1. Главная
  2. Публикации
  3. Corporate Law
  4. Conversion of a branch of a foreign entity into a Russian LLC

Conversion of a branch of a foreign entity into a Russian LLC

15 декабря 2022
211
On 14 July 2022, new types of transformational claims appeared in the legislation: 
  • on the transformation of a branch of a foreign entity into a Russian LLC;
  • on suspension of foreign investor's rights.
Amendments were introduced by Federal Law No. 320-FZ of 14.07.2022 "On Amendments to the Federal Law 'On Privatization of State and Municipal Property' and Certain Legislative Acts of the Russian Federation and on Introduction of Specifics of Regulation of Property Relations" ("FZ No. 320-FZ").

Federal Law No. 320-FZ states that these novelties are necessary to ensure national defence and energy security in the context of unfriendly and contrary to international law sanctions against Russia (Articles 5-18 of No. 320-FZ).

The conditions to be met by a branch of a foreign legal entity in order to sue for transformation of a branch of a foreign legal entity into a Russian LLC:
  • has no more than 50 participants (shareholders);
  • at least 25% of shares (participatory interests) are owned by Russian residents or persons directly or indirectly controlled by Russian residents;
  • is not a public company;
  • has the right (licence) to use subsoil resources in the Russian Federation or owns cross-border gas transportation infrastructure facilities in the Russian Federation.
Conditions that must be met by a branch of a foreign legal entity in order to sue for suspension of the rights of a foreign investor
  • has no more than 50 participants (shareholders);
  • is not a public company;
  • has the right (licence) to use subsoil resources in the Russian Federation or owns facilities of cross-border gas transportation infrastructure in the Russian Federation.
To date, the only case in which these transformational claims have been asserted is Case No. A41-54894/22, heard by the Moscow City Arbitrazh Court.

In this case, GPN-Salym Projects Ltd. brought an action against Salym Petroleum Development N.V. and Shell Salym Development B.V. 

The court upheld the claims of OOO GPN-Salym Projects in part:
  • Salym Petroleum Development N.V.'s Nefteyugansk branch was reorganised into Salym Petroleum Development LLC;
  • the membership of OOO Salym Petroleum Development was determined:
- OOO GPN-Salym Projects;
- Shell Salym Development B.V. with the same participation interest as the abovementioned persons in a foreign legal entity.
  • a new General Director of OOO Salym Petroleum Development was approved;
  • a new version of the Charter of OOO Salym Petroleum Development was approved.

Nadmitov, Ivanov & Partners law firm provides services in Russian arbitration courts and courts of general jurisdiction of all levels, foreign courts and international commercial arbitration in complex commercial and corporate disputes, tax cases and bankruptcy cases.

Email: info@nplaw.ru
Tel: +7 (495) 649-87-12

+7 (495) 649-87-12