Risks for foreign shareholders of breaching management duties in Russia
As we have learned from publicly available acts and news, sanctions imposed in the EU, UK and certain other jurisdictions include, inter alia, restrictions on providing business and management consulting services to persons connected with Russia (including subsidiaries of foreign companies active in our jurisdiction), while the scope and exposure of such restrictions is not yet well defined.
In the meantime, we would like to caution you that current Russian civil and corporate legislation contains a number of obligations for shareholders of Russian companies that they must observe while being present in Russia regardless of their jurisdictions and foreign law restrictions in place.
15 May 2024
ALRUD experts prepared an article for the magazine AEB Quarterly
ALRUD Regulatory practice experts Boris Pribylov, Senior Associate, and Maria Yakusheva, Associate, prepared an article for the magazine AEB Quarterly on the topic: “Key changes to extended producer responsibility (EPR) legislation and their impact on business”.
Within the article Boris and Maria reviewed the reform of the extended producer responsibility which changed the regulation of goods recycling and statements on recycling results. The experts clarified, inter alia, the following amendments to the law on the extended producer responsibility:
Responsibility for disposal of packaging of goods manufactures in the Russian Federation has been shifted from manufacturers of packaged goods to packaging manufacturers;
Requirements to packaging utilizers have been formalized;
Packaging recycling standards have been approved until 2027;
A new system of regulatory acts specifying the procedures for payment of environmental charges has been developed.
Within implementation of the closed-loop economy concept there is also an act against the use of certain types of polymer goods and packaging (including some PET bottles, coffee capsules made of multicomponent material) is being actively developed due to complexities in recycling of such goods and packaging.
Boris and Maria concluded that though these changes help to significantly reduce waste storage, they still have a negative effect on business relating to increase of costs and changes in production processes.
You can read the article here.
03 April 2024
Environmental ban on packaging
On November 15, 2023 the Ministry of Industry and Trade has submitted to the authorized departments for approval a draft governmental decree (“Decree”) banning the use of polymer goods and packaging waste from which is not recyclable or inefficiently extracted. In case the draft Decree receives positive feedback, it will undergo further consideration in the Russian government and subsequently adopted.
What will be banned?
The list is not publicly available as of the current moment, and it is not clear when it will be finally adopted, but, according to press publications, the document includes a list of 23 types of packaging, 6 of which are proposed to be limited as of 2024, and the remaining 17 items — as of 2030.
Contemplated to be banned as of 2024:
translucent PET bottles of all colours, except blue, green, brown, and black (these colours preserve the consumer properties of products and increase the shelf life),
opaque PET bottles, with the exception of white containers for dairy products (where the colour has a functional purpose), as well as PET packaging made using PVC labels that interfere with recycling,
multilayer PET bottles, coffee capsules made of multicomponent materials, and plastic containers for canned food with a rolled metal lid.
Contemplated to be banned as of 2030:
multicomponent Bag-in-Box packaging,
flexible vacuum packaging doypacks, flowpacks, multilayer toothpaste tubes,
multicomponent bags in the form of a jug,
polymer sachet bags up to 80 mm,
nets for vegetables and fruits, food packaging made of expanded polystyrene, etc.
Consequences of the reform
The mentioned amendments may have** material influence** on both:
Russian manufactures of goods;
Foreign manufacturers and importers of their products to Russia both from the member and non-member states of the EAEU.
Amendments may require substantial changes in manufacturing processes and re-equipment of production lines, as well as development of new production methods. In this regard, we would recommend keeping an eye on the further development of this Decree and other requirements related to the EMR.
Aim of restrictions
Thus, the contemplated measures should stimulate the transition from opaque PET containers to transparent ones, from multilayer materials to single-layer ones, and from multicomponent to monomaterial ones, which will facilitate the processing of these materials. According to the public discussions, further reforms in this regard are underway.
The planned reform is conducted in line with the developing of the extended manufacturer's responsibility (“EMR”) system, which was adopted on August 4, 2023 by the amendments (“Amendments”) to Federal Law No. 89-FZ dated June 24, 1998 “On Production and Consumption Waste”. The EMR system was introduced in Russia in 2015 in order to create an incentive for manufacturers and importers to recycle waste from the use of goods and packaging that they market in the territory of the Russian Federation.
We will keep you updated on the development of the EMR system in Russia, and our team is ready to provide you with full legal support in this regard (from advising on the applicable requirements to communicating with Russian state authorities and filing necessary documents).
04 December 2023
Further development of Russian legislation on alternative smoking products
On 28 April 2023, a new law was adopted on additional restrictions on devices for the consumption of nicotine-containing products (the “Law” and “Devices”, respectively). The Law introduces special new aspects on the retail, advertising and manufacturing of Devices as well as further restrictions on turnover of nicotine-containing products.
The Law envisages the following key amendments:
Ban on the retail sale of Devices and their components at fairs and exhibitions, remotely and through vending machines or delivery
Ban on the release and circulation of nicotine-containing products with flavourings and additives enhancing nicotine addiction in order to reduce the attractiveness of these products for minors. The Russian government should determine the list of such flavourings/additives to be in force starting from 1 September 2023
Ban on the open display and demonstration of Devices in stores and any kind of discount on them, including coupons
Non-nicotine liquids are subject to the vast majority of restrictions and requirements applicable to nicotine-containing products
The Law sets forth minimum prices for nicotine-containing products, which should be applied starting from 1 September 2023
The Law also restricts advertising with images, descriptions or occasional references to the Devices and prohibits showing them to children under 12 years old
Several years ago, the Russian government banned the advertising and sale of nicotine-containing products via the Internet and introduced requirements for the maximum nicotine content in vaporizer liquids and a number of other restrictions and requirements. However, these regulatory changes did not extend to such Devices. Now similar restrictions have been imposed on such Devices, thus the Law continues the trend of restricting the consumption of tobacco and alternative products. Stronger enforcement of the Law should be expected as well.
Considering all this, we believe it would be advisable for all manufacturers, importers, distributers and advertisers to ensure compliance with the new requirements and closely monitor the further development of nicotine-related regulations and practice.
10 May 2023
Legal Regulatory Guide Russia: Q3, 2021
ALRUD Regulatory practice is proud to present you the Regulatory Guide for the Third Quarter of 2021.
The points of focus of this regulatory guide are product compliance, regulatory enforcement and environment protection. Most, if not all, of the topics commented in this guide have strategic importance for the Russian regulatory field.
They have either been long awaited:
the perspective of the new Seed Farming Law has been discussed for the last two years;
possibility for the issue of Carbon Units and CO2 emissions have been largely expected by most of the business community,
or have a long-lasting impact:
Chestny Znak traceability system has beenin development since 2018, and currently 16 categories of goods are subject to traceability requirements with many new acts and regulations being enacted every year; responsibility is long-standing;
the concept of extended product liability, recycling, and payment of Environmental Fees has been steadily evolving since 2015 from a low-paced regulation imposing no real obligation to completely indispensable piece of regulation causing a lot of questions for the business, or reshape the system of interaction between the business and the government, like the completely new risk-oriented system of administrative inspections which sets out a new full set of rules and requirements to the functioning of business, especially of entities engaged in production and sales of tangible products.
The review was published with the participation of ALRUD experts - Maxim Alekseev, Senior Partner and Head of ALRUD Regulatory practice, Timur Akhundov, Co-Head of Regulatory Practice, Of Counsel, Dina Kravchenko, Senior Associate, and Boris Pribylov, Associate.
Full text of this publication can be found here.
21 February 2022