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A unit trust does not comprise a legal entity. The participants of a unit trust pool their contributions into a property complex held in trust by a management company. The participants lose ownership over their contributions, and the trust’s property is owned jointly by all trust members. The management company acts in its name but it must make it known that it acts as a trustee, otherwise the participants will be personal liable.

Again a management company and the trustee of a unit trust, must be authorised by the Central Bank.

Banking

RUS-450

The Central Bank of the Russian Federation is the regulatory body for banking and it is authorised to issue and withdraw licenses to provide banking services. The main legal act is the federal law on banks and banking of December 2, 1990.

A bank can be incorporated in the form of a limited liability or a joint-stock company or in other forms established by company law. Banks are entitled to accept money from individuals or legal entities on deposits, operate these funds in its name and at its own expense, open accounts. Russian law provides different arrangements for the non-banking credit institutions that can provide certain banking operations.

Banking names

The name of a credit institution must contain the words “bank” or “non-banking credit institution”. The Central Bank may prohibit the use of a particular name if such name is already in the Book of State Registration of Credit Institutions.

A credit institution must publish its balance sheet quarterly; it must annually publish a profit and loss account, information about own capital and reserves, and annually a balance sheet and a profit and loss account together with the statement of an auditor who examined the bank’s accounts.

Barrier tariffs

Since 2013, Russian banks apply so-called “barrier tariffs” as a measure against money laundering. Such tariffs apply to the operations and persons banks find suspicious. The measure is, by far, dubious, and application of such tariffs may be challenged in court.

Change of control and directors

The Central Bank must be notified about an acquisition in the ownership or trust by one legal entity or individual or a group of legal entities and/or individuals of more than 5 per cent shares in a credit institution. Prior consent from the Central Bank is required for acquisition of more than 20 per cent of shares. Founders of a bank may not exit within three years after incorporation.

Candidates for the following positions in a credit institution must comply with certain special requirements to qualification established by law and the Central Bank’s regulations:

• a member of the board of directors;

• a chief executive and a deputy chief executive;

• a chief accountant and a deputy chief accountant;

• a head, a chief accountant and their deputies of branches.

A credit institution must notify the Central Bank in writing regarding a prospective appointment to the above mentioned positions in advance. The Central Bank is entitled to prohibit such appointment upon grounds established by law. A credit institution must also notify the Central Bank about each dismissal from these positions.

Insurance

RUS-475

Control over insurance is provided by the Federal Service of Insurance Supervision of the Ministry of Finance (FSIS). The principal legal act is the Federal law on the organization of insurance in the Russian Federation of November 27, 1992. Insurance companies are formed as limited liability or joint stock companies or in other forms of commercial organisations. Insurance companies must be authorised by the FSIS and be included in the register of insurers.

The name of an insurance company must identify the company’s activity and include words like “insurance”, “reinsurance”, “mutual insurance” or “insurance broker”. The head and the chief accountant of the insurer must have an economics or financial education and two years work experience in insurance. The actuary must have mathematical or economics education and an actuarial diploma in actuary. The head and the chief accountant of an insurance company must be citizens of the Russian Federation.

Insurance companies of which more than 49 per cent of shareholders are foreign entities or individuals and subsidiaries of foreign insurance companies may not provide the following insurances:

• life insurance;

• obligatory State insurance (e.g. mandatory health insurance);

• property insurance, related to supply goods and services for the state needs;

• property insurance for state and municipal organisations.

Solvency requirements

The minimal charter capital of an insurance company depends on the kind of insurance the company is involved in and is between RUR 60 million (€653,700) and RUR 480 million (€5,229,600).

Insurers must comply with the solvency requirement established by law as related to reserves, an assets structure, reinsurance quotas, obligations against own capital ratio, etc. Also, in some cases (e.g. life insurance, health insurance) insurance company activities shall be limited to only one type of insurance.

Please note that new requirements and rules for establishing financial sustainability come into force on on July 1, 2021. Under those requirements and the rules for calculation of assets and liabilities, inter alia, it is set that the allowed total amount of securities, loans and alike assets shall not exceed 40 percent of the Insurance Company total asset value.

Taxation

Individuals

RUS-500

Personal income tax is imposed on the income of Russian residents and individuals who have sources of income in Russia. Individuals are deemed residents of Russia, for tax purposes, if they are present within the Russian Federation for at least 183 days in the calendar year (which is from January 1 to December 31). In this case they are subject to Russian tax on their worldwide income. Non-residents pay tax on the Russian-source income only, at a rate of 30 per cent, as against a flat rate of 13 per cent for residents. Residents also pay tax at the rate of 13 per cent (against 15 per cent for non-residents) on dividends received. However, from January 1, 2021, a progressive taxation scale will be used (so-called “wealth tax”), so resident individuals whose total personal income exceeds RUR 5 million (EUR 54,555) subject to income tax of RUR 650,000 (EUR 7,092) plus 15 per cent of their income.

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