The triple crisis – 15 questions businesses have


Watch the recording of our webinar “The triple crisis -15 questions businesses have” from 30.03.2020

Questions and Answers

Status 30.03.2020

Legal and HR questions

Non-working week – Implications

No public holidays, no vacations, “days off but fully paid”

  • Certain categories of enterprises excluded
  • Those who work remotely can continue
  • Moving around the city to get to work only for those who work in exempted enterprises

Important to consider

  • accrual and payment of salary proceeds on regular basis;
  • days off shall not be subtracted from principal annual and/or additional paid vacations
Remote Work

Proper HR formalization is needed to:

  • Issue the staff order on transfer to remote work regime
  • Conclude addendums to employment agreements

Additional measures:

  • Updating local policies
  • Developing new policies / instructions on remote work
  • Affected employees must be familiarized with them and give their signature
Reduction of Working Hours
  • Mutual agreement – best option
  • Do not mix with idle time:
    • Reduction of payment (2/3 of average earnings or base salary), but with suspension of business operations and work of employees
  • Unilateral change of employment terms:
    • Must be based on organizational and/or technological changes of work conditions
    • Change of employment terms must not lead to change of job function
    • 2-month prior written notice plus motivated opinion of a trade union (if any)
Staff Redundancy
  • Requires strict compliance with formal rules
  • Should be initiated under HR order
  • Notification of affected employees 2 months in advance
  • Plus notification of state employment center 2 months in advance (3 months – in case of mass dismissals)
  • Proposal of all suitable vacancies (even downgraded with less pay)
  • Payment of monthly severance upon the dismissal (up to 3 months for regular regions and up to 6 months for regions with abnormal climate conditions)
  • Some employees are protected
Migration Rules
  • Russian Borders have been fully closed as of March 30, 2020. Before that, restrictions on entry of foreign citizens to Russia until April 30, 2020 were implemented.
  • Restrictions on applying for work permits and work visa invitations for those who are abroad
  • Those who are legally staying in Russia are allowed to prolong and correct work permits / work visas

Financial management

How can I reduce my fixed costs in a situation when I lose most of my revenue?

It is officially possible to delay tax payments, you can enter in negotiations with creditors in order to change contractual payment terms, it is also possible – with the consent of the employees – to reduce there working hours and aliquot reduce the salary

What state support is there for SME on the liquidity side?

There is a 6 months moratorium for bank mortgage loans and executions for non payment of debt. All taxes payments except VAT are delayed. The social security contribution has been reduced from 30% to 15%.

When does the Ruble devaluation lead to FX losses, and does that decrease equity?

If according to Russian Standards of Accounting you have to value an asset or a liability nominated in foreign currency in Rubel at year end or when you have to realize a loss from current operations due to the Rubel devaluation, the resulting loss may decrease the equity capital.

What are the effects of fixed currency contracts on the financial result of the client (liquidity, P & L, and tax base)?

If a contract is expressed in a fixed currency exchange rate, then one party due to the devaluation of the Rubel has to pay more Rubel for the same amount of foreign currency. This leads to an additional liquidity outflow on each interest payment and an related foreign currency loss on a loan agreement and when you have to value the contract at year end you realize an additional foreign currency exchange loss as well. Both expenses are tax deductible and lead to a decrease of a profit or an increase in a loss carry forward.

I have negative net assets. What should I do and when?

If the net assets of a company are negative for consecutive 3 years then any creditor and can file for bankruptcy. To eliminate that threat one can swap debt with equity or just increase the equity.

Business continuity

2 general directors – how does it work?
  • Definition of joint or individual powers
  • If individual, define areas of responsibility
  • Adaption of charter and registration of new charter
  • Appoint 2nd GD and register the change

How can powers be transferred via PoA?

  • The general director can issue PoA to represent the company to third parties
  • Issuance in written form. Certain authorities or sub-PoA may require a notarized form
  • Validity for the entire specified period
Can a document in Russia be signed electronically? If yes, which ones?
  • Many documents can be e-signed (e.g. TORG-12, SF, Acts, internal orders, etc.)
  • Exception: HR and salary related documents
  • Not a facsimile of signature and stamp!
  • Taxcom and Kontur Diadoc often used
Is organizing all bank operations from abroad possible?
  • Paper based signature card with specimen signature
  • Online banking also for externals/employees of HQ
  • Both variants allow approval matrix (different groups)
  • Consider large enough number of approvers in group
What is a business continuity plan? Why do businesses need it?
  • Business processes and operations
  • Risk analysis and impact assessment
  • Roles and responsibilities
  • Training, monitoring process
  • Disaster recovery plan