Changes to the Russian Civil Code in 2013

Currently there is the ongoing process in Russia on the changes of the Russian Civil Code. Recently two law amendments were signed, which come into force from 1 September and 1 October 2013 respectively.

Changes to the Russian Civil Code coming into force from 1 September 2013.

The changes are introduced by Federal Law as of 07.05.2013 N 100-ФЗ “On amendments to Subsections 4 and 5 of Section I of Part 1 and article 1152 of Part 3 of the Russian Civil Code” (further – “Law”). The changes relate to the following:

Conclusion of transactions

It is confirmed that silence can not be considered as a consent for a transaction unless otherwise is established by law. Thus, under the general rule all transactions under Russian law shall as earlier be performed in the written form;

Russian Civil Code does not contain any more the imperative rules on the mandatory written paper form of cross-border transaction. This confirms that the transactions can be also concluded via electronic means of communication.

Transaction challenge

The limitation period in one year is established for requirements relating to state registration and notarial certification of a transaction (p. 4 of art. 165 of CC);
According to the new provisions transactions as general shall be disputable, but not void. Now the transaction that infringes the law requirements shall be disputable (p. 1 of art. 168 of CC);
The ban is introduced to require the transaction as invalid by persons which have approved it earlier or by own actions confirmed their intentions to perform it. This creates more economic stability and reduces the risks of bad faith of the parties;
The Law saves the general limitation period of three years to recognize a transaction as invalid from the moment a party got knowledge or should have got knowledge on a transaction (p. 1 of art 181 of CC). But the Law establishes the maximum period for challenging the transaction – 10 years from the date of the commencement of the performance of a transaction.

Meetings’ decisions

The Russian Civil Code is added by the new chapter on meetings’ decisions (participants in legal entities, creditors, etc.)
The decision of the meeting shall be considered as taken if the majority of the participants voted for it and the quorum constituted not less than 50% of the participants;
The decision of the meeting is formalized by the minute in the written form. The minutes are signed by the chairman and the secretary of the meeting. The minutes shall specify the date, time and place of the meeting, information on participating persons, results of voting on each agenda point, information on persons summarizing the voting results, etc.
The Law establishes the grounds for recognizing decisions as invalid (art. 181.3, 181.4 and 181.5 of CC).

Representation and power of attorney

One of the main change is the possibility to establish any term of the power of attorney and not up to 3 years how it was before;
The Law terminates the necessity of notarial certification of powers of attorney issued as re-delegation of powers to legal entities, branch managers and representative offices of legal entities (art. 187 of CC);
Irrevocable power of attorney is introduced (art. 188.1 of CC). This power of attorney is issued by persons involved in the entrepreneur activity. However, it can be cancelled if a representative abused its rights. Such power of attorney shall be notarially certified and can not be redelegated to third parties unless it specifies otherwise;
It is permitted to issue a power of attorney to several persons for joint actions (analogue of “vieraugen Prinzip” under German law) (p. 5 of art. 185 of CC).

Changes to the Russian Civil Code coming into force from 1 September 2013.

The changes are introduced by Federal Law as of 02.07.2013 N 142-ФЗ “On amendments to Subsection 3 of Section I of Part 1 of the Russian Civil Code” (further – “Second Law”). The changes relate to the following:

Objects of civil rights

The Second Law adds the Civil Code by the new object – single immovable complex – combination of buildings and other things with single purpose and inseparably linked physically or technologically, including linear facilities (railways, electric power lines, pipelines and other), or located at one land plot (art. 133.1 of CC).
Fruits, products, income received as a result of using of things, irrespectively from who uses it, shall belong to the owner of the thing (art. 136 of CC). Currently the approach is the opposite – a person using the thing possesses the right to the fruits, products and income.
The provisions on securities, their types, performance, transfer of rights, responsibility for validity of rights and etc. are given in more detailed.
Shareholders’ register
Currently Russian law permits small joint stock companies to keep the shareholders register and maintain them internally. Under the Second Law such internal maintenance of the register will be impossible. All joint stock companies shall until 1 October 2014 transfer the shareholders’ registers to the licensed registrars.

from Andrey Nikishenko, 2013