On February 24, 2021, Federal Law No. 27-FZ “On Amendments to Article 21 of the Federal Law “On Foreign Investments in the Russian Federation” was adopted. The changes will come into force on 24.08.2021.
According to the amendments, the accreditation period for a branch or a representative office of a foreign legal entity (hereinafter – “branch(es)/representative office(s)”) is reduced from 25 to 15 working days, except for representative offices dealing with civil aviation (for them it remains unchanged).
Also, in connection with the changes, a new procedure for suspending accreditation, making changes and closing of a branch or representative office is established. The decision to suspend is taken by the authorized federal executive body if:
- the branch/representative office does not submit the documents required for the accreditation (or its termination), does not introduce timely changes to the register,
- the submitted documents do not meet the requirements for their preparation.
Suspension may be introduced until its causes are eliminated, but for no more than 15 working days.
In addition, the list of grounds for denial of accreditation, amendments and closure of a branch/ representative office are expanding. Among the new grounds for denial are the following:
- failure to eliminate in time the violations specified in the decision on suspension;
- administrative punishment in the form of disqualification of the head of a branch/representative office;
- tax debts in the amount of more than 3,000 rubles.
These changes are aimed at speeding up the accreditation procedure for branches/representative offices. The purpose of the new accreditation suspension procedure is to prevent denial and to provide the branch/representative office with additional time to eliminate violations.
Considering the fact that the state fee for accreditation is 120,000 rubles (non-refundable, if denied), and also given that previously the authorized body made a decision to deny at the slightest discrepancy in the information in the documents on formal grounds, these changes were much-awaited.
However, the duration of accreditation is often a critical factor for investors in the process of establishing a branch/representative office, and therefore, the provision of additional time to eliminate violations only increases it. For 15 days provided for the elimination, it is not always possible to obtain additional documents that require notarization and legalization (apostille). Therefore, it is very important to prepare the initial package of documents as accurately and correctly as possible.
How SCHNEIDER GROUP can help
SCHNEIDER GROUP has succeeded in accrediting branches/representative offices of foreign legal entities (several years without denials). If your foreign company intends to establish a branch/representative office in Russia, our legal practice specialists will be ready to help you do this with maximum savings in time and resources, and also offer related services to resolve all associated issues.