Russia - Corporate/M&A: Mid-Market Lawyers & Law Firms - Europe - Chambers and Partners
Chambers & Partners has detected the use of an ad blocker.
We make use of tailor-made ads to enhance your experience of our website.
Please 'whitelist' http://www.chambersandpartners.com.
Close
Europe Guide

Corporate/M&A: Mid-Market — Russia

Overview

Russia continues to reform its legislation by reducing the imperative tone of its regulations and putting emphasis on enhancing the protection of business investments. We hope that this reform will have a positive impact on Russian business as a whole and M&A transactions in particular.

In recent years, Russia has been gradually simplifying the administrative regulation of business. Some of the most recent simplifications included a reduction in the time required for registering a new legal entity to up to three business days as well as changes to the rules and procedures relating to transferring a participation interest in a limited liability company. In response to demand from business, the state has also strengthened some legal instruments whose enforceability was very limited before. Good examples are the use of waivers, options, corporate guarantees and transaction break-up payoffs. Another change relates to permitting shareholders of joint-stock companies to make unremunerated contributions to the companies’ assets.

To enhance the protection of shareholders, Russia has also amended rules relating to corporate approvals required for major transactions and interested party transactions. The amendments provide for a more detailed and flexible regulatory regime which addresses a number of practical issues. In order to mitigate the risks of groundless challenges to such transactions, the new regulation limits the potential claimants eligible to launch such a challenge, to shareholders holding at least 1% of the votes. Also, now the challenging party does not need to prove any damage; the fact that an approval for a transaction is absent constitutes grounds for invalidation.

Creating a more comfortable environment is not limited only to substantive law; procedural law regulations are also being improved. For example, a new law on arbitration has been adopted that contains a number of very important innovations; in particular, the arbitrability of certain corporate disputes is acknowledged. Also, to ensure consistency in applying the new legal instruments and concepts as well as to promote the uniform interpretation of the law, the higher courts, while developing case law practice, now issue guidelines on using and interpreting the new legal instruments for further use by lawyers and lower courts.

Russian versus international law

The lack of flexibility and the excessively imperative tone of the Russian legal system has often made it more difficult for investors to use some of the institutions and legal instruments that are available in other jurisdictions. This was a source of criticism. It was also a reason why investors, and some Russian companies, tried to move to foreign jurisdictions, have their contracts regulated by foreign law and have their disputes resolved by non-Russian courts.

However, using foreign law and foreign arbitral tribunals (or foreign state courts) is not always justified, as such disputes are expensive and involve lengthy procedures in the dispute resolution stage itself and during the decision enforcement process.

To address this, Russia has launched a reform of civil legislation and, as a result, extensive amendments are being made to the Russian Civil Code and a number of other laws. The focus of the changes has been the introduction of legal mechanisms and tools that offer similar protection to Russian law deals as those structured under foreign law. For example, representations and indemnities were introduced. Additionally, the approach to interpreting conditions precedent was changed; pre-contractual negotiations are now regulated and a mechanism of payment by escrow has been introduced. The new legal instruments are not identical but are fairly similar to foreign legal provisions. Despite the fact that such legal instruments are fairly new, the number of Russian law transactions has already been growing.

New legal instruments available under Russian law

Below, we briefly describe key innovative legal instruments that can be used in M&A transactions under Russian law.

Representations

Among recent amendments to the Civil Code, the equivalent of representations and warranties was introduced, defined as ‘representations as to circumstances’. However, in Russian law representations, no distinction is made between representations and warranties. According to the Civil Code, breaching representations evokes an obligation to compensate a counterparty for losses or pay a penalty. Moreover, the counterparty may repudiate the contract if there is a breach of representations that is significant to the counterparty. As a general rule, liability applies irrespective of fault, i.e. irrespective of whether the party knew that such representations were false.

Indemnities

Before the reform, Russian law did not recognise the concept of indemnity, which is widely used in international M&A transactions. Now Russian law allows the parties to establish in a contract that one party has an obligation to the other party for the other party's property loss which arises as a consequence of specified circumstances, but is not connected to any breach of obligations. If a contract is treated as invalid or not having been concluded, this does not terminate an indemnity obligation.

Conditions precedent

A condition precedent is an event or state of affairs that is required before a transaction is completed. If such conditions are not met, the transaction is terminated. Previously, the concept of condition precedent had a limited effect in Russian law; in particular, such conditions can not depend on the will of the parties. Therefore, a condition to obtain a consent of the board of directors or of a general meeting of shareholders as a condition precedent was unenforceable in practice. Now, the law directly provides that the parties may stipulate that obligations are to be met by way of certain actions being performed or not performed, or if circumstances occur that are fully dependent on the will of the parties.

Bad-faith negotiations

The negotiation process is now regulated by law. In particular, the law apportions the costs of negotiations in the event a party enters into negotiations without an intent to conclude a contract. Providing false information or terminating negotiations without reasonable grounds is now treated as bad-faith behaviour. The party negotiating in bad faith must reimburse the losses caused by its behaviour. What is especially noteworthy is the obligation established by the law not to disclose and not to use confidential information received during negotiations in an improper manner for one’s own purposes. Also, the law stipulates that losses must be reimbursed if this obligation is violated.

Escrow account contract

The mechanism of payment by escrow is also widely used in international M&A transactions. The main purpose is to ensure that neither party can, at the same time, hold shares and the money transferred as payment for shares. The new escrow account mechanisms introduced into Russian law will ensure flexibility when determining the terms and conditions of settlements, including with regard to M&A transactions.

READ MORE

READ LESS


FBK Legal - Corporate/M&A

-

Band 1

第一等

Commentary from the Chambers Europe guide

Basic facts about the department
- 2 partners
- 22 other qualified lawyers

What the team is known for Advancing to the top tier in our mid-market ranking, the team provides transactional and general advisory assistance. Well known for advising on large-scale deals, including due diligence. Also assists clients with day-to-day general corporate issues, assisting local as well as significant international clients. The firm has recently become a member of Grant Thornton International.

Strengths "I appreciate that the lawyers are available either in person or on the phone at any time."

"Client-oriented, efficient and structured."

Work highlights Represented RTI Group in the USD74 million acquisition of Kronshtadt Group.

Acted for Central Geological Company on its acquisition of an oil company.

Advised CRRC Corporation on establishing a joint venture with Russian investors.

Significant clients Actavis, Belvedere, Fanuc, Ranbaxy, Roland Music.

Notable practitioners

Practice head Alexander Ermolenko provides Russian law advisory and transactional assistance. Clients appreciate his responsiveness and describe him as "easy to deal with."

Department profile by FBK Legal

Department profile not yet provided by FBK Legal. Please see their firm profile.

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

No Content Provided


Monastyrsky, Zyuba, Stepanov & Partners - Corporate/M&A

-

Band 1

第一等

Commentary from the Chambers Europe guide

Basic facts about the department
- 3 partners
- 18 other qualified lawyers

What the team is known for Highly regarded team at a litigation-focused firm that assists with M&A, joint venture and general corporate matters in mid-market transactions. Advises significant Russian companies from the heavy industry and natural resources sectors as well as a variety of other industries. Also acts for a number of international clients.

Work highlights Represented the shareholders of Opus Group in the sale of Opus to Beaulieu International Group.

Significant clients Forum Properties, Gerald Metals, Izurium Capital Management, Mangazeya, Uralvagonzavod.

Notable practitioners

Mikhail Motrich assists Russian and international clients with transactions, day-to-day corporate issues and also has practical experience of advising on an establishment of cross-border joint ventures.

Department profile by Monastyrsky, Zyuba, Stepanov & Partners

Department profile not yet provided by Monastyrsky, Zyuba, Stepanov & Partners. Please see their firm profile.

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

No Content Provided


Vegas Lex - Corporate/M&A

-

Band 1

第一等

Commentary from the Chambers Europe guide

Basic facts about the department
- 3 partners
- 21 other qualified lawyers

What the team is known for Active domestic firm visible on mid-sized M&A deals and joint venture projects. Advises solid domestic and international clients, including Chinese and Japanese corporate names. Represents a core client base of pharmaceutical, financial and real estate companies and is also recognised for its expertise of infrastructural projects. The firm is active across regions in Russia and has offices in Moscow, Volgograd and Krasnodar.

Strengths "They are always in touch, ready to help their clients 24/7."

"The lawyers are deeply involved in the project and have excellent attention to detail."

Work highlights Advised Russian Post on establishing Post Bank.

Acted for Yugoria on its sale of Yugoria-Med to the AlfaStrakhovanie Group.

Significant clients Gan & Lee Pharmaceutical, Rompharm, Sojitz Corporation, Sberbank Capital.

Notable practitioners

Managing partner Alexander Sitnikov is an experienced, versatile lawyer assisting clients with M&A, joint venture and restructuring instructions. "He brings his enthusiasm and expertise as well as his deep knowledge," a client reports.

Department profile by Vegas Lex

Department profile not yet provided by Vegas Lex. Please see their firm profile.

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

No Content Provided


Lecap - Corporate/M&A

-

Band 2

第二等

Commentary from the Chambers Europe guide

Basic facts about the department
- 4 partners
- 18 other qualified lawyers

What the team is known for Focuses on Russian law advisory issues, corporate restructuring and governance. Also assists clients with transactional mandates. Has a core client base of large Russian real estate and construction companies and also represents domestic financial services providers.

Strengths "They are diligent."

"Attentive to the client."

Work highlights Advised bank24.ru on its acquisition by Otkritie.

Assisted Sistema with corporate restructuring of several of its real estate companies.

Significant clients Donstroy, Kazkommertsbank, O1 Group, Sollers.

Notable practitioners

Roman Belenkov is praised for his "very good practical knowledge" of transactional matters. He provides Russian law assistance to a broad selection of domestic clients.

Department profile by Lecap

Department profile not yet provided by Lecap. Please see their firm profile.

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

No Content Provided


Lidings - Corporate/M&A

-

Band 2

第二等

Commentary from the Chambers Europe guide

Basic facts about the department
- 3 partners
- 9 other qualified lawyers

What the team is known for Strong advisory firm focusing on corporate governance, corporate structuring and Russian law issues, advising a range of international Asian and European clients. Also assists notable corporate Russian names. Active on projects aimed at establishing local production by foreign companies.

Strengths "Able to offer sharp legal advice that is also business savvy."

Work highlights Advised Gruma on corporate restructuring of its Russian operations and establishing production at a special economic zone in Stupino.

Acted for Skywind on a potential acquisition of a Russian airline.

Significant clients Agrowill, Beijing Automotive Industry Company, INEOS, Lupin, Sanofi.

Notable practitioners

Andrey Zelenin provides Russian law advice to a broad range of international clients as well as large domestic companies. Sources describe him as "very focused, very good at explaining things." A client adds: "He can be reached on the phone any time of day to answer any question."

Department profile by Lidings

Department profile not yet provided by Lidings. Please see their firm profile.

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

No Content Provided


Nektorov, Saveliev & Partners Law Firm - Corporate/M&A

-

Band 2

第二等

Commentary from the Chambers Europe guide

Basic facts about the department
- 3 partners
- 4 other qualified lawyers

What the team is known for Active on corporate restructuring and governance matters, representing significant Russian and international clients, particularly the Chinese investors. Also provides Russian law support in transactions. Represents clients from a broad range of industries. Particularly active in the e-commerce sector.

Strengths "Client-oriented and business-minded lawyers."

"Responsible, provides quick and timely feedback, always meet deadlines and are attentive to detail."

Work highlights Assisted IBS Group Holding with its complex corporate restructuring.

Significant clients Abrau-Durso, Innovestor, Ozon.ru, Uralkali, Zoomlion.

Notable practitioners

Alexander Nektorov offers corporate advisory assistance to clients. "He has a wonderful ability to look at the problem from the different angles and helps to make well-balanced and considered decisions," a client reports. He principally acts for significant private and state-owned Russian clients.

Department profile by Nektorov, Saveliev & Partners Law Firm

Department profile not yet provided by Nektorov, Saveliev & Partners Law Firm . Please see their firm profile.

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

No Content Provided


Pepeliaev Group - Corporate/M&A

-

Band 2

第二等

Commentary from the Chambers Europe guide

Basic facts about the department
- 4 partners
- 22 other qualified lawyers

What the team is known for Remarkable advisory-focused firm acting for a broad roster of blue-chip international clients as well as notable Russian corporates. Provides due diligence reviews and is particularly active in the real estate and life sciences sectors. Also offers corporate governance advice and maintains a transactional practice. Stands out for its excellent tax capability.

Strengths "I think they're down to earth. They understand the questions we want them to deal with and they deliver on quality."

"Very client and solution-oriented lawyers."

Work highlights Advised Harry’s on the sale of its subsidiary Kondi for RUB400 million.

Significant clients Procter & Gamble, GlaxoSmithKline, JTI, Nike, Volkswagen Finance.

Notable practitioners

Vladimir Sokov and Ilya Bolotnov are key client contacts.

Department profile by Pepeliaev Group

This is one of the key practices within Pepeliaev Group and one of the best M&A teams on the Russian market. 

The practice includes 4 partners and 22 lawyers. 

Our lawyers have experience of working in leading international law firms, including Magic Circle. 

They have assisted in more than  50 transactions worth between USD 10 million and 4 billion. 

Key services 

  • Preparing and conducting M&A transactions
  • Due Diligence
  • Providing legal support in reorganising and restructuring of businesses and their assets
  • Analysing the efficiency and transparency of corporate management structures, developing new management and ownership models
  • Providing legal support for share issues and transactions with securities
  • Providing legal support for various aspects of business in relation to corporate legislation
  • Providing support to clients at all stages of investment projects

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

No Content Provided


Capital Legal Services International LLC - Corporate/M&A

-

Band 3

第三等

Commentary from the Chambers Europe guide

Basic facts about the department
- 2 partners
- 24 other qualified lawyers

What the team is known for Advises international companies active in Russia on corporate matters. Represents a broad client base of European and Chinese companies and also assists some notable Russian names. Works in co-operation with international law firms.

Strengths "Their approach was always pragmatic, solution-driven with hands-on experience of how certain processes operate in Russia."

"Helpful and timely advice."

Work highlights Advised a Scandinavian sawmill and furniture manufacturer on corporate law matters and a cross-border M&A deal.

Significant clients Ansaldo Energia, Lifting Machines, Messe München, Metsä Group, Paroc Group.

Notable practitioners

Pavel Karpunin is a key client contact.

Department profile by Capital Legal Services International LLC

Department profile not yet provided by Capital Legal Services International LLC. Please see their firm profile.

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

No Content Provided


Infralex law firm - Corporate/M&A

-

Band 3

第三等

Commentary from the Chambers Europe guide

Basic facts about the department
- 2 partners
- 9 other qualified lawyers

What the team is known for A new addition to the mid-market rankings this year, this domestic firm acts on a broad range of corporate and transactional matters. Provides domestic law support to cross-border transactions, often acting as local co-counsel with international law firms. Offers assistance with restructuring and corporate governance matters.

Strengths "They had great attention to detail, were robust in negotiations but also displayed a sensible commercial approach."

"What I like about them is that they're very quick; they're always on the spot and their English language skills are ideal."

Work highlights Advised on the Russian law aspects of the USD1 billion sale of SANORS's assets in Samara to Rosneft.

Significant clients AM-Building Centre, Novaya Perevozochnaya, Sberbank Capital, United Aircraft Corporation.

Notable practitioners

Artem Kukin and Yulia Eremenko are key contacts for clients.

Department profile by Infralex law firm

Department profile not yet provided by Infralex law firm. Please see their firm profile.

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

No Content Provided


Ivanyan & Partners - Corporate/M&A

-

Band 3

第三等

Commentary from the Chambers Europe guide

Basic facts about the department
- 3 partners
- 17 other qualified lawyers

What the team is known for Offers Russian law support on large-scale M&A projects, particularly on transactions in the energy market. Also advises on corporate governance and restructuring matters across a variety of industries. Represents high net worth individuals.

Strengths "They found efficient solutions even in complicated situations. Their advice is not only practical but is well adapted to our business objectives."

Work highlights In co-operation with Cleary Gottlieb, advised the selling shareholder of SIBUR Holding on the disposal of a 10% stake in SIBUR Holding to Sinopec.

Significant clients Crudex, Morion.

Notable practitioners

Managing partner Khristofor Ivanyan advises on a wide array of corporate governance matters, including cross-border restructuring, de-offshorisation issues and Russian law aspects of mergers and joint ventures. "Khristofor is always available and capable to provide strategic advice on complicated contentious and non-contentious matters," a client reports.

Practice head Maria Miroshnikova is described as an "effective and business-oriented transactional lawyer." She acts for major domestic clients in the oil and gas and petrochemicals industry, leading transactions and advising on complex restructuring projects. One source describes her as "extremely hard-working, very responsive and client-oriented."

Department profile by Ivanyan & Partners

Department profile not yet provided by Ivanyan & Partners. Please see their firm profile.

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

No Content Provided


Jus Aureum - Corporate/M&A

-

Band 3

第三等

Commentary from the Chambers Europe guide

Basic facts about the department
- 5 partners
- 9 other qualified lawyers

What the team is known for Enters the rankings due to strong feedback and involvement on significant transactions. Offers Russian law support on cross-border commercial projects. Also recognised for its corporate advisory and transactional experience. Often works with clients from the domestic FMCG and retail sectors.

Strengths "They are very capable and commercial. They have excellent technical expertise and give clear advice."

"Practical approach and the capability to find solutions to the most complicated issues."

Significant clients Dixy Group, Victoria Group, SovInterAvtoServis.

Notable practitioners

Alexander Kobzev is a key contact for clients.

Department profile by Jus Aureum

Department profile not yet provided by Jus Aureum. Please see their firm profile.

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

No Content Provided


Liniya Prava Law Firm - Corporate/M&A

-

Band 3

第三等

Commentary from the Chambers Europe guide

Basic facts about the department
- 3 partners
- 18 other qualified lawyers

What the team is known for Well-regarded team assisting with corporate governance and day-to-day business issues, as well as acting on domestic transactions. Represents a client base of well-known Russian brands from a broad range of industries.

Strengths "Custom-tailored service approach and attention to detail."

Work highlights Advised MTS on its USD217.4 million acquisition of NVision.

Significant clients CentrObuv, MoneyMan.

Notable practitioners

Managing partner Andrey Novakovskiy is an experienced partner who assists clients with strategic corporate and transactional matters. "He is the heart of the firm: a good specialist with good experience," a source reports.

Department profile by Liniya Prava Law Firm

LP Law Firm’s M&A, Сorporate and Commercial Law practice is recognized on the Russian legal market by an ability to grasp the full range of corporate and commercial law issues, providing a top-notch quality product to a client.

Key points and facts:

  • Experience – almost two decades of successful track record
  • Innovation – developing practice, using new legal instruments
  • Geography – representing major Russian corporations, as well as clients from Asia, Europe, Middle East and USA
  • Scale – advising Fortune 500 Global, LSE, NYSE, HKEX, SSE, SZSE and JPX listed companies, as well as SMEs
  • Scope of services – both transactional work and ongoing legal support of company’s life cycle

Services:

  • Share and asset deals
  • Joint ventures
  • Transactional documentation (SPA, SHA, JVA, LPA, Option agreements, etc.)
  • Legal due diligence
  • Corporate and tax structuring
  • Antitrust and strategic investment clearance
  • Post-M&A business integration
  • Shareholders’ rights protection
  • Corporate governance
  • Corporate restructuring
  • Privatization
  • Commercial contracts
  • Regulatory matters
  • Procurements and compliance
  • Establishing business in Russia

Recent team news:

Vadim Konyushkevich, previously heading China desk in LIDINGS Law firm strengthened the practice as a partner in 2016.

Vadim is a recognized expert in supporting foreign business in Russia, having advised such companies as: CDB, CITIC, Emerson, Flydubai, Geely, GM, Huawei, Mitsui, Mizuho Bank, Sanofi, Şişecam Flat Glass, Turkish airlines, Yokogawa, ZTE, 3M and others.

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

LP team’s recent international experience:

  • ARC International – prepared investment agreement with the regional government for glass manufacturing plant construction in Kaliningrad with an overall investment of USD 100m
  • China Development Bank – advised on USD 650m aircraft financial deal involving lease of 16 Airbus A320 and A321 to Aeroflot Russian Airlines
  • China Development Bank – advised  on subordinated loan financing arranged by Vnesheconombank for construction of a polymetallic ore mining and refining plant in Republic of Tyva
  • ChinaNetCenter – advised a major Chinese IT company on JV structuring through acquisition of a controlling stake in a leading Russian content delivery networks provider
  • Dirui Industrial – advised a global supplier of laboratory solutions on acquisition of a majority stake in a leading Russian pharmaceutical and medical devices producer
  • Gruma – advised the world’s largest corn flour and tortillas producer on corporate restructuring and manufacturing localization in special economic zone in Moscow region
  • Japanese Sogo Shosha – advised one of the largest Japanese trading companies on USD 470m acquisition of a global automotive components production holding
  • Anhui Anli Material Technology – full legal support of acquisition by a top 10 Chinese artificial leather producer of a leather manufacturing facility in Moscow Region
  • MTS Group – advised a major Russian telecom company in acquisition of a leading system integrator NVision Group in 10 jurisdictions, including India, Pakistan, Cyprus, Czech Republic, Kazakhstan, Belarus
  • Hals Development – advised a major Russian developer under English, Cyprus and Russian law in acquisition of a Cyprus SPV for structuring investment into construction project

YUST Law Firm - Corporate/M&A

-

Band 3

第三等

Commentary from the Chambers Europe guide

Basic facts about the department
- 4 partners
- 18 other qualified lawyers

What the team is known for Enters the rankings this year thanks to its increased market visibility. Offers clients domestic law support in transactional and day-to-day corporate governance matters. Assists clients with due diligence, corporate advisory issues and also offers corporate restructuring support.

Strengths "They look at an issue from different perspectives and sometimes offer original and non-standard options."

"Efficient, thorough, practical and very, very responsive."

Work highlights Assisted Rosgeologia with large-scale corporate restructuring.

Advised Achimgaz on its preparation to take part in the development of a gas field in Novy Urengoy.

Significant clients Asseco Poland, Hypothekenbank Frankfurt, Roscosmos, Samsung, X5 Retail Group.

Notable practitioners

Anna Kotova-Smolenskaya and Roman Cherlenyak are key contacts for clients.

Department profile by YUST Law Firm

Department profile not yet provided by YUST Law Firm. Please see their firm profile.

No Content Provided

Industries

  • {{industry.name}}

No Content Provided

Clients

  • {{client.name}}

No Content Provided

No Content Provided


Overview

Russia continues to reform its legislation by reducing the imperative tone of its regulations and putting emphasis on enhancing the protection of business investments. We hope that this reform will have a positive impact on Russian business as a whole and M&A transactions in particular.

In recent years, Russia has been gradually simplifying the administrative regulation of business. Some of the most recent simplifications included a reduction in the time required for registering a new legal entity to up to three business days as well as changes to the rules and procedures relating to transferring a participation interest in a limited liability company. In response to demand from business, the state has also strengthened some legal instruments whose enforceability was very limited before. Good examples are the use of waivers, options, corporate guarantees and transaction break-up payoffs. Another change relates to permitting shareholders of joint-stock companies to make unremunerated contributions to the companies’ assets.

To enhance the protection of shareholders, Russia has also amended rules relating to corporate approvals required for major transactions and interested party transactions. The amendments provide for a more detailed and flexible regulatory regime which addresses a number of practical issues. In order to mitigate the risks of groundless challenges to such transactions, the new regulation limits the potential claimants eligible to launch such a challenge, to shareholders holding at least 1% of the votes. Also, now the challenging party does not need to prove any damage; the fact that an approval for a transaction is absent constitutes grounds for invalidation.

Creating a more comfortable environment is not limited only to substantive law; procedural law regulations are also being improved. For example, a new law on arbitration has been adopted that contains a number of very important innovations; in particular, the arbitrability of certain corporate disputes is acknowledged. Also, to ensure consistency in applying the new legal instruments and concepts as well as to promote the uniform interpretation of the law, the higher courts, while developing case law practice, now issue guidelines on using and interpreting the new legal instruments for further use by lawyers and lower courts.

Russian versus international law

The lack of flexibility and the excessively imperative tone of the Russian legal system has often made it more difficult for investors to use some of the institutions and legal instruments that are available in other jurisdictions. This was a source of criticism. It was also a reason why investors, and some Russian companies, tried to move to foreign jurisdictions, have their contracts regulated by foreign law and have their disputes resolved by non-Russian courts.

However, using foreign law and foreign arbitral tribunals (or foreign state courts) is not always justified, as such disputes are expensive and involve lengthy procedures in the dispute resolution stage itself and during the decision enforcement process.

To address this, Russia has launched a reform of civil legislation and, as a result, extensive amendments are being made to the Russian Civil Code and a number of other laws. The focus of the changes has been the introduction of legal mechanisms and tools that offer similar protection to Russian law deals as those structured under foreign law. For example, representations and indemnities were introduced. Additionally, the approach to interpreting conditions precedent was changed; pre-contractual negotiations are now regulated and a mechanism of payment by escrow has been introduced. The new legal instruments are not identical but are fairly similar to foreign legal provisions. Despite the fact that such legal instruments are fairly new, the number of Russian law transactions has already been growing.

New legal instruments available under Russian law

Below, we briefly describe key innovative legal instruments that can be used in M&A transactions under Russian law.

Representations

Among recent amendments to the Civil Code, the equivalent of representations and warranties was introduced, defined as ‘representations as to circumstances’. However, in Russian law representations, no distinction is made between representations and warranties. According to the Civil Code, breaching representations evokes an obligation to compensate a counterparty for losses or pay a penalty. Moreover, the counterparty may repudiate the contract if there is a breach of representations that is significant to the counterparty. As a general rule, liability applies irrespective of fault, i.e. irrespective of whether the party knew that such representations were false.

Indemnities

Before the reform, Russian law did not recognise the concept of indemnity, which is widely used in international M&A transactions. Now Russian law allows the parties to establish in a contract that one party has an obligation to the other party for the other party's property loss which arises as a consequence of specified circumstances, but is not connected to any breach of obligations. If a contract is treated as invalid or not having been concluded, this does not terminate an indemnity obligation.

Conditions precedent

A condition precedent is an event or state of affairs that is required before a transaction is completed. If such conditions are not met, the transaction is terminated. Previously, the concept of condition precedent had a limited effect in Russian law; in particular, such conditions can not depend on the will of the parties. Therefore, a condition to obtain a consent of the board of directors or of a general meeting of shareholders as a condition precedent was unenforceable in practice. Now, the law directly provides that the parties may stipulate that obligations are to be met by way of certain actions being performed or not performed, or if circumstances occur that are fully dependent on the will of the parties.

Bad-faith negotiations

The negotiation process is now regulated by law. In particular, the law apportions the costs of negotiations in the event a party enters into negotiations without an intent to conclude a contract. Providing false information or terminating negotiations without reasonable grounds is now treated as bad-faith behaviour. The party negotiating in bad faith must reimburse the losses caused by its behaviour. What is especially noteworthy is the obligation established by the law not to disclose and not to use confidential information received during negotiations in an improper manner for one’s own purposes. Also, the law stipulates that losses must be reimbursed if this obligation is violated.

Escrow account contract

The mechanism of payment by escrow is also widely used in international M&A transactions. The main purpose is to ensure that neither party can, at the same time, hold shares and the money transferred as payment for shares. The new escrow account mechanisms introduced into Russian law will ensure flexibility when determining the terms and conditions of settlements, including with regard to M&A transactions.

READ MORE

READ LESS

Band 1

Alexander Sitnikov

Vegas Lex

From the Chambers Europe guide

Managing partner Alexander Sitnikov is an experienced, versatile lawyer assisting clients with M&A, joint venture and restructuring instructions. "He brings his enthusiasm and expertise as well as his deep knowledge," a client reports.

^ Return to Top

Band 2

TRUBOR law firm

From the Chambers Europe guide

Previously of Vegas Lex, Yuri Bortnikov co-established TRUBOR law firm in late 2016. He is a well-regarded corporate lawyer who "decisively solves problems," according to clients.

^ Return to Top

Band 2

Monastyrsky, Zyuba, Stepanov & Partners

From the Chambers Europe guide

Mikhail Motrich assists Russian and international clients with transactions, day-to-day corporate issues and also has practical experience of advising on an establishment of cross-border joint ventures.

^ Return to Top

Band 2

Alexander Nektorov

Nektorov, Saveliev & Partners Law Firm

From the Chambers Europe guide

Alexander Nektorov offers corporate advisory assistance to clients. "He has a wonderful ability to look at the problem from the different angles and helps to make well-balanced and considered decisions," a client reports. He principally acts for significant private and state-owned Russian clients.

^ Return to Top

Band 2

Lidings

From the Chambers Europe guide

Andrey Zelenin provides Russian law advice to a broad range of international clients as well as large domestic companies. Sources describe him as "very focused, very good at explaining things." A client adds: "He can be reached on the phone any time of day to answer any question."

^ Return to Top

Band 3

Lecap

From the Chambers Europe guide

Roman Belenkov is praised for his "very good practical knowledge" of transactional matters. He provides Russian law assistance to a broad selection of domestic clients.

^ Return to Top

Band 3

Branan Legal

From the Chambers Europe guide

Maxim Bunyakin is the managing partner of Branan. "He has a deep understanding of corporate law, an analytical mind and excellent communication skills," a client says. His focus is corporate restructuring and transactional deals where he often acts for clients from the domestic energy market.

^ Return to Top

Band 3

Alexander Ermolenko

FBK Legal

From the Chambers Europe guide

Practice head Alexander Ermolenko provides Russian law advisory and transactional assistance. Clients appreciate his responsiveness and describe him as "easy to deal with."

^ Return to Top

Band 3

Khristofor Ivanyan

Ivanyan & Partners

From the Chambers Europe guide

Managing partner Khristofor Ivanyan advises on a wide array of corporate governance matters, including cross-border restructuring, de-offshorisation issues and Russian law aspects of mergers and joint ventures. "Khristofor is always available and capable to provide strategic advice on complicated contentious and non-contentious matters," a client reports.

^ Return to Top

Band 3

Maria Miroshnikova

Ivanyan & Partners

From the Chambers Europe guide

Practice head Maria Miroshnikova is described as an "effective and business-oriented transactional lawyer." She acts for major domestic clients in the oil and gas and petrochemicals industry, leading transactions and advising on complex restructuring projects. One source describes her as "extremely hard-working, very responsive and client-oriented." 

^ Return to Top

Band 3

Andrey Novakovskiy

Liniya Prava Law Firm

From the Chambers Europe guide

Managing partner Andrey Novakovskiy is an experienced partner who assists clients with strategic corporate and transactional matters. "He is the heart of the firm: a good specialist with good experience," a source reports.

^ Return to Top

Band 3

Anton Samokhvalov

KIAP

From the Chambers Europe guide

Practice head Anton Samokhvalov of KIAP assists clients with transaction structuring and support as well as corporate restructuring mandates. "Anton is very responsive, displays exemplary behaviour in every aspect of his work and always keeps his word under all circumstances," a client says. 

^ Return to Top

Up and Coming

Zhanna Tomashevskaya

Tomashevskaya&Partners

From the Chambers Europe guide

Zhanna Tomashevskaya established the firm Tomashevskaya&Partners in October 2016. Interviewees praise her approach, stating: "She's very pragmatic in how she assesses the risks and what she's proposing."

^ Return to Top