At present, foreign companies cannot obtain a license in Russia. The good news is that this will soon be overturned.
Currently, lawyers working with Russian-based clients have had to contend with such gaps in Russian law that they often fail to find some explanation or the legislator’s logic, and therefore cannot understand whether those gaps were made deliberately or simply by negligence. Recently, I have encountered such a gap. Fortunately, on this occasion, the legislators have finally listened to my concerns.
Analysing the law “On Licensing Certain Activities” on behalf of a foreign company, I drew attention to the fact that, when speaking about legal entities entitled to obtain a license for a licensed activity, it is impossible to understand whether non-residents belong here or not.
The point is that the term “legal entities” can equally apply to both Russian and foreign legal entities.
However, when analysing other provisions of that law, one comes to the conclusion that a non-resident is not a “legal entity”, since they can’t file, along with the application for a license, a state registration number of the record on establishment of a legal entity or data confirming the fact of entering information about a legal entity in the Unified State Register of Legal Entities.
Hence, as they do not have this data, they do not obtain a license. Anyone would agree that this is a winding path to the answer that should be made plain and simple. And since it is not spelled out that way, it would be better to confirm it somehow. The best way proven in practice is to send a direct request to the relevant department that issues licenses and receive an equally direct response to it.
So that’s exactly what I did.
In response to my request to the Federal Service for Supervision in Sectors of Communications, Information Technology and Mass Media (Roskomnadzor), they, with reference to law “On Licensing Certain Activities” and law “On Communications”, informed me that:
“… licenses to provide communication services are issued exclusively to Russian legal entities and individual entrepreneurs registered in the Unified State Registers of Legal Entities and Individual Entrepreneurs, respectively …”.
The most interesting word in their answer is “exclusively“, given the fact that this answer does not come across so clearly and unconditionally in the law, but is rather left to the mercy of logical interpretation.
In addition, Roskomnadzor informed me: “Though, the legislation of the Russian Federation in the communication sector does not impose any restrictions on the participation of foreign capital in the formation of the authorized capital of a Russian legal entity that has applied to Roskomnadzor for obtaining a license.”
Thus, the “exclusiveness” for Russian legal entities, on the one hand, and lack of any restrictions for foreign companies, on the other hand, confirms that the exclusiveness has an extremely bureaucratic nature. In the end, it is just a matter of defective wording of the text of the law, and one should not look for any deep meaning behind it.
As expected, I wasn’t the only one to draw this conclusion. In fact, almost simultaneously with the response received from Roskomnadzor, the information and legal software system used by lawyers in Russia shared a news that the lawmakers wanted to fix in the law that foreign legal entities have got the right to obtain licenses as well.
They are simply going to make changes in the law that non-residents file, along with their application for a license – instead of information that they can’t provide in principle – information that they can provide: their name, the name of the branch and its address, the number of the accreditation record of a foreign legal entity branch in the register and the date of the entry of its accreditation in the register.
And, although the right to obtain a specific license will be granted to a non-resident not by the law itself, but by the regulation on licensing certain activities based on that law, that law will finally give a direct and positive answer to the question that non-residents are included in the circle of entities entitled to obtain a license.
The fact that the lawmakers just happened to “forget” about foreign companies when writing the law is also confirmed by an explanatory note accompanying the bill which says that the changes in the law are limited only to the inclusion of information to be provided by a non-resident, and those changes are aimed at creating favorable conditions for foreign investors, reducing administrative barriers in licensing activities.
This information is posted on the federal portal of bills. According to that portal, the passage of all the necessary instances of consideration of the bill is scheduled up to December 2020, and then a gap in the Russian legislation regarding foreign investors’ activities will be closed.
Anatoly Ivanenkov | 360 Business Law Russia