The federal law on the elimination of legal entities and the role of the notary is valid

On 30 March 2015, President Vladimir Putin signed Federal law No. 67-FZ, Amendments to certain legislative acts of the Russian Federation to ensure the reliability of information to be submitted for the state registration of legal entities and individual entrepreneurs, which amends a number of federal laws: State registration of legal entities and individual entrepreneurs, Limited liability companies, Fundamentals of Russian legislation on notaries, Code of administrative offences, and Criminal code of the Russian Federation. The law came into force on 31 March 2015, except for provisions stipulated otherwise in the law.

Below are the most significant amendments to the act.

An important change concerns the peculiarities of state registration for the liquidation of a legal entity. The law now states that the liquidation procedure is not complete until the entry into force of a judicial act, based on the claim of the legal entities that are in the process of liquidation. This change allows any interested person to block liquidation. It is enough to apply to the court with property or nonproperty demands since the law does not specify the nature nor the amount for any material demands.

The Federal law Limited liability companies now provides that a notary must confirm that the members at a general meeting of a company decided to increase the capital shares or change the structure of a company. It is important to note that the law does not provide for alternative verification options, unlike Paragraph 3 of Article 67.1 of the Civil Code, which states that the confirmation of a notary or another means, stated in the firm’s charter, can confirm a change that takes place during a general meeting of the participants of a LLC.

The amendments clarify the requirements for a notary, for example, in the process of establishing the identity of a citizen, his representative, or the representative of a legal entity, as well as for submitting documents. It provides for the possibility, at the request of the applicant, for the notary to submit documents in electronic form to a registration authority. It also grants permission to the notary to use video recording equipment when performing any his or her duties.

The law clarifies the provisions governing transactions for alienating a share or part of a share in the charter of a LLC. In particular, the notary now verifies not only the powers of the person to alienate shares, but he or she also must verify that the disposed share or partial share is fully paid. However, the notary must be sure that a person has the authority to dispose of the shares before he or she verifies the payment for the shares. In all cases, the notary must view the document outlining the basis for which a person acquired the percentage or portion of the shares and the certificate of incorporation. After the proving the transaction for alienating the shares, the company must prepare a statement about the change for the tax authority that the notary must sign.

The law establishes that, in case of reasonable doubt about the authenticity of information included or incorporated in the register, the registration authority must verify the validity of such information. The law defines how the registration authority can establish doubt about the reliability of information, in particular, through the examination of documents, information available to the registering authority, and objections of interested persons, regarding the upcoming registration. In the event that information is not yet available in the register, the authority may suspend the state registration for not more than one month. If the register information is inaccurate, the authority shall record the inaccuracy about the legal entity contained in the registry.

The law enhances the administrative responsibility for violations related to the registration of legal entities and individual entrepreneurs. Founders (participants) of legal entities now have administrative liability.

As far as the amendments to criminal legislation is concerned, the law clarifies the concept of a surrogate (подставного лица). Now, that category includes individuals who perform the functions of the governing body of the legal entity who do not have the aim to govern the legal entity.

A brief analysis of these amendments demonstrates that the provisions of this act strengthen the role of notaries in the areas of corporate relations, prevent fraud in the transactions of shares for LLCs, and increase penalties for offences in the registration of legal entities and individual entrepreneurs.

The full text of the law is available here