Legislative Update

Article by Elvira Danilova*

Banking

Banks to increase their internal funds (capital)

On January 1, 2012, new internal funds (capital) requirements came into force, requiring the amount of internal funds (capital) to open a new bank to be 300 million rubles. In addition, to obtain a license to perform banking operations with rubles and foreign currencies, as well as to raise funds in rubles and foreign currency, banks will be required to have not less than 900 million rubles in internal funds (capital).

Comments: operating banks may gradually increase internal funds (capital) to 300 million rubles, but must meet the new requirements by January 1, 2015.

Financial Reporting

Russian companies to report their financial figures in accordance with international financial reporting standards (IFRS)

From January 1, 2012, certain Russian companies are required to report their financial results according to international standards.

On December 12, 2011, the Ministry of Finance officially recognized IFRS. All public joint stock companies, insurance companies and banks must report under IFRS starting from January 1, 2012.

All companies in Russia will be subject to IFRS starting from 2015.

This is a positive step for Russian companies, given that IFRS is recognized around the world and is perceived as an important indicator of management transparency, credibility and stability. Local standards are often ignored by investors and foreign credit institutions as they are considered uncertain and sometimes irrelevant. Using international standards should improve the investment climate and make it easier for companies to attract financing.

Franchising Regulations

Franchising regulations have undergone major changes. The stated goal of these changes is to remove barriers to development of franchising operations in Russia.

Main changes:

granting the franchisor the right to determine the resale price and the territory on which the franchisee is entitled to sell goods, perform work or render services; Under Russian competition law, the franchisor already has this right, but prior to the amendments, such right was not recognized by the RF Civil Code. The amendments to the RF Civil Code have eliminated the discrepancy between antitrust and civil law regulation of franchise agreements.

providing parties the right to alter the terms and conditions of a franchise agreement when...