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

Lending in Russia

We set out below a brief discussion on certain matters related to lending to companies in Russia, by banks and other companies, with particular focus on foreign currency and secured lending.

Key contacts

Contact
Baranov Konstantin
Konstantin Baranov
Partner
Head of Banking & Finance
Tchoubykina Elena
Elena Tchoubykina
Counsel
Banking & Finance

Security interests

The choice of law for security documents usually depends on the location of the secured assets (e.g. intangible assets), or the governing law of the assets (e.g. contractual rights).

In Russia, the principal form of security is a pledge, which normally is entered into in connection with identified assets (subject to the discussion further below). In the case of competing pledges, the first in time by creation generally has priority. However, it is possible to change the priority of pledges by entering into an agreement between the pledgees, or between the pledgees and the respective pledgor. Russian law explicitly allows one pledge to secure different obligations of a borrower owed to different pledgees (lenders). The pledgees in this situation will be ranked equally unless they agree otherwise. In relation to the pledge of movable property (including rights), the priority may depend on the registration date in the register of notices of pledge over movable property (the “Movables Pledge Register”) as described below in more detail.

Under Russian law, a universal security instrument (such as an English law debenture), which might secure all assets of a company, is also available. However, it is virtually unregulated and it has not been tested in practice. Given that under Russian law pledging immovable property and pledging a participatory interest both require state registration, the pledge of all of a company’s assets is rarely used in practice. There is also a security instrument called a mortgage of an enterprise under Russian law, which may provide as security real estate, movable property, inventory, etc. However, because of practical difficulties in putting the security in place, it is also rarely used.

Pledges over particular types of assets (e.g. real estate, participatory interests and registered intellectual property rights) are recorded on specific public registers. The pledge of goods in circulation must be recorded in a “pledge book”, which is maintained by the company (pledgor) and which the pledgee may inspect.

A pledgee and a pledgor may register a pledge of movable property in the Movables Pledge Register through a notary. Although registration is not obligatory for the parties, if they do so, they will be afforded with some benefits. The pledgee whose pledge is registered in the first place will enjoy enforcement priority rights. If a subsequent pledge is registered before an initial unregistered pledge, the subsequent pledgee will have the first ranking security of the pledged asset.

A pledgor needs to have title to the secured assets and although the pledge can be “possessory” or “non-possessory”, the secured party need not take possession of the secured assets. A pledge needs to be in writing and needs to accurately identify the pledged assets, the secured obligations and their term.

The following points are worth noting, in relation to certain types of assets.

Shares or participatory interests

A pledge of shares held directly in a joint-stock company must be registered in the joint-stock company’s register (which must be held by an independent licensed company). If shares in a joint-stock company are held by a depository, then its involvement is required, and the pledge is registered with the depository. In this case, the shares may not be disposed of without the pledgee’s consent.

For participatory interests in limited liability companies, pledges must be notarised and registered in the public Unified State Register of Legal Entities. The pledge of participatory interests becomes effective from the date of its registration on such register.

Immovable property

Under Russian law, interests in land (e.g. freehold and leasehold interests) are considered “immovable property” and must be registered. Pledges (or “mortgages”) over the interests must also be registered in the Unified State Register of Immovable Property. A mortgage does not come into effect until it is registered by the relevant land registration authority (please see the Mortgage section).

Russian ships and aircraft are similarly immovable assets, and pledges over these also require registration in one of the shipping registers (depending on the type of the ship) or in the state register of rights to aircrafts respectively.

Contractual and intellectual property rights

Pledges over rights will require notice to be given to the relevant counterparties, and in some cases the consent of counterparties obtained. 

If intellectual property rights are registered, the pledge will require registration with the relevant intellectual property register. Pledges over contractual rights may be registered in the Movables Pledge Register.

Bank accounts

Russian law allows for the pledge of funds credited to the pledgor’s bank account. For these purposes a pledgor will have to open and maintain a specific “pledge bank account”. At the same time, Russian banks also use direct debit arrangements as an alternative.


Key contacts

Baranov Konstantin
Konstantin Baranov
Partner
Head of Banking & Finance
Tchoubykina Elena
Elena Tchoubykina
Counsel
Banking & Finance