Russian parliament considers the draft law on compulsory transformation of foreign branches and representative offices abandoned by their parent companies into limited liability companies.

The court will impose a judgement on transformation of the branch in the case of:
– refusal to use the property of the branch;
– suspension of management;
– decision on liquidation of the branch.

The preconditions to start the compulsory transformation could be:
– announcement on suspension of operations in Russia;
– announcement on dismissal of at least 1/3 of employees;
– termination or suspension of mining contracts;
– other suspension of activities.

Application on transformation shall be signed by the Russian shareholders of the foreign company (if any) or by the head of the branch or of the representative office.

During the court procedure the branch may be prohibited to alienate assets, dismiss employees, terminate contracts, etc.

The shareholders of the new LLC shall be the shareholders of the mother company.

Foreign shareholders may be banned to exercise their rights if they may hinder the activities of the LLC.
Please feel free to contact mlegal to keep safe your Russian business and assets.