this provision of the St. Petersburg law loses its effect (becomes inoperative) from 1
January 2012.
Please note that, theoretically, starting from 1 January 2012 the buyout price for the land plots may
change in the event that the local authorities adopt any amendments to the St. Petersburg Law
No.59-19. No such amendments were adopted as of November 2011. However, it is recommended
that Investors monitor this issue further.


4.12. Regulatory issues. Antimonopoly compliance
by DLA Piper
The basic law for antimonopoly regulation in the Russian Federation is the Federal Law “On
Protection of Competition” dated 26 July 2006, as amended ("Competition Law"). Under the
auspices of the Federal Antimonopoly Service ("FAS") the Competition Law regulates competition in
both the commodities market and the financial services market and includes seven areas of
particular interest to foreign investors:
 establishment of companies;
 mergers and acquisitions;
 agreements limiting competition;
 abuse of a dominant position;
 unfair competition;
 state aid; and
 selection of a financial organization by subjects of natural monopolies and various states and
municipal bodies.
Certain activities in each of the abovementioned areas require a prior approval or notification of the
antimonopoly authorities in order to comply with antimonopoly laws and such requirements have to
be taken into account when planning investment activities.

4.12.1. Establishment of companies
According to the currently effective legislation, the founders of a new company must obtain a prior
approval of the FAS for the establishment of a new company only if the charter capital of the new
company is paid by the contribution of shares, participation interests and/or property assets
(excluding cash assets) of another legal entity ("Target") (unless such a legal entity is a "financial
organization"48), if the newly established company acquires:
 more than 25 per cent of the shares of the Target (if the Target is a JSC and the charter capital of
the newly established company is paid by contribution of shares in the Target); or
 more than one-third of the participation interests of the Target (if the Target is an LLC and the
charter capital of the newly established company is paid by contribution of a participation
interest in the Target); or
 more than 20 per cent of the book value of the main production (fixed) assets and intangible
assets of any of its founders,
and if:
 the balance sheet value of the total aggregate assets of the founders (including their respective
"groups of persons"49) and the Target (including its groups of persons) exceeds RUB 7 billion; or

48
Meaning an individual or legal entity rendering financial services, including credit organizations, insurers, stock/currency
exchange organizations, pension funds, investment funds, etc.
49
In determining the threshold for asset values and aggregate revenues in the context of mergers and acquisitions, the
FAS takes into consideration not only the purchaser and the target, but also the persons (individuals and legal entities) in
their respective "groups of persons". The broad term "group of persons" means all persons and/or entities that directly or
indirectly control the company, are directly or indirectly controlled by the company or are under common control with this
company and/or entities directly or indirectly controlled by it. For the purpose of the definition of the group of persons,
"control" means holding of any of the following: (i) over 50% of votes (including combined participation), (ii) CEO position;
(iii) rights to give to a company binding instructions; (iv) right to appoint CEO; (v) right to appoint over 50% of the
management board and/or the board of directors.


 the aggregate revenue earned by the founders (including their respective groups of persons) and
the Target (including its groups of persons) from the sale of goods in the past calendar year
exceeds RUB 10 billion; or
 the Target is included in the FAS Register of dominant entities or legal entities with a Russian
market share exceeding 35 per cent.
The establishment of a new company whose charter capital is paid by the contribution of shares,
participation interests and/or property assets of a financial organization, will require prior approval
of the FAS if the balance sheet value of the total aggregate shares, participation interests and/or
property assets of such a financial organization exceeds an amount that is established by the
Russian Government.50

4.12.2. Mergers
Entities (except financial organizations) involved in a consolidation, affiliation or merger must obtain
a prior approval of the FAS51 if:
 the balance sheet value of the total aggregate assets of the merging entities (including those of
their respective groups of persons) exceeds RUB 3 billion; or
 the aggregate revenue earned by the merging entities (including those of their respective
groups of persons) from the sale of goods during the last calendar year exceeds RUB 6 billion; or
 either of the merging entities (including their respective groups of persons) is included in the
FAS Register of dominant entities or legal entities with a Russian market share exceeding 35 per
cent.
Consolidations, affiliations or mergers of financial organizations will require a prior approval of the
FAS if the total value of the entities' assets exceeds the amount established by the Russian
Government.52

4.12.3. Acquisitions
4.12.3.1. Acquisition of participation interests in a Russian company (LLC)
Preliminary approval of the FAS is required where a purchaser, be it an individual or legal entity and
its group of persons, acquires:
 more than one-third (on a first acquisition); or
 more than a half (on a first or any further acquisition); or
 more than two-thirds (on a first or any further acquisition) of the target LLC's total participatory
interests, and if (unless the purchaser is a financial organization):53
 the balance sheet value of the total aggregate assets of the purchaser and the target LLC
(including their respective groups of persons) exceeds RUB 7 billion and the balance sheet value
of the total aggregate assets of the target LLC (including its group of persons) exceeds RUB 250
million; or

50
This amount differs depending on the type of financial organization.
51
Preliminary FAS approval is not necessary if: (i) the consolidation, affiliation or merger is going to be performed between
the parent company and its subsidiary; (ii) entities, participating in the consolidation, affiliation or merger belong to the
same group of persons, information on which was disclosed within a special procedure, provided by the Competition Law;
(iii) the consolidation, affiliation or merger is stipulated by the acts of the President or the Government of the Russian
Federation.
52
This amount differs depending on the type of the financial organization.
53
For financial organizations the thresholds in this regard are: the balance sheet value of the total aggregate assets of the
financial organization exceeds the amount established by the Government of the Russian Federation. This amount differs
depending on the type of the financial organization.


 the aggregate revenue earned by the purchaser and the target (including their respective groups
of persons) from the sale of goods in the past calendar year exceeds RUB 10 billion and the
balance sheet value of the total aggregate assets of the target LLC (including its group of
persons) exceeds RUB 250 million; or
 either the purchaser or the target LLC (including their respective groups of persons) is included
in the FAS Register of dominant entities or legal entities with a Russian market share exceeding
35 per cent.
4.12.3.2. Acquisition of shares in a Russian Company (JSC)
Preliminary approval from the FAS is required where a purchaser, be it an individual or legal entity
and its group of persons, acquires:
 more than 25 per cent (on a first acquisition); or
 more than 50 per cent (on a first or any further acquisition); or
 more than 75 per cent (on a first or any further acquisition), of the target JSC's total share
interests, and if (unless the purchaser is a financial organization):
 the balance sheet value of the total aggregate assets of the purchaser and the target JSC
(including their respective groups of persons) exceeds RUB 7 billion and the balance sheet value
of the total assets of the target JSC (including its group of persons) exceeds RUB 250 million; or
balance sheet value of the total assets of the target JSC (including its group of persons) exceeds
RUB 250 million; or
 either the purchaser or the target JSC (including their respective groups of persons) is included
in the FAS Register of dominant entities or legal entities with a Russian market share exceeding
35 per cent.
4.12.3.3. Acquisition of assets in a Russian company
The preliminary approval from the FAS is required where a purchaser, be it an individual or legal
entity and its group of persons, acquires the right of ownership or the right to use the main
production (fixed) assets (except for land plots or non-industrial buildings, unfinished buildings,
structures, constructions, premises and parts of premises) or intangible assets of an entity, if the
acquired assets account for more than 20 per cent of the book value of the main production (fixed)
assets and intangible assets of another legal entity (the Owner), and if (unless the Owner is a
financial organization):
 the aggregate book value of the assets of the purchaser and the Owner (including their
respective groups of persons) exceeds RUB 7 billion and the balance sheet value of the total
assets of the Owner (together with those of its group of persons) exceeds RUB 250 million; or
 the aggregate revenue earned by the purchaser and the Owner (including their respective
groups of persons) from the sale of goods in the past calendar year exceeds RUB 10 billion and
the balance sheet value of the total assets of the Owner (together with its group of persons)
exceeds RUB 250 million; or
 either the purchaser or the Owner (including their respective groups of persons) is included in
the FAS Register of dominant entities or legal entities with a Russian market share exceeding 35
per cent.
4.12.3.4. Acquisition of rights in a Russian company
Preliminary approval from the FAS is required where a purchaser, be it an individual or legal entity
and its group of persons, acquires rights conferring the ability to determine the commercial behavior
of the target company (including as a result of change of indirect control over a Russian target
company) or of the right to perform the functions of its executive bodies. Such persons, entities or


group of entities involved in the acquisition must receive prior approval from the FAS if (unless the
purchaser is a financial organization):
 the aggregate book value of the assets of the purchaser and the target (including their
respective groups of persons) exceeds RUB 7 billion and the balance sheet value of the total
assets of the target (together with those of its group of persons) exceeds RUB 250 million; or
balance sheet value of the total assets of the target (together with its group of persons) exceeds
RUB 250 million; or
 either the purchaser or the target (including their respective groups of persons) is included in the
FAS Register of dominant entities or legal entities with a Russian market share exceeding 35 per
cent.
In practice, the FAS supervises those offshore mergers or other transactions involving the
acquisition of shares, as a result of which indirect control over a Russian entity changes. It is
presumed by the FAS that as a result of an indirect change of control of a Russian legal entity, the
foreign entity acquiring the shares would obtain rights over the Russian entity which would allow it
to determine the conditions of the Russian entity's own business activity.
4.12.3.5. Exemptions from rules on the application for prior approval
The Competition Law provides several exemptions from the obligatory rules on obtaining
preliminary FAS approval:
 the acquisition will be performed between a parent company and its subsidiary; or
 the entities, participating in the acquisition belong to the same group of persons, information on
which has been disclosed within a special procedure, provided by Article 31 of the Competition
Law; or
 the acquisition is stipulated by the acts of the President or the Government of the Russian
Federation.
4.12.3.6. Post-completion notification procedure
Any proposed transaction that meets the relevant conditions and thresholds (as described in the
preceding paragraphs of this section on "Acquisitions") will generally require a preliminary FAS
approval. However, in exceptional cases it may be permissible to notify the FAS post-completion of
such transactions provided that:
 the parties to the transaction belong to the same group of persons and information on such
group was disclosed under the special procedure, provided by the Competition Law; and
 the parties to the transaction are a parent company and its subsidiary.
Please, also note that post-completion notification is also required with respect to those
transactions in which the aggregate assets and the aggregate revenue of the purchaser and the
target company (including their respective groups of persons) is over RUB 400 million and, in
addition, the aggregate value of assets of the target company and the companies of its group
exceeds RUB 60 million.54
4.12.3.7. Procedures and timing
After all the required documents have been submitted, the FAS has 30 days to review the
application or notification. If the FAS believes that the transaction may lead to a restriction of

54
Provided that the prior approval thresholds (as described in the preceding paragraphs of this section on "Acquisitions")
are not met.


competition, the review period may be extended for additional two months, during which the FAS
places information about the transaction on its official website and invites all interested parties to
send their opinions on the transaction.
Any company established, either as a new company or as a result of a merger, consolidation or
affiliation, without the requisite prior approval of the FAS can be liquidated or reorganized if it is
determined that its establishment has led or may lead to the reduction of competition, in particular
as a result of emergence or strengthening of a dominant position.
Any acquisition made without the requisite prior approval of the FAS shall be declared invalid if it is
determined that its establishment has led or may lead to the reduction of competition, in particular
as a result of emergence or strengthening of a dominant position.
As for post-completion notification, the deadline for its submission is 45 days from the completion
date of the respective transaction.
4.12.3.8. Agreements and concerted actions limiting competition
Competition Law prohibits agreements, concerted actions or other business activities that lead or
may lead to the following:
 control or fixing of prices, discounts, bonus payments or surcharges;
 an increase or reduction of prices or the manipulation of prices at tenders;
 the division of the market by reference to territories or according to the volume of
sales/purchases, the range of marketable goods or the range of sellers or purchasers;
 refusal to enter into a contract with particular sellers or customers without an economic or
technological justification;
 imposition of contractual terms that are disadvantageous to the other party or do not relate to
the subject matter of the contract;
 setting different prices on the same goods without economic or technological justification;
 discontinuance or the reduction of production of goods for which there is a consumer demand if
it is possible to produce them on a profitable basis;
 restriction of access to the market or the removal from the market of other entities that sell or
purchase particular products, etc.
Competition Law further prohibits other agreements if such agreements lead or may lead to the
limitation of competition.
These bans are not applicable to agreements if they qualify as "vertical agreements". Vertical
agreements are agreements between economic entities not competing with each other, one of
which acquires goods or is the potential acquirer, while the other supplies goods or is the potential
seller. Competition Law enacts only two per se bans applicable to vertical agreements: setting resale
prices and exclusivity (i.e. contractual ban on selling competing goods). However, these bans do not
apply to vertical agreements which are either vertical agreements between economic entities where
the market share of each one is less than 20 per cent or vertical agreements in a written form which
are commercial concession agreements. This means that vertical agreements between two parties,
none of which has a market share in excess of 20 per cent, are exempt from all bans under
Competition Law applicable to the agreements.
In certain cases activities which would prima facie seem to limit competition may be permitted if it
can be proved that the positive effects of the action, including any positive socio-economic effects,
outweigh its negative consequences, or if the relevant Government Regulation permits such
agreements or business activities. Such Government Regulations exist for vertical agreements55 and

55
Government Decree “On Cases of Permissibility of Agreements between Business Undertakings” dated 16 July 2009.


for agreements between credit and insurance companies.56 In this context it is worth mentioning
that if the parties intended to enter into an agreement have certain doubts as to its compliance with
or permissibility under Competition Law they have the right to file the draft of such agreement with
the FAS and ask the FAS to give its opinion on whether or not the agreement complies with the
Competition Law requirements (Article 35 of the Competition law). This filing procedure is possible
with respect to specific agreements between specific parties only (i.e. no blanket clearances). In
addition, in approving agreements, the FAS may issue binding prescriptions designed to ensure
competition in the market.
Anti-competitive agreements are deemed by Competition Law as the severest violation. Each
company being a party to an anti-competitive agreement can be subject to turnover-based fines
varying from 1 per cent to 15 per cent of the party's turnover in the market to which the agreement
in question relates. At the same time the maximum fine to be imposed on the violator cannot
exceed 4 per cent of the violator's total turnover on a worldwide basis. Please, also note that
company's officers can be also penalized or even subjected to criminal liability.
In addition, Competition Law also prohibits so-called "coordination of economic activities"57
amongst economic entities, if such coordination may lead to restriction of competition.
4.12.3.9. Abuse of dominant position
Determining whether a particular entity, group of entities and/or their respective groups of persons
enjoy a dominant position involves a complex evaluation of various factors, most notably the
relevant entity's market share:
 For entities with a market share of more than 50 per cent there is a presumption of market
dominance.
 Entities with a market share of between 35 per cent and 50 per cent (inclusive) may be deemed
dominant by the FAS on the basis of an investigation into the relevant market.
 For entities with a market share less than 35 per cent, there is a conclusive presumption of non-
dominance, with several exceptions provided by the Competition Law for entities and financial
organizations and oligopoly markets.
For those in a dominant position, the Competition Law prohibits any of the following activities:
 setting and/or support of a monopoly for high or low prices;
 withdrawal of goods from circulation if the result of such a withdrawal is a rise in the price of the
goods;
 creation of conditions that place one or more business entities in an unequal position as
compared to other entities in their ability to access the market for particular goods (i.e.
discriminatory conditions);
 the imposition of contractual terms by one contracting party on another that are either
disadvantageous to the other contracting party or do not relate to the subject matter of the
contract;
 discontinuance or reduction of the production of goods for which there is a consumer demand if
it is possible to produce them on a profitable basis;58
 unjustified refusal to enter into a contract with particular customers if it is possible to produce or
deliver the relevant goods to such customers;

56
Government Decree “On Cases of Permissibility of Agreements between Credit and Insurance Organizations” dated
April 30, 2009.
57
"Coordination of economic activities" is understood to be the coordination of actions between economic entities who are
not a "group of persons" (i.e. one economic entity coordinating its activities with one or more third party economic
entities).
58
Activity may be allowed if the dominant entity can prove that the positive effects of a particular activity outweigh its
negative consequences.


 setting different prices for the same goods where it is not economically or technologically
necessary to do so;
 creation of discriminatory conditions;58
 creation of barriers to market entry or market exit for other business entities;58 and
 violation of pricing rules.
4.12.3.10. Unfair competition
The Competition Law prohibits unfair competition in Russia. That is, any actions of commercial
entities aimed at acquiring competitive advantages in commercial activity, which contradict
Competition Law, business customs, the requirements of good-faith, reasonableness and fairness,
which have caused or may cause losses to other competing legal entities, or damage their business
reputation.
Typical activities that would constitute unfair competition for the purposes of Competition Law
would include:
 the distribution of false, inaccurate or distorted information by a commercial entity, which may
cause losses to or otherwise damage the business reputation of another commercial entity;
 the misleading of consumers about the nature, method and place of production and quality of a
commercial entity's goods;
 the incorrect comparison by a commercial entity of goods produced or sold by it against those of
another commercial entity;
 the sale of goods by a commercial entity in contravention of certain intellectual property rights
(e.g. abuse of trademarks); and
 the abuse by a commercial entity of certain commercial secrets (i.e. the receipt, use or
disclosure of such information without relevant consent).
4.12.3.11. State preferences
State preferences are new to Russian competition legislation and were introduced by the
Competition Law.
In accordance with the Competition Law, state (or municipal) preferences consist of granting
economic entities certain privileges ensuring that such economic entities have more favorable
conditions for their activity by transferring state (or municipal) property and/or civil rights or by
granting a material privilege.
The Competition Law regulates the procedure of providing state (or municipal) preferences for the
following purposes:
 ensuring the livelihoods of the population in the Arctic regions and equivalent areas;
 development of education and science;
 conduct of scientific research;
 environmental protection;
 conservation, usage, popularization and state protection of the cultural heritage (historical and
cultural monuments) of peoples of the Russian Federation;
 development of culture, arts and conservation of cultural values;
 development of physical fitness and sports;
 ensuring defense powers and the security of the state;
 agricultural production;
 social protection of the population;
 labor protection;
 health care of citizens;
 support of small and medium businesses; and socially oriented non-commercial organizations in
accordance with the Federal Law No. 7-FZ dated 12.01.1996 (as amended); and


 other purposes, defined by the legislation of the Russian Federation.
State (or municipal) preferences shall be granted with the preliminary written approval from the
FAS, unless such preferences are directly granted by federal law, a law of a constituent entity of the
Russian Federation or a regulatory act of the local government on the budget, or are granted from
the reserve funds for financial security of extraordinary expenses in compliance with budgetary
legislation of the Russian Federation or in the amount which does not exceed limits established by
the Central Bank of the Russian Federation for settlements in cash in the Russian Federation
between legal entities, if such preferences are granted no more frequently than once a year for a
certain entity.
In order to provide state (or municipal) preferences, the authority intending to grant the preferences
must submit an application to the FAS in order to obtain the FAS approval to the granting of such
preferences together with:
 a draft act which provides for the granting of the state preferences with an indication of the
goals and the amount of the preferences;
 a list of the beneficiary entity's activities over the two years preceding the date of the FAS
application; and
 other information as provided for by the Competition Law.
The FAS shall make a decision on the application within one month from the date it is submitted
together with all necessary documents. The FAS may extend the period for its review of the
application for a term of up to two months.
4.12.3.12. Recent development of antimonopoly legislation
On December 6, 2011 the President of the Russian Federation signed Federal Law No. 401-FZ “On
Amendment of the Federal Law “On Protection of Competition” and Other Laws of the Russian
Federation” – a so-called “Third Antimonopoly Package”. The Third Antimonopoly Package was
officially published and most of the new rules will come into force from January 6, 2012.
The main purposes of such debated amendments are as follows:
 the development of competition on goods markets;
 the perfection of principles of control over activities of monopolies;
 the minimization of legal risks for business.
The representatives of antimonopoly authorities are sure that the Third Antimonopoly Package will
significantly liberalize current antimonopoly legislation, soften the liability of entities for the
violation of antimonopoly laws and reduce a number of bans (prohibitions) established by the
current antimonopoly legislation.
The amendments to the currently effective Competition Law, suggested by the Third Antimonopoly
Package, among other things include the following:
 The Third Antimonopoly Package excludes criminal liability for concerted actions.
 The new amendments also distinguish the terms "agreement" and "concerted action" and limit
the number of agreements currently prohibited by antimonopoly legislation.
 Agreements within the group of entities shall not fall under the bans established by
antimonopoly legislation (ex. Article 11 of the current Competition Law) in the event of the
control of one entity within the group over another.
 Concerted action shall mean only such actions where each participant has initially been aware of
the said action due to public declaration on performance of such actions (however, the
amendments remain unclear as to who shall make such public declaration and in what form).


 The bans established by the Competition Law in regard to agreements limiting competition
and/or concerted actions shall cover only such agreements and actions which are performed by
entities working on the same market (i.e. between competitors).
 The amendments also limit the applicability of the bans for concerted actions in connection to
such entities, the joint share of which on the goods market does not exceed 20% and the share
of each of which does not exceed 8%. However, in any case there is still a risk that the actions by
the said entities may be qualified as coordination.
 The amendments establish fixed administrative fines for abuse of a dominant position, which
did not lead to limitation/elimination of competition (however, this rule shall not apply to
activities of monopolies to which turn-over fines shall still be applicable).
 The Third Antimonopoly Package also limits the possibility of qualification as coordination of
economic activity only to such coordination of entities' activity by a third party, where such third
party does not perform any activity on the same goods market as the market on which
coordination is being performed.
 The new amendments increase thresholds currently established for preliminary approval of
reorganization (merger, etc.) of legal entities: the balance sheet value of the total aggregate
assets of the merging entities (including those of their respective groups of persons) shall
exceed RUB 7 billion and the aggregate revenue earned by the merging entities (including those
of their respective groups of persons) from the sale of goods during the last calendar year shall
exceed RUB 10 billion.
 The Third Antimonopoly Package also clarifies the situation related to acquisition of a foreign
company which has no legal presence in Russia, but supplies goods (renders services, performs
works in) to Russia. Thus, if such sales exceed RUB 1 billion within one year preceding the
transaction and the acquirer obtains more than 50% of voting shares (participatory interest) in a
foreign company or obtains other rights conferring the ability to determine business conduct of
a foreign company, or the right to perform the functions of its executive bodies, the preliminary
FAS approval may be required.
 The new law introduces mitigating circumstances and aggravating circumstances when
considering administrative cases in the field of competition/antimonopoly issues.
 A number of amendments are devoted to auctions. The new amendments suggest establishing
a procedure for the consideration of complaints regarding the violation of the auction procedure
and procedure for the execution of agreements as a result of an auction. It is also provided to
establish the order of the calculation of administrative fines for the said violations on the basis of
the value of the item put to auction. Besides, the Third Antimonopoly Package provides for a
number of sanctions for agreements and concerted actions at auction.
 It is provided to establish administrative liability not only for non-submission of information to
antimonopoly authorities as currently provided by the law, but also for untimely submission of
such information to antimonopoly authorities;
Undoubtedly, the above-mentioned examples refer only to the amendments introduced by the
Third Antimonopoly Package. It will bring important changes to the currently effective Competition
Law of the Russian Federation and influence business activity on the Russian market.


5. Costs of doing business
5.1. Costs of starting a company
5.1.1. Overview
Starting a business in St. Petersburg involves completing a series of legal activities. Russian
companies, as well as branches and representative offices of foreign companies in Russia, must be
registered with several authorities. Companies must be registered with the State Registration
Authority (currently, tax authorities), which takes care of state registration and registration for tax
purposes, as well as with the State Statistical Committee and three social funds. Branches and
representative offices must be registered with the tax authorities and accredited as well as
registered with the State Statistical Committee and three separate social funds. In St. Petersburg
registration is carried out through the Unified Registration Center, which registers companies with
all required establishments and authorities.59

In the preliminary phase, it is required to gather and draft all documents, which are to be filed with
competent authorities (notarized and apostilled corporate documents of a foreign company,
constitution documents of the newly established Russian company or business, etc.).
Additional steps are necessary for Russian companies, branches, and representative offices to be
fully operational, e.g. opening of bank accounts, development of a corporate seal, registration of the
issuance of shares (for JSCs only) with the securities authorities, etc.
You can establish a company with your own financial and human resources, however it is highly
recommended to refer to the services provided by consulting, law or special registration companies
to expedite the whole process.

5.1.2. Costs and duties
The following state duties are applied while registering a company through the Unified Registration
Center in St. Petersburg:60
 Individual entrepreneur / sole proprietorship
State duty: 800 RUB
Registration time: no more than 5 business days
 Legal entity (all types)
State duty: 4,000 RUB
Registration time: no more than 5 business days
The following costs may be incurred while registering and starting a company in Russia:
 Notary services
Some documents submitted for registration have to be approved by notary
Cost: starting at 200 RUB

59
For more information, please see Section 4.1 Establishing a legal presence
60
Effective January 30, 2010


 Stamp
In order to run a business all legal entities in Russia are required to have a company stamp
Cost: starting at 400 RUB
 Bank account
In order to run a business it is necessary to have a bank account
Cost: varies depending on the bank
 Certification and other issues
Certification might be required depending on the nature of your business and products
Cost: starting at 2,000 RUB

5.1.3. Contacts
Administration of the Federal Tax Service in St. Petersburg
Unified Registration Center at Interdistrict Tax Inspection #15
10-12 Krasnogo Tekstilschika Street
191124 St. Petersburg, Russia
Tel.: +7 812 335 14 03, 335 14 00 | Fax: +7 812 335 14 02
i784700@r78.nalog.ru
www.r78.nalog.ru


5.2. Human resources
According to the Territorial branch of the Federal State Statistic Service (www.petrostat.gks.ru),
average nominal salary in St. Petersburg constitutes 29,642 roubles (as of September 2011). In
September 2011 real accrued salary calculated with consideration of consumer price index
constituted 102.7% to the level of August 2011 and 103.5% to the level of September 2010.

5.2.1. Average salaries by industry
Industry September 2011, In % to
RUB August September Average
2011 2010 level
Agriculture 27,770 101.5 112.5 93.7

Mining 41,810 116.3 100.4 141.0

Manufacturing 29,810 100.5 110.9 100.6

Electricity, gas and water
36,389 97.9 109.0 122.8
production and distribution

Construction 26,499 99.1 107.7 89.4

Wholesale and retail trade; repair
of motor vehicles, motorcycles 23,624 98.9 109.2 79.7
and personal and household goods

Hotels and restaurants 16,751 108.2 109.1 56.5

Transport and communication 33,185 97.1 113.5 112.0

Financial activity 51,989 100.1 113.5 1.8 times

Real estate operations, rent and
35,064 104.4 111.5 118.3
services

Public administration, military
29,727 108.2 103.1 100.3
security, social insurance

Education 21,775 111.9 110.6 73.5

Health care and social services 24,881 105.6 110.1 83.9

Other community, social and
28,998 117.5 125.9 97.8
personal services

Source: Territorial branch of the Federal State Statistic Service


5.2.2. Salary, benefits and compensation survey
by CASE

CASE conducts cross-industry and industry-specific surveys of salaries, benefits and compensations
in St. Petersburg and other cities in Russia twice a year in spring and fall.
5.2.2.1. Sample characteristics
90 Russian and foreign companies engaged in different business sectors took part in a survey
conducted in October-November 2011. Employers provided information on 154 positions of various
levels in various professional fields. CASE analyzed salaries of more than 21 thousand employees.
Type of company Business area
6%
Production 34%
Russian
Industry / B2B 33%

Foreign FMCG, DCG 49%
44% 50%
Services 28%
Joint
IT – Telecom 17%

Retail 12%
Size of company
less than 100
employees in
14% St.Petersburg
100-500
employees
40% 46%

more than 500
employees

5.2.2.2. Salary raise
In 2011 64% of the analyzed companies raised salaries for their employees. The average raise
constituted 9-10%. Only 44% of the companies reported their intent to raise salaries in 2012. The
planned average raise constitutes 8-10%. 60% of the companies reported their intent to re-examine
salaries once a year, 9% - twice a year, 30% - without specific periodicity. Most of the companies re-
examine their salaries in January, April or July.
Pay raise percentage (from September 2010 to October 2011)

Salary 8.6%
Total income 6.8%


5.2.2.3. Bonuses
More than 70% of the companies pay periodic bonuses (monthly, quarterly) based on performance.
Approximately 70% of the companies pay yearly bonuses.
Share of bonuses and commissions in employees’ annual income

19% 14% 19% 24%
36%

81% 86% 81% 76%
64%

Production Office Sales Middle Top management
management

Salary Other income

5.2.2.4. Average salaries (as of October 2011) and personnel characteristics
Position Average salary, RUB Average monthly income (salary +
(prior to individual income tax bonuses), RUB
withholding) (prior to individual income tax
withholding)
Secretary 25,083 26,851
HR specialist 32,148 35,200
Accountant 35,359 38,615
System administrator 42,174 45,806
Advertising & marketing specialist 38,040 41,772
Customer representative 25,192 41,168
Sales assistant 15,942 24,016
Manufacturing line operator 23,924 28,624

Mechanic 32,493 37,374

Warehouse attendant 24,559 28,642

 Average personnel turnover coefficient – 23%
 Average age of employees (operational personnel) – 35 years
 Training and development opportunities – 93%
 Availability of programs for attracting young specialists – 41%
 Cooperation with Universities – 84%
While 49% of the companies are not planning to change the number of employees in 2012, 43%
intend to increase and 8% - to decrease the number of employees.


5.2.2.5. Benefits, compensations and working conditions

Financial assistance 84%
Meals 54%
Sport benefits 33%
Add. sick leave payments 46%
Add. vacation days 46%
Add. insurance 62%
VHI 79%
Mobile phone* 97%
Company car* 70%
* for specific group of employees


5.3. Office, retail and warehouse market
by Jones Lang LaSalle

5.3.1. Office market overview
5.3.1.1. Supply
In 2011 modern office stock (Classes A and B) in
th.sq.m Class A&B stock dynamics St. Petersburg exceeded 2 million sq.m,
2400 including 523,500 sq.m of Class A and 1,502,200
2200 sq.m. of Class B premises. Completions volume
2000 returned to average pre-crisis level, although it
1800 was lower than in 2008-2009, when over
1600 300,000 sq.m. were delivered annually. In 2011
1400 the total volume of completions reached nearly
1200 170,080 sq.m. Future office projects currently
1000
under construction are not numerous. Around
320,000 sq.m of office space will be delivered to
800
the market by the end of 2013 not considering
600
delays. The volume of completions announced
400
for 2012, however, is only around 200,000 sq.m,
200
mainly due to a number of projects announced
0
2004 2005 2006 2007 2008 2009 2010 2011 2012F
for delivery in 2011 being delayed. The
geographical distribution of new supply in the
Class A Class B next two years is split between the central part
of the city and Moskovsky district of St.
Petersburg, where over 30% of future supply is announced for delivery.
5.3.1.2. Demand
After the first quarter of 2011, when significant
th.sq.m. Completions and net absorption
amount of office space was absorbed via
purchases, owner-occupied construction and
140
lease, the city witnessed subdued activity from
120 tenants. Even at the year-end normal spike in
tenants’ activity was not observed. In 2011 net
100
absorption figures for Classes A and B reached
80 about 236,800 sq.m, whereas in 2010 the
60 annual volume of net absorption was 173,000
sq.m.
40 Sector wise, the most active companies in the
20 market were those from Wholesale & Retail
industry with 24% share, Construction and
0
Mining & Exploration industries with 16% and
Q1 2007

Q3 2011
Q3 2007

Q1 2008

Q3 2008

Q1 2009

Q3 2009

Q1 2010

Q3 2010

Q1 2011

-20 13% respectively. Recent activity of
Construction sector confirms its recovery after
the crisis. At the same time Banking & Finance
Completions Net absorption sector remains subdued, operating mainly in
the B2C segment and leasing street-retail
premises. IT companies were also active on the market in 2011.


5.3.1.3. Market balance and rents

Rent and vacancy rate dynamics Since the beginning of the year the average
USD/sq.m/ vacancy rate has decreased from 19.7% to
year
13.5%. At the end of 2011, the volume of
800 30%
available space was around 270,000 sq.m.
700
25% Potential tenants remain price-sensitive, which
600 limits rental growth. In 2011 rental rates
20% remained stable with only minor changes
500
explained mainly by currency rate at USD 320-
400 15%
400 for Class A and USD 240-320 for Class B
300
10%
office buildings. Slight growth within 5% for
200 rouble-denominated rents was observed
5% throughout the year. Prime office rents rose
100
from USD 500 to USD 550 per sq.m/year
0 0% (excluding VAT and OpEx). Further growth is
2004 2005 2006 2007 2008 2009 2010 2011 expected to be uneven due to high volumes of
Base rent, Class A remaining available space.
Base rent, Class B
Vacancy rate (R axis)

5.3.1.4. Outlook
Further market development will be highly dependent on the general economic conditions in the
country, which in turn influence demand for office space. The expected higher level of completions
will result in sustained vacancy rates. The current elevated level of available space will also limit
potential rental growth. Real rental increase is expected to be at 5-7% with the most popular office
properties demonstrating even greater increases.

2004 2005 2006 2007 2008 2009 2010 2011
Stock at the end of 506.7 634.8 821.3 997.2 1,402.7 1,713.6 1,825.6 2,025.7
year (thousand sq.m)
Completions 192.3 128.1 186.5 175.9 405.6 310.9 111.9 170.08
(thousand sq.m)
Vacancy rate (%) 5.0 5.0 6.1 5.8 15.0 25.9 19.7 13.5
Prime base rent 500 600 800 900 1,000 600 500 550
(USD/sq.m/year)
Source: Jones Lang LaSalle, 2011


5.3.2. Retail market overview
5.3.2.1. Supply
In 2011 the quality shopping center stock
th. sq.m. Shopping center stock reached almost 1.6 million sq.m. The level of
2000 14% completions in 2011 exceeded average retail
12% volumes delivered in 2009-2010 (i.e. 100,000
1600 sq.m.) and reached 200,000 sq.m. Seven new
10% quality shopping centers were delivered to the
1200 market in 2011, with the largest projects being
8%
Leto SEC (79,000 sq.m.) and City Mall 2nd phase
6% (30,400 sq.m.). Around 200,000 sq.m. of new
800
quality retail space is planned for delivery in
4% 2012 not considering possible delays.
400
2% The year 2011 was characterized by a number
of market trends, including redevelopment of
0 0%
existing outdated retail schemes and
2004

2012F
2013F
2005
2006
2007
2008
2009
2010
2011

concentration of new shopping centers of
Annual completions average size (from 20,000 to 40,000 sq.m. of
Stock at the beginning of the year leasable space) near new metro stations,
Vacancy rate (R axis) whereas larger formats have been focused on
actively developed residential zones.
Both projects that were frozen in crisis period, and new retail schemes are once again being actively
developed. Approximately 460,000 sq.m. of retail space will be delivered to the market in 2012-
2013, although previously the estimations of future pipeline were more moderate.
5.3.2.2. Demand
Real turnover growth in January-October 2011
Retail turnover and income
showed low but positive values, increasing 2.6%
dynamics
YoY in real terms. Real income growth dynamic
80%
was quite moderate as well, at 3.6% YoY based
on the first nine months in 2011, whereas pre-
60%
crisis indicators rarely showed annual growth
values below 10%.
40%
Lower indicators such as these may limit the
20% interest of international newcomers to the
market, although a number of retailers, who
0% have already started their activity in Moscow,
Mar 08

Sep 08

Mar 09

Sep 09

Mar 10

Sep 10

Mar 11

Sep 11
Dec 07

Jun 08

Dec 08

Jun 09

Dec 09

Jun 10

Dec 10

Jun 11

are considering St. Petersburg market for
-20% further development as well. Those brands,
that have not entered the Russian market yet,
-40% are opting to wait for the economic situation to
Real income growth, % YoY become clearer.
At the same time, both local and international
Retail turnover real growth, % YoY
retailers which are already present in the city,
are expanding their presence. Their expansion is restrained, however, by the lack of quality retail
space in popular shopping centers. In 2011 the average vacancy rate declined from 7% to 6%.


5.3.2.3. Rents
Prime rental rates in high quality shopping
Prime base rents, USD/sq.m/year centers remained at USD 2,000 per sq.m.
throughout the year, whereas rents for some
Budapest types of tenants, such as cafes and restaurants,
entertainment, supermarkets and
Hamburg
hypermarkets, showed growth between 10-
Warsaw 20% depending on segment.
Berlin Turnover rent, as an alternative for fixed rents,
remains as an option in leasing contracts.
Prague
However, the target turnover rent is rarely
St. Petersburg achieved, so fixed rate is applied more widely
than that based on turnover. Rents
Paris
denominated in USD or EUR often specify a
London fixed lower limit of the exchange rate. Rouble-
denominated rental contracts usually include
Moscow
an annual increase of 5-10%. Foreign
0 500 1000 1500 2000 2500 3000 3500 4000 4500 developers are using LIBOR and HICP indices
for rental indexation.
5.3.2.4. Outlook
The lack of retail turnover growth and instability of the world economy might force retailers to slow
down their expansion plans. There will be a limited number of new brands entering market in 2012.
Competition between brands already operating on the market will continue to strengthen as long as
the developers will be considering them as potential occupiers in the situation of lack of new
international retailers. As a result, prime rents are expected to show a raise during next year. The
rental increase is expected to reach about 5-10% in 2012.
2004 2005 2006 2007 2008 2009 2010 2011
Stock at the end of 117.6 186.2 809.5 101.5 1,194.8 1,234.8 1,380.5 1,581.1
Completions 61.7 68.6 623.3 201.0 184.4 40.0 145.7 200.6
(thousand sq.m)
Vacancy rate (%) 0.5 0.5 0.7 1.0 3.0 13.0 7.0 6.0
Prime base rent 2,000 2,100 2,400 3,000 3,000 1,800 2,000 2,000
(USD/sq.m/year)


5.3.3. Warehouse market overview
5.3.3.1. Supply
By the end of 2011, quality warehouse stock in
th.sq.m. Stock and vacancy rate
dynamics St. Petersburg reached 1.76 million sq.m. Four
1800 25% Class B warehouse projects were delivered to
the market with the total leasable area of
1500
20% 43,800 sq.m, including the owner-occupied
complex of 19,800 sq.m. Annual supply was
1200
15% very low, as there were no speculative
900
warehouse complexes delivered to the market
in the previous three quarters of 2011.
10%
600 After the construction boom of 2007-2008,
5%
when half of the existing supply was delivered,
300 developers are not eager to return to active
expansion. Currently, there is a small number of
0 0%
projects under construction. However, some
2012F
2004

2005

2006

2007

2008

2009

2010

2011

developers resumed work under previously
stalled projects or announced new projects for
Existing stock Vacancy rate (R axis) 2012-2013. At the same time, key market
players prefer to work on ‘built-to-suit’ projects.
This trend is expected to grow in the nearest
two years as a number of such projects is in negotiation stage now.
5.3.3.2. Demand
Demand for new warehouse space in 2011 was
USD/sq.m/y Prime rental rates
ear comparable with 2010. Net absorption reached
around 152,000 sq.m. from the beginning of
160
2011, with the share of H2 deals constituting
140 more than half of the total volume. The total
volume of deals was even higher. The most
120
popular size of a single deal was still 5,000-
100 10,000 sq.m. Larger spaces were also in
demand. One third of all deals closed in 2011
80 were in a range of 15,000-20,000 sq. m.
60 In January-September 2011 the most active
occupiers on the St. Petersburg warehouse
40
market were manufacturing, and retail and
20 distribution companies. Logistic companies
became more active in the end of the year, and
0 as a result the volume of deals in this segment
2011
2003

2004

2005

2006

2007

2008

2009

2010

reached more than 30% (62,000 sq. m) of all
space leased in quality warehouse complexes
from the beginning of 2011.


5.3.3.3. Market balance and rents

Warehouse demand breakdown The vacancy rate has been declining since the
by company name beginning of 2010. In 2011 it went down from
16% in the beginning of the year to 4% in the
end of the year. This was a result of
2011 supply/demand misbalance, when very low
2010 completion level was accompanied by high
absorption level throughout 2011. Currently,
2009 the volume of available space in quality
2008 warehouse projects is well below 100,000 sq.m.

2007
Stable growth of demand resulted in rental
increase. In 2011 rental rates increased from
2006 USD 95-105 to USD 110-120 per sq.m/year
showing annual growth of 5-10% on average
0% 20% 40% 60% 80% 100%
and up to 15% for the most demanded
Logistic properties. As the volume of available space
Manufacturing remains limited, rent is expected to grow
Retail and distribution throughout the next year as long as economic
Other situation remains stable.
5.3.3.4. Outlook
Trends observed during the last year will continue in 2012. Vacancy rate will continue to decline due
to the limited number of projects planned for delivery to the market. Rental rates will increase with
the same speed as in 2011 showing 5-10% growth per year. A tangible lack of class A premises is
expected as only two warehouse projects with the total leasable area of 50,000 sq.m. are planned to
enter the market. Occupancy rate in these projects is already close to 50%.

2004 2005 2006 2007 2008 2009 2010 2011
Stock at the end of 118.3 460.8 595.8 1,081.7 1,511.9 1,644.1 1,717.9 1,756.7
Completions 110.3 342.5 135.0 485.9 430.2 132.1 73.8 43.8
(thousand sq.m)
Vacancy rate (%) 0.1 0.3 0.5 1 19.7 22.3 16.2 4.4
Prime base rent 110 115 125 150 110 90 105 120
(USD/sq.m/year)


5.4. Communication
You can easily find all communication channels to suit your business needs in St. Petersburg.
Providers offer various telephone, mobile and internet services, depending on your location
(technical availability) and needs.

 Stationary and mobile telephone networks are well developed in St. Petersburg. Quality phone
coverage is available at affordable prices.61 Landline communications are available from a
number of operators.

 Most mobile operators in St. Petersburg run on GSM and CDMA 2000 networks. GSM networks
are mostly widely used and cover all parts of the city. CDMA offers quality communication as
well as high-speed Internet access. The largest GSM operators are Beeline, Megafon, MTS,
Tele2; CDMA 2000 – Skylink.

 IP calling cards are intended for international, national and local calls. You can use the following
cards to optimize you international communication costs – Apollo Phone, Arctel, Master,
Metrocom, Peterstar, Phoneclub, Web plus, West call.

 Virtually all forms of technology for Internet connections are available in the city. Depending on
your location, it is possible to obtain a necessary connection type, including dial-up connection,
ADSL, dedicated channels, Wi-Max. Free or paid Wi-Fi hotspots can be accessed at the airport,
major hotels, shopping and office centers & restaurants.

61
Detailed information on tariff plans and services can be found on company’s websites.


5.5. Utilities
Utility prices (electricity, water, heating and gas) for business as well as consumer purposes in Russia
are regulated by the state. In St. Petersburg the regulating bodies are the Regional Energetics
Commission of St. Petersburg Government and the Tariff Committee of St. Petersburg
Administration.

5.5.1. Electricity
The following electricity tariffs are effective beginning January 1, 2012 and ending June 30, 2012:
Grades and zones Units Tariffs*
1 grade tariff RUB/kW per hour 2.80
Tariffs varied per day/night zones
Night zone RUB/kW per hour 1.71
Day zone RUB/kW per hour 2.81

*Inclusive of VAT. Tariffs provided for residential customers.
Source: Tariff Committee of St. Petersburg Administration.

5.5.2. Water supply and water discharge
The following water tariffs by the State Unitary Enterprise “Vodokanal of St. Petersburg” are
effective beginning January 1, 2012 and ending December 31, 2012:
Type of customers Units Tariffs*
Drinking water Technical water Water discharge
Population RUB per cubic 15.78 — 15.78
meter
Other RUB per cubic 18.70 3.38 21.74
meter
* Tariffs (with the exclusion of residential customers tariffs) are indicated exclusive of VAT. Tariffs provided for residential
customers are valid till June 30, 2012.

5.5.3. Heating
The following heating tariffs are effective beginning January 1, 2012 and ending June 30, 2012:
Type of customers Units Tariffs*
Hot water Steam
Customers (that pay for RUB per 1,207.34 1,207.34
heat generation and hectocalory
transfer)
Population RUB per 1,424.66 —
hectocalory
* Tariffs (with the exclusion of residential customers tariffs) are indicated exclusive of VAT.


5.5.4. Natural gas
Natural gas tariffs may vary depending on location, season, volume of consumption and other
issues.
The following natural gas tariffs are effective beginning January 1, 2012:
Units Tariffs*
01.01.2012 – 30.06.2012 01.07.2012 – 31.12.2012
Natural gas RUB per 100 3,805.78 4,375.07
cubic meters
* Inclusive of VAT. Tariffs provided for residential customers.

5.5.5. Gasoline and diesel fuel
Fuel prices are not regulated by the state. Numerous local and international supplies, including BP,
Shell and Statoil, operate in St. Petersburg.
The average retail prices of gasoline and diesel fuel in St. Petersburg are provided in the following
table.
Fuel Units Average retail price*
Gasoline
A76 RUB per liter 25.79
Ai 92 RUB per liter 26.48
Ai 95 RUB per liter 28.60
Diesel RUB per liter 28.13
* Retail prices (inclusive of VAT) as of December 2011.
Source: Committee for Economic Development, Industrial Policy and Trade.


6. SME support
6.1. Overview
St. Petersburg has been and still remains the leader in the development of small businesses among
other regions of the Russian Federation. During the recent years small business has been gaining
more weight in the local economy.
According to the National institute for system studies of entrepreneurship, St. Petersburg is ranked
as the leader along the number of key indicators:
 #1 region in the number of small businesses (368.7) per 100 thousand residents
 #1 region in the volume of small business turnover (312%) per capita in percentage of the
average in the Russian Federation
 #2 region in the number of residents employed in small businesses (345.3 thousand).62
As for world rankings, St. Petersburg is ranked 18th in the number of small businesses per 100
thousand residents and 33d in the share of residents employed in small businesses. These indicators
are three times and 1.3 times higher than the respective average Russian indicators.63

6.2. Definition of SME – EU vs. Russia
Small and medium-sized enterprises (SMEs) are non-subsidiary, independent firms, which employ
less than a given number of employees. This number, however, varies across countries. In the words
of the Organization for Economic Co-operation and Development (OECD) Glossary of Statistical
Terms "the most frequent upper limit designating an SME is 250 employees, as in the European
Union". Some countries set the limit at 200 employees, while the United States considers SMEs to
include firms with less than 500 employees. In most OECD countries small enterprises are those with
less than 50 employees, while micro-enterprises have at most 10 or, in some cases, 5 employees. In
addition to this, financial assets are also used to define SMEs.64
The federal law #209-FZ “On small and medium business development in the Russian Federation”
which defines small, medium-sized and micro enterprises was adopted in 2007. The following table
summarizes the differences in definitions of medium-sized, small and micro enterprises in Russian
and the European Union.

Medium-sized Small Micro

Indicators EU Russia EU Russia EU Russia
Headcount, and 250 101-250 50 15-100 10 1-15
either: Turnover € 50 mln RUB 1 bln € 10 mln RUB 400 mln € 2 mln RUB 60 mln.
≈ € 24 mln ≈ € 9.6 mln ≈ € 1.4 mln
Or: Balance sheet total € 43 mln - € 10 mln - € 2 mln -

Source: European Commission. Enterprise and Industry. Small and medium-sized enterprises (SMEs): SME Definition;
Federal law #209-FZ “On small and medium business development in Russian Federation”.

62
As of the beginning of 2011
63
64
OECD Glossary of Statistical Terms (www. stats.oecd.org/glossary).


6.3. Statistics
Number of small
businesses
(thousand units): 301.4
276.3
261.5
227.8
180.8

01.01.2007 01.01.2008 01.01.2009 01.01.2010 01.01.2011


Type of small
businesses 207
(thousand units): 185.1 189.7
162.4
126.9
86.6 94.4
76.4
65.4
53.9

01.01.2007 01.01.2008 01.01.2009 01.01.2010 01.01.2011

Individual entrepreneurs
Companies


Small businesses by
sector of economy 4% Wholesale and retail trade, repair of
(2010): motor vehicles and household goods
Manufacturing

Construction
20%
Hotels and restaurants
4% 45%
Transportation and communication

Other communal, social & personal
services
9%
8% 8% Real estate, rental & leasing and other
3% services
Other



Turnover of small
businesses 1,266
(billion roubles):
1,086.4
981.3
927.8

608.7

2006 2007 2008 2009 2010


Investment in fixed
capital of small
businesses 01.01.2011 542 749 2,401
(million roubles):
01.01.2010 406 257 2,280
01.01.2009 1,098 857 1,731
01.01.2008 407 991 2,253
Manufactruring Trade Other



6.4. SME support and development programs
Small business development program has been functioning in St. Petersburg since 2008. A number
of special programs have been implemented since the launch of the program, including the
establishment of the Venture Fund, City Business Incubator, Fund for Small Business Credit
Assistance, and Enterprise Europe Network - St. Petersburg branch.
The city has managed to significantly reduce the problems of limited financial resources for start-
ups, high rental costs, unfavorable credit conditions and complexities of new market entry. During
the program implementation period the number of small businesses has increased by almost 70%
(from 181 thousand in 2007 to 301 thousand in 2011).65

6.4.1. Implementation of the Action Plan aimed at development and
support of small business in St. Petersburg (2008-2011)
The priorities of the Action Plan implemented during the period of 2008-2011 included:
 Development of human resources potential;
 Financial support;
 Strengthening of market positions;
 Development of social partnership;
 Information support;
 Increasing public significance;
 Improving information management of authorities.
The total financing of the program amounted to 4,078.4 thousand roubles. In 2010 the Action Plan
stipulated the implementation of 30 activities, which included both direct and indirect support of
small businesses. 879.7 million roubles were allocated for the implementation of the activities in
2010.
The following 9 special programs of the Action Plan envisaged direct and indirect subsidizing of
parts of expenditures incurred by small businesses:
 Business loans from commercial banks for small businesses;
 Rental subsidies for separate groups of businesses;
 Participation in exhibitions and fairs;
 Leasing of fixed assets;
 Grid connection subsidies;
 Small business start-up grants;
 Export subsidies for small businesses manufacturing export products or/and works, services.
Manufacturing enterprises represent a priority target group of the subsidy program. In 2010
manufacturing enterprises were granted 22,7445.9 thousand roubles in subsidies, thus accounting
for 62.6% of the total volume of all subsidies for small businesses.66

65
66


The results of the implementation of the Action Plan aimed at development and support of small
businesses in St. Petersburg (2008-2011) are presented in the following table.
Major problems Program solution Results
Limited financial Special programs 1 bln roubles in subsidies granted to
resources 3,787 small businesses
Special credit assistance program 1,151 subsidies granted to the amount of
240 mln roubles
Establishment of the Fund for Small 859 contracts of guarantee to the amount
Business Credit Assistance of 2.7 bln roubles which allowed to secure
6.2 bln roubles in credits
High rental costs Establishment of the First City Business More than 100 small companies have
Incubator undergone business incubation period
Buy-back of rental premises 1,361 purchase and sale agreements
concluded
Shortage of qualified Special program - Regional University of More than 2,500 specialists educated and
human resources Small Business trained
Complexities linked Establishment of Enterprise Europe Services provided to 800 small businesses
to new market entry Network - St. Petersburg
Administrative Establishment of the Public Council on Effective dialogue pursued between
control issues Small Business Development under the businesses and authorities
auspices of the Governor of St.
Petersburg

6.4.2. Program for small and medium business development
in St. Petersburg for 2012-2015
A new Program for small and medium business development in St. Petersburg envisages the
implementation of the following major goals till 2015:
 Increasing the comfort of living
Promoting affordability and diversified assortment of products and services provided to the
residents of St. Petersburg
 Increasing self-employment among population
Increasing the number of work places, growth in the number of population employed in small
business
 Changing the sectoral structure of small business
Increasing the share of manufacturing and innovative sectors, growing small businesses into
medium-sized businesses, thus increasing budget tax receipts.
The Program’s budget constitutes around 3.4 billion roubles for the period from 2012 till 2015 with
the largest share allocated for the financing of special subsidy programs as well as placement of
government contracts with small and medium-sized business.
The Program envisages a 1.5% increase in the share of products (works, services) produced by small
and medium-sized businesses in the total GRP volume as well as a 5% increase in tax receipts from
small and medium-sized businesses, and a 10% increase in the share of innovative and
manufacturing enterprises. Small and medium-sized business is to increase the number of work
places by 7%, which will allow to increase the share of population employed in this sector by 2.5%.
The growth in the average salary paid by small and medium-sized businesses is to constitute 10%.67

67


The major activities implemented in the framework of the Program are presented in the following
table:
Focus of the Program Types of support
1. Improved access to financial Special programs:
resources - Leasing of fixed assets
- Business incubator
- Business loans from commercial banks for small
manufacturing businesses
- Subsidies for small arts & crafts businesses
- Grid connection subsidies
- Small business start-up grants
- Franchising costs subsidies
- Increasing the assets of the Fund for Small Business
Credit Assistance
- Increasing the assets of the Fund for Venture
Investments Development into Small Scientific and
Technology Businesses
2. Strengthening of SMEs positions Special programs:
at intraregional, interregional and - Enter the regional markets
international markets - Exhibitions and trade fair activities
- Certification
- Intellectual rights protection
- Enterprise Europe Network – St. Petersburg
- Export subsidies for small businesses manufacturing
export products or/and works, services
- Improvement of energy efficiency of SMEs production
Subsidies:
- Support of SMEs pursuing innovative activities within a
cluster through acquisition of manufacturing and
technological equipment
- Development of the localization, import substitution
and subcontracting system
- Establishment of the regional center for the
coordination of export-oriented SMEs
3. Development of social - Functioning of the Public Council on Small Business
partnership Development under the auspices of the Governor of St.
Petersburg and specialized commissions
4. Development of human resources Special programs:
potential - Regional University for Small Business
- Basics of entrepreneurship for school students
- Women entrepreneurship support
- Technological internships
- Promoting youth entrepreneurship
5. Increasing public significance of - Popularization of entrepreneurship;
SMEs - Support of business initiatives of socially unprotected
groups of population
6. Improved information support - Complex monitoring of SMEs
- Collection, analysis, systematization and distribution of
legal, economic, marketing and other business
information for SMEs via Internet
- Development and management of the state information
system of St. Petersburg “St. Petersburg’s Register of
SMEs and business support infrastructure”


6.4.3. Further information
Further details are available at the official website of the Program for Small Business Development
in St. Petersburg at www.spb-mb.ru.

6.4.4. Contacts
16 Voznesensky prospect
Tel.: +7 812 576 00 01 | Fax: +7 812 570 35 54
info@cedipt.spb.ru | www.cedipt.spb.ru | www.spb-mb.ru


7. Contacts of the business support
infrastructure
7.1. Overview of the business support infrastructure
in St. Petersburg
Business support infrastructure provides extensive opportunities for business development during
the economic downturn and support for securing future economic prosperity and growth. This
section of the guide summarizes the existing support from government to help your business
succeed, including financial support, advice, consulting, information, skills training, etc.

7.2. Authorities
7.2.1. Committee for Economic Development, Industrial Policy and Trade
The Committee for Economic Development, Industrial Policy and Trade is tasked with long-term
objectives of development of growing economy with high level of competitiveness and share of
human capital. The Committee is comprised of the following 6 blocks each formed of specialized
departments and units: Economic Planning; Development of Industry, Agri-Industrial Complex and
Economic Security; Support of Industry, Small and Medium-Sized Entrepreneurship; Development
of Innovations and Investment Attraction; Consumer Market and Licensing; Improvement of Public
Contracting, External Economic Activity, Development of Medical and Pharmaceutical Projects.

Tasks
 Implementation of socio-economic development program of St. Petersburg;
 Development and implementation of programs aimed at supporting industry, small and
medium-sized businesses in St. Petersburg;
 Support of implementation of investment projects in St. Petersburg;
 Implementation of innovation policy in St. Petersburg;
 Implementation of cluster policy;
 Regulation of trading activities;
 Licensing of certain activities;
 Organization and implementation of citywide celebrations, forums and trade fairs.
The Committee is also entrusted with evaluation and coordination of other committees of the
Government of St. Petersburg as well as district administrations in the above-mentioned areas.
Together with the Finance Committee, Tariff Committee and Labor and Employment Committee,
Committee for Economic Development, Industrial Policy and Trade forms the financial and
economic sector of the Government.

Contacts
16 Voznesensky prospect
Tel.: +7 812 576 00 01 | Fax: +7 812 570 35 54
info@cedipt.spb.ru | www.cedipt.spb.ru


7.2.2. Committee for External Relations
The Committee for External Relations of the Government of St Petersburg is tasked with
implementation of the government policy of St. Petersburg in the sphere of development of
external relations and interregional cooperation. The Committee includes the following specialized
divisions and departments: State Protocol Division; Department for Europe, North America and
Australia; Asian, African and Latin American Countries Department; Department for Coordination of
State Programs for Interethnic Relations, Cooperation with Compatriots Abroad and Regions of the
Russian Federation.

Tasks
 Implementation of the government policy of St. Petersburg in the sphere of the development of
external relations of St. Petersburg, interregional cooperation of St. Petersburg
 Coordination of activities in the development and implementation of international technical
assistance and business cooperation programs, including those related to the development of
the city economy, social sphere, education, culture and health care in St. Petersburg
 Coordination of activities in the organization of participation of citizens and organizations in
interregional and international conferences and other interregional and international events
held by the executive agencies of the St. Petersburg government
 Implementation of the government policy aimed at supporting and developing ethnic cultures,
languages, traditions and customs of the communities residing in St. Petersburg
 Organization of work aimed at supporting compatriots residing abroad and using their potential
for the development of relations with foreign countries
 Other issues of foreign relations of St. Petersburg in compliance with the legislation in force.

Contacts
Committee for External Relations of St. Petersburg
Smolny
Tel.: +7 812 576 71 13 | Fax: +7 812 576 76 33
kvs@gov.spb.ru | www.kvs.spb.ru


7.3. Investment support
7.3.1. St. Petersburg Investment Promotion Agency
(St. Petersburg State Institution “City Agency for Industrial
Investments”)
St. Petersburg Investment Promotion Agency (St. Petersburg state
institution “City Agency for Industrial Investments”) has been working on
implementation of St. Petersburg investment policy and providing
integrated support of investment projects for 7 years. The Agency has the
status of a duly authorized organization of the St. Petersburg Government for attraction of
investments into the City. The mission of the Agency is to increase the investment potential of St.
Petersburg and improve its competitiveness both on domestic and external markets.
The Agency liases closely and personally with every customer and renders full spectrum of investor
support services free of charge.

Services
The Agency renders the following services:
 Information and consulting support at all stages of investment projects;
 Providing information necessary to make decisions on investment, e.g. conditions for doing
business in St. Petersburg, availability of sites and condition of infrastructure facilities,
applicable legislation and forms of state support, possible partners and project financing
sources;
 Selection of land plots most suitable for project implementation;
 Arrangement and carrying out of meetings with participation of stakeholders and project
implementation organizations, resolution of current and extraordinary matters;
 Support of investment projects at all stages of design, construction and commissioning of
facilities;
 Coordination of investor interaction with executive agencies of the State Government in St.
Petersburg, subordinate institutions and other entities participating in projects;
 Assistance in obtaining necessary approvals (statements, permitting documents) from
authorized agencies and organizations;
 Preparation of documents for obtaining initial permits and town-planning documents for
designing and construction, commissioning of construction/ reconstruction facilities, execution
of property rights for land plots and real property facilities.

Contacts
St. Petersburg Investment Promotion Agency
St. Petersburg State Institution “City Agency for Industrial Investments”
88-90 A Griboedov Canal Embankment
Tel.: +7 812 320 50 16 | Fax: +7 812 320 50 15
gapi@spbgapi.ru | www.spbgapi.ru


7.4. SME business cooperation support
7.4.1. Enterprise Europe Network – Module A Branch – St. Petersburg
The Enterprise Europe Network (EEN) is a key instrument in the EU's
strategy to boost growth and jobs. Bringing together 570 business support
organizations from 49 countries, we help small companies seize the
unparalleled business opportunities in the EU Single Market. ENN’s
mission lies in helping small businesses make the most of the business
opportunities in Russia and the European Union.
Enterprise Europe Network - Russia, Gate2Rubin Consortium, Module A Regional Center – St.
Petersburg is co-financed by the Government of the Russian Federation and the Government of St.
Petersburg and is operated by St. Petersburg Foundation for SME Development since 2008.

Services
The EEN branch in St. Petersburg focuses on providing business support to Russian companies. Our
services to foreign companies are provided free of charge and are aimed at fostering business
cooperation:
 Events
Together with our partners we implement a number of international and national events aimed
at developing and promoting international business cooperation.
 Basic partner search
In order to find business partners, suppliers or subcontractors in St. Petersburg, please contact
your local EEN branch and our colleagues will guide you through the partner search process.
 Partners, business offers and products from St. Petersburg
You can find business offers and products from companies located in St. Petersburg on our
portal at www.doingbusiness.ru .
 Information support
Our internet portal “Doing business in St. Petersburg” is an entry point for international SMEs,
investors and other parties interested in pursuing trade, outsourcing, investment activities and
starting business in St. Petersburg.
Extensive information on our services as well as key business and investment issues is available in
English at www.doingbusiness.ru.

Contacts
Enterprise Europe Network – Russia
Gate2Rubin Consortium,
Module A Regional Center – St. Petersburg
14 Izmaylovsky prospect
Tel.: +7 812 325 84 16, 325 8351, 575 04 80 | Fax: +7 812 712 66 07
info@enterprise-europe-network.ru | www.doingbusiness.ru


7.5. SME support
7.5.1. St. Petersburg State Institution
“Center for Business Development and Support”
The Center of Business Development and Support (CBDS) aims to improve the
quality and accessibility of state services for juridical entities and individual
entrepreneurs.
CBDS was established in 2010 and is managed by the Committee for Economic
Development, Industrial Policy and Trade.

Services
 Do you need to get permit, license, agreement to develop your business?
Make use of the services provided at the Multi-Services Center. The Multi-Services Center
started to provide various state services for entrepreneurs on the basis of one-stop shop in
cooperation with 11 executive authorities of St. Petersburg from January 2012.
 Would you like your company to participate in state support programs?
CBDS advises SMEs on state support programs, such as crediting by commercial banks, backing
the costs caused by product exports, protection of intellectual property, certification, acquisition
of fixed assets on leasing, energy efficiency. CBDS contributes to involvement of St.Petersburg’s
SMEs in the process of creating high-tech products on subcontract basis paving the way for
localization of the leading foreign companies. Further, the Center implements the mechanism of
import substitution in cooperation with large -scale enterprises of St. Petersburg.
 Do you have any ideas? Do you want to create or have you already been creating new
products and technologies?
CBDS facilitates the implementation of measures aimed at stimulating R&D activities and
contributes to the development of Technological platforms. The Center provides support to St.
Petersburg companies participating in competitions for funding of innovative projects by the
programs of innovative development of companies with state participation, government
corporations, federal state unitary enterprises, as well as in federal programs. The Center
cooperates with development institutions and St. Petersburg organizations tasked with
ensuring continuous financial and non-financial support for innovative projects. CBDS promotes
the creation of R&D-centers in St. Petersburg.
The Center conducts educational seminars, panel discussions, meetings and consultations as well as
assists in the organization of fairs and exhibitions. Extensive information on services and activities is
available at www.crpp.ru.

Contacts
St. Petersburg state institution “Center of Business Development and Support”
16 Voznesenski prospect
190000 St.-Petersburg, Russia
Tel.: +7 (812)576-25-89 | Fax: +7 (812)576-25-89
info@crpp.ru | www.crpp.ru
Multi-Services Center
let. O 10-12 Krasnogo tekstilschika street
Tel.: +7 (812) 417-31-31, 417-31-30
Business hours: M-Th 9:30 am to 5.30 pm; Fri 9.30 am to 4.30 pm, Sa-Sun closed.


7.5.2. Public Council on Small Business Development under the auspices of
the Governor of St. Petersburg
Consulting and advisory body under the auspices of
the Governor of St. Petersburg on the issues
pertaining to the realization of government policy in
the sphere of small business development and support.

Public Council unites representatives of the most important public business organizations, including
the Union of Industrialists and Entrepreneurs of St. Petersburg, St. Petersburg Chamber of
Commerce and Industry, OPORA RUSSIA, St. Petersburg Union of Entrepreneurs, St. Petersburg
branch of «Business Russia», Merchant club of St. Petersburg and many others.

Services
 Rendering assistance to executive authorities in the implementation of government policy in the
sphere of small business development and support;
 Aligning interests of executive authorities and small business associations regarding the issues
of implementation of socio-economic development policy of St. Petersburg;
 Developing recommendations on protection of rights and interests of small businesses in the
course of development and implementation of economic, proprietary, city planning and social
policy;
 Informing the Governor of St. Petersburg, Government and other executive authorities on the
most acute problems of small business development;
 Developing positive image of small business, raising public confidence in businesses, developing
business culture and business ethics.
Public Council actively carries out analyses of legislative acts regulating business activities. A lot of
attention is also paid to information support. Public Council publishes periodical «Public Council
Newsletter», presents TV program «Small business of a big city», organizes 4 city competitions –
«Best entrepreneur of St. Petersburg», «Young, bold, ambitious», «Business lady Petersburger»,
«Mass media about small business».
Public Council regularly holds seminars, conferences, round tables on acute issues for businesses.

Contacts
Public Council on Small Business Development under the auspices of the
Governor of St. Petersburg
46/5 Mayakovskogo Street
Tel.: +7 812 576 25 66, 576 26 59, 576 26 58 | Fax: +7 812 273 58 45
sovet@osspb.ru | www.osspb.ru


7.6. Financial support
7.6.1. Nonprofit organization “Fund for Small Business Credit Assistance”
Nonprofit organization “Fund for Small Business Credit Assistance” was
established by the Government of St. Petersburg in 2007. The Fund carries
out two programs aimed at supporting small and medium businesses in St.
Petersburg:

Services
 Credit guarantee for businesses to the amount of 50% of the total credit amount and up to
12 million roubles
Conditions of the credit guarantee program:
- Credit agreements concluded for at least 3 months
- Fund’s commission: 1.75% per annum
- 37 participating banks
Eligibility requirements:
- Small and medium-sized businesses
- At least 3 months of business activity prior to the date of application
- No breaches of previously concluded credit agreements, loan agreements, leasing, etc. 6
months prior to the Fund’s guarantee application
 Loans to individual entrepreneurs and legal entities to the amount of 50,000-1,000,000
roubles at 10% interest per annum
Conditions of the micro finance program:
- Application review period: 3 to 5 days
- Percentage accrues on the actual amount outstanding
- Overpayment for 12 months: 5.5%
- Maturity: 3 to 12 months
- Repayment any time, commission free
- Individual approach to every customer
- Standard package of documents
Means of loan guarantee:
- Business owner guarantee
- Loans up to 100,000 roubles: business owner guarantee
- Loans over 100,000 roubles: guarantee and collateral (motor vehicles, property, bank
guarantees, etc.)

Contacts
Fund for Small Business Credit Assistance
let. A, 46 Mayakovskogo Street
Tel.: +7 812 576 25 75 | Fax: +7 812 273 49 55
credit-fond@bk.ru | www.credit-fond.ru


7.6.2. Nonprofit organization “Fund for Venture Investment Development
Assistance for Small Science and Technology Enterprises
of St. Petersburg”
The Fund for Venture Investment Development Assistance for Small
Science and Technology Enterprises of St. Petersburg was established
by the Government of St. Petersburg with the participation of the
Committee on Economic Development, Industrial Policy and Trade.
The Fund aims to create and develop venture (risk) financing infrastructure for small science and
technology businesses in St. Petersburg.

Services
 Selection of innovative investment projects for small science and technology enterprises
engaged in priority areas of science, technology and engineering in Russia
The Fund carries out the selection of innovative projects for investment from two sources – (1)
Closed-End Mutual Fund for High-Risk (Venture) Investments “Regional Venture Fund for
Investment in Small Science and Technology Enterprises of St. Petersburg” and (2) “Fund for
Seed Investments of the Russian Venture Company”.
Selection criteria (1):
- Volume of investment requested – from 10 to 90 million roubles
- Transmission of more than 25% of shares to the Fund
- Strong business team capable of developing a company in conditions of fast growth and
limited resources
- Availability of intellectual property rights (patents, copyrights, certificates)
- Project aimed at development of a new type of knowledge intensive products (works,
services) or increase of its technical level, introduction of new and improvement of applied
technologies
- High level of project development, potential for mid-term business development (4-7 years)
at the regional, Russian and international markets, clear company development strategy
and plan for application of investment resources
- Business development plan, including description of risks linked to financing
Selection criteria (2):
- Volume of investment requested – up to 33.3 million roubles
- Qualified team
- Availability of intellectual property rights (patents, copyrights, certificates)
- Attraction of investments with the aim of acquiring, development, manufacturing and
promotion of commercial version of innovative product/service
- Withdrawal from Investment company in 1-5 years is carried out though transmission of
shares to strategic partner or venture fund or through buy-out of company’s management

 Expert support and consulting of project authors and innovation companies on investment
support and preparation of investment projects
The Fund advises entrepreneurs on venture infrastructure in St. Petersburg and provides
information on government measures aimed at small business support.

Contacts
Fund for Venture Investment Development Assistance for
Small Science and Technology Enterprises of St. Petersburg
37 Sedova Street, office 802, 192148 St. Petersburg, Russia
Tel.: +7 812 640 96 45, 910 34 33 | Fax: +7 812 640 96 45
venture-spb@bk.ru | www.vf-spb.ru


7.7. Techno parks and business incubators
7.7.1. Ingria Technopark and Business Incubator
Ingria Technopark will be created on the principles of
public-private partnership with the support of the
Government of the Russian Federation and the
Government of St. Petersburg. The project is a part of the
federal program aimed at creating techno parks in the sphere of high technologies. The total volume
of investment equals 30 billion, including 64% of private investment. The construction of the first
stage will start in 2012 with the opening planned for 2013. Microsoft and DataArt have already
announced their plans to locate their R&D centers in Technopark. Ingria Technopark is a member of
the Association of technoparks in the sphere of high technologies of Russia since 2011.
Business Incubator Ingria began operating as a pilot project of Technopark in December 2008. It is a
subdivision of the managing company OJSC Technopark tasked with rendering assistance in
accelerated development of innovative companies. Information technologies is the key
specialization of the residents. During the first 3 years of its operation the Incubator's residents
attracted more than 500 million roubles in investments from international IT companies, private and
state funds, business angels. Ingria is actively developing its cooperation with Russian and St.
Petersburg Universities, thus sharing its experience with other regions. Nowadays, Business
Incubator Ingria has about 70 residents.
Ingria residents are winners and finalists of many contests, including Web Ready, Start-11, the best
project in the cluster in St. Petersburg, BIT-Online, the International Young Interactive Entrepreneur
Award 2010, IBTEC-2010, Product/Solution of the year-2011 and many others.

Services
 Programs offered to the residents
Pre-Incubation and Incubation: Pre-Incubation lies in formation of a business model, while
Incubation is aimed at progressing the business and entering the market. Regardless of
incubation program, companies can reside in the office during their cooperation with Ingria.
 Organization of events
Every year Business Incubator Ingria organizes more than 100 events, including Open Days
Ingria (featuring lectures of famous speakers), Lead The Way (discussions of technology trends),
StartupLynch, Train&Develop Program (specialized trainings), VC Corner, seminars, round
tables, conferences as well as partners’ and residents’ events. During these events start-ups
have an opportunity to receive expert feedback, investment estimation of their projects and
improve their presentation skills.
 Experts and mentors
Ingria cooperates with major IT and technological companies and venture funds. As a part of
joint programs Ingria engages leading experts as mentors of business incubator’s residents.

Contacts
Ingria Technopark Business Incubator
70 Obukhovskoy Oborony prospekt, building 2
Tel.: +7 812 313 10 85, 313 10 86 | Fax: +7 812 313 10 87
startup@ingria-park.ru | www.ingria-park.ru | www.ingria-startup.ru


7.7.2. The First St. Petersburg Business Incubator
The First St. Petersburg business incubator supports and facilitates the
development of small innovation companies. It is a unique business,
information and creative environment for successful development of
innovative business of residents.
The First St. Petersburg business incubator was founded in 2006 by the Administration of St.
Petersburg in cooperation with the Ministry for Economic Development of the Russian Federation. It
is managed by Managing Company «REO «Service». The First St. Petersburg business incubator is
located in «Crystal» Business Center.

Services
The St. Petersburg business incubator provides following services:
 Offices
Renting comfortable offices equipped with furniture, computers and conditioning system at a
reduced rental rate
 Consulting
Consulting on legal issues, economy, taxation, marketing, business planning, promotion, PR,
accounting, financing, loan services, HR, internationalization
 External accounting services
 Promotion of the companies
Advertising, exhibitions, media, PR-support, events
 Education programs
Seminars, trainings, master classes
 Internationalization
Business trips, seminars, joint projects, internships, consulting
 Access to business incubator’s partnership network
To find more information about the First St. Petersburg business incubator, its services and resident
companies visit www.start-business.ru.

Contacts
The First St. Petersburg Business Incubator
37 Sedova St.
Tel.: +7 812 448 56 65 | Fax: +7 812 560 97 49
info@start-business.ru | www. start-business.ru


7.8. Educational programs and internships
7.8.1. St. Petersburg State Institution
“St. Petersburg Interregional Resource Center” (SPIRC)
The President Management Training Program is a leading program in
professional business education for managers since 1997. Nearly 3,500
managers graduated from the Program during these years. In 2005 St.
Petersburg Interregional Resource Centre (SPIRC) was registered as State
Institution.
SPIRC represents a new format of the President Management Training
Program in St. Petersburg – a state training program for managers of national
economic enterprises of the Russian Federation.

Services
 President Management Training Program
State Plan for training managers of national economic organizations of the Russian Federation
 Postgraduate work with President Program’s alumni
Supporting President Program graduates in career development, assistance in promotion
graduate’s business and projects
 Regional University of small business
Governmental support programs, educational programs, seminars
 Development and maintenance of international and interregional educational projects
 Special educational projects
Trainings, Consulting, Coaching, Special Internships
 Wide range of partnership all over Russia
Signed collaboration agreements with 18 regions of Russia, Northwest Russia consortium
coordination center
 Event management
International conferences, meetings, seminars, business meetings in St. Petersburg, exhibitions
 Database of business contacts
Business match-making for Russian and potential foreign partners
 Business exchange program
Russian-foreign exchange management training program for top-managers in Russia and
abroad

Contacts
St. Petersburg State institution “St. Petersburg Interregional Resource Center"
88/90 Griboedova embankment
190068 St. Petersburg Russia
Tel. + 7 812 326 42 75 | Fax: +7 812 326 42 74
int@spbmrc.ru | www.spbmrc.ru


7.9. Chambers of commerce and industry
St. Petersburg Chamber of Commerce and Industry
46-48 Chaikovskogo Street
Tel.: +7 812 719 66 44 | Fax: +7 812 272 97 13
spbcci@spbcci.ru | www.spbcci.ru
American Chamber of Commerce in Russia, St. Petersburg Chapter
24 Yakubovicha Street
Tel.: +7 812 448 16 46 | Fax: +7 812 448 16 45
all@spb.amcham.ru | www.amcham.ru/spb
Finnish-Russian Chamber of Commerce
4-6-8 B Bolshaya Konjushennaya Street, office B301
Tel.: +7 812 322 21 21 | Fax: +7 812 322 21 21
info@spb.svkk.ru | www.svkk.ru
Russian-German Chamber of Foreign Trade
4A Finlyandsky prospect
Tel.: +7 812 332 14 15 | Fax: +7 812 332 14 16
info@petersburg-ahk.ru | www.petersburg.russland.ahk.de
Russo-British Chamber of Commerce
23A Vladimirsky prospect, office 705
Tel.: +7 812 346 50 51 | Fax: +7 812 346 50 52
infospb@rbcc.com | www.rbcc.com

7.10. Business associations
Union of Industrialists and Entrepreneurs of St. Petersburg
1 Smolny proezd, Letter B
Tel.: +7 812 576 76 81 | Fax: +7 812 576 77 92
spp@spp.spb.ru | www.spp.spb.ru
St. Petersburg Union of Entrepreneurs
16 Stachek prospect
Tel.: +7 812 252 39 50, 252 43 50, 252 38 10
www.spbsp.ru
St. Petersburg International Business Association (SPIBA)
21 Nevsky prospekt, office 506
Tel.: +7 812 325 90 91, 312 53 07 | Fax: +7 812 325 90 92
office@spiba.ru | www.spiba.ru


7.11. Audit, tax and consulting firms
BANKO Audit & Consulting Juralink
Tel./Fax: +7 812 702 07 03 Tel.: +7 812 606 66 24
www.bankoaudit.ru Fax: + 7 812 606 66 23
BDO www.juralink.ru
Tel.: +7 495 797 56 65 Jurconsult International
Fax: + 7 495 797 56 60 Tel.: +7 812 324 73 24
www.bankoaudit.ru Fax: + 7 812 274 68 09
Deloitte www.jurconsult.spb.ru
Tel.: +7 812 703 71 06 Konsu SP
Fax: + 7 812 703 71 07 Tel.: +7 812 325 82 94, 327 38 92
www.deloitte.com Fax: + 7 812 325 82 93, 321 29 96
Eccona www.konsu.com
Tel./Fax: +7 812 622 12 13 KPMG
www.eccona.ru Tel.: +7 812 313 73 00
Energy Consulting Fax: + 7 812 313 73 01
Tel.: +7 812 327 55 22 www.kpmg.com
Fax: + 7 812 327 55 39 PKF
www.ec-group.ru Tel.: +7 812 600 91 00
Ernst & Young Fax: + 7 812 600 90 50
Tel.: +7 812 703 78 00 www.mcd-pkf.com
Fax: + 7 812 703 78 10 Moore Stephens
www.ey.com Tel.: +7 812 332 28 51
G.C.E. Group Fax: + 7 812 332 14 88
Tel.: +7 812 334 55 61, 334 55 62, 334 55 63 www.mscis.moorestephens.com
www.gce.ru PricewaterhouseCoopers
Hannes Snellman Tel.: +7 812 326 69 69
Tel.: +7 812 363 33 77 Fax: + 7 812 363 66 99
Fax: +7 812 363 33 88 www.pwc.ru
www.hannessnellman.com Prime Advice
IBS Tel.: +7 812 449 50 00
Tel.: +7 812 333 15 44 Fax: + 7 812 449 50 01
www.ibs.ru www.hlbprime.com
Impex Consult PROUD
Tel.: +7 812 309 39 85 Tel.: +7 812 329 40 04
www.impexconsult.ru www.pra.ru
Intalev RBS
Tel./Fax: +7 812 677 90 67, 600 99 24 Tel.: +7 812 332 13 55
www.intalev.spb.ru www.rbsys.ru
Institute for Enterprise Issues Russia Consulting
Tel.: +7 812 703 40 41 Tel.: +7 812 458 58 00
Fax: + 7 812 703 30 08 Fax: + 7 812 458 57 00
www.ipp.spb.ru www.russia-consulting.eu
Institute of Independent Social & Economic St. Petersburg Foundation
Research (INSEI) for SME Development
Tel.: +7 812 232 84 54 Tel.: +7 812 325 84 16
www.insei.ru Fax: + 7 812 712 66 07
InterComp www.fbd.spb.ru
Tel.: +7 812 740 18 60
www.intercomp.ru


7.12. Banks
Cetelem Promsvyazbank
Tel.: 8 800 500 89 98 Tel.: +7 812 321 20 20
www.cetelem.ru www.psbank.ru
Citibank Raiffeisen Bank
Tel.: +7 812 336 75 75 Tel.: +7 812 334 43 43
www.citibank.ru www.raiffeisen.ru
Banca Intesa Rosbank
Tel.: +7 812 275 41 54 Tel.: +7 812 332 12 29
www.bancaintesa.ru www.rosbank.ru
Bank of Moscow Russian Agricultural Bank
Tel.: 8 800 200 23 26 Tel.: +7 812 335 06 30
www.bm.ru Fax: + 7 812 335 06 30
Bank Uralsib www.rshb.ru
Tel.: +7 812 334 44 33 Sberbank
www.bankuralsib.ru Tel.: 8 800 555 55 50
Barclays www.sbrf.ru
Tel.: +7 812 747 34 30 Swedbank
www.barclays.ru/ Tel.: +7 812 313 63 63
Gazprombank www.swedbank.ru
Tel.: +7 812 301 99 99 TransCreditBank
www.gazprombank.ru Tel.: +7 812 703 44 30
GE Money Bank www.tcb.ru
Tel.: +7 812 320 87 56 UniCredit Bank
www.gemoney.ru Tel.: 8 800 700 73 00
Nordea Bank www.unicreditbank.ru
Tel.: +7 812 747 34 30 VTB 24
www.nordea.ru Tel.: 8 800 100 24 24
www.vtb24.ru

7.13. Certification and testing
Center for Certification and Marketing Kvatro – Certification Center
Tel.: +7 906 239 58 30 Tel.: +7 812 712 66 05, 972 66 30, 712 67 01
www.gost-spb.ru www.kvatro-spb.ru
Center of Quality Control Mezhregiontest
Tel.: +7 812 274 14 30 Tel.: +7 812 600 06 07
Fax: + 7 812 274 14 32 www.megregiontest.ru
www.quality.spb.ru Reglamentsert – Northwestern Scientific and
Center for Testing and Certification - Technical Center for Testing and Certification
St. Petersburg Tel.: +7 812 777 05 15, 766 19 40
Tel.: +7 812 251 39 50 Fax: + 7 812 766 1940
Fax: + 7 812 251 41 08 www.reglamentsert.ru
www.rustest.spb.ru Rostest
Center –Test Tel.: +7 812 927 94 11
Tel.: + 7 812 328 62 62, 328 62 02 Fax: + 7 812 633 05 16
www.okp.ru www.i-trade.spb.ru
Certification
Tel.: +7 812 337 16 02, 388 12 16
www.sertis.ru


Russian Register Test St. Petersburg
Tel.: +7 812 600 11 67, 600 11 68 Tel./Fax: +7 812 334 02 62, 327 55 51,
Fax: + 7 812 600 11 69 327 5552, 575 0093
www.rusregister.ru www.en.test-spb.ru
SGS Vostok Limited
Tel.: +7 812 449 04 66
Fax: + 7 812 449 04 67
www.sgs.ru

7.14. Exhibitions
ExpoForum Sivel
Tel.: + 7 812 240 40 40 Tel.: +7 812 324 64 16
www.expoforum.ru Fax: +7 812 596 38 14
FarExpo www.sivel.spb.ru
Tel.: +7 812 718 36 37 Sovencon
Fax: +7 812 777 04 07 Tel.: +7 812 369 01 34, 369 00 16, 369 08 45
www.farexpo.ru www.sovencon.ru
Imperia Stachek 47
Tel.: +7 812 327 49 18 Tel.: +7 812 702 04 38
Fax: + 7 812 327 49 18 Fax: + 7 812 784 65 30
www.imperiaforum.ru www.stachek47.ru
Monomax Restec
Tel.: +7 812 335 20 55, 335 20 39 Tel.: +7 812 320 63 63
www.monomax.ru Fax: + 7 812 320 80 90
PrimExpo www.restec.ru
Tel.: +7 812 380 60 00 Vystavka, LLC
Fax: +7 812 320 80 90 Tel.: +7 812 320 24 57, 320 24 55, 766 47 17
www.primexpo.ru www.y-expo.ru
Severnaya Palmira
Tel.: +7 812 975 12 40, 448 36 55
Fax: +7 812 449 52 44
www.congresscity.ru

7.15. Law firms
Baker & McKenzie Castren & Snellman
Tel.: +7 812 303 90 00 Tel: +7 812 325 80 85
Fax: + 7 812 325 60 13 Fax: +7 812 325 80 86
www.bakermckenzie.com www.castren.fi
Beiten Burkhardt Clyde&Co
Tel.: +7 812 449 60 00 Tel.: +7 812 232 22 97
Fax: + 7 812 449 60 01 Fax: +7 812 233 81 09
www.bblaw.com www.clydeco.com
Capital Legal Services International DLA Piper
Tel.: +7 812 346 79 90 Tel.: +7 812 448 72 00
Fax: + 7 812 346 79 91 Fax: + 7 812 448 72 01
www.cls.ru www.dlapiper.com


Duvernoix Legal Pepeliaev, Goltsblat & Partners
Tel.: +7 812 702 62 00 Tel.: +7 812 640 60 10
Fax: + 7 812 702 62 55 Fax: + 7 812 640 60 20
www.duvernoixlegal.ru www.pgplaw.ru
Egorov Puginsky Afanasiev & Partners Salans
Tel.: +7 812 322 96 81 Tel.: +7 812 325 84 44
Fax: + 7 812 322 96 82 Fax: + 7 812 325 84 54
www.epam.ru www.salans.com
Hellevig Klein & Usov Unicomlegal Russia
Tel.: +7 812 244 75 49 Tel.: +7 812 380 16 61
Fax: + 7 812 244 75 48 Fax: + 7 812 380 16 61
www.hkupartners.com www.unicomlegal.ru
Mannheimer Swartling
Tel.: +7 812 335 23 00
Fax: + 7 812 335 23 01
www.mannheimerswartling.se

7.16. Real estate
Advecs Jones Lang LaSalle
Tel.: +7 812 322 52 00 Tel.: +7 812 363 32 31
www.advecs.com Fax: + 7 812 363 32 30
ARIN – Agency for Development and www.joneslanglasalle.ru
Real Estate Research Knight Frank
Tel./Fax: +7 812 600 03 94 Tel.: +7 812 363 22 22
www.arin.spb.ru Fax: + 7 812 363 22 23
Colliers International www.spb.knightfrank.ru
Tel.: +7 812 718 36 18
Fax: + 7 812 718 36 16
www.colliers.spb.ru

7.17. Recruitment
ANCOR BusinessLink Personnel
Tel.: +7 812 448 88 35 Tel.: +7 812 327 89 96
Fax: + 7 812 448 88 36 Fax: + 7 812 327 89 93
www.ancor.ru www.blp.ru
AVANTA Personnel – Adecco Group Russia CASE HR solutions
Tel./Fax: +7 812 329 57 70, 329 00 11, Tel.: +7 812 334 24 25
329 2211 Fax: + 7 812 334 24 25
www.avantapersonnel.ru www.case-hr.com
Avenir Group HR Solutions
Tel./Fax: +7 812 718 81 57 Tel./Fax: +7 812 702 70 99
www.avenir.ru www.hrsolutions.ru
BARONA Kelly Services
Tel.: +7 812 640 90 33, Tel.: +7 812 332 22 44
Fax: + 7 812 640 90 34 Fax: + 7 812 332 23 35
www.barona.ru www.kellyservices.ru
Business Kernel
Tel.: +7 812 315 55 88, 222 52 51, 222 37 58
www.business-kernel.ru


Manpower 1000 kadrov
Tel.: +7 812 324 46 46 Tel.: +7 812 313 93 80
Fax: + 7 812 324 46 47 www.1000kadrov.ru
www.manpower.ru Ventra Employment
Morgan Hunt Group Tel.: +7 812 635 86 16
Tel.: +7 812 336 38 28 www.ventra.ru
Fax: + 7 812 336 38 27
www.morganhunt.ru
Staffwell
Tel.: +7 812 640 20 01
www.staffwell.com

7.18. Transport and logistics
Ahlers IWM
Tel.: +7 812 332 67 00 Tel.: +7 812 393 70 54
Fax: + 7 812 332 67 01 Fax: + 7 812 309 12 12
www.ahlers.com www.iwm.ru
DHL TNT
Tel.: +7 812 326 64 00 Tel.: +7 812 718 33 30
www.dhl.ru Fax: + 7 812 718 34 95
FedEx www.tnt.com
Tel.: +7 812 325 88 25 UPS
Fax: + 7 812 571 59 30 Tel.: +7 812 703 39 39
www.fedex.com/ru Fax: + 7 812 703 16 50
www.ups.com


8. Authors and contributors
Guide “Doing business in St. Petersburg” was developed by and under supervision of the Enterprise
Europe Network, Gate2Rubin Consortium – Russia, Module A Branch – St. Petersburg operated by
St. Petersburg Foundation for SME Development with the kind contribution of the following legal,
human resources, certification, research and real estate firms.
Enterprise Europe Network - Russia, Gate2Rubin Consortium,
Module A Regional Center – St. Petersburg
The Enterprise Europe Network (EEN) is a key instrument to boost
growth and jobs. Bringing together 570 business support organizations
from 49 countries, we help small companies seize the unparalleled
business opportunities on the world Market. ENN’s mission lies in
helping small businesses make the most of the business opportunities in
Russia and the European Union.
Regional Center in St. Petersburg is co-financed by the Government of
the Russian Federation and the Government of St. Petersburg and is
operated by St. Petersburg Foundation for SME Development since
2008.
Tel.: +7 812 325 84 16, 325 8351, 575 04 80 | Fax: +7 812 712 66 07
www.doingbusiness.ru

BEITEN BURKHARDT
BEITEN BURKHARDT is an international law firm, represented by 12
offices in 6 countries, with a staff of over 300 specialists providing legal
and tax consulting in Western and Eastern Europe, Russia, Ukraine and
China. BEITEN BURKHARDT's Russian Practice comprises offices in
Moscow (since 1992) and St. Petersburg (since 1996).
The firm's specialists provide comprehensive legal support for
investment projects in the areas of manufacturing, infrastructure, health
care and real estate, render services for establishing subsidiaries, joint
ventures and branches, conduct legal and tax due diligence on
companies and property being acquired in Russia, consult on tax,
customs, financial and other issues of activities in the Russian
Federation. The working languages are English, German and Russian.
T: +7 812 449 60 00 | F: +7 812 449 60 01
www.bblaw.com

CASE
CASE was established in April 5, 2010 on the basis of the ANCOR Survey
Services with the aim of implementation of consulting projects in the
field of personnel management. The major services include salary,
benefits and compensation surveys, labor market research, reward
system development, personnel assessment, personnel training and
development, HR Projecting, outplacement, labor law consulting.
CASE successfully implements projects on the territory of Russia,
Ukraine and Kazakhstan. Today, CASE is represented in 5 cities in
Russia, including Moscow (head office), St. Petersburg, Rostov-on-Don,
Perm and Novosibirsk.
T: +7 812 334 24 25 | F: + 7 812 334 24 25
www.case-hr.com


DLA Piper
DLA Piper is one of the most highly rated global law firms, with branch
offices in 30 countries of Europe, the Middle East, Asia and also the USA.
With 39 lawyers and 4 partners, our St. Petersburg practice constitutes
the largest legal and full-fledged tax services provider in Russia's
northwest. The firm advises on corporate law, mergers and acquisitions,
taxation, real estate and infrastructure, project finance, customs and
regulatory, employment, IP and IT protection, and possesses significant
litigation capabilities and experience.
In 2007-2011, DLA Piper was recognized as the leading legal practice in
St. Petersburg according to Chambers Europe and the leading corporate
practice in the North West region in the view of the Legal500 directory.
T: +7 812 448 72 00 | F: +7 812 448 72 01
www.dlapiper.com

Jones Lang LaSalle
Jones Lang LaSalle is a financial and professional services firm
specializing in real estate. The firm offers integrated services delivered
by expert teams worldwide to clients seeking increased value by owning,
occupying or investing in real estate. The firm is an industry leader in
property and corporate facility management services, with a portfolio of
approximately 167 million square meters worldwide.
In Russia and CIS Jones Lang LaSalle has offices in Moscow, St.
Petersburg, Kiev and Almaty. Jones Lang LaSalle, Russia was voted
Consultant of the Year in 2004, 2006, 2007, 2008, 2009, 2010 and 2011
at the Commercial Real Estate Awards, Moscow and Consultant of the
Year at the Commercial Real Estate Awards 2009, St. Petersburg.
T: +7 812 363 32 31 | F: + 7 812 363 32 30
www.joneslanglasalle.ru

SGS
The SGS Group is the global leader and innovator in inspection,
verification, testing and certification services. Founded in 1878, SGS is
recognized as the global benchmark in quality and integrity. With 70,000
employees, SGS operates a network of over 1,350 offices and
laboratories around the world. Operating in Russia since January 1981,
today SGS Vostok Limited, the Russian subsidiary of the SGS Group,
employs a staff of 3,300 people at the Moscow headquarters and the
various offices and laboratories all over the Russian Federation,
including Northwest Russia.
T: +7 812 449 04 66 | F: + 7 812 449 04 67
www.sgs.ru


Legal disclaimer
All of the information included in this document is for informational purposes only, and may not
reflect the most current legal developments, judgments, or settlements. This information is not
offered as legal or any other advice on any particular matter. The Enterprise Europe Network,
Gate2Rubin Consortium – Russia, Module A Branch – St. Petersburg and the contributing authors
expressly disclaim all liability to any person in respect of anything, and in respect of the
consequences of anything, done or not done wholly or partly in reliance upon the whole or any part
of the contents of current brochure. No client or other reader should act or refrain from acting on
the basis of any matter contained in this document without first seeking the appropriate legal or
other professional advice on the particular facts and circumstances.
If you have finished with this document, please pass it on to other interested parties or recycle it.
Thank you


Doing.business.in.st.petersburg.2012

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