Softening of state regulation for international companies. Amendments to the Federal Law No. 290 'On International Companies and International Funds'

From April 14, 2023, a bill has been submitted to the State Duma proposing new provisions regarding the activities of international companies. Against the backdrop of sanctions imposed on the Russian Federation by unfriendly countries, the bill aims to adjust the provisions of the existing Federal Law No. 290 “On International Companies and International Funds” (hereinafter referred to as the Law) in terms of easing and softening the state regulation of international organizations.

In this article, we will consider the main changes being prepared for introduction by this bill. Accordingly, according to the proposed changes, Article 1 of the Law will now include independent regulation through the company’s charter, addressing issues such as the formation of governing bodies, the exercise of their powers, and the determination of the rights and obligations of shareholders.

In this regard, it is proposed not to apply certain provisions of the Federal Law “On Joint-Stock Companies” and the Federal Law “On Limited Liability Companies,” as well as articles of the Civil Code of the Russian Federation regulating the rights and obligations of company participants (Article 67), the procedure for management and control in companies (Article 67.1), and the procedure for decision-making (Article 181.2), until separate indication by the legislator.

It should be noted that in case of contradictions between the aforementioned legislative acts and Federal Law No. 290-FZ “On International Companies and International Funds,” the rules established by the latter are applied.

Regarding the proposed regulation for international companies, provisions of civil legislation that come into effect after the date of state registration of the international company and restrict the rights of participants (shareholders) of the international company will not be applicable.

The scope of limitations is clearly defined in the bill and includes only four points:

1. Deprivation of rights of participants provided to them by the charter of the international company;
2. Forced withdrawal of shares in the authorized capital of the international company;
3. Changes to the requirements for determining the quorum for holding general meetings of participants;
4. Granting the right to vote at the general meeting of participants to individuals who are not participants of the international company, contrary to the provisions of the international company’s charter.

Under the new rules, the procedure for the formation and establishment of the competence of the bodies of the international company is proposed to be left almost entirely at the discretion of the international company itself by specifying the necessary provisions in the company’s charter.

Amendments are also planned to be introduced regarding the grounds for applying the status of an “international company.” In addition to the obligation to register the company in the special administrative districts through incorporation, there will be a requirement for the founder to transfer assets to the newly established business entity within one year from the date of its state registration, with a value of no less than eight hundred million rubles. However, the value of these assets will not be taken into account when determining the volume of investments provided for in Article 3 of the Law in its current version.

It is expected that these changes will allow international companies to more effectively address corporate governance and investor protection issues, which, in turn, will create a more favorable investment environment in Russia.

As of today, the bill is still under consideration and has already passed the first reading in the State Duma.