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Август 2017




Chief editor’s column


Interview of the issue


The Event. Comments of the Experts


Topic of the issue

G.V. Tsepov Alternative dependence in the transfer of the debtor’s business: civil law point of view
The paper deals with the problem of tax debt enforcement while transferring financial and economic operations from one legal entity to another. This goes beyond the tax legislation deriving from civil legislation and bound by its legal concepts and doctrines. Controversy is inevitable after disregarding, misborrowing these concepts or creating alternative ones. For example, the concept of ‘alternative dependence’ leads to legal uncertainty. This concept mistakenly equates an enterprise as chose with an organisation as legal entity. Assuming that tax authorities have the right to recover the receivables from the deputy organisation outside bankruptcy proceedings, and the recovered funds are not included in the insolvency estate, then the budget will get illegitimate profit at the expense of the rest of the creditors. A solution of the problem should be developed through an accurate qualification of debtor/ deputy property relations rather than introducing new types of dependency, unknown to civil law.
Keywords: debtor, tax debt, business transfer, dependence, enterprise


T.S. Boyko Legal nature of non-public companies: a comparative study between US, UK and Russian approaches
The amendments to the Russian Civil Code (effective May 2014) have divided all business companies into public and non-public ones. However, the statutory criteria do not help fully understand the specific nature of a nonpublic company and answer why it is regulated differently in Russia. To get the answer, the author undertakes a comparative study of the legal nature between US close corporation, English private company and Russian nonpublic company. The study addresses another relevant issue for the Russian corporate law, that is whether a nonpublic company shareholder is obliged to act in good faith and reasonably towards another member of the same company.
Keywords: non-public company, close corporation, private company, liability, shareholder obligation to act in good faith and reasonably
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M.T. Belova, R.V. Makin Minority interest discount and low liquidity discount at LLC member exit
The focus of this article is the price mechanism for the LLC member exit, which has been reviewed by the Russian Supreme Court Presidium in the current year. The authors examine the appropriateness of the exit interest reduction based on various factors (degree of corporate control, member’s conduct, exit reasons as well as external circumstances) analysing the key arguments for the widespread opinion in other jurisdictions that it is unreasonable to apply reducing discounts to the forced buy-back of minority shares in closed corporations. The conclusion about the inappropriateness of noncontrolling or illiquidity discounts at the corporation member exit is also valid for the valuation of net assets as direct or indirect equity participation.
Keywords: LLC member exit, LLC member’s ownership interest, share valuation, corporate control, minority shareholder’s rights, minority interest liquidity, minority interest discount, illiquidity discount, share alienation
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D.G. Kopylov Repurchase of shares upon demand of their holders
The paper deals with the right of shareholders to require the company to purchase their shares. First, it considers arguments for and against share repurchase, also depending on whether the company is public or private. It further discusses how the repurchase right arises and how this right can be exercised. Finally, it analyses a range of issues such as types (or classes), amounts and prices of share repurchases.
Keywords: repurchase of shares upon demand of their holders, reorganisation, major transaction, delisting
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Judicial practice. Comments

T.S. Krasnova Railroad track easements: fantasy or reality?
On April 26, 2017 the Supreme Court of the Russian Federation not only approved the Judicial Review of Easements but also adopted Decision No. 306-ES16-18379 which, like the Judicial Review, deals with the rules of easement law. The author finds it important not so much because of another attempt to find a balance between the interests of the dominant and servient owners but the possibility of non-public railroad track easements, which is specifically addressed by the article.
Keywords: easement, non-public railroad track, encumbrance on real estate, entitlements to possession and use
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Discussion Board

L.V. Golovko Deja vu: yet another argument or corporate criminal liability
Despite serious arguments against corporate criminal liability in Russia, proposals for its institution re-emerge repeatedly, still no new arguments. One recent example is an article by A.V. Fedorov that was published as part of the discussion in this year’s 6th issue of Statute journal on national legislation. In response, the author critically and thoroughly reviews the arguments presented.
Keywords: legal entities, criminal liability, administrative liability
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A.V. Asoskov Can purely domestic disputes without a foreign element be referred to foreign arbitration?
The paper examines conditions which shall be complied with in order to refer purely domestic disputes without an objective foreign element to foreign arbitration. The author proposes a mechanism, which allows to escape a prohibitory approach but at the same time creates effective impediments that prevent circumventing mandatory provisions of the Russian arbitration legislation.
Keywords: international commercial arbitration, arbitral tribunal, foreign element, place of arbitration
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Press Release



Theory and practice

A.I. Savelyev Cryptocurrencies in the system of civil law objects
The paper focuses on the analysis of legal status of cryptocurrencies in the system of civil law objects under Russian law. It considers a possibility of their qualification as money, electronic money, currency values, information or “other property”. It is concluded that cryptocurrency can be considered as “other property” and money from an economic perspective. It is noted that categorising cryptocurrency as money surrogate is not correct for the private law relationship. And it is concluded that if a certain type of cryptocurrency is considered to be legal tender in another jurisdiction, it will be recognised as currency value under Russian law without any amendments. The paper also criticises the idea of introducing the concept of ‘digital good’ into legislation and suggests the definition of virtual currency which is based on international practices and the principle of technological neutrality.
Keywords: money, money surrogate, cryptocurrency, virtual currency, blockchain
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A.S. Vorozhevich, S.V. Tretyakov The utility of intellectual rights, compulsory licenses, and bureaucratic rents
The authors examine the Federal Antimonopoly Service’s draft bill empowering the government to compulsory licensing of pharmaceuticals. Their analysis uncovers that implementation of this legislative initiative will lead to significant negative consequences for the pharmaceutical industry. The compulsory licensing will be used to obtain bureaucratic rent. In addition, the authors describe cases and conditions for permissible limitations to patent rights.
Keywords: utilitarianism, compulsory license, patent rights, pharmaceuticals, standard essential patents, TRIPS Agreemen
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E.A. Evdokimova The need and the forms of public control over the enforcement of proprietary security right
According to Russian law there are two stages in the procedure of enforcement of proprietary security right: confirmation of the right of the secured creditor to enforce the security right and enforcement itself. The author raises a question, in which cases the right of the secured creditor for enforcement shall be confirmed by the court. The author considers effective Russian rules as well as acts of the soft law and argues that relevant Russian legislation needs further improving. Moreover, the nature of the claim of the secured creditor to enforce the security right is being analysed. The author deliberates whether such claim may be substituted by the claim to recover the secured debt in cases security was provided by the debtor.
Keywords: proprietary security, pledge, enforcement of security, judicial order of enforcement, extra-judicial order, priority, claim to enforce
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M.V. Bando Qualification and revocation of dwelling donations where the donee predeceases the donor
The paper looks at the legal opinion of the Russian Federation Supreme Court stating that the dwelling donation can be revoked upon written notification to the real property registry at the donee’s death. It is argued that another approach is appropriate which entitles the donor to demand donated property at the donee’s death. This demand should go to the heirs rather than to the notary or the registrar. The review of court decisions suggests the following explanation. In most cases, the donor would continue to reside in the donated dwelling, thereby acquiring the status of the owner’s family member. This status stops at the owner’s death, but it is unfair to evict the donator from the dwelling.
Keywords: donation, revocation by the donor, donation of premises, conditional transactions, inheritance
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