PDFYellow jersey for the lawyer, Column by Matvey Levant (Legal Business magazine, October 2008)

 

PDF The notes on Foreign Colleagues Life Not of a Particularly Legal Nature,  Column by Matvey Levant (Legal Business magazine, September 2008)

 

 

PDF Levant & partners law firm (Advoc CTG Review. Spring 2008)

 

 

Entrance and residence of foreign citizens in Russia (The CTG Review. Gazette of the Company Law and Tax Interest Group. Spring 2007)

 

 

Employing Foreigners: The Legal Maze (AmCham News. An insider prospective on International Business in Russia. July-August 2003)

 

 

Registering legal entities: some clarification is still needed (AmCham News. American Chamber of Commerce in Russia. March-April 2002)

 

 

 

Entrance and residence of foreign citizens in Russia (The CTG Review. Gazette of the Company Law and Tax Interest Group. Spring 2007)

 

Matvey Levant, managing partner Levant & partners law firm

 

Substantial alterations were entered into legislation on the procedure of entrance of foreign citizens in Russia. From the 15th of January, 2007 the conditions of employment of foreigners and the requirements to the employers were sumplified. Thus, migration registration was substituted by migration recording and from now on it is available upon notification of duly athorities but not upon obtaining their permission as it earlier. Procedure of obtaining of work permits also exposed to new regulation.

 

Formely the employee had to find a job at first and then his employer would have to apply for work permit. From now on the amployee applies to migration athorities by himself and the latter are not entitled to reject such an application. Together with that penalties for violation of the new migration rules encreased several times. Therewith new legislation establishes a limited quota of foreign employees in retail trade. For our foreign partners such alternatives are interesting because they will have possibilities to initiate business activities in Russia and hire foreign employees more promptly.

 

 

 

 

Employing Foreigners: The Legal Maze (AmCham News. An insider prospective on International Business in Russia. July-August 2003)

 

Matvey Levant, managing partner Levant & partners law firm

 

A new law on foreigners and a government decree with detailed regulations on the issuance of work permits took effect last fall. Most foreigners need visas to enter Russia, while employers who want to hire foreigners need to receive work permits. Visas depend on the purpose of travel to Russia (business, working visa, tourist, stu­dent, etc.). A person who intends to work in Russia needs to obtain a working visa, which is usually issued after the work permit is received. Work permits are required even for top-level managers who do not receive salaries or if they are not physically present in Russia. In order for a foreigner to obtain a visa, in Moscow particularly, she must receive an invitation from a host company that is regis­tered with the Interior Ministry, Local Department of Visas and Registrations (OVIR) and Passport and Visas Central Department (PVU - former UVIR). Upon arrival in Russia, all visas have to be registered by a hotel or with PVU within three days. Prior to employing a foreign national, a Russian company must apply for a work per­mit. A foreigner is not allowed to engage in any business activities (e.g. as a consultant or entrepreneur) without a work permit.

 

The Russian government sets a national quota for foreign labor each year, giving pref­erence to the local workforce. In Russia, work permits and the corresponding confirmations are related to the company in whose name they are issued. This means that the foreigner will have to leave Russia upon termination of employment (with a few exceptions). Work permits are non-transferable and allow for only one job. If a person takes up positions in two or more separate legal entities, then a separate work permit and confirmation is required for each.

 

Work Permits 

An employer has to submit documents to six different auihorities when applying for a work permit. The company may include more than one position in the applications. According to current practice a company is allowed to file for work permits only once a year, requiring the company to foresee all of its needs to employ foreigners and apply for all simultaneously. 

 

First, the employer has to register with OVIR and PVU. Once registered, the com­pany may submit an application to receive a general permit to employ foreign citizens (or persons without residency in Russia). This is done by obtaining a decision regarding the necessity to employ a foreigner from the local (regional) labor agency with confirmation by the central labor agency. Upon receipt of the decision, the employer files for the permit through the local migration department. Next, the company applies to the federal migration department for the work permit. Once the permit is granted, the employer will be able to issue an invitation for a specific person for a specific position, as detailed in the permit.

 

Once the future employee is identified the employer has to receive confirmation from the migration department for the right to employ that individual.

 

Prior to the new law, companies with for­eign investments received quotas for work permits without any special application. These companies could directly apply for confirmation to employ a specific foreigner (exemption to employ foreign "top manage­ment" and "specialists"). This practice lives on, although the law does not differentiate between companies with foreign investments and fully Russian owned companies.

 

The employer assumes the following obligations when employing a foreigner:

  • Ensure that the employee (or contractor) has a valid work permit
  • Deposit the amount to cover the cost of return transport to the foreigner's home country;
  • Register the foreigner at his/her place of residence;
  • Notify the local tax inspectorate about hir­ing a foreigner in specified cases;
  • Facilitate the foreigner's departure upon his/her termination;
  • Cover deportation costs, if necessary:  

 

  1. Notify the Interior Ministry about a breach of agreement terms or early termination; and
  2. Notify the Interior Ministry and Federal Security Service (FSB) about a foreigner's absence from work or place of residence.

 

At the same time certain categories of foreigners are exempt from the requirement to receive a work permit. These are

  • Foreigners with temporary or permanent residence permits;
  • Diplomats and foreigners with similar sta­us, according to law;
  • Accredited journalists;
  • Foreign workers contracted to install imported  machinery and equipment (installations, supervision, servicing, war­ ranty or post-warranty repairs);
  • Students — in specific cases;
  • Teachers in licensed educational institu­tions (except for religious instruction).

 

Long-term options

 

 

Visa and work permit requirements should also be considered in light of the pro­visions of residency. According to the Foreign Status law, a foreigner can apply for either temporary residence or permanent residence. A temporary resident is required to obtain a visa, but not a work permit. A permanent resident needs neither a visa nor work permit.A temporary resident is not allowed to change his/her place of residence without permission from the state authorities.

 

In order to receive a permanent residen­cy permit a foreigner must live in Russia for at least one year as a temporary resident. The permanent residency permit is valid for five years and is renewable.

 

Sanctions for violating laws concerning visas, work permits and residency are stipu­lated in the Code of Administrative Violations of the RF, the Foreign Status law and the Entry and Exit law and prescribe in particular:

 

  • Fines levied on the company and its head;
  • Employee deportation;
  • Liability for expenses incurred by the for­ eigner.

 

In addition to the sanctions directly imposed by the law, the relevant authorities require the host company to sign a guarantee letter whereby the company takes on exten­sive liability for the conduct of a foreigner who has a multiple-entry visa. 

 

Despite their good intentions to simplify the process for foreigners to obtain work and residency permits, lawmakers have made it more difficult in most cases. 

 

 

 

Registering legal entities: some clarification is still needed (AmCham News. American Chamber of Commerce in Russia. March-April 2002)

 

Matvey Levant, managing partner Levant & partners law firm

 

New legislation and long-anticipated amendments to some major laws, which significantly increase the legal protection for business­es, have recently been enacted in Russia.

 

Since 1994, the process of registering legal entities has been regulated by the Ordinance of the President of the Russian Federation. Therefore, the introduction of the federal law, On Registration of Legal Entities, has been greatly anticipated by everyone - from law firms to the govern­ment registration authorities.

 

The law, expected after part I of the Civil Code, has finally been enacted and takes effect July 1. However, the law stipu­lates just a general algorithm of state reg­istration rather than a list of specific steps required to complete state registration.

 

 Let's consider in detail some of the innovations introduced by the law. The law stipulates that state registration is conduct­ed by a federal authority (registration body). Unfortunately there is no clear indi­cation as to what particular body will carry out this function. There are widely-circulat­ing rumors that the Tax and Duties Ministry is prepared to take on these functions. On the one hand, this seems quite reasonable, as state registration and the registration of a taxpayer will be done at the same window. On the other hand, it may result in the "monopolization" of the state registration process by tax authorities. It is important to note, that there is not a "one window" prin­ciple stipulated by the law. Does that mean that only two stages are united in its multi­stage process, and registration with non-budgetary funds will have to be carried out as before? It should be emphasized that if the Tax and Duties Ministry is responsible for registration, then additional changes to the Civil Code will be necessary, as it stipu­lates that legal entities must be registered by agencies of the Justice Ministry. 

 

The law provides for a state register containing information on the creation, reorganization and liquidation of all legal entities in Russia, as well as the name and position of those authorized to represent a legal entity without power of attorney. With the opportunity to obtain data on potential counter-parties, regardless of where they are located in Russia, the risk of entering into relations with an unfair partner should be diminished. 

 

The register also contains data on licenses obtained by a legal entity, provided by the licensing body within five business days from when the license is granted. 

 

In an attempt to make the law reflect actual practice, it now stipulates that regis­tration should be completed within five business days, instead of the current three-day term. However, due to the extensive volume of work in all government agen­cies, regardless of what agenq' handles registration, it will be difficult for the extended deadline to be met either. 

 

The list of documents required for registering a newly created legal entity becomes shorter. A literal interpretation of the law would show that there are no requirements, for example, to present a charter of the founder or some of the other documents that are currently required.

 

 The law also stipulates that if a legal entity is voluntarily liquidated, it should send a notice to the registration body in order to obtain the consent of the latter. 

 

The law's closing provisions arc cer­tainly meant to make things smooth for controlling bodies. Pursuant to such provi­sions, a duly authorized representative of a legal entity registered before the law's enactment shall, within six months of the date of enactment (before Dec. 1, 2002), provide the registration body with information set forth by the law. Failure to comply is considered grounds for the court to pass judgment on the liquidation of such legal entity on the basis of an application filed by the registration body The compulsory liquidation of non-existent companies will help to decrease a risk for counter-parties and facilitate the work of controlling and supervising bodies.

 

 In general, the introduction of the above amendments and additions will considerably simplify the existing system of registration of legal entities, which will allow Russian businesses and foreign investors to work more efficiently on the Russian market.

 

 It is interesting to note a correlation between the law and other new legislative acts. The federal law On Opposition to Money Laundering, which came into effect on Feb. 1, stipulates that almost all large operations (exceeding 600,000 rubles) will fall under mandatory control. For exam­ple, when an individual invests cash into the charter capital of an entity, such investment generates a number of conse­quences. The registration body must inform the newly created Committee on Financial Monitoring of the Russian Federation of this operation. In turn, if the CFM discovers any facts confirming money laundering, it must inform relevant bodies in order to initiate criminal proceedings.

 

 It is worth noting that since Feb. 1, banks must inform the CFM on amounts transferred to its client's account. This will certainly provide for maximum transparency of financial and business operations. However, I think that this is a direct violation of the basic principles of confidentiality for these institutions. 

 

Thus, the new laws facilitate the build­ing of relations between legal entities and the state, where Russian business becomes more transparent. The enactment of such laws will certainly increase the actuality of Russia's membership in the WTO. However, the efficiency of the new laws should be judged by the process of their application.