The following issues are scheduled for discussion at the Government Presidium meeting on February 9, 2009
1. Presentation of the revised European Social Charter of May 3, 1996, to the President of the Russian Federation for ratification
The European Social Charter is one of the documents of the Council of Europe on the guarantees of human rights. It implements the protection of human rights in tandem with the European Convention for the Protection of Human Rights and Fundamental Freedoms, which Russia ratified in 1998.
Ready for signing in 1961, the Charter was put into effect in 1965. It was revised in 1996 to include new categories of rights in consideration of social changes across many European countries.
The new Charter was made available for ratification on May 3, 1996, and came into force on July 1, 1999. It incorporates in one document the rights proclaimed in the Charter of 1961 and protocols and appendices thereof, and also contains a number of new clauses.
At this time, the European Social Charter of 1961 and the revised Charter of May 3, 1996, have been signed by all 47 member-countries of the Council of Europe, of which 39 countries have ratified it (15 have ratified the 1961 Charter and 24 the revised Charter of 1996).
The revised European Social Charter was signed on behalf of the Russian Federation in Strasbourg on September 14, 2000.
The revised European Social Charter has to be ratified in compliance with the Federal Law on the International Treaties of the Russian Federation, Article 15, Paragraph 1, Subparagraph B, as it highlights fundamental human rights and freedoms.
The ratification of the Charter fulfils one of the pledges Russia made while joining the Council of Europe in February 1996, and confirms its dedication to the norms and principles of the European legal order within the social sphere.
In a comparative analysis of Russian legislation with the provisions of the Charter, with regard to current measures to improve the social and labour sphere in Russia, it has been shown that the legal and institutional grounds for social and economic guarantees of human rights in the Russian legislation comply, for the most part, with the provisions of the Charter.
The articles and paragraphs of the Charter, which shall be acknowledged on behalf of the Russian Federation, do not contain regulations differing from what the Russian legislation stipulates; their implementation will not imply additional federal budget expenditures. The ratification of the Charter will provide more guarantees for the protection and development of citizens' social and economic rights, as well as establishing the course for further social reforms.
2. The draft Federal Law On Amending Article 10 of the Federal Law On the Police
This law has been drafted to streamline Russian legislation on social relations with the supervision of organisations, which had been granted the legislative right of protecting sites and property, by the Russian law enforcement agencies.
Federal Law on the Police No. 1026-1, of April 18, 1991, Article 10, Paragraph 11, establishes the duty of police inspection of corporate security services. However, Russian regulatory acts at present do not determine the following: the inspection procedure, the relevant jurisdiction of law enforcement agencies, the limitations of inspection, and the rights and duties of managers and personnel of inspected corporate security services.
Therefore, it is proposed that the Federal Law on Police should envisage a norm allowing the Government to employ the procedure of the aforesaid assessments (the rights and duties of participants thereof, the methods, formats, periodicity and limits of inspections, etc).
The adoption of the law will establish an effective mechanism of state monitoring of compliance by organisations protecting sites and property with available standards of protection from threats such as terrorism and crime.
The law also envisages the replacement of the legally ambiguous term "corporate security services" by terms used in the Russian legislation, namely "legal entities with special chartered duties and objectives" and "departmental security services".
The implementation of the premises of this law will result in neither establishing new law enforcement units nor enlarging the personnel of available ones. Moreover, the adoption of the law will neither seek additional expenditures from the federal budget nor amend the acting legislation.
3. The draft Federal Law On Amending the Criminal Code and the Criminal Procedural Code of the Russian Federation
Drafted by the Federal Service for Financial Markets, this law aims to protect investors' interests by enforcing liability claims for acts fraught with considerable damage to the rights and interests of private and legal parties in the stock market, as well as encroaching on the basic functioning principles of the financial market for just and effective price formation, equality of financial market participants and protection of stockholders' rights.
With regard to amendments on securities in the Russian legislation, the draft specifies provisional formal means of definition of abusive practices in securities, as well as malicious evasion of disclosing or delivery of information specified by the Russian legislation on securities (Articles 185 and 185/1/).
The number of stock-related offenses is growing while law enforcement practice shows that administrative liability does not suffice to stop abuses on the stock market. It is necessary to introduce criminal liability for financial market abuses of outstanding public concern.
For this reason, it has been proposed that the Criminal Code be supplemented with new articles 185/2/-185/4/, envisaging criminal liability for the abuse of the procedure of stock accounting, stock price juggling, and impeding the exercise of stockholder rights or illegal limitation of such rights. Criminal liability for such acts is envisaged when they are fraught with major damage to individuals, organisations or the state, or imply major profit. Damage/profit exceeding a million roubles shall be qualified as major, and exceeding 2,500,000 rubles as notably large-scale. The bill qualifies abuses under proposed articles 185/2/-185/4/ as misdemeanors, crimes of average weight or grave offenses depending on aggravating circumstances.
In particular, the abuse of stockholders' rights accounting that involves major damage to individuals, organisations or the state (Article 185/2/) is qualified as a misdemeanor, punishable by a 300-500 thousand rouble fine or imprisonment up to two years with or without a smaller fine.
The same abuse committed by a group of persons or by an organised group, implying especially large-scale damage, is qualified as a serious offense and results in imprisonment for two to six years.
Impeding the exercise of stockholder rights or illegal limitation of such rights (Article 185/4/) is also qualified as a misdemeanor, punishable by a fine up to 300,000 roubles or imprisonment up to two years.
The same abuse committed by a group of persons or by an organised group is qualified as a crime of average weight punishable by a 300-500 thousand rouble fine or imprisonment up to five years.
The law qualifies stock price juggling (Article 185/3/) as a grave offense punishable by a fine from 500,000 to a million roubles or imprisonment for two to six years, and from five to seven years when committed with the use of mass media technology.
International experience and foreign practice of criminal liability for stock market abuse have also been drawn up in the drafting of this bill.
4. The draft Federal Law On the Ratification of the Agreement Between the Government of the Russian Federation and the Government of the State of Qatar on the Promotion and Mutual Protection of Capital Investments
The Agreement between the Government of the Russian Federation and the Government of the State of Qatar on the Promotion and Mutual Protection of Capital Investments was signed on February 12, 2007, on the basis of Executive Order No. 159r of February 12, 2007.
The Agreement was drawn proceeding from the model agreement approved by Government resolution No. 456 of June 9, 2001 (in the revision of Government resolution No. 229 of April 11, 2002) and reverts to approximately all its provisions in full.
The basic provisions of the Agreement are as follows:
1. Admittance of capital investments of one contracting party to the territory of the other contracting party in compliance with the national legislation of the host party.
2. Granting by either contracting party to capital investments of the other contracting party of terms no less beneficial than what its own capital investors or investors of any third country are granted, depending on which the investor finds more beneficial.
3. Retention by either contracting party of the right to exclude overseas capital investments from the national regimen and introduce such exclusions.
Moreover, in compliance with the Agreement, neither contracting party is obliged to spread benefits granted due to participation in a free trade zone, customs or currency union, common market and similar economic integration entities, and/or on the basis of existing international taxation agreements, to capital investments of the other contracting party.
The Agreement has several minor differences from the model agreement. In particular, it does not envisage the withdrawal of former Soviet republics of the Most Favored Nation status. It is a concession made by Russia in exchange for inclusion in the Agreement of several key premises in the Russian revision. Largely formal, this concession is compensated by the Agreement envisaging the withdrawal of the Most Favored Nation status in connection with Russian participation in free trade zones, customs and currency unions and other integration entities (i.e., such exclusion concerns CIS countries).
4. Guarantee of capital investment protection from appropriation through nationalisation, expropriation and other measures implying similar consequences, with the exception of instances when they serve public interests, do not involve discrimination and are accompanied with timely, sufficient and effective compensation.
5. Guarantee of unhindered transfer abroad of incomes and other payments related to capital investment after investors fulfill all fiscal obligations to the host contracting party.
6. Guarantee of adequate judicial protection of investors' rights through contemporary procedure of dispute settlement between one contracting party and an investor belonging to the other contracting party, as well as dispute settlement between the contracting parties concerning the interpretation or application of the present Agreement.
The implementation of the present Agreement will grant investors lasting stability and predictability within a legal framework and will seek to promote further expansion of investment, trade and economic partnership between Russia and Qatar.
5. The draft Federal Law On the Ratification of the Agreement Between the Government of the Russian Federation and the Government of the Hashemite Kingdom of Jordan on the Promotion and Mutual Protection of Capital Investments
The Agreement between the Government of the Russian Federation and the Government of the Hashemite Kingdom of Jordan on the Promotion and Mutual Protection of Capital Investments was signed on February 13, 2007, on the basis of Executive Order No. 160r of February 12, 2007.
The Agreement was drawn proceeding from the model agreement approved by Government resolution No. 456 of June 9, 2001 (in the revision of Government resolution No. 229 of April 11, 2002) and reverts to approximately all its provisions in full.
The basic provisions of the Agreement are as follows:
1. Admittance of capital investments of one contracting party to the territory of the other contracting party in compliance with the national legislation of the host party.
2. Granting by either contracting party to capital investments of the other contracting party of terms no less beneficial than what its own capital investors or investors of any third country are granted, depending on which the investor finds more beneficial.
3. Retention by either contracting party of the right to exclude overseas capital investments from the national regimen and introduce such exclusions.
Moreover, in compliance with the Agreement, neither contracting party is obliged to spread benefits granted due to participation in a free trade zone, customs or currency union, common market and similar economic integration entities, on the basis of an agreement on avoiding dual taxation or other taxation agreements; and in compliance with Russia's agreements with former Soviet republics.
4. Guarantee of capital investment protection from appropriation through nationalisation, expropriation and other measures implying similar consequences with the exception of instances when they serve public interests, do not involve discrimination and are accompanied with timely, sufficient and effective compensation.
5. Guarantee of unhindered transfer abroad of incomes and other payments related to capital investment after investors fulfill all fiscal obligations to the host contracting party.
6. Guarantee of adequate judicial protection of investors' rights through contemporary procedure of dispute settlement between one contracting party and an investor belonging to the other contracting party, as well as dispute settlement between the contracting parties concerning the interpretation or application of the present Agreement.
The implementation of the present Agreement will grant investors lasting stability and predictability within a legal framework and will seek to promote further expansion of investment, trade and economic partnership between Russia and Jordan.
6. Introducing Amendments to the Statute of the Ministry of Finance of the Russian Federation
The present resolution of the Government of the Russian Federation has been drafted with the need for settling the issue of recognition of Russian and foreign rating agencies' ability of ranking legal entities, financial assets, constituent entities of the Russian Federation and municipal entities.
In deciding upon capital investment in stock, bank deposits and other assets, a potential investor needs an evaluation of the investment attractiveness of a target, and of the probability of the return of the investment and obtaining profit.
The evaluation of the investment attractiveness of particular assets demands sizeable expenditures from both private and major institutional investors even when they possess their own analytical service.
The Ministry of Finance of the Russian Federation suggests several ways of settling the problem of professional evaluation of asset quality and reliability, not to mention the issue of implied hazards-namely, the use of ratings made by professional rating agencies.
Rating is an evaluation of the borrower's solvency/credit status, based on evaluating risks. It comprehensively assesses the borrower's ability to maintain his credit obligations in full and meet their deadlines throughout the term of debt payment or the stock circulation period in consideration of projected changes within the socio-political and economic environment.
Credit rating is an independent public and professional estimation. It allows issuers to extend access to loans and other capital sources and reduce loaning costs. It also protects a company and its stock from suspicion of insolvency due to other companies' market default.
Credit ratings serve as an instrument of monitoring for managers of pension or mutual investment funds and other forms of trust asset management.
Banks also use credit ratings for financial decision making since many companies prefer not to disclose their financial information at business meetings.
Independent rating agencies' evaluations help to attract outward investments and promote the development of investment activity within the country.
Analytical centers of those services, which specialise on evaluating stock investment qualities, elaborate on their own methods for rating corporate stock. They also offer minimum standards to give an idea of threshold investment security and thus a company's ability to meet its obligations to creditors and holders.
The Russian rating system is developing dynamically side by side with the international system.
Russian rating agencies have the benefit of understanding the specifics of Russian business and national nuances. They also analyse political hazards in greater detail. In addition, international agencies prefer to analyse major Russian companies while their Russian counterparts place the emphasis on borrowers, including regional ones.
However, the ratings and methods on the basis of which agencies objectively evaluate activities of the financial market players, companies, assets, regions and cities, and analyse their financial situation and solvency, are different.
The state does not recognise Russian agencies' ratings, so Russian business entirely depends on international rating agencies; such agencies, however, align themselves with the economic and business habits and traditions of other countries while, at the same time, Russian companies cannot proceed from Russian analytical reports.
The development of the financial market and regulatory system for financial activities necessitates official recognition of rating agencies in pursuance of stabilising Russian finance, enhancing its transparency and protecting Russian businesses in international financial markets.
In addition, the accreditation of the Russian rating agencies will facilitate their international recognition and will strengthen the positions of the Russian businesses in international financial markets.
The accreditation procedure is not analogous to licensing. It is conventional and does not create more obstacles. The registering of agency ratings is open. Agencies whose ratings have been recognised join the register, and participants of the financial market are notified about them.
With the present draft Government resolution, the Ministry of Finance is authorised to accredit rating agencies and establish a register of accredited rating agencies.
The additional mandates vested on the Ministry of Finance by the present draft Government resolution will be exercised within the limits of the personnel and the labour remuneration fund set up by the Government.
No extra federal budget allocations will be necessary.
7. Introducing Amendments to the Statute of the Ministry of Agriculture of the Russian Federation
The present resolution of the Government of the Russian Federation has been drafted in compliance with the International Plant Protection Convention (Rome, 1957, 1997 version). It grants the contracting parties the sovereign right of regulating imports of plants, plant products and other materials subject to quarantine in accordance with relevant international agreements to prevent introduction and/or spread of regulated hazardous organisms in their territory. With this aim, the contracting parties can prescribe and implement phytosanitary measures with respect to imports of plants, plant products and other materials subject to quarantine.
International Standard for Phytosanitary Measures (ISPM) No. 5, The Glossary of Phytosanitary Terms (registered by the Standartinform federal state unitary enterprise of the Federal Agency for Technical Regulation and Metrology, No. 3370/ISPM) defines "phytosanitary regulations" as an official rule to prevent introduction and/or spread of quarantined hazardous organisms or limit economic damage from regulated non-quarantined hazardous organisms-in particular, by the establishment of a phytosanitary certification procedure.
At present, there is no legislative determination of mandates of federal executive agencies on the approval of norms and regulations of plant protection and quarantine.
The present draft resolution proposes to assign the duty of drafting and adopting plant protection and quarantine norms and regulations to the Ministry of Agriculture with relevant amendments of its Statute.
The implementation of the draft resolution will not imply further federal expenditures and personnel increase.
9. The Federal Service for Alcohol Market Regulation
The Statute of the Federal Service for Alcohol Market Regulation has been drawn up in compliance with Resolution No. 1883 of the President of the Russian Federation of December 31, 2008, On the Establishment of the Federal Service for Alcohol Market Regulation.
The Statute envisages the withdrawal of relevant duties from the Ministry of Agriculture, the Federal Taxation Service and the Federal Tariff Service.
As the Executive Order on the implementation of the Statute stipulates, premises extending from noted paragraphs (6.2.2, 6.2.3, 6.2.4. 6.3.1 and 6.3.3) concerning the labeling and fixation of information in the unified, automated state information system of indicating the amount of production and circulation of ethyl alcohol, alcoholic beverages and other alcohol-containing products for the state monitoring of the aforesaid production and circulation, and for the installation and sealing of alcohol gauges at plants and other organisations engaged in distilling ethyl alcohol from their particular raw materials, shall come into force on January 1, 2010.
The Executive Order also entitles the Federal Service for Alcohol Market Regulation to submit to the Government, within three months, proposals on assigning the duties of the introduction of the unified, automated state information system of indicating the amount of production and circulation of ethyl alcohol, alcoholic beverages and other alcohol-containing products for the state monitoring of the aforesaid production and circulation to the Federal Service for Alcohol Market Regulation. These proposals shall be coordinated with the Ministries of Finance and Economic Development, the Federal Taxation Service and the Federal Customs Service.
The introduction of these transition measures is necessitated by the potential inability of the Federal Service for Alcohol Market Regulation to meet these targets in full at present as they demand relevant staffing measures. Moreover, the prompt shifting of the aforesaid duties would destabilise the alcohol market.
The Federal Service for Alcohol Market Regulation is also expected to execute the following:
- launch proceedings on administrative offences;
- consider the relevant cases in compliance with the legislation on administrative offences in the production and circulation of ethyl alcohol, alcoholic beverages and other alcohol-containing products;
- monitor and supervise the production and circulation of ethyl alcohol, alcoholic beverages and other alcohol-containing products;
- render relevant services in accordance with the Administrative Offenses Code.
Moscow,
February 9, 2009
* 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.
