New measures in view of COVID-19: Lease, business audits, licensing and bankruptcy
Russian authorities continue fighting against the consequences of the spread of coronavirus by taking various anti-crisis measures. On March 31, 2020 the State Duma approved in the third and final reading a bill amending certain legislative acts of the Russian Federation on prevention and response to emergencies[1]. The bill should enter into force immediately after it is approved by the Federation Council and signed by the President. The bill mainly focuses on how emergency measures should be introduced and their consequences. We have outlined below the main changes proposed by the bill.
Real estate lease
Landlords will have to conclude an additional agreement within 30 days of their tenant’s request for deferment of the rent required in 2020 provided lease agreements were concluded before the state of emergency was introduced. Landlords are not entitled to terminate lease agreements during the deferment period on grounds of non-payment of the rent. The Government will specify soon the terms and conditions for such deferment.
Tenants will be entitled to request a rent reduction for 2020 due to the inability to use their leased property following the introduction of the state of emergency. It should be noted, however, that the law does not provide for the landlord’s obligation to agree to the requested rent reduction, so this rule is, in our opinion, solely declaratory.
Business audit
Audits of small and medium businesses – whether they are legal entities or individual entrepreneurs – are banned from April 01, 2020 to December 31, 2020 inclusive. An exception is made for audits triggered by injurious action or risk of harm to life and public health, the occurrence of natural and man-made emergencies.
Licensing
In 2020, the Government will be able to make decisions on licensing issues, in particular:
- Specify the entities that will be able to temporarily continue operating without obtaining new licenses and permits after expiration of their licenses and permits. No liability will be imposed on these entities for operating with an expired license or permit;
- Specify the cases and conditions when professional activities requiring permits may be carried out without obtaining such permits.
Bankruptcy
The Government is entitled to introduce a moratorium on bankruptcy initiated by creditors. This means that bankruptcy petitions filed by creditors will not be examined and will be dismissed by courts. During the moratorium:
- Property foreclosures will not be allowed even in out-of-court settlements;
- Enforcement proceedings for foreclosures initiated prior to the introduction of the moratorium will be suspended although property seizure and other restrictions on the disposal of property will remain in place.
The bill once passed into a law will introduce several important changes, including in matters of public procurement, registration of medical devices, etc.
We look forward to advising you on any of the above changes, so if you have any questions or would like to discuss these points further, please feel free to write or call us.
Truly yours,
[1] https://sozd.duma.gov.ru/bill/931192-7