These recent updates aimed at foreign companies doing business in Russia remind us of the stark contrast between Ian Fleming’s Cold War Russia and the Russia of today, which joined the World Trade Organization earlier this summer.
On accounting, arbitration and anti-corruption, from Russia with JD Supra love:
1. New accounting rules on January 1, 2013 – and most foreign businesses will be affected:
“Russian companies typically have two positions: the general director (or chief executive officer) and the chief accountant. Under current law, one individual may perform both roles, but the New Law will prohibit this practice. Accordingly, Russian companies will need a second person to act as an accountant, or they will need to engage an outside expert to perform this service.
Small- and medium-sized businesses are exempt from this rule and may continue to have one person perform both roles. To qualify as a small- or medium-sized business, a company must meet a number of requirements, including the following: (a) foreign ownership may not exceed 25%, and (b) ownership by other companies that are not themselves small- or medium-sized businesses may not exceed 25%. Unfortunately, due to these requirements, we expect that many of our clients may not qualify for the exemption.” (Morgan Lewis)
2. International arbitration is making strides in Russia – but there’s still a long way to go:
“Dispute resolution through international arbitration is rapidly developing in Russia, although not quite at the pace set by the leading international arbitration centers of Europe, such as London, Paris, and Stockholm. All the basic pieces are in place… These are certainly positive developments, but hurdles must still be cleared on the path to Russia’s full acceptance of international arbitration as a global dispute resolution mechanism. Court, decisions, and even statements of high-ranking Russian officials, reflect a cautious—and in some cases an internally controversial—attitude towards arbitration of which practitioners and clients should be aware.” (Quinn Emanuel)
3. U.S. and Russian regulators are watching the Sochi Olympics – two years before opening ceremonies:
“… the Sochi games may also be fertile ground for prosecutions under the United States’ Foreign Corrupt Practices Act (FCPA). The U.S. government’s actions in this setting will serve as a signal to any company doing business abroad that it must be proactive in ensuring compliance with the FCPA… Russia itself recognizes its corruption problem, and in May of 2011, passed legislation similar to the FCPA, criminalizing the actions of offering and accepting bribes. This legislation applies to foreign entities doing business in Russia, so an individual who runs afoul of the FCPA due to bribery in Russia may also be in violation of Russian law.” (Saul Ewing)
Read the updates:
- Accounting Requirements to Change in Russia – Morgan Lewis
- Russia Litigation Update – Quinn Emanuel Urquhart & Sullivan, LLP
- Winter Olympics in Russia Set Stage for FCPA Scrutiny – Saul Ewing LLP
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