From 25 November 2020 it will become possible to reflect a wider scope of information on the existence of a corporate agreement and other types of information in the Unified State Register of Legal Entities

On 25 November 2020 Order of the Federal Tax Service of Russia (FTS) No. ED-7-14/617@ “On the approval of forms and requirements for the execution of documents provided to the registration body during the state registration of legal entities, individual entrepreneurs and farmer households (farms)” (Order) enters into force.

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

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

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

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

• determines the scope of authorities of a business company's participants which is not in proportion to their participation interests in the charter capital of the company;
• provides for restrictions on, and terms and conditions for, disposals of participation interests.

Furthermore, it is now possible to include information on the scope of authority of a company's participant which is provided for by a corporate agreement, for example, the number of votes attaching to a participant's participation interest which differs from its percentage participation interest in the company.

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

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

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

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

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

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

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

Before the Order was adopted the possibility to note such information on USRLE was not used in practice, even though the Russian Civil Code was supplemented by article 65.3 during the reform in 2014, which allowed the authority of a company's sole executive body to be exercised by several persons.

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

3. Information that the company acts under a standard charter ¹

The new forms approved by the Order allow a company to indicate the number of the standard charter under which the company will act.

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

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