Russian Federation: Overview Of Certain Developments To The Russian Laws May - June 2014

1 CORPORATE LAW

1.1. Procedure for Payment of the Charter Capital of Limited Liability Companies

The Federal Law dated 5 May 2014 No. 129-FZ 'On the Introduction of Amendments to Article 90 of the Civil Code of the Russian Federation (First Part) and Article 16 of the Federal Law 'On Limited Liability Companies', as effective from 5 May 2014, made some changes in the procedure for payment of charter capital of a limited liability company (OOO).

Each founder of a company shall pay its share in the company's charter capital in full within the period defined by the company's foundation agreement or, when the company was founded by a sole person, by the decision on the company foundation; such period shall not exceed four months after the state registration.

Prior to the enactment of these changes, the company's charter capital at the time of registration must be paid by its participants at least in half (in practice, this entailed for founders the need to open a savings account or make contributions to the charter capital in the form of assets). The remaining outstanding part of the charter capital must be paid by the participants within the first year of the company's existence.

1.2. Inclusion in the Russian Civil Circulation of Legal Entities Operating in the Crimea and Sevastopol

The Federal Law dated 5 May 2014 No. 124-FZ 'On the Introduction of Amendments to the Federal Law 'On the Enactment of the Civil Code of the Russian Federation (First Part)' and to Article 1202 of the Civil Code of the Russian Federation (Third Part)', as effective from 1 July 2014, provides, in particular, that legal entities operating in the territory of the Republic of Crimea and Sevastopol city are entitled to bring their founding documents in line with the Russian Federation laws and to apply for entering their profiles into the Unified State Register of Legal Entities until 1 January 2015, or to seek for the status of a branch (representative office) of a foreign legal entity in Russia.

1.3. Legal Entities and Non-Profit Corporate Body

The Federal Law dated 5 May 2014 No. 99-FZ(hereinafter – the 'Law No. 99-FZ') made another set of changes to to the Civil Code of the Russian Federation as to the regulation of legal status of legal entities and non-profit corporate bodies, procedure for the liquidation and reorganization of legal entities, rights and obligations of their participants, and actions of government authorities.

The said changes come into force from 1 September 2014, except for certain provisions, which are subject to other terms for coming into operation.

a. Powers to act on behalf of a legal entity may be in accordance with the foundation documents granted to several persons acting jointly or independently; information thereon shall be entered into the Unified State Register of Legal Entities.

b. A person having the capacity to determine actions of the legal entity, including the capacity to give instructions to its sole executive authority, board members or collegial executive authority, shall act in the best interests of the legal entity, be liable reasonably and in good faith for damages caused by its fault to the legal entity jointly with the said parties.

c. Detalisation was made as to the consequences of actual absence of a legal entity at its 'legal' address: notices delivered to the address specified in the Unified State Register of Legal Entities, shall be deemed to be received by the legal entity, even if it is absent at the specified address.

d. The changes provide for the option to re-organise a legal entity:

• with simultaneous combination of several forms of reorganisation (merger, accession, division, separation, transformation).
• involving two or more legal entities, including those incorporated in different forms, provided that the Russian Civil Code or other law provides for the possibility of transforming a legal entity of one of such forms of incorporation into a legal entity of another such form (for instance, non-public joint stock company into a limited liability company and vice versa).

e. Specific features were set forth as to the discharge of claims of creditors of the reorganised legal entity.

f. The changes established a general procedural period of 3 months after entry into the Unified State Register of Legal Entities about the beginning of the reorganisation procedure to invalidate the decision on reorganisation of a legal entity at the request of members of the reorganised legal entity and consequences of such a decision.

g. Founders (participants) of a legal entity, regardless of the grounds of the liquidation decision, are required to make at the expense of the legal entity's assets actions for liquidation of the legal person, and in case if the legal entity's assets are not enough - to make these actions jointly at their own expense.

h. The procedure for liquidation of a legal entity in terms of discharge of creditors claims and distribution of property of the legal entity among its participants was clarified.

i. A legal entity that actually terminates to act (non-operated) is a legal entity, which within the past 12 months did not submit accounting documents as provided by the legislation of the Russian Federation on taxes and fees, and did not carry out operations at least with one bank account; such legal entity shall be excluded from the Unified State Register of Legal Entities.

j. A new classification of legal entities was introduced:

• corporate legal entities (corporations), which include, inter alia, business partnerships and companies, farms, economic partnership, producers' and consumers' cooperatives, social organisations, associations (unions), homeowners' associations;
• unitary legal entities, which include state and municipal unitary enterprises, funds, institutions, independent non-profit organisations, religious organisations, public companies.

k. The changes also established the rights and obligations of corporate participants and list of issues related to the exclusive competence of the supreme authority of a corporation (in both cases, the lists are not exhaustive and may be expanded by the charter).

l. The law specifies for the possibility to restore the corporate control by a commercial corporation member that unwittingly lost the right to participate therein as a result of unlawful actions by other members or third parties: unless otherwise provided by the Civil Code of the Russian Federation, such a member may to demand the return of its interest passed to other persons with the payment of fair compensation determined by the court, as well as damages recovery by those responsible for the loss of the interest.

m. The division of joint stock companies into open and closed ones was replaced with the provisions that:

• public joint stock company is a joint stock company, where shares and convertible securities are public offered (through public offering) or public circulated under the conditions established by securities law, as well as a joint stock company, where charter ans company name specify that the company is public (open);
• a limited liability company and joint stock company which do not meet the features of public company are non-public.

n. Charter of a non-public company, as well as its corporate agreement (including a shareholding agreement) may provide for a scope of powers for the company's participants disproportionate to their shares in the charter capital (subject to registration of information on existence of such an agreement and on scope of power provided by the agreement in the Unified Register of Legal Entities).

o. Charter of a non-public company may, as unanimously decided by the participants (founders), include provisions, which materially increase the flexibility of decision-making by the management of the company, in particular:

• submission for consideration by collegial managerial authority or collegial executive authority of the company of matters assigned by law to the competence of the company's general meeting (except for certain issues affecting the interests of all participants, including the reorganisation or liquidation of the business company, determination of a number, par value, category (type) of declared shares and the rights attached to these shares);
• procedure for convocation, preparation and holding of general meetings of the company and decision-making thereby different from that established by laws and other legal acts;
• procedure for exercising the pre-emptive right as to a share or interest in the charter capital of a limited liability company or the pre-emptive right as to shares or convertible securities offered by a joint stock company.

p. The changes provide for the following requirements of confirmation of the decision made by the general meeting of participants of the business company and structure of the company's participant attended at the decision-making with regard to:

q. The changes established the liability of a joint stock company (both public and non-public) to engage on the annual basis of an auditor having no property interest in the company of participants thereof in order to check and conform the accuracy of annual accounting records.

r. It was also established the common rules applicable to the corporate agreement (regardless of whether a company is public or non-public), in particular:

• liability to enter into the corporate agreement in writing by drafting a single document signed by the parties;
• option to sign the agreement between creditors and others participants of the company, under which the parties undertake to exercise their corporate rights in a certain way or to abstain (waive) from the exercising them in order to meet interests of the third parties;
• mandatory ban to include in the corporate agreement the duty of the parties thereto to vote in accordance with the instructions of the company, to determine the structure of the company and their competence;
• possibility to establish in the corporate agreement the duty of the parties thereto to vote at the general meeting of the company for inclusion in the company's charter of provisions governing the structure of the company authorities and their competence, when changing the structure and competence is allowed by law.

foundation documents as well as names of legal entities established prior to 1 September 2014 must be brought in line with the changes above made by the Law No. 99-FZ to chapter 4 of the Russian Civil Code at first change in the foundation documents of such legal entities; before doing that foundation document of such legal entities are valid to the extent corresponding to the chapter 4 of the Russian Civil Code as amended. When registering corresponding changes to the foundation documents of legal entities no state fee will be charged.

Changing the company name of a legal entity in order to bring the name in line shall not require changes in the title and other documents containing its former company name.

Joint-stock companies founded before 1 September 2014 and meeting the criteria of public joint stock companies, shall be recognised as public joint stock companies, regardless of public mark in their names.

2 BRANCHES AND REPRESENTATIVE OFFICES OF FOREIGN LEGAL ENTITIES

The Federal Law dated 5 May 2014 No. 106-FZ 'On the Introduction of Amendments to Certain Legislative Acts of the Russian Federation' (hereinafter - the 'Law No. 106-FZ'), as effective from 1 January 2015 (save for certain provisions), amends the procedure for accreditation of branches and representative offices of foreign legal entities, as well as the procedure for personal accreditation of foreign nationals being the employees thereof.

A foreign legal entity within twelve months after the decision on establishment, opening in the territory of the Russian Federation of a branch or representative office shall submit an application for accreditation that includes the information certified by the Chamber of Commerce of the Russian Federation on the number of foreign employees of the branch or representative office and other documents for accreditation of the branch or representative office to the authorised federal executive body (hereinafter - the 'accrediting body').

Accreditation of a branch, representative office of a foreign legal entity shall be performed within twenty-five business days after the relevant documents together with the application for accreditation has been submitted to the accrediting body.

Branches and representative offices of foreign legal entities (except for representative offices of foreign credit institutions and foreign legal entities operating in the area of civil aviation), accredited or operating under a permit to open a representative office in the Russian Federation until 1 January 2015, and the validity the relevant accreditation or permit do not expire until 1 April 2015, must provide information to the accrediting body for inclusion in the state register of accredited branches, representative offices of foreign legal entities before 1 April 2015.

The Law № 106-FZ set forth the following deadlines for applying to the accrediting body by branches and representative offices of foreign legal entities (except for offices of foreign credit institutions and foreign legal entities operating in the area of civil aviation), whose accreditation or permits expire:

• when accreditation or permit term expires after 1 January 2015, branches and representative offices may apply within thirty calendar days prior to the expiry of the accreditation or permit term;
• when accreditation or permit term expires in the period between 1 January 2015 and 31 January 2015, branches and representative offices may apply within the period from 1 February 2015 until 28 February 2015.

Validity of accreditation of branches and representative offices of foreign legal entities as well as permits to open representative offices of foreign legal entities (except for offices of foreign credit institutions and foreign legal entities operating in the area of civil aviation), which fails to meet the above requirements, will terminate from 1 April 2015.

3 BANKING LAW

The following regulatory acts approved by the Bank of Russia have been registered with the Ministry of Justice of the Russian Federation:

a. Regulations on the Procedure and Criteria for Evaluation of the Financial Standing of Legal Entities Founded a Credit Organisation and Legal Entities Committing Transactions Aimed at the Acquisition of Shares (Interests) in a Credit Organisation and(or) for Establishment of Control over Shareholders (Participants) of the Credit Organisation' (approved by the Bank of Russia dated 18 February 2014 No. 415-P) (hereinafter - the 'Regulation No. 415-P');

b. Regulations on the Procedure and Criteria for Evaluation of the Financial Standing of Legal Entities Founded a Credit Organisation and Legal Entities Committing Transactions Aimed at the Acquisition of Shares (Interests) in a Credit Organisation and(or) for Establishment of Control over Shareholders (Participants) of the Credit Organisation' (approved by the Bank of Russia dated 18 February 2014 No. 416-P) (hereinafter - the 'Regulation No. 416-P');

Both Regulations become effective from 27 June 2014.

A new procedure established by the Regulations No. 415-P applies to:

• legal entity acquiring shares (interests) in a credit organisation and(or) establishing direct or indirect (through third parties) control over the shareholders (participants) of the credit organisation and owning more than 10 percent of its shares (interests), alone or in a group persons as a result of a transaction or a series of transactions;
• share investment funds and other forms of trust management over property having the right to acquire shares (interests) in a credit organisation.

Compared with the former Regulations (approved by the Bank of Russia dated 19 June 2009 No. 337-P) the Regulations No. 415-P extends the criteria of sufficiency of the financial standing of a legal entity, providing that such criteria are:

• compliance with the requirement of sufficient number of acquirer's shares (stakes) in a credit organisation, net assets (equity) adjusted in the manner specified by the Regulation (hereinafter - adjusted net assets (equity), and absence of other grounds for the recognition of its financial standing as poor;
• no grounds provided by the Regulation No. 415-P for recognition of poor financial standing of entities exercising control over the acquirer (in particular, owning more than 50 percent of the voting interest in the charter capital of the acquirer, or legal entities that are shareholders (participants) of a credit organisation in the absence of other shareholders (participants) holding more than 20 percent of the voting shares or interests in the acquirer or the credit organisation, respectively), and compliance thereby with of the requirements of sufficient number of adjusted net assets (equity), established by the Regulations No. 415-P;
• compliance by entities establishing solely or in a group of entities the control over shareholders (participants) of the credit organisation with the requirements of sufficient number of adjusted net assets (equity, property), as well as the absence of other bases for recognition of the financial standing of those entities as unsatisfactory.

Regulation No. 416-P that supersede the Regulation of the Bank of Russia dated 19 June 2009 No. 338-P 'On the Procedure and Criteria for Evaluation of the Financial Standing of Individuals Founded a Credit Organisation' also specifies the evaluation of the financial standing of individual, who has solely (or in a group of persons) applies for the approval of the Bank of Russia to purchase of more than 10 percent of shares (interests) in a credit organisation and(or) to establish control over shareholders (participants) of the credit organisation.

Grounds for recognition of the financial standing of an individual as poor remain the same:

• lack of equity (assets) and the poor financial standing of the individual acquirer or individuals, who applied for the acquisition by a legal entity of shares (interests) in a credit organisation, as well as lack of adjusted net assets (equity) of legal entities acquiring (acquired) shares (interests) in a credit organisation, provided the applied individuals are shareholders (participants) of these entities, or control the shareholders (participants) of the credit organisation;
• failure to comply with the requirements to the structure or form of documents provided by the Regulation No. 416-P;
• other grounds stipulated by federal laws.

The financial standing of both legal entities and individuals being acquirers is not evaluated, when:

• the value of the acquired shares or interests with an increase in the charter capital of a credit organisation exceeds twenty million roubles (the price criterion is twice raised);
• in receiving shares (interests) in a credit organisation in trust management under a trust management agreement (newly-established ground).

The Instruction of the Bank of Russia dated 30 May 2014 No. 153-I 'On the Opening and Closing of Bank Accounts, Deposits, Deposit Accounts' (registered with the Ministry of Justice of Russia on 19 June 2014 No. 32813) as effective from 1 July 2014 and supersedes the current Instruction of the Bank of Russia dated 14 September 2006 No. 28-I. The Instructions No. 153-I establishes the procedure for opening and closing bank accounts, deposits, deposit accounts of individuals and legal entities, individual entrepreneurs and individuals engaged in private practice, as well as courts, bailiffs service departments and law enforcement agencies in Russian and foreign currency. The Instruction does not apply to:

• accounts opened in accordance with the Russian legislation on elections and referendums;
• accounts opened with separate divisions of credit institutions located outside of the territories of Russia and established in accordance with the legislation of the Russian Federation;
• accounts opened on grounds other than the bank account, deposit, deposit account agreement.

Internal documents of banks effective as of 1 July 2014 must be brought into compliance with the Instruction No. 153-I until 1 October 2014. At the same time, re-registration of signature cards accepted by the bank before the entry into force of Instructions No. 153-I is not required. In this case, the documents containing the client's order is signed by the person, who had the primary signatory authority, and the person, who had the secondary signatory authority (if available in the card).

4 STATE PROCUREMENTS

The Federal Law dated 5 May 2014 No. 122-FZ 'On the Introduction of Amendments to the Code of Administrative Violations', as effective from 16 May 2014, specified administrative liability for violations in the procurement of goods, works and services by certain types of legal entities (state corporations, state companies, natural monopolies, state and municipal unitary enterprises, etc.)

The Code of Administrative Violation of the Russian Federation (hereinafter - the 'Administrative Code') was supplemented with Article 7.32.3, which imposes fines for violation of the procedure for procurement of goods, works and services, in particular:

• failure to comply with the electronic form of procurement of goods, works and services;

• breach of statutory deadlines for posting information about purchase in the unified information system for procurements or failure to post information provided by the law, in this system;
• failure to comply with the requirement to the content of notices and(or) procurement documentation;
• make requirements to the participants of procurement of goods, works and services that are not specified in the procurement documentation.

Depending on the violation a fine for officials will be from 2 to 50 thousand roubles, for legal entities - from 5 to 500 thousand roubles.

Moreover, in case of repeated procurement made not in electronic form, when otherwise required, the official responsible for the procurement may be fined or suspended for up to 1 year.

The Administrative Code was supplemented with Article 19.7.2-1, which provides for the liability for failure to provide information or submission of knowingly false information about unfair parties to the procurement and suppliers to the supervisory authority. This violation will entail a fine of up to 15,000 roubles for officials, and up to 50,000 roubles for legal entities.

The Federal Law dated 4 June 2014 No. 140-FZ 'On the Introduction of Amending to the Federal Law 'On the Contract System in the Area of Procurement of Goods, Works and Services for the State and Municipal Needs', as effective from 4June 2014, (hereinafter - the 'Law No. 140-FZ'), expanded the list of cases, when procurement can be made from a single supplier.

Such cases are:

• entering by organisations recognised as the federal or regional innovation platforms into contracts for the supply of equipment and software with the owners of exclusive rights thereto;
• entering by a budgetary institution into the contract for granting a bank guarantee;
• procurement of folk artistic crafts of recognised artistic value, samples of which are registered in the specified manner.

Law No. 140-FZ also abolished the requirement to customers to engage experts and expert organisations to audit contract performance:

• in the most cases of procurement from a single supplier provided for by the Federal Law 'On the Contract System in the Area of Procurement of Goods, Works and Services for State and Municipal Needs' (hereinafter - the 'Contract System Law');
• in making procurements of expert services;
• when the contract performance results in the project documentation for capital construction and(or) engineering studies that were subject to state or non-state expertise.

Requirements to enforce the contract specified by the Contract System Law will not apply to the procurement of services for provision of loans and contracts for granting bank guarantees.

In addition, the Contract System Law clarified certain provisions related to the participation in the procurement by small businesses and social non-profit organisations, as well as those related to the chose of supplier by quotation request.

The Order of Ministry of Economic Development of the Russian Federation dated 25 March 2014 No. 155 'On the Conditions for Admission of Goods Originating from Foreign Countries for the Purpose of Procurement of Goods, Works and Services for State and Municipal Needs' (registered with the Ministry of Justice of the Russian Federation dated 6 May 2014 No. 32183), as effective from 1 June 2014, established the admission conditions for the purposes of the procurement of certain goods originating from foreign countries.

When procuring goods for the state and municipal needs through a tender, auction or quotations request from procurement participants, whose bids and final quotations provide for the supply of goods originating from Russia, Belarus and(or) of Kazakhstan, there are preferences for contract price at a rate of 15%.

Country of origin of goods shall be the country where the goods were wholly produced or sufficiently processed in accordance with the criteria established by the customs legislation of the Customs Union.

The Order is valid until 31 December 2015.

5 LABOUR LAW

The Federal Law dated 5 May 2014 No. 116-FZ 'On the Introduction of Amendments to Certain Legislative Acts of the Russian Federation' (hereinafter - the 'Law No. 116-FZ'), as effective from 1 January 2016, regulates the use of agency labour in Russia.

Prior to the adoption of the Law No. 116-FZ, the staff secondment was only mentioned in the Russian Tax Code, however, the conclusion of secondment agreements is a common practice and the option to enter into such agreement confirmed by the decisions of Russian courts.

The Law No. 116-FZ introduces into the the Labour Code the definition of agency labour as work carried out by an employee under the employer's order for the benefit of, under supervision and control of an individual or legal entity that is not the employer of the employee.

The Law specifies that activities related to the staff secondment, in particular: temporary sending by the employer of its employees upon their consent to an individual or legal entity, which is not the employer of these employees, to perform their contractual duties in the interest, under supervision and control of the host party, shall be performed under a personnel secondment agreement. This activity can be exercised by private employment agencies and other legal entities, including foreign legal entities and their affiliates (except for individuals).

Private employment agencies may carry out activities to provide employees (staff) subject to accreditation, which is conditioned by the existence of the charter capital of not less than 1 million roubles, absence of tax, duty arrears to the budgets of the budgetary system of the Russian Federation.

The Law No. 116-FZ provides for the specific features of regulating labour of the employees sent on a temporary basis by a private employment agency to other individuals or legal entities under the secondment agreement, as well as features those sent on a temporary basis by the employer, which is not a private employment agency, to other legal entities under the specified agreement.

6 EURASIAN ECONOMIC UNION

"The Eurasian Economic Union Treaty" (signed in Astana on 29 May 2014), according to which Russia, Belarus and Kazakhstan established the Eurasian Economic Union (hereinafter - the 'EAEU' or 'Union'). The EAEU Treaty enters into force from the date of receipt by the depositary of the last written notice on the performance by the member states of internal procedures required for its entry into force.

The entry into force of the EAEU Treaty terminates the validity of international treaties concluded within the framework of the Customs Union and the Common Economic Space (subject to Appendix No. 33 to the Treaty).

6.1. Fields of EAEU Competence

EAEU is an international organisation of the regional economic integration, within the framework of which there is free movement of goods, capital and labour, as well as coordinated policy in the following sectors:

• foreign trade;
• circulation of medicines and medical devices;
• trade with services, establishment and implementation of investment activities;
• financial markets;
• natural monopolies;
• energy industry;
• transport;
• production sector;
• agricultural complex,
• as well as in the following areas:
• application of sanitary, veterinary and sanitary and phytosanitary quarantine measures;
• consumers' rights protection;
• macroeconomic policies;
• currency regulation;
• competition (antitrust) policy;
• labour migration.

EAEU international treaties with a third party must not contradict the basic objectives, principles and rules of the Union functioning. The EAEU Treaty provisions take precedence over the provisions of international treaties within the EAEU.

6.2. EAEU Bodies

As part of the EAEU there are the following bodies:

• the Supreme Eurasian Economic Council, consisting of heads of the member states (hereinafter - the 'Supreme Council');
• the Eurasian Intergovernmental Council, composed of the heads of the member states;
• the Eurasian Economic Committee (hereinafter - the 'Committee'), which is a permanent regulatory EAEU body located in Moscow;
• the Court of the Eurasian Economic Union - a permanent judicial EAEU body located in Minsk.

6.3. Customs Regulation

Within the framework of the Customs Union of the EAEU member states it is provided:

a. functioning of an internal market of goods;

b. application of the Common Customs Tariff of the Eurasian Economic Union and other unified measures of regulating foreign trade of goods with third parties;

c. application of the unified mode for trade relations with third parties;

d. customs regulation;

e. free movement of goods between the territories of the member states without customs declaration and state control (transport, sanitary, veterinary and sanitary, phytosanitary quarantine), except as provided by the EAEU Treaty.

Conditions for the creation and functioning of free (special) economic zones and free warehouses are determined by EAEU international treaties.

Customs regulation within the EAEU, inter alia, will be performed in accordance with the Customs Code of the Union.

The EAEU member states in trading with third countries may unilaterally introduce and apply non-tariff regulation in the procedure prescribed by the Appendix No. 7 to the EAEU Treaty.

The Committee may decide to introduce internal market protection measures for goods originating from third countries and imported into the customs territory of the Union in the form of special protective, antidumping and countervailing measures, etc.

6.4. Technical Regulation

The Committee approves a unified list of products that must meet the requirements of technical regulations of the Union or national ones.

Products that are subject to the technical regulations of the Union shall be released in circulation in the territory of the Union, provided that it has passed the necessary conformity assessment procedures established by the relevant technical regulations.

6.5. Tax and Taxation

Indirect taxes in mutual trade with goods are withheld on the basis of the country of destination that applies a zero VAT rate and(or) exemption from excise duty on export of goods, as well as imposition of indirect taxes on import.

Indirect taxes are withheld in case of import into the territory of a member state of:

a. goods that are under the legislation of that member state shall be exempted from taxation in importation into the state territory;

b. goods imported into the territory of a member state by individuals not for the purpose of business;

c. goods imported into the territory of a member state from the territory of another member state in connection with their transfer within the same legal entity.

6.6. Natural Monopolies

List of services of natural monopolies referred to the areas of natural monopolies shall be established by the legislation of the member states.

The areas of natural monopolies in the member states are extended:

• in accordance with the laws of the member states, if a member state intends to include into the areas of natural monopolies the area, which is the area of natural monopolies in another member state and is given in Appendix No. 1 or No. 2 to Annex No. 20 to the EAEU Treaty;
• according to the decision of the Committee, when a member state intends to include into the areas of natural monopolies the area not specified in Appendix No. 1 or No. 2 to Annex No. 20 to the EAEU Treaty, after the respective application from the member states to the Committee.

6.7. Common markets of medicines and medical products

The EAEU Treaty provides for the formation of a common market of medicines and common market of medical devices (medical devices and medical equipment) from 1 January 2016, and establishes the general principles of the formation of these markets, including the harmonization of legislation of member states in the area of control (supervision) over circulation of medicines and medical devices.

Details of the functioning of these common markets will be determined in accordance with the international treaties of the member states within the framework of the EAEU, which should be concluded by the member states no later than 1 January 2015.

6.8. Common Markets in Energy Industry

EAEU Treaty also provides for the staged formation of:

- common energy market;

- common gas market;

- common markets of oil and petroleum products.

Concepts and programs related to the formation of the above markets are approved by the Supreme Council, and based on the approved concepts and programs the member states conclude international agreements in the framework of the Union for the formation of the relevant markets.

The member states undertook:

• within available technical capability to provide unimpeded access to the services of natural monopolies in the electrical energy sector subject to the priority use of these services for the domestic demand for electric energy (power) of the member states;
• within available technical capability, free capacities of gas handling systems taking into account the agreed indicative (predictive) gas balance of the Union and based on civil law contracts of economic entities to ensure unimpeded access for economic entities of other member states to the gas handling systems located in the territories of member states for the gas transportation;
• within available technical capability, in view of the agreed indicative (predictive) oil and petroleum products balance of the Union and based on civil law contracts of economic entities to ensure unimpeded access for economic entities of other member states systems to the oil and petroleum products handling systems located on the territories of the member states.

6.9. Trade with Services; Establishment and Implementation of Investment Activities

The EAEU member states undertook, in particular:

• to liberalise trade with services, establishment and implementation of investment activities in view of international principles and standards through the harmonisation of legislation of the member states and organisation of mutual administrative cooperation between the competent authorities of the member states;
• not to introduce new discriminatory measures against trade with services, establishment and implementation of activities of persons of other member states as compared with the regime as effective on the date of entry into force of the EAEU Treaty.

6.10. Intellectual Property

As a general rule, persons of one member state in the territory of another member state are granted the national regime in terms of legal regime of intellectual property objects. Exceptions to the national regime may be provided by the legislation of the member state in relation to judicial and administrative proceedings, including an indication of the correspondence address and appointment of a representative.

Specific features of the legal regime applicable to certain types of intellectual property objects are established in accordance with Appendix No. 26 to the EAEU Treaty.

6.11. Labour Migration

Workers of the member states are not required to obtain permits to work in the another member state. Employers and(or) customers of works (services) of a member state are entitled to engage workers of the member states regardless of the restrictions for the protection of national labour market.

Employees of one member state in order to perform educational, legal, medical or pharmaceutical activities in another member state shall be subject to the procedure established by the legislation of the state of employment for the recognition of educational certificates in accordance with the laws of the state of employment.

The period of temporary stay (residence) of a worker and his/her family members of one member state in the state of employment is determined by the period of employment or a civil contract with the employer or customer of works (services).

Nationals of a member state arrived to work or employment in the territory of another member state and their family members are exempted from the obligation to register within 30 days after the arrival.

7 INTELLECTUAL PROPERTY

Terms of remuneration for service inventions, utility models, industrial patterns approved by the Resolution of the Government of the Russian Federation dated 4 June 2014 No. 512 specify the following amounts of remuneration:

• for creation of service invention - 30 percent of the average salary of the worker for the last 12 calendar months;
• for creation of service utility model or industrial pattern - 20 percent of the average salary of the worker for the last 12 calendar months.

These rules will not apply to the cases when the employer and employee have signed the contract establishing the amount, terms and procedure for remuneration.

The rules become effective from 1 October 2014.

8 LITIGATION

The Federal Law dated 4 June 2014 No. 143-FZ 'On the Introduction of Amendments to Certain Legislative Acts of the Russian Federation in connection with the Change of Jurisdiction of Certain Types of Cases Considered by Courts of General Jurisdiction and Arbitration Courts' excludes from the jurisdiction of arbitration courts:

• case challenging the results of cadastral value by referring them to the jurisdiction of courts of general jurisdiction of the regional level;
• cases challenging the legal acts (regulations of the federal executive bodies in the area of customs regulations will be appealed to the Supreme Court).

In addition, there are changes to the Administrative Code, which provide for review by the Supreme Court of enacted arbitration awards on administrative cases. The review will be possible if all methods for appealing such decisions to arbitration courts prescribed by the Administrative Code are exhausted.

The changes become effective from 6 August 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.