Home / Doing business in Russia 2020 / Introduction / Political and administrative structure
  1. Introduction
    1. Political and administrative structure
    2. Legal environment
  2. Common forms of business structures for foreign investors
    1. Main types of structure
    2. Registration, liquidation and reorganisation of business structures
    3. Shareholders’ and participants’ agreements
    4. Strategic industries
  3. Anti-monopoly issues
    1. General legal and regulatory framework
    2. Scope of application of the Competition Law
    3. Anti-competitive practices and restriction of competition
    4. Liability
  4. Tax system
    1. General approach
    2. Corporate taxation
    3. Incentives
    4. Special tax regimes
    5. Taxation of individuals
    6. Double taxation treaties
  5. Customs regulations
    1. General approach
    2. Trade between EEU and non-EEU countries
    3. Mutual trade between the EEU members
  6. Currency control
    1. Foreign currency transactions
    2. Consequences of breach/Penalties
  7. Lending in Russia
    1. Lending documents and governing law
    2. Jurisdiction
    3. International finance transactions and repatriation requirements
    4. Security interests
    5. Recognition of security trusts
    6. Syndicated loans
    7. Enforcement
    8. Suretyships and guarantees
    9. Bankruptcy considerations
    10. Other lending related issues
  8. Employment and migration
    1. Formalising the employment relationship
    2. Managing employment relationships
    3. Terminating an employment agreement
    4. Specifics of employing foreign nationals
  9. Personal data protection
    1. General approach
    2. Scope of the Data Protection Law
    3. Liability
    4. Right to be forgotten
  10. Intellectual property
    1. General approach
    2. Contractual aspects of intellectual property rights
    3. Rights over the results of intellectual activity
    4. Company names, trade names, trademarks and appellations of origin
    5. Intellectual property rights infringements
    6. IP Court
  11. Advertising issues
    1. General approach
    2. Scope of application of the Advertising Law
    3. Violations of the Advertising Law
    4. Liability
  12. Anti-corruption and compliance
    1. General approach
    2. Legal framework
    3. Compliance requirements for companies
    4. Concept of corruption in Russian law
    5. Possible targets of bribery
    6. Liability and penalties for corruption
    7. Example of sector-specific anti-corruption measures
  13. Real estate and construction
    1. Rights to real estate
    2. Real estate transactions
    3. Resolution of real estate disputes
    4. Planning and construction issues
  14. Corporate bankruptcy
    1. Insolvency criteria
    2. Stages of bankruptcy proceedings
  15. Import substitution and production localisation in Russia
    1. Measures affecting goods importation and current import substitution legislation
    2. Localisation incentives
    3. Sector-specific impact of import restrictions and localisation requirements
  16. Banking sector
    1. Legislative and regulatory framework
    2. Licensing and operations
    3. Deposit insurance
    4. The anti-money laundering law
    5. Bank secrecy
    6. FATCA and CRS
  17. Environment, energy efficiency and renewables
    1. Environment
    2. Energy efficiency
    3. Renewables
  18. Infrastructure and public private partnerships
    1. General approach
    2. Key PPP legislation
    3. Russian PPP environment
    4. Financing
    5. Legal issues
    6. Prospects for infrastructure projects
  19. Oil & gas
    1. Legislative framework
    2. Ownership and licensing
    3. Restrictions on foreign investors
    4. Licences
    5. PSAs

Key contacts

Contact
Marquaire-jean-Francois
Jean-Francois Marquaire
Managing Partner
Head of Infrastructure & Projects
Zubarev Leonid
Leonid Zubarev
Senior Partner
Head of Commercial | Head of Insurance

Political and administrative structure

 

Under the Constitution of the Russian Federation all state bodies are divided into:

  • federal bodies;
  • bodies of the “constituent subjects” of the Russian Federation; and
  • local (municipal) bodies.

The holder of the highest office in the Russian Federation is the President.

The President

Under the Constitution of the Russian Federation, originally adopted on 12 December 1993 and from time to time amended (the “Constitution”), the President is the Head of State. The term of office of the President is six years. The President may only serve two consecutive terms. In March 2018 Vladimir Putin was re-elected as President, which means he will not be able to run for the post in 2024.

The President appoints the Prime Minister and the Chairman of the Central Bank of Russia. Both appointments must be endorsed by the lower chamber of the Russian parliament (the State Duma).

The President determines the main trends of Russia's domestic and foreign policy and represents the country in both domestic and foreign affairs. He is Commander-in-Chief of the Russian Armed Forces.

The President has broad authority to issue executive orders and directives that in practice have the force of law. Under certain circumstances, he has the right to dissolve the State Duma. 

The Government

The Government of the Russian Federation exercises executive power at the federal level, with the Prime Minister acting as its head. The Government is required to enact the decisions made by the President and the laws adopted by the federal legislature.

The federal legislature

The Federal Assembly (the “Parliament”) consists of two chambers: an upper chamber called the Federation Council and a lower chamber called the State Duma. The Parliament exercises legislative power in Russia at the federal level.

There are 170 seats in the upper chamber of Parliament. They are occupied by representatives of the executive and legislative branches of the Russian regions.

The State Duma consists of 450 deputies who are elected by proportional representation. State Duma members are elected for five-year terms.

Federal bills may originate in the upper chamber of Parliament. Alternatively, they may be submitted by the President, the federal Government, regional legislatures or a member of any chamber of the Parliament. The Constitutional Court and the Supreme Court may originate bills on issues which are within their authority. Bills are first considered by the State Duma and must pass three readings. After being adopted by a majority in the State Duma, bills are considered by the Federation Council. If a bill is rejected by the Federation Council, a Conciliatory Commission may be established. This consists of representatives of the State Duma and Federation Council who review and amend the bill before it is presented to the State Duma again for consideration.

Once a bill is adopted by the Federation Council, it must be signed by the President. The President has the right of final veto which, if exercised, can only be overridden by a resolution passed by two-thirds of the members of the State Duma and the Federation Council.

The judiciary

The judiciary is split into three branches:

  • the courts of general jurisdiction;
  • the commercial (“arbitrazh”) courts; and
  • the Constitutional Court.

There is a federal system of courts and a system of local courts in each Russian region.

The courts of general jurisdiction deal with criminal, civil and administrative cases involving individuals who are not engaged in business activities. Cases are heard by the district court unless they fall within the jurisdiction of the magistrates’ courts or martial courts. The senior court of general jurisdiction is the Supreme Court of Russia (the “Supreme Court”). Decisions of the lower courts can be appealed through the intermediate courts, as far as the Supreme Court.

The commercial (“arbitrazh”) courts deal with economic disputes involving individuals engaged in business activities and disputes between legal entities and their participants (i.e. their shareholders). The commercial court system consists (in an increasing order of hierarchy) of the regional commercial courts, the commercial courts of appeal, the federal district commercial courts and the Supreme Court. Within this system, there is also a court specialised in the review of intellectual property claims, the Intellectual Property Court (please see the IP Court section).

The Constitutional Court has jurisdiction to decide on the constitutionality of federal and regional legislation and regulations. This court also resolves jurisdictional disputes between the federal and regional authorities and is able to interpret and provide guidance on the provisions of the Constitution.

Regional and local political structure

In accordance with the Constitution, the Russian Federation consists of 85 “constituent subjects”, i.e. regions within the federation. Regions are granted a certain degree of autonomy over their internal economic and political affairs. As cities of federal significance, Moscow, Saint Petersburg and Sevastopol enjoy the status of region.

The head of the executive branch of each region is directly elected in regional elections or by the legislative body of the respective region (if such option is set out in the Constitution or the law of such region).

The Constitution sets out a general list of powers that are within the exclusive federal jurisdiction. Some powers are jointly exercisable by the federal and regional authorities. The regional authorities are then allocated all residual powers. Regional powers include the authority to manage regional property, establish regional budgets, collect regional taxes and maintain regional law and order. The Constitution also gives regional bodies the authority to pass laws, provided those laws do not contradict the Constitution or existing federal laws.

The lowest level of the political system is local government which operates under an intricate two-tier system: municipalities are subdivided into city districts on the one hand and municipal districts on the other, with municipal districts being further subdivided into urban and rural settlements. Municipalities have their own budgets and depending on how much authority the regional government has delegated to them, they may enjoy certain limited taxation powers. They are also involved in the management of municipal land (they can act as landlords in lease agreements, allocate land plots for construction and act as sellers during the privatisation of municipal land).


Key contacts

Marquaire-jean-Francois
Jean-Francois Marquaire
Managing Partner
Head of Infrastructure & Projects
Zubarev Leonid
Leonid Zubarev
Senior Partner
Head of Commercial | Head of Insurance