July novels of civil law

At the beginning of July, a number of changes were made to the civil legislation. Thus, starting from August 1, 2016, the liability for non-fulfillment of the monetary obligation in the form of interest accrual for the use of other people’s money under Article 395 of the Civil Code of the Russian Federation will be determined by the key rate of the Bank of Russia, which from June 14, 2016 is 10.5% per annum. In the current version of the standard, the interest rate is linked to the average bank interest rates on deposits of individuals existing in the place of residence (location) of the creditor. This wording initially appeared in the current version of the Civil Code of the Russian Federation quite unexpectedly for the legal community, which closely followed the process of civil law reform, and has been repeatedly criticized by both lawyers and market participants. It seems that the new version of this article, as compared to the previous one, will contribute more to the discipline of debtors.

The amendments also affected the norm of Article 317.1 of the Civil Code of the Russian Federation regulating the accrual of interest on the amount of debt not related to the debtor’s delay (“legitimate interest”): starting from August 1, 2016 their amount will also be determined not by the refinancing rate, but by the key rate of the Bank of Russia.

In addition, the legislation introduces a new legal form of legal entity – a “public-law company”. Such a form is already mentioned in the Civil Code of the Russian Federation (par. 11, para. 3, Art. 50), however, the legislator has proposed a detailed legal regulation of public-law companies only now. A public-law company is recognized as a unitary non-commercial organization established by the Russian Federation, vested with functions and powers of public-law nature and carrying out its activities in the interests of the state and society. The main purpose of the adoption of the law regulating the status of public-law companies is to propose uniform regulation for state corporations, companies and societies with state participation. It appears that in the near future many of them will be reorganized into public law companies. The law also addresses, among other things, the issues of investing temporarily available funds of a public-law company. Thus, the list of permitted objects of investment of these funds is to be determined by the Government of the Russian Federation.

The law will come into force on 02 October 2016.

See:

Federal Law No. 236-FZ of 03.07.2016 “On Public Law Companies in the Russian Federation and on Amendments to Certain Legislative Acts of the Russian Federation

Federal Law of 03.07.2016 N 315-FZ “On Amendments to Part One of the Civil Code of the Russian Federation and Certain Legislative Acts of the Russian Federation.