Normative and organizational novations in registration Mr. Vitaly Kolesnikov Head of Registration of taxpayers Direct

1. Normative and organizational novations in registration • Mr. VitalyKolesnikov • Head of Registration of taxpayers Directorate of the FTS of Russia • Rio de Janeiro • 2014

2. Creation of Unified State Register of Legal Entities (USRLE) Until July 1, 2002 • over 4,5 thds. registration authorities • absence of single registration rules • time needed for registration is 30 days or more • absence of unified forms of documents proving registration • Absence of a single resource dedicated to registered legal entities After July 1, 2002 • registration is conducted by tax authorities • unified rules for registration • maximum time needed for registration is 5 working days • unified forms of documents proving registration • USRLE has been created • data from USRLE (except for personal data) is available for public • a «one stop shop» principle has bee implemented

3. Registration of legal entities with tax authorities (foundations) USRLE (information about registration of legal entities о in tax authorities) 2003 год – 1,4 mln. 2013 год – 4,5 mln. legal entities Russian State Register Information about property owners (land) Authority for Road Traffic Safety Federal data Base USRT (ITN) Information about vehicles owners Other registry authorities Information provided by legal entity (approx. 95% - about separate unit establishing)

4. Business process – Registration of legal entity (5 working-days) Checking if the documents filed along with application are sufficient and correct Reception and registration of documents (also in electronic form) Checking if there are any entries about disqualification with regard to directors (for legal entities) Verification of fidelity of provided information, including address Verification of passport data for individuals(source of information – Federal Migration Service) Verification of information about notaries who certified the applicants’ signatures Verification of commercial names of legal entities Checking if there is no injunctions for registration Verifying if the name of legal entity matches with Olympic and (or) Paralympic symbols Input of data fromthe application Checking if there is no objections of parties of interest Protocol DECISION MAKINGwith regard to checks results State registration. Information input to USRLE/USRIE Declining registration or SENDING THE DOCUMENTS TO THE APPLICANTCertificate, record or decision to decline

5. Digital signature There are 91 Certifying centers in 332 cities of Russia accredited in the authorized state body Price from 30$ Government services portal Websites of governmental bodies to acquire a key and a certificate it is required to present an ID open registries of certificates FTS of Russia website certificate can be nullified State registration services Control nullified certificates Reporting

6. E-Documents It is possible to receive copies of documents and information from register in electronic form upon the request Are stored in registry authority (USRLE) Federal state bodies @ Courts @ Record sheet, certificates Securities market @ Record sheet @ Insurance and credit organizations @ Electronic trade platforms @ Claimants and participants of civil relations @ Authorized bodies of other countries @ Other authorities

7. Legally set basis for declining registration Registration upon application Limited number of basis for rejecting the registration: Since 2002 1. Failure to file documents prescribed by the federal law 2. Misfiling (filing with a wrong registration authority ) 3. If USRLE contains an entry that the legal entity is being liquidated ______________________________________________________________________________________________________________________________________ Since2009 4. The filed documents are inconsistent with notarial forms 5. An application was signed by an unauthorized person 6. If participants withdraw from an LLC leaving no participants therein 7. The name of the legal entity is inconsistent with federal law 8. The required data is not validated by other authorities taking part in registration procedure Since July 2013 9. Absence of data registration in authority on transfer of assets at liquidation of unitary enterprise 10. The ID information stated in the application is inconsistent with data provided by authorities issuing such IDs 11. The registration authority received written petitions from individuals objecting from making entries about them into USRLE 12. The registration authority receives (before making entry into USRLE) a court or a court bailiff’s act containing an injunction from registration 13. An individual – settler (participant) of a legal entity – is deprived of a right to do business by a court judgment (for the duration of this judgment) 14. If a person with full authority or an individual entrepreneur – governor of a legal entity - is a disqualified person (for the duration of disqualification) 15. The registration authority has hard copy information that the information about address (residence) of a legal entity is incorrect

8. Negative implications of presentation of uncertain (misleading) informationwhen registering Preventative Individual • Criminal liability • The Criminal Code of the Russian Federation • article 170.1. • article171 • article173.1. • article173.2. • Legal entity liquidation Bringing information to unspecified persons through e-services Administrative liability Administrative Offences Code of the Russian Federation article 14.1. sub-article 1. fine article14.25. sub-article3. fine sub-article4. fine, disqualifying • Input in USRLE information about information uncertainty • Tax Code • Russian Federation • article 116 In2013 Number of protocols of bringing to administrative liability - more than 20 thousand Register of disqualified persons contains information about 1722 persons (includingpursuanttoArticle 14.25 ofAdministrativeCode - disqualified834 persons)

9. USRLE Statistics Limited liability companies- approx. 3,7 millions, + otherforms of legal entity’s incorporation 916,5 thousands: • Production co-operative (31,5) othernon-profit organizations (75,6) • Joint stock companies(32,2) • State and municipal organizations (303,3) • Limited and unlimited • partnerships (831) • companies, registered (214,5) • Limited companies(131) • Double liability companies (1,2) • consumerco-operative(81,2) • Unitary enterprise (25,5) • Other commercial enterprises (19,7) From all registered legal entities in 145 628 foreign companies or individuals are founders + Registered with tax authorities: 12 872 foreign companies (relative to activities through subdivisions, and under another Tax Code provisions) 2 187 409foreign citizens More than 1300 Mutual investment funds operate all over Russian Federation

10. Ways to close a business.Dynamics of taking non-operating legal entities off the register upon the decisions of tax authorities thds. Liquidation Bankruptcy Reorganization Other grounds Taking non-operating legal entities off the USRLE upon the decisions of tax authorities *non-operating legal entities –entities that during the year neither file accounting reports with tax authorities nor make transactions on accounts(Article 21.1 of Federal Law “On state registration of legal entities and individual entrepreneurs” dated 08.08.2001 №129-ФЗ

11. USRLE contentdocuments and information on the legal entity • Originals or notary order copies of constituent documents of the legal entity; • Company Name: in Russian full / short / corporate • + one of the languages ​​of the peoples of the Russian Federation and (or) foreign language (if specified in the constituent documents); • TIN / taxregistration event codeand date of registration with tax authorities; • Information on the legal form; • Codes of economic activities; • Address; • Information about the founders (participants); • The authorized capital (equity capital, the authorized fund, shares); • Information about licenses; • Information on branches and representative offices; • Methods of formation (termination); • Date of registration of changes and information on Succession; • Information on registration as an insurer by the Pension fund and the Social security fund; • Information about the person having the right, without the power of attorney to act on behalf of the legal person: name, surname, first name, position, TIN, data of identity document; • Information about that entity, a business entity is in the process of reducing its authorized capital; • Information about that entity is in the process of liquidation (reorganization); • In case if there are any changes of the information contained in USRLE, formerly included information remains stored

12. FTS official web-pageState Registration Openness principal is a basic value of democracy. This approach implies the creation of transparent mechanisms for governmental bodies operation, and feedback tools which enable the citizens to interact with state authorities

13. FTS of Russia e-services Open government data – information regarding state and local authorities operations posted in Internet as bulk data in the format providing its automated processing for the purposes of repeated use without manual adjustment (machine readable format) and implying its free (without charge) use • Information about legal entities and individual entrepreneurs, documents for state registration (including state registration of amendments made into articles of incorporation of a legal entity and making changes into USRLE entries on legal entity) thereof have been filed with registration authority/64 618 902 • Information about legal entities included into USRLE (publication)/585 mln. • Addresses stated as a place of residence by several legal entities /11 347 369 • Legal entities executive bodies of which include disqualified persons /1 043 870 • Information published in «State Registration Bulletin» magazine on the prospective exclusion of non-operating legal entities from USRLE • Information on legal entities that are impossible to communicate with on the address (place of residence) stated by them and entered into the USRLE /879 058 • Information on persons, who refused to participate (be a director) in business during the court trial or in respect to which the court established that fact /318 801 Number of calls to a service in 2013 • Messages of legal entities regarding liquidation, reorganization, charter capital reduction, acquisition of 20% charter capital of other company by LLC published in «State Registration Bulletin» magazine, and other messages of legal entities subject to publication in accordance with Russian legislation More than 31thds. attributes of access to USRLE data has been provided via Internet It is plannedtocreate NEW servicesprovidinginformationonlegalentitieswhich: - donotsubmittaxreturns- havearrearstothebudgetand - aboutindividuals - massleaders(founders)

14. Roadmap «Registration of enterprises optimization» • reduction of time needed for state registration; • reduction of number of documents filed for registration; • reduction of the number of registration actions requiring notary verification of applicant’s signature; • increase the share of e-registration; • increase availability of e-services, including e-means of notifying taxpayers which do not require to visit tax authority personally

15. Thank you for your attention!