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1. STATE AND MUNICIPAL AUTHORITIES IN ST. PETERSBURG 1.1. The Structure of State and Municipal Authorities of St. Petersburg In St. Petersburg the system of state authorities was formed which has statutory objectives and powers. City authorities consists of three branches: legislative, executive and judicial. The major goal of actions of all branches is to excercide the rights and interests of residents of St. Petersburg.

The Legislative Assembly of St. Petersburg is a standing effective supreme and sole legislative (representative) body of the state authority in St. Petersburg. The Government of St. Petersburg is a supreme executive body of the state authority of St. Petersburg headed by the commanding officer of St. Petersburg (the Governor of St. Petersburg).


Addresses and Phone Numbers of the State Authorities of St. Petersburg1 Name The Legislative Assembly of St. Petersburg The Administration of the Legislative Assembly of St. Petersburg The Audit Chamber of St. Petersburg

Address 6 Isaakievskaya Sq., St. Petersburg, 190107 6 Isaakievskaya Sq., St. Petersburg, 190107

Phone Phone: 570-3268 Fax: 570-3001 Phone: 570-3187

Antonenko Per., St. Petersburg, 190000

Phone: 314-3726 Fax: 314-3726

E-mail www.assembly.spb.ru

Committees and Commissions The Legislation Commitee

6 Isaakievskaya Sq., St. Petersburg, 190107

Phone: 570 33 61 Fax: 570-3361

The Budget and Financial Committee The Standing Commission for State Authority, Local SelfGovenment and Administrative Territorial Structure

Phone: 570-3716 Fax: 570-3716 Phone: 570-3162 Fax: 570-3162

The Standing Commission for Education, Culture and Science

Phone: 570-3454 Fax: 570-3604

The Standing Commission for City Economy, Urban Development and Land

Phone: 570-3480 Fax: 570-3480

The Standing Commission for Industry, Economy and Property

Phone: 312-7863 Fax: 314-4211

The Standing Commission for Health Care and Environment The Standing Commission for Social Security The Standing Commission for Justice and Law Enforcement

Phone: 310-9212 Fax: 570-3724 Phone: 570-3218 Fax: 570-3750 Phone: 570-3272 Fax: 570-3083 Executive Authorities

The State Administrative and Technical Inspection The State Housing Inspection

191014, Liteinii pr., 36, Đ?

Phone: 579-2001 Fax: 579-2093 Phone: 544-4300 Fax: 545-4859

gati@gov.spb.ru

11 Ostrovskogo Sq., St. Petersburg, 191023 The Commitee for Public Services 9 Karavannaya St., and Roads St. Petersburg, 191011 The Committee for External Smolny, St. Petersburg, 193060 Relations of St. Petersburg The Committee for Justice, Smolny, St. Petersburg, 193060 Legal Order, and Safety

Phone: 710-4885 Fax: 710-4726 Phone: 710-6212 Fax: 710-6060 Phone: 576-7204 Fax: 576-7633 Phone: 576-7970 Fax: 576-4374

www.gilkom.spb.ru

The Committee for State 1 Lomonosova Sq., St. Control, Use and Protection of Petersburg, 191023 Historical and Cultural Landmarks

Phone: 315-4303 Fax: 710-4245

kgiop@gov.spb.ru

The Committee for City Planning and Architecture

Phone: 315-5216 Fax: 710-4426

www.kgainfo.spb.ru

195067, Piskarevskii pr., 35

The Housing Committee

1

2 Lomonosova Sq., St. Petersburg, 191023

www.kgp--estate.spb.ru

equip@gov.spb.ru www.spbdorogi.ru www.kvs.spb.ru zhurbenko@gov.spb.ru zakon@gov. spb.ru

See www.gov.spb.ru 2


The Committee of Civil Registration

39 Tavricheskaya St., St. Petersburg, 1193 0115

Phone: 271-7943 Fax: 271-4110

kzags@gov.spb.ru

Phone: 571-3406 595-8979 Fax: 314-1814 Phone: 740-3639 Fax: 740-3641

kzdrav@gov.spb.ru www.zdrav.spb.ru

The Committee for Investments 6-oj podjezd, Smolny, St. and Strategic Projects Petersburg, 191060

Phone: 576-6988 Fax: 576-6081

info@cisp.gov.spb.ru

The Committee for Informatization and Communication

Smolny, St. Petersburg, 191060

Phone: 576-7123 Fax: 576-7345

kis@gov.spb.ru

The Culture Committee

40 Nevsky Prospect, St. Petersburg, 191186

Phone: 312-2471 Fax: 710-5515

kkult@gov.spb.ru www.spbculture.ru

The Committee for Youth Policy and Cooperation with Public Organizations The Committee for Science and Higher Education

31 Bolshaya Morskaya St., St. Petersburg, 191060

Phone: 314-3567 Fax: 314-6536

kpmp@gov.spb.ru www.kpmp.ru

Smolnyj, St. Petersburg, 191060

Phone: 576-7160 Fax: 576-7704

knvsh@gov. spb.ru

The Committee for Education

8 Antonenko Per., St. Petersburg, 190000 190000, Galernaya st., 7

Phone: 570-3179 Fax: 570-3829 Теl. 312-9236 Fax 312-8835

kobr@gov.spb.ru

Smolny, St. Petersburg, 191060

Phone: 576-4983 Fax: 576-6261

kpress@gov.spb.ru

The Committee for Nature Use, 5/3 Kamenoostrovsky Pr., St. Environmental Protection and Petersburg, 197046 Ecological Safety The Construction Committee 76 Mojka Emb., St. Petersburg, 190000

Phone: 232-8369 Fax: 232-8327

kpoos@gov.spb.ru

Phone: 570-3030 Fax: 570-3314

filimonov@kstr.gov.spb.ru

The Committee for Transport 10-12 A Moskovsky Pr., St. and Transit Policy Petersburg, 190031 The Transportation Committee 83 Moskovsky Pr., St. Petersburg, 196084

Phone: 310-5050 Fax: 310-0505 Phone: 576-5510 Fax: 388-5531

cttp@cttp.gov.spb.ru www.fincom.spb.ru public@transport.gov.spb. ru

The Committee for Labor and Social Security

6 Antonenko Per., St. Petersburg, 190000

Phone: 315-3061 Fax: 315-3060

ktrud@gov.spb.ru

The Committee for City Property Management

Smolny, St. Petersburg, 191060

Phone: 576-7557 Fax: 274-1026

The Committee for Physical Training and Sport

22 Millionnaya St., St. Petersburg, 191186

Phone: 312-1541 Fax: 315-9795

www.commim.spb.ru in@commim.spb.ru kugi@gov.spb.ru kfis@gov.spb.ru

The Committee for Energy and Engineering Support

4 Antonenko Per., St. Petersburg, 190000

Phone: 312-5411 Fax: 570-3901

kenerg@gov.spb.ru

The Finance Committee of St. Petersburg

16 Voznesensky Pr., St. Petersburg, 190000

Phone: 314-5674 Fax: 570-3939

kfin@kfin.gov.spb.ru

The Committee for Economic Development, Industrial Policy and Trade The Committee for Financial Control

16 Voznesensky Pr., St. Petersburg, 190000

www. cedipt. spb .ru info@cedipt.spb.ru

62 Suvorovsky Pr., St. Petersburg, 191060

Phone: 315-5152 570-3371 Fax: 570-3554 Phone: 576-4283 Fax: 576-4359

The Veterinary Administration of St. Petersburg

5 4th Sovetskaya St., St. Petersburg, 191036

Phone: 717-5237 Fax: 271-3598

uvet@gov.spb.ru

The Committee for Health Care 1 Malaya Sadovaya St., St. Petersburg, 191023 The Committee for Land Resources and Land Management of St. Petersburg

Committee of employement The Committee for Press and Cooperation with Mass Media

62, Suvorovsky Pr., St.Pe-St. Petersburg, 191124

kzr@gov.spb.ru www.kzr.spb.ru

http://www.rspb.ru admin@kzn.spb.ru

kfk@gov.spb.ru

3


The Social Catering Administration

2 Truda Sq., St. Petersburg, 190000

Phone: 387 8786 Fax: 388 2787

uspit@gov.spb.ru

The Service on Construction Works Supervision and Examination of St. Petersburg The Administration of Development of Gardening and Truck Farming The Central Administration of Civil Defence and Emergency Situations of St. Petersburg The Tariff Committee of St. Petersburg

49 Ligovskiy Pr. St. Petersburg, 191040

Phone: 576-1500 Fax :576-1506

gne@gov.spb.ru

4/2 Diagonalnaya St., St. Petersburg, 194100

Phone: 295-1229 Fax: 295-1229

ursosl@gov.spb.ru

26/28 Razyezzhaya St. St. Petersburg, 191002

Phone: 578-4113 Fax: 572-6205

gochs@gov.spb.ru

16 Voznesensky Pr., St. Petersburg, 190000

Phone:315-2265 Fax:315-1543

rek@gov.spb.ru

Sectoral State Authorities of Joint Subordination The Archival Committee of St. Peetersburg and Leningrad Region

39 Tavricheskaya St., St. Petersburg, Phone: 271-4455 191015 Fax: 271-7561

karchiv@gov. spb .ru http://spb.rusarchives.ru

The State Inspection of Supervision of Technical Condition of Self-propelled Machines and Other Kinds of Technics of St. Petersburg (Gostekhnadzor of St. Petersburg)

88-90 Griboedova Canal Emb., 190068

Phone: 312-0457 Fax: 312-0457

tehnadzor@gov.spb.ru

The Main Administration of Foreign Affairs (GUVD) of St. Petersburg and Leningrad Region

50/52 Suvorovsky Pr., St. Petersburg, 191015

Phone: 573-2206 Fax: 573-2206

guvdsl@gov.spb.ru

The Government of St. Petersburg is willing to cooperate with entrepreneurs and potential investors. All committees and administrations were established and operate to improve and develop the city. They provide consultative support in the fields they are engaged in. The Table below shows the duties of executives authorities of St. Petersburg, fulfillment of which directly affects business development and the authorities themselves2: 1

Development of the St. Petersburg external relations including the development and implementation of business cooperation programs. Organization of international conferences and other international events conducted by the Government of St. Petersburg.

The Committee for External Relations of St. Petersburg

2

Detection, registration, protection, examination, restoration and reconstruction the objects of historical and cultural legacy. Control that enterprises, establishments, organizations and citizens observe the laws on the protection and use of historical and cultural landmarks, and that all measures regarding the safety of landmarks in the case of construction, reclamation, road and other works are taken. Development and implementation of the city planning policy of St. Petersburg.

The Committee for State Control, Use and Protection of Historical and Cultural Landmarks

4

Providing of state policy and management in the sphere of land relationships and cadastral registration of real estate. Coordination of Saint-Petersburg state executive territorial organizations in the sphere m.a.

The Committee for Land Resources and Land Management of St. Petersburg

5

Providing of Saint-Petersburg state policy in the sphere of investments, realization of strategic investment projects and also in the sphere of tourism development and hostile infrastructure of Saint-Petersburg..

The Committee for Investments and Strategic Projects

3

2

The Committee for City Planning and Architecture

See www.gov.spb.ru 4


6

Provides the coordination of executive state institutes activity in the sphere of informatization, communications and information security, identifies the priority directions of regional informatization in social-economic sphere, in the sphere of territory regulation of information and telecommunication resources of the region. Promotion of the development of all types of communication, information and telecommunication infrastructure, the creation of common information space and its integration into Russian and global information space. Examination of the projects financied from budget. Adjustment of documentation for the design and construction of on-air and cable television networks. Coordination of the activities regarding the use of nature, environmental protection, ecological safety; state environmental control of enterprises, establishments and organizations regardless of their subordination and type of ownership; issue of the permissions to use natural resources. Implementation of environmental projects. Preparation of proposals regarding the procedure of environmental payments.

The Committee for Informatization and Communication

Promotion of the development of construction industry, capital construction, the development and reconstruction of territories, implementation of real estate investment programs and projects. Organization and realization of tenders for the placement of state construction orders, and auctions regarding the provision of real estate on investment terms. 9 Organization of public transportation, participation in the preparation of draft projects regarding the development of public transportation and optimization of the work of enterprises, establishments and organizations to increase the quality of services. Adjustment of the terms of construction, road, accident recovery and other works on thoroughfares. 10 Registration, evaluation of the efficiency of the use of real estate owned by St. Petersburg and the RF. Management of stakes (shares), deposits owned by St. Petersburg and acquisition of property for St. Petersburg. Transfer of the property owned by St. Petersburg under economic control, in operating management, rent, use, etc. Privatization of the property owned by St. Petersburg. Encouragement of investments in real estate owned by St. Petersburg. Realize management duties in the sphere of federal property, passed to the Government of Saint-Petersburg in accordance with existing order due to agreement between federal agency of Ground Resources and Land Management of St. Petersburg and the government of Saint-Petersburg in the part of management of the federal property of Russian Federation . 11 Development and implementation of the St. Petersburg budget and report on its execution, establishment of interbudget relations. Exercise, coordination of the state financial control. Concentration of finances on the priority lines of social and economic development, ensuring of finance stability. State borrowings on behalf of St. Petersburg and public debt management. 12 The analysis of economy, development of strategies, comprehensive plans, forecasts, social and economic development projects, industry and exportimport policy, trade, consumer market, food and transportation tecture Development of target investment programs, target programs on financial, monetary, investment, innovation and tariff policy. Promotion of business development, stable operation of enterprises, protection of domestic manufacturers and investment attraction. Promotion of the development of exhibition and fair activities. Assistance in realization and accompaniment of investment projects fulfilled on the territory of St. Petersburg

The Construction Committee

7

8

The Committee for Nature Use, Environmental Protection and Ecological Safety

The Transportation Committee

The Committee for City Property Management

The Finance Committee of St. Petersburg

The Committee for Economic Development, Industrial Policy and Trade

5


13 Elaboration and realization of Saint-Petersburg state policy , organization and The Committee for Ecointerbranch coordination of Saint-Petersburg executive state organizations’ nomic Development, activity in the sphere of analysis and forecast of Saint-Petersburg investment Industrial Policy and Trade and innovative policy of state economy regulation, function of state sector in the economy of Saint-Petersburg industry, agriculture and internal trade and services sector, tariff policy, territory development policy in SPb and also providing of state policy of Saint-Petersburg in licensing of certain types of activities. Licensing of activities subject to licensing by the executive authorities of the subjects of the RF but transferred by the latter for licensing to St. Petersburg executive authorities. Organization of state order system in Saint-Petersburg, executing of functions of authorized organization of Saint-Petersburg order for goods and services providing placement. Supervision over the observance of licensing requirements and terms. Suspension and resumption of licenses. Drawing up of licensing documents. Normative, methodical and information support of licensing activities, keeping of the license register.

In order the executive authorities of St. Petersburg can perform their duties, the federal city is divided into 18 districts3 or political units. The state executive body of St. Petersburg which governs a district of St. Petersburg is the Administration of a district of St. Petersburg4. Addresses and phones of the Administrations of St. Petersburg Districts No. Administration 1 The Administration of Admiralteysky District of St. Petersburg

Address 10 Izmaylovsky Pr, St. Petersburg, 198005

Phone 316-9003

2 The Administration of Vasileostrovsky District 55 Bolshoy Pr. V.O., St. Petersburg, of St. Petersburg 199178

321-3316

3 The Administration of Vyborgsky District of St. Petersburg 4 The Administration of Kalininsky District of St. Petersburg

86 Bolshoy Sampsonievky Pr., St. Petersburg, 194100 13/1 Arsenalnaya Emb., St. Petersburg, 195009

596-3557

5 The Administration of Kirovsky District of St. Petersburg 6 The Administration of Kolpinsky District of St. Petersburg 7 The Administration of Krasnogvardeysky District of St. Petersburg

18 Stachek Pr., St. Petersburg, 198095 1/4 Uritskogo St., St. Petersburg, 196655 50 Sredneohtinsky Pr., St. Petersburg, 195027

252-6183

542-3220

461-5888 576-8606

8 The Administration of Krasnoselsky District of 3 Partizana Germana St., St. PetersSt. Petersburg burg, 198329

576-1400

9 The Administration of Kronshtadsky District of 36 Lenina Pr., Kronshtadt, 197760, St. Petersburg

311-2000

10 The administration of Kurortny District of St. Petersburg

1 Svobody Sq., Sestroretsk, 197706

437-1454

11 The Administration of Moskovsky District of St Petersburg 12 The Administration of Nevsky District of St. Petersburg

129 Moskovsky Pr., St. Petersburg, 195084 163 Obuhovsloy Oborony Pr., St. Petersburg, 192131

576-8800 560-4792

3

The Law of St. Petersburg No. 411-68 of 25.07.2005 “On Territorial Structure of St. Petersburg”. In compliance with Article 13 of the Charter (as amended on 04.06.2007)of St. Petersburg, the Regulation of the Government of St. Petersburg No. 128 of December 23, 2003 “On Administrations of St. Petersburg Districts” (as amended on 22.05.2007). 4

6


13 The Administration of Petrogradsky District of 19 Bolshaya Monetnaya St., St. PeSt. Petersburg tersburg, 197101

232-8361

14 The Administration of Petrodvortsovy District 7 Kalininskaya St., St. Petersburg, of St. Petersburg 198510

450-7420

15 The Administration of Primorsky District of St. Petersburg 16 The Administration of Pavlovsky and Pushkinsky Districts of St. Petersburg

83 Savushkina St., St. Petersburg, 197110 24 Oktyabrsky Blvd., Pushkin, 196600

576-8282

17 The Administration of Frunzensky District of St. Petersburg 18 The Administration of Central District of St. Petersburg

46 Prazhskaya St., St. Petersburg, 192241 176 Nevsky Prospect, St. Petersburg, 191167

466-6302 576-8439 274-2441

In turn, each district of St. Petersburg has local self-government bodies. The governing is carried out directly by the people and/or through elected self-government bodies5. Local administration of municipal formation or minicipal councel is an executive-administrative body of minicipal formation which has all rights of a legal entity, powers granted by the charter of the municipal formation to resolve local issues, and powers to perform individual sate duties vested in municipal formations by federal and St. Petersburg laws. St. Petersburg has 111 municipal formations.

Addresses and Phones of St. Petersburg Municipal Formations No.

Municipal Formation

Address

Phone

Admiralteysky District 1 2

Kolomna Sennoy okrug

11 Kryukov Canal Emb., St. Petersburg 89 Fontanka Emb., St. Petersburg

714-0883 310-1696

3

Admiralteysky okrug

18 Dekabristov St., St. Petersburg

314-9660

4

No. 4

16 Serpukhovskaya St., St. Petersburg

316-2630

5 6

Izmaylovskoe No. 6

18 Egorova St., St. Petersburg 16 Narvsky Pr., St. Petersburg Vasileostrovsky District

316-5369 252-4003

1 8 9 10 11

No. 7 No. 8 Gavan Okrug Morskoy No. 11

7 V.O. 12 th line, St. Petersburg 45 V.O. 4 th line, St. Petersburg 29 Shevchenko St., St. Petersburg Saint-Petersburg, Morskaya emb, 9 35 (5) Korablestroiteley St., St. Petersburg Vyborgsky District

321-2046 328-5831 355-5419 356-6503 351-1915

12 13 14 15 16 17 18 19

Sampsonievskoe Svetlanovskoe Sosnovskoe No. 15 Parnas Shuvalovo-Ozerki Pargolovo Levashovo

86 B. Sampsonievsky Pr., St. Petersburg 35 (2) Morisa Toreza Pr., St. Petersburg 7 Esenina St., St. Petersburg 4 Rudneva St., St. Petersburg 131 (1) Engelsa Pr., St. Petersburg 5 Lunacharskogo Pr., St. Petersburg 17 Lomonosova Pr., Pargolovo 46 Zheleznodorozhnaya St., Levashovo Kalininsky District

596-3278 552-6438 511-6505 516-6377 599-1698 510-8195 513-8448 594-9624

20

Grazhdanka

41 Nauki Pr., St. Petersburg

535-3561

21 22 23

«Akademicheskoye» «Finlyandskiy District» No. 21

84 (1) Grazhdansky Pr., St. Petersburg 93 (A) Metallistov St., St. Petersburg 10 Luzhskaya St., St. Petersburg

555-2659 544-5841 532-3562

5

The Law of St. Petersburg No. 237-30 of 07.06.2005 (as amended on 04.06.2007) “On Local Self-Government in St. Petersburg”. 7


24 25 26

Piskarevka Severny Prometey

52 Piskarevsky Pr., St. Petersburg 80 (1) Lunacharskogo Pr., St. Petersburg 8 (1) Timurovskaya St., St. Petersburg Kirovsky District

298-3390 559-1679 558-6811

27 28 29

No. 25 Ulyanka Dachnoe

119(1) Leninsky Pr., St. Petersburg 9 Generala Simonyaka St., St. Petersburg 69 Veteranov Pr., St. Petersburg

377-2137 759-1515 752-9283

30 31 32 33

Avtovo Narvsky okrug Krasnenkaya rechka Morskie vorota

27 Krasnoputilovskaya St.., St. Petersburg 18 Oboronnaya St., St. Petersburg 20 Marshla Zhukova Pr., St. Petersburg 8A Kanonersky ostrov, St. Petersburg

784-9524 786-7766 757-9111 746-9045

Kolpinsky District 34 35 36 37 38

Kolpino Pontonny Ust-Izhora Petro-Slavyanka Saperny

1 Krasnaya St., Kolpino 10 Tovpenko St., Pontonny 219 Shlisselburgskoe shosse, Ist-Izhora 1 Truda St., Petro-Slavyanka 2 Dorozhnaya St.., Saperny

461-7202 462-4039 464-4481 462-1304 462-1631

39

Metallostroy

22 Tsentralnaya St., Metallostroy

464-9257

Krasnogvardeysky District 40

Polyustrovo

70 (3) Energetikov Pr., St. Petersburg

544-4543

41

No. 33

9 Tarasova St., St. Petersburg

224-1907

42 43

Malaya ohta Porohovye

25 (2) Novocherkassky Pr., St. Petersburg 27 (1) Kosygina Pr., St. Petersburg

528-4663 524-2903

44

Rzhevka

52 Kommuny St., St. Petersburg

527-6862

Krasnoselsky District 45 46

No. 37 No. 38

3 (2) Petergofskoe shosse, St. Petersburg 71 Leninsky Pr., St. Petersburg

745-7933 745-4766

47

Sosnovaya polyana

27 (2) Pogranichnika Garkavago St., St. Petersburg

744-8737

48

Uritsk

22 Partizana Germana St., St. Petersburg

735-8651

49 50

No. 41 No. 42

36 (1) Pogranichnika Garkavago St., St. Petersburg 46, Krasnoselskoe shosse, Gorelovo

730-0018 746-2565

51

Krasnoe Selo

85 Lenina Pr., Krasnoe Selo

749-4624

Kronshtadt 52

Kronshtadt

15 Surgina St., Kronshtadt Kurortny District

311-2176

53

Zelenogorsk

5 Ispolkomskata St., Zelenogorsk

433-8063

54

Sestroretsk

1 Svobody Square, Sestroretsk

437-1535

55 56

Beloostrov Komarovo

11-AVostochnaya St., Beloostrov 22 Tsvetochnaya St., Komarovo

434-0328 433-7283

57

Molodezhnoe

5 Pravdy St., Molodezhnoe

433-2596

58 59

Pesochny Repino

6 Sovetskaya St., Pesochny 443 Primorskoe shosse, Repino

596-8706 432-0111

60

Smolyachkovo

Smoljachkovo town, Primorskoe high-way, 678

433-2300

61 62

Solnechnoe Ushkovo

374 Primorskoe shosse, Solnechnoe 521 Primorskoe shosse, Zelenogorsk

434-2569 433-8218

63

Serovo

15 Lenina Pr., Zelenogorsk

433-6506

Moskovsky District 64 65

Moskovskaya zastava Gagarinskoe

7 Sveaborgskaya St., St. Petersburg 28 (4)Yu. Gagarina Pr., St. Petersburg

387-8878 379-9500

66

Novoizmaylovskoe

85 (1) Novoizmaylovsky Pr., St. Petersburg

370-4483

67

No. 47

8 Pobedy St., St. Petersburg

371-9257

68

Zvezdnoe

13 Altayskaya St., St. Petersburg Nevsky District

371-2872

69

Nevskaya zastava

19 Sedova St., St. Petersburg

365-1949

70

No. 50

26 Ivanovskaya St., St. Petersburg

560-3514

71

Obuhovsky

2, 2ntl Rabfacovsky Per., St. Petersburg

568-2945

72

Rybatskoe

16 Pribrezhnaya St., St. Petersburg

700-4873

73

No. 53

5-a Novoselov St., St. Petersburg

446-3912

8


74

No. 54

42 Dalnevostochny Pr., St. Petersburg

446-5940

75

Nevsky okrug

21(1) Kolontay St., St. Petersburg

589-2727

76

Okkervil

41 (1), lit. E, Kolontay St., St. Petersburg

588-2517

77

No. 57

11 (4) Latyshskih Strelkov St., St. Petersburg Petrogradsky District

584-4334

78

No. 58

4 Lisy Chaykinoy St., St. Petersburg

232-5152

79

Kronverkskoe

1/17 B. Monetnaya St., St. Petersburg

232-5525

80 81

No. 60 Aptekasky ostrov

4 Posadskaya St., St. Petersburg 5 Lva Tolstogo St., St. Petersburg

233-2824 234-9573

82

Petrovsky

16 Gatchinskaya St., St. Petersburg

232-9952

83

Chkalovskoe

20 B. Zelenina St., St. Petersburg Petrodvortsovy District

235-6736

84

Strelna

69 Sankt-Peterburgskoe shosse, Strelna

421-3988

85

Peterhoff

3 Samsonievskaya St., Peterhoff

450-5418

86

Lomonosov

40 Dvortsovy Pr., Lomonosov

422-5721

Primorsky District 87 88

Lahta-Olgino No. 65

2 Sovetskaya St., St. Petersburg 59 (1) Bogatyrsky Pr., St. Petersburg

498-3324 341-0382

89

No. 66

7 (lit. A) Sestroretskaya St., St. Petersburg

430-5830

90 91

Komendantsky aerodrom Ozero Dolgoe

7/5 Bogatyrsky Pr., St. Petersburg 31(1) Ispytateley Pr., St. Petersburg

394-6948 301-0502

92

Yuntolovo

5 (1) Shavrova St., St. Petersburg

307-2976

93

No. 70

7 Zemsky Per., St. Petersburg

304-0206

94

Lisy Nos

3/5 Holmistaya St., Lisy Nos Pushkinsky District

434-9029

95

Pavlovsk

11/16 Peschany Per., Pavlovsk

452-2013

96

Pushkin

24 Oktyabrsky Blvd, Pushkin

466-2401

97

Shushary

5 (lit. A) Shkolnaya St., Shushary

723-2540

98

Tyarlevo

1 Novaya St., Tyarlevo

466-7968

99

Aleksandrovskaya

33 Volhonskoe shosse, Aleksandrovskaya Frunzensky District

451-3618

100 No. 71 101 No. 72

22 Strelbischenskaya St., St. Petersburg 35 Prazhskaya St., St. Petersburg

766-0336 360-3922

102 Kupchino

19 (1) Budapeshtskaya St., St. Petersburg

774-4287

103 No. 74 104 No. 75

18 (1) Dimitrova St., St. Petersburg 34 Oleko Dundicha St., St. Petersburg

773-8794 778-8453

105 No. 76

32 (lit. B), Kupchiskaya St., St. Petersburg

778-8197

Central District 106

Dvortsovy okrug

14 Bolshaya Konyushennaya St., St. Petersburg

571-8623

107

No. 78

48 Gorohovaya St., St. Petersburg

310-8888

108 109

Liteyny okrug Smolninskoe

27 Furshtadskaya St., St. Petersburg 60 Suvorovsky Pr., St. Petersburg

579-8401 274-5406

110

Ligovka-Yamskaya

1/6 Telezhnaya St., St. Petersburg

717-8709

111

Vladimirsky okrug

12 Pravdy St., St. Petersburg

713-2788

1.2. St. Petersburg Controlling and Regulatory Bodies in Economy and Business Business activities in St. Petersburg shall be carried out in compliance with the federal and St. Petersburg laws. The compliance with the established rules and standards is controlled by the St. Petersburg state authorities. Regulatory duties are vested in special bodies which have powers to detect violations and impose penalties on organizations operating in St. Petersburg under the laws regulating corresponding activities.

9


Addresses and Phone Numbers of St. Petersburg Regulatory Bodies in Economy and Business Type of Control

Regulatory Bodies

Government Environmental Monitoring

Address

The Department of Federal Service on supervision in the sphere of wildlife management in the North-Western federal region (The Department of Rosprirodnadzor in the NWFR) The Administration of technological and ecological supervision Rostekhnadzor in St. Petersburg

Phone

24(1) Odoevskogo, St. Petersburg, 199155

351-8805

51, 10th line, VO, St. Petersburg, 199048

321-8988

Supervision over Labor Law Compliance Observation and control for execution of definitive requirements of Russian Federation legislation in the sphere of sanitary-epidemic population welfare security of customers rights and consumers market Licensing Requirements and Terms Supervision

The State Labor Inspection in St. Petersburg

28 Zoi Kosmodemianskoi St., St. Petersburg, 198095 Territory management of Federal service 19 Stremyannaya St., St. Petersburg, of surveillance in the sphere of consumers 191025 rights security and welfare of individual in Saint-Petersburg

Currency and Export Supervision

The Main Administration of the Central Bank 68, 70, 72-74 Fontanka Emb., St. of the RF in St. Petersburg Petersburg, 191038

320-3675

Control of following to custom legislation Tax Supervision

The North-West Customs Administration

20 Kutuzova Emb., St. Petersburg, 191187 The Administration of Federal taxation service 76 Fontanka Emb., St. Petersburg, of the Russian Federation in St. Petersburg 191180

273-1619

Antimonopoly Supervision

The Administration of the Federal Antimonopoly Service in St. Petersburg and Leningrad Region

314-7914

The Committee for Economic Development, Industrial Policy and Trade

16 Voznesensky Pr., St. Petersburg, 190000

7/9 Nevsky Pr., St. Petersburg, 191186

746-5986 712-2981 764-4974

315-5152 570-3371

740-4070

The Table below shows major duties of federal regulatory bodies and their territorial bodies in St. Petersburg. No. 1

Type of Federal Control Controlling Body Governme Federal Service for nt Supervision of Environme Nature Resources ntal Monitorin g

Legal Regulation The Provision "On the Federal Service for Supervision of Nature Resources" â„– Settled by the regulation of state government of Russian Federation from the 30.06.2004 â„– 400

Major Regulatory Duties 1. The control and supervision over protection, utilization and reproduction of objects of fauna and their inhabitance environment (except for objects of hunting and fishery), except for powers the realization of which is passed to the governmental bodies of the subjects of the Russian Federation. 2. The control and supervision over organization and functioning of especially protected territories of the federal value. 3. . Control (within the limits of its powers) over the compliance with the laws of the RF on air protection and waste treatment. 4. The state wood control and supervision over the wood fund protection and reproduction of forest areas on lands of especially protected natural territories of Federal value.

Local Regulatory Bodies in St Petersburg The Administration of the Federal Service for Supervision of Nature Resources (Rosprirod-nadzor) in St. Petersburg

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No.

1

2

3

4

Type of Federal Control Controlling Body

Legal Regulation

Major Regulatory Duties

Local Regulatory Bodies in St. Petersburg The Administration of the Federal Service for Supervision of Nature Resources (Rosprirod-nadzor) in St. Petersburg

Governme Federal Service for nt Supervision of Environme Nature Resources ntal Monitorin g

The Provision "On the Federal Service for Supervision of Nature Resources" Settled by the regulation of state government of Russian Federation from the 30.06.2004 № 400

1. The control and supervision over protection, utilization and reproduction of objects of fauna and their inhabitance environment (except for objects of hunting and fishery), except for powers the realization of which is passed to the governmental bodies of the subjects of the Russian Federation. 2. The control and supervision over organization and functioning of especially protected territories of the federal value. 3. The state wood control and supervision over the grounds of the wood fund over forest areas and forest parks specified in Item 2 Art. 83 of the Wood Code of the Russian Federation, and (or) in cases when the specified powers are withdrawn according to the stated order from the governmental bodies of the subjects of the Russian Federation. 4. The control and supervision over utilization and protection of water objects (the federal state control and supervision over utilization and protection of water objects). 5. The state ground control within the limits of its competence over the grounds of the water fund, the wood fund, the grounds of woods which are not included into the wood fund, and especially protected natural territories. 6. The state fire supervision in woods.

Federal Service for Environmental and Engineering Supervision

The Provision "On the Federal Service for Environmental, Engineering and Nuclear Supervision" Settled by the regulation of state government of Russian Federation from the 30.06.2004 № 401

1. Control over the compliance with the standards of the use of nuclear energy. 2. Control over the safety of works regarding the use of subsoil to ensure the compliance with the laws of the RF, standards (rules) approved in accordance with the established procedure regarding subsoil protection (within the limits of its powers), safety of works, and for the purpose of prevention and elimination of their adverse effect on people, environment, and buildings. 3. Control (within the limits of its powers) over the compliance with the laws of the RF on environment protection (state environmental monitoring). 4. Control (within the limits of its powers) over the compliance with the laws of the RF on air protection and waste treatment. 5. The control over observance within the limits of its competence of safety requirements in the electric power industry (the technical control and supervision in the electric power industry).

Supervisio n over Labor Law Compliance

Federal Labor and Employment Service. The Ministry of health protection and social development of the Russian Federation.

The Provision "On Federal Labor and Employment Service" of 30.06.2004 Settled by the regulation of state government of Russian Federation from the 30.06.2004 № 324

1. Control over the compliance with the labor laws and regulatory acts containing State Labor labor law standards. Inspection in St. 2. Control over the compliance with the established procedure of investigation and Petersburg reporting of industrial accidents. 3. Control over state employment security.

State Sanitary and Epidemiological Supervision

Federal Service for the Protection of Consumer Rights and Public Welfare

The Provision "On the Federal Service for the Protection of Consumer Rights and Public Welfare". (as amended on 14.12.2006), Settled by the regulation of state government of Russian Federation from the 30.06.2004 № 322

1. State sanitary and epidemiology supervision over the compliance with sanitary laws. 2. The sanitary and quarantine control over the check points on the state border of the Russian Federation 3. Organization of activity of State Sanitary and Epidemiological Service of RF 4. Supervision over the activity of legal entities, individual entrepreneurs and citizens on the compliance of Sanitary laws requirements

Territorial federal department providing surveys in the sphere of consumers rights security and individual welfare in Saint-Petersburg

Trade Supervision

Federal Service for the Protection of Consumer Rights and Public Welfare

The Provision "On the Federal Service for the Protection of Consumer Rights and Public Welfare" . Settled by the regulation of state government of Russian Federation from the 30.06.2004 №322

1. State supervision over the compliance with laws and regulatory acts of the RF on protection of consumer rights. 2. Supervision over the compliance with the standards for the sale of individual goods, works, services specified in the laws; 3. Examination under the established procedure if the activities of legal entities, individual entrepreneurs, and citizens comply with the laws of the RF on the protection of consumer rights and standards for the sale of individual goods.

The Administration of the Federal Service for the Protection of Consumer Rights and Public Welfare in St. Petersburg

The Administration for Environmental and Engineering Supervision (Rostechnadzor) in St. Petersburg

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5

Licensing Requirements and Terms Supervision

6

Currency and The Central Bank Export Supervision

Federal Bodies which have the right to license individuals types of activities

Federal Customs Service

7

Tax Control

8

Antimonopoly Federal Supervision Antimonopoly Service

The Federal Law Licensing of activities, which should be licensed by state executive The Committee for Eco«About Licensing of institutes of Russian Federation, excluding the kinds of activity that nomic Development, Certain Kinds of should be licensed by other state executive institutes of Saint-Petersburg Industrial Policy and Trade Activities» from the 08.08.2001 №128 FL The Federal Law «About the Central Bank of the Russian Federation (The Bank of Russia )» from 10.07.2002 № 86 FL

1. Organization and realization of currency regulation and currency The Main Administration control according to the legislation of the Russian Federation. of the Central Bank of the 2. Establishing of the accounting procedure with international RF in St. Petersburg organizations, foreign organizations, and also with legal and physical persons. 3. Establishing and publication of the official rates of foreign currencies per ruble.

Settled by the regulation of state government of Russian Federation from the 26.06.2006 № 459»

1. Providing observance of interdictions and restrictions concerning The North-West Customs goods transferred through the customs border of the Russian Federation established according to the legislation of the Russian Federation about the state regulation of the foreign trade activity and international contracts. 2. Providing unified application of the customs legislation of the Russian Federation by customs bodies. 3. Performance of customs registration and customs control. 4. Collection of the customs duties, taxes, antidumping, special and countervailing duties, preliminary antidumping, preliminary special and preliminary countervailing duties, custom charges, control of calculation correctness and payment timeliness of the specified duties, taxes and charges, application of measures over their compulsory collecting or return. 5. Realization within the limits of the competence of control over currency transactions of residents and the non-residents, connected with moving goods and vehicles through the customs border according to the currency legislation of the Russian Federation and to the normative legal certificates of the currency regulation bodies accepted according to it

Federal Tax Service The Provision on “On The Federal Tax Service” Settled by the regulation of state government of Russian Federation from the 30.09.2004 № 504

The Provision “On the Federal Antimonopoly Service” Settled by the regulation of state government of Russian Federation from the 30.06.2004 № 331»

1. The control over observance of the legislation on taxes and tax The Administration of collections, and also the normative legal certificates accepted according the Federal Tax Service to it, calculation correctness, completeness and timeliness of payment in St. Petersburg of taxes and tax collections, and in cases stated in the legislation of the Russian Federation the one over calculation correctness, completeness and timeliness of registering of other obligatory payments in the corresponding budget, control over currency transactions made by residents and non-residents who are not credit organizations. 2. Enforcement of the requirements to cash equipment, the procedure and terms of its registration and use. 3. Control that organizations and individual entrepreneurs fully recognize their revenues.

The control of compliance of antimonopoly legislation, legislation in the sphere of natural monopoly subjects, advertising legislation, and also the control of compliance of state orders Realizes the conclusion, merger and joining of commercial organizations, transactions with shares, companies property and assets of financial organizations in cases determined by antimonopoly legislation.

The Administration of the Federal Antimonopoly Service in St. Petersburg and Leningrad Region

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1.3. TAXATION The following taxes and fees are levied in the Russian Federation6: 1. Federal taxes and fees are imposed by the Tax Code of the RF and payable throughout the RF. 2. Regional taxes in St. Petersburg are imposed by the Tax Code of the RF and St. Petersburg laws on taxes and payable in St. Petersburg. Regional Taxes in St. Petersburg are enforced and invalidated in compliance with the Tax Code of the RF and St. Petersburg laws on taxes and dues. 3. Local Taxes in St. Petersburg are imposed by the Tax Code of the RF and St. Petersburg laws on taxes and payable in St. Petersburg. Local taxes are enforced and invalidated in compliance with the Tax Code of the RF and St. Petersburg laws. Special tax regimes are imposed by the Tax Code of the RF and can provide for the elimination of obligation to pay individual federal, regional and local taxes and dues. Introduction of such taxes, enforcement and application of special tax regimes is established by the Tax Code of the RF. With the introduction of taxes, taxpayers and the following elements of taxation shall be defined: taxable item, tax base, tax period, tax rate, the procedure of tax calculation, the procedure and terms of tax payment), and with the introduction of dues, it is necessary to define taxpayers and elements of taxation relative to particular fees. The laws of St. Petersburg according to the procedure and within the limits set by the Tax Code of the RF: - define only tax rates, the procedure and terms of payment upon the establishment of regional and local taxes in St. Petersburg. Other elements of taxation regarding regional and local taxes and taxpayers are defined by the Tax Code of the RF; - establish tax concessions, grounds for and procedure of their use7. Depending on the type of taxes and fees and set procedure of tax payment, certain percentage of taxes and fees is collected to the different budgets. Federal taxes are distributed between budgets of different levels in compliance with the procedure set by the federal Law on the Federal Budget for the next fiscal year for a term of at least three years provided possible increase in allocations to budgets of lower levels for the next fiscal year. Detailed information on federal, regional and local taxes and fees, taxpayers, tax concessions and elements of taxation for each type of taxes and fees and on special tax regimes (with amendments of tax legislation which come into effect since January 1, 2008) see in the table below8.

6

Part 1 of the Tax Code of the RF of July 31, 1998, No. 146-FZ as amended on 02.02.2006 (hereinafter the Tax Code of the RF). 7 For more detailed information on tax concessions see Table “Federal, Regional and Local Taxes and Fees in St. Petersburg” as of 01.01.2007 in this section and Table “Tax Concessions in St. Petersburg after 01.07.2006” in Section 1.6 “System of the Government Support of Entrepreneurship”. 8 For more detailed information on concepts used in the below – mentioned table see the Tax Code of the RF and lows of the RF, references on which in it are given. 13


Federal, Regional and Local Taxes and Fees in St. Petersburg as of 01.01.2008 FEDERAL TAXES AND FEES No

Tax

Taxpayers

Taxable Item

1 1

2 Value Added Tax

3 1.Organizations. 2.Individual enterprisers. 3.The persons considered to be the bearers of the value added tax because of transit of goods through the customs border of the Russian Federation, defined according to the Customs Code of the Russian Federation. The organizations and individual enterprisers applying the simplified taxation system and transferred to the payment of the unified tax to the made income and the unified agricultural tax, except for the VAT which is paid according to Art. 161 and 174.1 of the Taxation Code of the Russian Federation, are not considered to be the bearers of the value added tax.

4 Sale of goods (works, services) on the territory of the RF, including the sale of subjects of a pledge and transfer of goods (results of performed works, rendered services) under a compensation agreement or a novation, as well as the transfer of property rights. The transfer of goods (performance of works, provision of services) on the territory of the RF for own purposes in respect of which expenses are not accepted for offset (in particular, as depreciation deductions) when the tax on the profit of organizations is being calculated. Performance of construction works for own consumption. Import of goods to the customs territory of the RF.

Chapter 21 of the Tax Code of the RF

Tax Base/Tax Period/Terms of Payment 5 Tax Base - at realization of goods (works, services) is defined as the cost of these goods (works, services) including excises (for excised goods) and excluding the tax; Tax base is defined according to Art. 155 – 162 of the Taxation Code of the Russian Federation depending on peculiarities of realization of goods (works, services). - at transfer of goods (works, services) for personal needs, whose charges are not accepted to the deduction (including through depreciation charges), is defined as the cost of these goods (works, services) estimated basing on realization prices of identical (and at their absence - homogeneous) goods (similar works, services) of the previous tax period, and at their absence – basing on market prices including excises (for excised goods) and excluding the tax of the reorganized organization; - at import of the goods on the customs territory of the Russian Federation is defined as the sum of customs cost of goods, customs duties and excises (on excised goods). Tax Period - a calendar month (also for tax bearers acting as tax agents); - a quarter for tax bearers (tax agents) with monthly sums of proceeds from realization of goods (works, services) excluding the tax not exceeding two million roubles during a quarter Since 01/01/2008 a quarter is established as a tax period for all tax bearers. Terms of Payment The 20th day of the month following the reporting period at the latest.

Tax Rates 6 0% Preferential Rate applies to: - exported goods; - works (services) directly connected with the production and sale of ex-ported goods; works (services) directly connected with the transportation of goods through the customs territory of the RF in the regime of international customs tra nsit; - services regarding the carriage of passengers and luggage with departure and destination stations outside the RF and unified international shipping documentation; - the works (services), carried out (provided) directly in the space, and also the complex of preparatory on-the-ground works (services) technologically caused and indissolubly connected with the performance of works (providing services) directly in the space; - the precious metals by tax bearers carrying out their mining or manufacture from breakage and waste containing precious metals, to the State Fund of Precious Metals and Jewels of the Russian Federation, the funds of precious metals and jewels of the subjects of the Russian Federation and to the Central Bank of the Russian Federation; - sale of goods (rendering of services or jobs) for the official use by foreign diplomatic representatives and other representatives equal to them; fuels and lubricants necessary fro providing normal operation of aircrafts and sea cratfs, mixed river-seagoing ships, withdrawn in the regime of stored

14


transportation; - the woks (services) on transportation of goods from the territory of the Russian Federation, and on export of processed products from the customs territory of the Russian Federation carried out by Russian carriers by railroad transport; 10% Preferential Rate applies to: - food products as per list; - goods for children as per list; periodicals and educational, scientific and culture books as per approved list; - pharmaceuticals and medical goods in accordance with the codes of All-Russian Classifier of Products and foreign trade nomenclature of goods determined by the government of the Russian Federation. 18% rate is applied in cases which are not specified in Items 1, 2 and 4 Art. 164 of the Taxation Code. The tax-free operation are represented In Art. 164 of the Taxation Code. 2

Excise Taxes Chapter 22 of the Tax Code of the RF

1) Organizations; 2) Individual entrepreneurs 3) Persons recognized as taxpayers in connection with the movement of goods across the customs border of the RF specified in the Customs Code of the RF. 4) Organizations and other persons are recognized as taxpayers if they carry out any operations subject to taxation in accordance with the Chapter 22 of the Tax Code of the RF.

1) Sale on the territory of the RF of manufactured excisable goods, including the sale of subjects of pledge and transfer of excisable goods under a compensation or novation agreement. 2) Sale by persons confiscated and/or ownerless excisable goods on the basis of verdicts of courts and arbitrations or other authorized state bodies, excisable goods whose owners refused from them in favour of the state and that are subjected to transformation to state and/or municipal property. 3) Sale at the territory of Russia of excisable goods produced from goods made on commission to the owner of that goods

Tax Base Is determind separately to each type of excisable goods. 1. Tax base on realization (transfer recognized as subject to tax in accordance with the Chapter 22 of the Tax Code) of the excisable goods produced by the taxpayer depending on tax rates for abovementioned goods is determined as follows: - as the amount of sold (transferred) excisable goods in kind – for the excisable goods in relation to which fixed (specific) tax rates were established (in absolute amount per unit). - as the amount of sold (transferred) excisable goods, calculated on the basis of prices defined under the provisions of Article 40 of the Tax Code of the RF disregarding the excise tax, value-added tax, for which advalorem (in percents) tax rates are established. - as the amount of transferred excisable goods calculated on the basis of average selling prices effective during the previous tax

-

-

Fixed (specific ) tax rates Ad valorem tax rates (in percentage terms) mixed tax rate, consisting of the fixed and advalorem tax rates.

15


made on commission or to other persons including receiving the above excisable goods as payment for services of manufacturing excisable goods from the goods made on commission. 4) Transfer of excisable goods produced by an organization to other units within this organization’s structure for further manufacturing of nonexcisable goods except transfer of manufactured virgin petrol for further manufacturing of oil chemistry products in the structure of an organization having a license issued to an entity allowed to work with the virgin petrol and/or except transfer of manufactured denature ethanol for manufacturing nonalcohol products within the structure of an organization having a license issued to an entity allowed to work with the denature ethanol. 5) Passing by persons at the territory of Russia excisable goods manufactured by them for their own needs. 6) Passing by persons at the territory of the RF of excisable goods into the authorized capital stock of organizations, unit trusts of cooperatives and as fees in accordance with the partnership agreement (joint operation agreement). 7) Passing on the territory of the RF by an organization (economic association or partnership) excisable goods manufactured by it to one of its participants (or their successors or heirs) when the latter quits the organization (the economic association or partnership) and passing excisable goods produced within the framework of a partnership agreement (joint operation agreement) to its participant (or their

period, and if that is not applicable on the basis of market prices disregarding the excise tax and valueadded tax on excisable goods for which advalorem (in percents) tax rates are established. - as the amount of sold (transferred) excisable goods in kind for calculating excise when applying fixed (specific) tax rate and as a calculated cost of sold (transferred) excisable goods calculated on the basis of maximum retail prices for excise calculation when using advalorem (in percents) tax rate – for excisable goods in relation to which combined tax rates are applied consisting of a fixed (specific) and advalorem (in percents) tax rates. The calculated cost of tobacco products in relation to which combined tax rates are established are defined on the basis of Article 187.1 of the Tax Code. When selling confiscated and/or ownerless excisable goods and excisable goods the were rejected in favour of the state and are subjected to transformation to state and/or municipal property the tax rate is defined in accordance with paragraphs 1 and 2 of clause 2 of Article 187 of the Tax Code. Tax base on the acquisition (posting) of denature ethanol by the organization, having an operating license for production of alcoholnon-containing goods, is determined as amount of received denature ethanol in kind. Tax base on the acquisition of virgin petrol by the organization, having an operating license for reprocessing of virgin petrol, os determined as amount of received straight-run gasoline in kind. Tax Period Calendar month. Terms of Payment 1. Unless otherwise provided by Article 204 of the Tax Code, when the taxpayers transfer the excisable goods they have produced the excise tax is paid on the basis of actual selling (transfer) volumes of such goods for the expired tax period in equal portions not later than on the 25th day of the month following the reporting period and not later than on the 15th day of the second month following the reporting period. 2. The taxpayers having a license issued to an entity executing operations with virgin petrol and/or a license issued to an entity executing operations with denature ethanol pay the excise tax on virgin petrol and denature ethanol not later than on the 25th day of the third month following the reporting period.

16


successors or heirs) when portioning his share from the joint ownership property of the agreement participants or when dividing such property. 8) Passing produced excisable goods for further processing on commission. 9) Import of excisable goods to the territory of Russia. 10) Receiving (posting) denature ethanol by an organization having a license for manufacturing non-alcohol goods. 11) The reception of directly distilled gasoline by the organization which has the certificate for processing of directly distilled gasoline. The list of excised goods is in Art. 181 of the Taxation Code of the Russian Federation.

The taxpayers shall present to the tax bodies at the place of their residing and at the place where each independent branch of the company is located a tax statement for the tax period in relation to their activities acknowledged as the tax base in accordance with this Article not later than on the 25th day of the month following the expired reporting period unless otherwise provided by this paragraph and taxpayers having a license for executing operation with virgin petrol issued and/or executing operations with the denature ethanol shall do that not later than on the 25th day of the third month following the reporting period. Excise tax for the excised goods is payed at the place of goods production. The terms and order of paying the excise tax when importing the excisable goods to the territory of Russia are stated by the customs legislation of the Russian Federation.

Tax Concessions The taxpayer has the right to reduce the total excise tax amount on excisable goods (tax deductions). Tax deductions are set out in Article 200 of the Tax Code of the RF. Deductable are: amounts of excise tax presented by vendors and paid by the taxpayer when acquiring excisable goods or paid by the taxpayer when importing excisable goods to the customs territory of the RF which have been released for free circulation and used thereafter as raw material to produce excisable goods; The excise sums concerning the part of goods, irrevocably lost within the limits of norms of technological losses and (or) the norms of natural loss approved by the authorized federal enforcement authority for the corresponding group of goods. On the transfer of excisable goods manufactured from customer-owned raw materials in case these materials are the excised goods, those excise amounts are deductible, which are payed by the owner of the abovementined customerowned raw materials on the acquisition, or on the import of materiials to the customs territory of the Russian Federation. Released for free circulation, as well as excise amounts, payed by the owner of the abovementioned raw materials on its production. amounts of excise tax paid on the territory of the RF on ethyl alcohol produced from food raw material used in the production of wine materials and thereinafter used in the production of alcohol products; amounts of excise tax paid by the taxpayer when a buyer returns excisable goods (including return during warranty period) or rejects such, etc.; amounts of excise tax accrued on receiving (posting) denature ethanol by a taxpayer having a license for manufacturing nonalcohol products when using the ethanol for manufacturing those non-alcohol products; amount of excise tax on the excisable goods determined on accordance with the Chapter 22 of the Tax Code to the amount of excise tax calculated by the taxpayer from the amounts of advance and/or other payments received against the imminent supply of excisable goods. amounts of excise tax accrued by a taxpayer having a license for manufacturing denature ethanol when selling the denature ethanol to a taxpayer having a license for manufacturing non-alcohol products; amounts of excise accrued by a taxpayer having a license for manufacturing virgin petrol when selling the virgin petrol to a taxpayer having a license for refining the virgin petrol; amounts of excise tax accrued by a taxpayer having a license for manufacturing virgin petrol when executing with the virgin oil operations stated in paragraphs 7 and 12 of clause 1 of Article 182 of the Tax Code; amounts of excise tax accrued when receiving virgin petrol by a taxpayer having a license for refining the virgin petrol when the virgin petrol is used by the taxpayer itself to manufacture oil chemistry products and/or when passing the virgin petrol for manufacturing oil chemistry products on commission (o the basis of an agreement on rendering services on refining the virgin petrol belonging to this taxpayer). Tax-exempted transactions are specified in Articles 183 and 184 of the Tax Code of the RF.

4

Income Tax Article 23 of the Tax Code

1) Individuals who are tax residents of the RF (residing in the RF for not less than

For individuals who are tax residents of the RF tax is levied to income received

Tax Base Income in cash and in kind. Material benefit. The tax base is the income in

Flat income tax rate: 13%. Tax is levied at the rate of 3 5 % to: - any winnings and advertising

17


of the RF

183 days in a calendar year) 2) Individuals receiving income from sources in the RF and who are tax non-residents of the RF (residing in the RF for less than 183 days in a calendar year).

by taxpayers from sources in the RF and/or from sources outside the RF. For individuals who are not tax residents of the RF tax is levied to income received by taxpayers from sources in the RF. Non-taxable income or partially taxable income is specified in Article 217 of the Tax Code of the RF.

the form of material benefit. Tax Period Calendar year. Terms of Payment The day when the cash for the payment of income is actually received in a bank. The day when income in kind is transferred. Entrepreneurs pay the tax with three advance payments: for January—June — not later than July 15; for July-September — not later than October 15; for October—December — not later than January 15. The final payment of the tax for the current year under tax return shall be made not later than July 15 of the next year. On the terms of payment as related to tax agents at the latest on the day of factual receiving of money in the bank for the revenue payment , as well as not later than the day of revenue transfer from the tax agents’ accounts in the bank to the taxpayer’s account, or in his name to the accounts of the third parties in the banks. In other cases tax agents transfer amounts of calculated and withheld tax at the latest on the next day after the factual receiving of the revenue by the taxpayer – for revenues, payed in money terms, and on the next day after factual withdrawal of amount of the tax – for revenues, received by the taxpayer in kind or in the form of material benefit.

prizes exceeding 4,000 rubles; - 35% rate is applied to the percent interests on the deposits exceeding the sum calculated basing on the current refinancing rate of the Central Bank of the Russian Federation, or over 9% in a foreign currency. - to the amoubt of savings on the interest on thetaxpeyrs’ receiving of borrowings (loan funds) as related to surplus of the interest amount, calculated on the basis of three-foutrhs of the current refinance rate, determined by the Central Bank of the Russian Federation on the date of taxpayer’s factual receiving of revenue for the use of money in roubles (on the basis of 9% per annum on the currency assets) to the interest amount calculated on the basis of the contract terms. Material benefit is not subject to tax if the taxpayer is entitled to receive property-related tax deduction in connection with housing acquisition or building (paragraph 2, clause 1, Chapter 22 of the Tax Code of the RF) - 30% rate is applied to the income of physical persons not being tax residents of the Russian Federation, except for the income received in the form of dividends from individual share in the activity of Russian organizations, to which 15% rate is applied. - 9% rate is applied to: the income from individual share in the activity of organizations received by physical persons being tax residents of the Russian Federation in the form of dividends; - the income in the form of interests on the bonds with mortgage coverage emitted before 1 January 2007, and also the income of founders of confidential management of mortgage coverage received on the basis of purchase of mortgage

18


certificates of participation given out to managers of mortgage coverage before 1 January 2007. 5

Unified Social Tax Article 24 of the Tax Code of the RF

1) persons making payments to individuals: - organizations and individual entrepreneurs except for those who use simplified taxation system or pay the unified tax on imputed income an unified agricultural tax; - individuals who are not individual entrepreneurs; 3) individual entrepreneurs, lawyers, and private notaries. If the tax bearer belongs to several categories of tax bearers specified in Items 1 and 2 simultaneously, he estimates and pays the unified social tax on each basis.

For organizations and private entrepreneurs payments and remuneration accrued for the benefit of individuals under labor and civil law contracts for the performance of works, rendering of services (except for remuneration to persons listed in paragraph 2 of clause 1 of Article 235 of the Tax Code of the RF), and under copyright agreements. For physical persons not registered as private entrepreneurs – payments and other remunerations on the basis of labour or civil contracts the subjects of which are fulfilling jobs or rendering services paid to taxpayers and in favor of physical persons. The taxation objects dos not include payments made under civil contracts the subject of which is transfer of the property right or other interests in property as well as contracts connected with passing property (property rights) for use. For individual entrepreneurs, lawyers, private notaries the tax is levied to income from business or professional activities less expenses for their execution. Payments and remuneration (depending on the form in which they are made) are not taxable if: organizations-

Tax Base For organizations and private entrepreneurs making payments to individuals - amount of payments and remuneration (excluding nontaxable amounts) accrued by taxpayers (organizations and individual entrepreneurs) for the benefit of individuals over the tax period. For individuals who are not individual entrepreneurs the tax base is defines as the amount of payments and remuneration to individuals over the tax period. For individual entrepreneurs (lawyers, notary officers engaged in private practice) the tax base is defined as income from business and other professional activities less expenses for its production. Tax Period Calendar year. Reporting periods: 1st quarter, six or nine months. Terms of Payment The terms of payment: monthly advance payments are performed not later than the 15th day of the following month. Taxpayers – persons making payments to individuals – submit the Unified Social Tax Report to the Tax Authority not later than on March, 30 of the year next to the lapsed tax period. Individual entrepreneurs , lawyers, notary officers engaged in private practice submit the Unified Social Tax Report to the Tax Authority not later than on April, 30 of the year next to the lapsed tax period.

Rates: 1) income up to RUR 280,000 —26%; 2) income from RUR 280,001 to 600,000 — RUR 72,800 + 10% of the amount exceeding RUR 280,000; 3) over RUR 600,000 — RUR 104,800 + 2% of the amount exceeding RUR 600,000 except for employerstaxpayers (organizations and private entrepreneurs) having the status of residents of a technical and innovatory special economic zone and making payments to private persons working at the territory of the technical and innovatory special economic zone, manufacturers of agricultural products, organizations manufacturing people’s art crafts and tribal and family communities of the indigenous nations of the North occupied in traditional branches of economy as well as of organizations-taxpayers executing activities in the sphere of information technologies. Preferential rates: а) for agricultural manufactures, organizations engaged in folk arts, and family communities of small numbered peoples of the North pursuing traditional economic exceeding RUR 600,000. for private lawyers and notaries: — below RUR 280 000 — 8%; — from 280 001 to 600 000 — RUR 22 400 +3,6% of the amount exceeding RUR 280 000; over 600 000 рублей — 33 920 + 2% of the amount exceeding RUR 600 000. b) For organizations executing activities in the sphere of informational technologies except for taxpayers having the status of residents of the technical and innovatory special economic zone: - below RUR 75 000 – 26,0% - from 75 001 to 600 000 – RUR 19 500 +10% of the

19


taxpayers do not classify them as expenses reducing the corporate tax base in the current accounting (tax) period; for entrepreneurs or individuals such payments do not classified as expenses reducing income tax base for the current accounting (tax) period; for tax payers – private entrepreneurs, private notaries and lawyers or physical persons such payments do not reduce the income tax base in the current (accounting) period.

amount exceeding RUR 75 000. - over RUR 600 000 – RUR 72 000 + 2% of the amount exceeding RUR 600 000. B) for lawyers the tax is levied at the following rates: — up to RUR 280,000 — 8%; — from RUR 280,001 to 600,000 RUR 22,400 + 3.6% of the amount exceeding RUR 280,000; — over RUR 600,000 — RUR 33,920 + 2% of the amount exceeding RUR 600,000.

The payments to physical persons which are not liable to taxation are specified in Item 238 of the Taxation Code of the Russian Federation and include the following: - welfare payments established by the legislation of the Russian Federation, acts of subjects of the Russian Federation, decisions of authorized bodies of local self-management; - compensatory payments established by the legislation of the Russian Federation, acts of subjects of the Russian Federation, decisions of authorized bodies of local self-management;; - sums of lumpsum material aid provided by the tax bearer, and other charges according to the list. Payments on contracts of civil legislation character and on author's contracts are not liable to the uniform social tax (in the part regarding the Federal Social Service of the Russian Federation). The following taxpayers are exempt from the tax (Article 239 of the Tax Code of the RF): 1. organizations of any legal forms — on the amount of payments and remuneration not exceeding RUR 100,000 to each individual being a disabled person of Group I, II or III over the tax period; 2. the following taxpayers — on the amount of payments and remuneration not exceeding RUR 100,000 to each individual over the tax period: — not-for-profit organizations of disabled persons (including those established as unions of not-for-profit organizations of disabled persons) among which members disabled persons and their legal representatives constitute no less than 80 per cent, their regional and local branches; — organizations whose entire authorized capital consists of contributions of not-for-profit organizations of disabled persons and in which the average pay roll number of disabled persons constitutes no less than 50 % and the share of wages of disabled persons in the wage fund constitutes no less than 25%; — establishments created with the aim of achieving goals of educational, cultural, treatment and health improvement, physical culture and sports, scientific, information and other social purposes, and also for rendering legal and other help to the disabled, disabled children and their parents, the sole owners of whose assets are said not-for-profit of disabled persons. These tax benefits do not apply to taxpayers who produce and/or sell excisable goods, mineral raw materials, other mineral resources and other goods as per the list approved by the Government of the RF upon submission by all-Russian not-for-profit organizations of disabled persons; — individual entrepreneurs and lawyers who are disabled persons of Group I, II or III — on income from business and other professional activities in the amount not exceeding RUR 100,000 over the tax period. 6

Fees for the Use of the Objects of Fauna and Water Biological Resources Article 25.1 of the Tax Code of the RF

1) Organizations and individuals including individual entrepreneurs who use the objects of fauna except for the objects of water biological resources and receive in accordance with

1) Objects of fauna as per the list specified in Item 1 of Article 333.3 of the Tax Code of the RF which can be withdrawn from their habitat only on the basis of the license (permission) for

Tax Base Amount and name of the objects of fauna. Amount and name of the objects of water biological resources. Tax Period and Terms of Payment Fee for the use of the objects of fauna is paid by a taxpayer upon receipt of the license for the use of the objects of fauna. Fee for the use of the objects of

The tax rate depends on the object of fauna or water biological resources and is set in rubles per: — one animal depending on the name of the object of fauna; — one ton of particular object of water biological resources; — one mammal depending on the name of the object

20


the established procedure the license (permission) for the use of the objects of fauna in RF; 2) Organization and individuals including individual entrepreneurs who use the objects of water biological resources and receive in accordance with the established procedure the license (permission) for the use of the objects of water biological resources in inland waters, in territorial waters, on the continental shelf of the RF and in the exclusive economic zone of the RF as well as in the Sea of Azov, the Caspian Sea, the Barents Sea and in Spitsbergen.

the use of objects of fauna granted in compliance with the laws of the RF; 2) Objects of water biological resources as per the list specified in Items 4 and 5 of Article 333.3 of the Tax Code of the RF which can be withdrawn from their habitat only on the basis of the license (permission) for the use of objects of water biological resources granted in compliance with the laws of the RF.

Organizations and individuals who use water in a special way in compliance with the laws of the RF. Organizations and individuals are not considered to be taxpayers if they consume water basing on the water consumption contracts or basing on the decisions of right of water bodies use concluded or taken after coming into effect of the Water Code of the RF (after January, 1 2007)

1) Water intake from water objects; 2) Use of water objects (except for timber rafting purposes); 3) Use of water objects without water intake for water-power industry purposes; 4) Use of water objects for timber rafting purposes.

water biological resources is paid in the form of one-off and regular payments. One-off payment 10% of calculated fee upon receipt of license. The remaining amount is paid in equal installments within the effective period of the license (on monthly basis, not later than the 20th day of the month).

of water biological resources.

Non-taxable objects are specified in Item 2, Article 333.2 of the Tax Code of the RF. Tax Concessions When cubs (less than one year old) of wild hoofed animals are withdrawn the tax on the use of the objects of fauna is levied at a rate of 50% of the rate established by the laws. For Russian fishery enterprises promoting urban development included into the list approved by the Government of the RF, the tax on each object of water biological resources is levied at a rate of 15% of the rates established by the Tax Code. The tax is levied at zero rate for each object of fauna and water biological resources if such objects are used for the following purposes: — community health protection, elimination of the threat to human life, protection of agricultural and domestic animals from diseases, control of species composition of the objects of fauna, elimination of the damage to economy, fauna and habitats, and reproduction of the objects of fauna carried out in compliance with the permission issued by the authorized executive body; — study of stocks and industrial examination and for scientific purposes in compliance with the laws of the RF. 7

Water Tax Chapter 25.2 of the Tax Code of the RF

Non-taxable types of water use are specified in the Clause 2 Article 333.9 of the Tax Code of the RF.

Tax Base Tax base is determined as: volume of water taken from the water body; area of water space provided quantity of energy produced during the tax period product of wood volume in ths of square metres and flotage distance in km/100. For each type of water use subject to taxation under Article 333.9 of the Tax Code of the RF, the tax base is determined by a taxpayer for each water object separately. Tax Period Quarter Terms of Payment not later than the 20th day of the month following the last quarter

The tax rate depends on the type of water object and its use (in rubles per one thousand cubic meter of collected water; in 1000 rubles per year per 1 square km of used water space; in rubles per one thousand kWh of power; in rubles per 1 ths cubic metres of floatwood for each 100 km of flotage). Water tax rate on the collection of water from water bodies for water supply of population is fixed at the rate of 70 rubles per 1 ths cubic metres of water collected from the water body. If water intake exceeds limits of water use set for quarter (year) the tax rate for such excess is five times as much.

21


8

Stamp Duty Article 25.3 of the Tax Code of the RF

9

Mineral Resources Extraction Tax Article 26 of the Tax Code of the RF

1) organizations, and 2) individuals if they: — apply for the performance of legally significant acts specified in Article 25.3 of the Tax Code of the RF; — defend suits in the courts of general jurisdiction, courts of appeal, considered by justices of the peace. If a court does not decide in the favor of a plaintiff, they are released from the obligation to pay the stamp duty in compliance with the above mentioned article.

Taxable activities and items not determined.

Organiza-tions and individual entrepre-neurs recognised as users of subsoil under the law of the RF.

Mineral resources recovered from sub-soil on the territory of the RF; Mineral resources extracted from mining industry waste if such an extraction is subject to a licensing under the laws of the RF; Mineral resources extracted from sub-soil outside of the RF but on territories under the jurisdiction of the RF.

Tax Base and tax period are not determined. Terms of payment Stamp duty is payed before any legal actions. before submitting request, petition, claim, plaint, application (incl. appelate, cassation and supervisory appeals) while applying to Constitutional court of the RF; courts of general jurisdiction; courts of arbitration; to the Justice of Peace; Before takinf any notary actions; Before making out of documents (copies or dublucates of documents) – when applying to get those documents; Before submitting application for state registration and other legally significant actions; Before issuing apostille – when applying for its issuance; Besides other terms of stamp duty payment are fixed for: persons, appearing in court of general jurisdiction, court of arbitration or in cases reviewed by Justice of Peace, if they are recognized as stamp duty payers, pay stamp duty within ten days period starting from the day when judicial decision comes into effect. When applying for annual confirmation of ship registration in the Russian International Register of Vessels – at the latest on March, 31 of the year netx to the year when such confirmation was provided. Tax Base Tax base is determined separately for each type of mineral resources, defined in accordance with the Chapter 337 of the Tax Code of the RF. 1.Cost of extracted mineral resources (except for associated gas and combustible natural gas from all kinds of hydrocarbon raw material fields). The cost is determined in compliance with Article 340 of the Tax Code of the RF. 2. For associated gas and combustible natural gas from all kinds of hydrocarbon raw material fields the tax base in defined as the amount of extracted mineral resources in

The amount of the stamp duty depends on taxable item or the cost of a suit: — in percent; — fixed rate; — as percentage of the minimum wage; — multiple amount of the minimum wage.

1. 0% — in the case of losses of mineral resources, development of substandard mineral resources, accompanying mining, etc. (Column "Tax Concessions"). 2.Graded rates depending on the type of extracted mineral resources (from 3.8% on potassium salts to 17.5% on gas condensate) (Item 2, Article 342 of the Tax Code of the RF). 419 rubles per 1 tonne of extracted oil, dehydrated, desalinized and stabilized. Thereby given tax rate is multiplied by index, characterizing degree of depletion of concrete subsoil plot (Kv),

22


Non-taxable mineral resources specified in Article 336 of the Tax Code of the RF.

kind. The amount is determined in compliance with Article 339 of the Tax Code of the RF. Tax Period Calendar month. Terms of Payment The amount of the tax payable based on the results of the tax period shall be paid not later than the 25th day of the month following the lapsed tax period.

determined in accordance with paragraphs 3 and 4 of the Chapter 342 of the Tax Code of the RF. 3. Taxpayers who carried out exploration and prospecting of mineral deposits or completely reimbursed all State expenditures on the exploration and prospecting of correspondent quantity of such mineral resources and who are in accordance with federal laws as of July,1 2001 exempt of contributions for the replacement of the raw material base for the development of those deposits, pay the tax for mineral resources extracted on the corresponding license area with index 0,7.

The tax is levied at zero rate on: 1. Mineral resources as much as rated mineral resource loss is concerned; 2. Associated gas; 3. Underground waters containing mineral resources (industrial waters) the extraction of which is connected with the mining of other types of mineral resources and which are recovered in the course of mineral deposit mining and in the case of construction and operation of underground structures; 4. Mineral resources in the case of mining of substandard (remaining low-quality) mineral deposits or mineral deposits written off earlier (except for the cases of a deterioration in the quality of a mineral deposit as the result of a selective mining); 5. The mineral resources remaining in overburdens, diluting (impoverishing) rock, processing facility dumps or waste in connection with the lack of technology of their extraction in the RF and also mineral resources mined from overburdens and diluting (impoverishing) rock, mining facility waste and mining-related facility waste (in particular, resulting from oil slurry processing) within the standards of the content of mineral resources in the said rock and waste set in compliance with the procedure approved by the Government of the RF; 6. Mineral waters used by a taxpayer exclusively for medical treatment and health rehabilitation purposes without a direct sale thereof (including after their treatment, preparation, processing and bottling into containers); 7.Underground waters used by a taxpayer exclusively for agricultural purposes, including in irrigation of agricultural land, water supply to animal farms, animal facilities, poultry farms, fruit and vegetable gardening and animal-breeding associations of citizens. 8. Oil on sites of the bowels located in full or in part in borders republic Sakhas (Yakutia), Irkutsk area, Krasnoyarsk region before achievement of the saved up volume of an oil recovery 25 million tons on a site of bowels and provided that term of development of stocks of a site of bowels does not exceed 10 years or is equal to 10 years for the license for the right of use bowels for the purpose of investigation and extraction of minerals also does not exceed 15 years or it is equal to 15 years for the license for the right of use of bowels simultaneously for geological studying (search, investigation) and extractions of minerals from the date of the state registration of the corresponding license for using bowels, at use of a direct method of the account of quantity of the extracted oil on concrete sites of bowels. 9. The superviscous oil extracted from sites of bowels, containing oil viscosity more than 200 mPa Ń… c (in bedded conditions), at use of a direct method of the account of quantity of the extracted oil on concrete sites of bowel.

REGIONAL TAXES OF ST. PETERSBURG No.

Tax

Taxpayers

Taxable Item

Tax Base/Tax Period/Terms of Payment

Rates

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1

Corporate Property Tax Article 30 of the Tax Code of the RF The Law of St. Petersburg No. 684-96 of 26.11.2003

1) Russian organizations . 2) Foreign organizations operating in the RF through their permanent representations and/or owning real estate in the RF, on the continental shelf of the RF, and in exclusive economic zone of the RF.

1) For Russian Tax Base organizations: Average annual cost of taxable property. Property is as— real and personal sessed at depreciated cost. For the property of foreign estate reported in the organizations the tax Base is defined as inventory cost of balance sheet as fixed the property according to the data of the technical assets under the inventory bodies. established accounting Tax period procedures. Calendar year. 2) For foreign Reporting period organizations operating The first quarter, six and nine month of calendar year. through their permanent Terms of Payment representations: Advance tax payments are performed not later than — real and personal the 30th day of the month following the expired estate classified as fixed accounted period. assets; Tax declarations are submitted not later than 30 March 3) For foreign of the year following the expired accounted period. organizations not operating through permanent repre Tax Concessions

2.2%. Rate is established by the law of St. Petersburg within the limits of federal restrictions (2.2%).

Under the Law of St. Petersburg No. 684-96 of 26.11.2003 the following organizations are tax-exempt: 1) organizations whose major activity is production of special equipment rehabilitation facilities for disabled persons; 2) St. Petersburg state authorities and public institutions established by them and operating on account of the budget of St. Petersburg; 3) building societies, householders societies in the case of buildings and common property of apartment house and property used for the maintenance of apartment house; 4) religious organizations in the case of buildings and other property designed for services, religious meetings, religious worships (pilgrimage), property of monasteries, datsans, metochions; 5) organizations in the case of property owned by St. Petersburg and de and drainage: public utilities, machinery, equipment and cars for public utilities; 6)gardening and country not-for-profit associations of citizens in the case property used for social and economic activities of gardening; 7) organizations in the case of the objects of housing stock and engineering infrastructure of housing and utilities system financed from the budget of St. Petersburg and/or local budgets; 8) organizations in the case of social and culture objects used for the needs of culture and art, education, physical culture and sport, health and social welfare; 9) scientific organizations of the Russian Academy of Science, Russian Academy of Medical Sciences, Russian Academy of Agricultural Sciences, Russian Academy of Education, Russian Academy of Architecture and Construction Sciences, Russian Academy of Arts in the case of the property used for the purposes of research and development; 10) state institutions conducting wrecking under the Federal Law "On Wrecking and Status of Rescue Workers" in the case of wrecking facilities,. Under federal laws the following organizations are tax-exempt: 1) criminal enforcement organizations and agencies in the case of the property used by these organizations to perform their duties; signed for water supply; 2) religious organizations in the case of property used for religious activities; 3) all-Russian not-for-profit organizations of disabled persons among which members disabled persons and their legal representatives constitute no less of than 80 per cent in the case of property used by them to fulfill their duties as per the list specified in Article of 381 of the Tax Code of the RF.

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2

Gambling Tax Article 29 of the Tax Code of the RF The law of St. Petersburg No. 623-94 of 11.11.2003 as Amended

1) Organizations or 2) Individual entrepreneurs engaged in gambling business.

Gambling tables; slot machines; cash registers of totalizators; cash registers of bookmakers. Each taxation object shall be registered at the tax authority at the location of the taxation object not later than two days before the date of installing each taxation object.

Tax Base The amount of gambling tables, slot machines and cash registers. Tax Period Calendar month. Terms of Payment Not later than the 20th day of the month following the lapsed tax period.

The tax rates shall be established by the authorities of the subjects of the RF within the limits set by federal laws: 1) per one gambling table: from RUR 25,000 to 125,000; 2) per one slot machine: from RUR 1,500 to 7,500; 3) per one cash register of totalizator or bookmakers': from RUR 25,000 to 125,000. When tax rates are not established by the laws of the subjects of the RF the rates set by federal laws are applied: 1) per one gambling table: RUR 25,000; 2) per one slot machine: RUR 1,500; 3) per one cash register of totalizator or bookmakers': RUR 25,000. Since 01.01.2005 in St. Petersburg the following rates are applied: 1) per one gambling table: RUR 125,000; 2) per one slot machine: RUR 7,500; 3) per one cash register of totalizator: RUR 125,000; 4) per one cash register of bookmakers': RUR 125,000.

The laws of the subjects of the RF can provide for tax concessions and grounds for their use by taxpayers. St. Petersburg does not have such laws

25


3

Transport Tax Article 28 of the Tax Codeof the RF The law of St. Petersburg No. 53 of 04.11.2002 as amended

Persons who are registered as owners of transport vehicles recognized as taxable items in compliance with the laws of the RF.

Cars, motorcycles, motor scooters, buses and other self-propelled machines and mechanisms on pneumatic and caterpillar bases, planes, helicopters, steam-ships, yachts, sailing vessels, boats, snowmobiles, snowmobile, motor sleighs, motor boats, hydrocycles, not self-propelled (towed) vessels and other water and air vehicles registered in the stated order according to the legislation of the Russian Federation. Non-taxable transport vehicles are specified in Article 358 of the Tax Code of the RF.

Tax Base 1. For the transport vehicles with engines (except for those specified in Item 1.1) the tax base is defined as engine power in horse powers; 1.1. For air transport vehicles for which the thrust of jet engine is determined the tax base is defined as name-plate static thrust of jet engine of the aircraft (total nameplate static thrust of all jet engines) at the take-off mode in earth conditions kilograms of force; 2. For water non-selfpropelled (tows) transport vehicles for which gross tonnage is determines the tax base is defined as gross tonnage in register tons; 3. For water and air transport vehicles not mentioned in Items 1, 1.1 and 2 the tax base is defined as transport vehicle unit. Tax Period Calendar year. Reporting Period Six months. Terms of Payment For organizations: - advance tax payments are performed not later than the last day of the month following the expired accounted period. - the tax liable to payment after the tax period is paid not later than the term established for submission

Tax rates are established by laws of the subjects of the Russian Federation accordingly depending on capacity of the engine, draft of the jet engine or gross tonnage of vehicles, the category of vehicles basing on one horsepower of capacity of the engine of the vehicle, one kg of draft force of the jet engine, one register ton of the vehicle or the vehicle unit. Tax rates depending on the objects of taxation are specified in Art. 361 of the Taxation Code of the Russian Federation. Tax rates may be increased (reduced) by laws of the subjects of the Russian Federation, but no more than five times. The establishment of differentiated tax rates concerning each category of vehicles, and also the term of useful utilization of the vehicles is accepted. The tax rates on the territory of St. Petersburg established since 1 January 2008 are specified in the Law of St. Petersburg No. 487-53 of 04/11/2002.

Under the law of St. Petersburg No. 487-53 of 04.11.2002 in the edition of the Law of St.Petersburg of 26.09.2007 No. 416-81, the following groups of residents of St. Petersburg are tax-exsempt: 1)Persons having the title of the Hero of the Soviet Union, Hero of the RF, Hero of Socialist Labour, Full Cavalier of the Order of Glory, Full Cavalier of the Order of Labour Glory, veterans of the Great Patriotic War, veterans of the warfare on the territory of the USSR, territory of the Russian Federation and other states, disabled persons of Groups I and II with systemic disease, disabled people having limited ability of labor activity of groups 2 and 3, citizens exposed due to the Chernobyl power-station disaster, citizens having directly participated in divisions of substandard risk in nuclear and thermonuclear testings, nuclear plant accident elimination on the military facilities, citizens of the RF having been subject to radiative effect after nuclear testings on the Semipalatinsk test site, subject to radiative effect after the accident in 1957 on the industrial association “Mayak” and radioactive waste discharge in the river Techa. 2) Citizens in reference to one registered passenger car of home-manufacture (USSR) with the capacity up to 80 horsepowers incl. year of manufacture and up to the year 1990. 3) Pensioners registered on the place of their residence in St. Petersburg pay 70% of the established rate of the tax on the vehicle registered on them, provided that the vehicle is a passenger car of domestic production (the Russian Federation, the USSR before 1991) with the capacity of the engine up to 100 horsepowers inclusively (excluding passenger cars mentionned in paragraph 2), a boat, a motor boat or other water vehicle (except for yachts and other sailing motor ships and hydrocycles) with the capacity of the engine up to 30 horsepowers inclusively. The specified privilege is provided on one vehicle. 4) Tax-exempt are also organizations – residents of a special economical area on the territory of the RF for the period of 5 years from the moment of registration ofvehicle in the manner prescribed by the law, excluding seacrafts and aircrafts.

26


LOCAL TAXES IN ST. PETERSBURG No.

Tax

1

Land Tax Article 31 of the Tax Code of the RF

Taxpayers

Taxable Item

Organizations Land plots located in municipal and units (in the federal cities of individuals Moscow and St. Petersburg) owning land which levy this tax. plots by the Non-taxable items: right of prop- 1) land plots excluded from Low of St. erty, unlimited commerce under the laws of the Pet. of use, or RF; 28.11.200 lifetime 2) land plots limited in 5 № 611- ownership commerce under the laws of the 86 with RF occupied by the important hereditary objects of cultural heritage of the succession. peoples of the RF, objects Organizations included into the World and Heritage List, historical and individuals cultural national parks, objects using land of archeological heritage; plots by the 3) land plots limited in right of commerce under the laws of the gratuitous lim- RF used for military defense, ited use or security and customs needs; under lease 4) ground sites in the structure of contract are the wood fund grounds; not consid- 5) ground sites with the turn ered to berestricted according to the egislation of the Russian taxpayers. Federation, occupied by water objects of the state ownership in he structure of the water fund.

Tax Base/ Tax Period /Terms of Payment Tax Base Cadastral cost of land plots determines in compliance with the laws of the RF. For particular groups of citizens the tax base can be reduced (Article 391 of the Tax Code of the RF). Tax Period Calendar year. Reporting Period The first quarter, six and nine months of calendar year. Terms of payment Taxpayers – organizations and individual entrepreneurs pay advance payments on the tax not later than last day on the month next to the lapsed reporting period. Tax that must be payed upon expiration of reporting period is payed not later than February, 1 of the year next to the lapsed reporting period. Taxpayers who are nor involved inro entrepreneurship pay tax on the basis of tax demand not later thanon April, 1 of the year next to the lapsed reporting period.

Rates The tax rates shall be established by the legal acts of municipal authorities (laws of the federal cities of Moscow and St. Petersburg) and shall not exceed: 1) 0.3% for the following land plots: — considered as agricultural lands or lands in the agricultural zones of settlements used for agricultural production; — occupied by housing stock and the objects of housing and utilities sector (except for limited interest in land plot regarding the object which does not belong to housing stock and objects of housing and utilities sector) or designed for housing construction; — designed for personal auxiliary plot, gardening, or animal breeding; 2)1.5 % for other land plots. The Law of St. Petersburg of 28/11/2005 No. 611-86 establishes the following tax rates on the territory of St. Petersburg since 1 January 2006: 1) 0.004 percent of the cadastral cost of the site concerning the ground sites included in the grounds in the structure of agricultural zones of settlements and used for agricultural production; 2) 0.042 percent of the cadastral cost of the site concerning the following ground sites: - occupied by objects of the housing fund and engineering infrastructure of the housing municipal complex (except for the share in the right to the ground site which falls on the object which does not belong to the housing fund and engineering infrastructure of the housing municipal complex), garages or provided for housing construction; - provided for personal subsidiary and country facilities, gardening, truck farming or cattle breeding. 3) 1.5 percent of the cadastral cost of the site concerning the other ground sites.

27


The laws provides tax exemption for: 1) Criminal enforcement agencies of the Ministry of Justice of the RF in the case of land plots designed for them to fulfill their duties. 2) Organizations in the case of land plots occupied by motor roads in general use. 3) Religious organizations in the case of land plots owned by them which are occupied by religious and charity buildings. 4) All-Russian not-for-profit organizations of disabled persons (including those established as unions of not-for-profit organizations of disabled persons) among which members disabled persons and their legal representatives constitute no less than 80 per cent in the case of the land plots used by them to fulfill their duties: — organizations with authorized capital consisting of contributions of not-for-profit organizations of disabled persons if the average payroll number of disabled persons constitutes no less than 50 % and the share of wages of disabled persons in the wage fund constitutes no less than 25% in the case of land plots used by them for production and/or sale of goods (except for excisable goods, mineral raw materials and other mineral resources as well as other goods as per the list approved by the Government of the RF as agreed with all-Russian public organizations of disabled persons), works and services (except for brokerage and other intermediary services); — establishments which property is owned only by the above all-Russian public organizations of disabled persons in the case of land plots used for educational, cultural, treatment and health improvement, physical culture and sports, scientific, information and other social purposes, rehabilitation of disabled persons and rendering of legal and other aid to disabled persons, disabled children and their parents. 5) Organizations engaged in folk arts in the case of land plots located in traditional folk arts places and used for the production and sale of the objects of folk arts. 6)Individuals who belong to small numbered peoples of the North, Siberia and the Far East of the RF and family communities of such peoples in the ase of land plots used for the preservation and development of their traditional living, arts and crafts. 7) Organizations-residents of the special economic zone get land tax concession for the period of 5 years from the date of registering the property right for the plot of land provided to the resident of the special economic zone. Extra tax concessions in St. Petersburg (the Law of St. Petersburg No.236-35 of 09.04.2001): —the following groups of citizens are exempt from the land tax on the land plots located in St. Petersburg within the limits of the amount disposable by St. Petersburg: 1) persons awarded the Medal “For the Defense of Leningrad”; 2) persons awarded the badge “To the Resident of the Leningrad under Siege”. 2

Individual Individuals who Property own property. If the property tax that presents the The Law taxation object is of the RF co-owned by No. 2003- several physical 1 of persons – 09.12.199 taxpayers, each 1 as of these physical amended. persons is acknowledged as The Law a taxpayer in of St. accordance with Petersburg his/her share in No. 625- that property. 93 of 11.11.2003 In the edition of the Law of St.Petersbu rg No. 58478 of 24.11.2004 and the Law of St.Petersbu rg No. 18234 of 08.05.2007

Houses, apartments, dachas, garages and other buildings and premises.

Tax Base Total inventory cost of property Total sum of inventory costs for buildings, rooms and plants recognized as subject to taxation and situated on the territory of representative body of local administration. Terms of Payment In two equal installments (not later than September 15 and November 15).

The rates are established by municipal authorities of St.Petersburg within the limits set by the law of St.Petersburg: Up to 0.1% (the cost of property does not exceed RUR 300,000); From 0.1% to 0.3 % (the cost of property is from RUR 300,000 to 500,000; From 0.3% to 2% (the cost of property exceeds RUR 500,000). Municipal authorities has the right to establish graded rates depending on total inventory cost, type of use and other criteria within set limits. Since 01.01.2005 the following rates are established in St. Petersburg: 1. For houses, apartments, dachas and other residential buildings and premises the following tax rates are established: 1) 0.1% (total inventory cost of less than RUR 300,000); 2) 0.2% (total inventory cost of RUR 300,000-500,000); 3) 0.3% (total inventory cost of over RUR 500,000). 2. For garages and other non-residential buildings and premises the following tax rates are established: 1) 0.1% (total inventory cost of less than RUR 300,000); 2) 0.3% (total inventory cost of RUR 300,000-500,000); 3) 2% (total inventory cost of over RUR

Tax Concessions Municipal authorities have the right to establish tax concessions and grounds for their use by taxpayers. The Federal Law "On Individual Property Tax" (Article 4) exempts from the tax the following persons: holders of the Title of the Hero of the Soviet Union (the RF), disabled persons of Group I and II, disabled persons from birth, participants of the Great Patriotic War, military depandents who have lost their parent or spouse, etc.

28


SPECIAL TAX REGIMES No.

Tax

1 1

2

Taxpayers

3 Organizations and individual Unified who have Agricul- entrepreneurs tural Tax deliberately switched to the Unified Agricultural Tax Article 26.1 of the Tax Code of the RF

Terms for Application/Taxable Item 4 Terms for Application: Agricultural producers have the right to transfer to the tax if, based on the results of twelve months preceding the date when an organization or individual entrepreneur applies for the transition to the tax, the portion of the profit from the sale of agricultural products manufactured by them and/or fish raised by them including primary processing products produced by them from their own raw materials and/or fish raised by them in aggregate profit from the sale of products (works, services) of such organizations or individual entrepreneur makes up at least 70%. The following organizations do not have the right to switch to the tax: 1) Organizations and private entrepreneurs having subsidiaries and/or representative offices. 2) Organizations and private entrepreneurs producing excisable goods. 3) Organizations and individual entrepreneurs executing activities in the sphere of gambling business. 4) Budget organizations. Transition to the Tax provides: The transfer to the payment of the unified agricultural tax: 1) For the organizations provides abolition of the duty to pay the tax on the income of organizations, the tax to the property of organizations and the unified social tax. The organizations being tax bearers of the unified agricultural tax are not considered to be the tax bearers of the value added tax (except for the value added tax charged according to the Taxation Code at importing of goods on the customs territory of the Russian Federation, and also for the value added tax charged according to Art. 174.1 of the Taxation Code). 2) For individual enterprisers provides abolition of the duty to pay the tax on the income of physical persons (concerning the income received from the enterprise activity), the tax to the property of physical persons (concerning the property used for performing the enterprise activity) and the unified social tax (concerning the income received from the enterprise activity, and also the payments and other compensations performed to physical persons by them). The individual enterprisers being tax bearers of the unified agricultural tax are not considered to be the tax bearers of the value added tax (except for the value added tax charged according to the Taxation Code at importing of goods on the customs territory of the Russian Federation, and also for the value added tax charged according to Art. 174.1 of the Taxation Code). Other taxes are payed by organizations and individual entrepreneurs transferring to the unified agricultural tax in accordance with other modes of taxation. Object of taxation: revenues, reduced by the amount of costs.

Tax Base Tax Period Terms of 5

Rates

Tax Base Income reduced by expenses. Tax Period Calendar year Reporting Period Six months. Terms of Payment Advance payments – within 25 calendar days after the end of the reporting period, as a result of tax period not later than March, 31 next to the lapsed tax period.

6 Rate 6%

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2

Simplified Organizations and individual Taxation entrepreneurs who have switched to the simplified taxation system. System The following organizations Article 26.2 are not entitled to switch to of the Tax the simplified taxation system Code of the (as in force since 01.01.2006): RF — organizations which have branches and/or representations; banks; insurers; non-governmental pension funds; investment funds; professional players on stock market; pawn offices; organizations and individual entrepreneurs which manufacture excisable goods, extract and sell mineral resources (except widespread mineral resources); organizations and individual entrepreneurs engaged in gambling industry; private notary publics, lawyers who have established law firms; organizations which participate in production sharing agreement; organizations and individual entrepreneurs which have switched to the unified agricultural tax; organizations with participating interest of other organizations of more than 25% (except for organizations with authorized capital consisting of contributions of not-for-profit organizations of disabled persons, if the average payroll number of disabled persons constitutes no less than 50 % and the share of wages of disabled persons in the wage fund constitutes no less than 25%; not-for-profit organizations including consumer cooperation organizations operating in compliance with the Law of the RF No. 3085-I of June 19, 1992 "On consumer cooperation (consumer societies, their unions) in the RF"; and economic societies established by consumer societies and their unions and operating in compliance with the above law); - organizations and individual entrepreneurs with the average number of employees for the tax (reporting) period defined in compliance with the procedure set by federal executive body authorized in statistics exceeds 100; organizations with depreciated cost of fixed assets and intangible assets defined in compliance with the accounting laws of the RF exceeds RUR 100,000,00. Capital assets and intangible assets subject to amortization and recognized as amortizable assets in

Terms of Application The organization has the right to transfer to the simplified taxation system if according to the results of nine months of the year when the organization submits the application for transfer to the simplified taxation system the income evaluated according to Art. 248 of the Taxation Code of the Russian Federation has not exceeded 15 million roubles. The specified maximum size of income of the organization, limiting the right of the organization to transfer to the simplified taxation system is to be indexed regarding the deflating coefficient annually established for each next calendar year and considering the changes in consumer prices of goods (works, services) in the Russian Federation during the previous calendar year, and also regarding the deflating coefficients applied earlier. The deflating coefficient for 2008 is 1.34 (The Order of Mineconomrazvitiye of the Russian Federation of 03/11/2006 No. 360). The order and conditions of the beginning and the termination of the application of the simplified taxation system are the following: Organizations and individual enterprisers expressing the desire to transfer to the simplified taxation system submit the application to the taxation body of the place of their location (residence) during the period 1 October – 30 November of the year previous to the year since which the tax bearers transfer to the simplified taxation system. In the letter to the Federal Tax Service of Russia of 22.06.2006 No. 02-6-10/34 as an answer to the request of Administration of Federal Tax Service of Russia in St.Petersburg of 12.04.2006 it is stated that taxpayers are entitled to provide application about the transfer to the simplified taxation together with the documents for registration of newly grounded organization or new individual entrepreneur. Moreover, the organizations in their application for transfer to the simplified taxation system indicate the size of income during nine months of the current year, and also the average number of employees during the indicated period and the residual cost of the basic means and non-material actives according to the state on 1 October of the current year. A newly created organization and a newly registered individual enterpriser have the right to submit the application for the transfer to the simplified taxation system within a five-day term since the date of registration in the taxation body, indicated in the certificate of registration in the taxation body. In this case the organization and the individual businessman have the right to apply the simplified taxation system since the date of their registration in the taxation body, indicated in the certificate of registration in the taxation body. The amount of maximum of taxpayers revenue limiting his right for simplified taxation is subject to indexation in the order specified in the paragraph 2 Chapter 346.12 of the Tax Code of the RF. Organizations and individual enterprisers which according to statutory acts of authorized bodies of municipal areas and city districts, laws of the cities of federal value of Moscow and St. Petersburg about the taxation the form of the unified tax on the made income by the end of the current year stopped to be tax bearers of the unified tax on the made income, have the right to transfer to the simplified taxation system since the

Tax Base Rates: 1. Money income; 6% if 2. Money incometaxable item reduced by is income. expenses. 15% if Tax Periodtaxable item Calendar year. is income reduced by Reporting expenses. Period The first quarter, six and nine months of a calendar year. Terms of Payment Tax and advance payments are made at the location of organization (place of residence of individual entrepreneur). Tax payable at the end of tax period is payed not later than the date determined for submition of the tax declaration for the correspondant tax period: taxpayersorganization s pay not later than March, 31 of the year next to the lapsed tax period; taxpayersindividual entrepreneur s – not later than April, 30 of the year next to the lapsed tax peroid. Advance payments are payed by the taxpayers not later than the date determined for the tax declaration submission for the corresponding tax period – 25 calendar days from the last day of the reporting

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accordance with the Chapter beginning of the month of termination of their duty to 25 of the Tax Code. pay the unified tax on the made income according to their application. state-financed Tax bearers applying the simplified taxation organizations; system do not have the right to transfer to another organizations and taxation order before the termination of the tax individual entrepreneurs period, if another is not stated in Art. 346.13 of the being transferred under Taxation Code of the Russian Federation. the Chapter 26.3 of the In case according to the results of the Tax Code of the RF to the accounting (tax) period the income of the tax bearer payment of Unified Tax estimated according to Art. 346.15 and Subitems 1 on imputed income for and 3 Item 1 Art. 346.25 of the Taxation Code, have separate kinds of activity exceeded 20 million roubles and (or) during the to one or several activities accounting (tax) period a breakage of the are entitled to use the requirements established by Items 3 and 4 Art. Simplified Taxation in 346.12 and Item 3 Art. 346.14 of the Taxation Code reference to other is admitted, such a tax bearer is considered to lose activities operated by the right to the application of the simplified taxation them (paragraph 4, system since the beginning of the quarter when the chapter 346.12 of the Tax excess and (or) breakage of the specified Code of the RF) requirements was admitted. In this case the sum of the taxes liable to payment in foreign organizations case of use of another taxation order is evaluated and with branches, paid according to the order stated in the legislation representations and other of the Russian Federation on taxes and tax collection separate subdivisions. for newly created organizations and newly registered individual enterprisers. The specified tax bearers: - do not pay fees and penalties for untimely payment of monthly payments within that quarter when these tax bearers transferred to another taxation order; - are obliged to inform the tax body about the transfer to another taxation order within 15 calendar days following the accounting period. A tax bearer applying the simplified taxation system has the right to transfer to another taxation order since the beginning of the calendar year, having notified the tax body about it not later than 15 January of the year when he plans to transfer to another taxation order. A tax bearer who has transferred from the simplified taxation system to another taxation order has the right to return to the simplified taxation system not earlier than in one year after he has lost the right to application of the simplified taxation system.

period. Upon the end of the tax period, within the term set for tax return submission. Quarter advance payments (not later than the 25th day of the first month following the lapsed reporting period. Tax bearing organizations submit tax declarations to tax bodies at the end of the tax (accounting) period not later than 31 March of the year following the expired tax period. Tax declarations according to the results of the accounting period are submitted not later than within 25 calendar days since the termination date of the corresponding accounting period.

The Simplified Taxation System provides for: 1) For organizations: relief from the duty to pay corporate profit tax, corporate property tax and unified social tax. 2) For individual entrepreneurs: relief from the duty to pay income tax (on income from business activities), individual property tax (on the property used for business activities) and unified social tax (on income from business activities and payments and remuneration accrued for the benefit of individuals). Organizations and individual entrepreneurs using the simplified taxation system: 1) are not considered as taxpayers of VAT (except for VAT on import of goods on the customs territory of the RF payable under the Tax Code of the RF); 2) pay compulsory pension insurance contributions in compliance with the laws of the RF. 3) pay other taxes in compliance with the Tax Code of the RF 4) shall follow the effective procedure of cash payments and statistical reporting. 5) are not relived from the duties of tax agents provided

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for in the Tax Code of the RF. Taxable Item 1) Income. 2) Income reduced by expenses. The tax bearer who applies for the taxation the income reduced by the sum of expenses, pays the minimum tax in order stated in paragraph 6, Chapter 346.18 of the Tax Code of the RF. The sum of the minimum tax is estimated for the tax period at the rate of 1 percent of the tax base which is formed by the income estimated according to Art. 346.15 of the Taxation Code the Russian Federation. The minimum tax is paid in the case when the sum of the tax calculated in the common order is less than the sum of the estimated minimum tax. 3

Organizations and individual entrepreneurs carrying out business activities subject to the unified tax on imputed income on the territory of municipal and city districts, the federal cities of Moscow and St. Petersburg where the Unified Tax on Article 26.3 Imputed Income is levied. of the Tax Code of the RF

Unified Tax on Imputed Income on Certain Types of Activities

Terms of Application The Unified Tax on Imputed Income can be applied by the decision of the representative bodies of municipal districts, legislative (representative) bodies of state authorities of Moscow and St. Petersburg to the following types of business activities: 1) Rendering personal services, their groups and subgroups (or separate personal services classified in accordance with the All-Russia classifier of personal services (in the edition of Federal laws No 191-FZ dated 31.12.2002 and No 63-FZ dated 18.06.2005). 2) Rendering veterinary services. 3) Repair, maintenance and washing of transport vehicles. 4) Retail trade, performed through department stores with the trading hall floor space of no more than 150 square meters at each retail store. For the purposes of this clause retail trade executed through shops and outlets with the trading hall floor space over 150 meters at each retail store are treated as a type of business activities in relation to which the Unified Tax is not applied. 5) Retail trade performed through kiosk, outlets, booths and other objects of stationary retail trade network without trading hall floor space as well as nonstationary retail trade objects. 6) Rendering parking services. 7) Rendering public catering services through public catering organizations with the trade hall floor space of no more than 150 square meters at each public catering object. For the purposes of this clause public catering services executed through public catering objects with the trade hall floor space over 150 meters at each object of public catering are treated as a type of business activities in relation to which the Unified Tax is not applied. 8)providing public catering services through the objects of public catering organization (except for public catering services provided by educational, health protection and social security establishments) with the area of the visitors service hall of no more than 150 square meters on each object of the public catering organization; 9) Rendering automobile transportation services in passenger and freight carriages, performed by organizations and by private entrepreneurs using of no more than 20 vehicles. 10) Distribution and/or placement of outdoor advertisements. 11) Distribution and/or placement of advertisements on buses of any types, trolley-buses, cars, carriers and trucks, and on water-boats. 12) providing services on temporary

15% of Tax Base The amount of the imputed imputed income, income calculated as the product of the basic profitability of certain type of business activities (calculated for the tax period) and physical index defining this type of activities. Tax Period Quarter. Terms of Payment Not later than the 25th day of the first

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accommodation and residing by the organizations and the enterprisers using the total area of premises for temporary accommodation and residing of more than 500 square meters on each object of providing the given services; 13) providing services on transfer to temporary possession and (or) using the trading places located in the objects of a stationary trading network without trading halls, the objects of a non-stationary trading network (counters, tents, stalls, containers, sections and other objects), and also the objects of public catering organization without visitors service halls; 14) providing services on transfer to temporary possession and (or) using the ground sites for organization of trading places in a stationary trading network, location of the objects of a non-stationary trading network (counters, tents, stalls, containers, sections and other objects), and also the objects of public catering organization without visitors service halls. The laws of the representative bodies of municipal and city districts, of Moscow and St. Petersburg shall determine: 1) The kinds of taxable business activities in relations to which the Unified Tax is applied within the limits specified by paragraph 2 of Article 346.26 of the Tax Code of the RF. 2) The value of coefficient K2 specified in Article 346.27 of the Tax Code of the RF or the values of that coefficient considering the peculiarities of executing business activities. According to the Law of St. Petersburg of 4 June 2003 No. 299-35 ÂŤAbout the introduction of the taxation system in the form of the uniform tax to the made income for separate kinds of activity on the territory of St. PetersburgÂť in territory of St. Petersburg the uniform tax is introduced for the following kinds of enterprising activity: - providing public catering services through the objects of public catering organization without visitors service halls; - providing services on transfer to temporary possession and (or) using the stationary trading places located in the markets and other trading places without visitors service halls; - retail trade carried out through the shops and pavilions with the area of the trading hall of no more than 150 square meters on each object of the trade organization. - Rendering personal services, their groups and subgroups (or separate personal services classified in accordance with the All-Russia classifier of personal services (in the edition of Federal laws No 191-FZ dated 31.12.2002 and No 63-FZ dated 18.06.2005). - Rendering veterinary services. - Repair, maintenance and washing of transport vehicles. -Rendering automobile transportation services in passenger and freight carriages, performed by organizations and by private entrepreneurs using of no more than 20 vehicles. - Distribution and/or placement of advertisements on buses of any types, trolley-buses, cars, carriers and trucks, and on water-boats. - Distribution and/or placement of outdoor advertisements. - Rendering parking services. - Retail trade performed through kiosk, outlets, booths and other objects of stationary retail trade network without trading hall floor space as well as non-

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stationary retail trade objects. Art. 2 of the Law of St. Petersburg of 4 June 2003 No. 299-35 indicates the correcting coefficients of the base profitableness K2 considering the peculiarities of separate kinds of activity, concerning which the unified tax on the made income is applied on the territory of St. Petersburg. The peculiarities of application of the correcting coefficient of the base profitableness К2: 1) At realization by tax bearers of the uniform tax of a kind of enterprising activity indicated in Item 1 Art. 1 of the Law of St. Petersburg of 17 June 2003 No. 29935 the rate of the correcting coefficient of the base profitableness К2 is established as 0.2 provided that the disabled make more than 70% in the average number of the employees (considering all employees, including working pluralizing, turnkey contracts and other contracts of civil legal character) per every calendar month. 2) At realization of the kinds of enterprising activity indicated in Items 6, 7 and 11 Art. 1 of the Law of St. Petersburg of 17 June 2003 No. 299-35 on the territories of military stations and military units the rate of the correcting coefficient of the base profitableness К2 is established as 0.2. Moreover, the realization of activity in the specified territories should be supported by the reference of the chief of the garrison (the commander of the military unit). 3) At realization of the kinds of enterprising activities indicated in Items 6 and 11 Art. 1 of the Law of St. Petersburg of 4 June 2003 No. 299-35 on the territories of intercity municipal formations of St. Petersburg indicated in Subitem 2 of Item 1 Art. 1 of the Law of St. Petersburg of 4 June 2003 the rate of the correcting coefficient of the base profitableness К2 in the period 1 October – 1 April is established as 0.2. 4) In case that several correcting coefficients of the base profitableness К2 indicated in Items 2 – 5 Art. 2 of the Law of St. Petersburg of 17 June 2003 No. 299-35 are applied to the realized of enterprising activity, the minimum rate of the coefficient K2 is applied during the calculation of the sum of the unified tax. 5) At realization of the kinds of enterprising activity indicated in Items 6 and 11 Art. 1 of the Law of St. Petersburg of 17 June 2003 No. 299-35 on intradomestic territories the rate of the correcting coefficient of the base profitableness К2 indicated in Item 2 Art. 1 of the Law of St. Petersburg of 17 June 2003 No. 299-35 is reduced by 30 percent. Moreover, the location of the object on the intradomestic territory is supported by the corresponding record or mark in the document containing the description of the ground site on which the specified object is located, issued by an authorized executive governmental body of St. Petersburg К1 is the deflating coefficient established for a calendar year considering changes of consumer prices of goods (works, services) in the Russian Federation during the previous period. The deflating coefficient is to be established and officially published in the order stated by the Government of the Russian Federation. According to the Order of Mineconomrazvitiye of 19.11.2007 No. 401 «About the establishment of the deflating coefficient К1 for 2008» the deflating coefficient required for the calculation of the tax base on the unified tax on the made income for 2008 is 1.081. The Unified Tax on Imputed Income provides for: 1) The payment of the unified tax on the made income by organizations provides abolition of the duty of payment of the income tax of organizations. (on profit from business activities subject to the unified tax), corporate property tax (on property used for business activities subject to the unified tax) and the unified social tax (on payments to individuals with regard to business activities subject to the unified tax). 2) for individual entrepreneurs: replacement of income tax (on income from business activities subject to the unified tax), individual property tax (on the property used for business activities subject to the unified tax) and the unified social tax (on income from business activities subject to the unified tax and payments to individuals with regard to business activities subject to the unified tax). Organizations and individual entrepreneurs using the simplified taxation system: 1) are not deemed as taxpayers of VAT (on transactions which are considered as taxable items under Article 21 of the Tax Code of the RF, conducted within the framework of business activities subject to the unified tax) except for on VAT import of goods on the customs territory of the RF

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payable under the Tax Code of the RF. 2) pay other taxes and fees not mentioned in paragraph 4, Art. 346.26 of the Tax Code in compliance with other tax regimes. 3) pay compulsory pension insurance contributions in compliance with the laws of the RF. 4) shall observe the procedure for carrying out settlement and cash transactions in cash and non-cash forms established by the laws of the RF. 5) shall keep separate records on the property, liabilities and economic transactions if along with business activities subject to the uniform tax they carry out other business activities. Taxable Items Imputed income of a taxpayer for certain types of activities specified in Article 346.26 of the Tax Code of the RF.

1.4. Compulsory Non-tax Payments The laws of the RF provides for a number of compulsory payments for organizations and individual entrepreneurs which do not bear the marks of a tax, namely: + compulsory payment; + individually gratuitous payment; + collected from organizations and individuals to finance the activities of the state and/or municipal formations; + provided for in the Tax Code of the RF; or the marks of a fee, namely: + compulsory payment; + individually onerous payment (fee payment is one of the conditions of legally significant actions to be taken in relation to payers of fees by government authorities, local selfgovernment bodies or other bodies and officials authorized by them, including granting of particular rights or issue of permits and licenses; + provided for in the Tax Code of the RF. Since January 1, 2005 a lot of individual compulsory payments were systematized in Article 25.3 of the Tax Code of the RF "Stamp Duty". The rest of non-tax payments, which unlike taxes and fees are not defined in the Tax Code of the RP and do not have a unified legal source, can be classified as follows: + compulsory payments connected with compulsory pension, health, and social insurance of employees; + compulsory occupational insurance; + environmental payments; + customs duties and fees; + other payments. Below the legal framework of compulsory non-tax payments under the above classification are given.

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Obligatory payments connected with the insurance fees for obligatory pension insurance of employees The obligatory payments connected with the insurance fee for obligatory pension insurance are individual onerous obligatory payments made to the budget of the Pension Fund of Russia and whose personal purpose is providing the right of a citizen of Russia to receive a pension from the funds of the obligatory pension insurance equivalent to the sum of the insurance fees registered on his personal pension account. Payers 1 1) Persons making payments to physical persons including: - organizations; -private entrepreneurs; - physical persons. 2) Private entrepreneurs and lawyers. The notion of private entrepreneurs includes private detectives and private notaries. Physical persons entering the legal relationship for obligatory pension insurance in accordance with Clause 19 of Federal Law No 167-FZ “On obligatory pension insurance in the Russian Federation” dated December 15, 2001.

Taxation object 2 The object of taxation by insurance payments on obligatory pension insurance is the object of the unified social taxation ЕСН indicated in Chapter 24 of the Taxation Code the Russian Federation «The Unified Social Tax». The obligatory pension insurance extends concerns the citizens of the Russian Federation permanently or temporary residing on the territory of the Russian, the foreign citizens and the persons without citizenship. а) working on the basis of a labour contract or a civil contract the subject of which is carrying out jobs and providing services and on the basis of an author’s contract and a license contract; b) self-employed people (private entrepreneurs, private detectives, private notaries and lawyers; c) members of peasant economies (farming enterprises); d) people working outside Russia if the insurance fees are paid in accordance with Clause 29 of Federal Law No 167-FZ “On obligatory pension insurance in the Russian Federation” dated December 15, 2001 unless otherwise provided by international agreements of the Russian Federation; e) members of tribal or family communities of indigenous peoples of the North involved in traditional branches of economy.

Tax base / Tax period / Payment terms 3 Tax base Payment of the basic part of the labour pension is financed at the expense of the sums of the Uniform Social Tax (fee) transferred to the federal budget and payment of the insurance and funded parts of the labour pension is financed at the expense of the budget of the Pension Fund of Russia. At that financing the payments of the funded part of the labour pension are made at the expense of the sums of pension savings registered in a special part of the personal pension account of an insured person. Tax period – a calendar year. Accounting period – first quarter, half a year, nine months. Terms of payment The monthly advance payments of the insurance fees are made not later than on the 15th day of the following month. The difference between the sum of the advance payments made for the accounting period and the amount of the insurance fees due to payment on the basis of the calculation (declaration) shall be paid within 15 days from the day stated for handing in the calculation (declaration) for the accounting (payment) period or shall be recalculated on the account of the future payments of insurance fees or shell be returned to the insurant. The declaration on the insurance fees shall be rendered to the taxation authority before March 30 of the year following the expired accounting period.

The rate of insurance payment for additional sum of insurance` s rate edict in article 22 of Federal Law No 167-FZ “On obligatory pension insurance in the Russian Federation” dated December 15, 2001. (as amended on 19.07.2007) Compulsory Payments Connected with Compulsory Health and Social Insurance of Employees Under Article 927 of the Civil Code of the RF, insurance is compulsory when it is established by the laws of the RF. Life, health, property, civil liability can be an object of compulsory insurance. Compulsory insurance is carried out through insurance agreeent which made by the person responsible for that. 36


Compulsory social insurance is a part of state social security system characterized by the insurance of employed citizens against the changes in financial and/or social position including for reasons beyond control in compliance with federal laws. Compulsory social industrial accident insurance and occupational disease insurance is a type of social insurance aimed to: - ensure the social security of insured persons and economic incentives for insurance subjects to decrease occupational risk; - reimburse damages inflicted on the life and health of insured persons when they performed their duties under labor contract and in other cases specified by law through full insurance coverage including reimbursement of expenses for medical, social and occupational rehabilitation; - ensure preventive measures to curb the number of industrial accidents and occupational diseases. Compulsory health insurance is a part of the state social insurance which ensures that all citizens of the RF have equal access to medical services and drugs covered by the compulsory health insurance on terms specified in compulsory health insurance programs. Minimum amount of insurance and objects subject to the compulsory insurance as well as the terms and procedure of compulsory pension, social and health insurance are determined in the following federal laws: - Federal Law No. 167-FZ of December 15, 2001 "On Compulsory Pension Insurance in the RF" (as amended on 11.05.2006); - Federal Law No. 125-FZ of July 24, 1998 "On Compulsory Social Industrial Accident and Occupational Diseases Insurance" (as amended on 22.12.2005); - Federal Law No. 165-FZ of July 16, 1999 "On the Foundations of Compulsory Social Insurance" (as amended on 05.03.2004); - Law of the RF No. 1499-I of June 28, 1991 "On Health Insurance in Russian Soviet Federative Socialist Republic"; - Federal Law No. 52-ФЗ of March 28, 1998 "On Compulsory State Insurance of Life and Health of Military Persons, Citizens Called up for Military Periodical Training, the Ranks and Commanding Officers of Internal Affairs Bodies of the RF, the State Fire Fighting Service, the Staff of Bodies Controlling the Turnover of Drugs and Psychotropic Substances, Penitentiary Facilities and Bodies and that of Federal Taxation Police Bodies" (as amended on 02.02.2006). Compulsory Occupational Insurance Compulsory occupational insurance implies the obligation of subjects to insure their (or other persons') life, health, property, and civil liability with regard to professional activities. Such requirements are applied to many types of activities, e. g. carriers (regardless of the type of transportation, except for urban and suburban transportation) shall insure the life and health of passengers, auditors shall insure their professional liability, owners of vehicles shall insure their civil liability, private detectives shall insure their life or health, etc. Customs Duties and Fees Article 318 of the Customs Code of the RF provides for the following customs duties: + import duty; + export duty; + VAT taken when the goods are imported to the customs territory of Russia ; + excise tax taken when the goods are imported at the customs territory of Russia; + customs duties.

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The above Article also provides for special, antidumping and countervailing duties established in compliance with the laws of the RF on measures regarding the protection of economic interests of the RF in foreign trade of goods which shall be collected under the procedure specified in the Customs Code of the RF. The procedure of introduction, calculation and collection of customs duties is established by the Customs Code of the RF, Law of the RF No. 5003-I of May 21, 1993 "On Customs Tariff”, while rates are established by the regulations of the Government of the RF. The objects of customs duties are goods transferred acro9ss the customs border of the RF. The base for the calculation of duties is customs value of goods and/or their amount. Payers of customs duties and taxes are customs applicants and persons who are obliged to pay customs duties under the Customs Code of the RF. However, any person has a right to pay customs duties on goods moved across the customs border. Customs fees: + customs processing fees; + customs fees for customs escort; + customs fees for storage. The procedure of introduction, calculation and collection of customs fees is the same as that for customs duties.

Other Payments All other payments which were not included into the above groups, such as execution fee levied under Article 81 of Federal Law No. 119-ФЗ of July 21, 1997 "On Enforcement Proceedings" in the case of non-execution of a court order without good reasons in time set for voluntary execution of the said document. The execution fee makes up 7% of the collected amount or cost of debtor's property. In the case of non-execution of a non-property court order the execution fee is levied in the amount of five minimum wages (for individuals) or 50 minimum wages (for organizations). Such payments also include consular fees approved by the Order of the Ministry of Internal Affairs No. 14383 of November 26, 1998 "On the Approval of the Rates of Fees for Actual Expenses Regarding Passport and Visa Services Rendered When Russian Citizens Leave the RF and Foreign Citizens and Apartides Enter the RF". The Budget Code of the RF contains different concepts, namely, tax and non-tax income. Tax income of budgets (non-budget funds) is federal, regional, and local taxes and fees, penalties and fines provided for in the tax laws of the RF. Non-tax income of budgets includes: — income from the use of property owned by the state or municipal formations after the payment of taxes and fees provided for in the Tax Code of the RF; — income from services rendered to the state organizations under the jurisdiction of federal executive bodies, executive bodies of the subjects of the RF, municipal bodies after the payment of taxes and fees provided for in the Tax Code of the RF; — funds received as a result of legal, administrative, and criminal sanctions including fines, confiscations, compensations, as well as funds received as reimbursement of damage incurred by the RF, the subjects of the RF, municipal formations, and other forced collections; — other non-tax income.

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1.5 System of State Support of Business in St. Petersburg In St. Petersburg the coordinating body promoting development of business in St. Petersburg, creation of conditions for the development of competition and market economy, reduction of administrative restrictions in the business sphere, providing economic safety in the real sector of the economy is the Committee of Economic Development, Industrial Policy and Trade. To provide favorable conditions for inflow and placement Russian and foreign investments with the purpose of economic and social development of the city the Government of St. Petersburg carries out an active investment policy. St. Petersburg investment policy is based on the following principles11 - goodwill to investors; - presumption of bona fide investors; - balance of public and private interests; - free access to information required to carry out investment activities; - transparent and clear investment process in St. Petersburg; - equal rights of all investors and unified public procedures; - unbiased and resonable economic decisions; - consistency of made decisions; - mutual responsibility of St. Petersburg and investors. The laws of St. Petersburg provide for various forms of state support of investment activities12: - state guarantees of St. Petersburg to investors to secure the return of funds attracted by investors to perform investment activities in the amount provided for in annual budget of St. Petersburg; - tax concessions to investors within the amount entered into the budget of St. Petersburg in compliance with the effective laws; corporate tax concessions to banks and credit organizations which extend investment loans for investment activities within the amountentered into the budget of St. Petersburg in compliance with the effective laws; - benefits to investors in the case of the lease of St. Petersburg real estate to perform investment activities with regard to the leased real estate; - the possibility of deferred and down payments for a term of no more than five years with regard to payments for real estate owned by St. Petersburg and rights to them on investments terms in compliance with the procedure established in St. Petersburg; - Providing the support of investors using the means of the budget. - providing investment tax credit to investors. State Guarantees of St. Petersburg in the Case of Investment Projects Meeting the Objectives of Social and Economic Development of St. Petersburg13 State Guarantee of St. Petersburg is a way to secure civil and legal obligations according to which the federal city of St. Petersburg acting as the Guarantor represented by the Finance Committe of St. Petersburg undertakes to be responsible for the fulfilment by the person who has received state guarantees of his obligations to third parties fully or partially. 11

Article 1 of St. Petersburg Law No. 185-36 on 30.06.1998 “On the State Support of Investment Activities in St. Petersburg” (as amended on 8.05.2001, 9.12.2003) (as amended on 08.05.2001, 0.12.2003). 12 Article 4 of St. Petersburg Law No. 185-36 of July 30, 1998 “On the State Support of Investment Activities in St. Petersburg” (as amended on 8.05.2001, 9.12.2003) (as amended on 08.05.2001, 0.12.2003). 13 Under the Regulation of the Government of St. Petersburg No. 1385 of 17.08.2004 “On Granting of State Guarantees of St. Petersburg”. See also “The Procedure of Granting of State Guarantees of St. Petersburg in the Case of Investment Projects”, approved by the щder of the Finance Committee of the Government of St. Petersburg No. 23-р on 28.02.2005. 39


State guarantees of St. Petersburg are provided for legal entities regardless of the type of ownership to secure the fulfilment of their obligations to third parties in the case of investment projects meeting the objectives of social and economic development of St. Petersburg. An investment project shall be implemented with the attraction of borrowed funds and meet the Terms of Granting of State Guarantees of St. Petersburg in the case of investment projects. In order to receive guarantees one should submit to the Committee for Economic Development, Industrial Policy and Commerce an application for state guarantees with documents specified in the Procedure of Granting of State Guarantees. The office for the Committee on Economic Development, Industrial Policy and Trade accepts documents from an applicant for state guarantees in a sealed envelope (except for an application) in the first working week of each month. The package of documents includes the documents confirming the legal ability of the Applicant, financial documents, documents on the investment project and other documents. The Commission for Budget Support selects investment projects. The planned time of outlay recovery of the total amount of investments on the investment project should make no more than 5 years since the beginning of the investment activity. The interest rate of the loan taken by a legal entity against state guarantee shall correspond to interest rates of the loans taken by St. Petersburg on internal and external markets for the same period. Obligations of a guarantor regarding state guarantee granted to a creditor (resident) to secure the fulfilment of credit obligations of a legal entity implementing investment project shall not exceed the principal amount of a loan. Obligations of a guarantor regarding state guarantee granted to a creditor (non-resident) to secure the fulfilment of credit obligations of a legal entity implementing investment project may include all obligations arising from the terms of the credit contract. A guarantor with regard to state guarantee bears subsidiary responsibility in addition to the responsibility of debtor for guaranteed obligation. State guarantees are supposed to be granted only after careful examination of a project and possibly the audit of a creditor. Guarantees cannot be granted to legal entities which are currently in the process of reorganization, liquidation or which have the signs of bankruptcy established by the federal laws.

Terms of the Granting of Guarantees Compulsory conditions for the granting of state guarantees

Compulsory conditions Organizations included into the contract having priority for the granting 40


Legal persons regardless the form of ownership can apply for the reception of the state guarantees provided that they meet the following obligatory conditions: - presence of practical work experience of the applicant of not less than three years since its state registration; - absence of delayed debts on means earlier given from the federal budget and the budget of St. Petersburg on the returnable basis, on payment of interests for using them, on charged and presented penal sanctions; - absence of debt on payment of taxes and tax collections into budgets of all levels and non-budget funds according to the results of the last accounting fiscal year and on the last accounting date with the applicant; - absence of delayed debts on loans and credits with the applicant; - absence of delayed creditor debts and losses according to the results of the last fiscal year and on the last accounting date prior to the date of submission of the documents for receiving a budgetary support in the form of the state guarantee with the applicant; - absence of delay or installments on payment of taxes and tax collections into budgets of all levels, non-budget funds, and also tax and budgetary credits with the applicant: - presence of the own means not less than 50 percent of the total amount of the investments required for realization of the investment project.

Agreements with banks for the right of a guarantor to undisputable and acceptance-free write-off of funds from the account of a guarantee recipient under the guarantee agreement. Submission of the report on project implementation on quarterly basis. Submission on quarterly basis of the balance sheet verified by the tax authorities, and other documents confirming that the credit is used properly. Providing of a guarantor with liquid security of the return of the amount paid to third parties under the terms of a contract.

Enterprises established or owned by St. Petersburg. Organizations with maximum proportion of own funds in total investments. Organizations with minimum term of state guarantee. Organizations with minimum pay-off period.

Tax Concessions to Investors within the Amount Entered into the Budget of St. Petersburg in Compliance with the Effective Laws14 Executive and legislature governmental bodies of St. Petersburg constantly work on improvement of the tax legislation of the city. The purpose of this form of the state support is to stimulate the development of investment activity on the territory of St. Petersburg. Tax concessions mean benefits granted to individual taxpayers group including tax exemption or reduction.

14

Tax concessions are listed in the Law of St. Petersburg No. 81-11 on 14.06.1995 “On Tax Concessions� (as amended on 08.05.2007). 41


The investment tax privileges provided according to the legislation of St. Petersburg Tax bearer

Term of Tax Concessions

Taxes

Comments

Corporate tax 1. Legal entities meeting the following requirements: 1) They pay corporate tax which is entered into the budget of St. Petersburg; 2) They made in any calendar year since January 1, 2005 investments for production purposes (in their own production of goods, works, services in St. Petersburg for sale to third parties to receive profit) calculated in compliance with the procedure and amounts established by the low.

The right to reduced corporate tax rate arises since the first day of the first month of the calendar year following the calendar year when the amount of investments into fixed assets calculated in appropriate way made up at least RUR 150, 000,000. The right to reduced tax rate is granted for three tax periods.

Reduced rates for the corporate tax due to the budget of St. Petersburg are established: - 15.5%, if a legal entity made investments in the amount from RUR 150,000,000 to RUR 300,000,000; - 13.5%, if a legal entity made investments in the amount over RUR 300,000,000. In case of alienation of the basic means and in case of their transfer to the branches and other separate departments which do not have the status of the legal person and are located outside the territory of St. Petersburg before the expiration of a three year term since occurrence of the right to the privilege, the sum of the tax on the income of organizations should be recounted, and the rate of the tax on the income of organizations paid into the budget of St. Petersburg will be: - in the amount of 15.5% if at the result of the alienation the total cost of the objects becomes from RUR 150,000,000 to RUR 300, 000,000. - in the amount of 17.5% if as a result of the alienation the total cost of the fixed assets becomes less than RUR 150,000,000.

Investments are considered as purchase (except for purchase of the basic means under the leasing contract) and introduction of the basic means which have not been used on the territory of St. Petersburg before, construction (including in the economic way), reconstruction and modernization of the basic means, and also receiving as a contribution to the authorized capital of the basic means which have not been used on the territory of St. Petersburg before and their following introduction15 . Calculating the sum of investments in fixed assets, booked on balance of the tax bearer, including contribution in authorized capital (excepting fixed assets, received gratuitous and by means of leasing agreement) and implemented into exploitation on the territory of SaintPetersburg, are accounted due to primary value and according with data of accountability, and for modernized or reconstructed objects of fixed assets – due to added value in accordance with accountability data. The sum of investments mentioned in the pt.1 of the this Article should be reduced for residual value of the fixed asset used on the territory of Saint-Petersburg and booked on taxpayer’s balance and dropped out of use during the a.m. period. The object of fixed assets may take place in accounts only once. The tax bearer loses the right to use the reduced rate of the tax on the income of organizations since the first day of the first month of the calendar year following the calendar year when the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg has made less then the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg for a calendar year preceding the year of beginning of application of the reduced rate of the tax on the income of organizations. At calculation of the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg for the calendar year preceding the year of beginning of application of the privilege the sums of the corporate tax of organizations (including advance payments) to be paid into the budget of St. Petersburg regarding the objects of the basic means specified in Item 1 Art. 11-4 of the Law of St. Petersburg “About tax privileges” are not considered16 .

15

According to the Decision of the Government of St. Petersburg of 05.06.2007 No. 632 «About the project of the Law of St. Petersburg «About modifications in the Law of St. Petersburg «About tax privileges» (hereinafter - the Decision of the Government of St. Petersburg of 05.06.2007 No. 632) (A. 1, I. 2, P. 3).

16

According to the Decision of the Government of St. Petersburg of 05.06.2007 No. 632 (A. 1, I. 2, P. 6). 42


2. Legal entities meeting the following requirements: 1) They pay corporate tax which is entered into the budget of St. Petersburg; 2) They made in any calendar year since January 1, 2005 investments (at least RUR 50,000,000) in fixed assets for production purposes (in their own production of goods, works, services in St. Petersburg for sale to third parties to receive profit); 3) At least 80% of taxable income is revenue from the sale of goods, works, services (in compliance with the Law of St. Petersburg No. 8111 of July 14, 1995 “On Tax Concessions” and the codes of the AllRussia Classifier of Products OK 005-93) of its own making connected with established types of activities.

17 18

The right to reduced corporate tax rate arises since the first day of the first month of the calendar year following the calendar year when investments into fixed assets calculated in appropriate way makes up at least RUR 50,000,000 for three tax periods.

The reduced rate of the tax on the income of organizations whose sum is paid into the budget of St. Petersburg is 13.5%. In case of alienation of the objects of the basic means and in case of their transfer to the branches and other separate departments which do not have the status of the legal person and are located outside the territory of St. Petersburg before the expiration of a three year term since occurrence of the right to the privilege, the tax bearer should make a recount basing on the rate of 17.5% during the whole period of using the privilege.

Investments are considered as purchase (except for purchase of the basic means under the leasing contract) and introduction of the basic means which have not been used on the territory of St. Petersburg before, construction (including in the economic way), reconstruction and modernization of the basic means, and also receiving as a contribution to the authorized capital of the basic means which have not been used on the territory of St. Petersburg before and their following introduction17 . Calculating the sum of investments in fixed assets, booked on balance of the tax bearer, including contribution in authorized capital (excepting fixed assets, received gratuitous and by means of leasing agreement) and implemented into exploitation on the territory of SaintPetersburg, are accounted due to primary value and according with data of accountability, and for modernized or reconstructed objects of fixed assets – due to added value in accordance with accountability data. The sum of investments mentioned in the pt.1 of the this Article should be reduced for residual value of the fixed asset used on the territory of Saint-Petersburg and booked on taxpayer’s balance and dropped out of use during the a.m. period. The object of fixed assets may take place in accounts only once. The tax bearer loses the right to use the reduced rate of the tax on the income of organizations since the first day of the first month of the calendar year following the calendar year when the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg has made less then the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg for a calendar year preceding the year of beginning of application of the reduced rate of the tax on the income of organizations. At calculation of the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg for the calendar year preceding the year of beginning of application of the privilege the sums of the corporate tax of organizations (including advance payments) to be paid into the budget of St. Petersburg regarding the objects of the basic means specified in Item 2 Art. 11-5 of the Law of St. Petersburg “About tax privileges” are not considered18.

According to the Decision of St. Petersburg of 05.06.2007 No. 632 (A. 1, I. 2, P. 3). According to the Decision of St. Petersburg of 05.06.2007 No. 632 (A. 1, I. 3, P. 2). 43


3. The legal persons meeting the following requirements simultaneously: 1) being bearers of the tax on the income of organizations whose sum is paid into the budget of St. Petersburg; 2) having performed the investments calculated according to appropriate item for the minimum of 3 billion roubles since 1 January 2007 on the territory of St. Petersburg during any three subsequent calendar years; 3) performing the kinds of economic activity according to Section D "Processing manufactures" of the All-Russia qualifier of kinds of economic activities.

19

The right to apply the reduced tax rate on the income of organizations arises with the tax bearer since the first day of the first month of the calendar year following the calendar year according to the results of which the total sum of investments makes not less than 3 billion roubles, and is given for five tax periods.

The rate of the tax on the income of organizations which is paid into the budget of St. Petersburg is established as 13.5%. In case of alienation (leaving) of the objects of the basic means and in case of their transfer to the branches and other separate departments which do not have the status of the legal person and are located outside the territory of St. Petersburg before the expiration of a five year term since occurrence of the right to the privilege, the sum of the tax on the income of organizations should be recounted basing on the rate of 17.5% during the whole period of using the privilege.

Investments are considered as the objects (including the objects of the basic means reconstructed and (or) modernized on the territory of St. Petersburg), including the ones received as a contribution to the authorized capital (except for the ones received gratuitously or under the leasing contract) which have not been used on the territory of St. Petersburg before and intended to production and (or) administrative needs of the organization, necessary for the production, accepted to book keeping and introduced on the territory of St. Petersburg. Calculating the sum of investments in fixed assets, booked on balance of the tax bearer, including contribution in authorized capital (excepting fixed assets, received gratuitous and by means of leasing agreement) and implemented into exploitation on the territory of SaintPetersburg, are accounted due to primary value and according with data of accountability, and for modernized or reconstructed objects of fixed assets – due to added value in accordance with accountability data. The sum of investments mentioned in the pt.1 of the this Article should be reduced for residual value of the fixed asset used on the territory of Saint-Petersburg and booked on taxpayer’s balance and dropped out of use during the a.m. period. The object of fixed assets may take place in accounts only once. The tax bearer loses the right to use the reduced rate of the tax on the income of organizations since the first day of the first month of the calendar year following the calendar year when the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg has made less then the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg for a calendar year preceding the year of beginning of application of the reduced rate of the tax on the income of organizations. At calculation of the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg for the calendar year preceding the year of beginning of application of the privilege the sums of the corporate tax of organizations (including advance payments) to be paid into the budget of St. Petersburg regarding the objects of the basic means specified in Item 2 Art. 11-5 of the Law of St. Petersburg “About tax privileges” are not considered19 .

According to the Decision of St. Petersburg of 05.06.2007 No. 632 (A. 1, I. 4, P. 2). 44


Tax on the profit of organizations 4. Organizations – residents of the special economic zone located at the territory of St. Petersburg

The right to apply the reduced tax rate on the profit of organization is in force during the whole period of existence of the special economic zone located at the territory of SaintPetersburg.

The rate of the tax on the income of organizations which is paid into the budget of St. Petersburg is established as 13.5%.

This tax rate is applicable only for enterprises’ activity, realized on the territory of the special economic zone and on the condition of separate calculating of incomes(costs), gained from activity realized on the territoritory of special economic zone and incomes(costs) gained from other activities.

Tax on the property of organizations 5. The legal persons meeting the following requirements simultaneously: 1)Organizations which are taxpayers of the corporate tax (entered into the budget of St. Petersburg); 2) Organizations which have made, since January 1, 2005 in St. Petersburg in any calendar year, investments (at least RUR 150, 000,000) in fixed assets for production purposes (in their own production of goods, works, services in St. Petersburg for sale to third parties to receive profit).

20

The right to apply the reduced tax rate on the profit of organizations can be given since the first day of the first month of the calendar year following the calendar year when investments into fixed assets makes up at least RUR 150, 000,000 for three tax periods.

In case of alienation of the basic means and in case of their transfer to the branches and other separate departments which do not have the status of the legal person and are located outside the territory of St. Petersburg before the expiration of a three year term since occurrence of the right to the privilege, the sum of the tax on the income of organizations should be recounted basing on the rate of 1.1% during the whole period of using the privilege.

Investments are considered as purchase (except for purchase of the basic means under the leasing contract) and introduction of the basic means which have not been used on the territory of St. Petersburg before, construction (including in the economic way), reconstruction and modernization of the basic means, and also receiving as a contribution to the authorized capital of the basic means which have not been used on the territory of St. Petersburg before and their following introduction20. Taxpayers shall submit to the tax authority where it is registered financial reporting for the first reporting period when the reduced corporate tax rate was applied, including: - name, historical cost, the date of the fixed assets commissioning: - documents confirming the formation of thee historical cost of fixed assets (except for fixed assets created by economic means); - name, depreciated cost and alienation date of fixed assets. The tax bearer loses the right to use the reduced rate of the tax on the property of organizations since the first day of the first month of the calendar year following the calendar year when the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg has made less then the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg for a calendar year preceding the year of beginning of

According to the Decision of St. Petersburg of 05.06.2007 No. 632 (A. 1, I. 2, P. 3). 45


application of the reduced rate of the tax on the income of organizations21 .

6. The right not to bear the tax on the property of organizations arises with the following: organizations performing the kinds of economic activity specified in Item 2 Art. 11-51 of the Law of St. Petersburg «About tax privileges» and being the bearers of the tax to the property of organizations whose sum is paid into the budget of St. Petersburg, performing since 1 January, 2007 on the territory of St. Petersburg during any three subsequent calendar years acceptance to book keeping and introduction of objects of the basic means specified in Item 1 Art. 11-5-1 of the Law of St. Petersburg «About tax privileges».

The right not to bear the tax on the income of organizations arises with the tax bearer since the first day of the first month of the calendar year following the calendar year according to the results of which the total sum of investments in the objects of the basic means, evaluated according to Item 3 Art. 11-5-1 of the Law of St. Petersburg «About tax privileges» makes not less than 3 billion roubles.

7. Organizations – residents of the special economic zone located at the territory of St. Petersburg

The term for which the exemption can be given is five years from the date of registering the vehicle.

In case of alienation of the basic means and in case of their transfer to the branches and other separate departments which do not have the status of the legal person and are located outside the territory of St. Petersburg before the expiration of a three year term since occurrence of the right to the privilege, the sum of the tax on the income of organizations should be recounted basing on the rate of 0% during the whole period of using the privilege.

Investments are considered as purchase (except for purchase of the basic means under the leasing contract) and introduction of the basic means which have not been used on the territory of St. Petersburg before, construction (including in the economic way), reconstruction and modernization of the basic means, and also receiving as a contribution to the authorized capital of the basic means which have not been used on the territory of St. Petersburg before and their following introduction. The tax bearer loses the right to use the reduced rate of the tax on the property of organizations since the first day of the first month of the calendar year following the calendar year when the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg has made less then the corresponding total sum of taxes and tax collections paid into the budget of St. Petersburg during the calendar year preceding the application of the privileges. At calculation of the total sum of taxes and tax collections (including advance payments) to be paid into the budget of St. Petersburg for the calendar year preceding the year of beginning of application of the privilege the sums of the tax on the property of organizations (including advance payments) to be paid into the budget of St. Petersburg regarding the objects of the basic means specified in Item 1 Art. 11-5-1 of the Law of St. Petersburg “About tax privileges” are not considered22.

Transport tax Transport tax is exempted.

The exemption is not applied in relation to water boats and means of air transport.

Extension of Investment Tax Credit (Tax Deferral) to Provide Favorable Conditions for Creation or Modernization of Fixed Assets and Intangible Assets in St. Petersburg23 21 22

According to the Decision of St. Petersburg of 05.06.2007 No. 632 (A. 1, I. 4, P. 2). According to the Decision of St. Petersburg of 05.06.2007 No. 632 (A. 1, I. 1, P. 2).

23

The Law “On Investment Tax Credit” No. 316-28 on 12.07.2002 (as amended on 20.07.2006) and “Provision on Investment Tax Credit” No. 56-р on 6.08.2002. 46


The investment tax credit can be given regarding the part of the sums paid into the budget of St. Petersburg by the tax on property of organizations. The investment tax credit on the tax on the property of organizations can be given to the organization at presence of at least one of the following bases: 1) realization by the organization during the period from 1 January 2002 to the last date of the accounting period previous to day of submission by the organization of the application for granting of the investment tax credit on the tax to the property of organizations of the investment project providing expenses directed on financing of investments in the basic means and non-material actives (including the volumes of modernization), used at production of goods (works, services) on the territory of St. Petersburg for the sum exceeding three millions roubles; 2) realization by the organization during the validity of the contract on granting the investment tax credit on the tax to the property of organizations of the investment project providing expenses on financing of investments in the basic means and non-material actives (including the volumes of modernization), used at production of goods (works, services) on the territory of St. Petersburg for the sum exceeding three millions roubles. The investment project is understood as a substantiation of economic feasibility, volume and terms of realization of the capital investments, including the required design and budget documentation developed according to the legislation of the Russian Federation and the standards approved according to the stated order (by norms and rules), and also the description of practical activities directed on realization of investments (the business plan). The specified bases for reception of the investment tax credit on the tax to the property of organizations should be documentary confirmed by the organization. The conditions of granting of the investment tax credit on the tax to the property of organizations are the following: 1. The investment tax credit on the tax to the property of organizations can be given both by one and by several investment projects at the observance of the following conditions: presence of the means stipulated in the budget of St. Petersburg for the purpose of granting of investment tax credits on the tax to the property of organizations; the sum of the investment tax credit actually saved up during one financial year cannot exceed the established budgetary appropriations according to the departmental structure of the expenses of the budget of St. Petersburg for the corresponding fiscal year; absence of bankrupting procedures concerning the organization; absence of debts with the organization under taxes and tax collections, fees and penal sanctions to the budgets of all levels (except for the case when the sum of the debts under taxes and tax collections to the budgets of all levels does not exceed or equals the sum of the value added tax due to compensation (offset, return) according to the current legislation of the Russian Federation about taxes and tax collections) on the first date of submission of the application for granting the investment tax credit on the tax to the property of organizations by the organization. 2. The substantiation (business plan, feasibility report) for reception of the investment tax credit on the tax to the property of organizations according to one of the bases stated by the Law of St. Petersburg ÂŤAbout the investment tax creditÂť cannot be used for reception of the investment tax credit on the tax to the property of organizations on other bases. 3. The investment tax credit on the tax to the property of organizations can be given for the term from one year up to ten years. 4. The rights of the organization arisen from the contract on granting of the investment tax credit on the tax to the property of organizations cannot be conceded to another person. 5. The term on which the investment tax credit on the tax to the property of organizations is given is estimated since the date of signing the contract about granting the investment tax credit on the tax to the property of organizations by the parties. The sums of the investment tax credit on the 47


tax to the property of organizations and the added interests should be completely re-paid by the expiry date of the contract on the investment tax credit on the tax to the property of organizations. 6. The size of the interest rate for using the investment tax credit on the tax to the property of organizations is stated in the contract on granting the investment tax credit on the tax to the property of organizations within the limits of one eighth up to the whole refinancing rate of the Central Bank of the Russian Federation. 7. The maximum size of the means directed on granting of investment tax credits on the tax to the property of organizations is established by the Law of St. Petersburg about the budget of St. Petersburg for the next fiscal year. 8. The organizations whose investment projects provide the following have the right of priority to reception of the investment tax credit: the least period of return of the received means; the greatest number of newly created working places per one rouble of the given investment tax credit; the greatest size of tax revenues in the budget of St. Petersburg from the realization of the project per one rouble of the given investment tax credit.

Preparation of industrial territories. The work of the city authorities on the development of investment activity on the territory of the city is bearing fruit. St. Petersburg today is a place of successful realization of a big number of investment projects. It is enough to note that such world famous companies as General Motors, Nissan, Toyota, Suzuki, Bosh Siemens, British American Tobacco, Pepsi and many others have chosen our city for accommodation of their manufactures. However, such an interest to Petersburg has put another problem before the Government of the city – the absence of infrastructurally prepared territories. In 1990th because of several objective reasons no complex systematic activity on infrastructural projects was performed, only the reserves remaining from the Soviet time were used. It is also necessary to note a low efficiency of use of already developed industrial zones: the building density of the territory is 2-3 times lower in comparison with the western analogues, the buildings and the infrastructure are decayed, the ecology is poor, and the residential areas are isolated. Historically the industry of St. Petersburg developed together with the city, and it has resulted in the formation of numerous industrial territories on the "former" city suburbs, and nowadays the residential areas of the central part of the city. The further development of city became impossible without the development of a new General plan. This basic development, strategic for the development of the city environment, was accepted in the form of the regional law in 2006. The General plan considers St. Petersburg as: - a comfortable inhabitancy, - the cultural capital, - the major transport unit, - the center of business activity, - the center of innovations and high technologies, - a powerful industrial core. It was the latter item that defined a close attention of the city authorities to the development of industrial territories. There are about 50 industrial regions and units in St. Petersburg, to say nothing of separate objects located beyond their territories.

48


In accordance with General plan of Saint-Petersburg industrial territories were identified and reserved for further productive objects placement. There are about 50 industrial regions and units in St. Petersburg, to say nothing of separate objects located beyond their territories. All these territories are located in close to transportation links and highways, first of all closed to circular highroad, the main part of which was already constructed and placed into operation (the end of construction works - 2012). Also territories are closed to West paid speed diameter, that will link north and south of the city. The city policy towards the development of St. Petersburg industrial zones is established by the Decision of the city Governmental of city of 14/12/2004 No. 1961 «About the development of the territories intended for location of objects of industrial, transportation and logistical, social and business, and also warehouse purpose». Government decision № 1961 determinates 28 strategic territories for reconstruction and placement of industrial objects of logistic, business and warehouse purposes. In placement of new enterprises the Government uses cluster approach – as a result the enterprises of the same branches are located in the one or closed districts. The realization of the Decision should result in engineering prepared industrial territories with the developed town-planning documentation, ready for location of investment objects of, first of all, industrial purpose. The Decision specifies the list of industrial zones which are the subject of prime development, including engineering preparation, and the list of territories demanding development of the documentation about the lay-out of the territories. The city makes substantial investments in the construction of roads, a transport infrastructure, housing and communal services, preparation of new territories for construction of industrial objects. Every year the investment component of the city budget is increased. The city authorities have cardinally changed the approach to planning of the capital investments, having passed from a residual principle to managing of capital investments as a component of the investment policy of St. Petersburg. Long-term plans include realization of several important projects, among them there is construction of new power sources, construction of the Circular motorway, construction of a tunnel under the Neva, development of system of water supply and water removal, reconstruction of «Pulkovo» airport . One of priority spheres in the city management for the Government of St. Petersburg is the engineering and power complex. To increase the efficiency and to develop the system of power supply of St. Petersburg the programs of the development of the engineering and power complex up to 2010 are developed and realized. To improve the investment climate the of the Committee of the Development of Industrial Policy and Trade perform a set of activities financed from the means of the budget of St. Petersburg directed for the development of industrial zones. These activities include the following: • stocktaking of the territories, • development of the documentation on the lay-out of the territories, • direct engineering preparation of the territories, including activities on recultivation of the industrial territories. Support of Investors Using the Budget Funds of St. Petersburg The support of investors with the use of the means of the budget of St. Petersburg is provided in the following forms26: 26

According to the Law of St. Petersburg No. 185-36 on 30.06.1998 “On State Support of Investment Activities in St. Petersburg” (adopted by the Legislative Assembly on 8.06.1998 ) (as amended on 09.12.2003). 49


- granting loans in the order and according to the conditions stated by the laws of St. Petersburg about loans from the budget of St. Petersburg and about the budget of St. Petersburg for corresponding year; - participation in the creation of economic companies and societies in the cases and according to the order established by the legislation of the Russian Federation and by the legal certificates of St. Petersburg; - placing the state order of St. Petersburg in the order established by the current legislation; - in St. Petersburg the transparent system of placement of the state order is created, that allows the investor to estimate the volume of goods selling considering an opportunity to receive the order financed from the means of the budget during making a decision on investments. - granting compensatory payments according to the order approved by the Administration of St. Petersburg provided in the budget of St. Petersburg to the person, intending to perform the investment activity directed on realization of the investment programs which have the priority in St. Petersburg, but with the planned negative resulted accumulated profit, in the size providing a sufficient norm of profitableness of the investment calculated according to the method specified in Art. 9 of the Law of St. Petersburg «About the state support of investment activity on the territory of St. Petersburg». The Administration of St. Petersburg has the right to provide investors with the guarantee as the security of obligations of the investor to return extra money resources drawn for performance of investment activity. The total sum of guarantees of St. Petersburg is established for a fiscal year during the statement of the budget of St. Petersburg and cannot exceed the limit established by the law of St. Petersburg about the budget of St. Petersburg for the corresponding year. The specified limit of guarantees cannot be less then the sum intended to payment during the given year according to the contracts of guarantees concluded by the Administration of St. Petersburg. The term of the guarantee of St. Petersburg cannot exceed five years. Support of small entrepreneurship27 In recent years S&M business becomes more and more significant for the economy development. In Saint-Petersburg as of Y 2007 the number of S&M enterprises increased for 47055 (by 26%). As of 01.01.2008 the turnover of S&M companies was RUB 927 793 Mio, that exceeds Y 2006 result for 34%. The share of S&M enterprises turnover in the whole turnover of Saint-Petersburg organizations was 29%, and in the previous year it was 22%. Average annual number of employers on S&M enterprises reached 707 493 people, that exceeds FY 2006 result for 8338 people. The volume of tax duties from S&M enterprises in the whole number of tax duties in city’s budget reached 25%. 29,5% volume of government’s orders were done by S&M enterprises. The analysis of industrial structure of S&M enterprises activity shows that about 50% of these companies operate in the sphere of trade. Transfer to innovative way of development demands qualitative changes in industrial structure. S&M enterprises should be orientated for manufacturing industry with high scientific degree in the production and also for service sectors. The share of such companies should reach 50-60%. The support of S&M companies is an official policy of the government, that is realized together with industrial community. In FY 2007 the government of Saint-Petersburg affirmed General Plan of measures for support 27

In accordance with the data of the Official website of the Public Council for Small Entrepreneurship at St. Petersburg Governor’s office www.bishelp.ru. 50


the development of S&M companies in 2008-2011 with total volume of budget financing in amount of 2,7 mlrd rub. The plan consists of 3 interlinked blocks. The first block decides a key problem of effective S&M business development in the city: the increase of its competitiveness and strengthening in different spheres of business. The total number of projects is 50. The Plan reflects priority directions of business support: industrial production, innovations and high technologies housing sphere and and services. To support small-sized business it is planed to develop subcontract systems, to uphold export – oriented production companies, creation of technological-production centers for S&M enterprises. Special attention will be centered on staff preparation. Strategic investments from abroad will have a positive influence on local S&M enterprises. Main part of investors belong to motor-car construction industry and household appliances sphere. Goverments’ orders number is forecasted to increase following the changes of subcontracting system. This changes will be supported by business associations and unions. In terms of General Plan the government plans to create a University of Small Business, that will prepare staff for S&G enterprises, taking into account its specificity. The University will provide special and high education. Also a special program “business basic course for schools” and “Business practical course for students” will be implemented. As in previous years the government companies participation in exhibitions will be supported. Also the government plans to realize a program “Access to regions” that will promote local production on regional markets. The next priority is development of S&G firms operating in scientific and technological sphere. To realize this program significant financial resources were planed and invested into development of business-incubators system that will increase up to 11 in Y 2011. At the moment the first incubator that was organized in Y 2006 effects its activity in SPb. It was created commonly with the Ministry of economic development and trade. About 40 companies of housing sector and in the sphere of innovations are situated in the buildings provided to firms on favorable rent conditions. On the 30-th of November Regional Venture Fund for S&M enterprises operating in the scientific sphere was finally formed and began its activity. At the moment the capitalization of the Fund amounts Mio 400 Rub. On the 10-th of December 2007 on the 1-st meeting of Fund Invest Committee the first project in the field of optical-electronic systems was approved for financing. Beginning from Y 2005 Saint-Petersburg realize a commercial bank credit financing program. From year to year this program becomes more and more claimed among S&M companies. In frames of this program in Y 2007 177 credits were extended. Moreover, compensation of part of credit interest was extended in Y 2007 in frames of credit agreement concluded beginning from the 1-st September 2006. The whole amount of credit extends overalls RUB 16,3 Mio. Total credit portfolio consists of 177 new credit agreements, concluded by S&M companies in frames of the Program reached in Y 2007 about 1 mlrd rub, that exceeds Y 2006 for 3 times. Fond of credit assistance in accordance with decision of state government was created. Beginning from 15.12.2007 the Fund provides the guarantees for small business firms in case of absence of pledge in full volume. For S&M companies, operating in the sphere of production, innovation and high technologies the Fund will provide about 70% of pledges. This will allow them to attract credit facilities for business financing. About 200 mln. rub were taken from the budget of Saint-Petersburg to finance the Fund. To increase the number of banks-participants of the program there was taken a decision to increase maximal interst rate for 2 % (reference rate +5%) 51


Interest rate compensation will depend on Co’s kind of activity and will approach to 90%. Moreover, the Co. that will get Funds guarantee may extend 90% of costs, related with fees, paid to the Fund, that amounts 1,75% of provided security. Also in Saint-Petersburg there was created a Common Union of small sized business development in the jurisdiction of the governor. This is a form of effective dialog between the state power and business.Every district in Saint-Petersburg has its own representative. The realization of the measures is directs to the following aims: - creation of prosperous infrastructre ; -Identity of priority state development of S&G firms, producing the follows items: guarantee of priority development of S&G firms in the direction of manufacturing, housing, scienctific – technological development and services basing on differentiating approach to measures of its realization. The basic points (forms) of realization of the Plan of the activities: 1. The program of the state support «Business-incubator (technical center)». Business incubator (technical center) is intended for accommodation of beginning and developing subjects of small business on conditions of the reduced rent rate along with providing a complex of services for the term of no more than 3 years. The order of realization of the given special program is established by the order of the Committee of economic development, industrial policy and trade of 31/08/2006 No. 107-r. 2. The program of the state support of crediting of subjects of small business by commercial banks. The part of expenses connected with reception of a credit in the commercial bank with the purpose and according to the order established by the order of the Committee of economic development, industrial policy and trade of 31/08/2006 No. 111-r is compensated to subjects of small business from the budget of St. Petersburg. (The realization of the Program started in 2005 according to Item 4.1. of the Decision of St. Petersburg of 19/10/2004 No. 1676 «About the activities on development and support of small business in St. Petersburg»). 3. The program of the state support «Business-incubator (technical center)». Business incubator (technical center) is intended for accommodation of beginning and developing subjects of small business on conditions of the reduced rent rate along with providing a complex of services for the term of no more than 3 years. The order of realization of the given special program is established by the order of the Committee of economic development, industrial policy and trade of 31/08/2006 No. 107-r. 4. The special program «Certification of goods, works and services». Its purpose is to subsidize the a part of expenses of subjects of small business connected with the payment for services on the performance of obligatory requirements of the legislation of the Russian Federation and (or) the legislation of the country-importer which are necessary for exporting goods (works, services), including the works on certification, registration or other forms of acknowledgement of correspondence. The order of realization of the given special program is established by the order of the Committee of economic development, industrial policy and trade of 31/08/2006 No. 114-r. 5. The program of the state support «Financial outsourcing». Its purpose is to provide services on assistance in performing external accounting service of subjects of small business located in business-incubators, and also the one of crisis subjects of small business. The order of realization of the given special program is established by the order of the Committee of economic development, industrial policy and trade of 31/08/2006 No. 106-r. 6. Special Program «Accesses to Regions». 52


The program is realized together with Saint-Petersburg Trade Committee and realizes the measures of distribution of goods and services in regional markets. The order of realization is definited by Committee of economic and trade of SPb 25.07.2008 № 663-r. 7. Staff development 8. Informatonal and communication system improvement. 9. Complex of mesuares, that improves the legislative base. 10. Complex of measures for development stimulation independent unions and associations of small companies. 11. Complex of measures that aim is to increase of small-business prestige and increase of allegiance to small business Legislative support of S&M companies includes: 1) The Law of SPb from 17.04.2008 № 194-32 «About the development of S&G companies in North-West region.; 2) Governments order of Saint-Petersbourg from 13.11.2007 № 1423 «About the results of Plan realization for 2006-2008 Y based on main directions of business in Saint-Petersburg for Y 2008-2011. 3) Governments order of Saint-Petersbourg from 01.04.2008 № 326 «About the order of provision of state subsidies for companies support and for small business development needs». 4) Law of St. Petersburg No. 185-36 of 3007.1998 “On State Support of Investment Activities in St. Petersburg”(as amended on May 8, 2001; 9.12.2003); 5) Regulation of the Government of St. Petersburg No. 1561 of 14.09.2004 “On Methods of Calculation of Land Rent” (as amended on 20.07.2006); 6) Law No. 316-28 of 12.07.2002 “On Investment Tax Credit” (as amended on 20.07.2006); 7) Law of St. Petersburg No. 81-11 of July 14, 1995 “On Tax Concessions” (as amended on 08.05.2007); 8) Regulation of the Government of St. Petersburg No. 1385 of 17.08.2004 “On Granting State Guarantees of St. Petersburg”.

53


2. Organization, Reorganization and Liquidation of a Business St. Petersburg provides lots of opportunities to set up a business, but sooner or later a businessman will have to carry out a number of necessary procedures, that include: 1. Search for the source of funding; 2. Choice of a type of ownership; 3. Choice of a corporate title; 4. Registration of a business with respective authorities; 5. Choice of a suitable taxation system; 6. Licensing, if necessary; 7. Certification of a product or a service, if they are subject to certification; 8. Search for business premises; 9. Getting information about one's business rights and liabilities, as well as information about controlling and supervising state authorities. This section of the Guide is to help business people address these and many other issues related to setting up a new business.

2.1. Choice of a Type of Ownership for Business Relations Participants Type of ownership is taken to mean the way of registering and using assets of a commercial entity and legal status and business aims of a commercial entity resultant from registration28. Business activities can be carried out by citizens registered as individual enterprisers without formation of a legal person, and also legal persons Individual proprietor is liable for his obligations with all his property except for the property upon which penalty can not be imposed under the applicable law. Legal entities include: — for-profit organizations that set yielding profit as their primary objective; — not-for-profit organizations that don't set making profit as they main priority and don't distribute received revenues between participants. Not-for-profit organizations can conduct commercial activity only if it helps them achieve the goals for which they were established29. According to the Civil Code of the Russian Federation for-profit organizations in the Russian Federation (and in St.-Petersburg in particular) can have following ownership structures (see the scheme below).

28

The RF Civil law regulation of relations between persons conducting commercial activity or participating in such activity is based on the assumption that business activity is an independent activity that implies liability of a businessperson and is targeted at regular profit making from using assets, selling goods, executing works or rendering services by persons duly registered in this capacity under the law. The rules determined by the civil legislation shall be applied to relations with foreign citizens, individuals without citizenship, and foreign legal entities unless otherwise provided by the law. 29 For details about not-for-profit organizations see the Federal Law of No. 7-FZ 12.01.1996 “On Not-for-Profit Organizations” (as amended on 17.05.2007), the Federal Law of 11.08.1995 “On Charity and Charitable Organizations” (as amended on 30.12.2006). 54


Every legal structure identified here has certain features, and is suitable for achieving certain business objectives under given economic circumstances. Legal entities that are non-profit organizations can be established in a form of customers' cooperatives, public or religious organizations (associations) maintained by their owner, charitable funds and other funds and also in forms provided by the law. Making business in a form of special partnership does not require establishing a legal entity (Articles 1041 to 1053 of the Civil Code of the RF). The table below presents the comparative characteristics of types of ownership. It is advisable for an entrepreneur while choosing an appropriate type of ownership to analyze how available types of ownership correspond with his aims, goals and presumed business conditions (see tables below). This can be done with the help of tables provided hereafter by applying a qualitative method. Commercial organizations that form a legal entity have the right to establish controlled firms, set up and join corporate associations30. This way the law gives businesses the right to set up subsidiaries and controlled companies, holding companies and financial and industrial groups.

30

The classification of organizational legal structures shall be distinguished from classification based on the economic criteria that are business priorities, centralization principles of production, economic, commercial functions, distribution of powers between participants of an association. From an economic point of view businesses are classified into concerns, cartels, syndicates, pools, consortiums etc. The goals of associations may be achieved through establishing of a certain legal structure: a holding, financial and industrial group, association (union), noncommercial partnership, special partnership.

55


Comparison Table of Main Types of Ownership Characteristics No. Type of Ownership

1

Legal status

Participants’ legal status

2

3

1

Individual proprietorship

Individual entrepreneu rship

Individual proprietor

Individual form

2

Special partner-ship

Individual entrepreneu rship

Partners: individual proprietors and (or) commercial organizations

From partners

3

General partner-ship

Legal entity

Full partners: individuals and (or) commercial organizations

From partners

4

limited partnership

Legal entity

Full partners: individuals and (or) commercial organizations; investors: citizens and legal entities (except for state authorities and local self governing bodies) Participants: citizens and legal entities (state authorities and local self-governing agencies shall not have the right to be participants in companies, unless otherwise established by law)

5

Limited liability company

Legal entity

6

Additional Liability Company

Legal entity

7

Closed Joint Stock company

Legal entity

8

Open Joint Stock

Legal entity

4

Limitations on the number of participants

Participants: citizens and legal entities (state authorities and local self-governing agencies shall not have the right to be participants in companies, unless otherwise established by law) Shareholders: individuals or/and legal entities

Shareholders: individuals or/and legal entities

Constituent documents (or documents proving the general right to conduct commercial activity)

5

Size, structure and the procedure of formation of an authorized capital (shared property)

6

Details of participants’ entrance and withdrawal procedures

7

8

License, Certificate of Incorporation or patent

Not formed

Based on individual decision

2

Joint venture agreement

Shared property of partners shall be formed of partners’ investments

Entrance by common agreement of participants. Withdrawal: upon the termination of a contract, on the basis of personal decision (with reimbursement of damage to other partners by withdrawal).

2

Foundation agreement

Share capital of a partnership is formed of partners’ investments

Entrance by common agreement of participants. Withdrawal: expulsion through trial proceedings by unanimous decision of partners, on the basis of personal decision (with reimbursement to the participant of a money equivalent of his share in a share capital).

Not less than one full partner and one limited partner

Foundation agreement

Share capital of a partnership shall be formed of investments of partners and limited partners

Entrance by common agreement of participants. Withdrawal: expulsion by participants’ unanimous agreement, on the basis of the participant’s personal decision (with reimbursement of his share). At the end of a financial year the investor can withdraw from partnership and get his investment share according to a procedure established in a foundation agreement.

No more than 50 participants

Foundation agreement, a charter

No more than 50 participants

Foundation agreement, a charter

No more than 50 shareholders

charter

No limitations

charter

full

The authorized capital of the company shall be formed of participants' shares' par value. The size of the authorized capital shall not be less than 100 minimum monthly wages set by the federal law on the date of submitting documents for the company's state registration Similar to the rules of a limited liability company

The authorized capital of a company consists of the shareholders' investments. At the registration moment an authorized capital shall not be less than 100 minimum monthly wages. The authorized capital of a company shall be formed of shareholders'

Entrance by common agreement of participants. Withdrawal: expulsion by participants' majority vote, on the basis of the participant's personal decision (with reimbursement of his share). Other participants have the preemptive right to purchase the share of this participant.

Similar to the rules of a limited liability company.

Entrance by common agreement of participants. Withdrawal: on the basis of personal decision (purchase or sale of shares). Other shareholders have the preemptive right to purchase shares of the withdrawing shareholder. Based on individual decision. (free purchase and sale of shares).


Company 9

Producers' cooperative

Legal entity

Members or participants: mostly individuals

From 5 participants

investments. The minimum size of the authorized capital shall not be less than 1000 minimum monthly wages The share fund of a cooperative shall be formed of the members' share investments and may include nondistributable assets

charter

Entrance by common agreement of participants. Withdrawal: expulsion by the decision of the shareholders' general meeting on the basis of the majority vote, on the basis of the partner's personal decision (with reimbursement to the partner of a money equivalent of his share in a share capital).

Comparative characteristic of basic forms of incorporation of commercial activities №

1

Name of the form of incorporation

2

Characteristic Peculiarities of constituting the supreme authority

Rules of decision making by the supreme authority

Rules of participating in the organizational issues

Rights to participate in other organizations

Number of hire employees

Requirements to publish information about the results of the activities in the open press

Responsibilities, participation in profits and losses

3

4

5

6

7

8

9

Not limited

Not obligatory

Responsibility: in the limits of the entrepreneur’s property that can be arrested in accordance with the law.

Not limited

Not obligatory

Expenses, losses and profit are distributed proportionally to the investments. The responsibility is solidary.

1

Private entrepreneur

ONE-MAN AGENCY

Individual activity

Personal participation

No limitations

2

Simple partnership

Partners’ assembly

The principle of unanimity Partners’ dominates Each partner has participation one vote everyday activities prevails

3

Full partnership

Partners’ assembly

The principle of unanimity Partners’ The partners may not be dominates Each partner has participation in participants in another full one vote. everyday partnership activities prevails

Not limited

Not obligatory

Expenses, losses and profit are distributed proportionally to the shares in the share capital. The partners solidary have subsidiary liability.

4

Limited partnership or kommandit partnership

Partners’ assembly

The principle of unanimity Partners’ (not The partners may not be dominates Each partner (not creditors) participants in another creditor) has one vote. participation in limited partnership everyday activities prevails

Not limited

Not obligatory

Expenses, losses and profit are distributed proportionally to the shares in the share capital. The partners solidary have subsidiary liability.

Have not rights to in participate in other organizations

57


5

Limited liability company

General meeting of participants. A collegial and/or personal executive body.

The principle of decision making by a simple majority of participants’ votes dominates. Reorganization and liquidation anticipate an unanimous decision. The number of participants’ votes is proportional to the number of shares. General meeting of Same as the rules for a participants. A limited liability company. collegial and/or personal executive body.

6

Additional responsibility society

7

Closed joint- General stock company stockholders’ meeting. It is possible to found a board of directors (supervisory council). A collegial and/or personal executive body.

The principle of decision making by a simple majority of shareholders’ votes dominates. The number of a shareholder’s votes is proportional to the number of voting shares.

Participation shareholders everyday activities common

8

Open jointGeneral stock company stockholders’ meeting. It is possible to found a board of directors (supervisory council). A collegial and/or personal executive body.

The principle of decision making by a simple majority of shareholders’ votes dominates. The number of a shareholder’s votes is proportional to the number of voting shares.

The practice of Not regulated stakeholders’ participation in the current activities is not common

9

Production cooperative or work association

The principle of decision Obligatory making by a simple majority of votes dominates. Reorganization and liquidation anticipates an unanimous decision. Each member has one vote.

General meeting of the cooperative embers. A cooperative with over 50 embers can have supervisory council, a board and/or its chairman.

Direct participation of owners in current activities is common

If the company consists of Not limited a single person it cannot be the only participant of another company

Not obligatory

Expenses, losses and profit are distributed proportionally to the shares in the authorized capital. The responsibility of the participants is limited with their investments.

Same as the rules Same as the rules for a Not limited for a limited limited liability company liability company

Not obligatory

Expenses, losses and profit are distributed proportionally to the shares in the authorized capital. The participants solidary have subsidiary responsibility with their property for the liabilities of the company in equal for everybody size proportionate to the size of their investments.

of Not regulated in

Not limited

is

Not regulated

Not obligatory except Profits and losses are distributed proportionally to the cost of shares for cases of public of the shareholders. The shareholders’ liability is limited with the cost placement of bonds or of their shares. other securities by the company

Not limited

Obligatory

Not limited

Not obligatory

Same as the rules for the closed joint-stock companies.

Expenses, losses and profits are distributed mostly among the members in accordance with their labour participation. The members have solidary responsibility in the limits of their investments

58


Main Criteria for the Choice of an Efficient Type of Ownership No.

Business objectives (conditions) of an entrepreneur

Types of ownership Individual proprietor Special Partnership

1

2

3

General Partnership

4

Limited partnership

5

Limited liability company

6

Additional liability company

7

Closed Joint Stock Company

8

Open Joint Stock Company

9

Producers' cooperative

10

11

1.

Size of business

1.1. 1.2.

Running of a large business Running of medium-size business

-

0

-

0

0 +

0 +

0 +

+

0

1.3. 2. 2.1.

Running of small business Relation to risks of external intervention Reduction of risks of external intervention

+

+

+

+

0

0

0

-

+

+

+

+

+

+

+

+

-

+

-

-

-

-

-

-

-

+

-

3.

The requirement of attracting additional capital investment by constitutors

3.1.

Additional capital investment is not required for setting up and running + business 0 Small additional capital investment is required for setting up and running business

+

0

0

+

0

+

0

+

+

+

+

0

+

0

0

0

Large additional capital investment is required for setting up and running business Risk characteristics of a business sphere

-

-

-

-

-

-

+

-

0

0

0

0

0

0

0

+

0

+

0

-

-

+

-

+

-

+

+

-

+

+

0

+

0

-

+

-

0

-

-

+

0

+

+

0

2.2

3.2.

3.3. 4. 4.1. 4.2. 5. 5.1.

Neutral relation to risks of external intervention (expansion or random changes in the composition of participants)

Setting up an organization for running a stable business Setting up an organization for conducting risk (venture) business activity Relation to participants' liability for the results of joint business Higher participants' liability for the results of joint business

5.2

Limitation of participants' liability for the results of joint business

6

Relation to the conditions of cooperation with business partners

6.1

Forming the initial image of a reliable company at the moment of establishing an entity in order to get benefits from external partners (suppliers etc.)

0

+

+

-

+

-

+

0

6.2

Providing favorable conditions for cooperation of the participants of the 0 organization

+

+

+

0

+

0

0

+

7

Relation to the confidentiality of conducting a business activity

7.1.

Guarantees of the confidentiality of mechanisms and results of conducting a + business activity

0

+

+

+

+

0

-

+

7.2

Openness of business results (publication of financial and operating results in mass media)

0

-

-

-

-

0

+

-

59


8

Perspectives of (potential for) the setting up corporate networks (possibility to be a constitutor)

8.1

Potential for establishing networks of companies on the basis of contractual 0 agreements

+

0

0

0

0

0

0

0

8.2

Potential for establishing networks of organizations on the basis of property relations (possibility to operate as a parent company)

-

-

-

0

0

+

+

0

Agreed notations: + — type of ownership is preferable under given conditions, 0 — type of ownership is neutral under given conditions, - — type of ownership is not adequate under given conditions

60


2.2 REGISTRATION OF A BUSINESS State Registration Procedure Procedure of state registration of legal entities and individual proprietors is established by the Federal Law No. 129-Ф3 of 08.08.2001 "On State Registration of Legal Entities and Individual Proprietorships", as amended. State registration of legal entities and individual proprietorships is carried out by a federal authorized agency that is the Ministry of Taxation of the RF through its regional bodies (hereinafter referred to as "the registration authority"). Registration Terms and Registering Authorities State registration procedure is carried out within the maximum 5 days term after documents have been filed to the registration authority. The entity legally comes into existence when the registration authority makes a respective entry in a state register: – the Unified State Register of Legal Entities for legal entities; – the Unified State Register of Individual Entrepreneurs for individual proprietors. The state registration of a legal entity is made at the location of a permanently acting executive body indicated by the applicant in the request for the state registration and if no such executive body is available – at the location of another body or person entitled to act from the name of a legal entity without the power of attorney. State registration of an individual proprietor shall be carried out at the place of his residence. In St. Petersburg "one-window" registration of legal entities and individual proprietors is practiced: documents for registration are filed to the Single Centre for registration of legal entities and individual proprietors – Interregional Inspectorate of the Ministry of Taxation of the RF No. 15 in St. Petersburg, located at the address – 39, Professora Popova St., (hereinafter referred to as "the Unified Registration Centre "). In accordance with the “one-window” principle the Unified Registration Center independently carries out all the activities not only for registering a legal entity or a private entrepreneur but also for registering them as tax-payers and at the territorial subdivisions of the state off-budget funds (executive bodies of the Fund of the Social insurance of Russia and the Pension Fund of Russia) and statistical bodies31

The Procedure of the Filing Procedure The list of documents and the filing procedure are also established by the Federal Law No. 129-O3 of 08.08.2001 "On State Registration of Legal Entities and Individual Proprietors" and depend on the types of information subject to registration: 1) For legal entities these include information about: – establishing; – reorganizing; – liquidation; – making changes to the constituent documents; 31

According to the Federal Law No. 185-ФЗ of 23.12.2003 “On Amending the RF Legislative Acts for the Purpose of Improving the State Registration Procedure for Legal Entities and Individual Proprietors” as in force since 01.01.2004.


– introducing changes concerning information about the legal entity but not requiring making changes to constituent documents. 2) For individual proprietor these include information about: – State registration of individuals as individual proprietors; – Termination of activity in a form of an individual proprietor; – Amending the data about a private entrepreneur contained in the Uniform state Register of private entrepreneurs. State registration requires paying a state duty as established by the Tax Code of the RF (for detailed information on the procedure of paying the state duty see “Taxation” Chapter of this Guide). Registration with off-budget funds and state statistics agencies is free. The registration agency has a maximum of one working day to issue (to forward) two documents to the applicant — one proving that an entry has been made in a proper register and another confirming that tax registration has been completed. It shall also present information within a maximum five days period from a unified state register of legal entities to state offbudget funds for legal entities to be registered as insurers32. Regarding non-profit organizations, state and municipal unitary enterprises, chambers of commerce, public associations, political parties, national and cultural autonomies, religious organizations and trade unions federal legislation has set a special registration procedure. For details see the following federal laws (as amended): – Federal Law No. 12.10.1996 № 7-ФЗ of 12.10.1996 “On non-profit organizations”. – Federal Law No. 161-ФЗ of 14.11.2002 “On State and Municipal Unitary Enterprises”, Article 10. – Federal Law No. 95- ФЗ of 11.07.2001 “On Political Parties”, Articles 15 to 20. – Federal Law No. 74- ФЗ of 17.06.1996 “On National and Cultural Autonomy”. – Federal Law No. 10- ФЗ of 12.01.1996 “On Trade Unions, Their Rights and Guarantees of Their Activity”, Article 8. – Federal Law of No. 82- ФЗ 19.05.1995 “On Public Associations”, Article 21. – The Law of the RF No. 5340-I of 07.07.1993 “On Chambers of Commerce in the Russian Federation, Article 9. – Federal Law No. 395-I of 02.12.1990 “On Banks and Banking”, Articles 12 to 23. Legal entities that are commercial organizations with foreign investments are subject to registration according to a common procedure at the location of a standing executive authority that is specified in the constitutors’ application for registration. For the lack of such local authority legal entities shall be registered with another local authority at the location of such authority or an individual who has the right to act in their name without obtaining a power of attorney33, i. e. the documents established by the law shall be filed to the Unified Registration Center. Tax Registration34

32

According to the RF Government Executive Order No. 110 of 26.02.2004 “On Improving State Registration Procedures for Legal Entities and Individual Proprietors”. 33 Under Article 20 of the Federal Law No. 160-ФЗ of 09.07.99 (as amended on 08.12.03 No. 117-ФЗ ) “On Foreign Investment to the RF” and Item 2 of Article 8 of the Federal Law No. 129-ФЗ of 08.08.01 “On State Registration”. 34 See Articles 83,84 of the Tax Code of the RF, the Order of the Ministry of Taxation of the RF of 09.08.2002 No. БГ -3-09/426 “On the Order of Registering with the Tax Authority at the Location of a Legal Entity Registered after 01.06.2002”, the letter of the Ministry of Taxation of the RF of 15.04.2003 No. ММ -6-09/439 “On Issuing a Tax Registration Certificate to Legal Entities Registered after June 1,2002”, the Order of the Ministry of Taxation of the RF of 28.07.2003 No. 3-09/426 “On Registering Foreign Organizations with Tax Authorities” 69


For the purpose of tax control tax payers shall be subject to registration respectively with tax agencies at the location of the organization and at the location of its separate subdivisions, at the place of residence of an individual and likewise at the location of their real estate and transport that are subject to registration. A company or an individual entrepreneur conducting commercial activity without tax registration shall be subject to a fine that is worth 10% of business revenues received during a specified period and can not be lower than RUR 20,000. A company or an individual proprietor conducting commercial activity without tax registration for more than three months shall be subject to a fine that would be worth 20% of business revenues received during the period of working without tax registration exceeding 90 days. Tax registration for large tax payers has certain peculiarities. It relates to Russian35 and 36 foreign organizations and taxpayers working under product sharing agreement37. While registering with tax authorities a newly established legal entity or an individual registered as an individual proprietor shall be assigned a taxpayer's identification number (INN) and respective registration reason code (KPP) to a new legal or physical entity. The Scheme of State Registration as an Individual Proprietor

35

See Particularities of large taxpayers’ registration established by the Order of the Ministry of Finance of the RF of 11.07.2005 No. 85n. 36 See the Order of the RF Ministry of Taxation of 07.04.2000 No. A П -3-06/124 “On Approval of the Regulation on Peculiarities of Tax Registration of Foreign Organizations” and the RF Ministry of Taxation Order of 28.07.2003 No. БГ -3-09/426. 37 See Chapter 26.4 of the Tax Code of the RF. 70


The Scheme of Legal Entities' State Registration

Documents issued upon registration of a legal entity: 71


1. Legal entity's registration certificate (document proving state registration) The main state registration number (OGRN) shall be assigned. The number shall be used as a registration number for the registration file of the legal entity and shall be indicated in all entries of the state register and in all documents of the legal entity along with its title. 2. Tax registration certificate (the document proving tax registration). The legal entity is assigned: – Taxpayer's identification number (INN); – Respective registration reason code (KPP). Tax registration shall be carried out at the district tax inspectorate at the location of the organization indicated in the constituent documents submitted for registration. 3. The information letter on the inclusion of a legal entity to the Unified State Register of enterprises and organizations (the document proving the fact of registration and identification with statistics bodies). It includes: – the OKPO identification code (the Russian National Classifier of Enterprises and Organizations or RNCEO); – the OKATO code of location (the Russian National Classifier of AdministrativeTerritorial Formations, RNCAT); – the OKONH code of a type of activity (the Russian National Classifier of Economy Branches); – the code of affiliation with the OKOGU managing body (the Russian National Classifier of State Authorities); – the OKFS ownership form code (the Russian National Classifier of Forms of Ownership); – the OKOPF code of types of ownership (the Russian National Classifier of Types of Ownership); – other requisites. 4. The notice of registering as an insurer with executive bodies of the RF Social Security Fund under compulsory social insurance against labor accidents and job-related diseases. When registering the insurer is assigned: – the registration number; – the subordination code. The RF Social Security Fund bodies shall determine: – the branch office of the Fund's regional department that in future would liaise with an insurer; – the rate of professional risk on the basis of the main type of economic activity (OKVED) for the purpose of setting the insurance premium rate under compulsory social insurance against labor accidents and job-related diseases. The RF Social Security Fund bodies shall draw up: – "Notice of the insurance premium rates under compulsory social insurance against labor accidents and job-related diseases" The notice is valid for one year. The insurance premium rate depends on the professional risk rate that shall be determined on the basis of OKVED. The insurance premium rate can be changed only for the next calendar year provided the main activity type is confirmed. 5. The Notice of registration as an insurer with the RF Pension Fund regional body (PFR) of an enterprise that certifies registration as an insurer and contains requisite information about the in surer' registration number, the procedure and terms of making contributions under compulsory pension insurance and about submission of data on insured persons to the regional body of the PFR according to a established procedure.

72


Addresses and Phone Numbers of Tax Registration Agencies of the Ministry of Taxation of the RF in St. Petersburg (The MOT Inspectorates in St. Petersburg) Code Tax Registration Agency's Name

Tax Registration Agency's Address

Phone

7800

Regional Department of the 76, Fontanka emb., St. Petersburg, 191180 MOL of Russia

Phone: 315-22-42

7801

Interregional Inspectorate of 55, Bolshoy Pr., letter "B", St. Petersburg, the MOL of the RF № 16 in 199178 St. Petersburg Interregional Inspectorate of 13, Parkhomenko Pr., St. Petersburg, 194156 the MOL of the RF № 17 in St. Petersburg

Phone: 321-3454 Fax: 321-3469

7802

Phone: 335-5707 Fax: 335-5687

7804

Interregional Inspectorate of 13/1 Arsenalnaya Emb., St. Petersburg, 195009 Phone: 542-6770 the MOL of the RF № 18 in Fax: 541-8316 St. Petersburg

7805

Interregional Inspectorate of 23 (suite 1), Tramvayny Pr., St. Petersburg, Phone:635-5293 the MOL of the RF № 19 in 198216 Fax: 335-4733 St. Petersburg

7806

Interregional Inspectorate of 12/34 Bolshaya Porokhovskaya St. the MOL of the RF № 21 in , St. Petersburg, 195027 St. Petersburg

7807

Interregional Inspectorate of 37, Partizana Germana St., St. Petersburg, Phone: 740-4412 the MOL of the RF № 22 in 198334 Fax: 730-8069 St. Petersburg

7810

Interregional Inspectorate of 182, Moskovsky Pr., St. Petersburg, 196105 the MOL of the RF № 23 in St. Petersburg

7811

Interregional Inspectorate of 78, Dalnevostochny Pr., St. Petersburg, 193315 Phone: 447-7937 the MOL of the RF № 24 in Fax: 447-7790 St. Petersburg

7813

Interregional Inspectorate of 11/64 Lenina St., St. Petersburg, 197136 the MOL of the RF № 25 in St. Petersburg

Phone: 335-1448 Fax:230-5551

7814

Interregional Inspectorate of 71, Savushkina St., St. Petersburg, 197183 the MOL of the RF № 26 in St. Petersburg

Phone: 430-9693 Fax: 430-1853

7816

Interregional Inspectorate of 65, Salova St., St. Petersburg, 192102 the MOL of the RF № 27 in St. Petersburg

Phone: 335-1229 Fax: 767-1166

7817

Interregional Inspectorate of 22, Lenina Pr., Kolpino, 196653 the MOL of the RF № 20 in St. Petersburg

Phone: 461-7845 Fax: 461-7119

7819

Interregional Inspectorate of 4/2, Razvedchika Blvd., Petrodvoretz, 198516 the MOL of the RF № 3 in St. Petersburg

Phone: 420-9950 Fax: 420-5822

7820

Interregional Inspectorate of 14, Malaya St., Pushkin, 196600 the MOL of the RF № 2 in St. Petersburg

Phone: 466-2429 Fax: 466-2433

7834

Interregional Inspectorate Taxpayers

Interregional 53, Liteyny Pr., St. Petersburg, 191104 on Major

Phone: 740-4151 Fax: 740-4892

7835

Interregional Inspectorate of 53, Liteyny Pr., St. Petersburg, 191104 the MOL of the RF № 4 in St. Petersburg

Phone: 272-0073 Fax: 335-1293

7836

Interregional Inspectorate of 7/2, Zemledelcheskaya St., St. Petersburg, Phone: 740-4374 the MOL of the RF № 5 in 197343 Fax: 335-1291 St. Petersburg

Phone: 222-2593 Fax: 227-2446

Phone: 388-3157 Fax: 387-8472

73


7837

Interregional Inspectorate of 9-а Solyanoy Drive the MOL of the RF № 6 in St. Petersburg, 191028 St. Petersburg

Phone: 740-4296 Fax: 740-4290

7838

Interregional Inspectorate of 133 Griboedov Chanal Emb., St. Petersburg, Phone:314-9582 the MOL of the RF № 7 in 190068 Fax: 310-2302 St. Petersburg

7839

Interregional Inspectorate of 133 Griboedov Chanal Emb., St. Petersburg, Phone: 635-5242 the MOL of the RF № 8 in 190068 St. Petersburg

7840

Interregional Inspectorate of 68/40, Nevsky Pr., St. Petersburg, 191025 the MOL of the RF № 9 in St. Petersburg

Phone: 571-2489 Fax: 571-1848

7841

Interregional Inspectorate of 68/40, Nevsky Pr., St. Petersburg, 191025 the MOL of the RF № 10 in St. Petersburg

Phone: 272-7343 Fax: 315-9074

7842

Interregional Inspectorate of 46/48, Chaykovskogo St., St. Petersburg, Phone: 275-9428 the MOL of the RF № 11 in 191123 Fax: 275-9429 St. Petersburg

7843

Interregional Inspectorate of 6, Sestroretsk, Borisova St., 197701 the MOL of the RF № 12 in 41 Posadskaya, Kronshtad 197760 St. Petersburg

7845

Interregional Inspectorate of 136 cons 2 Leninsky Pr. St. Petersburg, 191028 Phone: 335-4504 the MOL of the RF № 13 in Fax: 335-4504 St. Petersburg

7846

Interregional Inspectorate of 2 Pestelya St. Petersburg, 191028 the MOL of the RF № 14 in St. Petersburg

7847

Interregional Inspectorate of 39, Professora Popova St., St. Petersburg, Phone: 335-1403 the MOL of the RF № 15 in 197376 St. Petersburg

7848

Interregional Inspectorate of 13 Kuznetsovskaya St. Petersburg, 196128 the MOL of the RF № 28 in St. Petersburg

Phone: 740-4500 Fax:434-3160

Phone: 335-1642 Fax: 335-1645

Phone: 635-5282 Fax: 635-5291

Registration with State Statistics Bodies When registering with state statistics bodies an individual entrepreneur or an organization receives the document, proving the fact of registration and identification of a legal entity or an individual entrepreneur with statistics bodies (information letter). The information letter includes: OKPO identification code (Russian National Classifier of Businesses and Organizations), OKATO location code (Russian National Classifier of Administrative-Territorial Formations), the OKONH code of a type of activity (Russian National Classifier of Economy Branches), the OKOGU code of affiliation with a managing body, (Russian National Classifier of State Authorities), the OKFS ownership form code (Russian National Classifier of Forms of Ownership), the OKOPF code of business legal structures (Russian National Classifier of Business Legal Structures), other requisites. Application filing for the purpose of registration with the state statistics authorities is the same for registration of subsidiaries and separate subdivisions of legal entities. Registration of subsidiaries and separate subdivisions of legal entities, assigning of classification codes (OKONH, OKFS etc.) and providing of national classifiers is carried out by the Regional Department of the Federal State Statistics Service in St. Petersburg and the Leningrad Region (Petrostat). Registration of subsidiaries and separate subdivisions of legal entities, assigning of classification codes (OKONH, OKFS etc.) and national classifiers is carried out by the Regional Department of the Federal Statistics Service in St. Petersburg and the Leningrad Region (Petrostat). 74


Addresses and Phone Numbers of Interdistrict (District) State Statistics Departments Department

Address

The territorial body of the federal service of state statistics in St. Petersburg and Leningrad region (Petrostat) The Admiralteyskiy interdistrict department (including representatives of the department in Vasileostrovskiy district) The Kalininsky interdistrict department (including representatives of the department in Krasnogvardeysky district)

39, Professora Popova St., St. Petersburg, 197376

Phone

55, Bolshoy Pr., P.S., St. Petersburg, 199178

Phone :230-7520 Fax: 230-0145 psc@gostat.spb.ru www.gostat.spb.ru 321-3295

13/1, Arsenalnaya Emb., St. Petersburg, 195009

542-0073

Kirovsky district department

18, Stachek Pr., St. Petersburg, 198095

252-1660

The Krasnoselsky interdistrict department (including representatives of the department in Petrodvortsovy district)

3, Partizana Germana St., St. Petersburg, 198329

735-0527

The St. Petersburg interdistrict 39, Professora Popova St., St. Petersburg, 197101 department of state statistics (including the following districts of St. Petersburg: Vyborgskiy, Kurortniy, Pavlovskiy, Petrogradskiy, Primorskiy, Pushkinskiy and Kronshtadtskiy, and the following towns of Leningrad region: Kirovsk, Shlisselburg, Sosnoviy Bor)

234-0954

Moscovsky district department

129, Moskovsky Pr., St. Petersburg, 196006

388-9555

Nevsky district department

163, Suite 2, Obukhovskoy Oborony Pr., St. Petersburg, 193131

568-0325

The Frunzensky interdistrict department (including representatives of the department in Kolpinsky district) Tsentralny district department

46, Prazhskaya St., St. Petersburg, 192241

576-8495

8, Mokhovaya St., St. Petersburg, 191028

275-0432

Registration with Social Security Fund Bodies of the RF38 Registration with executive bodies of the RF Social Security Fund under compulsory social insurance against labor accidents and job-related diseases is required for: 1) legal entities; 2) legal entities at the location of their separate subdivisions that have a separate balance sheet, a settlement account, accrue payments and other benefits to individuals; 3) individuals that have entered into a labor contract with an employee; 4) individuals obliged to pay insurance premiums because of entering into a civil legal contract. Legal entities and individuals indicated in 1-3 items along with registering as insurers under compulsory social insurance against industrial accidents and occupational diseases shall be recorded by the Fund's executive bodies as insurers under compulsory social insurance.

38

According to the Social Security Fund Resolution of 23.03.2004 No. 27 “On Regulating Insurers’ Registration Process Performed by the Executive Bodies of the RF Social Security Fund” that took effect on 07.09.2004 and validated “The regulating procedure of registration performed by the RF Social Security Fund executive bodies of legal entities on the basis of the Single State Register of Legal Entities data” and “The procedure of registering legal entities with the RF Social Security Fund executive bodies as insurers at the location of separate subdivisions and individuals”. 75


Upon registration the insurer shall be assigned a registration code and a code of subordination and the "Notice of registration as an insurer" shall be drawn up. The professional risk rate shall be determined on the basis of OK VED (Russian Classifier of Economic Activities) in order to set insurance rate under compulsory social insurance against labor accidents and job-related diseases. "Notice of the insurance premiums rates under compulsory social insurance against labor accidents and job-related diseases shall be drawn up. Insurance rate shall be set for one year (for more detailed information see the "Compulsory non-tax payments" chapter of this guide). Legal entities shall be registered with the St. Petersburg Regional Department of the RF Social Security Fund at the insurers' registration division. The data contained in the Unified State Register of Legal Entities are forwarded in an electronic form through the Unified Registration Centre to the registration division of the Regional Department. On the basis of the data the insurers' registration division shall complete registration, draw up respective documents that include the Notice of registration as an insurer and the Notice of insurance premiums rates and forward them to the Unified Registration Centre. In certain cases documents may be sent to an insurer by mail within the terms set by regulatory documents. Registration of legal entities at the location of separate subdivisions and individuals shall be carried out straight by the branch offices of the Regional Department within the period not exceeding five working days on the basis of forms set in the Appendixes 1 and 2 to the Procedure of Registration. These forms shall be filed: — by a legal entity at the location of a separate subdivision within a maximum 30 days period after a separate subdivision has been established; — by an individual within 10 days maximum after making the first work contract with the first employee or a respective civil law contract providing the insurer's liability to pay insurance premiums under compulsory social insurance against labor accidents and jobrelated diseases. Registration with the RF Pension Fund Bodies Participation in compulsory pension insurance is required for: 1) Those that make payments to individuals, namely: — organizations; — individual proprietors; — individuals. 2) Individual proprietors, lawyers (private investigators and notaries public who engage in private practice are equated to them and fall in this category). If an insurer can be attributed to several categories of insurers identified in Items 1 and 2 of the first clause this insurer shall calculate and make insurance contributions on each ground. The insurers' registration with the RF Pension Fund Bodies is compulsory and shall be carried out on the territory of St. Petersburg and the Leningrad Region in the following way: 1) Legal entities shall get registered with the Pension Fund Bodies within the period not exceeding 5 days after the extracts from the Unified State Register of Legal Entities (EGRUL) are submitted from the tax bodies to the Department of the RF Pension Fund); 2) Individuals registered as individual proprietors and heads of farms making contributions to the RF Pension Fund budget shall get registered at their place of residence (at the place of registration). Registration with the RF Pension Fund shall be carried out within a maximum 5 days period after the extracts from the Unified State Register of Individual Entrepreneurs (EGRIP) are submitted from the tax bodies to the Department of the RF Pension Fund; 3) Legal entities that have separate subdivisions shall get registered at the location of their separate subdivisions that have a separate balance sheet and a settlement account, make payments and other compensations to individuals. Registration is to be completed within a maximum 30 days 76


period after a subdivision has been established; 4) Private notaries shall get registered with the RF Pension Fund at their place of residence (at the place of registration) or where they conduct their activities after they have received the tax registration certificate. Registration shall be completed within a maximum 30 days period after getting a notary license; 5) Lawyers shall get registered with the bodies of the RF Pension Fund at their place of residence (at the place of registration) after they get the tax registration certificate. Registration shall be completed within a maximum 30 days period after getting a lawyer's certificate; 6) Individuals that have labor contracts with their employees, make payments to them under civil law contracts and make insurance contributions under the RF legislation shall get registered at their place of residence. Registration shall be completed within a maximum 30 days period after the contracts have been signed. Upon the completion of registration the Notice of registration with the Regional Department of the RF Pension Fund shall be sent by mail or handed over to an insurer. Addresses and Phone Numbers of the Regional Department of the RF Pension Fund The department of the Pension Fund in St. Petersburg and Leningrad region

73, Engelsa Pr., St. Petersburg, 194214

District offices of the RF Pension Fund in St. Petersburg

Phone: 553-2078 Phone/fax.: 554-0822 www.opfr.spb.ru Address

The administration of the Pension Fund of the Russian Federation in Admiralteyskiy district

8 lit «а»Glinky St. Petersburg, 190068

The administration of the Pension Fund of the Russian Federation in Vasileostrovsky District

27, Shevechenko St., St. Petersburg

The administration of the Pension Fund of the Russian Federation in Vyborgskiy District

73, Engelsa Pr., St. Petersburg, 194214

The administration of the Pension Fund of the Russian Federation in Kalininsky District

73, Engelsa Pr., St. Petersburg, 194214

The administration of the Pension Fund of the Russian Federation in Kirovsky District

67 (suite 8), Stachek Pr., St. Petersburg

The administration of the Pension Fund of the Russian Federation in Krasnoselsky District

3, Partizana Germana St., St. Petersburg 198205

The administration of the Pension Fund of the Russian Federation in Kolpinsky District The administration of the Pension Fund of the Russian Federation in Krasnogvardeysky District The administration of the Pension Fund of the Russian Federation in Kronshtadsky District

14 A Truda St., Kolpino 60 Energetikov Pr., St. Petersburg 17 A, Vosstaniya St., Kronshtadt

The administration of the Pension Fund of the Russian Federation in Kurortny District

1, Svobody Sq., Sestroretsk

The administration of the Pension Fund of the Russian Federation in Moskovsky District

15 Tomchaka St., St. Petersburg

The administration of the Pension Fund of the Russian Federation in Nevsky District

63 (suite 1) Bolshevikov pr. St. Petersburg, 193315

The administration of the Pension Fund of the Russian Federation in Petrodvoretsky District

73, Engelsa Pr., St. Petersburg, 194214

The administration of the Pension Fund of the Russian Federation in Petrodvoretsky District

1 (lit A) Konno-Grenaderskaya Str. St. Petersburg, 198516

The administration of the Pension Fund of the Russian Federation in Primorsky District

73, Engelsa Pr., St. Petersburg, 194214

The administration of the Pension Fund of the Russian Federation in Cenralny District

73, Engelsa Pr., St. Petersburg, 194214

The administration of the Pension Fund of the Russian Federation in Frunzensky District

73, Engelsa Pr., St. Petersburg, 194214

The administration of the Pension Fund of the Russian Federation in Pushkinsky and Pavlovsky District

28, Novaya St., Pushkin

The administration of the Pension Fund of the Russian Federation in Lomonosov and the Lomonosovsky District

30, Dvortsovy Pr., Lomonosov

77


2.3 Opening of a Bank Account Temporary (Accumulating) Account Under the effective legislation at the moment of state registration a legal entity (in a form of a limited liability company) must have raised not less then 50% of the authorized capital. A bank may open a temporary (accumulating) account for the money to be placed to it. A bank accumulating account shall be set up only for the founders to pay the authorized capital while registering a new legal entity. The clients' account shall be assigned a number that shall be kept at the opening of a bank account. Upon paying the authorized capital a bank shall issue a reference to be presented when registering with tax authorities. Money shall be withdrawn from the account at the moment of opening a settlement account. If registration is denied to a legal entity or founders decide not to set up a business the accumulating account shall be closed and money shall be returned to founders at their requests List of documents needed to open a temporary (accumulating) bank account: — The application for the opening of a bank account. — The decision on the setting up a legal entity. — Constituent documents. — Power of attorney of the constitutor's (constitutors') representative for making a contract with the bank on the opening of a temporary account. Settlement Account Opening of a settlement account with making a contract with a bank on rendering cash and settlement services is one of the necessary steps that are to be taken while setting up a business. Cash and settlement services to clients shall be carried out only if a settlement (current) account is opened. Banks shall set up bank accounts for organizations, individual proprietors only after a tax registration certificate is presented and must report within a five days period after the account opening or closing about it to the local tax authorities with which an organization or an individual proprietor is registered (Article 86 of the Tax Code of the RF). To open a settlement account a legal entity is required to present the following documents to the bank: — client's standard application for bank account opening; — state registration certificate (a copy verified and certified by a notary or a registration authority); — the decision on the setting up a legal entity; — constituent documents (according to the Tax Code of the RF); — tax registration certificate (the original); — list of authorized signatures and seals in three copies one of which shall be certified by a notary or a higher authority; — documents confirming the powers of the client's officials to manage the account (specifically the procedure to appoint a senior accountant in case this position is provided in a list of staff members); — the data from questionnaires concerning the company officials who are authorized to manage the account and are identified in the list of authorized signatures and seals (by agreement with the client); — information letter from the state statistics body confirming that the company has been included in the Unified State Register of enterprises and organizations (a copy verified 78


and certified by a notary of by the Bank). To open a settlement account it is necessary that an individual registered as an individual proprietor should present the following documents to the bank: — client's standard application for the bank account opening; — certificate on state registration as an individual proprietor (a copy verified and certified by a notary or a registration authority); — list of authorized signatures and seals (if there is any) in three copies one of which is certified by a notary; — tax registration certificate (the original); — information letter from the state statistics body confirming that the company has been included in the Unified State Register of enterprises and organizations (a copy verified and certified by a notary of by the bank). When choosing a bank rendering cash and settlement services it is important to consider a number of details that may sufficiently affect the work of a business or an individual proprietor. The first thing that is necessary to consider is the bank's reputation. Making sure that the bank has a stable position and extensive work experience in the market, a developed network of regional departments and recommendations of their clients will allow to avoid possible problems with carrying out settlement operations. It is recommended to carry out a thorough comparison of the bank's rates for the settlement transactions that the business is planning to carry out in future, because most banks exercise a differentiated approach to commission fees charging. Efficiency of transactions depends on whether the bank has its own automated payment system that unites all regional banks, a computerized document circulation system, participates in the system of interregional electronic payments of the RF Central Bank settlement system (the MEP). Transactions between commercial banks located in various regions of Russia and participating in the MEP are carried out within 1 or 2 days. Cash services package is required for making payments with cash through a cash department. A cash services package usually includes: – receipt of cash revenue to the bank's cash department or through specialized structural – subdivisions dealing with legal entities; – withdrawal of cash; – collection of revenues by the bank's collection service; – delivery of salaries by the bank's collection service. It is also very important to pay attention to how the bank's collection service is equipped and the possibility of cash delivery with immediate placement of revenues to the organization's bank account. Running accounts in foreign currency, cash and settlement services in foreign currency are necessary for those who engage in export-import transactions. And it is especially important that while dealing with these transactions the bank should fulfill the functions of a currency control agent, i. e. control over the export revenues inflow, control over the validity of the use of foreign currency in payments for imported goods, signing of transaction passports under exportimport contracts, clients' consulting. Using the automated payment system like the "Bank-Client" system makes it possible to organize an electronic data interchange with a bank, to forward directions and get information on the accounts' balance and funds' flow. Reliability is a necessary requirement for these systems: a system of data protection, encryption coding, document's continuity testing, protection against unauthorized access to the bank account, confirmation of the authorship and authenticity of electronic documents. These systems allow users to improve efficiency and reliability of document processing, to reduce settlement transaction costs, the expenses on visiting 79


the bank, to save time from making settlement transactions, to computerize the archiving of payment documents.

2.4 Licensing A license is a special permit for carrying out a certain activity issued by a licensing body to a legal entity or to a private entrepreneur and assuming obligatory observing requirements and conditions39. A licensed activity is an activity for the execution of which at the territory of Russia a license is required40. Licensed activities include activities the execution of which may result in causing damage to rights, interests and health of people, to defense and security of the state, to the cultural heritage of the Russian Federation when control of such activities is impossible with other methods but licensing41. The activity for which a license was provided can be executed only by the legal entity or private entrepreneur who received the license42. In accordance with Federal Law No. 128-FZ from 08.08.2001 "On Licensing Certain Activities" as amended on 22.07.2008 the following activities require licensing43: 1) private safeguarding activity (licensed by the Ministry of Internal Affairs); 2) private investigation activity (licensed by the Ministry of Internal Affairs); 3) cargo shipment by inner water transport; 4) transportation of passengers by inner water transport; 5) cargo shipment by air; 6) passengers' transportation by air; 7) rail haulage of cargo-luggage; 8) rail haulage of cargoes; 9) cargo shipment by marine transport; 10) transportation of passengers by marine transport; 11) transportation of passengers by motor vehicles equipped for the transportation of more than eight persons (except for the cases when identified activity is conducted by a legal entity or an individual proprietor for their own needs); 12) transportation of passengers and luggage by rail; 13) loading and discharging of hazardous cargoes on and from inner water transport; 14) loading and discharging of hazardous cargoes in sea ports; 15) loading and discharging of hazardous cargoes on and from rail transport; 16) rendering data encryption services; 17) application of industrial explosive materials; 39

According to Art. 2 of the Federal Law of 08.08.2001 No. 128-FZ «About Licensing of Certain Kinds of Activities» (ed. 05.02.2007).

40

According to Art. 2 of the Federal Law of 08.08.2001 No. 128-FZ «About Licensing of Certain Kinds of Activities» (ed. 05.02.2007). 41 According to Art. 4 of the Federal Law of 08.08.2001 No. 128-FZ «About Licensing of Certain Kinds of Activities» (ed. 05.02.2007). 42 According to Art. 7 of the Federal Law of 08.08.2001 No. 128-FZ «About Licensing of Certain Kinds of Activities» (ed. 05.02.2007). 43 According to Art. 17 of the Federal Law of 08.08.2001 No. 128-FZ «About Licensing of Certain Kinds of Activities» (ed. 05.02.2007).

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18) production of aircraft including double-purpose aircraft; 19) production of industrial explosive materials; 20) production of weapons and military equipment; 21) production of pharmaceuticals (Licensed by the Ministry of Health Care and Social Development of the RF); 22) conducting underground\mine surveys; 23) production of medical equipment (licensed by the Ministry of Health Care and Social Development of the RF); 24) production of weapons and major components of firearms; 25) production of cartridges for weapons and spare parts of cartridges; 26) production of fireworks; 27) conducting installation, operation and maintenance support of fire prevention systems of buildings and constructions; 28) aircraft engineering including double-purpose aircraft; 29) weapons and military equipment engineering; 30) ensuring and production of ammunition items and their major components; 31) development and production of encrypting tools protected with encrypting tools of information and telecommunication systems; 32) development, production, selling and purchasing for the purpose of reselling of special tools for confidential data gathering by individual proprietors and legal entities conducting commercial activity; 33) aircraft and double-purpose aircraft maintenance; 34) weapons and military equipment maintenance; 35) construction of buildings and structures except for buildings and structures of the III level of responsibility; 36) medical equipment maintenance (except for the cases when identified activity is conducted by a legal entity or an individual proprietor for their own needs) (licensed by the Ministry of Industry and Power Energy of the RF); 37) trade in weapons and military equipment; 38) trade in weapons and major components of firearms; 39) trade in cartridges for weapons; 40) renovation of objects of cultural heritage(historical and cultural monuments);rail cargo haulage (transportation of cargoes without entering into a contract for shipment services) by rail tracks of general usage, except for removing from dead-end rail tracks or placing of arrived cargoes to dead-end rail tracks; 41) recycling of ammunition items and their major components; 42) recycling of weapons and military equipment; 43) pharmaceutical activity (licensed by the Ministry of Health Care and Social Development); 44) storage of industrial explosive materials; 45) operating explosive production facilities; 46) operating chemically hazardous production facilities; 47) exhibiting weapons, major components of fire arms, cartridges for weapons. 48) reproduction (production of copies) of audiovisual pieces and records on all kinds of media (licensed by the Federal Agency for Legislation Observance in Mass Media and Cultural Heritage Protection); 49) performing works and rendering services in storage, shipment and disposal of chemical weapons; 50) performing works involving exerting strong influence on geophysical processes and phenomena; 51) performing works involving exerting strong influence on hydro meteorological processes and phenomena; 81


52) geodesic activity; 53) collecting of weapons, major components of activity in the field of hydrometeorology and related fields; 54) detecting electronic facilities designed for indoor confidential data gathering and technical equipment (except for the case when this activity is conducted by a legal entity of an individual proprietor for their own purposes); 55) printing of products protected from counterfeiting , including blanks of securities, and selling these products; 56) production and maintenance of gauge devices; 57) ensuring aviation safety; 58) organizing and operating gambling and\or betting, including using of roulette tables and other items of gambling equipment in casinos (licensed by the Federal Agency of Physical Culture and Sport of the RF); 59) organizing and operating gambling and\or betting, including using of gambling equipment (except for roulette tables) (licensed by the Federal Agency of Physical Culture and Sport of the RF); 60) towage with marine transport (except for the cases when the identified activity is conducted by a legal entity or an individual proprietor for their own needs); 61) fire preventing and fighting; 62) conducting industrial safety examinations; 63) producing and selling special gambling equipment designed for gambling business needs; 64) development and\or production of inside data protection means; 65) distribution of industrial explosive materials; 66) distribution of fireworks of the 4th and 5th categories according to national standards; 67) distribution of encrypting devices; 68) renovation of objects of cultural heritage (historical and cultural monuments); 69) collecting, using, processing, transportation and disposal of hazardous wastes; 70) technical protection of confidential information; 71) maintenance of encrypting devices; 72) activity related to using agents of dangerous infections; 73) activity, related to narcotic drugs and psychotropic substances turnover (development, production, processing, storage, selling, distribution, purchasing, using, disposal), included in the List I under the Federal Law No. 3-O3 of January 8, 1998 "On Drugs and Psychotropic Substances"; 74) activity, related to narcotic drugs and psychotropic substances turnover (development, production, processing, storage, selling, distribution, purchasing, using, disposal), included in the List II under the Federal Law No. 3-O3 of January 8, 1998 "On Drugs and Psychotropic Substances"; 75) activity, related to narcotic drugs and psychotropic substances turnover (development, production, processing, storage, selling, distribution, purchasing, using, disposal), included in the List III under the Federal Law No. 3-O3 of January 8, 1998 "On Drugs and Psychotropic Substances"; 76) job placement of the RF citizens abroad (licensed by the Migration Agency of the RF); 77) procuring, processing and selling of nonferrous scrap; 78) procuring, processing and selling of ferrous scrap; 79) production of prosthetic and orthopedic appliances to citizens' orders; 80) engineering surveys for construction of buildings and structures except for 82


buildings and structures of the III level of responsibility (licensed by the State Committee for the Issues of Construction and Architecture). 81) conducting test trials of aircraft including double-purpose aircraft; 82) map making; 83) collecting of weapons, major components of firearms and cartridges for weapons; 84) surveyor servicing of sea ships in sea ports; 85) maintenance and repairs of rolling stock at the railways; 86) maintenance and repairs of facilities used at the railway transport; 87) engineering of buildings and structures45 Provisions on licensing certain activities establish the list of the following works and services subjected to licensing46: 1) activities for carrying out and organizing gambling and/or gaming including activities carried out with the use of gambling tables and other gaming equipment in casinos (casino activities); 2) activities for organizing and carrying out gambling and/or gaming including the use of gaming equipment (except gambling tables); 3) space activities; 4) medical services; 5) designing buildings and structures except for buildings and structures of the III level of responsibility; 6) constructing buildings and structures except for buildings and structures of the III level of responsibility; 7) engineering surveys for constructing buildings and structures except for buildings and structures of the III level of responsibility; 8) operating of explosive and flammable production facilities The simplified order of licensing can be applied under condition of the conclusion of the contract of insurance of civil liability by the applicant of the license or the licensee or at presence of the certificate of correspondence of a performed licensed kind of activity to the international standards at the licensee concerning licensing of the following kinds of activity47: The simplified order of licensing can be applied under condition of the conclusion of the contract of insurance of civil liability by the applicant of the license or the licensee or at presence of the certificate of correspondence of a performed licensed kind of activity to the international standards at the licensee concerning licensing of the following kinds of activity: operation of fire dangerous industrial objects; activity on restoration of objects of a cultural heritage (historical and cultural monuments); cargo transportation by sea transport; cargo transportation by an internal sailing charter; cargo transportation by air transport; 45

According to the Federal Law of 19.07.2007 136-FZ «About the Amendments to Art. 17 and 18 of the Federal Law «About Licensing of Certain Kinds of Activities» Concerning the Licensing of Construction Works» the licensing of the kinds of the activities specified in Items 35, 85, 96 is prolonged up to 01.07.2008. 46 According to Item 2 Art. 17 of the Federal law of 08.08.2001 128-FZ «About Licensing of Certain Kinds of Activities» (ed. 05.02.2007). 47 According to Item 6 Art. 9 of the Federal Law of 08.08.2001 No. 128-FZ “About Licensing of Certain Kinds of Activities” (ed. 05.02.2007). 83


cargo transportation by railway transport; cargo and luggage transportation by railway transport; cargo transportation (moving of cargoes without the conclusion of the transportation contract) by railways of general use, except for removal of the arrived cargoes from the exhibiting railways and their return to the exhibiting railways; cargo handling activity concerning dangerous cargoes on an internal sailing charter; cargo handling activity concerning dangerous cargoes in seaports; cargo handling activity concerning dangerous cargoes on a railway transport; towage activity by sea transport (except for the case when the specified activity is performed to satisfy the own needs of the legal person or the individual enterpriser).

The list of activities is exhaustive except for certain activities the licensing of which is carried out in accordance with other federal laws. These activities include48 1) Lending institutions' activity. 2) Activity related to the protection of a state secret. 3) Production and turnover of ethyl spirit, alcoholic beverages and products containing spirits. 4) Telecommunications activity. 5) Stock exchange activity. 6) Customs activity. 7) Notarial activity. 8) Insurance activity, except for pension insurance carried out by non-state pension funds. 9) Activity of professional participants of the securities market. 10)Carrying out of foreign economic operations. 11)International passengers' and cargo motor vehicle transportation. 12)Purchasing weapons and cartridges for weapons. 13)Using results of intellectual activity. 14)Using orbital frequency resources and radio frequencies for television and radio broad casting.(including broadcasting of additional information). 15)Using natural resources including subsurface resources, forest resources, resources of flora and fauna. 16)Activities, works and services in the sphere of the nuclear energy use. 17)Educational activity.

From 30.06.2009 licensing of the following activities is ceased50: - organizing and operating gambling and\or betting, including using of roulette tables and other items of gambling equipment in casinos (licensed by the Federal Agency of Physical Culture and Sport of the RF); - organizing and operating gambling and\or betting, including using of gambling equipment (except for roulette tables) (licensed by the Federal Agency of Physical Culture and Sport of the RF); 48

According to Item 2 Art. 1 of the Federal law of 08.08.2001 128-FZ «About Licensing of Certain Kinds of Activities» (ed. 05.02.2007).

50

According to Item 1 Art. 17 of the Federal law of 08.08.2001 128-FZ «About Licensing of Certain Kinds of Activities» (ed. 05.02.2007). 84


From 01.01.2010 licensing of the following activities is ceased construction of buildings and structures except for buildings and structures of the III level of responsibility; engineering surveys for construction of buildings and structures except for buildings and structures of the III level of responsibility (licensed by the State Committee for the Issues of Construction and Architecture) designing buildings and structures except for buildings and structures of the III level of responsibility. Issue of licenses for this kinds of activity will be ceased on the 01.01.2009. Besides, after technical regulations stipulating compulsory requirements to licensed types of activity come into effect, licensing of the following activities will be stopped51: — production and maintenance of gauge devices; — geodesic activities; — conducting industrial safety examinations; — conducting test trials of aircraft including double-purpose aircraft; — map making; — production of medical equipment; — aircraft engineering including double-purpose aircraft; — aircraft production including double-purpose aircraft; — aircraft and double-purpose aircraft maintenance; — medical equipment maintenance (except when the identified activity is conducted by a legal entity or a private entrepreneur for their internal needs); — operating fire hazardous production facilities; — operating chemically hazardous production facilities; LIST OF FEDERAL BODIES OF EXECUTIVE POWER CARRYING OUT LICENSING52 Licensing of activities in the order defined by Federal Law from 08.08.2001 No 128FZ “On Licensing Certain Activities” (as amended on 05.02.2007) is executed by the following state power bodies: The Ministry for Home Affairs of Russia Non-state (private) security services Non-state (private) detective services Trade with weapons and basic components of firearms Trade with cartridges Export of weapons, basic components of firearms and cartridges Collecting weapons, basic components of firearms and cartridges. Federal Migration Agency of Russia

51

According to Item 7 Art. 18 of the Federal law of 08.08.2001 128-FZ «About Licensing of Certain Kinds of Activities» (ed. 05.02.2007). 52 According to the Decision of the Russian Federation of 26.01.2006 No. 45 «About the Organization of Licensing of Certain Kinds of Activities». 85


Activities connected with employment of citizens of Russia outside the country The Emergency Situations Ministry of Russia Activities for fire prevention and extinguishing Carrying out activities for assembling, repairing and servicing the means of fire security provision in buildings and structures The Emergency Situations Ministry of Russia, Federal Agency for environmental, technological and nuclear control Maintenance of fire-hazardous industrial objects The Federal Service for Technology and Export Control of Russia Activities for technical protection of confidential information The Emergency Situations Ministry of Russia, Federal Agency for environmental, technological and nuclear control, FSB of Russia Activities for developing and (or) manufacturing means of protecting confidential information FSB of Russia Development, manufacturing, sale and purchase by private entrepreneurs and legal entities carrying out business activities with the purpose of reselling special equipment for secret receiving of information. Activities for detecting electronic means intended for secret receiving of information in rooms and inside equipment (except for cases when such activities are carried out by a legal entity or a private entrepreneur for their own needs). Activities for distributing ciphering (cryptographic) equipment. Maintenance of ciphering (cryptographic) equipment. Providing services in the sphere of information ciphering. Development and manufacturing of ciphering (cryptographic) equipment protected with the use of ciphering (cryptographic) devices of informational and telecommunication systems. Federal Agency for control in the sphere of consumer rights and people’s welfare Activities connected with the use of pathogenic agents. Federal Agency for controlling pubic health care and social development Medical activities Manufacturing of prosthetic and orthopedic items on people’s orders Medical equipment manufacturing Maintenance of medical equipment (except for cases when such activities are carried out to satisfy a legal entity or a private entrepreneur’s own needs). Activities connected with circulation of drugs and psychotropic agents (development, manufacturing, production, rework, storage, transportation, supply, sale, distribution, purchase,

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utilization, and destruction) included into List II in accordance with Federal Law from 8 January, 1998 No 3-FZ “On Drugs and Psychotropic Agents�. Federal Agency for controlling pubic health care and social development, Federal Agency for veterinary and phytosanitary control Production of medicines. Pharmaceutical activities. Federal Agency for controlling observation of legislation in the sphere of mass communications and protecting the national culture Activities for restoration of cultural heritage objects (historical and cultural monuments). Copying audiovisual products and phonograms with any type of equipment. Rossvyazokhrankultura53 Activity in the field of TV broadcasting. Activity in the field of communication services. Activity on restoration of objects of the cultural heritage (historical and cultural monuments). Activity on reproduction (copying) of audiovisual products and soundtracks on any kinds of carriers. Federal Industrial Agency Manufacturing weapons and basic components of firearms. Manufacturing cartridges for weapons and cartridges components. Development and manufacturing of ammunition and its components. Disposal of ammunition and its components. Production of pyrotechnic devices. Distribution of IV and V class pyrotechnic devices in accordance with the national standard. Activities and services connected with storage, transportation and destruction of chemical weapons. Development of aircraft including double-purpose aircraft. Production of aircraft including double-purpose aircraft. Testing aircraft including double-purpose aircraft. Activities for manufacturing and selling special gambling equipment intended for gambling industry companies. Federal Industrial Agency, Federal Space Agency Development of weapons and military equipment. Production of weapons and military equipment. Repairs of weapons and military equipment. 53

According to the Decision of the President of the Russian Federation of 12.03.2007 Rosokhrankultura and Rossvyaznadzor are transformed into the Federal Service on Supervision in the Sphere of Mass Media, Communication and Protection of the Cultural Heritage (Rossvyazokhrankultura).

87


Disposal of weapons and military equipment. Trade with weapons and military equipment. Federal Industrial Agency, Federal Agency for transport control Repairs of aircraft including double-purpose aircraft. Federal Agency for construction and communal services Designing buildings and structures except for buildings and structures of the III level of responsibility. Constructing buildings and structures except for buildings and structures of the III level of responsibility. Engineering surveys for constructing buildings and structures except for buildings and structures of the III level of responsibility. Federal Agency for Technical Regulation and Metrology Activities for producing and repairing measuring equipment. The Federal Agency of Russia for Control at Drugs Circulation Cultivating crops used in production of drugs and psychotropic substances. Rostransnadzor Transportation of passengers by marine transport. Cargo shipment by marine transport. Transportation of passengers by inner water transport. Cargo shipment by inner water transport. Transportation of passengers by motor vehicles equipped for the transportation of more than eight persons (except for the cases when identified activity is conducted by a legal entity or a private entrepreneur for their own needs). Transportation of passengers and luggage by rail Rail haulage of cargoes Rail haulage of cargo-luggage Loading and discharging of hazardous cargoes in sea ports Loading and discharging of hazardous cargoes on and from rail transport Towage with marine transport (except for the cases when the identified activity is conducted by a legal entity or an individual proprietor for their own needs); Rail cargo haulage (transportation of cargoes without entering into a contract for shipment services) by rail tracks of general usage, except for removing from dead-end rail tracks or placing of arrived cargoes to dead-end rail tracks. Federal Aircraft Agency

88


Passenger transportations by air. Cargo shipment by air. Federal Agency for Geodesy and Cartography Geodesic activity. Map making. Federal Tax Agency of Russia Activities for manufacturing protected against falsification polygraphic products including blank forms of securities and trade with these products. Activities for carrying out and organizing gambling and/or gaming including activities carried out with the use of gambling tables and other gaming equipment in casinos (casino activities). Federal Agency for Hydrometeorology and Environmental Monitoring Performing works involving exerting strong influence on geophysical processes and phenomena. Performing works involving exerting strong influence on hydro meteorological processes and phenomena. Activities in the sphere of hydrometeorology and related spheres. Rostechnadzor Operating explosive production facilities. Operating chemically hazardous production facilities. Conducting industrial safety examinations. Surveyor activities. Production of industrial explosive materials. Storage of industrial explosive materials. Application of industrial explosive materials. Distribution of industrial explosive materials. Collecting, using, processing, transportation and disposal of hazardous wastes. Federal Space Agency Space activities. The Committee for Economic Development, Industrial Policy and Trade Procuring, processing and selling of nonferrous scrap. Procuring, processing and selling of ferrous scrap. Licensing of activities in the order defined by other federal laws is carried out by the state authorities named in the corresponding federal laws.

89


Licensing of retail sales of alcohol spirits is carried out in the order defined by Federal Law “On State Control at Production and turnover of ethyl spirit, alcoholic beverages and products containing spirits” from 22.11.1995 No 171-FZ54.

Technical regulation Technical regulation is a legal regulation of the relationships in the field of establishment, application and execution of obligatory requirements to the production or to the following processes connected with them: designing (including research works), manufacturing, construction, installation, adjustment, operation, storage, transportation, realization and recycling, and also in the field of establishment and application on a voluntary basis of the requirements to the production, and the following processes: designing (including research works), manufacturing, construction, installation, adjustment, operation, storage, transportation, realization and recycling, work performing or providing services and legal regulation of the relationships in the field of estimation of correspondence55. Technical rules are accepted with the purpose to protect the life and health of citizens, the property of physical or legal persons, the state or municipal property, to preserve the environment, and also to prevent the actions misleading purchasers. Thus were accepted the technical rules «About the requirements to emission of harmful (polluting) substances of the automobile technics produced on the territory of the Russian Federation» approved by the Governmental Order of the Russian Federation of 12.10.2005 No. 609. The technical rules concerning the degree of risk of causing harm establish minimum necessary requirements providing the following conditions56: - radiation safety; - biological safety; explosion safety; mechanical safety; fire safety; industrial safety; thermal safety; chemical safety; electric safety; nuclear and radiating safety; electromagnetic compatibility regarding safe work of devices and equipment; other kinds of safety. The technical rules should include the list and (or) the description of the objects of technical regulation, the requirements to these objects and the rules of their identification to provide the application of the technical rules. The technical rules should include the requirements to the characteristics of the goods or to the following processes connected with them: designing (including research work), manufacturing, construction, installation, adjustment, operation, storage, transportation, realization and recycling, but they should not include the requirements to the construction or execution, except the cases when the absence of the requirements to the construction or

54

According to Item 10 Art. 18 of the Federal Law “On State Control at Production and turnover of ethyl spirit, alcoholic beverages and products containing spirits” from 22.11.1995 No 171-FZ. 55 According to Art. 2 the Federal Law of 27 December 2002 No. 184-FZ «About technical regulation». 56

According to Item 1 Art. 7 of the Federal Law of 27 December 2002 No. 184-FZ «About technical regulation». 90


execution considering the degree of risk of causing harm prevents from correspondence to minimum necessary requirements established by the technical rules57. The following prime technical rules should be adopted by 1 January 201058: about the safety of machines and equipment; about the safety of low-voltage equipment; about the safety of construction materials and products; about the safety of buildings and constructions; about the safety of medical products; about the safety of lifts; about the safety of power plants and networks; about the safety of equipment working under superfluous pressure; about electromagnetic compatibility; about the safety of wheel vehicles; about the safety of products of medical purpose; about the safety of means of an individual defence; about the safety of chemical production; about the safety of foodstuff; about the safety of the devices working on gaseous fuel; about the safety of equipment intended to work in an explosive environment; about the safety of packing. Any person can be a developer of the project of the technical rules. The development of the project of the technical rules should be announced in a printed edition of the federal enforcement authority of technical regulation, and also in an open information system in the digital form59. The legislation of the Russian Federation about technical regulations consists of the Federal Law of 27 December 2002 No. 184-FZ «About technical regulation», and federal laws and other normative legal certificates of the Russian Federation adopted in accordance with it.

Standardization Standardization is an activity on an establishment of the rules and characteristics to provide their voluntary repeated use, directed on the achievement of orderliness in the spheres of manufacturing and turnover of goods, and also on the increase of competitiveness of goods, works and services. Standardization has the following purposes: to increase the level of safety of the life and health of citizens, the property of physical and legal persons, the state and municipal property and the objects considering the risk of emergency situations of natural and technogenic origin, and to increase the level of ecological safety, safety of the life and health of animals and plants; to maintain the competitiveness and quality of goods (works, services), standardization of measurements, rational use of resources, interchangeability of technical means (machines and equipment, their components, completing products and materials), technical and information compatibility, comparability of the results of research works (tests) and measurements, technical and economic-statistical data, analysis of goods (works, services)

57

According to Item 4 Art. 7 of the Federal Law of 27 December 2002 No. 184-FZ «About technical regulation» According to Item 1 Art. 9 of the Federal Law of 27 December 2002 No. 184-FZ «About technical regulation» 59 According to Item 3 Art. 9 of the Federal Law of 27 December 2002 No. 184-FZ «About technical regulation» 58

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characteristics, execution of the state orders, voluntary acknowledgement of correspondence of goods (works, services); to assist the correspondence to the requirements of the technical rules60; to create the systems of classification and coding of technical-economic and social information, the systems of cataloguing of goods (works, services), the systems of maintenance the quality of goods (works, services), the systems of search and data transmission, to assist the unification works. Standardization is carried out according to the following principles: voluntary application of the standards; maximum consideration of legitimate interests of the interested persons during the development of standards; application of the international standard as the basis for development of the national standard, except the cases when such an application is considered impossible because the requirements of the international standards do not correspond to the climatic or geographical features of the Russian Federation, to the technical and (or) technological peculiarities, or on another basis, or the Russian Federation does not support, according to the established procedures, the acceptance of the international standard or its separate position; inadmissibility of creation of more obstacles to manufacturing and turnover of goods, performance of works and rendering of services than it is necessary to achieve the goals, according to the Law «About technical regulation»; inadmissibility of establishing the standards contradicting the technical rules; providing conditions for unified application of the standards. The standardization documents applied on the territory of the Russian Federation include the following: national standards; standardization rules, norms and recommendations; classifications applied according to the adopted order, national qualifiers of technical and socioeconomic information; standards of organizations; rule codes. Organization and performance of standardization in the Russian Federation are carried out by the federal enforcement authority, the Federal Agency of technical regulation and metrology (Rostekhregulirovaniye). According to the Government of the Russian Federation, Rostekhregulirovaniye is appointed to be the body which is authorized to execute the functions of the national standardization body. The national standardization body performs the following activities: approves national standards; accepts the program of development of national standards; organizes the examination of projects of national standards; provides the correspondence of the national standardization system to the interests of the national economy, to the state of material base and scientific and technical progress; 60

From the date of adopting of the Federal Law «About technical regulation» of 27/12/2002 till the adopting of corresponding technical rules the requirements to the goods or to the following processes connected with them: designing (including research works), manufacturing, construction, installation, adjustment, operation, storage, transportation, realization and recycling, established by legal standardization certificates of the Russian Federation and normative documents of federal enforcement authorities, are obligatory only in the part connected with the following purposes: - protection of the life and health of citizens, the property of physical and legal persons, the state or municipal property; - preservation of the environment, the lives or health of animals and plants; - preventions of the actions misleading purchasers. 92


accounts the national standards, standardization rules, norms and recommendations and provides their availability to the interested persons; creates technical standardization committees, approves the regulations connected with them and coordinates their activities; organizes publication and distribution of the national standards; participates in the development of the international standards according to the charters of the international organizations, and also defends the interests of the Russian Federation during their acceptance; approves the sign of correspondence to the national standards; represents the Russian Federation in international standardization organizations. The system of Rostekhregulirovaniye of the Russian Federation includes technical standardization committees, where representatives of federal enforcement authorities, scientific organizations, independent organizations, public associations of enterprisers and consumers, commercial and noncommercial organizations can participate on an equal footing and a voluntary basis. The procedure of establishment and functioning of the technical standardization committees is approved by the national standardization body. The sessions of the technical standardization committees are open. The technical standardization committees act according to the regulations concerning them. In the Russian Federation the united information system was introduced according to the procedure and the conditions established by the Government of the Russian Federation with the purpose to provide the interested persons with the information on the documents of the Federal information fund of technical rules and standards. Rostekhregulirovaniye assigned the establishment and support of the Federal information fund of technical rules and standards, and also the coordination of works on the establishment and support of the united information system of technical regulation to the Federal State Unitary Enterprise «Standartinform» subordinated to Rostekhregulirovaniye. The Federal agency on technical regulation and metrology acts directly, through its local bodies and subordinated organizations cooperating with other federal enforcement authorities of the subjects of the Russian Federation, local governmental bodies, public associations and other organizations. Rostekhregulirovaniye is in charge of 91 federal official bodies, the Centers of standardization, metrology and certification. On the territory of St. Petersburg and Leningrad region they are represented by the Federal official body «The Testing and Certification Center of St. Petersburg» (the federal state administration «Test-St. Petersburg»). The federal state administration «Test-St. Petersburg» performs standardization activities and provides the unification of measurements (metrology) and tests (measurements) of goods (processes, works, services). The address of the federal state administration «Test-St. Petersburg» is 1 Kurlyandskaya St., St. Peter Certification Certification is a procedure of confirming that the results of the production activity, a product or a service conform to the regulatory requirements, and through this procedure the third party certifies with the documents that products, work (as a process) or a service conform to the preset requirements. The third part is an individual or an authority acknowledged to be independent from the supplier (the first party) and from the customer (the second party). The validation by the third party shall be independent, shall guarantee the conformity to the preset requirements and shall be carried out according to the rules of a certain procedure. 93


Certification is a unified system of control over conformity to the requirements set by regulatory documents. It includes standardization, metrology and products' quality management activity. Main objectives of certification61: + helping consumers make a competent choice of a product; + favoring export and better competitiveness of products; + consumer's protection against producer's, seller's, contractor's unfair practices; + safety control of products concerning environment, life and property safety; + validation of products' quality indicators. Types of Certificates Certificate Fire safety Certificate Hygienic Certificate Environment Safety Certificate The Gosstroy Certificate

Conformity Certificate

Quarantine Certificate

Veterinary Health Certificate

Fytosanitary Certificate Certificate of Origin Products' Export—Import Certificate The letter rejecting the application for certification

Characteristics A document validating the products' conformity to the requirements (rules) of fire safety. It is an integral part of the conformity certificate that is products shall not be certified before a respective fire safety certificate is presented. Issued by the Ministry of Internal Affairs Bodies. A document certifying permission to produce or import products conforming to effective requirements and proving products' safety for the health of people under specified conditions. Issued by the offices of the Department of State Sanitary and Epidemiological Control of the RF Ministry of Health. A document officially certifying that the content of environmentally hazardous elements does not exceed the level established by the regulatory documents. Certification is not mandatory. A document validating the conformity of products used for construction to the mandatory requirements that ensure people's life, health and property safety and environment safety, to the requirements set for this type of product (Gost, Gost-R, SNIP, PB etc.). To receive a compulsory certificate it is necessary to have a hygienic certificate and fire safety certificate. Compulsory certification is carried out by the Ministry of Construction of the RF. Voluntary certification is also possible. A document issued according to the rules of the certification system that provides the needed confidence that the product (process or a service) duly identified conforms to a specific standard or some other regulatory document. Products that have been certified shall be marked with a sign of conformity and shall be registered with the certifying body. The certificate without a registration number shall not be valid. A document certifying that products of animal or vegetation origin are nor ill or infected. Certificate for imported products is checked at the border checkpoint of veterinary and fytosanitary control. Exported products shall be certified by the national bodies authorized to control the quality of exported products. A standard international veterinary document issued for animals, products of farming and other cargoes subject to veterinary control by the state veterinary physician of the exporting country. This certificate ought to protect the territory of the RF from bringing and distributing of highly dangerous contagious diseases of people, animals and vegetation and from importing toxic substances. Certification is conducted at checkpoints conducting control over the transit of goods across the border of the RF. An international document issued by the quarantine of vegetation protection bodies of the exporting countries, certifying fytosanitary condition of products. The certificate shall be attached to products' transport documents The certificate shall be issued by state vegetation quarantine inspectorates. The document certifying that the product originates from a certain country. It shall be presented together with a customs declaration and other documents needed for customs registration. A document ensuring importing of goods that conform to standards and other national documents setting compulsory requirements to goods on the basis of Russian legislation. An official document issued by an authorized authority stating that products (title, the OKP code or TN VED are identified) shall not be subject to compulsory certification or belongs to a group of products that require only the declaration of conformity for conformity validation. The rejecting letters can be of two types - for the Customs and for trade.

Certification of quality management systems in the RF is voluntary. The regulatory basis of the quality management systems of certification in the RF is formed of international ISO 9000 61

According to the Decision of Gosstandart of the Russian Federation of 10.05.2000 No. 26 (ed. 05.07.2002) ÂŤAbout the statement of rules of performing certification in the Russian FederationÂť (registered in the Ministry of Justice of the Russian Federation on 27.06.2000 No. 2284).94


standards (that regulate requirements to enterprises' quality management systems), ISO 14000 standards (requirements to the management systems of enterprises' environment quality) and a number of documents concerning their certification. Certification of quality management systems includes examination and assessment of quality management and assurance activities, production system and products' quality. The process of certification of quality management systems usually consists of three stages: 1. Preliminary (distance) evaluation of a quality management system. 2. Final examination and evaluation of a quality management system. 3. Supervisory control over the certified quality management systems. The general procedure of an enterprise's quality management systems' is shown on the picture above. Compulsory certification is put into effect by the RF legislative acts and is carried out regarding products that are subject to meeting the regulatory technical documents' requirements concerning environment safety, ensuring people's health and life safety, safety of property and the environment. In this case the producer who does not have a respective certificate has no right not only to sell but also to manufacture products. Compulsory certification requires certifying compliance only with that compulsory requirements that are established by the law that enacts compulsory certification. A certificate of conformity and a sign of conformity issued upon certification shall be valid on all territory of the RF. The list of products subject to compulsory certification: goods for children; foodstuff; goods for prevention and treatment of illnesses, technical appliances for the rehabilitation of the disabled; perfume and cosmetic goods and soap; textile products; ready-made garments and headwear; knitted goods; goods made of fur and pelts; footwear; construction materials; equipment and appliances for heating, hot-water supply, sanitary and hygienic equipment furniture; housekeeping equipment; leisure and entertainment products; sporting goods, pleasure boats, floating crafts, goods for hunting and fishing. Obligations of manufacturers (sellers, contractors) of products subject to compulsory certification: to sell products only if a certificate has been obtained; to guarantee the conformity of products they sell to the requirements of regulatory documents under which their conformity was certified and ensure that products are marked with a sign of conformity according to the established procedure; to indicate information about a certificate or a declaration in accompanying technical documents; to suspend or stop selling products if they do not meet the requirements of the regulatory documents under which their conformity was certified; 95


not to impede the work of officials of the bodies conducting products' compulsory certification and controlling certified products; to inform the certifying body about changes made to technical documents or technological process of producing certified goods according to the established procedure. Voluntary certification system envisages products' certification only on the producer's initiative. In this case the producer is eligible to certify products regarding conformity to any requirements of regulatory and technical (including foreign) documents. Voluntary certification shall be conducted on the initiative of legal entities and citizens on the basis of a contract between an applicant and a certifying authority. Voluntary certification can be used for works, services and goods that do not fall into the category of products subject to compulsory certification. Voluntary certification systems have a number of advantages: - confidence in the quality of goods exported to other countries; - prevention of importing goods that do not conform to the required level of quality; - certification of domestically produced goods reduces import of similar products; - certification facilitates the process of choosing a product for the customer; - certification protects the producer from competition with suppliers of non-certified products, provides advertising opportunities and a market for his products; - certification improves the quality of standards by uncovering outdated provisions and stimulates revision of these standards. Voluntary certification of products subject to compulsory certification can not substitute for compulsory certification. The adoption of a declaration of conformity shall be conducted according to one of the schemes outlined below: - adopting the declaration of conformity according to one's own evidence; - adopting the declaration of conformity according to one's own evidence, evidence received through a certifying body and (or) an accredited testing laboratory (center) (later referred to as "the third party"). When declaring conformity on the basis of one's own evidence the applicant shall form the evidential matter by himself in order to confirm products' conformity to the requirements of technical regulations. The structure of the evidential matter is set by a respective technical regulation. The validity term of the declaration of conformity shall be established by the technical regulation. The declaration of conformity drawn up according to the established procedure shall be registered with the federal executive body on technical regulation within three days. The list of products the conformity of which can be validated by a declaration of conformity is established by legislation62. Compulsory certification shall be carried out by a certifying body accredited according to the procedure established by the RF Government. Gosstandart of the RF keeps a unified register of issued certificates of conformity. Products conformity of which to the requirements of technical regulations is certified according to a established procedure shall be marked with a sign of a market participant. The basis of national certification in Russia is constituted by certification systems that are established for a certain type (category) of homogeneous products that include large groups of products (services), that have same functions, principles of operation (of using or applying them), methods of control and testing. The central certifying bodies for homogeneous types of products and accredited testing laboratories form the basis of the certification system organizational structure.

62

By the RF Government Resolution No. 766 of June 7, 1999 “On Adopting the List of Products that Require only the Declaration of Conformity for Conformity Validation, the Procedure of Adopting and Registering of the Declaration of Conformity� (as amended on 17.12.2005). 96


The largest certification system in the RF is the Gost-R state certification system that embraces more than 30 certification systems for homogeneous products and services (including foodstuffs, food raw materials, textile and light industry products, electrical equipment etc.). More than 900 certifying bodies and about 2000 testing laboratories of various types located in various regions of the country have been accredited under the Gost-R system and are successfully operating. They issue more than 500 thousand certificated for products and services subject to compulsory certification. Certification of products and quality systems shall be carried out in the RF according to general rules and the established certification procedure. Standard procedure of the products' certification procedures under the Gost-R certification system is shown of the picture.

97


98


99


Control Carried out by the Gosstandart Bodies The powers of the federal agency for technical regulation and metrology (Gosstandart of the RF) include the following functions: + is a national certifying authority; + guarantees measurements uniformity; + carries out accreditation in the sphere of conformity certification; + carries out the state control and supervision over the compliance with mandatory requirements of standards and technical regulations; + maintains the federal information fund of technical regulations, standards and the unified information system on technical regulation; + renders services in the sphere of standardization, technical regulation and metrology. 63

Phone numbers of Standardization and Certification Agencies in St. Petersburg No.

Name

Phone

1

The center for Testing and Certification - St. Petersburg (FGU «Test-Sankt-Peterburg»)

Phone:251-3950 www.rustest.spb.ru

2

St. Petersburg State Administration « The Center of Quality Assurance of Goods (Production), Works and Services»

Phone.: 274-14-30 www.quality.spb.ru

3 4 5

Test Laboratory "Sertis" NP "SevZapStandart" Russian Registr — Baltiyskaya Inspectsiya

Phone: 232-7352 Phone: 235-7111 Phone: 323-9117

2.5. Restructuring and Reorganization of Business Restructuring of Business is its structural reformation, purposed to provide an effective distribution and usage of all the resources (material, manpower, financial, technological, monetary), consisting of creating of business-units based on dividing, associating, dissolution (forwarding) of the active structural subdivisions and creation of new ones, responsibility centers, association of further enterprises to the main enterprise, purchasing of the controlling share of the authorized capital or of the shares of external organizations, readjustment of the management system, conducting of monitoring, and changing of the type of ownership. Restructuring is connected with the reducing of the expenditures due to the elimination of unprofitable or detrimental kinds of activity and is aimed to improve the management and the staff. However, it needs the precise criteria of the activity effectiveness to be applied and precise reporting system. Re-structuring of a particular enterprise or a business is a complex process of changes mentioning all management functions. In literature the concept of re-structuring is used, as a rule, in its narrow sense - changes of organizational structure of a business. However, restructuring of an enterprise or a business cannot be measured only by their structural changes. Proceeding from understanding of re-structuring in its more general meaning - Re-structuring – we can say that it is a systematic purposeful process of qualitative changes in the structure of actives and passives of the company and the management.

63

Operates on the basis of the Resolution of the Federal Agency for Technical Regulation and Metrology, enacted by the Resolution of the Government of the Russian Federation No. 294of June 17, 2004. 100


As a rule, the restructuring process is preceded by audit, procedure of "due diligence" (see the corresponding Section of the Guide "Sale (Acquisition) of Operating Business"). The procedure of "due diligence" shall be carried out by the experienced advisors. Basic stages of re-structuring include: • Analysis of service departments and non-profile actives, systematization of their functions by their profile, priority, profitability, etc. • Development of the concept of re-structuring of service departments and nonprofile actives, definition of the optimum organizational and legal form, development of mechanisms of functioning of service departments. • Development of the business plan (program) of re-structuring of non-profile actives and service departments. • Realization of transactions and realization of organizational actions (a regular report on performance of the program includes a report on concluded deals on re-structuring, a report on execution of deals on re-structuring, a report on execution of current budgets). The restructuring processes affect the legal aspects, which are connected, firstly, to the necessity of reorganization: such as creating of new legal entities and/or determination of the activity of old legal entities. The effective Civil Code of the Russian Federation provides for such forms of legal entities reorganization as their merger, affiliation, splitting up, appropriation and reformation. According to Art. 58 of the Civil code of the Russian Federation, part I, chapter IV, at the merge of legal persons the right and duties of each of them pass to a newly appeared legal person according to the transfer certificate. At the connection of a legal person to another legal person the latter acquires the rights and duties of the attached legal person according to the transfer certificate. At the division of a legal person its rights and duties pass to newly appeared legal persons according to the division balance. At the allocation of one or several legal persons from the structure of a legal person the rights and duties of the reorganized legal person pass to each of them according to the division balance. At the transformation of a legal person of one kind to a legal person of another kind (the change of the organizational and legal form) the rights and duties of the reorganized legal person pass to a newly appeared legal person according to the transfer certificate. For the state registration of a legal entity to be created by its reforming in form of reformation, merger, splitting up or appropriation, the following documents are to be presented to the Registration Authority64: a) application for registration of each legal entity to be newly created by its reforming in the form approved by the Government of the Russian Federation. The application is to be signed by an applicant. This application should confirm the following: — the charter documents of the legal entities created by reformation comply with the requirements to charter documents of a legal entity of the corresponding type of ownership approved by the Government of the Russian Federation; — the reliability of the information presented in the above mentioned charter documents and the application for registration; — the deed of assignment or the distributive statement contains the legal succession provisions on all the obligations of the newly created legal entity concerning to all of his creditors; — all of the creditors of the legal entity to be reformed are informed about the reformation of the Legal Person in written form; 64

See Article 14 of the Law of the Russian Federation “On State Registration of Legal Entities and Individual Entrepreneurs” of August8, 2001 No. 129-ФЗ (as amended on 05.02.2007). The Procedure of Registration of Legal Entities to be created by Reorganization. See also Articles 15–16 of the above Law. 101


— in the cases established by the Legislation, the reformation of the legal entity are agreed with the corresponding state and/or to municipal authorities; b) the charter documents of each newly created legal entity to be created by reformation (in original form or in form of notarial copy); c) the decision on the reformation of the legal entity; d) the Merger Contract in the cases established by the federal legislation; e) the deed of assignment or the distributive statement; f) the document confirming the payment of the stamp duty. Representation of documents of legal persons created by reorganization is carried out in the order generally established for all legal persons. The state registration of legal persons created by reorganization is carried out in the term not exceeding five working days from the date of granting documents to the registering body. It should be mentioned, that, in spite of nomenclature concurrence, the actual legislated forms of reformation of legal entities do not reflect the diversity of economic forms of restructuring. 2.6. Sale (Acquisition) of Operating Business Business is entrepreneurial activities which ensure stable cash turnover and require assets, necessary infrastructure, and legal support. Sale and acquisition of a business is beneficial for both parties since: 1. If a seller sells his/her operating business in parts, the cost of individual assets may be much less that the cost of entire business. 2. When a buyer purchases an operating business, his/her investments immediately ensure cash flows. A buyer needs only to optimize them, e. g. reduce costs, or increase them (increase sales). Acquisition by an operating company of its supplier or client makes it possible to gain more control over process. Moreover, it is easier to receive financing for an operating business than for the business plan of a new project. Market of an operating businesses is one of the most actively developing in Russia. Setting up of new companies to sell them has become a separate and very promising field of business. Moreover, our country now have companies whose major activity is comprehensive support of transactions regarding the alienation of property rights to an operating small or medium business — business-brokers. In Russia such support is generally carried out by auditing and legal companies. One of the most popular ways to sell business is a sale or transfer of shares in limited liability companies, or equities of closed or open joint-stock companies. It is the easiest, cheapest and fastest way for a new proprietor to acquire business since only charter documents of a sold legal entity shall be changed while all licensing and legal documentation remains the same. It should be noted that this approach cannot be applied to businesses owned by an individual proprietor. The other way to sell a business is a sale of an enterprise as a property complex (Paragraph 8, Article 30 of the Civil Code of the RF). In this case an enterprise as an object of rights is considered to be a property complex used to carry out business activities. Entire enterprise being a property complex is considered as a real estate. Enterprise as a whole or its parts can be an object of sale or acquisition, pledge, rent and other transactions regarding the establishment, change or termination of property rights. An enterprise as a property complex can be purchased with its property: all types of property used to carry out its activities including land plots, buildings, equipment, raw materials, products, incorporeal right, debts, and rights to logotypes of an enterprise, its products, works and services (name, brand, service marks) and other exclusive rights unless otherwise provided for by laws or a contract. Such transactions are usually connected with the sale of big businesses owning significant assets. 102


This procedure of the sale of an enterprise is equivalent to the sale of real estate and subject to compulsory state registration65. In order to reduce risks connected with business acquisition and to ensure its efficient sale it is advisable to consult professional appraisers, lawyers, auditors, and insurers (section "Protection and Safety of Business" of this Guide). One of the most important stages of the presale preparation of a business is its careful examination or due diligence in which the advisor who has the reputation of an independent expert shall be involved. Due diligence can be translated with the main emphasis upon legal aspects of the assumed deal (the legal due diligence), upon tax aspects (tax due diligence) as well as upon environmental, personnel and other aspects. The main objectives of due diligence as a comprehensive examination of a company are to: + examine the reliability of financial and non-financial information on a company; + examine information presented in investment documentation; + assess if the existing strategy of a company can be implemented; + examine if document flow of a company comply with the effective laws and company's internal standards; + assess competitiveness of a company; + assess the expertise of the management of a company; + examine if company's tax and statistical reporting is properly prepared and submitted on time. + assessment of tax, legal, and financial risks. A person ordering due diligence may ask for both comprehensive examination and examination of individual aspects of a business (taxes, finance, environment, etc.) After the conduction of due diligence an ordering person receives the following documents: + description of the current financial standing of a company; + information on production capacities; + information on employees; + description of management accounting system; + financial structure of a company; + administrative structure of a company; + description of expenses accounting; + description of income accounting; + description of management analysis system; + description of management reporting; + description of company's software and/or other automation means used for management accounting; + assessment of tax, financial and legal risks of the company existing before the purchase of the company. 2.7 Dissolution of Business and Insolvency A Legal Entity can be dissolved according to the following resolutions: + the decision of the incorporators (members) of a legal entity or according to the decision of the body of the legal entity, which is authorized to issue such a resolution by the charter documents. This includes the dissolution of a legal person in connection with time limits of existing of the legal entity and with attaining of the purpose, for which the legal entity have been created, as well; 65

For more information on state registration of the rights to an enterprise as a property complex and transactions connected with it see the Federal Law No. 122-ФЗ of July 21, 1997. (as amended on 18.12.2006) 103


+ the Court Conclusion if the activities of a legal entity were carried out without a permit (license), or with gross violations or any repeated breach of the laws or other regulatory acts. This is also in force if social or religious organization or charitable fund carries out activities which do not comply with its objectives specified in its charter and in other cases, approved by the Civil Code of the Russian Federation; + the Court Conclusion in the case of gross violations of the legislation committed by creating of a legal entity, if these violations can insolvency (bankruptcy) be characterized as unremovable, or by bringing of the verdict of an insolvency of a legal entity. Liquidation of the legal person, except for a state enterprise, establishment, political party and a religious organization, is carried out as the result of its recognition as the insolvent (the bankrupt) according to Art. 65 of the Civil Code of the Russian Federation provided that the cost of the property of such a legal person is insufficient for meeting creditors’ requirements. The Procedure of Dissolution66 The dissolution of a legal entities concerned to be finished, and a legal entity is concerned to be dissolved when registration of this fact in the Uniform State Register of Legal Entities has taken place. Since June 1, 2002 the Federal Tax Service of the Russian Federation executes the functions of the authorized federative body of the executive authority, which carries out the State Registration of Legal Entities67.

66

According to Articles 62–63 of the Civil Code of the Russian Federation. According to the Governmental Regulation of the Russian Federation “On the Authorized Federative Body of the Executive Authority, which carries out State Registration of Legal Entities” of 17.05.2002 No. 319 (as amended on 25.04.2003), which has been enacted to execute the Federal Law of August 8, 2001, No. 129-ФЗ “On About State Registration of Legal Entities”. 67

104


Insolvency (bankruptcy)68 Insolvency (bankruptcy) is an incompetence of a debtor to fully satisfy the demands of the creditors on money obligations and (or) to satisfy his obligation to pay the compulsory payments. Money Obligation is an obligation of a debtor to pay the set amount to a creditor under the civil transaction and (or) for other reasons established by the Civil Code of the Russian Federation. Compulsory Payments are taxes, duties and other compulsory payments to the budget of the corresponding level and to the state off-budget funds incompliance with the procedure and terms established by the laws of the Russian Federation. The composition and amount of money obligations and compulsory payments are to be determined on the date of filing of the statement on recognition of a debtor bankrupt to the Arbitration Tribunal. Bankruptcy legal proceedings may be instituted by the Arbitration Tribunal given that the total claims to the debtor (legal entity) makes up not less than RUR 10,000 and the signs of the bankruptcy exist. The signs of the bankruptcy are the following: For a Legal Entity if money obligations and (or) the obligation to pay compulsory payments are not met within three months since the date of that, when they should have been met

For an Individual Entrepreneur if money obligations and (or) the obligation to pay compulsory payments are not met within three months since the date of that, when they should have been met, and if the total sum of his obligations exceeds the cost of its estate.

The Federal Law «About inconsistency (bankruptcy)» also includes simplified bankrupting procedures applied to liquidated debtors and absent debtors. The Federal Tax Service is the authorized body for the presentation of bankruptcy cases and for bankruptcy procedures regarding compulsory payments and money obligations claims of the Russian Federation69. For carrying out of bankrupting procedures and realization of other powers stated in the Federal Law by an arbitration court, the arbitration managing director who is the citizen of the Russian Federation, is registered as the individual enterpriser; has a higher education; has not less than two years’ general experience in supervision; has passed theoretical examination under the program of preparation of arbitration managing directors; has passed not less than six months’ training as the assistant of the arbitration managing director; has no previous convictions for crimes in the economical sphere, and also for ordinary, grave and especially grave crimes; is a member of one of self-managing organizations is appointed70.

68

See the Federal Law dated by October, the 26th , 2002. № 127-ФЗ “About the Insolvency (bankrupt)” (with the changes to the date on 05.02.2007 and 26.04.2007). 69 See the Regulation of the Government of the Russian Federation of September30, 2004 No. 506 “On the Adoption of the Provision on the Federal Tax Service” (as amended on 06.06.2007). 70 The Regulation of the Government of the Russian Federation of February 3, 2005 No. 52 establishes that the Federal Registering Service is concerned to be a Regulation Authority for controlling the self-regulatory organizations of the arbitration managing directors’ activities. 105


During each bankrupting procedure the functions, rights and duties of the arbitration managing director are defined71. The arbitration court approves arbitration managing directors according to one of bankrupting procedures as temporary managing directors, administrative managing directors, external managing directors or competitive managing directors. The information on self-managing organizations of arbitration managing directors of St. Petersburg registered in the unified state register of self-managing organizations of arbitration managing directors see in the table below. Features of the Bankruptcy of Individual Entrepreneurs The application for an acknowledgement of an individual entrepreneur a bankrupt can be submitted by: 1) a debtor (an individual entrepreneur); 2) the creditor whose claims are connected with the obligations regarding the carrying out of business activities; 3) authorized bodies. By the application of the bankruptcy procedures creditors whose claims are not connected with the obligations regarding business activities, and also creditors whose claims are connected with their person, have also the right to raise the claims. When the decision on the acknowledgement of an individual entrepreneur a bankrupt and the decision of the opening of the bankruptcy proceeding are made by the Arbitration Tribunal, the state registration of a citizen as an individual entrepreneur becomes invalid, and also the issued licenses for individual kinds of business activities are cancelled. The individual entrepreneur to be acknowledged a bankrupt cannot be registered again within a year since the moment of the acknowledgement of him a bankrupt.

71

See the Federal Law dated by October, the 26th , 2002. № 127-ФЗ “About the Insolvency (bankrupt)” (with the changes to the date on 05.02.2007 and 26.04.2007). 106


Purchasing of a Business after Bankruptcy In Russia, as well as in other countries, the purchasing of the companies which have gone bankrupt or being on the verge of bankruptcy for nothing is being wide practiced, which would be followed by restructuring, changing of the management strategy, introduction of new technologies and attraction of investments. As a rule, the purchasing of such business is carried out either in contact to the owners ("a soft variant"), or through the procedure of bankruptcy (the temporary managing director of the company is appointed by the plaintiffs). The specified measure (sale of the enterprise through bankrupting procedure) was fixed in the Federal Law No. 6-FZ of 08.01.1998 ÂŤAbout inconsistency (bankruptcy)Âť. It allowed to preserve the 107


enterprise as a property complex, to preserve working places, to partially meet the requirements of creditors, to receive, as the result, a working enterprise not burdened by debts. By the sale of an enterprise (business), money obligations and compulsory payments of a debtor on the date of the decision on the acknowledgement of a debtor a bankrupt by the Arbitration Tribunal are not to be included into the structure of the enterprise. All kinds of the estate intended to carry out business activities of a debtor, including land plots, buildings, constructions, equipment, stock, raw materials, products, incorporeal right and also the rights to logotypes of a debtor, his products, works and services (company's name, trade marks, service marks), other exclusive rights belonging to an enterprise, excepting the rights and duties which cannot be transferred to other persons — all of them are to be amortised. The sum obtained from sale of an enterprise is to be included into the structure of the estate of a debtor. As a result, he has an opportunity of debts repayment, and an enterprise is released of its obligations. Addresses and the Phone Numbers of the Self-Regulatory Organisations of the Arbitration Managing Directors Registered in the Unified State Register of the Self-Regulatory Organisations of the Arbitration Managing Directors in St. Petersburg No. 1

2

3

4

Organisation Non-commercial Partnership "Self-regulatory Organisation of the Arbitration Managing Directors of the North-West" Non-Commercial Partnership "Self-regulatory Organisation of the Arbitration Managing Directors "Northern Capital" ("Severnaya Stolitsa") Non-Commercial Partnership "Self-regulatory Organisation of the Arbitration Managing Directors "Continent" The con-commercial partnership SRO independent establishment «Mezhregionalniy Investitsionniy Tsenter»

Address

E-mail

1/3 (6) Smolnogo St., St. Peters- sro@spp.spb.ru burg, 191060

60 (A) B. Sampsonievsky Pr., St. Petersburg, 199178

Phone Phone: 576-7007 Fax: 576-7329

spp@mail.wplus.net Phone/Fax: 3365253

28 (office 301) Koli Tomchaka sro.continent@au.ru Phone/Fax: 314St., St. Petersburg 196084 Postal 5878 Address: post office box 167, St. Petersburg, 191023 Premise 31, 6 Kavalergardskaya St., St. Petersburg, 191015

The legal regulation of the dissolution partially includes the following: The legal regulation of dissolution 1) The Civil Code of the Russian Federation, Part 1 dated November 30, 1994 No. 51ФЗ (as amended on 05.02.2007) and Part 2 dated January 26, 1996 No. 14-ФЗ (as amended on 20.04.2007); 2) The Tax Code of the Russian Federation, Part 1 dated July 31, 1998 No. 146-O3 (as amended on 26.04.2007) and Part 2 dated August 5, 2000 No. 117-O3 (as amended on 30.12.2006); 3) The Code of the Administrative Violations of the Russian Federation dated December 30, 2001 No. 195-O3; 4) The Letter of the Ministry of Taxation of the Russian Federation "On Dissolution of Legal Entity" dated September 17, 2004, No. 09-1-03/3716. The legal regulation of Insolvency (Bankruptcy) 1) The Civil Code of the Russian Federation, Part 1 dated November 30, 1994, No. 51O3 (as amended on 05.02.2007) and Part 2 dated January 26, 1996, No. 14-O3 (as amended on 20.04.2007); 108


2) The Federal Law of the Russian Federation "On Insolvency (Bankruptcy)" dated щт 26.10.2002 No. 127-Ф3; 3) The Federal Law of the Russian Federation "On Insolvency (Bankruptcy) of Credit Organisations"; 4) The Information Letter of the Presidium of the Arbitration Tribunal of the Russian Federation dated August 6, 1999 No. 43 "The Issues of the Application of the Federal Law "On Insolvency (Bankruptcy)" in the judicial practice"; 5) The Letter of the Supreme Arbitration Tribunal of the Russian Federation dated April 25, 1995 No. C1-7/OP-237 "Preview of the Practice of the Law On Insolvency (Bankruptcy) Application by the Arbitration Tribunals"; 6) The Information Letter of the Presidium of the Arbitration Tribunal of the Russian Federation dated August 7, 1997 No. 20 "Preview of the Practice of the Law On Insolvency (Bankruptcy) Application by the Arbitration Tribunals"; 7) The Letter of the Supreme Arbitration Tribunal of the Russian Federation dated July 14, 2000 No. C3-7/up-806 "On Coordination of the Intermediary Dissolution Statements and the Dissolution Statements of Credit Organisations Acknowledged an Insolvent (Bankruptcy) with the Local Russia's Bank Institutions"; 8) The Determination of the Plenary Session of the Supreme Arbitration Tribunal of the Russian Federation dated April 8, 2003 No. 4 "On Some of the Issues Regarding Enactment of the Federal Law "On Insolvency (Bankruptcy)"; 9) The Information Letter of the Presidium of the Arbitration Tribunal of the Russian Federation dated June 14, 2001 No. 64 "On Some of the Issues of the Application of the Federal Law "On Insolvency (Bankruptcy)" in the judicial practice".

3. BUSINESS RUNNING 3.1. Purchasing and Tenancy of Real Estate By closing of the tenancy transactions the owner of the real estate remains to be the same, because of that fact, that the right to use a thing, but not to the thing itself is the object of such agreements. The essential conditions should be determined in the tenancy contract; the absence of those could lead to the non-acceptance of this contract. The Buyer selects the realty object independently or with the help of a real estate agency. When selecting the realty object in St. Petersburg independently the buyers can use specialized periodicals, such as “Real Estate Bulletin”, “City Real Estate Catalogue”, “Bulletin of the Property Fund of St. Petersburg”, etc. The supply in the market of commercial property is traditionally divided into two segments: private and state. The state segment means the city of St. Petersburg represented in the market by the Committee for City Property Management (CCPM), “Property Fund of St. Petersburg” OJSC, a number of managing companies that were handed the right for asset management of the city realty, as well as some State Unitarian companies leasing part of their areas (on the agreement with the CCPM). According to the data provided by the Committee of management of the city property, by 1 January 2007 18 550 contracts on leasing of objects of the uninhabited fund of the city property with the total area of more than 3.4 million sq. m. had been signed. 48 % of these objects are the objects of trading real estate, 21 % of office one, 14 % of industrial and warehouse one, and 17 % are the other objects.

109


The Managing System of the Real Estate being the property of the city of SaintPetersburg72 Organisation

The main functions

Address

Phone/Fax Number

The Committee for City Property Management (KUGI)

Manages and runs the state real estate which is the property of St. Petersburg and the Russian Federation (within the limits of the powers provided by Rosimuschestvo according to the agreement between the Government of St. Petersburg and Rosimuschestvo, approved by the Governmental Order of the Russian Federation of 30.12.2005 No. 841).

Approach 6, Smolny, St. Petersburg, 191060,

Phone: 576-7744 Fax: 574-1026 E-mail: in@commim.spb.ru www.commim.spb.ru

The Committee for the Land Resources and the Land Management

Accounting and monitoring of the real estate objects of all the property forms, state controlling of the land usage and custody, keeping of the State Land Cadastre. The Committee Structure includes 16 district divisions.

62 Suvorovsky Pr., St. Petersburg, 191124

Phone: 740-3639 Fax: 740-3641 E-mail: info@kzr.gov.spb.ru www.kzr.spb.ru

State Unitarian Technical inventorying, accounting and market extent of Company “City the objects of the state untenantable foundation and of the Authority for housing. Inventory Taking and Realty Evaluation� (SUC CAITRE)

1-3 (Approach 6) Zodchego Rossi St., St. Petersburg, 191023.

Phone: 710-4893 Fax: 710-4780, 710-4893 E-mail: info@guion.spb.ru www.guion.spb.ru

The Fund of St. Petersburg Property

In the name of the city of Saint-Petersburg executes the functions of the preparation of the real estate of SaintPetersburg for the privatization, implementation of the decisions on the privatization conditions and the controlling of the privatization. The basic working fields are organization and running auctions on sale of the state real estate.

5 Grivtsova Per., St. Petersburg, 190000

Phone: 777-2727 Fax: 571-0001 E-mail: info@property-fund.ru www.profnd.spb.ru

The Department of Federal Registration Agency in St. Petersburg and Leningrad

Executes the state registration of the real rights for the estate property and the transactions with the rights for the real estate objects located within the territory of the circumscription

3 Galerny Proezd, St. Petersburg, 199226

Phone: 324-5910 Fax: 324-5902 E-mail: info@gbr.ru www.gbr.spb.ru

72

According to the Official Web- Site of the Committee for City Property Management of St. Petersburg (KUGI): www.commim.spb.ru.

110


The rent for objects of the uninhabited fund is established basing on their market price calculated according to the Methods of rent rates calculation73. The values of basic rates suggested by the Methodology reflect the changes that took place in the market of industrial property lease: the rent rates for trade and manufacturing and warehousing premises grew up all over the city, and the rent tariffs in the suburbs have recently grown much faster than those in the main part of the city. The new Methodology due to more exact modeling the realty market of St. Petersburg makes it possible to bring the lease rates for the industrial objects owned by St. Petersburg to the rates for the objects leased by private owners. In accordance with the new Methodology the whole territory of St. Petersburg is divided into five price zones and the rates are influenced by the distance to the city center, the distance to the nearest highway and the location of the main entrance (from the street or from the yard). As the Government of St.-Petersburg does not always have the means for the works on reconstruction and repair of the premises to be handed over, the premises will be offered the tenants in their existing (and sometimes not satisfactory) condition. It is necessary to mean, that, besides the charges on the maintenance of the premise, the costs of the fully or the partially restoration may be also transferred to the tenant. However, considering the fact of the lower rent prices level of the state sector than those of the private sector, the demand for the tenancy of the premises in this sector does not decrease. The market of the commercial real estate, according to the specialisation, is divided into 4 groups: office premises; warehouses; trading premises; industrial premises. Office real estate For many years the demand in the market of commercial real estate in St. Petersburg considerably exceeds the offer. The greatest lack is in office premises of different classes and in objects of warehouse real estate. Business centers are a dynamically developing section of the market of offices in St. Petersburg. During 2006 7 new “A”-class business centers with the total area of 46 thousand sq. m were introduced. The first objects of this category appeared on Vasilievskiy island (“Gustaff”, “Magnus”) and Petrogradskaya Storona (“Langenzipen”)74. Such buildings were initially constructed in the center of St. Petersburg. However, the number of the places for new construction in the historical part of the city is decreasing. Constant traffic jams and parking problems force the leaseholders to focus on the city suburbs. Thus, more and more “A”- class business centers appear in “sleeping” districts. This tendency is supported by the absence of traffic jams and a rather wide choice of sites for construction works. Besides, the rent rates in new business centers are often lower than in old ones. During the first quarter of 2007 about 33 thousand sq. m of office areas in new business centers were introduced. Thus, the total area of office premises “A” and “B”-class business centers is about 480 thousand sq. m75. Nevertheless, the rent rates in business centers keep growing within a constant growth of the offer of qualitative areas, and we can make a conclusion that the market is not satisfied yet. Nowadays the premises with the area of 200 – 500 sq. m in business centers of Moskovskiy, Petrogradskiy, Vyborgskiy, Krasnogvardeiskiy and Vasileostrivskiy 73

According to the Law of St. Petersburg of 14 July 2004 No. 387-58 «About the methods of definition of a rent rate for the objects of the uninhabited fund whose lease provider is St. Petersburg» (ed. 11 July 2006). 74 According to "Bekar-Nedvizhimost" Ltd. (www.becar.ru). The analytical report “Commercial real estate in the first quarter of 2007”. 75 According to "Bekar-Nedvizhimost" Ltd. (www.becar.ru). The analytical report “Commercial real estate in the first quarter of 2007”. 111


districts are the most demanded. The territory of the future socio-business complex "Okhta-center" is becoming perspective. The demand for “A”-class business centers is created by large Russian companies and representations of foreign structures. They are usually more interested in the site, the characteristics of the building and the level of service than in the rent rate. In “A”-class business centers the companies prefer to rent either rather small, up to 50 sq. m., offices (in representation purposes), or premises with the area of more than 1 thousand sq. m. – for the head offices. However, “B” and “B+”-class business centers, especially recently constructed objects with a free lay-out of premises and a good engineering infrastructure, are the most popular. New “B”-class office premises can seriously compete with “elite” ones. Today there are only 1 – 2% free premises in “A”-class objects. Many leaseholders are eager to expand their territories, but they have no opportunity to do it. Such leaseholders usually move to “B+”-class objects. Moreover, in such centers the premises are often sold even at the stage of construction. The businessmen are mostly interested in the offices with the area of 100 – 300 sq. m. And in the majority of cases they are bought with the purpose not to invest money, but to use them. The rent rates for “A”-class office premises are $500 - 940 per a square meter a year. In “B” and “B+”-class business centers the rent is $300 - 580 per a square meter a year. Free areas in “A” and “B”-class office centers are no more than 4-6 % of the total area of the building. And the business-centers under construction are practically completely provided with leaseholders even before the end of the construction works76. “B”-class premises are mostly demanded by foreign companies requiring small offices. Besides, such objects are rented by Russian middle-sized companies. The premises with the total area of 200 – 500 sq. m. are the most demanded in this sector. And it is this sector where the lack of offers is observed. Besides, more and more often large companies – banks, raw holdings, insurance and IT companies – demand larger (about 1,000 sq. m.) areas, as a rule, it is the whole floor in a business center. “C”-class objects (usually they are reorientated and reconstructed buildings of former scientific research institutes and factories), remaining the most numerous, nevertheless, lose their popularity within leaseholders. Warehouse real estate In St. Petersburg the area of introduced warehouses increased 4 times in 2008 – up to 600 thousand sq. m. a year77. The total area of warehouses in St. Petersburg and Leningrad region today is 2 – 2,5 million sq. m. During the period January – April 2007 the volume of the warehouse areas market increased in 7.6 %78. But, however, it cannot satisfy the rapidly increasing demand. In particular, the company Onninen has finished the construction of a logistical complex with the area of 8 thousand sq. m. in the settlement Zanevka. The transportation and warehouse terminal "Ruslan" with the area of 14.8 thousand sq. m. has been introduced. Thus, the total area of “A” and “B”-class warehouses is nowadays about 330 sq. m. The premises with the area of 500 – 20,000 sq. m. remain the most demanded. This demand is formed by logistical operators, and also large Russian and international trading networks. The most perspective for location of warehouses are the territories in the southern part of St. Petersburg, near the Moskovskoye highway. The most important criteria while choosing the location of the warehouse is being close to the Circular motorway. The rent rates for “A”-classs warehouses are $125 – 130 per a square meter. As to “B”-class objects, the rent rates for them fluctuate within the limits of $100 – 115 per a square meter. 76

77

According to “Real Estate Bulletin” (www..bn.ru).

According to the company Knight Frank (www.knightfrank.ru). The review of the commercial real estate market of the first quarter of 2007. 78

According to the company Colliers International. The information from the site “Real Estate Bulletin”. 112


According to the experts, there are not enough territories to completely satisfy the needs of the market. According to the evaluations, St. Petersburg will reach the point of satisfaction of its need in warehouses only by 2009. However, it is rater difficult to exactly predict the necessary volume of such real estate, as the demand will depend on changes in the macroeconomic situation in Russia and on occurrence of large players in the retail market of St. Petersburg. The rent rate on warehouses essentially depends on the technical condition of the object. New high-quality warehouses are, as a rule, a part of modern logistical complexes where the major part of premises is used for responsible storage of cargoes. The rent of the area in such a warehouse is accompanied with a complex of services on transportation, processing, labeling of goods. New high-quality warehouse, as a rule, are a part of modern logistical complexes where the most part of premises is used for responsible storage of cargoes. Rent of the area in such warehouse is accompanied by a complex of services on transportation, processing, marks of the goods. An important price-forming factor for warehouse real estate is location and transport availability. The rent rate on warehouses within the city boundaries differs insignificantly. Regarding a substantial increase in city traffic, the optimum spot for industrial and warehouse real estate objects are industrial zones located near St. Petersburg Sea trading port, the Circular motorway and other large highways on the edge of the city provided with branch lines. The tendency of decrease in demand for poor-quality warehouses is observed. The competition among trading companies stimulates the increase in requirements to suppliers and manufacturers of goods, which, in its turn, toughens the requirements to warehouse complexes. More and more often clients prefer to rent modern warehouses with full range of additional services (cargo handling services, account and control, logistical services, etc.). More and more often leaseholders prefer to rent warehouses in the complex with office premises located nearby. Technical requirements to warehouses are also put forward: a warehouse building should be rectangular, it should have one gate per every 500 sq. m, ceilings should not be lower than 7 m, floors should have an anti-dust covering, and there also should be compulsory ventilation and a fire extinguishing system. Trading real estate During recent years the market of trading real estate of St. Petersburg remains the most dynamically developing and economically attractive section of the market of commercial real estate. Recently the purchase of trading premises in the “sleeping” areas of the city is the most profitable. The demand for these areas which potential clients – dwellers of the houses located nearby – can reach on foot is constantly increasing. But the demand for premises in so-called trading corridors, on the first lines of houses, walking streets, the central highways and near underground stations – in the places with a high passage stream – remains traditionally great. Industrial premises The demand for industrial premises in industrial zones of St. Petersburg is formed by metal working, food-processing industry, manufacturers of building materials, furniture and chemical and packing industry. The market of specialized warehouses is basically presented by refrigerating warehouses, pharmaceutical warehouses and black oil stores. The major part of refrigerating warehouses is located in the port or close to it, and some of them are situated along railways. The most expensive districts are Vasileostrovskiy, Tsentralniy, Kurortniy, Moskovskiy and Petrogradskiy. The least expensive districts are Petrodvortsoviy, Krasnoselskiy, Frunzenskiy and Kalininskiy. It is caused by their remoteness from the city center. The optimum location for warehouses is industrial zones near 113


the Circular motorway and highways on the edge of the city provided with branch lines. The most popular and dynamically developing industrial zones are “Pulkovo, “Utkina Zavod” and “Parnas”. The purchase of sites in property in St. Petersburg St. Petersburg provides the lease of sites for capital construction. The right to sign a contract on leasing of sites is given in two ways: 1) purposefully – according to the governmental orders of St. Petersburg; 2) by an auction; the organizer of the auctions is the Fund of property of St. Petersburg. After the conclusion of construction works and the registration of the constructed object in property it is possible to sign a long-term (for 49 years) contract on leasing of the site under the real estate object or to repay of the specified site by the owner of the real estate object. In St. Petersburg the procedure of the repayment of sites under the real estate objects which are a private property, is well-organized and functioning. According to the Law of St. Petersburg of 29.12.2004 No. 692-101 «About the establishment of the price of the ground in St. Petersburg », the rate of repayment of 1 sq. m. of the site equals ninefold rate of the ground tax. Formerly the price of repayment equaled thirty rates of the ground tax. The realization of the state policy and the governmental functions in the sphere of ground relationships is assigned to the Committee of ground resources and land management of St. Petersburg within the limits of the powers stated in the Regulation about the Committee (further – the Regulation), and adopted by the Governmental order of St. Petersburg of 05.06.2007 No. 640. According to the Regulation the Committee fulfils the following duties: 1. To realize of the state policy in the sphere of land management of ground relationships on the territory of St. Petersburg; 2. To keep the State cadastre of the real estate of St. Petersburg, which is the unified information system containing the data on sites and real estate objects firmly connected with them, and also other information according to normative legal certificates of St. Petersburg if other is not established by federal laws or agreements; 3. To coordinate the activity of the executive bodies of the government of St. Petersburg, and also to maintain cooperation of the executive bodies of the government of St. Petersburg with the territorial bodies of the federal bodies of the government with in order to fulfil the duties assigned to the Committee. According to Chapter 32 of the Tax Code of the Russian Federation "The Land Taxes", the calculation of the land tax has to be made on the basis of the cadastral land prices. To get the information from the state cadastre of real estates of St. Petersburg it is necessary to submit an application to the authorised worker of the Committee for Land Resources and Land Management of St. Petersburg or to send an application via the post79. In the application one should specify the requisites of the person requesting the information, the address and type of the real estate object (land plot, building (construction), premise), the cadastral number of the real estate object (if the data on the presence of the cadastral account of the real estate object is presented), the purposes of the requested information. It is necessary to apply to the application the scheme of the requested land plot scaled to the 1:2000 with the determined borders of the requested land plot. The total area of the required territory should not exceed 5,000 square meters. 79

Nowadays the order of granting information from the State cadastre of the real estate of St. Petersburg is stated by the Order of the Committee on ground resources and land management of St. Petersburg of 23.01.2003 No. 11 (ed. 19.02.2003) «About the statement of the order of granting information from the State cadastre of the real estate of St. Petersburg». However, with the acceptance of new Regulation about the Committee on ground resources and land management of St. Petersburg a new order of granting information from the State cadastre of the real estate of St. Petersburg is being developed. 114


Under the showing of the application the following amount of the information included in the State Cadastre of Real Estate of St. Petersburg can be provided: — address formed in the established procedure; — cadastral number of the real estate object (if presented); — land category of the requested land plot; — total area of the land plot; — legal restrictions (encumbrance) of the usage of this land plot registered in the established procedure; — actual usage of the land plot established by the real survey (in case of providing of the land plot on investment terms); — information on the real estate objects located within the borders of the requested land plot. The information is to be prepared and issued within 30 days. The information is to be given to the authorised person after he has shown the papers verifying his personality. In the cases when the seller of the right on site leasing is the Open stock corporation «The Fund of St. Petersburg Property» («Fond Imuschestva Sankt-Peterburga»), it is necessary to present the package of documents including: - application form for participation in the auction according to the established form; - deposit contract (the contract of connection); - payment document (the original and the copy) with a mark of the bank about the transaction, confirming the deposition of payment for the object into the account according to the deposit contract by the applicant; - passport (for individuals); - notarially certified copy of constituent documents (for legal entities). Registration of Real Estate Transactions In St. Petersburg the realty deals are registered by the Department of the Federal Registration Agency in St. Petersburg and Leningrad Region. With all the questions concerning lease and other rights for immovable property objects owned by the city it is expedient to turn to the agency of the CCPM of the district where the realty object is located. Addresses and Phone Numbers of the District Agencies of the Committee for City Property Management of St. Petersburg Name

Address

Phone

Admiraltejskoe

41 Bolshaya Morskaya St., St. Petersburg, 190000

314-2087

Vasileostrovskoe

55 (A) Bolshoj Pr. of Vasilievsky Island, St. Petersburg, 199178

321-3337

Vyborgskoe

84 Bolshoy Sampsonievsky Pr., St. Petersburg, 194100

542-9098

Kalininskoe

9 Mikhailova St., St. Petersburg, 195009

542-9530

Kirovskoe Krasnogvardejskoe

18 Statsheck Pr., St. Petersburg, 198095 50 Sredneohtinsky Pr., St. Petersburg, 195027

252-2984 576-8677

Krasnoselskoe

3 Partizana Germana St., St. Petersburg, 198329

735-7471

Moskovskoe Nevskoe

129 Moskovsky Pr., St. Petersburg, 196084 163-a Obuhovskoy Oborony Pr., St. Petersburg, 193131

388-9117 362-8710

Petrogradskoe

26-28 Kamennoostrovsky Pr., St. Petersburg, 197101

233-2737

Primorskoe Frunsenskoe

24 The Chernaya River Embankment, St. Petersburg, 197183 46 Prazhskaya St., St. Petersburg, 192241

Central

5 Muchnoy Lane, St. Petersburg, 191023

430-2941 576-8507 708-8122 576-3929

KolpinskoPushkinskoye

7/5 Truda St., Kolpino, 196655 Pushkin, 24 Oktyabr’sky Avenue, 196600

Kronshtadskoe

10 Lenina Pr., St. Petersburg, 197760

461-4550 466-6275 461-0354 311-0680

Kurortnoe

1 Svobody Sq., Sestroreck, St. Petersburg, 197706

434-1301

115


Petrodvortsovoe

7 Kaliningradskaya St., St. Petersburg, 198903

450-7568

3.2. Business Financing Financing of commercial (entrepreneurial) activity of the managing subject or association of managing subjects means maintenance of corresponding operational or investment activity of the subject in necessary volume of money resources or, generally, financial resources, sufficient for performance of business projects planned by it. The main characteristic of the financial resources is their cost for business. Investments Investments is long-term spending of financial, labor and material resources for the purpose of increasing and getting profit. Investments ensuring dynamic development of a company allow for decision of the following tasks: + increasing business activities by accumulation of more financial and material resources; + purchase of new companies; + diversification by learning new business areas. All investments can be divided into two main groups: Portfolio investments are capital investments in the group of projects, for example, purchase of the securities of different companies. Real investments are financial investments in a specific and, as a rule, long-term project linked with the purchase of real assets. Types of investments: + starting investments; + investments on expansion; + re-investments, allocation of free funds for the acquisition of new fixed assets; + investments in the change of fixed assets; + investments in diversification and so on. Stocks. Initial public offering According to the Federal Law No. 39-FZ of 22/04/96 ÂŤAbout the security marketÂť a stock is an emission security fixing the rights of its owner to receive a part of profit of the jointstock company in the form of dividends, to participate in the management of the joint-stock 116


company and to get the part of the property remaining after its liquidation. It is termless, i.e. it operates on the market until the joint-stock company which has issued it exists. In the classical sense IPO is an initial public offering when the company for the first time places its stocks on the market and a wide circle of institutional and private investors buy them. In Russia IPO is sometimes understood more widely, also including in it secondary offering of a significant stock holding on the market through the system of public offering. There are several types of public offering depending on the issue of offered stocks: - РРО (Primary Public Offering) is a primary public offering when an emitting company draws the necessary capital offering an additional stock issue of the company to investors; - SРО (Secondary Public Offering) is a secondary public offering used by initial investors as a way of withdrawal from the company fixing the profit of the investments. Besides, the securities of the basic issue belonging to stockholders are offered to investors. It is necessary to emphasize that during IРО both stocks of additional (new) and basic (old) issue (РРО + SРО) can be offered to investors simultaneously. There are several types of offering depending on the way and the place of offering of stocks, and also the number of investors: - Public Offering is an offering of stocks among the unlimited circle of persons on the stock-exchange or non-stock-exchange market. - Private Offering is an offering of stocks among the circle of persons on the stockexchange or non-stock-exchange market known in advance. - Direct Public Offering (DРО) is an offering of stocks on the non-stock-exchange market by the emitter without participation of the underwriter. The choice of the stock exchange for IРО Great Britain: London Stock Exchange (LSE), includes 2 trading areas: Main Market and AIM

The USA: New York Stock Exchange (NYSE), NASDAQ

Significant circle of investors

Widest investors base

Capacious and liquid market Opportunity to use various variants of listing

High liquidity degree of the market Unified tender system using the auction market and the centralized book of orders -

Unlimited number of stockholders Short time of entering the secondary market (up to 7 days) Tax on stock operations Heavy offering expenses (for average companies) Rigid requirements to corporate management (presence of independent directors, committees and so forth) Some tendering methods may be not clear for Russian emitters (SET/SEAQ/IOB)

Europe: Euronext, Deutsche Börse

Benefits All European investors are presented

High enough liquidity of the market Opportunity to perform listing in one European country and then to trade through the integrated area Unlimited number of stockholders

Short time of entering the Short time of entering the secondary market (up to 7 secondary market (up to 7 days) days) Drawbacks and restrictions Rigid requirements of Rigid requirements of listing listing Heavy offering expenses Less liquid market in comparison (for average companies) with LSE and NYSE Rigid requirements to Requirements to presence of presence of independent independent directors directors in the board of directors (majority) Number of stockholders not less than 400

-

Russia: Russian Goods and Raw Materials Exchange, Stock Exchange of Moscow Interbank Currency Exchange Investors are informed of Russian companies, hence, no significant efforts on positioning of the company are required Quite liberal requirements to corporate management Unlimited number of stockholders Performing IPO in shorter terms and with smaller expenses Poorly liquid market in comparison with foreign areas -

During the performance of foreign IPO a Russian emitter is obliged to offer not less than 30 % of stocks of the

117


given issue on the domestic market

Foreign Currency Stock Exchange The absence of the uniform payment means at calculations in foreign trade, over credits, investments and interstate payments causes the necessity of exchange of one currency into another. Such an exchange is carried out on the currency market80. The foreign currency stock exchange is an element of the infrastructure of the currency market whose purpose is to provide services on organization and tendering during which the participants make transactions with foreign currency. At the foreign currency stock exchange free sale and purchase of national currencies basing on price parity among them (quotation) formed on the market under the influence of supply and demand is performed. There are some foreign currency stock exchanges specializing on terminal foreign currency and financial actives trade, such as London International Financial Futures Exchange, European Options Exchange in Amsterdam, Deutsche Tenninboerse in Frankfurt, Singapore International Monetary Exchange, Sydney Futures Exchange, Oesterreichische Termin Optionsboerse81. Moscow Interbank Currency Exchange (MICEX) is a leading Russian stock exchange on whose basis the national tender system on all basic segments of the financial market has been created. The Central Bank of the Russian Federation establishes an official rate of the Russian rouble basing on the results of currency tenders at Moscow Interbank Currency Exchange. On 21 May 1992 St. Petersburg Currency Exchange was founded by the leading banks of St. Petersburg and the Committee on external relations of the Mayoralty of St. Petersburg. The address of St. Petersburg Currency Exchange is 12/23 Sadovaya St., St. Petersburg. The basic functions of St. Petersburg Currency Exchange are: - Organization of operations on purchase and sale of foreign currency for roubles; - Performing activity on organization of trade on the security market; - Performing clearing activity; - Organization of exchange trade in commodity sections. Venture investment Venture business is an investment, as a rule, in the form of joint-stock capital, in fast growing companies, which demonstrate potential, and one of the main form of realization of the new technological methods. The purpose of the venture investment is a getting high profit from the investments, in more cases not as dividends, but as return on the investments at the sale of it share of company for the business partners after some years of successful development at the open market or to a large company, which operates in the same area, as a developing company. Venture investment, as a rule, are made in small and medium companies without granting of the pledge, what is different, for example, from the bank credit. Representatives of a venture investor usually take part in the control of the invested company. By the definition of the European Association of Venture Investment, venture capital is a joint-stock capital, presented by the professional companies, which invest own businesses in their starting development, extending and transformations, with the control at the same time. 80

According to the site of the dealing company “Teletrade”.

81

According to the site of the dealing company “Teletrade”. 118


There are the following sources of venture investments: — sources of the non-formal sector (physical entities, business agents, private companies and so on); — sources of the formal sector (venture funds, institute investors). The biggest foreign funds are the funds, which are financed by the European Bank of Reconstruction and Development), the World Bank, the Russian-American Fund of Entrepreneurship and so on. There are Russian funds: the members of the Russian Private Equity and Venture capital Association. In venture business there is the following companies classification, claimed for the investments getting: Seed is only a project or business-idea, which must be invested for making additional sources or for the creating pilot examples of the production before exit to the market. Start up is a company, created recently, which hasn't long market story. Investment is necessary for making science and research works and sale starting. Early stage is companies, which have ready production and these companies are on the very beginning stage of it's commercial realization. Expansion is companies, which need additional among investor sand customer investments to finance their activity. Investments can be used for extending of the manufacture and sale volume, for the additional marketing researches, increasing of the authorized capital or current assets. Mezzanine are companies, ready for the public (open) issue of its shares on the stock market. These companies offer smaller profit and shorter investment period, than the companies which are on the more starting stages of the development. Relations with an investor can be divided into several stages: acquaintance with the company (deal flow); searching of a business (due diligence); joint running of a company (hands on); sale of an investor's stake (exit of capital). The prominent feature of venture financings is that the investor almost never tends to get the control stock of the company, which essentially differs him from the strategic investor. The venture investor basically takes up the financial risk, and passes such kinds of risks as technical, market, administrative, price, etc., to the management which, as a rule, has a control stock of the company. As venture investments are extremely risky and in case of unsuccessful development of the company the investor loses all the invested means, venture investors tend to directly participate in the management of the enterprise by including their representatives in directing bodies of the company to decrease the risks. Besides, venture investors tend to directly participate in selection of objects for investment, and also to perform several venture operations, that is to work with new companies, already existing and prepared for sale ones. Loans and credits Loan is a contract, under which one party (lender) passes to the other party (debtor) monetary means and/or property, and the debtor is obliged to return received monetary means and/or property under the terms of concluded contract. Credit is a form of moving of money capital, which extends as a the loan. This loan is expressed by granting of money or products by the creditor for the debtor as a debt in temporary use with interest payment. In practice various bases for classification of bank credits are applied. Basing on terms of use credits are subdivided into: - poste restante; - terminal (short-term, intermediate and long-term). Basing on the degree of security there are the following types of credits: 119


- non-secured (blank) credit is given to regular clients for whom the bank performs settlement and cash service; - secured credit is given depending on the character of property mortgage security or under financial guarantees of the third parties. Basing on the way of repay the following types of credits are distinguished: - credit repaid with a lump-sum payment; - credit repaid with installments. Basing on the purpose there are: - credits given on increase of the fixed capital (updating of production assets, new construction works, increase of manufacture volumes) - credits on temporary increase of the current capital. The following types of bank credits given to commercial firms are distinguished: Lump-sum (target) credit is given once with a lump-sum for a definite period to satisfy the certain need in means. The given credit is made out by an individual contract indicating the sum and the purpose of the credit, the security, the repay term and the interest rate. Overdraft credit is a short-term credit given to clients for payment of their payment documents at absence or lack of means on the settlement (current) account. The overdraft credit is usually given to loaners for whom the given bank performs settlement and cash service and who have a significant turnover on the accounts, and also a faultless credit history and a steady financial position. Opening a demand line of credit the loaner and the bank sign a treaty about the maximum sum of credit which the loaner can use within a given period of time under certain conditions. Within the limits of the demand line of credit the loaner is given a credit by settling payment documents as required, i.e. the loan has no particular date of payment defined in advance. There are several types of demand lines of credit: - not renewed demand line of credit when repay of the loan and termination of relationships between the bank and the client under the given contract happen at gradual use of the limit; - renewed demand line of credit (revolving credit) which assumes giving and repay of credit automatically within the stated limits of debts and the total validity of the credit contract. Credit cooperatives In the process of the business activity companies make mutual crediting. Credit cooperatives (credit unions, societies of small business support) are created for the purposes to help their participants by the way of unification of personal savings of participants and using them for mutual crediting at affordable interest rates. Credit union being a non-for-profit organization renders services only for its shareholders, gets personal savings and extends loans to its shareholders. These operations are similar with bank operations in their form, but are not the same since these operations are not aimed to get profit. Credit organizations are transparent, and its cash flows can be controlled. Other forms of business financing Leasing is a kind of investment activity on purchase by a leasing company of the property specified by a lease acquirer from a certain seller and its transfer according to the leasing contract to the lease acquirer on compensatory basis for temporary possession and using for the certain period with a business purpose with the right of the lease acquirer to repay the property82. 82

Article 655 Of the Civil Code of the Russian Federation and the Federal Law of 29.10.1998 No. 164-ФЗ “On Financial tenant (about leasing)”. 120


The lease provider and the lease acquirer sign a leasing contract, according to which the lease provider undertakes to purchase the property specified by the lease acquirer from the seller indicated by it and to give the lease acquirer this property on compensatory basis for temporary possession and using. The subject of leasing can be any inconsumable goods, including enterprises and other property complexes, buildings, constructions, equipment, vehicles and other movable and real estate which can be used for a business activity. During the term of the leasing contract the lease acquirer pays leasing payments including the refund of the lease provider’s expenses connected with the purchase and the transfer of the subject of leasing to the lease acquirer, the compensation of the expenses connected with other services stipulated by the leasing contract, and also the income of the lease provider. The size, the method and the period of leasing payments are defined by the leasing contract. An important feature of a leasing scheme of equipment purchase is the reference of all the sum of leasing payments on the cost price of the production of the lease acquirer. The subject of leasing carries over to the lease acquirer either after the term of the leasing contract or before its expiration on the conditions stipulated by the agreement of the parties. There are several types of leasing. Basing on term of use of property these types are the following: - financial leasing is the leasing with a complete recoupment when during the validity of the leasing contract there is a complete amortization of property and, hence, payment the cost of the subject of leasing to the lease provider; after the expiry date of the contract the subject of leasing becomes the property of the leaseholder under the condition of payment of the complete sum under the contract; - operative leasing is the leasing with an incomplete recoupment when during the validity of the leasing contract there is only partial amortization of property, that is the validity of the contract is less than the normative service life of the property; after the expiry date of the contract the subject of leasing is returned to the lease provider. Basing on quantity of subjects of a leasing operation there are: - bilateral (returnable) leasing when the seller of property and the lease provider are one person, that is the owner of the property provides leasing independently; - classical tripartite leasing when the property is transferred in leasing not by the seller but by the financial intermediary – the leasing company. Basing on national identity of participants of leasing operations the following types of leasing are distinguished: - domestic leasing when all subjects of the leasing operation are residents of the Russian Federation; - international leasing when one or several subjects of the leasing operation are non-residents of the Russian Federation. Basing on the form of leasing payments there are: - leasing with monetary payment when payments are made in the monetary form; - leasing with compensatory payment (compensatory leasing) when the leaseholder pays the lease provider with goods produced on the leased equipment, or by providing counter services; - mixed payment leasing when the first two forms of payment are combined. The list of the largest leasing companies in St. Petersburg84 №

83

leasing company

1

"Nomos-lizing" (Group of companies «Baltiyskiy lizing») Ltd.

2 3

"Interlizing" LLC "Globus-lizing " LLC

Phone 325-90-80, 325-90-82, 325-90-83 346-60-55, 541-82-98 702-50-80

The companies are ranged by the number of deals in 2006. 121


4 5 6 7 8 9 10

Group of leasing companies «Severnaya Venetsiya» FC "Baltinvest" Ltd. Leasing holding "Petrokonsalt" «Progress-Neva Lizing » LLC Petersburg Leasing Company "PRG-resurs" LLC "PL-lizing " Ltd.

380-66-08, 380-66-09 325-64-83, 325-89-51 334-13-40, 327-31-03 331-90-09, 369-03-00 329-81-82, 326-93-60 324-51-86, 314-38-09 438-28-28, 441-38-16

Franchising Franchising is such an organization of business when the company (the franchisor) transfers the right to sale of the product and services of this company to the independent person or the company (the franchisee). The franchisee undertakes to sell the product or services according to certain laws and rules of business dealing established by the franchisor in advance. In return for following all the rules the franchisee is allowed to use the name of the company, its reputation, the product and services, the marketing technologies, the examination and the methods of support. Thus, following the rules is not a drawback, but, on the contrary, is a good opportunity for the franchisee to make profit and to understand the advantage of the investment. To receive these rights the franchisee makes an initial payment to the franchisorу and then makes monthly payments. It is a kind of rent, because the franchisee never becomes a complete owner of the trade mark, but only has the right to use it trade mark during the period of monthly payments. The sum of these payments is stated in the franchising contract and becomes the subject of negotiations. The franchising package (the complete system of business dealing transferred to the franchisee) allows the corresponding businessman to perform the business successfully even without a previous experience, knowledge or training in the given area. The franchisor is the company which licenses or transfers the right to use the trade mark, the know-how and operational systems. For example, the franchisor creates a successful product or services, such as a special working style of a fast food restaurant. The franchisor studies and develops the business, spends money on promotion of the business, creates good reputation and recognized image (brandnaming). After the company has proved working capacity of its business concept and successful reproducibility of this business, it may start offering the businessmen who want to have a similar success to buy its franchise. The franchisee is the person or the company which buys an opportunity of training and help at creation of the business from the franchisor and makes service payment (royalty) for use of the trade mark, the know-how and systems of work performance of the franchisor. The franchisee pays the expenses for creation of the business by itself. Very often the franchisor gives very favorable discounts for the important deliveries (materials and account means). These discounts always enable the franchisee to buy the products from the franchisor under a lower price, and thus it is cheaper than to develop the business without the franchisor. The franchisee makes an initial payment for the help on creation and opening of the business. The franchisee takes up the duty to make monthly payments for the right to use the trademark and the business system, and also for the support, training and consulting provided by the franchisor. If everything happens according to the plan, the franchisee does a successful business, and its profit surpasses expenses. 122


The franchise is a complete business system which is sold to the franchisee by the franchisor. Another name for such a system is the franchising package which usually includes grants on conducting works and other important materials belonging to the franchisor. There are several ways to get a permission to become the franchisee, the most common are the following: Straight franchising. The franchisor sells the franchise directly to the local businessman (the franchisee). It is the best way to provide good interaction between the franchisor and the franchisee. In case of international franchising when geographical distance between the franchisor and the franchisee is great, the absence of support at the local level and a smaller attention to the local peculiarities may become the drawback of this method. Many small franchisors do not use such a form of franchising because the support of such franchisee takes a lot of time and efforts. Large franchisors use this system to research the market and the conditions of business dealing in the given country. Master franchise. Master franchise relations appear when an international franchisor sells the exclusive rights to develop all the system on the whole territory of the country to one franchisee. Such a type of franchisee is called the owner of the master license. Thus, the franchisee becomes the franchisor on the territory of the given country, selling and offering franchises to other businessmen and collecting service payment (royalty) from them. It often happens when there is an obvious demand on the franchise. In that case the franchisor does not worry about a successful development of its business. Instead of it the franchisor searches for a prosperous local businessman owing the organization which will turn the franchisor’s system into the concept successfully working on the territory of the whole country. Addresses and telephones of associations and unions of investors Name Banks Association of the North-West

Address

Phone

21 Sadovaya St., Petersburg, 191023

Centre of Credit Unions service 143 Moskovsky Petersburg, 196105

Pr.,

Contacts

St. Tel.: 315-6509, 310-9272 Fax: 315-7283

acb@acb.spb.ru www.nwab.ru

St. Tel.: 369-3108

www.creditunious.ru

Russian Private Equity and Venture capital Association (RVCA)

27 (12B), office 209, Engelsa Tel.: 326-6180 Pr., St. Petersburg Fax: 326-6180

rvca@rvca.ru www.rvca.ru

Stock Exchange of St. Petersburg

15, 26th line of Vasiljevsky Tel.: 322-7778 Island, St. Petersburg, 199026 Fax: 322-7790

www.spbex.ru spbex@spbex.ru

Legal regulation of credit activity includes: 1) Civil Code of the Russian Federation, Part 1 of 30.11.1994 No. 51-O3 (as amended on 24.07.2008) and Part 2 of 26.01.1996 No. 14-Ф3 (as amended on 14.07.2008); 2) Federal Law of 2.12.1990 No. 395-I "On Banks and Banking" (as amended on 08.04.2008); 3) Law of the Russian Federation of 9.10.1992 "On Currency Regulation and Currency Control"; 4) Federal Law of 10.07.2002 No. 86-Ф3 "On the Central Bank of the Russian Federation (Bank of Russia)"; Legal regulation of equity market: 5) Federal Law of 22.04.1996 № 39-ФЗ “On equity market” (as amended on 17.05.2007); 123


6) Federal Law of 26.12.2995 № 208-ФЗ (as amended on 29.04.2008); Legal regulation of leasing: 7) Civil Code of the Russian Federation, Part 1 of 30.11.1994 No. 51-O3 (as amended on 24.07.2008) and Part 2 of 26.01.1996 No. 14-Ф3 (as amended on 14.07.2008); 8) Federal Law of 29.10.1998 No. 164-Ф3 "On Leasing" (as amended 26.07.2006); 9) Letter of the Ministry of Finance No. 03-06-01-04/05 of 3.03. 2005 "On Leasing".

3.3. Intellectual Property Since 1 January 2008 Part 4 of the Civil Code of the Russian Federation of 18.12.2006 No. 230-ФЗ (adopted by the State Duma of the Federal Soviet of the Russian Federation 24.11.2006), according to which the legal regulation of intellectual property in the Russian Federation will be carried out, inures in the Russian Federation. The objects of intellectual property (OIP) are the results of intellectual activity and the means of individualization of the participants of business activity. The main criteria while the reference of such objects to the OIP is the presence of right protection. As a rule, the presence of right protection means the recognition of exclusive rights of the legal owner to such an object, which gives the basis to considering the OIP the objects of exclusive rights. The objects of intellectual property include: 1) works of science, literature and art; 2) programs for electronic calculating machines (computer programs); 3) databases; 4) executions; 5) soundtracks; 6) broadcasting or cable casting of radio- and TV-programs (casting of broadcasting or cable casting organizations); 7) inventions; 8) useful models; 9) industrial samples; 10) selection achievements; 11) topology of integrated microcircuits; 12) know-how; 13) company names; 14) trade marks and service marks; 15) names of places of goods origin; 16) commercial signs84. The author of the result of intellectual activity is considered the citizen by whose creative activity such a result has been created. The citizens who have not brought a personal creative contribution to the creation of such a result, including the ones who have performed only technical, consulting, organizational either material assistance or help to the author, or only have promoted registration of the rights to such a result or its use, and also the citizens who have supervised the performance of corresponding works, are not considered the authors of the result of intellectual activity. Copyright 84

According to Item 1 Art. 1225 of the Civil Code of the Russian Federation (Part 4) of 18.12.2006 No. 230-ФЗ (further CC RF). 124


Copyright regulates the relationships arising in connection with creation and use of works of science, literature and art. The author of the work posesses the following rights: 1) the exclusive right to the work; 2) the copyright; 3) the right of the author to the name; 4) the right to inviolability of the work; 5) the right to promulgation of the work. The author of the work of science, literature or art is considered the citizen by whose creative activity it has been created. The person indicated as the author on the original or the copy of the work is considered its author if other is not proved. The objects of copyrights are works of science, literature and art irrespective of advantages or purposes of the work, or of the way of its expression: literary works; drama and music-drama pieces, script works; choreographic pieces and pantomimes; pieces of music with or without text; audiovisual products; pieces of painting, sculpture, graphics, design, graphic stories, comics and other works of fine arts; pieces of crafts art and scenographic art; - pieces of architecture, town-planning and landscape gardening art, including projects, drawings, images and breadboard models; - photographic works the works created in the ways similar to the photography; - geographical, geological and other cards, plans, sketches and the plastic works concerning geography, topography and other sciences; - Others works85. The copyrights to all kinds of computer programs (including operational systems and program complexes) which can be expressed in any language and in any form, including the initial text and the objective code, are protected in the same way with the copyrights to works of literature. The registration of the product or any other formalities are not required for occurrence, realization and protection of copyrights. What about computer programs and databases, a voluntary registration of the legal owner according to rules of the Civil Code of the Russian Federation is possible. Copyrights do not spread on ideas, concepts, principles, methods, processes, systems, ways or decisions of technical, organizational or other problems, and also on discoveries, facts, programming languages. To announce the exclusive right on the product a legal owner has the right to use the sign of copyright protection which is located on every copy of the product and consists of the following elements: the encircled Latin letter "C", the name of the legal owner, the year of the first publication of the work. The terms of validity of the exclusive right to the product are specified in Art. 1281 of the Civil Code of the Russian Federation. Patent Right

85

According to Art. 1259 of the CC RF. 125


Intellectual rights to inventions, useful models and industrial samples are considered patent rights. The author of the invention, useful model or industrial sample posesses the following rights: 1) the exclusive right; 2) the copyright. Besides, the author of the invention, useful model or industrial sample possesses other rights, including the right for the patent and the right for the compensation for use of the service invention, useful model or industrial sample. The exclusive rights to the inventions, useful models and industrial samples, certified by the patents given out by the federal enforcement authority on intellectual property, or the patents valid on the territory of the Russian Federation according to international contracts of the Russian Federation, are admitted on the territory of the Russian Federation96. The author of the invention, useful model or industrial sample is considered the citizen by whose creative activity the corresponding result of intellectual activity has been created. The person indicated as the author in the application form for the patent on the invention, useful model or industrial sample is considered the inventor if other is not proved. The objects of patent rights are the results of intellectual activity in the scientific and technical sphere meeting the requirements to the inventions and useful models established by the Civil Code of the Russian Federation, and the results of intellectual activity in the sphere of art designing meeting the requirements to the industrial samples established by the Civil Code of the Russian Federation87. Invention The technical decision in any area, concerning the product (in particular, the device, the substance, the strain of a microorganism, the culture of cells of plants or animals) or the method (the process of actions over the material object by material means) is protected as the invention88. The invention is provided with the right protection if it: - is new, that means it is not known from the level of technics; - has an invention level, that means it is not obvious for an expert from the level of technics; - industrially applicable, that means it can be used in industry, agriculture, health protection and other branches of economy or in social sphere. The following items are not considered inventions: 1) discoveries; 2) scientific theories and mathematical methods; 3) decisions concerning only layout of products and directed on satisfaction of aesthetic needs; 4) rules and methods of games, intellectual or economic activities; 5) computer programs; 6) decisions consisting only of presentation of information. The right protection as the invention is not provided to: 1) grades of plants, breeds of animals and biological methods of their acquiring, except microbiological methods and products received by these methods; 2) topology of integrated microcircuits. Useful Model The technical decision in any area, concerning the appliance is protected as the useful model. The useful model is provided with the right protection if it: - is new, that means its essential attributes are not known from the level of technics; 86

According to Art. 1346 of the CC RF. 126


- is industrially applicable. The right protection as the useful model is not provided to: 1) decisions concerning only layout of products and directed on satisfaction of aesthetic needs; 2) topology of integrated microcircuits. Industrial Sample The artistic and design decision of the product of industrial or domestic manufacture, defining its external layout is protected as the industrial sample99. The industrial sample is provided with the right protection if it: - is new, that means its essential attributes reflected in the images of the product and stated in the list of essential attributes of the industrial sample are not known from the data which has become world popular before the priority date of the industrial sample; - is original, that means its essential attributes are caused by a creative character of the features of the product. The essential attributes are the attributes defining aesthetic and (or) ergonomic features of the layout of the product, in particular the form, the configuration, the ornament and the color combination. The right protection as the invention is not provided to: 1) the decisions caused exclusively by the technical function of the product; 2) the objects of architecture (except small architectural forms), the industrial, hydraulic engineering and other stationary constructions; 3) the objects of unstable form of liquid, gaseous, loose or similar substances. The exclusive right to the invention, the useful model or the industrial sample is admitted and protected under the condition of the state registration of the corresponding invention, useful model or industrial sample, basing on which the federal enforcement authority on intellectual property grants a patent on the invention, useful model or industrial sample. Validity of Exclusive Rights to the Invention, Useful Model and Industrial Sample The term of validity of exclusive right to the invention, useful model, industrial sample and the one of the patent certifying this right is estimated from the date of submission of the initial application for the patent into the federal enforcement authority on intellectual property and under the condition of meeting the requirements established by the Civil Code of the Russian Federation is the following: twenty years – for inventions; ten years – for useful models; fifteen years – for industrial samples. The protection of exclusive right certified by the patent can be provided only after the state registration of the invention, useful to model or industrial sample and the delivery of the patent. Address and telephone of services specializing on intellectual property, patents and trade marks The Russian Agency for Patents and Trade Marks

87 88

30, k. 1, G-59, GSP-5 Berezhkovskaya Emb., Moscow, 123995

Phone: (8-499) 240-6015 240-6138 Fax: (8-499) 243-3337

www.rupto.ru

According to Item 1 Art. 1352 of the CC RF. According to Item 1 Art. 1352 of the CC RF. 127


Point of reception of applications for objects of industrial property in St. Petersburg

35 Apraksin Dvor, 28 – 30 Sadovaya St., St. Petersburg

Tel.: (812) 110-58-09

Patent Attorneys of St. Petersburg The patent attorneys deal with the issues of receiving the timely patent and legal information, detection, legal security and commercial use of the objects of intellectual property89. Patent attorneys are highly professional specialists in the sphere of intellectual property (IP), the qualification of each of them is checked and confirmed with an official certificate of the Russian Patent Authority. Professional activity of the patent attorneys at the territory of Russia is controlled by provisions “On Patent Attorneys” dated February 12, 1993 No 122. In accordance with the Provisions a citizen of Russia who: • is a permanent resident of Russia, has a higher education and at least 4 year experience of practical work in the sphere of defending industrial property or professional trade representation (as an attorney or another person received a permit for dealing in the sphere of law enforcement activities); • knows legislative and other normative acts of Russia, international agreements and treaties necessary for carrying out activities for defending the rights for the objects of industrial property in the amount defined by Rospatent and correspondent skills of practical applying them confirmed by he results of the qualification exam can be registered as a patent attorney. A patent attorney can carry out his professional activities both independently as an entrepreneur and being employed. In accordance with the data of the Federal service for Intellectual Property, Patents and Trademarks (ROSPATENT) as of 31.12.2006 162 patent attorneys are registered in St. Petersburg, authorized to provide, register and support the right for inventions and useful models, industrial samples, and trademarks at the territory of Russia. Some patent attorneys of St. Petersburg are united in the College of Patent Attorneys90 registered by the City Administration. 3.4. Human resources Labor resources of St. Petersburg are one of its major investment advantages. A great number of qualified personnel is caused by the fact that the city is one of the largest scientific and cultural centers not only in Russia, but also in the whole world. The Program of the development of the labor market for 2006 – 2015 (further - the Program) which represents the complex of activities of the governmental executive bodies of St. Petersburg, directed on the achievement of the main purpose of the Program – the formation of personnel potential for effective social and economic development of St. Petersburg – was adopted in St. Petersburg. The Program has the following purposes: - to create the conditions for providing a required number and also demographic and qualifying structures of the labor resources and an increase of working capacity of the population of St. Petersburg according to the needs of the economics of St. Petersburg; - to increase the efficiency of use of available labor resources by the organizations in St. Petersburg; 89 90

The information from the website of St. Petersburg College of Patent Attorneys http://collegium.chat.ru Information from the website of St. Petersburg College of the Patent Attorneys http://collegium.chat.ru. 128


- to optimize the structure of vocational training of the personnel to provide the economics of St. Petersburg with the personnel of the required qualification and to decrease the level of the structural misbalance in the supply and the demand on specialists of various qualifications; - to improve the infrastructure and the machinery of functioning of the labor market of St. Petersburg. Regulation of labor relations Labor relationships are the relationships based on the agreement between the employee and the employer about a compensatory personal performance by the employee of the labor function (the work regarding the position, list of staff, profession and speciality indicating the qualification; a particular kind of work charged to the employee), submission of the employee to the rules of the internal labor schedule within providing by the employer of working conditions established by the labor legislation and other normative legal certificates, containing the norms of the labor right, the collective treaty, the agreements, the local statutory acts, and the labor contract91. Labor relations arise between an employee and an employer on the basis of labor contract concluded by them according to the Labor Code of the RF92. The counterparts of labor relationships are the employee and the employer. Labor relations between an employee and an employer also arise on the basis of factual authorization to work with the knowledge or on behalf of the employer or his representative in case when labor contract wasn’t properly executed. The employee is a physical person who has entered labor relationships with the employer. The persons who have reached the age of sixteen are able to enter labor relationships as employees, and in cases and according to the order established in the Labor Code of the Russian Federation the persons who have not reached the indicated age also have such a right. The employer is a physical person or a legal person (an organization) which has entered labor relationships with the employee. In the cases stated in the federal laws, another subject authorized to conclude labor contracts is able to act as an employer.

91

According to Art. 15 of the Labor Code of the Russian Federation ed. of the Federal Law of 30.06.2006 No. 90FZ (further LC RF). 92 According to Art. 15 of the LC RF. 129


Labor contract The labor contract is an agreement between the employer and the employee according to which the employer incurs the duty to provide the employee with the work according to the stated labor function, with the working conditions established in the labor legislation and other normative legal certificates stating the norms of the labor right, the collective treaty, the agreements, the local statutory acts, and the given contract, to pay wages to the employee duly and in the full size, and the employee incurs the duty to personally perform the labor function defined in this contract and to submit the rules of the internal labor schedule of the given employer93 . The parties of labor contract are the employer and the employee. The labor contract indicates94: the surname, name and patronymic of the employee and the name of the employer (the surname, name and patronymic of the employer-a physical person) who have concluded the labor contract; the information about the identification documents of the employee and the employer-a physical person; the identification number of the tax bearer (for the employers, except for the employersphysical persons not being individual enterprisers); the information about the representative of the employer who has signed the labor contract, and the basis for authorization with corresponding powers; the place and date of the conclusion of the labor contract. The labor contract should include the following conditions: the place of work, and in case when the employee is hired to work in a branch, representation or other isolated structural department of the organization located in another district, - a place of work with the indication of the isolated structural department and its location; the labor function (the work regarding the position, list of staff, profession and speciality indicating the qualification; a particular kind of work charged to the employee). If according to the federal laws the performance of works on certain positions, professions and specialities is connected with granting indemnifications and privileges or with restrictions, the names of these positions, professions, specialities and the qualification requirements to them should correspond to the names and the requirements specified in the qualifying directories approved in the order established by the Government of the Russian Federation; the starting date and in case of a short-term labor contract – the term of its validity and the circumstances (reasons) forming the basis for the conclusion of a short-term labor contract according to the Labor Code of the Russian Federation or another federal law; the terms of payment (including the size of tariff rate or salary (official salary) of the employee, surcharges, extra charges and incentive payments); the working and leisure schedule (if for the given employee it differs from the general rules of the given employer); the indemnifications for heavy work and work in harmful and (or) dangerous working conditions if the employee is hired under the corresponding conditions, with the indication of characteristics of the working conditions on the workplace; the conditions defining in necessary cases the character of work (mobile, business trips, on the road, another character of work; the condition about the obligatory social insurance of the employee according to the Labor Code of the Russian Federation and other federal laws; other conditions in the cases stated in the labor legislation and other normative legal certificates stating the norms of the labor right. Employers and employees have a rater wide range of rights and duties stated in the Labor Code and other normative certificates of the Russian Federation. 93 94

According to Art. 56 of the LC RF. According to Art. 57 of the LC RF. 130


Labor contract may include provisions on trial period, nondisclosure of secrets protected by the law (state, service, commercial and other), obligation of an employee to work in a company after training for a term established by a contract if training was made at the expense of an employer, and other provisions which do not worsen working conditions for an employee established in the Labor Code, laws and other normative legal acts, collective agreement, and other agreements95. Labor contract may include additional provisions which do not worsen working conditions for an employee in comparison to those established in the Labor Code, laws and other normative legal acts, collective agreement, and other agreements specifying workplace (with a reference to business subdivision and its location) and (or) stipulating workplace, trial period, nondisclosure of secrets protected by the law (state, service, commercial and other), obligation of an employee to work in a company after training for a term established by a contract if training was made at the expense of an employer, improvement of social and living conditions of employee and members of his family; specifying rights and obligations of employee in conformity to his working conditions and rights and obligations of employer, that are defined by the labor legislation and other normative legal acts containing norms of the labor law. Labor contracts may be concluded for: 1) uncertain term; 2) certain term not exceeding 5 years (fixed-term labor contract), unless otherwise provided in the Labor Code of the RF or other federal laws. If labor contract does not specify its validity period, it is considered to be made for uncertain term96. On the conclusion of labor contract employee must present to employer: • passport or other idetifying document; • labor book, except for cases when labor contract is concluded for the first time or employee is going to work part-time (bywork); • State pension insurance certificate; • Military service registration documents – for persons liable for military service, subject to enlistment for military service; • Document confirming education, qualification, proving domain-specific knowledge – if the work requires such domain-specific knowledge or skills; In some cases considering specific character of work the Labor Code of the RF, other federal laws, presidential edict or government order may provide the necessity to submit other additional documents for the conclusion of labor contract. It’s is prohibited to require from employee any other documents not specified in the Labor Code, other federal laws. Edicts of the President of the RF or government order. When labor contract is concluded for the first time labor book and State pension insurance certificate are provided by the employer. In case of absence of labor book as a result of loss, damage or any other reasons employer is obliged to provide a new labor book At the conclusion of labour contract parties may agree on the trial period when an employer may check whether an employee can properly perform his work. Trial period cannot exceed 3 months (6 months for managers of organizations and their assistants, chief account-

95 96

According to Art. 57 of the LC RF According to Art. 58 of the LC RF. 131


ants and their assistants, heads of branches, representations and other separate structural divisions of organizations) unless otherwise provided for in the federal law. Labor contract shall be made in writing in two copies (one copy for each party). Labor contract if not made in writing is considered to be concluded if employee practically starts to work with the knowledge or on behalf of the employer or his representative. If employee is de facto authorized to work , employer is obliged to conclude with him a labor contract in writing within three working days after the factual beginning of work. On the basis of labor contract the order of the employer by which employment is made is issued. The Labor Code establishes working time which cannot exceed 40 hours per week. Article 92 of the Labor Code provides for reduced working time for specific categories of citizens and individual kinds of work Besides, on the agreement of employer and employee when hired to work or later parttime working day or part-time working week may be stipulated. If working under the conditions of part-time work the remuneration od labor of employee is made rateably to hours worked and scope of work completed. On the initiative of both an employee (secondary employment) an employer (overtime work) working time may exceed statutory working time. In the case of secondary employment working time cannot exceed four hours per day and 16 hours per week. Overtime work should not exceed for each employee four hours per day within two days and 120 hours per year97. Employee is entitled to conclude labor contracts for other regularly payed work if completed at primary employment off duty time. According to Article 284 of the Labor Code working hours if working part-time musn’t exceed 4 hours per day. In the days when employee if free of duty on the primary work place he may work full-time on his secondary job. Under the written consent of employee he can be authorized to any additional work of the same or some other kind within the established working hours along with the main job for extra pay (Art. 151 of the Labor Code of the RF). Kinds of time of rest under the labor legislation are: breaks within the working day (shifts) (no more than two hours and not less than 30 minutes); daily (between shifts) rest; weekly continuous rest (days off) which cannot be less than 42 hours; non-working holidays; vacations (besides a basic paid vacation of 28 calendar days, annual additional paid vacation should be given to separate categories of employees). In accordance with the Article 135 of the Labor Code the remuneration (salary) of employee is stipulated in the labot contract in compliance with current remuneration system of employer. Order, place and terms of remuneration payment are determined in the Article 136 of the Labor Code. Salary payment must be made not less than once every half-month on the day, fixed by the internal labor regulations, collective agreement or labor contract. In assordance with the Article 352 of the Labor Code everyone is entitled to protect his (her) labor rights and legitimate interests not prohibited by the law. In the case of any disputes and conflicts the basic ways of protection of the labor rights and legitimate interests of employees are: – protection of labor rights by employees themselves; – protection of the labor rights of employees by trade unions; – state supervision over labor law compliance; – judicial protection.

97

According to Art. 99 of the LC RF 132


Selection of personnel Selection of personnel is determination of whether candidates meet requirements of an organization, a workplace. While selection of the personnel, both personal characteristics and expertise of a candidate are taken into account. To this end, the decision on the best candidate is made on the basis of the general and concrete requirements to a candidate to the given position and an estimation of all available candidates. In St. Petersburg there is an opportunity to involve in selection of the personnel one of numerous recruiting agencies. At a choice of agency it is necessary to take into account the following: - specialization of an agency; - its business reputation; - organization of work with applicants. Phones of the largest recruiting agencies No.

Name

Telephone numbers

1

Kelly services, LLC

Phone: 325-7300,325-7301

2

Boyden, LLC

Phone: 325-8574 Fax: 325-8575

3

Personnel – Service, LLC

Phone: 244-2489 Fax: 327-4348

4

Avenir St . Petersburg, LLC

Phone: 718-8157 Fax: 718-8158

5

Ancor St . Petersburg, LLC

Phone: 329-5770 Fax: 329-5771

6

Almaz, CC

Phone: 324-7188 Fax: 312-9310

7

BCK Connection

Phone: 370-7695 Fax: 370-6735

8

Norman DL Consulting St . Petersburg, LLC

Phone: 703-5153 Fax: 703-5152

9

Neo Staff, LLC

Phone: 321-6122 Fax:534-8577

10

Recruitment agency "Expert", LLC

Phone: 324-5637 Fax: 324-5638

11

Staff Standard, CC

Phone: 327-7555 Fax: 321-0721

12

Arlon, LLC

Phone: 234-0129 Fax: 346-4969

13

Manpower Inc.

Phone: 324-4646 Fax: 324-4647

14

EMG Professional

Phone: 326-8097 Fax: 326-8098

State organizations rendering services on selection of personnel The Employment Committee of St. Petersburg (The Employment Service) is the executive agency of State power of St. Petersburg exercising authorities granted by the government of the Russian Federation in the field of promotion of employment. The Employment Service provides the assistance in work search to everybody, regardless irrespective of age, education and qualification. According to the employment legislation, the citizens and the employers are provided with the following range of services: - assistance to the citizens in their search of suitable work, and the one to the employers in the selection of required employees; 133


- assistance in work search to the disabled, employment of the disabled within the limits of the established quota, registration of the disabled as the unemployed; - informing on the situation on the labor market; - organization of vocational counseling of the citizens in their choice of the field of activity (the profession), employment and vocational training; - psychological support, vocational training, retraining and improvement of professional skills of the unemployed citizens; - providing social payments to the citizens registered as the unemployed according to the stated order; - organization of compensatory public works; - organization of temporary employment of the minors at the age of 14 – 18 during the time free from the studies, the jobless citizens who are experiencing difficulties search of work, and the unemployed at the age of 18 – 20 from among the graduates of educational establishments of primary and secondary vocational training searching the work for the first time; - social adaptation of the unemployed on the labor market; - assistance to self-employment of the population; - delivery of conclusions about the attraction and use of foreign employees to the employers in accordance with the legislation on the legal status of foreign citizens in the Russian Federation; - assistance to the citizens in their resettlement for work in the countryside. Addresses and phones of state bodies "Employment Centers in St.Petersburg" No. District 1 Admiralteisky

45/26 Angliysky Pr.

Address

Phone Phone: 714-7018 Fax: 713-7710

2

Vasilieostrovsky

27 Shevchenko St., V.O.

Phone: 356-1048 Fax: 356-0076

3

Vyborgsky

31 2nd Murinsky Pr.

Phone: 552-7606 Fax: 591-6515

4

Kalininsky

23 Neishlotsky Per.

Phone: 294-5958 Fax: 542-1930

5

Kirovsky

20/24 Vasi Alekseeva St.

6

Krasnogvardeysky

19 Revolyutsii Sh.

Phone: 785-0236 Fax: 785-0344 Phone: 227-4498 Fax: 227-6087

7

Krasnoselsky

36 (1) Pogranichnika Garkavogo St.

Phone: 730-0882 Fax: 730-8492

8

Kronshtadsky

27 Vladimirskaya St., Kronshtadt

Phone: 311-3350 Fax: 311-7964

9

Kurortny

11 Dubkovskoe Sh., Sestroretsk

Phone: 437-1258 Fax: 437-1256

11

Lomonosovsky

2/10 Peterburgskaya St., Lomonosov

Phone: 423-1444 Fax: 423-1433

12

Moskovsky

63(1)VarshavskayaSt.

Phone: 374-1740 Fax: 374-1737

13

Nevsky

52 Babushkina St.

Phone: 367-0105 Fax: 362-6410

14

Petrogradsky

74 Bolshoy Pr., P.S.

Phone: 233-3900 Fax: 232-5576

15

Petrodvortsovy

12 (2) Shahmatova St., Peterhof

Phone: 428-8492 Fax: 428-8479

16

Primorsky

131 Savushkina St.

Phone: 430-6563 Fax: 345-3317

17

Pushkinsky and Pavlovskij

34 Novaya St., Pushkin

Phone: 465-8030 Fax: 476-8832

18

Frunzensky

61 Buharestskaya St.

Phone: 701-7386 Fax: 701-6257

19

Centralny

29/18 Furshtatskaya St.

Phone: 273-7097 Fax: 279-6597

134


3.5. Transport and Logistics St. Petersburg is the largest transport junction in Russia where international freight and carriage of passengers is carried out. On the laying of the city at the exit to the Baltic Sea, it was provided with nature water communication lines which besides the sea way throw the Gulf of Finland include the developed system of internal water communications: the Lagoda, navigable rivers Neva, Volhov and other. In St.Petersburg the volume of cargo transportation by transportation organizations (excluding railway transport) had 4.9% increase in comparison with january – december 2006 and reached 111,8 million tons. The increase of cargo transportation was 12,2% at sea transport, 8,9% at inland water transport, 4,3% at automobile one and 4,3 % at pipelines. The decrease of transportation was 0.9% at air transport. The turnover of goods at all means of transport (excluding railway transport) had 3,5% increase during the year and reached 69,5 billion tons/km. In Leningrad region the volume of cargo transportation by transportation organizations (excluding railway transport) had 10,6% increase in comparison with january – december 2006 and reached 97,5 million tons. The increase of cargo transportation was 42,2% at inland water transport, 4,4% at automobile one and 8,4 % at pipelines. The turnover of goods at all means of transport (excluding railway transport) had 10,5% increase and reached 58,5 billion tons/km. Transport system of the North-West region has radial structure: almost all of main railway and car roads go from one centre (St. Petersburg). Important lines of communication which link the central and east regions of Russia with Kareliya Republic and Murmansk, Baltic states and Finland pass throw it. There are all types of the transport infrastructure on the city territory: car roads, railways, river and sea transport, two airports, pipelines and gas lines. The most important component of the international transport complex of Petersburg is the Big (Bolshoy) port of St. Petersburg, which includes the territories and water areas of the former Sea trading port of St. Petersburg, the Wood (Lesnoy) port, the berthing complexes of ship-building and ship-repairing enterprises (for example, Federal State Unitary Enterprise «The Admiralty Shipyards» («Admiralteyskiye Verfi»), Open Stock Corporation «The Baltic Plant» («Baltiyskiy Zavod»), Open Stock Corporation «The Ship-building Plant «The Northern Shipyard» («Sudostroitelniy Zavod «Severnaya Verf»), the Kanonerskiy ship-repairing plant ) and other port complexes. Every year about USD 20,000,000 of off-budget investments are invested in the construction and modernization of the port capacities. There are several big railway junctions in St. Petersburg. The total length of railways within the city is 991 kilometers. Highway system of the city is very developed — the total length of automobile roads is 1268 kilometers. From St. Petersburg federal roads go in all directions which as a rule repeat railway routes and form communication transport corridors with them. There are automobile roads: St. Petersburg—Moscow — "Russia", St. Petersburg—Murmansk — "Cola", St. Petersburg—Vyborg—state border — "Scandinaviya", St. Petersburg—Tallinn — "Narva", St. Petersburg—Pskov—Vologda—New Ladoga. Federal automobile roads ensure external economic and internal region links, and through the Karelian Isthmus go into the transport system of the European Union. One of the main task for the city is improvement and development of automobile roads since for the last years automobile flows have increased many times and this growth will continue. The Government of St. Petersburg pays maximum attention to the finishing of construction 135


of the ring road of St. Petersburg and the west speed diameter. The ring road of St. Petersburg is connected with the development of automobile transit : in the ring route region customs terminals networks will be constructed. All this will make it possible to increase the amount of export-import freight which undergo procedure of custom documentation in St. Petersburg. Inland water transport also has huge meaning, because the water system of the Neva and Ladoga has a big continuation. Through the system of the Svir river and Onezhskoe Lake you can get to Kareliya by water, and through the Belomoro-Baltic canal to the White Sea. Another water way, Volgo-Baltic, makes it possible to link the city with the North of Europe, Central Russia, Volgo-Vyatsky region, the Urals, Povolzhje, Caspian Sea ports; and VolgoDonsky Canal makes it possible to link the city with the North Caucasus, Priazovje, sea ports of the Black Sea. The Ports of St. Petersburg and Leningrad Region98 The Big Port of St. Petersburg The Big port St. Petersburg plays the most important role in European trading system. The Big port of St. Petersburg includes the former Sea trading port of St. Petersburg, the Wood port, berthing complexes of ship-building and ship-repairing enterprises of the city, port complexes in Lomonosov and Kronstadt, Vasileostrovskiy and Nevskiy cargo areas. The Big to port of St. Petersburg has more than 110 moorings with the general length of more than 15 kilometers, it is able to accept vessels with the draught of 11 meters and to process all kinds of cargoes. The largest stevedore companies of the Big port of St. Petersburg are: Open Stock Corporation “The Seaport of St. Petersburg ”, Joint-Stock Company “The First Container Terminal” (“Perviy Konteynerniy Terminal”), Open Stock Corporation "Petrolesport", Joint-Stock Company “Petersburg Oil Terminal” (“Peterburgskiy Neftyanoy Terminal”). The Sea Trading Port Vysotsk The Sea trading port Vysotsk specializes on coal transshipment. The port is able to accept vessels with the carrying capacity up to 25 thousand tons. The sea terminal “The distribution and transshipment complex (DTK) – Vysotsk “LUKOIL II” The sea terminal was constructed by Open Stock Corporation “LUKOIL”, the construction was completed in September 2006 by commissioning of the third turn of the object. The first turn of the DTK was commissioned in June 2004, the second one – in April 2005. The sea terminal, with the throughput of 12 million tons a year, is intended for transshipment of all kinds of mineral and crude oil. The Sea Trading Port Vyborg The port has 13 moorings (the general length is 1480.0 running meters) located along the coastal line of the Vyborg gulf. The depth at the cargo moorings is 7.5 – 9.8 m. The port specializes in transshipment of bulk and wood cargoes. The Port Primorsk The port "Primorsk" is a part of the Baltic pipeline system of the company "Transneft", the specialization of the port is the export of crude oil. The port "Primorsk", the largest oil port in Russia, was commissioned in 2001 and in seven years it 6 times increased the volumes of oil swapping to the European consumers around the transshipment states. The port is able to accept four tankers with the displacement of 100 thousand tons simultaneously.

98

According to the agency "PortNews". 136


The Sea Trading Port Ust-Luga It is a new port, the first one in Russia which was constructed with participation of both private and state capital. It is supposed to construct 11 specialized terminals. The port will process all kinds of cargoes except mineral oil. The designed capacity of the port is 35 million tons. Now a coal terminal functions in the port. Logistic system of St. Petersburg In the common understanding, logistic is an organization and control over the material and information flows. In other words, it is a system of the creating relations between the members of the suppliers processes, manufacture and distribution of ready goods, control of the technological processes and information, which accompany these processes. Supplier and consumer of a material flow generally represent two systems connected by the so-called logistic channel, i. e. some set of various parts through which finishing a material flow from the supplier up to consumers is carried out. After the choice of concrete participants of the process of a moving of a material flow from supplier to consumer, the logistic channel is transformed into a logistic chain, i. e. linearly ordered set of participants of the process of moving of a material flow up to consumer99. Transit terminals are subsystems of a logistic chain, which within the framework of multilevel system carry out functions of gathering and distribution. Sometimes they are also called intermediate terminals or warehouses not engaged in storage of cargo. In a transit terminal, direction of movement or distribution of a cargo is known at the receipt of freight flows at a receiving center. The basic function is not a creation of buffer stocks but a change of assortment of freight inflows. The logistic centers are points where a lot of transport enterprises are gathered. It allows to share infrastructure and special equipment and increase competitiveness of the enterprises, which are market participants. Participation in joint granting of logistic services can be especially beneficial for small enterprises. The logistical centers create preconditions for new products in the sphere of freight, and such product first of all is a combined transportation. St. Petersburg today is one of the most perspective transport and logistical complexes in Russia. Converted industrial shops and hangars are substituted by modern warehouse complexes. In 2007 more than 600 thousand sq. m. of modern “A” and “B”-class logistical areas were introduced. Industrial companies prefer to rent the warehouse complexes located near basic manufacture, retail companies – within the city boundaries, logistical, wholesale and distributing companies – near large highways. The demand on warehouse complexes located near the Circle motorway, Moskovskoye, Vyborgskoye and Pulkovskoye highways is the highest. Warehouses of "A" class are characterized by convenient access roads for super-size automobile and railway transport, automated warehouse equipment, adjustable temperature modes. Premises reconstructed from industrial shops or hangars, where engineering systems are restored, face lifting is installed and simple mechanisms and equipment are established belong to "B" class,. "C" class, as a rule, is premises which are not equipped with special technical equipment, where the minimal convenience to storage of cargoes are given. The overwhelming majority of existing warehouses are located in former industrial premises and belong to "C" class. On St. Petersburg transport market the number of companies rendering logistic services is growing, their financial opportunities is increasing, technical equipment is becoming better, qualification of the personnel is improving. Many companies overestimate their market strategy taking into account needs of clients for logistic management of delivery chains. For today in St. Petersburg there are a lot of logistic operators which offer a wide 99

Tituhin N. F., Manzhosov G. P. “Loginfo”, February 2002, No. 2, p. 18–23. 137


range of services regarding freight transportation, storage and processing. These services can be divided into the following groups: + International and internal loads transportation: — transportation by railway transportation (by the car, container sending, transportation of bulky goods); — transportation by sea transport (containers of various types, large-sized cargoes, chartering and agency service of vessels, switching vessels such as "river—sea"); — transportation by air transport; — transportation by motor transport, including perishable freight in a refrigerator rolling stock; — transportation of bulk cargoes chemical and the food-processing industry in the tank-containers (the specialized containers-tanks); — intermodal transportation (delivery of cargoes from any point of the world by the mixed transport). + Customs clearing: — includes rendering of the maximal assistance on release of a cargo in the free circulation or on export registration. Cargo delivered by various types of transport is registered: by air — Pulkovskaya customs house, by sea — the Baltic customs house, by automobile — the St.-Petersburg customs house. + Responsible storage of cargoes: — storage of cargoes in equipped warehouses. + Terminal processing of cargoes in a warehouse: — sorting, packing and re-packing, division of one consignment into several, drawing of marks and other operations as agreed with a client. + Distribution of cargoes across Russia: — delivery of cargoes after customs clearing to destination point. + Insurance of cargoes: — registration of insurance policies for a cargo. + Armed support: — armed protection of a cargo by the security enterprises of St. Petersburg. + Information support: — information about cargo throughout delivery route with granting of the data on concrete location of a cargo; search of cars and containers; — development of optimal ways of the delivery of cargoes. Telephone numbers of St. Petersburg largest associations and companies of transport and logistic complex No. Name 1 Association of international automobile transportation (ASMAP), Branch on Northwest federal district 2 The inter-regional union of autocarriers and forwarding agents of Northwest 3 Group of companies "Interterminal"

Phone, fax Phone: 312-6318 Fax: 312-7136 Phone/fax: 567-2259

4

Asstra-Saint-Petersburg, LLC

5

RT group, LLC

6

Agency "Lenintertrans", CC

Phone: 598-5202, 605-0505 Fax: 598-5260 Phone: 335-7970, 335-7971 Fax: 335-7950 Phone: 380-0202 Fax: 380-0200 Phone: 327-9794, 371-9039

7

ARP, LLC

Phone: 326-6595, 334-4595

8

АТL Saint-Petersburg, LLC

9

Baltimpex, LLC

Phone: 718-6464 Fax: 718-6465 Phone: 574-2729 Fax: 600-6177 Phone: 325-8395 Fax: 328-5475

10 Welz, CC

138


11 «The North-Western Transportation Company» («SeveroZapadnaya Transportnaya Kompaniya»), CC 12 DHL Logistic, LLC 13 Evrologistics, LLC 14 Evrosib St.P. – TS, CC 15 Alers Saint-Petersburg, CC 16 Interact, CC 17 Tanagold, CC 18 Transcon, CC 19 Transport systems, CC 20 Shenker, CC 21 MST Petersburg, CC 22 C Logistics, CC 23 Soyuz Trans Servis 24 Vneshtrans-Nova 25 Baltic shipping company, LLC 26 ITsT-Saint-Petersburg, LLC 27 Mortrans, LLC 28 Ohta terminal, LLC 29 RVD-Service, LLC 30 Rusmarin-Logistics, LLC 31 Ruscont Agency, LLC 32 Baltic escort, LLC 33 Inkotek, group of companies 34 Modul, LLC 35 EUROTRANS, Open Stock Corporation, representation in St. Petersburg 36 Intertrans, LLC

Phone: 327- 3132 Phone: 346-7410 Fax: 346-7413 Phone: 332-2211 Fax: 332-1699 Phone:326-8116, 326-8111, 380-3681 Fax:326-8128, 326-8110 Phone: 718-3656 Fax: 783-1512 Phone:723-3812 Fax:723-3812 Phone: 335-4804, 335-4802 Phone:380-3818 Fax: 740-2030 Phone: 327-4150 Fax: 327-4012 Phone: 273-6750 Fax: 273-5945 Phone: 259-8681 Fax: 251-9882 Phone: 702-0870 Fax: 702-0875 Phone: 541-8633 Phone: 251-4197 Fax: 713-0880 Phone: 327-4025 Fax: 327-4026 Phone: 703-0900 Fax: 740-1419 Phone:718-4870, 326-9304, Fax: 325-3773 Phone:331-1357 Fax: 331-1344 Phone: 326-5840 Fax: 326-5842 Phone: 326-2065 Fax: 326-2066 Phone: 326-2050 Fax: 326-2055 Phone: 746-6930 Fax: 746-6900 Phone: 622-1732 Fax: 622-1733 Phone: 303-9149 Fax: 325-3773 Phone/ Fax: 723-0784, 723-0787

Phone: 324-2144 Fax: 324-2145 37 «Maersk», Joint-Stock Company, Branch in the Northwest of Phone: 718-3640 Russia Fax: 7183641 38 Holding company «Morportservis – Evrotransservis», CC Phone: 327-9363 Fax: 327-9362 39 The North-Western Transport Agency, CC Phone: 380-5990 Fax: 380-5991

3.6. Business informatization100 St.Petersburg occupies high positions among other regions and doesn’t significantly (for 2%) stay behind Moscow as far as informatization level is concerned. In St.Petersburg personal computers are used in the business activities by 98% of companies. 100

Analytical materials used in the article were taken from expert conclusions of RBK Cnews Analitics, that do not always coincide with the opinion of Committee of informatization and connection. 139


In St.Petersburg the index of companies’ equipment with local computer networks is equal 75%. Thus the advancement is evident in comparison to the year 2007 – 70%. The companies’ equipment with local computer networks is a proof of information system implementation, that interlinks the work of different functional departments, which indicates the high level of IT usage, and in maximum point of the limit – it’s a proof of the implementation in the companies and enterprises of information systems of ERP class. This tendency is also proven by increase of sales of servers, aimed at managing of technological and business processes. In St.Petersburg specialized computers are used by 20% of enterprises, in the North-West region – about 10%, in Russia on the whole – 11% of the companies. The level of companies’ IT-activity in Saint-Petersburg, North-West region, Moscow and in Russian Federation

Source: CNews Analitics. Survey of IT in Spb 2008 On the higher level the companies use electronic means of communication, such as – Internet, email, allocate circuit and companies’ web sites. Internet access have more than 82% of all enterprises in St.Petersburg and 66% of regional companies in the North-Western region, which on the whole corresponds to the Moscow and average Russia’s data (91% and 63% respectively). Email is used in 85% of companies in St.Petersburg. PC equipping level of the companies of St.Petersburg is rather high: at the average 39 computers per 100 employees – this index is much higher in comparison to the average Russia’s index. Internet access level in the companies of St.Petersburg is slightly lower – in St.Petersburg it equals 15 PCs with Internet access per 100 employees (previous year index is 11 PCs per 100 employees), in the North-Western region – 10 PCs per 100 employees.

140


The level of PC integration in different regions of Russia

The Government of the Russian Federation on diverse levels has defined a task to make the ITsector of Russia’ economy to a strategic industry, anticipating to have it as a support for economical competition on the international niveau in the future. A project of new special economic area (ob two sites – “Neudorf” and “Novo-Orlovskoye”) is developed in St.Petersburg currently. There are also a number of other projects of industrial parks, incl. a project of IT-park on the ground of M.A. Bonch-Bruyevitcha St.Petersburg State University of Telecommunications. In the sphere of taxation there are equally with other companies of St.Petersburg a number of tax exemptions (see chapter 1.6 System of State support of St. Petersburg entrepreneurship). When analyzing the informatization level of business the following activity profiles on the telecommunication market can be named: 1. computer production 2. distribution of computer, office and networking equipment 3. system integration and IT-outsourcing 4. development and distribution of software 5. communications and network 6. internet-technologies the main profit of IT sector in St.Petersburg for 2007 fell on 10 major companies and was equal apprx. 40 billion Rubles.

Conpany

Activity

Revenues Revenues for FY for FY 2007 , 2006 г., TRUB TRUB

Growth, %

Number of employees as of 31.12.2007

141


1.

BCC

Integration

7 794 800

3 685 500

111,50%

811

2.

Superwave

Distribution

7 449 611

2 817 137

164,40%

141

3.

Nienshans

Grou of companies

7 368 834

4 384 039

68,10%

403

4.

Tranzas

Grou of companies

4 909 240

2 809 000

74,80%

1124

5.

Ramec VC

Computers production

3 530 367

3 006 414

17,40%

412

6.

Paladin Invest

Grou of companies

2 523 000

2 363 000

6,80%

100

7.

GMCS (SPb)

Integration

2 061 676

603 442

241,70%

484

8.

Exigen Services

Development of PC

1 644 000

1 457 500

12,80%

510

9.

Svega-Computer

Distribution

1 296 042

926 085

40%

117

10.

Bercut

Development of PC

1 114 001

902 303

23,50%

387

Source CNews Analitics. Rating CNews: North-West region 2008 If talking about 30 major companies, on the basis of IT fractions of market they can be arranged in the following way: Structure of revenues in IT-sector in accordance with types of activity as of FY2007 Specialization

Quantity of the Co. in rating

Total turnover in FY 2007

Share of the Co. in total turnover of the sector, %

Integration

9

13 026 224

27,1%

Distribution

6

9 961 067

20,7%

Group of Co.

5

15 890 350

33%

Development of program equipment

6

4 426 542

9,2%

IT-services

3

1 203 121

2,5%

PC production

1

3 530 367

7,3%

Source CNews Analitics. Survey of IT in SPB, 2008. Computer manufacturing On the market of St.Petersburg there is a number of computer manufacturers, incl. such big companies as Ramec BC, besides that almost all computer retailers produce (mainly assembling) computers with their trademarks (“Computer center KEY”, “Kompyuterniy mir”, “Tsifri”. “Polaris” etc.). the average price of one workplace (system unit with Windows XP, LCD-display, printer) equals in a retail outlet 20000-25000 Rubles. 142


Distribution of computer, office and networking equipment In St.Petersburg in the sphere of distribution the main part of sales fall for wholesale companies, specializing on the definite types of equipment of a limited row of producers; companies that deal exclusively with corporate sales; retail chain stores. The first ones include BTK, ComBrig, Auroville. The second type includes Superwave, Svega-Computers. Major retail chain stores are “Kompjuterniy mir” (17 stores), “KEY” (13 stores), “Tsifri” (11 stores). This sphere also includes stores dealing with sales of household appliances – Eldorado (22 stores), M-video and Technoshock. System integration and IT-outsourcing System integration includes a number of services, starting from equipment supply, network laying and software installation, and ending with organizing of data flow, through which works the interaction of diverse information systems. System integration is the creation, maintenance and developing if informational infrosrtucture of organozation, that is the complex of software and harware, providing comnpletely the processing of information. System integration presupposes the creation of information system in a company. Information system represents a sort of formalized model of business conduct in an enterprise. IT outsourcing is a complex of services, provided by external agency for solving a number of information tasks and/or business processes of a company or organization (those tasks and processes are not profiled for these companies/organizations, but are necessary for their successful operation). Oursourcing presupposes the transfet of Client’s current functions on the support of information systems to a sprecialized IT company. In this case the executing agency guarantees the fulfillment of functions, stipulated in the contract, in accordance with services agreed-upon. In most cases company that was dealing with system integration will in future provide services on IT outsourcing. The vakue of system intergration services is very fluctuant and depends exclusively on the tasks of the client. In the basic variant the equipment and installation of specific settings of one office with 7 work places using one server may cost about 30-40 th Rubles not including the price of hardware. This price includes the assembly of local networking system, software installation, server setup. The value of IT outsourcing is easier to define, because most companies on the market have basic prices – about 1000 Rubles per month for maintenance of one working place. The following companies work in the field of system integration: BCC, GMSC, Ramek BC. These organizations offer different solutions, among others – the most up-to-date and automotized ERP-systems. In St.Petesburg machine building is one of the most developing segments of indusrty. The majority of biggest IT projects in the Northern capital are for the machine-building companies. But even here the situation is not very homogeneous. Nevertheless the contrast between the companies can be significant. For example, the concern “Power Machines” implemets the most expensive ERP-project in the region on the basis of linked automated systems SAP and “Compas”. Development and distribution of software Sofrware occupies an important place in the automatization of each company. There exist general universal products, necessary in each office computer (Microsoft Windows, Office) and also professional products, oriented at definite industries and unique products, made on a individual offer.

143


On the market of St.Petersburg there is a big number of software engineering companies and distributors. Among the biggest software engineering companies they can name “Compas”, Exogen Services, Bercut, Reksoft. The majority of organizations of the segment are middle-sized and deal with the development of databases and Internet solutions. The majority of distributors specialize on the selling of products of definite software engineering companies and also deal with the maintenance of software. There is an exemption – the products of Microsoft, Adobe etc., which are sold in the majority of retail stores. Among the software programmes the following types can be distinguished: operation systems, office applications, bookkeeping programmes, designer programmes, anti-virus programmes etc. The most popular operation system for using in the office is nowadays Windows XP Professional Edition SP2 by Microsoft. Its average price is for today 6500 Rubles in the version OEM. Standard package of office applications – microsoft office small business 2007 costs also about 6000 Rubles. For servers the most popular solution is Windows 2003 Server Standard which costs 30000 rubles. On the anti-virus market there is a number of competing products: Kaspersky, Avast, Symantec, Nod32, Dr Web. The average price of such licenced product for one PC is about 900-1700 rubles. Big demand have also such programmes as Adobe Photoshop, Abbyy Finereader, Lingvo, Corel Draw, AutoCAD etc. Main programme products for bookkeeping and accounting on the russian market nowadays are 1C: Enterprise, Best, Kompas, Parus, Monolit, Buchsoft etc. The most popular version 1C: Bookkeeping 8.0 (8.1), its minimal price is 2500 rubles for licenced version on one PC. There are also more and more programmes appearing on the market for automatized reporting to Federal Tax Service and Pension Fund of the Russian Federation. The value of annual service and maintenance in such companies as Atlant costs from 3000 rubles and higher. In the sphere of legal support the leading programmes are Consultant Plus, Garant, Kodex. The value of monthly service of “Consultant Plus” in the professional version will cost about 50006000 rubles for one working place, in the version Bookkeeper Prof – 4000 rubles. The price of legal system “Garant” in the Classic version and “Kodex” in the version “Bookkeeper’s assistant” is quite the same – 4000 rubles for 2 upgared per month. Communications There is a developed communication infrastructure operating in St.Petesburg nowadays. Its main parts are fixed network operators, cellular communication operators and internet providers. № 1

Operator

Activity

Revenues in 2006, TRUB

Revenues in 2005, TRUB

Increase 2006/2005, %

Quantity of empoyees, 2006

Megafon N-W region

Mobile communication

22 253 000

19 364 000

14,9

2 000

Fixed communication

20 473 000

20 383 000

0,4

26 000

2 SZT 3

МТС СевероЗапад*

Mobile communication

10 715 000

9 235 000

16

4

Beeline N-W region

Mobile communication

6 508 000

4 360 000

49,3

421

5

Sky-Link N-W region

Mobile communication

2 911 000

2 644 000

10,1

400

144


6 Peterstar

Fixed communication

2 578 000

2 589 000

-0,4

520

7 Neva Line

Fixed communication

1 100 000

91 000

1 108,8

67

8 Metrocom

Fixed communication

981 000

880 000

11,5

280

9 ТКТ

Cable TV, internet access

826 000

617 000

33,9

н/д

Fixed communication

680 000

679 000

0,1

230

10 Web Plus

Source CNews Analitics. Rating Telecom: North-West 2007. Practically everywhere in the city there are optical networks of one or another provider, and if somewhere there appears free zones, it is possible to use there wireless technologies. The price for traffic is very fluctuant and depends on the volume of consumption, transit velocity, location and provider.

Internet-technologies In the sphere of internet technologies on the St,Petersburg market there are many companies. A rather high competition level is in the field of hosting. In this sector such huge companies are represented: Peterhost, Replay, Petelink. Hundreds of internet-studios, mainly of small sizes, offer their services to create web-sites. Price for OBC website starts from 5000 rubles, for Internet-magazine – from 20000 rubles. Some huge projects are evaluated at several million of rubles. There is a possibility to use freelance services – specialists, working on a contract basis remotely. Theis services cost 20-50% lower, but there is a risk of unconscionable work and delay 4. PROTECTION AND SAFETY OF BUSINESS 4.1. Audit Audit101 is business activities regarding independent examination of bookkeeping and financial (accounting) reporting of organizations and individual entrepreneurs (audited entities). The purpose of audit is an expression of opinion on reliability of the financial (accounting) reporting of audited entities and conformity of accounting with the legislation of the Russian Federation. Reliability is as a degree of accuracy of the data presented in financial (accounting) reporting which allows an user of this reporting to draw correct conclusions on results of economic activities, financial and property status of entities under audit and to make decisions entities based on these conclusions. Audit does not substitute the state control of reliability of the financial (accounting) reporting carried out according to the legislation of the Russian Federation by the authorized bodies of the government. The auditor is a physical entity which meets qualifying requirements established by an authorized federal body and have qualifying auditor certificate . Auditor has the right to carry out audit activities as an employee of an audit organization or as a person engaged with an audit 101

According to the Federal Law “On Audit Activities" of 07.08.2001 No. 119-ФЗ (as amended on 03.11.2006). 145


organization on the basis of civil-law contract, or as an individual entrepreneur who is carrying out his activities without formation of a legal entity (hereinafter referred to as “individual auditor”). Auditor organization is a commercial organization carrying out audit examination and rendering audit services. Audit organization carries out the activity regarding audit services rendering on terms and in compliance with the procedure established by the Federal Law “On Audit Activities". Audit organization can be of any type of ownership except for open joint-stock company. Not less than 50 percent of personnel of an audit organization should be citizens of the Russian Federation constantly living on the territory of the Russian Federation. In the case if the head of an audit organization is foreign citizen this figure should be not less than 75 percent. Audit organization should employ not less than five auditors. Audit organizations and individual auditors are forbidden to be engaged in any other business activities except for carrying out of audit and rendering of services accompanying it. Accompanying services are the following: 1) Development, restoration and keeping of accounting, drawing of financial (accounting) reporting, accounting consulting; 2) Tax consulting; 3) Analysis of financial and economic activities of organizations and individual entrepreneurs, economic and financial consulting; 4) Management consulting including that regarding re-structuring of organizations; 5) Legal consulting and also representation in judicial and tax bodies in tax and customs disputes; 6) Automation of accounting and implementation of information technologies; 7) Estimation of the cost of property, estimation of enterprises as property complexes, and assessment of risks; 8) Development and analysis of investment projects, drawing up of business-plans; 9) Carrying out of marketing researches; 10) Carrying out of research and experimental works in the field connected with audit activities and distribution of their results, including on paper and electronic medium; 11) Training of experts in the field connected with audit activities in compliance with the procedure established by the legislation of the Russian Federation; 12) Rendering of other services connected with audit activities. Audit can be obligatory and initiative. The first one is carried out in the cases directly established by the legislation of the Russian Federation, the second — under the decision of an economic subject. The following entities are subject to obligatory annual audit: — Open joint-stock companies irrespective of number of their participants (shareholders) and the size of authorized capital; — Credit organizations, a bureau of credit conditions; — Insurance organizations and societies of a mutual insurance; — Commodity and stock exchanges; — Investment funds; — State off-budget funds which receive financing from obligatory payments of legal and physical entities established by the legislation of the Russian Federation; — Charitable and other (not investment) funds, which receive financing from voluntary payments of legal and physical entities; — Organizations and individual entrepreneurs with annual proceeds from the sale of goods (performance of works, rendering of services) for 1 year exceeds 500,000 minimal wages102 or total assets of at the end of year of more than 200,000 minimal wages; 102

Minimal salary size is the minimal salary size defined by the Russian legislation 146


— State unitary enterprises with annual revenues of more than 500,000 minimal wages or total assets at the end of year of more than 200,000 minimum wages (for municipal unitary enterprises financial parameters can be lowered by the law of the subject of the Russian Federation); — Organizations or individual entrepreneurs obligatory audit of which is stipulated by the Federal Law. Obligatory audit can be carried out only by audit organizations; individual auditors have no right to carry out such activities. Result of the audit of financial reporting is audit report confirming its reliability. Auditor report is an official document intended for users of the financial (accounting) reporting of entities under audit, made in compliance with federal rules (standards) of audit activities and containing the opinion of an audit or consulting organization or individual auditor expressed in the established form about reliability in all material aspects of the financial (accounting) reporting of an entity under audit and conformity of accounting with the legislation of the Russian Federation. Audit report can be: Unqualified. Unqualified audit opinion takes place when an auditor comes to the conclusion that the financial (accounting) reporting gives true and fair view of financial position and results of financial and economic activities of the entity under audit according to the established principles and methods of conducting of book keeping and preparation of financial (accounting) reporting in the Russian Federation (a level of reliability of the reporting: provides in all essential aspects reflection of assets and liabilities of an economic entity as for reporting date and financial results of its activities as for the reporting period proceeding from statutory acts); Modified. Audit report is considered to be modified if there are factors not influencing auditor's opinion but described in audit report to attract attention of users to any circum stances of an audited entity revealed in financial (accounting) reporting, or factors influencing auditor's opinion which can result in qualified audit report, refusal of expression of opinion or negative opinion (a level of reliability of reporting: provides in all essential aspects, except for the circumstances determined in the report, reflection of assets and liabilities as for reporting date and financial results as for the reporting period proceeding from statutory acts); Qualified audit report. Accredited professional audit associations are associations which include not less than 1000 auditors and (or) not less than 100 audit organizations established according to the lation of the Russian Federation to create of conditions for audit activities of their members and protection of their interests, operate on a noncommercial basis, establish obligatory standards of work and a professional etiquette for their members, carry out control over their observance, and have accreditation of an authorized federal body. Under the Regulation of the Government of the Russian Federation of 06.02.2002 No. 80, authorized federal executive authority which carries out state regulation of audit activities in the Russian Federation is the Ministry of Finance of the Russian Federation. From 01.01.2009 the licensing of audit activity will be cancelled. Membership in selfregulated authorities will be necessary for all audit organizations. List of accredit in Ministery of Finance Auditors Organizations: № Name 1 Non-profit-making partnership «Institution of professional accountants and auditors of Russia»

Adress 125009, Moscow, st. Tverskaya 22b-3

2 Non-profit-making partnership «Audit Chamber of Russia» 3 Non-profit-making partnership « Audit Chamber of Moscow »

107120, Moscow, 3-d Siromjatnecheinskii , 3/9 103031, Moscow, Petrovskii pr. , 8 -2

Contacts Tel. (495) 975-72-00, 694-53-30 Fax (495)699-46-45 www.ipbr.ru Tel/Fax (495)781-24-79 www.aprussia.ru Tel/Fax (495) 694-01-56, 694-01-08, 629-32-64, 147


4 Non-profit-making partnership «Russian Auditors Bar» 5 Non-profit-making partnership «Institution of professional auditors»

101000, Moscow, Mjasnitskaya st., 18 - 1 of. 411 117420, Moscow, Nametkina st., 14-1, of. 812

www.m-auditchamber.ru Tel/Fax (495) 648-76-70 www.rka.org.ru Tel/Fax (495)332-04-86, 332-04-87 www.e-ipar.ru

All big global market players, including the Big Four companies operate in the St. Petersburg market of audit and consulting. Consulting In Russia and St. Petersburg, in particular, the tendency of the merge of audit and consulting markets becomes more clear. In this connection many people speaking about consulting market mean audit activities as well. Demand for consulting services in St. Petersburg is constantly growing. It should be noted that 85% of those who used consulting services earlier plan to use them in the future. That means the certain degree of satisfaction with the given services and understanding of the need for the highly skilled help of experts in various fields of consulting. The situation on St. Petersburg consulting market is developing very dynamically, the number of the market participants and the range of services provided by consulting companies is extending.

Phones of the Largest Audit and Consulting Companies in St. Petersburg No.

Name

Phone, fax

1

The Audit Chamber of St. Petersburg

Phone: 712-5932 Fax: 712-5932

2

Ernst and young, St. Petersburg branch

Phone: 703-7800, 703-7810

3 4

Price water house Coopers Audit, branch in St. Petersburg KPMG,CC, St.-Petersburg branch

Phone: 326-6969 Fax: 326-6699 Phone: 325-8348 Fax: 325-8347

5

Deloitte, St.-Petersburg branch

Phone: 310-0142 Fax: 310-0142

6

BDO Unicon North-West, LLC

Phone: 332-2090, 332-2091

7

Petro-Balt-Audit, CC

8

ZEP-AUDIT, LLC

9

Audit Saint Petersburg, LLC

Phone: 322-9051 Fax: 316-1456 Phone: 327-8596, 327-8597, 3263892 Phone: 274-6503

10 О.S.V.-Audit, LLC

Fax: 274-6503 Phone.: 275-7238 Fax: 275-3179

11 Financial and Consalting Group "Respect", LLC

Phone/fax: 315-0998, 380-9227

12 Group of Companies "Avers"

Phone: 320-9775 Fax: 328-8065

13 Audit company "Alko", LLC

Phone: 325-1374 Fax: 325-2494

14 Marka Ltd., CC

Phone: 237-0707 Fax: 237-0707

15 Baker and McKenzie, representation in St. Petersburg

Phone: 325-8308 Fax: 325-6013

16 DLA Papir

Phone: 703-7801

17 Beiten Burkchart

Phone: 449-6000 Fax: 449-6001

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4.2. Valuation of Business Cost of the company is an objective parameter of its activity result. The valuation of business includes the profound financial, organizational and technological analysis of the current activity and prospects of the estimated enterprise. Definition of business valuation is extremely important for efficiency estimation while making management decisions when the criterion for the choice is the increase of the company’s cost. While attracting investments and credit resources there is a necessity in carrying out the valuation procedure as the balance cost of assets usually differs significantly from the market cost. Performance of the valuation procedure for a business presupposes various kinds of restructuring of the enterprise (see Section 2.5. of the Guide “Restructuring and Reorganization of Business”). Evaluative activity (valuation)103 is an activity which basic purpose is the definition of the market cost or some other cost of the object under valuation as of the certain date (date of the valuation) according to purpose of the valuation. The systematization and the analysis of the information collected with regards to the object of valuation, are made on the basis of provisions of special valuation principles. The principles are based on logic, rules, and models of economic behavior of subjects, entering the market relations, that influence the formation of cost of goods at the free market. The market cost of the object under valuation on three approaches is the most probable price of the object under valuation it can be alienated in the open market in conditions of com-petition when the parties of the transaction operate reasonably, having all necessary information, and no force majeure reflect on the amount of the transaction cost, i. e. in case when: + One of the parties of the transaction is not obliged to alienate object under valuation, and other part is not obliged to accept the performance of it; + The parties of the transaction are well informed on the subject of the transaction and operate in their own interests; + The object under valuation is presented in the open market in the form of the public offer; + The cost of the transaction is a reasonable remuneration for the object under valuation and there was no compulsion to perform the transaction with regards to parties of the transaction made by anyone; + Payment for the object under valuation is expressed in the monetary form. The definition of cost of objects under valuation is based on three approaches: 1) Profitable approach, that calculates the amount of future income of the object under valuation; 2) Spending approach, that calculates investments necessary for such object formation; 3) Comparative approach, that analyzes costs of sales for objects similar to the evaluative one. Each approach includes various methods. The choice of certain approaches and methods of estimation is determined basing on the type the object under valuation, a type of cost, valuation purposes and other factors. The valuation can be carried out in two cases: 1. In the cases directly stipulated by legislative deeds of the Russian Federation (obligatory valuation); 2. By the client's initiative (initiative valuation). 103

Controlled by Federal law “On valuation activities in Russia” № 135-ФЗ of 29.07.1998 (amended) and by other legal acts of Russia approved in connection with it and by international agreements of Russia. 149


Obligatory valuation Cases of compulsory usage of the appraiser's services are given in the table below. Case of obligatory valuation

The legislation

1. Valuation of property in connection with transfer property as a contribution to the authorized capital: 1.1. Open joint-stock company - in payment of shares by nonmonetary means. An item 34 Federal laws from 26.12.1995 No. 208-FL "About joint-stock companies". Production co-operative - at the size of a share more than 250 Minimal Sizes of a Paymentor. An item 10 Federal laws from 08.05.1996 No. 41-Ф3 "About production co-operatives. 1.2. Limited liability company — in payment of the contribution by non-monetary means with nominal value over 200 Minimal Wages.

Article 34 of Federal law No. 208-ФЗ of26.12.1995 "On JointStock Companies".

1.3. Production co-operative - with share contribution over 250 Minimal Wages.

Article 10 of Federal Law No. 41-Ф3 of 08.05.1996 "On Production Cooperatives".

2. In bankruptcy process:

Article 15 of Federal Law No. 14 of 08.02.1998 "On Limited Liability Companies".

2.1. In carrying out the procedure of external management, the Article 110-111 of valuation of property to be sold in compliance with the plan Federal Law No. 127of external management, is obligatory. Ф3 of 26.10.2002 "On Inconsistency (Bankruptcy)" 2.2. In carrying out procedures of competitive manufacture, the Article 130of Federal valuation of property by an independent appraiser with Law No. 127-Ф3 of presentation of the opinion of the state financial control body 26.10.2002 "On with regards to performed valuation, except several cases, and Inconsistency (Bankother cases of carrying out an obligatory valuation, is ruptcy)". obligatory. An item 130 Federal laws from 26.10.2002 No. 127-Ф3 3. Performance of transactions with property, that is partially or completely owned by the Russian Federation, subjects of the Russian Federation and municipal formations: 3.1. In definition of cost of objects for the purpose of their privatization, transfer to confidential management or transfer to rent. 3.2. In usage of objects as subjects of pledge. 3.3. In sale or other alienation of objects.

Article 8 of Federal Law No. 135-ФЗ "On Evaluative Activity in the Russian Federation" of 16.07.1998.

3.4. In assignation of debts with objects under valuation. 3.5. In transfer of objects as the contribution to the authorized capital, funds of legal entities. 4. In purchase of shares of a joint-stock company: 4.1. Valuation of issued shares for the purposes of their purchase out of shareholders and determination of the cost of their placement.

Article 75, 77 of Federal Law No. 208-ФЗ "On Joint-Stock Companies" of 26.12.1995.

5. Tax cases: 5.1. Gratis received property.

Item 8 Article 250 of the Tax Code of the Russian Federation. 5.2. Receipt of insurance compensation under contracts of Item 4 Article 213 of the voluntary property insurance. Tax Code of the Russian Federation. 5.3. In carrying out valuation of objects under valuation for the Article 8 of Federal Law purpose of control over correctness of payment of taxes in No. 135-ФЗ "On case dispute on calculation of taxable base arises. Evaluative Activity in the Russian Federation" of 16.07.1998.

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6. Disputes on cost amount of objects under valuation: 6.1. In nationalization of property. An item 8 Federal laws "About estimated activity in the Russian Federation".

Article 8 of Federal Law No. 135-ФЗ "On Evaluative Activity in the Russian Federation" of 16.07.1998.

6.2. In mortgage lending to persons and legal entities in case disputes on cost amount of the mortgage subject arise. 6.3. In drawing up marriage contracts and division of property of spouses, getting divorced, on demand of one of the parties or both parties in case the dispute on cost of this property arises. 6.4. In redemption or seizure of property, stipulated by the legislation of the Russian Federation, from proprietors for the state or municipal needs. 6.5. In performance of object valuation for the purpose of control over correctness of tax payment in case the dispute on calculation of taxable base arises. 7. Valuation of real estate and rights to it of joint-stock investment funds and share investment funds: 7.1. In purchase and alienation of real estate, and also not less than Article 37 of the Federal once a year. Law No. 156-ФЗ "On Investment Funds" of 29.11.01.

Initiative Valuation The initiative valuation is carried out in cases when, in compliance with statutory deeds, valuation is not obligatory, but it is necessary to find out the real cost of the property that is supposed to be involved in various transactions. A party to valuation may be individual, who belong to one of self regulated valuation organizations and who has ensured their legal responsibility in accordance with the requirements of Federal Law № 135 16.07.2008. A valuer may practice his activity independently, by means of private practice, or basing on labour contract between the valuer and a legal entity, that correspond to requirements of art. 15.1 of m.a. Federal Law. Insurance of civil responsibility of the appraiser is a condition providing protection of the rights of consumers of appraisers' services, and is carried out according to the legislation of the Russian Federation. An insurance case is to cause losses to the third parties in connection with performance by the appraiser of its activity, established by the valid decision of court, arbitration court or the Court of Referees.

4.3. Insurance of business Insurance presents relations of protection of interests of individuals and legal entities, the Russian Federation, subjects of the Russian Federation, and municipal formations at approach of the certain insurance cases due to the monetary funds formed by insurers from paid insurance premiums (insurance payments), and also due to other means of insurers. Insurance activity (insurance business) is a field of insurers’ activity on insurance, reinsurance, mutual insurance, and also the one of insurance brokers, insurance aucutaries on providing services connected with insurance and reinsurance. Insurers are the legal entities who have received the licenses in the order, established by the current law, carry out an estimation of insurance risk, receive insurance premiums (insurance payments), form insurance reserves, invest actives, determine the size of losses or damage, make insurance payments, carry out others connected with performance of obligations under the contract of insurance of action. Insurance as a method of compensation of material losses carries out triune function: provides economic interests of a certain individual, enterprise structure and a society as a whole. 151


Participants in insurance relations are: insurants, insured entities, persons getting benefit, insurance organizations, societies of a mutual insurance, insurance agents, insurance brokers, insurance actuaries, federal enforcement authority which competence includes realization of functions under the control and supervision in the sphere of insurance activity (an insurance case), associations of subjects of an insurance case, including the self-regulatory organizations. The size of insurance payment of the separate insurant usually exceeds the insurance contributions paid by him. The economic essence of insurance is that the source of indemnification for one insurant is the payments of other insurants and the insurance reserves formed by the insurer on their basis.The difference between the earned premium (calculated proportionally to the term of the contract) and insurance indemnities, changes of insurance reserves, administrative and company expenses makes the income of the insurer. The state regulation of insurance activity is carried out by the Federal Service of Insurance Supervision of the Russian Federation, being part of the structure of the Ministry of Finance of the Russian Federation. Types of insurance Insurance is subdivided into personal and property insurance. The personal insurance includes property interests connected with: 1) with achievement of certain age or term by an individual; with death, with other events in the individuals' life (life insurance); 2) with causing harm to life, health of individuals, providing them with medical services (insurance from accidents and illnesses, medical insurance, loss of professional working capacity) Objects of property insurance include interests connected, in particular, with: 1) possession, usage and disposal of property (property insurance); 2) duty to compensate the harm caused to other individuals (insurance of civil responsibility); 3) performance of entrepreneurial activity (insurance of entrepreneurial risks). For all kinds of property insurance the object of insurance is the property interests of the insured person connected with possession, usage and disposal of the property. The property, with regards to which property insurance contract is made, includes things, money, securities, and other objects that are not withdrawn out of civil circulation, and not referred to objects to be insured under other contracts. Under this contract the property can be insure only for the benefit of the person (the insurant or the person getting benefit) having the interest of keeping this property based on the law, other legal deed or a contract. A special kind of property insurance is insurance of entrepreneurial risks. The insurance company fully or partially compensates loss of income and additional charges of the insurant, in cases: - suspension of production or reduction of volume of production as a result of events stipulated by the contract; - losses of work (for individuals); - bankruptcies; - contingencies; - non-performance or improper performance by the contractor of contract obligations with regards to the insurant being the creditor under the transaction; - legal cost suffered by the insured person; - other events connected with loss of income and additional expenses. The object of insurance of civil liability is property interests of individuals, having been insured under the insurance contract, that are connected with a liability of compensation for damage caused to them by third parties. The liability of compensation for damage caused by 152


third parties, is regulated by the civil legislation of the Russian Federation. Thus, not only the harm caused to the property, but also the one caused to the health or life of the citizen, and also the loss of income are considered. Both individuals and legal entities can be insurants on a civil liability. In contrast to insurance of civil liability, insurance of the professional liability concerns some kinds of professional work which subjects should indemnify damage, caused by them to third parties (clients) according to the law. This kind of insurance is obligatory, that it is offered by the law for individuals who carry out professional work as individual practice: estimators (experts), lawyers and others In insurance of liability for non-performance of obligations, the object of insurance is property interests of an individual who is insured under an insurance contract (insured individual), and is a debtor. This individual has a liability to compensate losses, pay forfeit to creditor because of his non-performance (improper performance) of liability, including contract liability. The order of compensation of the mentioned is established by the civil legislation.

Forms of insurance Generally, insurance is subdivided into two forms: obligatory (by act of the law) and voluntary (by act of the contract between the insurant and the insurer). Obligatory insurance The insurance which is carried out by act of the law is obligatory. Its kinds, conditions and the order of carrying it out are determined by appropriate federal laws. Obligatory insurance has more detailed description in the Chapter "Obligatory Non-Tax Payments" of the Guide. Voluntary insurance Voluntary insurance is carried out on the basis of contract between the insurant and the insurer. The insurant makes his independent decision concerning the conclusion of the contract and the choice of the insurer. The insurer has the right to accept or to not accept risk of insurance too, depending on certain circumstances. Rules of insurance are accepted and approved by the insurer or association of insurers independently in compliance with the Civil Code of the Russian Federation, and contain regulations with regards to subjects of insurance, objects of insurance, insurance cases, insurance risks, order of determination of the insurance sum, insurance tariff, insurance premium (insurance payments); order of conclusion, performance and stoppage of insurance contracts; rights and duties of the parties, determination of losses or damage size, order of determination of insurance payment, cases of refusal in insurance payment and other statements.

Licensing of insurance activity The license for carrying out insurance activity is the document certifying the right of its owner for carrying out insurance activity in the territory of the Russian Federation if he observes conditions and requirements stipulated when being licensed. The license can be given for realization of insurance activity in the certain territory declared by the insurer. Licensed insurance activity is understood as activity of the insurance organizations and societies of the mutual insurance (insurers), connected with formation of special monetary funds (insurance reserves), necessary for forthcoming insurance payments. Activity according to insurance risks, to definition of the sizes of damage, consultation, etc. does not require reception of the license. 153


As a rule, the license for carrying out insurance activity has no restrictions on validity, if only such restriction were not stipulated when the license was granted. If at the moment of registration of the license there is no trustworthy information on the risks, that allows estimate them, the temporary license is given to the insurer. In connection with changes introduced into the in the Law "On Organization of Insurance Business" by Federal Law No. 172-ФЗ of December, 10, 2003, the list of licensed kinds of activity in the sphere of insurance is considerably expanded. Licensing of insurance activity is carried out by Ministry of Finance of the Russian Federation Classification of licensed kinds of insurance in the Russian Federation Kinds of Licensed activity insurance Personal insurance 1) Life insurance for the case of death, achievement of certain age or term or approach of other event. 2) Pension insurance. 3) Life insurance with periodic insurance payments (rent) and (or) with participation of the insurant in the investment income of the insurer. 4) Insurance against accidents and illness. 5) Medical insurance. Property insurance 1) Insurance of ground-based transport (except for means of a railway transportation). 2) Insurance of railway transport. 3) Insurance of air transport. 4) Insurance of water transport. 5) Insurance of freights. 6) Agricultural insurance (insurance of a crop, agricultural crops, long-term plantings, animals). 7) Insurance of property of legal entities, except transport and agricultural insurance. 8) Insurance of property of individuals, except transport. 9) Insurance of civil liability of motor transport owners. 10) Insurance of civil liability of air transport owners. 11) Insurance of civil liability of water transport owners. 12) Insurance of civil liability of railway transport owners. Insurance of civil liability of organizations that exploit dangerous objects. 14) Insurance of civil liability for causing harm owing to defects of goods, works, services. 15) Insurance of civil liability for causing harm to third parties. 16) Insurance of civil liability for non-performance or improper performance of obligations under a contract. 17) Insurance of entrepreneurial risks. 18) Insurance of financial risks. Reinsurance Mutual insurance.

Insurance brokers That is possible to single out those kinds of insurance that are mostly claimed by largescale business: insurance of property against fire and accompanying risks, insurance of freights, motor transport; medical insurance. At the same time such kinds of insurance as life insurance of employees, of civil liability, insurance against stoppages in manufacture process, and also insurance of machines and mechanisms against breakages are underestimated. Insurance brokers are individuals that are permanent residents in the territory of the Russian Federation and are registered as individual entrepreneurs in compliance with the order established with the legislation of the Russian Federation, or Russian legal entities (commercial organizations) that act in the interests of insurant (re-insurant) and perform activity aimed at provision of services connected with conclusion of contracts of insurance (reinsurance) between the insurer (re-insurer) and insurant (re-insurant), and also with performance of the mentioned contracts. The legal status of the broker is protection of interests of the insurant (the consumer of insurance services). The service of the broker is free-of-charge, as the commission of the agent, 154


and the broker is included into the insurance tariff. The cost of insurance for the client does not depend on the presence or absence of a broker in the relations circuit “insurer-insurant” That is the task of the insurance broker to offer insurance companies that satisfy to definite criteria, to highlight features of different insurance products in different organizations. Also the broker protects client's interests when broker is not necessary. Some kinds of insurance does not demand usage of the insurance broker, as a rule, they are mass, standardized insurance.

Insurance in St. Petersburg According to data provided by the Inspection of Insurance Supervision, in 2006 the volume of the insurance market of St. Petersburg has made 36, 634 billion roubles having increased on comparison with 2005 on 26,7%. The control over activity of the insurance organizations is carried out with the St.Petersburg Inter-Regional Inspection of Insurance Supervision of the Finance Ministry of the Russian Federation. Additional information regarding insurance in St. Petersburg can be received in the following organizations: The name

Inspection of Insurance Supervision for Northwest Federal District

The address

191186, St. Petersburg, B. Konyushennaya Street, Build. 29/42..

Phone/fax: 312-9293 www.fssn.ru spbnadzor@mail.ru 191186, St. Petersburg, Konyushennaya Phone: 325-9713 Street, Floor 5, Office 18 mail@nwvss.inc.ru

Representation of the All-Russia Union of insurers in Northwest federal district The St.-Petersburg Union of Insurers 191011, of SPb, emb. of the river of Fon-tanka, Build 23 Russian Union of Automobile Insurers, Represetation in Northwest federal district Medical Insurance Association

Phone, e-mail

Phone/fax:314-8563 spbss@lsk.ru

191119, SPb, Dnepropetrovskaya, 3

Phone. 712-1833 autoins@mail.wplus .net

199053, SPb, Tuchkov per, 8/1

Phone. 323-9869 smaspb@rumed.ru

Legal regulation of insurance activity, in particular, includes: 1) The Civil Code of the Russian Federation, Part 1 No. 51-Ф3 of 30.11.1994 (edition dated 05.02.2007) and Part2No. 14-Ф3 of 26.01.1996 (edition dated 20.04.2007); 2) Federal Law No. 4015-1 of 27.11.1992 "On Organization of Insurance Activity in the Russian Federation" (as amended on 17.05.2007).

4.4. Protection of business In order to ensure safety of institution activity an entrepreneur could apply to the state authority bodies (legal protection, courts, etc.). In addition, by law is stipulated possibility of

155


organising own security service at the enterprise or use services of specialised (security, detective, etc.) agencies holding licenses necessary for their activities. The Russian Federation legislation regulates: 1. Means to ensure information safety of business. 2. Security and detective means to ensure safety of business. Information Safety Law provides protection: + Of a proprietor against unauthorised access to data resources and information systems. Any documented information access hereto could cause damage to its proprietor, owner, user or another person is the subject of such protection. + Of an information user against limitation of his rights to obtain certain information. Proprietor of data resources has the right to control the fulfilment of information protection requirements and to stop or suspend data processing if those requirements are not fulfilled. A proprietor establishes the order of presenting information to a user with indication of place, time, officials in charge, necessary procedures and provides the access of users to information. An owner of documents provides protection of information on the level being in compliance with the legislation of the Russian Federation. User of information could apply to the court with claim against refusal of access to nonclassified information, submission of unreliable information deliberately and other abuse of his rights. The court examines as well the arguments on unreasonable classification of information to limited access information. Security and detective means to provide safety of business Specialised detective agencies can provide the following services: + market research, collection of information for business negotiations, identification of untrustworthy or unreliable business partners; + revealing cases of unlawful use of trade marks and trade names, unfair competition, disclosure of classified information being a commercial secret; + finding out biographical and other personal data on individual citizens (with their written consent) upon conclusion by them labour or other contracts; + searching for properties lost by citizens, enterprises, institutions and organisations; The following security services can be provided: + safeguarding of the goods of proprietors, including safeguarding during their transportation; + design, assembly and technical maintenance of security and fire alarm equipment; + consulting and provision of recommendations for customers on legal protection against unlawful invasion; + providing order at places of mass events. Institutions involved in the detective and security business must hold a license issued in the order established by the Russian Federation legislation. Enterprises disregarding their organisational and legal forms are empowered to set up separate departments to carry out security and detective activities in the interests of a founder with the right to open current and settlement accounts. However, these departments are not allowed to provide services not related with safety provision for their enterprise. At present in the market of security services and in the market of services provision a large number of private and state organizations works, including Department of ExtraDepartmental Guard of the Main Department of Internal Affairs of St. Petersburg and Leningrad

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region (at present some of its functions are transferred to Federal State Unitary Enterprise "Ohrana" . Legal regulation of protection of business, in particular, includes: 1) Law of the Russian Federation No. 2487-1 of 11.03.1992 (edition dated 18.07.2006) "On Individual Detective and Security Activity in the Russian Federation"; 2) Labor Code of the Russian Federation No. 197-Ф3 of 30.12.2001(edition dated 30.12.2006); 3) Federal Law No. 98-Ф3 of 29.07.2004 "On Commercial Secret"; 4) Civil Code of the Russian Federation, Part 1, No. 51-Ф3 of 30.11.1994 (edition dated 05.02.2007); 5) Administrative Law Violation Code of the Russian Federation No. 195-Ф3 of 30.12.2001 (edition dated 10.05.2007); 6) Criminal Code of the Russian Federation No. 63-Ф3 of 13.06.1996 (edition dated 10.05.2007). 4.5. Protection of Entrepreneurs rights Ways of entrepreneurs rights and interests protection All types of objects legal security in the sphere of business activity legal regulation could be subdivided into three groups: Property rights and interests. Non-property rights and interests. Organisational and pre-conditional rights and interests of an entrepreneur. The first group includes, first of all, entrepreneur's proprietary rights: the right of ownership, the right of business conduct, the right of property operational management, the right of permanent (perpetual) land lot use, servitudes. The same group includes an entrepreneur's right of claim obligations arising in a result of participation in setting up commercial institutions, of concluded by them agreements, transactions and other grounds, for example, in a result of damage inflicted to entrepreneur's property outside contractual relations. The second group of guardable objects are nonmaterial welfare such as business reputation, rights for industrial and intellectual property objects. This group also includes the right for maintenance of official and commercial secrecy. The third group of guarded objects includes the organisational and pre-conditional rights and interests of an entrepreneur. That is the right to state registration as an individual entrepreneur or a legal entity, the right to obtain qualification certificates and licenses for the specified activities being subject to mandatory licensing. The bodies that are authorised to execute state registration of entrepreneurs and licensing of specified activities should perform state registration and issue required licenses by request of applicants. Refusal or avoidance could be claimed against in court by an entrepreneur. This group also includes the right for tax registration and issuance of a taxpayer's identification number, the right to obtain a status of a small business subject, the right to conclude an agreement with a selected by own choice commercial bank on opening a bank account in compliance with the provisions of Art. 846 of the Civil Code, and the right to define an internal production structure of a legal entity and setting up labour legal relations. Protection of entrepreneur's rights and interests is a system of legal measures (mechanisms) of restoring or acknowledging violated or disputed rights and interests of their bearer executed in the established form and by fixed procedures within the limits established by legislation, with application of legal responsibility measures to the violator, as well as mechanisms of practical application and execution of these measures. The Constitution of the Russian Federation establishes the right of every person to protect the rights and interests in all ways, the right on judicial protection, on indemnification of caused damage, 157


and on compensation of harm caused by illegal actions (or inactions) of the governmental bodies and their officials104. In compliance with Art.15 of the Civil Code, the losses of an entrepreneur being the result of his rights and interests violation should be fully indemnified. The significance and content of losses cover all possible for an entrepreneur material losses, including lost revenues that an entrepreneur could have obtained under normal conditions of civil circulation, if his right had not been infringed — a lost profit. Some actions directed at hindering entrepreneurial activity could be classified as a crime (art. 169 Hindering Lawful Entrepreneurial Activity of the Criminal Code of the Russian Federation).

Methods and mechanisms of entrepreneur's rights and interests protection The methods of civil rights protection are stipulated by the Civil Code and other laws of Russian Federation legal means, application thereof is based on the right acknowledgement, results in restoration of the situation existed before the right's violation as well as in cessation of actions violating the right or creating threat to its application. There are means of civil rights protection, following of them being applicable to the sphere of entrepreneurial activity: 1. Acknowledgement of right. 2. Restoration of the situation existed before the right's violation and cessation of actions 3. Acknowledgement of a transaction in question to be invalid and application of the consequences of its invalidity, application of the consequences of invalidity of a null transaction. Acknowledgement of the act of state authority or local self-administration invalid. Self-defenсe of the right. Sentence for execution of an obligation in kind. Indemnification of losses. Charging penalty. Termination or modification of a legal relationship. Non-application by court of an act of state authority or local self-administration contradicting to law. Every one of the above mentioned methods could be applied separately or together with other types. Law allows use of such methods of civil rights protection that are not listed in art.12 of the Civil Code but are stipulated by legislation. They include, for example, the right to address competent state authorities (prosecutor's office, etc.) with request to take measures of state compulsion. Various methods of protection assumes various procedures and mechanisms of entrepreneur's rights and interests protection. The mechanism of rights protection is an application of methods of protection. There are the following kinds of protection mechanisms: 1. Out-of-court — self-defence; settlement of disputes out of court; settlement of applications and claims by executive authority bodies in order of subordination (including notary form of protection). 2. In-court — constitutional protection; settlement of economic disputes by common courts, arbitration courts and intermediary courts. As a rule, existing legislation allows entrepreneurs to select those methods and procedures of his rights protection that he finds to be the most adequate under particular circumstances. 104

According to Art. 53 of the Constitutuion of the Russian Federation. 158


Out of court methods of protection Self-defence of entrepreneur's rights and interests The methods of self-defence include those methods of obligations provision, that in case of their application by failure in fulfilment or unduly fulfilment lead to the restoration of situation existed before the violation of the right: to make a claim to mortgaged property; retention of the object at creditor's; abandon of deposit at it recipient's or its return in double. At entrepreneurs' disposal are variable legal and technical means of protection. For example, in the aim of keeping property accounting records are performed, as well as its stocktaking, valuation and making up balances; are concluded the agreements of full material responsibility with the persons in charge of entrepreneur's property. For security of property complexes and other significant objects specialised militia subdivisions are attached, with whom are concluded agreements on extra-departmental guarding. Monetary assets and valuables are on storage at commercial banks. Guarding of entrepreneur's industrial property objects is ensured by acknowledgement of the entrepreneur's exclusive rights on specific objects from the side of competent state authorities, that is attained by issuance of patents for invents, industrial samples and useful models, by registration of trademarks with company names, service marks and names of commodities origin, by registering and registration of fulfilled scienceresearch works. The legislation stipulates protection of information keeping by its owner as official or commerce secrecy because of its commercial value. According the Civil Code persons received information being subject of official or commercial secrecy by illegal methods are obliged to indemnify to its owner the inflicted damages .For example, official and commerce secrecy is ensured by including of confidentiality terms into labour agreements (contracts) and civil law contracts. Necessity of individual entrepreneur business reputation protection arouse in cases of spreading of information discrediting his honor and dignity or his reputation as businessmen. In order of self-defence entrepreneur is empowered to apply to the person who spread such information with the demand on termination of spreading, on refutation and on compensation payment. The entrepreneur could publish his answer in the same mass media, where the information touching his rights or protected by law interests was published. In order to protect themselves against economical crimes entrepreneurs are empowered to secure their safety via application to the specialised safeguard structures or by their own means. In the last case own subdivisions for guarding are being set up which usually have name of safety service or economical safety. Such subdivisions exist, for example, in all commercial banks and large insurance institutions. To defence from economic crimes entrepreneurs have right to provide their own security addressing either specialized safeguard structures, or with its own forces, setting up own safeguard, department of security and economic security. Settlement of disagreements with contract parties and partners in out-of-court order In case disagreements arouse between partners in joint business activity or contract parties on commercial agreements there is always possibility to settle your relationships without application to the court. This is the way of negotiations, search for compromise, achievement of consensus. The pre-court (claim) order of economy arguments settlement order is compulsory for claims connected with railway transport, mail communication, demands to change or stop a contract105, and also in cases stipulated by contracts concluded by the parties of argument. 105

According to I.5 Art. 4 of the Arbitration Code of Practice of the Russian Federation, Federal Law “On Federal Railway Transport”, “On Communication”, “On Mail Communication” and I. 2 Art. 452 of the Civil Code. 159


These necessary steps include the send of written note called claim by the interested party, that contains detailed requirements (to repay debts, to indemnify damages, to put changes in the contract or to cancel prior to the mentioned termination date) and their grounds with references to legal norms subject to be applied, terms of the contract and description of factual circumstances resulting in origin of the requirement. The receipt of answer not satisfying the applicant of claim, or non-receipt of an answer gives him the right to transfer argument to be settled in the Arbitration Court. In all other cases of economical argument arising, the party, interested in the settlement of the conflict, has the possibility to take a case directly to the Arbitration Court. Settlement of applications and claims by executive authority bodies in order of subordination In particular, settlement of entrepreneurs' arguments with state authorities, executing control-supervision functions. Stipulated by the effective legislation control-supervising powers are executed by the state authorities directly without application to Court via issuing of proper acts (resolutions, directions) coming into force immediately (for application of specific sanctions to entrepreneurs state authorities should apply to court). Entrepreneur who disagrees with the directing act issued in to his address and supposes it to be unreasoned, has the right to argue the act. Protection of civil rights in administrative order is performed only in cases stipulated by law106. The decision taken in administrative order could be claimed to court. Notary form of entrepreneurs' rights and interests protection An important role on ensuring of business activity play notaries. Notary is called to ensure protection of rights and legal interests of citizens and legal entities via executing by notary stipulated by legislation acts notarial actions on behalf of the Russian Federation. Notarial actions executing by a notary is document confirmation of different situations and facts entailing legal circumstances. In case of the arguments arising notarial attesting of the facts and documents assists protection of violated rights or rights in argument. All these gives the basis to speak about notarial form of protection of rights. In-court methods of protection In Russia legal authority is carried out via constitutional, civil, criminal and administrative legal proceedings. Legal system divides on independent one from the other branches of legal authority.

106

According to I. 2 Art. 11of the Civil Code of the Russian Federation, Part of 30.11.1994 No. 51-ФЗ (as amended on 05.02.2007). 160


Judicial Authority in the Russian Federation

Courts of subjects of the Russian Federation

Federal courts

Constitutional court of the Russian Federation

Supreme Court of the Russian Federation

Military Courts System

Supreme Courts of republics, territorial and regional courts, courts of cities of federal importance, courts of autonomous region and autonomous regions

District courts

Supreme Arbitration Court of the Russian Federation

Constitutional and Statute Courts of Federation Subjects

Justice of Peace

Federal arbitration courts

Arbitration appeal courts

Arbitration Courts of Federation Subjects

Violated rights and interests of entrepreneurs can be protected by Constitutional Court of the Russian Federation. An application to the Constitutional Court is allowed, if the law, involving constitutional rights and freedoms of citizens, was carried out or is subject to be carried out in specific trial, the hearing of which is terminated or started in court or other body, applying the law. The application to the Constitutional Court should be reasoned, it should contend indications on the subject of specific laws in whole or their particular parts nonconformance with the Constitution and with what particular provisions of the Constitution nonconformance occurred. Acts or their particular provisions, acknowledged as non constitutional by the Constitutional Court, are coming out of force. Constitutional (Statute) Court of the Subject of the Russian Federation examine the issues of conformity of the law of the Subject of the Russian Federation, normative legal acts of the 161


state authority bodies of the Subject of the Russian Federation, local self-administrative authorities of the Subject of the Russian Federation with the Constitution (Statute) of the Subject of the Russian Federation, and gives comments on understanding of the Constitution (Statute) of the Subject. Settlement of economical arguments by the Arbitration Courts107 Arbitration courts in the Russian Federation carry out justice via settlement of economical arguments that arouse from civil, administrative, and other legal relations: - between legal entities, citizens-entrepreneurs; - between the Russian Federation and the Subjects of the Russian Federation; - between the Subjects of the Russian Federation. If at least one of the parties of civic trial is the citizen without the status of an entrepreneur, then this trial is subject to be settled in public jurisdiction court. Trials of the institutions conduct in Arbitration Court their authorities, legal representatives or heads acting in accordance with federal law, other normative legal acts or a constituent documents of the institutions. During legal proceeding the parties are provided with possibility to explain their position on the argument being under examination, to reason it and to put additional thoughts and contra-arguments after the hearing of other party's opinion. Legal acts of arbitration courts could be subject to retrial, modification or leaving effective — in procedure of correspondingly appellation, cassation and supervision procedure and retrial on the grounds of newly opened circumstances. Settlement of economical arguments by public jurisdiction courts. At present the subject of settlement of economical arguments by public jurisdiction courts can include the following types of arguments with participation of legal entities and citizens-entrepreneurs: claim cases with participation of citizens, institutions, state authority bodies, local self-administration authorities on protection of violated rights or rights in argument, freedoms and legal interests; cases subject to demands, being settled in procedure of order performance (e.g., demand to collect from citizens arrears on taxes, fees and other compulsory payments; requested demand to collect salary, calculated but not paid to an employee); cases, arising from public legal relations (e.g., by applications arguing decisions and actions (inaction) of state authority bodies); cases of special procedure (on establishing the facts of legal importance; on acknowledgement of movable object to be ownerless and acknowledgement of the right of municipal property on the ownerless movable object; on input of amendments and corrections into the records in acts of civil status); cases on arguments against decisions of intermediary courts and on issuance of court orders for compulsory execution of intermediary courts decisions; cases on acknowledgement and execution of foreign courts and foreign arbitration courts decisions. When applying to the court with a claim, containing several related demands, one of them are in competence of public jurisdiction court, and the other — in competence of the arbitration court, if the division of demands is impossible, the case is subject to settlement in the public jurisdiction court. In case when the division of demands is possible, the judge issues decision on acceptance of demands in competence of public jurisdiction court, and on refusal to accept demands in competence of arbitration court. Supreme Court of the Russian Federation is the supreme legal authority on civil, criminal, administrative and other cases in competence of public jurisdiction courts, carries out within the

107

The order of considering cases in arbitration court is established by the Arbitration Code of Practice of the RF of 24.07.2002 No. 95-ФЗ. 162


stipulated by federal law procedure forms legal supervision over their activity and gives comments on the issues of legal practice. Legal system of public jurisdiction in St. Petersburg is presented by federal courts and St. Petersburg courts. Federal system is presented by City Court, 23rd federal district courts, Leningrad Regional Military Court, St. Petersburg Garrison Military Court. Besides, in the city acts the Council of St. Petersburg Judges, Qualification Board of St. Petersburg Judges, and Legal Department Management in St. Petersburg provides the activity of federal courts and Legal society authorities. Stages of legal proceedings In arbitration courts, as well as in courts of public jurisdiction, the legal proceedings are being carried out at several instances: — first instance court; — appellation instance; — cassation instance; — supervision instance. — The first instance court is a court enforced within his competence to examine primarily the essence of legal cases. In the system of public jurisdiction courts the first instance courts are Justice of the Peace, district (town) courts, courts of military garrisons. The setting up of district arbitration courts is not stipulated, therefore arbitration courts of subjects of RF settles all cases of first instance, subject to be settled by arbitration courts, excluding the cases, subject to be settled by Supreme Arbitration Court of the Russian Federation. Appellation instance is a stage of legal proceedings, stipulating the examination of legality and decisions of the court standing below. In the system of public jurisdiction courts as an appellation instance act district courts, they examine the legality and grounds of decisions or orders of Justice of the Peace that did not come into force. In the system of arbitration courts as an appellation instance acts arbitration courts of the subject of the RF, i. e. arbitration courts of the subject of RF settles the cases in a first instance and then resettle them in procedure of appellation. Appeal complaints are considered in accordance with the appeal procedure by the arbitration court of the appeal instance formed according to the Federal Constitutional Law «About the arbitration courts in the Russian Federation». Appellation instance examines legality and grounds of the legal decisions of the first instance court that did not came into force. Cassation instance is the stage of legal proceedings, stipulating the examination by higher standing court the legality and grounds of the decisions and orders of the lower standing court. In the system of public jurisdiction courts in cassation procedure the courts examine the decisions or orders of first instance courts that did not come into legal force. In the system of arbitration courts in order of cassation are examined decisions of the first instance court came into legal force. Supervision instance is the stage of legal proceedings providing the check of the legality and the validity of judicial certificates (decisions, verdicts and so forth) which has acquired validity by consideration of supervising the complaints submitted by persons, participating in the business, and other persons if their rights and legitimate interests are broken by the judicial decisions, and also the protests of the officials specified in the law (such a right is provided only to the officials of the bodies of the Office of Public Prosecutor if the public prosecutor participated in the consideration of the business). For the public jurisdiction courts the following courts act as supervision instance: presidiums of supreme court of the subject of the Federation; legal boards on criminal cases and on civil cases and Military board of the Supreme Court of RF; Presidium of the Supreme Court of the Russian Federation. Function of supervising instance in the system of arbitration courts carries out the Supreme Arbitration Court of RF. The Supreme Arbitration Court of the Russian Federation is a 163


supreme legal authority on the settlement of economical arguments and other cases to be settled by arbitration courts, carries out legal supervision over their activity within the stipulated by federal law procedure forms and gives comments on the issues of legal practice. Settlement of the economical arguments by intermediary courts To the intermediary court by the agreement of the parties of intermediary trial (hereinafter referred to as the Parties) can be transferred any argument arising from the civil legal relationships, if the other is not established by federal law. In the Russian Federation permanent intermediary courts and intermediary courts can be set up for settlement of specific argument. Permanent intermediary courts are set up by trade chambers, stock exchanges, public unions of entrepreneurs and consumers, other institutions (legal entities), founded in compliance with the Russian Federation legislation, and their allotments (associations, unions) and act by these institutions (legal entities). The argument can be transferred for settlement to the intermediary court in case of intermediary agreement concluded by the parties. Intermediary agreement could be concluded by the parties in relation to all arguments that had arouse and could arise between the parties in connection with some specific legal relation. Intermediary agreement is concluded in writing. An individual is elected (nominated) as an intermediary judge, being able to ensure impartial settlement of an argument, not interested in the solution of the case not directly nor indirectly, being independent of the parties and gave approval for the carrying out the obligations of the intermediary judge. Intermediary judge, settling up the argument in single should have higher education in jurisdiction. In case of collegial settlement of an argument the higher juridical education should have the chairman of the intermediary court. The number of intermediary judges should be odd. The distribution of expenses related to the argument settlement between the parties is carried out by intermediary court in accordance with the agreement of the parties, and if there is none — proportional to satisfied and refused demands. The parties, concluded intermediary agreement, take an obligation to fulfill the courts decision voluntarily. If the decision of intermediary court is not fulfilled voluntarily in the fixed period, it should be fulfilled compulsory. If in the intermediary agreement it is not stipulated that the decision of the intermediary court is to be final, then the decision of the intermediary court could be argued against by the participating in the case party via an application to the competent court about the disaffirmation of decision within three months from the date of intermediary court decision receipt.

Addresses and Telephone Number of Intermediary courts that are in action in St. Petersburg Name North-east regional intermediary court Intermediary court at the St. Petersburg trade industrial chamber St. Petersburg intermediary court of medical insurance and health protection system The Arbitration Court of St. Petersburg and Leningrad Region of Independent Private Establishment "Arbitr"

Address

Contacts

6 Chapigina street, 198152 St. Petersburg 46-48 Chaikovskogo street, 191123 St. Petersburg

Phone: 327-5099

4 Yakovlevsky St., 196105 St. Petersburg

Phone: 388-8354, 388-8733

67 Blagodatnaja St, 196128 St. Petersburg,

Phone: 422-8877 Fax: 740-7474 www.spbarbitr.ru

Phone: 273-8354 www.spbcci.ru

164


Legal Chamber of intermediary courts permanent action

11 Zverinskaya street, 198510 Petergof

Phone: 427-7994 Fax: 427-7995

Addresses and Telephone Numbers of judicial instances in St. Petersburg Name

Address

Contacts

St. Petersburg City Court

16 Fontanka River emb., St. Petersburg, 191028 Arbitration Court of St. Petersburg 50/52 Suvorovsky avenue, St. and Leningrad region Petersburg, 191015

Federal Arbitration court of the 4 Yakubovicha street, North-West Circuit Petersburg, 190000

Phones: 273-1081, 273-1952 sergey@gor.courts.ru Phones: 274-5100 Fax: 710-7425 spb@arbitr.ru www. spb .arbitr.ru

St. Phone/fax: 312-8296, 1174767 www.fas.spb.ru

Management of Legal Department 35 Bolshaya Morskaya street, at the Supreme Court of the St. Petersburg, 190000 Russian Federation in St. Petersburg

Phone/fax: 312-8787 pressa@courtdept.spb.ru www.cdept.spb.ru

Statute Court of St. Petersburg

62 Suvorovsky Pr., St. Petersburg, 191124

Appeal Arbitration Court No. 13

50/52 62 Suvorovsky Pr., St. Petersburg, 191015

Phone: 576-6620, 576-6551 www.spbustavsud.ru info@ustavsud.ru Phone: 278--5673

Addresses and Telephone Numbers of Federal District Courts of St. Petersburg Address

Phone

Vasileostrovsky district court Viborgsky district court Dzerginsky district court Zelenogorsky court

Federal District Court

55 Sredny avenue, St. Petersburg, 199034 14/3 Smolyachkova, St. Petersburg, 194044 38 Vosstaniya str., St. Petersburg, 191123 21 Lenina avenue, Leningradsky region, Zelenogorsk, 197720

321-7432 542-8687 272-3936 231-3736

Kalininsky district court Kirovsky district court

2 Mikhailova str., St. Petersburg, 195009 38 Marshala Govorova str., St. Petersburg, 198095 12 Bratyev Radchenko str., St. Petersburg, Kolpino, 196653 14 Krasnodonskaya str., St. Petersburg ,195176 3 Suvorova str., St. Petersburg , 198320 31 Karla Marksa str., Leningradskaya region, Kronshtadt, 189610 20 Karavannaya street, St. Petersburg, 191011

542-1879 252-6274

Kolpinsky district court Krasnogvardeinsky district court Krasnoselsky district court Kronshtadtsky district court Kuibishevsky district court Leninsky district court

469-6151 224-0393 141-3232 236-4126 314-0447

Moscovsky district court

17B, 13th Krasnoarmeiskaya str., St. Petersburg, 251-1792 198005 11 Aleksandrovskaya str., St. Petersburg, 189510 423-1236 Leningradskaya region, Lomonosov 129 Moskovsky ave., St. Petersburg, 196084 388-7039

Nevsky district court

5 Krupskoy str., St. Petersburg, 193029

567-5321

Oktyabrsky district court

17 Pochtamtskaya str., St. Petersburg, 190000

311-5758

Petrogradsky district court

9/6 Siegginskaya str., St. Petersburg, 197198

233-3414

Petrodvortsovy district court Primorsky district court

3 Razvodnaya str., Leningradskaya Petrodvorets 83 Savushkina str., St. Petersburg, 197374

Pushkinsky district court

22 Pushkinskaya str., Pushkin, 196007

Sestroretsky district court

31 Volodarskogo str., Leningradskaya reg., 437-4071 Sestroretsk 2 Moiseenko str., St. Petersburg, 193144 275-2713

Lomonosovsky district court

Smolninsky district court

reg., 450-5452 430-9388 465-2993

165


Frunzensky district court

3 Kurskaya str., St. Petersburg, 192007

275-2787

5. FOREIGN ECONOMIC RELATIONS 5. FOREIGN ECONOMIC RELATIONS 5.1. Foreign trade activities On a national scale, foreign economic activity is an important factor for the country's financial stabilization. Revenues from foreign economic activity (customs fees, VAT, excise duties, non-tax revenues) constitute a significant part of the budget. Relations between the Russian Federation and foreign states in area of external trade activity are based on the observance of universally accepted principles and norms of international law and obligations originated from international agreements concluded by Russia. At present the commercial policy of the Russian Federation is carried out by means of customs and tariff regulation (export and import custom duties) and non-tariff regulation (in particular, by giving quotas and licensing) of external economic activity. Other methods of state regulation of the external trade activity are regarded as interruption and establishing different restrictions by state bodies and not allowed. Export and import are carried out without quantitative restrictions. Quantitative restrictions are entered for special purposes: provision of 166


national safety of the Russian Federation; observance of the international obligations of the Russian Federation with account of internal commodity market status; protection of the home market of the Russian Federation. Customs privileges In compliance with the customs and investment legislation, privileges can be given for customs payments107. But at that, Article 34 of the Russian Federation Law "On Customs Tariff” states that the order of granting tariff privileges is defined by the Government of the Russian Federation. Thus, application of all kinds of tariff privileges stipulated by Articles 35, 36, 37 of the mentioned Law, is carried out only in presence of appropriate decision of the Russian Federation government. Exemption from taxes for the value added cost with regards to goods imported to the customs territory of the Russian Federation is applied in compliance with statements of Article 150 of the Tax Code of the Russian Federation. That Article has a frame character and require appliance of other legal deeds, that, as a rule, are Orders of the Russian federation Government. Object of the taxation excises is import of goods to the customs territory. Privileges concerning the given kind of customs payments are not stipulated by the legislation. The customs broker (representative) is an intermediary who performs customs operations on behalf and on order of a declarant or another person on whom the duty is assigned or to whom the right to make customs operations is given according to the Customs Code. Customs operations are separate actions with regards to goods and transport means, performed by persons and customs bodies in compliance with the Customs Code at customs registration of the goods and transport means. Operating conditions of customs brokers in the territory of Russia108: + Only the Russian legal entity can be a customs broker; + Business as the customs broker can be carried out only after making registering notes in the Register of customs brokers. Conditions of inclusion of customs brokers in the Register: — There must be not less than two experts for customs registration, having the qualifying certificate, in the applicant's staff. . The expert for customs registration is only the individual meeting to qualifying requirements, that are established by federal ministry authorized in the field of the customs affair, and having the qualifying certificate; — The completely generated initial authorized capital authorized fund or shares of the applicant must be present; — Payment of customs payments must be provided — The contract insuring risks of the civil liability that can occur as a result of causing harm to property of represented persons or infringements of contracts with these persons, must be present. The insurance sum cannot be under 20 million rubles. Relations of the client and the customs broker are based on the contract (for example, contracts of the assignment or the agency contract). On behalf of the declarant or other interested persons and on their order, the customs broker performs customs operations. The customs broker has a right to restrict the sphere of his activity to performance of customs operations concerning certain kinds of the goods, or concerning goods transported 107

According to the RF Law “On Customs Tariff” No. 5003-I of 21.05.1993 (edition dated 10.10.2006 and Part II of the Tax Code of the RF No. 117-ФЗ of 05.08.2000 (edition dated 30.12.2006). 108 According to the RF Customs Code No. 61-ФЗ of 28.05.2003 (edition dated 30.12.2006). 167


across customs border by certain types of transport, and also performance of certain customs operations or region for activity within the framework of the region of activity of one or several customs bodies. The certificate on making entry in the Register of customs brokers (of representatives) is without time-limit and contains: 1) name, indication of the organizational and legal form and location of the customs broker; 2) information on sizes and form of customs payments; 3) data on restriction of the activity field of the customs broker if it is established. Rights of the customs broker: 1. In performance of customs operations the customs broker possesses the same rights, as the person who authorizes him to represent interests in mutual relations with customs bodies. 2. The customs broker has the right to act as the guarantor before customs bodies for meeting obligations with regards customs payments by the person represented by it. 3. The customs broker has the right to demand presentation of documents and information necessary for customs registration from the person who represents, including information that is commercial, banking, or other protected by the law secret, and other confidential information. Duties and responsibility of the customs broker: 1. In customs registration duties of the customans broker are caused by requirements and conditions established for customs operations, necessary for placement of goods in the customs regime or other customs procedure. 2. The customs broker pays the customs, taxes if the contents of the customs regime, determined for declaring goods, provides their payment. He bears the same responsibility for making customs payments in declaring goods as declarant. 3. Information received from represented persons that is commercial, banking secret, or some other secret protected by the law, and other confidential information should not be disclosed or used by the customs broker and his workers for own purposes, or be transferred to other persons. 4. Customs broker is obliged to keep account of goods with which regards he performs customs operations, and present reporting about performed customs operations to the customs bodies. 5. Duties and responsibility of the customs broker due to customs bodies cannot be restricted by the contract of the customs broker with represented person. The broker can provide clients with other services both connected with customs registration (for example, services of a warehouse of time storage), and sphere different from customs services (for example, transportation). To have a right to provide such services, it is necessary for a customs broker to receive a special license for each of them. Recommendations for participants of external economic activities + Preliminary search of the customs broker. In order to prevent contingencies in goods import from abroad it is necessary to calculate the size of the customs and taxes preliminary. It is necessary to remember, that observance of measures of non- tariff regulation in customs registration for some the goods needs the state control of the authorized bodies (Ministry of Health of the Russian Federation, System of Obligatory Certification, State Department for Supervision of Communication, etc.).

168


+ The attentive attitude to drawing up the contract with the customs broker. The contract should provide rendering of all necessary services, including consulting. + In settlements of the foreign legal entity with the customs broker there arouses a question on the opportunity of payment in foreign currency. In case, the customs broker does not have sanction of Bank of Russia for performance of export and import transactions, he can receive compensation only in rubles. In some cases, there is a necessity in expertise while keeping external trade activity: 1. Independent identification examination for the purpose of export control is carried out in performance of external economic operations with goods and technologies with the purpose of establishment, whether they are supervised in compliance with the Federal law "On Export Control" (these are goods, information, works, services, results of intellectual activity which can be used for production of weapon of mass defeat, means of its delivery, other kinds of armament and military technical equipment). Performance of external economic operations with such goods and technologies is based on licensing or other form of their state regulation. 2. Expertise of goods in performance of export and import transactions is necessary for customs purposes, drawing up of damage statements and establishment of the Russian origin of goods. 3. Surveillance service of sea vessels in seaports can be provided by organizations having license given by the Ministry of Transport of the Russian Federation. Consultations with regards to customs topics are provided by legal departments of customs bodies (addresses and telephone numbers are given in the table below). Telephone numbers of the largest customs brokers of St. Petersburg No.

Name

Phone, fax

1

Northwest, regional association of customs brokers

Phone.: 324-4024; fax: 324-4003

2

Elite – Trance, LTD

Phone: 303-9453, 718-3533 Fax: 303-9454

3

Evrologystika, LTD

Phone: 332-2211; fax: 332-1699

4

Voshod, LTD

Phone: 718-3511; fax: 718-3513

5

Rostek SeveroZapad, JSC

Phone: 272-0055; fax:275-4161

6

Tandem, LTD

Phone: 327-7731; fax: 327-7729

7

Kustom-Servis, LTD

Phone: 704-3268, 704-3267

8

Task, LTD

Phone: 323-6111; fax: 323-2746

9

Center of Commonwealth, LTD

Phone: 465-2997; fax: 465-3678

10

Pan- Bait-Service, LTD

Phone: 322-6038; fax: 322-6098

11

BaltTek, LTD

Phone: 320-2766; fax: 251-6565

12

Terminal – SV, JSC

Phone/ fax: 741-7591

13

VneshTransAvia, JSC

Phone: 704-3477; fax: 704-3498

14

Baltik-Terminal, JSC

Phone: 336-9178; fax: 336-9179

15

NPO «Megadelta», JSC

Phone: 324-4038, 324-4043

16

Petra, LTD

Phone: 324-2126, 324-2127

17

Baltic Forwarding Company, LTD

Phone: 326-1703; fax: 326-1704

18

Gelen, LTD

Phone: 326-2291, 973-8648

19

Northwest Broker Сompany, LTD

Phone/ fax: 315-4104

20

Greenway, JSC

21

Tamtra, LTD

Phone: 438-80-90; fax: 438-8091 Phone: 708-5411; fax: 373-8485

The Northwestern Customs Authority

169


Control of the foreign trade activities of Russia lies in the sphere of authorities of the Federal Customs Service that carries out its activities directly through customs bodies and representative offices of the Service abroad in cooperation with other federal bodies of executive power, bodies of executive power of the subjects of the Russian Federation, bodies of local selfgovernment, the Central Bank of Russia, public associations, and other organizations. The Northwestern Customs Authority is the only authority having boundaries with the European Union. The structure of the Authority includes 17 customs, 15 of which are boundary ones and 2 of which are specialized. They unite 120 customs stations located at the territory controlled by the Northwestern Customs Authority with the area of over 1 600 thousand square kilometers, which in their turn are located in 11 subjects of the Russian Federation. In the first half of the year 2008 the foreign trade turnover of the Northwestern Customs Authority decreased by 12% and made almost USD 46597,0 million. The volume of export was 23058,4 million USD and import was 23538,6, the export decreased for 31% and import increased for 22%. The reduction of export was caused by: from the 01.06.2007 the North-West Excise Custom was reorganized into North-West Excise Post and submitted to Central Excise Custom. From the 01.08.2007 the Custom post Marine Port “Primorsk” was liquidated. Newly established North-West Custom Post (Primorsk) was submitted to Central Energetic Custom. Fuel, metals, timber industry products prevailed in the trade structure of export and the leading export countries were the Netherlands, Great Britain, Germany, France, and Switzerland. The main positions in the goods structure of import were occupied by food, products of machinebuilding and chemical industries and the leading import countries were Germany, China, Finland, Brazil and the USA

Information on the Northwestern Customs Authority and on the structures it controls №

2

Name of the customs authority The Northwestern Customs Authority Arkhangelsk Customs

3

The Baltic Customs

4

Velikolukskaya Customs

5

Vologda Customs

6

Vyborg Customs

7

Kaliningrad Customs

8

Kaliningrad Customs

9 10

Kaliningrad Region of the Northwestern Customs Authority Kinghisepp Customs

11

Karelia Customs

12

Murmansk Customs

183010, Murmansk, Gor’kogo Street, 15

13

Novgorod Customs

173000, Novgorodskaya Oblast, Velikiy Novgorod, Rogatitsa Street, 19/40

1

Operative

Address 191187, St. Petersburg, Kutuzova Embankment, 20 163045, Arkhangelsk, Embankment of the Severnaya Dvina, 138 198184, St. Petersburg, Kanonersky Island, 32A 182100, Pskovskaya Oblast, Velikiye Luki, Zaprudnaya Street, 1 160025, Vologodskaya Oblast, Vologda, Petrozavodskaya Street, 3 188800, Leningradskaya Oblast, Vyborg, Zheleznodorozhnaya Street, 9/15 236003, Kaliningrad, Chaadayeva Street, 41 236004, Kaliningrad, Smelukh Lane, 31 236006, Kaliningrad, Gvardeiskiy Prospect, 30 188480, Leningradskaya Oblast, Kinghisepp, Bolshaya Grazhdanskaya Street, 5 185029, The Republic of Karelia, Petrozavodsk, Engelsa Street, 25

Phones Phone: (8-812) 740-35-39 Fax: (8-812)275-43-70 Phone: (8-8182) 63-34-29, Fax: (8-8182) 24-30-30 Phone: (8-812) 380-37-28 Fax: (8-812) 713-99-40 Phone: (8-81153) 5-29-70 Fax: (8-81153) 5-62-96 Phone: (8-8172) 73-25-33 Fax: (8-8172) 73-25-01 Phone: (8-81378) 5-92-28 Fax: (8-81378) 2-44-96 Phone: (8-4012) 47-20-07 Fax: (8-4012) 47-24-62 Phone: (8-4012) 35-25-28 Fax: (8-4012) 35-25-95 Fax: (8-4012) 35-25-29 Phone: (8-4012) 578-296 Fax: (8-4012) 578-229 Phone/fax: (8-81375) 2-99-50 Fax: (8-81375) 2-87-11 Phone: (8-8142) 783-700 Fax: (8-8142) 711-129 Fax: (8-8142) 781-425 Phone: (8-8152) 28-22-28 Fax: (8-8152) 23-16-36 Fax: (8-8152) 28-22-29 Phone: (8-8162) 98-32-28 Phone: (8-8162) 63-81-88 Fax: (8-8162) 98-32-29

170


14

Pskov Customs

15

Pulkovo Customs

16

St. Petersburg Customs

17

Sebezh Customs

18

The Northwestern Operative Customs Syktyvkar Customs

19

Fax: (8-8162) 63-86-77 Phone: (8-8112) 79-22-28 Fax: (8-8112) 79-22-29 Phone: (8-812) 740-25-28 Fax: (8-812) 740-25-63 Fax: (8-812) 740-25-29 199034, St. Petersburg, 9th line of Vasilievskiy Island, Phone: (8-812) 740-23-28 Fax: (8-812) 740-23-29 10 Fax: (8-812) 323-05-01 1822250, Pskovskaya Oblast, Sebezh, Margo Street, Phone: (8-81140) 3-53-18 Fax: (8-81140) 3-56-86 62A 197183, St. Petersburg, Savushkina Street, 71, building Phone: (8-812) 380-22-28 Fax: (8-812) 380-22-29 2 167005, The Republic of Komi, Syktyvkar, Phone: (8-8212) 51-31-74 Fax: (8-8212) 51-47-75 Tentyukovskaya Street, 101 180004, Pskovskaya Oblast, Pskov, Rabochaya Street, 9 196210, St. Petsrburg, Startovaya Street, 21, Airport “Pulkovo-2”

Legal regulation of foreign trade activities, in particular, includes: 1) Civil Code of the Russian Federation, Part 1 No. 51-Ф3 of 30.11.1994 (edition dated 14.07.2008) and Part. 2 No. 14-Ф3 of 26.01.1996 (edition dated 14.07.2008); 2) Customs Code of the Russian Federation No. 61-Ф3 of 28.05.2003 (edition dated 26.06.2008); 3) Law of the Russian Federation of 08.12.2003 "On State Control over External Trade Activities"(edition dated 02.02.2006); 4) Law of the Russian Federation No. 183-Ф3 of 18.07.1999 "On Export Control" (with amendments as of 22.05.2008); 5) Regulation of the Russian Federation No. 477 "On System of Independent Identification Expertise of Goods and Technologies Performed for Export Control Purpose" of 21.06.2001 (with amendments as of 30.12.2006).

5.2. Consulates, trade missions, organizations for international cooperation accredited in St. Petersburg In St. Petersburg, the second-largest city of Russia, there are general consulates of almost 50 countries of the world. Besides, international cooperation in the sphere of science, education, trade and business assistance is carried out by trade missions, chambers and associations of entrepreneurs (see the table below). In structure of St. Petersburg Government, the Committee for External Communications in charge of organizing international cooperation. Addresses and telephone numbers of general consulates and the honorable consuls in St. Petersburg № Country

Name of the representative

Phone

1. Kingdom of Norway www.norvegia.ru

Otto Jort 336-64-20 Mamelund 15.07.1959

The date of Adress exequatur delivery 21.02.03 Nevsky prospect, 25 171


2. Ukraine www.cons-ua.ru 3. Hungary www.hungary.ru 4. Greece Republic

Nikolai Rudko 04.04.1947 Ferents Ratkai 03.05.46 Dimitrius Letsios 22.09.1952 Takuo Kidokoro 01.09.1945

331-51-69 312-64-58

20.02.04

Bonch-Bruevich st, 1 10.08.2004 Marata st, 15

314-14-34

Chernishevskogo prospect, 17 Moika emb, 29

Eitvidas Bajarunas 23.03.1963 7. Azerbaidjan Republic Gudsi Dursinovich Www.azconsul.spb.ru Osmanov 16.02.1966 Jaroslav 8. Poland Drozd13.06.1955 www.weh.spb.ru 9. China Republic Tjan Erlun 17.04.64

327-02-30

Rileeva st, 37

717-38-91

2-nd Sovetskaya st, 27-а

336-31-40

10 Kingdom of Sweden . www.swedenabroad.co m 11 Swiss Confederation . 12 Federal Republic of . Germany www.sanktpetersburg.diplo.de 13 Latvian Republic . www.mfa.gov.lv 14 Rumania . 15 Italian Republic . www.conssanpietrobur go.esteri.it 16 Czech Republic . 17 Kingdom of Spain .

329-14-30 329-14-40 КО 327-08-17

5-th Sovetskaya st, 12 Griboedova emb. 134 Malaya Konushennaya, 1

5. Japan www.stpetersburg.ru.embjapan.go.jp 6. Lithunian Republic

18 United Kingdom of . Great Britain and Northen Ireland www.britaininrussia.ru 19 Republic of France . 20 Kingdom of Denmark . www.gksktpetersborg. um.dk 21 Republic of Turkey .

Sven Gunnar Clinga 18.12.1953 Urs Shtrausak 25.03.1955 Bernd Riner Haince Braun 05.09.1946

334-35-86

714-76-70

320-24-00

Ivete Sers 14.08.1966 Ion Bistreanu 11.12.42 Massimo Drei 07.01.1959

336-34-54

Lubor Bartosh 29.10.1958 Fransisco Pascual de la Parte 15.07.1952 William Elliott 16.03.1968

271-04-59 271-46-12 579-14-48

Mishel Obri 11.09.1952 Sorei Melsen Cragholm 04.11.1949 Mehmet Chinar 12.05.1951

Chernishevskogo prospect, 17 Furshtadskaya st, 39 Basil island, 10th line, 11 Gorohovaja st, 4

312-61-41 312-32-17

320-32-00

07.08.06

Theatre sq., 10 Tverskaya st, 5

04.07.06

Furdshtatskaya st, .9

30.10.2006 Prolitarskoy dictaturi sq., 5

332-22-70

Moika emb., 15

703-39-00

24.07.2007 Camennii island, Big Alley, 13

312-10-48

07.09.2007 Malaya Morskaya st. 6. 172


22 Cyprus Republic . www.cyprus-spb.ru

Anthonis Sammutis 26.03.1975

380-78-00

23 Estonian Republic . www.peterburg.estemb .ru 24 Republic of Finland . www.finland.org.ru

Christian Lahtein 25.09.1966

702-09-20 702-09-24

Olli Erkki Tapani Perheentupa 11.03.1947 Georgii Mihailov Mihov 01.02.1945 Ralhica Lokesh

331-76-00

31.01.08

273-40-18

19.02.2008 Rileeva st., 27

272-19-88

06.03.2008 Rileeva st., 35

312-09-87

31.03.2008 Galernaja st. 11

718-76-58

07.04.2008

571-72-36

26.05.08

25 Bulgaria . 26 Republic of India . 27 Republic of . Kazakhstan 28 . 29 . 30 .

Kingdom of Belgium Armenia

Jumabec Kojaevich Kenshimov 19.10.1956 Mari-Joan Rokkas 24.10.56 Var lan Frunzeevich АКОПЯН 06.02.1952 Entoni Mari Van der Togt 09.01.1958

Kingdom of Nitherlands www.nitherlandsembassy.ru 31 United States of Sheila Guoltni . America www.stpetersburgusconsulate.ru 32 Republic of Korea I.o. An Hjo-Jhon . 33 Slovakian Republic Augustin Chisar . www.cjanktpeterburg. mfa.sk

334-02-00

331-26-00

10.01.08

Furshtadskaya st, 27 Bolshaya Monetnaya, 14 Peobrazenskaya sq., 4

Decabristov st., 22 02.07.2008 Moika emb. 11

01.07.2008 Furstadskaya st, 15

448-19-09

Necrasova st, 32А. Orbeli st., 21. corp. 2

294-36-66

Consulate departments 34 Belarus Republic .

Sivitskii Dmitrii Alexandrovich

273-00-78 273-41-64 т/ф

Bonch-Bruevich st., 3

Tom Holier Westvelt 17.08.1949 Jurii Kovalchuk 25.07.1951

275-05-02

22.12.97

325-62-71

31.08.00

Nikolai Orlov 25.07.1954

312-53-96

18.03.03

General Consulates Consular General of the 35 Honorable Austrian Republic . 36 Thailand Kingdom . . 37 Honorable Kingdom of . Monako

Furstadskaya st, 43, corp. 1 Bolshoi prospect, за Basil island, 9/6 English emb., 42

173


38 Seychellois islands . www.seychellesconsulate.ru 39 Indonesia Republic . 40 Malta Repaublic . 41 . 42 . 43 . 44 .

Bangladesh Republic Brazil Australia Slovenia Republic

45 Democratic Social . Republic of ShriLanka 46 Angola Republic . 47 Philippines Republic . 48 Islamic Republic of . Pakistan 49 Chili Republic . 50 Iceland . 51 Kirghiz Republic .

Victor Hmarin 10.12.1949

322-38-16

25.01.01

Detskaya st, д.30

Valerii Radchenko 12.06.1941 Igor Onokov 28.02.1958

237-08-83 т/ф 449-47-80

16.05.01 25.10.01

Sergei Fursenko 11.03.1954 Taimuraz Bolloev 28.02.1953 Sebastian Fitzlaion 01.01.1948 Sergei Alexandrovich Vasiliev 08.06.1957 Vladimir Vasilievich Grishanov 17.06.45 Victor Georgievich Budnii 28.04.1958 Sergei Pavlovich Alexeev 16.10.1947 Abdul Rauf Rind

635-85-69

22.07.02

703-74-58

27.08.02

Kamennostrovski i prospect., 15 8-th Krasnoarmeiskay a, 6а/5 Chapigina st., 6p, оf. 315 Moika emb., 75

325-73-33

20.01.03

Italian st.,1

314-41-85

7-th Krasnoarmeiskay a, 24/14 of. 13 Basil island, 17th line, 60

305-01-85 272-09-94 321-26-05 320-78-31

Alexandr Petrovich 702-12-80 Slugin 25.07.1962 Magnus Trsteinson 326-85-85 06.12.1961 Taalaibek Kalibaevich 400-22-80 Abdiev 20.04.1968

Shpalernaya st., 36, оf.324 21.03.05

Basil island, Bolshoi pr, 103, b/c "Sentraco" 08.02.2007 Viborgskaya emb., 29, оf.516 07.03.2007 Basil island. 9-th line, 34 26.03.2007 Telman st, .24 12.03.2008 Suvorovskii pr., 40

International organizations 52. Inter-Parliamentary Assembly of CISmembers

Mihail Iosifovich Krotov 29.07.50

53. Representative deparment of European Bank of Reconstruction and Development www.cbrd.com 54. Filial Of Euro-Asian Bank of

Bruno Huan Balvanera 703-55-25 Levi 05.09.1962

Andrei Valerievich Lukjanov

272-53-01

710-20-63

04.03.04

Shpalernaya st., 47

14.08.2006 Nevskii prospect., 25

Ochakovskaya st, 6 174


Development Information business centers of St. Petersburg abroad The purpose of establishment and development of information business centers of St. Petersburg abroad is to form a positive image of St. Petersburg abroad and to extend international and foreign economic relations of our city with the authorities and the organizations of other countries. Information business centers of St. Petersburg abroad are constantly operating expositions providing the information about St. Petersburg located on the territory of a foreign state. The centers provide consulting and marketing services. Addresses and phones of operating information business centers of St. Petersburg abroad № 1

The name Information business centre of St. Petersburg in Hamburg

Contacts Glukengiserval, Hamburg, Germany Phone: +494030106186 Fax: +494039106196 info@spb-hamburg.de www.spb-hamburg.de

2

Information business centre of St. Petersburg in France

3

Information business centre of St. Petersburg in Kiev

Rue Fesanderie, Paris, France Phone: 0805 800 155 ovs@mission-spb.fr 19 «lit B» Reitarskaya Str. Ukraine Phone.: 38044 209 97 18 ganus@voliacable.com

4

Information business centre of St. Petersburg in New York

Park Avenue, New York, USA Phone: 212 829 57 24 Fax: : 917 322 21 05 vkb@ctec.ru www.ctec.ru Krishjanisa Barona St., Riga, the Latvian Republic Phone.: 371 721 79 61 Fax: 371 721 79 64 rosbalt@apollo.lv

5

Information business centre of St. Petersburg in Riga

6

Information business centre of St. Petersburg in Juvjaskulja

Sepjankatu, Juvjaskulja, the Finnish Republic Phone.: + 358 14 652 117 Fax: + 358 14 652 129 Minna.haapala@jykcs.fi www.jykes.fi

7

Information business centre of St. Petersburg in Yerevan

Zaryana St., Yerevan Phone.: + 7 904 632 92 78 eminfo@yandex.ru

8

Information business centre of St. Petersburg in Ozimo

Sbrozzola St., Ozimo (AN), the Italian Republic

9

Information business centre of St. Petersburg in Kohtla-Jarve

Keskallee, Kohtla-Jarve, the Estonian Republic Phone.: + 372 337 85 38 Fax: + 372 337 85 33 dusman@estpak.ec

10

Information business centre of St. Petersburg in Kotka-Khamina Region

11

Information business centre of St. Petersburg in Rakvere

Kaminlinnanti, Kotka, the Finnish Republic Phone.: + 358 5 227 97 74, + 358 5 227 97 73 Fax: + 358 5 227 97 80 Virpi.herranen@ckymi.fi www.bizkon.biz Rakvere, the Estonian Republic Phone.: + 372 325 80 28 Fax: + 372 325 80 29 Erilka.paabus@lvirumv.ec

175


Addresses and Telephone Numbers of Chambers of Commerce and Representations in St. Petersburg No.

The name

The address

Phone

Contacts

1 St. Petersburg Chamber of

Phone: 380-7800 spbcci@spbcci.ru Fax: 272-8612 www.spbcci.ru

2

Phone: 311-8554 Fax:311-7180

3

4

5

6

7

8

9

10

11

12

13

14

15

191123, St. Petersburg, Commerce and Industry Chaykovskogo Street, Build. 46/48 Kronschtadt Chamber of 197762, Kronstadt, Commerce and Industry Petrovskaya Street, 10, building 3 Pavlovsk & Pushkin 196607, Pushkin, PushChamber of Commerce kinskaya Street, and Industry building 28/21 St. Petersburg Union of 191060, St. Petersburg, Manufactures and EntreSmolny, Road 1, building, preneurs lit. B Leningrad Region Cham- 191186, St. Petersburg, ber of Commerce and Nevsky Prospect, building Industry 1 American Chamber of 190000, St. Petersburg, Commerce, St. Petersburg White Nights House, Chapter Malaya Morskaya Street, 23 Hamburg Chamber of 193034, St. Petersburg, Commerce Vasiliyevskiy Island, Bolshoy Prospect, 10 Information Bureau of 191186, St. Petersburg, Council of Ministers of Malaya Konushennaya Northern Countries in St. Street, Build. 1/3, office Petersburg 329-1 Russian-Finnish Chamber 198005, St. Petersburg, of Commerce 4th Krasnoarmeyskaya Street, buildung 4/A Russo - British Chamber 191015, St. Petersburg, of Commerce Shpalernaya Street, 54, office C-21 Trade Mission of 191186, St. Petersburg, Consulate General of the Nevsky Prospect, 25, USA in St. Petersburg office. 318-b Trade mission of General 191186, St. Petersburg, Consulate of France Embankment of Moyka river, Build. 11 Trade mission of Flanders 191186, St. Petersburg, at the Embassy of Belgium Malaya Konushennaya Street, building 1/3, Office 13-b St. Petersburg 191014, St. Petersburg, International Business Teatralnaya pl. 10 Association of the Northwest ÂŤSPIBAÂť Institute of foreign trade 190125, St. Petersburg, of Italy (ICE) Shpalernaya Street, 36, office 323

16 The Department of Trade

and Investments at the General consulate of Great Britain in St. Petersburg 17 The Japanese center in

St. Petersburg

18 The Japanese

organization of the assistance to the development of foreign trade (JETRO)

Phone: 476-8588 Fax: 465-0529

info@rushkin-town.net

Phone: 576-7681 Fax: 576-7792

spp@spp.spb.ru www.spp.spb.ru

Phone/Fax: 571-1222, 312-3100 Phone: 326-4525 Fax: 326-4524

lotpp@lotpp.ru www.lotpp.ru

Phone: 323-4505

service@hkhamb-ahk. spb.ru www.hkhambahk.spb.ru

Phone: 336-7580 Fax: 336-7581 Phone: 316-1641 Fax: 712-7252

info.spb@finruscc.ru www.finruscc.ru

Phone: 333-0718 Fax: 333-0719

adminspb@rbcc.com

Phone: 326-2560 Fax: 326-2561 Phone: 332-2270 Fax: 312-7283 Phone: 703-5107

Phone.: 325-9091 279-1815 Fax: 279-9789

Phone.: 312-3216 312-3356 Fax: 314-8082

191124, St. Petersburg, Phone.: 320-3200 5 Proletarskoi Diktaturi Fax: 320-3222 pr.

191186, St. Petersburg, 25 Nevsky office 414-B

stpete@spb.amcham.ru ww.amcham.ru/stpete

admin@spiba.ru www.spiba.spb.ru

Pietroburgo.pietroburgo@ ice.it www.ice.it/estero/sanpietr oburgo Commercial.stpetersburg @fco.gov.uk www.britain.spb.ru

Phone.: 326-2550 Fax: 326-2551

191124 St. Petersburg, Phone.: 576-7353 6 Proletarskoi Diktaturi Fax: 576-7173 pr.

Spb@jetro.ru

176


GLOSSARY Affiliated persons —individuals and legal entities that are capable to influence on the activity of legal entities and (or) individuals who carry out entrepreneurial activity. For transparency provision in mutual relations between managing subjects when it is clear who influences the policy and determines decisions in this or that organization, the legislation establishes rigid requirements with regards to account and informing participants of a civil flow and state bodies by the legal entity about presence of affiliated persons. For example, affiliated persons of a joint-stock company are obliged to notify in writing the joint-stock company about shares of the company owned by them with indication of number and type during 10 days of the date of shares purchase. When nonpresentation of the mentioned information or untimely presentation of it by the affiliated person to the joint-stock company causes damage, the affiliated person bears responsibility due to the jointstock company in the size of the caused damage. The joint-stock company is obliged to keep account its affiliated persons and to represent reporting about them accoin compliance with requirements of the legislation of the Russian Federation (Article 93 of Law "On Joint-Stock Companies"). Business — commercial (entrepreneurial) activity of the managing subject. Certification of manufacture — action of the third party confirming that the necessary confidence that properly identified manufacture and its conditions are a pledge of stability of characteristics for manufactured product, services, works, fixed by normative documents. 177


Certification of product — procedure of confirmation of conformity by means of which an independent from the manufacturer (the seller,) and the consumer (buyer) organization provides written confirmation that the product corresponds to the established requirements. Certification of quality systems — action of the third party confirming that the necessary confidence that properly identified system of quality corresponds to the chosen model or other normative documents determined by the applicant is provided. Commercial activity can be carried out by managing subjects (not only commercial ones) individually or together with other managing subjects. Dependent economic society (Article 106 of the Civil Code of the Russian Federation) — commercial organization, in which authorized capital another economic society (prevailing, participating) has over 20%. Restrictions of mutual participation of economic societies in the authorized capitals of each other and number of votes at the general meetings are established by law. Financial industrial group (FAG) — aggregate of legal entities working on the basis of contract for setting-up of financial and industrial group or as basic and affiliated companies, or as participants in full or patially united material and non-material actives (system of participation) for achievement of common targets. Financial and industrial groups can be created on the basis of holding scheme (on the basis of relations of the property), and on a contract basis. The financial and industrial group is subject to the state registration, but at that it does not become a separate legal entity. The decision on state registration of the financial industrial group is made by the authorized state body. Financial industrial group consists of participants that are independent legal being independent subjects of law, and activity of financial and industrial group is regarded as activity of its participants. Activity of financial industrial group is regulated by Federal Law No. 190-ФЗ of 30.11.1995 "On Financial and Industrial Groups", and by other normative legal acts of the Government of the Russian Federation and normative legal acts of other authorized authorities. Group of persons — a group of legal entities and (or) individuals with reference to whom one or more conditions given below are applicable: - One or several persons in common as a result of agreement (coordinated actions) have the right directly or to dispose indirectly (e. g., on the basis of contracts of sale and purchase, confidential management, about joint activity, assignments or other transactions or on other bases)to dispose of over 50 percent of total voices, falling on voting shares or comprising authorized capital, shares of one legal entity. At that indirect disposal of the legal entity's voices is a possibility of factual disposal by them though third persons with regards to which the first person has the above mentioned right or authority. - One or several persons as a result of agreement or in some other way received the right influence on the decisions made by other person or persons, including the right to influence on the conditions of keeping entrepreneurial activity by other person or persons, or to exercise the authority of the executive body of other persons on the basis of the contract. - The person has the right to appoint an individual executive body and (or) over 50 percent of the joint executive body of the legal entity, and (or) on the offer of the person over 50 percent of structure of board of directors (supervisory council) or other joint managing body of the legal entity is elected. - The individual exercises authorities of the individual executive body of the legal entity. - The same physical entities, their spouses, parents, children, brothers, sisters and (or) persons offered by the same legal entity, comprise over 50 percent of structure of the joint executive body and (or) board of directors (supervisory council) or other joint managing body of two and more legal entities, on the offer of the same legal entities over 50 percent of structure of board of directors (supervisory council) or other joint managing body of two and more legal persons is elected.

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- The individual performing labour duties in the legal entity or in one of the included into it group of legal entities, is an individual managing body of other legal entity at the same time, or individuals performing labour duties in the legal entity or in one of the included into it group of legal entities, comprise over 50 percent of structure of a joint executive body and (or) board of directors (supervisory council) or other joint managing body of another legal entity. - The same physical persons, their spouses, parents, children, brothers, and (or) legal entities have the right to dispose independently of through their representatives (attorneys) of over 50 percent of voices, falling on voting shares or comprising authorized capital, shares of each of two and more legal entities. - Individuals and (or) legal persons have the right independently or through representatives (attorneys) to dispose of a sum of over 50 percent of the voices, falling on voting shares or comprising authorized capital, contributions, shares of one legal entities, and at the same time these individuals, their spouses, parents, children, brothers, sisters and (or) persons, offered by one and the same legal entity, make up over 50 percent of structure of the joint executive body and (or) board of directors (supervisory council) or other joint managing body of other legal entity. - Legal persons are participants of one financial and industrial group. - Individuals are spouses, parents and children, brothers and (or) sisters. Guarantee — 1) An obligation of the guarantor to pay a certain money amount for guaranteed person after approaching a guarantee case. The guarantee is drawn out in compliance with the established order and stipulates obligatory information. Letter of guarantee must contain information what contract is guaranted with guarantee, tipe period of this guarantee and amount of guarantee. The guarantee differs from the pleadg that the first is not the action additional the basic transaction. 2) A way of securing the liability observance that is documented with a contract, where the guarantor undertakes responsibilities due to the creditor of other person (debtor) to be in charge of meeting obligations by the latter in full amount or partially. The guarantor who paid the debt under the contract to the creditor, has the right to the make demand of the debtor about compensation of the paid sum. The guarantee is a form of provision of the credit reccurency. Holding companies (or holdings) — one of legal forms of entrepreneurial associations that is a variant of a group of persons based on relations of economic dependency and control, which participants are under one of the group's participants in their entrepreneurial activity being legally independent at the same time. The mentioned head person makes influence on making decisions by other group's participants due to the control possession of shares or other circumstances. Holding companies are not independent organizational and legal form of the entrepreneurial activity stipulated by the Civil Code of the Russian Federation and are not subject to the state registration. Economic dependence of legally independent subjects incorporated into the holding company, is a subject of regulation of various branches of the Russian legislation. In the civil law the recognition of aggregate of persons as holding is observed within the framework of legal regulation of relations between the basic and affiliated (dependent) economic societies; the tax law allocates category "interdependent persons"; antimonopoly law — "a group of persons" and "affiliated persons". Each of the specified branches of the legislation has special purposes of legal regulation and various criteria of formation of concepts designating economic dependence of participants of holding. Interdependent persons (Article 20 of the Tax Code of the Russian Federation) — for the taxation purposes they are determined as individuals and (or) organizations, which relations can influence on conditions or economic results of their activity or activity of persons represented by them. The organizations are recognized as interdependent when one 179


of them directly and (or) indirectly participates in the other organization, and the total share of such participation makes up over 20%. Under transactions performed between interdependent persons, tax bodies has the right to examine correctness of price appliance in controlling the character of tax calculation. Licensing — actions connected with license provision, renewal of documents confirming presence of licenses, stoppage of licence validity in case of administrative stoppage of activity of licensees caused by violation of license requirements and conditions; renewal or cancellation of licenses, annulment of licenses, control of licensing bodies over observance of appropriate licence requirements and conditions in performance of licenced types of activity by the licencees, keeping registers of licenses, and also with provision interested persons with information from the lecence register or other information on licencing within the established order. • Applicant for the license — a legal entity or enterpreneur, apllying the licencing body for receipt of licence for a certain type of activity. • Licensee — a legal entity or entrepreneur having licence for performance of a specific type of activity. • License requirements and conditions — aggregate of requirements and conditions which performance by the licensee is necessari in performance of the licensed type of activity, established by regulations for licensing of certain types of activity. • Licensed type of activity — a type of activity which performance in the territory of the Russian Federation requires the receipt of licence in compliance with the current Federal law. • Licensing bodies — federal executive bodies, executive bodies of subjects of the Russian Federation, carrying out licensing in compliance with the current Federal Law. • Limit for placement of wastes — maximum permissible amount of waste products of a certain kind that is allowed to be placed in a certain way for the fixed time period in the iblects of waste placement with account of ecological situation in these territoties. • Register of licenses — aggregate of data with regards to granting licenses, renewal of documents confirming presence of licenses, stoppage and renewal of validity of licenses and about cancellation of licenses. Norms of allowed emissions and dumps — norms which are established for subjects of economic and other activity in compliance with parameter of weight of chemical substances allowable for enering the environment from stationary, mobile and other sources within the established regime, and with account of technological specifications, in which observance the norm of quality of the environment is provided. Pledge of property is connected with mortgage obligation given by the borrower to the creditor, and confirming the right if the latter to allow his claim from the cost the pledged property. The pledge of property is one of the most widely spread forms to secure the given credit. Subjects of business — economic subjects in which basis of activity there is commercial calculation (extraction of the enterprise profit or, generally, — benefits). Subjects of business can be legal entities, individuals, and their associations. System of quality — aggregate of organizational structure, techniques, processes and resources necessary for keeping general management of quality.

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Appendix 1. The list of exhibitions held in St. Petersburg in 2009110 №

Название

Тематика выставки

1 2 3 4 5 6 7 8 9

STATE ORDER OF SAINT-PETERSBURG CHILDHOOD PLANET EXPOHORECA FASHION INDUSTRY SPORT VELОEXPO BIG CITY ECOLOGY FORUM “ELDER GENERATION” CLEANEXPO

Performance of purchasing plan of budget of Saint-Petersburg Exhibition o educational programms 7-th international specialized exhibition of hospitality 32-nd international exhibition of textile production 16-th specialized sport exhibition 5-th international specialized exhibition International ecological forum International exhibition of social and medical support 11-th International speacialized exhibition of cleaning industry

10

DRY-CLEANING AND LAUNDRY INDUSTRY IN SAINT-PETERSBURG

11- International speacialized exhibition of equipment, chemistry and technologies for laundries and dry-cleanings

April

11 12

INTERFOOD INGRIDIENTS

13-th International speacialized exhibition of food and drinks 12-th International speacialized exhibition of food ingredients, goods and spice

April April

13

PRODТЕCH

Equipment and technologies of production

April

14

FOODPACK

12- International speacialized exhibition of package and packaging equipment foк food industry

April

15

INTERSTROYEXPO

International construction forum

April

16 17 18 19

INTERNATIONAL DRINK FORUM ALL FOR HOTELS AND RESTAURENTS SPB MARIGE SAINT-PETERSBURG FESTIVAL OF FLOWERS AND LANDSHAFT DESIGN LOGISTIC BOOK SALON THE WORLD OF AUTO RUS-GAS-EXPO BOILERS AND BURNERS INDUSTRIAL AND MINICIPAL ENERGY STOMATOLOGY HIPPOSPHERE ENERGY AND ELECTRICITY

Industry of drinks Specialized exhibition Special exhibition of products and goods for newlywed In frames of floristic festival

April April April April

1-st international specialized exhibition International exhibition of book production 18-th international specialized exhibition 13-th international specialized exhibition 7-th international specialized exhibition 3-d international specialized exhibition 12- th international specialized stomatology exhibition SPB horse exhibition international specialized exhibition of energy and electricity equipment international specialized exhibition of professional light and sound

April April April May May May May May May

11-th international specialized exhibition International Specialised exhibition

June June

Specialized exhibition of boats and yachts Exhibition of arm, military technologies and equipment International agricultural forum International marine construction and marine industry International industrial service 13-th International Exhbition of construction equipment and technologies Wholesale trade exhibition of home goods 33-d specialized exhibition International exhibition of ads and info agencies specialized exhibition

June June September September September September

October October

20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41

MUSIC. PROFESSIONAL LIGHT AND SOUND EXPO CHEMESTRY SAINT-PETERSBURG CHEMISTRY FORUM BALTIC BOAT SHOW INTERNATIONL NAVY EXHIBITION AGRORUS NEVA RUSSIAN INDUSTRIALIST BALTIC CONSTRUCTIONAL WEEK

Время проведения February March March March March March March March April

May

42

EVERYDAY LIFE-COMFORT-EXPO STYLE-FURNITURE-INTERIER ADVERTISING AND INFORMATION TRENDS: MODERN TENDENCIES IN DECORATION AND ORGANIZATION OF CELEBRATION AUTO+AUTOMECHANIC

43

HOSPITAL

International exhibition of transport means, transport services and accessories 14 -th international specialized exhibition of health care

44

PHARMACY

International pharmacy exhibition

October

45 46 47 48 49

ESTETIC MED SFITEX FASHION INDUSTRY ZOOSPHERE ZООSHOW

7-th international specialized exhibition in the shere of cosmetics 17-th international specialized exhibition "Security and safety" 33-d international exhibition of textile production International specialized exhibition of zooproduction and goods Specialized cynological and felinological exhibition

October October October November November

110

September September October October

The list of exhibitions is preliminary 181


50 51 52

GRAIN AND BREAD OF RUSSIA INTERNATIONAL YOUTH CONGRESS DENTAL EXPO SAINT-PETERSBURG

4 –th international congress and exhibition Specialized exhibition of goods for young people International specialized exhibition in the sphere of stomatology

November November November

53 54 55 56 57

АRТ. THEATRE. MUSEUM RADIOTECHNICS, AUTOMATIZATION NEW YEAR PRESENT FORUM FOR S&M ENTERPISES BALTIC BOAT SHOW

Specialized exhibition of reconstruction, goods and services International specialized forum Fair-trade of New-Year goods and presents Specialized exhibition Specialized exhibition of boats and yachts

November December December December December

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Appendix 2. The largest exhibition platforms of Saint Petersburg Name

Area and services provided

Address

Contact

Lenexpo exhibition complex

Lenexpo exhibition complex is one of the largest exhibition centres in 103 Bolshoy avenue, Russia and the most significant in the Northwest region of the country. V.O., St. Petersburg, Lenexpo complex includes 7 pavilions in Harbour of Vasilievsky Island 199106 and 2 pavilions in the districts of new building. Total exhibition area of the complex is 85 000 sq. Meters, of them the open space is 60 000 sq. Meters, and closed space is 25 000 sq. meters. Lenexpo offers to the exponents 3 conference-halls, provided with all means of audio- and video engineering; different means of communication, including satellite, restaurants, bars, rooms for negotiations.

Phone/fax: 321-2605, Phone 321-2601, 321-2602, 321-2833 lenexpo@mail.lenexpo.ru www.lenexpo.ru

Informationexhibition centre of Russian Federation Northwest

The convenient location of the Centre in point of intersection of many 2 Pobedy square, St. routes of city transport and close to metro station Moskovskaya, as well as Petersburg provision of large free parking makes it available for a visit. Exhibition space is 4000 sq. meters, 4 conference-halls (for 600, 180, 100 and 80 persons) and 2 halls for receptions allows to conduct events of different levels, major conferences and congresses as well as small conferences and seminars.

Phone: 373-0782; 373-8144 Fax: 373-5278 ivcsz@elstandart.spb.ru, expo@elstandard.spb.ru www.elstandard.spb.ru

Mikhailovsky Manege (former Winter Stadium)

Mikhailovsky Manege is a building 160 m long and 35,7 m wide, total exposition square is 4338 sq. meters. The convenient location of the complex, good transportation, full services range together with modern equipment makes it ideal place for conducting events. In Manege there are: a conference-hall for 100 persons and a restaurant for 50 persons. Petersburg spor- CKK is a largest exhibition hall of St. Petersburg. Its main exhibition arena tive-concert allows to spread expositions on the space more than 10000 sq. meters. complex (Peters- CKK has comfortable hall of 3500 sq. meters with for visitors reception burg CKK) with press-center, restaurants and bars, international communications terminal, winter garden and other additional conveniences. Visitors could use parking around the complex.

2 Manezhnaya square, 191011 St. Petersburg

Phone: 273-4367, 719-5525 fax: 719-5500 info@expomanege.com www. expomanege. com

8 Yuriya Ga-garina avenue, 8196105 St. Petersburg

Phone: 388-1211 Fax: 388-0107 info@ckk.ru www.spbckk.ru

Central Exhibi- CVZ was opened in 1977 and was designed for conduction of cultural and tion hall Manege art exhibitions. CVZ is situated in the ensemble of two large squares —Isaac and Decembrists. The total exposition square of CVZ is 3000 sq. meters. It consists of the first circle and the first floor. The hall is equipped with modern exhibition and technical items. Sports Palace In 1967 on the Dobroliubova prospect was ceremonially opened multiUbileiny functional complex Ubileiny with the enormous auditorium, that could contain from 6500 to 10000 spectators depending upon the transformation. Two Morozovs were the leaders of the authors’ group: academic and painter. Among the other authors are F.N. Yakovlev, A.L.Levhanyan, a group of leading engineers. That is the sportive complex of international standing, consisting of three buildingscentral, round by plan (diameter 93 m, height 22 m), Large and Small additional rectangular blocks. Inside the Large block training icescene with artificial ice is situated, at Small block – service rooms. At present the complex is being reconstructed and extended.

1 Isaakievskaya square, 190000 St. Petersburg

Phone: 314-5959 Fax:314-8254 info@manege.spb.ru www.manege.spb.ru

18 Dobrolubova avenue, St. Petersburg, 197198

Phone: 323-9322

Leningrad Youth Palace (LDM)

Concert hall of Leningrad Youth Palace is constructed for 1100 47 Professora places, situated as amphitheater. The mirror of the stage is 17 m wide Popova street, and 7 m high. The depth of the stage is 13,3 m. The hall is adopted for St. Petersburg, 197376 conducting of: concerts and plays large-scaled forums, conferences and seminars sport contests.

Phone: 234-0696 Fax: 458-5356 ldm@mail.wplus.net www.ldm.ru.service. businesscenter.conthall.

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AUTHORS А.I. Popov, Doctor of economic sciens S.V. Dulin, General director, «IТ-Concept» LLC К.G. Мatveeva, Analyst, «IT-Concept» LLC N.R. Mamedova, Analyst, «IT-Concept» LLC А.N. Alexandrova, Analyst, «IT-Concept» LLC THE GUIDE WAS PREPARED WITH PARTICIPATION OF COMMITTEE FOR ECONOMIC DEVELOPMENT, INDUSTRIAL POLICY AND TRADE Chairman A.I. Sergeev S.A. Fiveysky – First Deputy Chairman D.V. Bykov – Deputy Chairman А.Y. Egorova, Head of Industrial Investments Department M.L. Soboleva, Leading Specialist of Investment Policy Department А.V. Demin, Specialist of the 1-st category of innovation Policy department

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We would like to thank the following for their help in the work over the directory: Branch executive governmental bodies of St. Petersburg The Committee of International Relations The Employment Committee of St. Petersburg The Committee of Information and Communication The Committee of Transport and Transit Policy The Committee of Labor and Social Protection of the Population Federal authorities of the Russian Federation The Administration of the Federal Taxation Service in St. Petersburg The North-Western Customs Administration of the Russian Federation And also: «KIT Finance Insurance» Corp. «Kvazar» LLC. «Private Security Enterprise «Concept SPb» LLC. «Duvernua Legal» LLC. «Real estate agency «Vash Dom» Ltd. «Progress-Neva Leasing» LLC. «Gestion» LLC. «Audit Co. «Juridit» Ltd. «Saint-Petersburg Financial Center» LLC. «EuroAsia» Inc.

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Business.support.structure.in.St.Petersburg