*PRESS RELEASE*
Background material for the August 5, 2010 meeting
The following issues are scheduled for discussion at the Government Presidium meeting on August 5, 2010
1. Draft federal law On Introducing an Amendment to the Federal Law On Introducing Amendments to Volume 2 of the Tax Code of the Russian Federation and Some Other Legislative Acts of the Russian Federation
The draft federal law has been submitted by the Ministry of Finance.
Under Article 213 of the Tax Code of the Russian Federation which was in force from January 1, 2005 until January 1, 2008 the individual income tax base included insurance premium sums under voluntary pension insurance contracts if the said sums were paid on behalf of individuals by their employers. Income in the form of insurance payments under such contracts was exempt from taxation if the corresponding payments were made at the occurrence of pension grounds in accordance with the legislation of the Russian Federation. Under the provisions of Article 213 of the Code which came into force on January 1, 2008 insurance payments under voluntary pension insurance contracts signed by employers on behalf of their employees are subject to taxation as of January 1, 2008 while income in the form of insurance payments made by employers on behalf of individuals under voluntary pension insurance contracts are exempt from taxation.
As a result, after January 1, 2008 the individual income tax law applies to the income of individuals in the form of insurance premiums under voluntary pension insurance contracts signed by employers on behalf of their employees under which insurance premiums had been fully paid up by the organizations before January 1, 2008 and which had already been taxed. The Ruling of the Constitutional Court of the Russian Federation urges the need to introduce amendments to the procedure of enforcing Article 213 of the Code to rule out the double taxation of the income of individuals received in the form of insurance premiums under voluntary pension insurance contracts paid for them by employers before January 1, 2008 and in the form of insurance payments made after January 1, 2008. To resolve this, the Draft introduces an amendment to the federal law On Introducing Amendments to Volume 2 of the Tax Code of the Russian Federation and Some Other Legislative Acts of the Russian Federation and allows the calculation and payment of income tax by individuals with regard to insurance payments under voluntary pension insurance contracts concluded by employers on behalf of their employees on which the premiums had been paid by employers prior to January 1, 2008 in full under the procedure required prior to January 1, 2008.
2. Draft federal law On Introducing Amendments to the Federal Laws On the System of State Service in the Russian Federation and On the State Civil Service of the Russian Federation
Speaker: Tatyana Golikova, Minister of Healthcare and Social Development of the Russian Federation
The draft federal law has been submitted by the Ministry of Healthcare and Social Development. The draft law introduces amendments to the federal laws On the System of State Service in the Russian Federation and On the State Civil Service of the Russian Federation to delete the provisions whereby regulatory legal acts of the president on the procedure of keeping the General Register of Positions in the State Civil Service of Russia, on the procedure of keeping the General Register of State Civil Servants of Russia and on the correspondence between the positions in the federal state civil service and the standard positions in the state service of the constituent entities of the Russian Federation.
The Presidential Commission On Reform and Development of the State Service has decided that it is impracticable to continue working on corresponding draft legislative acts of the president and on the need to introduce amendments to the legislation on the state service. The draft law is aimed at reducing excessive administration of the state service in the Russian Federation.
3. Draft federal law On Introducing Amendments to the Federal Law On the Social Protection of the Citizens of the Russian Federation Exposed to Radiation as a Result of the 1957 Accident at the Mayak Production Association and the Discharge of Radioactive Waste into the River Techa
The draft federal law has been submitted by the Ministry of Healthcare and Social Development. The draft law has been prepared for the purpose of providing the above category of citizens with additional social support to ensure that they enjoy social guarantees equal to those enjoyed by citizens exposed to radiation as a result of the Chernobyl disaster.
Under the draft law disabled members of families who were dependents of the disabled persons who died as a result of the 1957 accident at the Mayak Production Association and the discharge of radioactive waste into the River Techa are entitled to monthly compensation for health damage issues along similar lines as the members of the families of people disabled as a result of the Chernobyl Nuclear Power Plant disaster.
The draft law entitles the first- and second-generation children suffering from diseases as a result of the accident to the social support measures established for the children who are suffering from diseases in connection with the Chernobyl disaster.
In addition, the size of monthly compensations for citizens who in 1949-1956 lived in the communities exposed to radioactive contamination as a result of the accident are to be increased to match the similar payments to the victims of the Chernobyl disaster and their annual indexation is to be ensured. Implementing the draft law would require federal budget allocations in the amount of 10.9 million roubles. Because that sum constitutes about 1 percent of the total amount of money earmarked for enforcing the law, and considering the annual natural reduction of the number of recipients of such benefits, the new expenditure commitments of the Russian Federation may be financed within the budget allocations stipulated by the federal budget allocations for the enforcement of the law stipulated by the federal budget for the next fiscal year.
4. Draft federal law On Introducing Amendments to the Federal Law on the Securities Market and Some Other Legislative Acts of the Russian Federation Aimed at Simplifying the Procedure of the Issue of Securities by Issuers whose securities are Listed at Stock Exchanges, Modifying the Procedure of the Issue of Privileged Shares with the Change of Rights they Confer, Formulating more Clearly the Requirements to Information Disclosure in the Securities Issue Prospectus, and Improving the Legal Regulation of the Procedure for the Issue of Securities in the Process of the Reorganization of Legal Entities
The draft federal law has been introduced by the Federal Financial Markets Service.
The draft law is aimed at improving legislation connected with the procedure of the issue of securities, information disclosure in the prospectus of securities issued, changing the scope of the rights certified by privileged shares.
The aim of the law is to remove excessive administrative barriers for the access of Russian companies to the capital market.
The draft law, in addition to the federal law On the Securities Market, introduces amendments to the federal laws On Joint Stock Companies and On State Registration of Legal Entities and Individual Entrepreneurs.
The draft law addresses the following main issues.
1. Under Article 2 of the federal law On the Securities Market the issue of securities is defined as the succession of the issuer's actions in issuing securities. The emission procedure must include mandatory stages established under Article 19 of the law unless otherwise provided for by the Law or other federal law.
The law envisages cases when the emission of securities may skip certain stages. Thus, under Article 27.5.2 of the law, exchange bonds may be issued without the state registration of the issue (additional issue), registration of the prospectus and state registration of the report on the results of the issue (additional issue) because such bonds are issued only by open subscription on the stock exchange floor. The issuer is allowed to use the simplified procedure of the emission of exchange bonds after the registrating body has duly performed all necessary registration actions with regard to at least one issue (additional issue) of its shares or bonds and the said securities have been listed at the stock exchange. Under the draft law it will be possible to use an emission procedure that is facilitated by dropping the registration actions with regard to those joint stock companies whose shares of the same category (type) have been listed at the stock exchange. Registration actions with regard to an additional issue of shares, as of exchange bonds, may be dropped only if corresponding shares are placed in stock exchange trading.
Relieving the issuer of a "double review" for compliance with Russian legislation will reduce the time and financial cost of entering the public capital market and consequently make the financial market more accessible for leading Russian companies.
At the same time, considering the specific features of the lending institutions and the fact that the Bank of Russia monitors the financial status of the buyers of the shares of lending institutions, the elimination of registration actions in the event of additional issue of shares will not apply to lending institutions.
2. Part 3, Clause 1 of Article 19 of the Law stipulates that in the event of reorganization of legal entities, including joint stock companies in the form of merger, separation, branching out and transformation, securities are placed prior to state registration of their issue while state registration of the report on the results of the securities issue takes place simultaneously with the state registration of the issue of securities.
It is a feature of the procedure of the issue of shares when reorganizing joint stock companies (with the exception of reorganisation in the form of takeover) that the issuer, i.e. the joint stock company created as a result of reorganization, applies to the registering body for state registration of the corresponding issue and the report on the results of the issue of securities after such securities have been offered. The said securities are recognized (counted as) being issued (offered) on the date when an entry on the creation of the joint stock company, the issuer of the said securities, as a result of reorganisation is made in the Unified State Register of Legal Entities.
Because state registration of the issue of shares at reorganisation takes place after the actual reorganisation and the placing of securities, the registering agency has no opportunity to prevent irregularities that may occur during the issue of shares. In this connection the draft law introduces a procedure whereby the documents for state registration of the issue of the shares of a joint stock company that are being placed at reorganisation must be submitted to the registering body prior to the state registration of the joint stock company created as a result of reorganisation. If the registering body decides in favour of registering the corresponding issue of shares that are being offered at reorganisation, such decision comes into force from the date of the state registration of the joint stock company created as a result of reorganisation.
The document confirming the decision of the registering body on the state registration of the issue of shares that are being placed at reorganisation is to be included in the body of documents submitted to the agency for state registration of legal entities for the purpose of making an entry in the Unified State Register of Legal Entities on state registration of the joint stock company created as a result of reorganisation.
This procedure will make it possible to expose and eliminate irregularities connected with reorganisation before it is completed and thus ensure proper protection of the rights and legitimate interests of the shareholders of the companies created as a result of reorganisation.
In the event of reorganisation of a legal entity that issues bonds or other securities, with the exception of shares of stock, the draft law envisages a special procedure of the transfer of obligations under bonds or other issued securities of the reorganised organisation to its legal successor. This special procedure envisages "replacement of the issuer" when the legal successor takes the place of the reorganised issuer and is liable on his own behalf to the holders of securities in the amount and on the terms that will exist at the time of its state registration. The legal successor does not perform any independent and separate issue of bonds or other securities.
The draft law also establishes some general rules (principles) that apply to the procedure of "replacement of issuer." Thus, the liabilities under securities of one issue must be transferred to only one legal entity which is the successor to the issuer of securities and which assumes the obligations connected with disclosure of information on the securities.
3. Under the federal law On Joint Stock Companies the holders of the company's ordinary shares may, in accordance with the said federal law and the company's charter, take part in the general meeting of shareholders and vote on all the problems within its competence and are entitled to receive dividends and in the event of the company's liquidation, to part of its property.
As distinct from ordinary shares, the federal law On Joint Stock Companies allows changes in the scope of rights conferred by privileged shares which entails the need for a separate emission of privileged shares with a different scope of rights.
In this case the shares are placed through conversion, i.e. the placing of "new" shares in place of redeemed "old" (earlier placed) shares. Accordingly, if the "old" shares were traded on the stock market, conversion excludes the said securities from the list of securities allowed to be traded at the stock exchange and if the joint stock company is interested in "new" shares being traded in the stock exchange it is necessary to register the prospectus of "new" shares and go again through the procedure of their admission to stock exchange trading.
These circumstances have a negative impact on the liquidity of the Russian stock market and its attractiveness for Russian and foreign investors.
The draft law proposes abolishing the practice of "technical" issues that envisage the conversion of privileged shares in connection with the change of the scope of rights they confer by replacing the "technical" issues with the procedure of entering corresponding amendments to the properly registered decision on the issue of privileged shares. The introduction of the said procedure will make it unnecessary to redeem the shares and save the cost the issuer of securities incurs in this connection.
In addition, to make the Russian financial market more competitive and attract global investors the draft law allows the establishment of terms for the placement of securities similar to those that are used at developed foreign financial markets. Securities may be placed with part payment if the obligation to make the full payment is assumed by the broker who renders the relevant services in placing the securities and the securities issued may start circulating before state registration of the report (notification) on the results of the issue.
5. Approving technical regulations on the safety of marine transport
The draft resolution has been submitted by the Ministry of Transport of the Russian Federation.
The draft resolution will set security requirements for marine transport facilities to ensure the protection of the life and health of the public, protect the property of physical and legal persons, protect state or municipal property, the environment and prevent actions that mislead the buyers of the marine transport facilities.
The requirements of the draft technical regulations on the safety of marine transport facilities take into account the international treaties of the Russian Federation on the protection of human life at sea (the 1974 International Convention for the Safety of Life at Sea), the preservation of the marine environment (the 1978 International Convention to Prevent Pollution from Ships), the Rules for the Prevention of Collision of Ships (International Collision Regulations, 1972) and the laws of the Russian Federation. The requirements of the draft technical regulations apply to:
- marine vessels navigating at sea and inland waterways, inland ships as well as hybrid (river-sea) vessels sailing on sea routes as well as inland waterways when carrying cargo, passengers and their luggage and calling at foreign ports;
- the materials, goods and equipment for ships sold in the market of the Russian Federation;
- the processes of exploitation (including withdrawal from operation and repair) and disposal in line with the requirements to marine transport facilities;
- berths and reloading facilities;
- the processes of designing (including exploration for the purpose of construction), construction, exploitation (including withdrawal from operation and repair, liquidation and disposal in line with requirements of the marine transport infrastructure objects.
The implementation of the draft technical regulations is aimed at:
- making the marine transport facilities more accident-proof, reducing the probability of environmental pollution by minimizing emergency dumping of hazardous substances and cargo being reloaded and transported;
- making marine transport more attractive for investors by harmonising domestic legal standards with international standards;
- reducing the probability of transport incidents and accidents;
- better protection for buyers and a balance of the interests and mutual responsibilities of the individual, society and the state.
6. Approving the technical regulations on the safety of inland water transport
The draft resolution has been submitted by the Ministry of Transport of the Russian Federation.
The draft resolution establishes requirements for the safety of inland water transport to ensure the protection of the life and health of the public, protect the property of physical and legal persons, protect state or municipal property, the environment, and prevent actions that mislead the buyers of inland water transport facilities regarding the dangers such facilities may present. The implementation of the draft technical regulations is aimed at:
- reducing the probability of accidents involving inland water transport, the probability of environmental pollution by minimizing emergency dumping of hazardous substances and cargo being reloaded or carried;
- making inland water transport more attractive for investors by harmonising domestic legal standards with international standards;
- reducing the probability of transport incidents and accidents.
The adoption of the draft resolution will have a positive impact on the transport services industry and on the economy as a whole.
Moscow,
August 4, 2010
* Press releases by the Department of Press Service and Information contain the materials submitted by the executive federal bodies for discussion by the Presidium of the Government of the Russian Federation