Monitoring of the Federal Legislation dated 16.03.2004

Federal Law No. 5-FZ of February 24, 2004 on the Amendments to the Federal Law on Joint-Stock Companies

Adopted changes are aimed at improvement of protection of the rights of minority stock-holders (those not possessing the majority holding). The Law specifies that cumulative voting is used in the election of the members of the board of directors for joint-stock companies with any number of stock-holders. The minimum number of the members of the board of directors is at least 5. This permits minor stock-holders possessing in aggregate 20% and more of the voting stocks of the company to elect on the board of directors at least one member, while in the case of a usual voting these stock-holders cannot elect even one member of the board of directors.

Earlier, the cumulative voting in the election of the board of directors was obligatory only for joint-stock companies with the number of stock-holders possessing voting stocks more than 1,000. For joint-stock companies with a lower number of stock-holders, cumulative voting could be used if envisaged in the company charter.

The Federal Law is entered into force from the day of its official publication.

Order of the Government of the Russian Federation No. 364-r of March 13, 2004

The Foreign-Trade Bank, the Russian Bank of Development and the Russian Agricultural Bank are ordered to represent the Russian Federation in courts as agents of the Government of the Russian Federation in issues of return of the debts of legal entities, budgets of the subjects of the Russian Federation and municipal formations in state and/or budget credits provided at the expense of the resources of the federal budget and non-budgetary resources, as well as the debts in resources of tied financing of legal entities granted under the condition of handing over of the stocks in the property of the Russian Federation.

Order of the Ministry of Taxation of Russia No. BG-3-03/190@ of March 11, 2004 on the Amendments to the Order of the Ministry of Taxation of Russia No. BG-3-03/447 of December 20, 2000

The Methodology Recommendations on the application of Chapter 21 of the Tax Code "Value Added Tax" now do not contain the provision stating that if the tax exemption was applied to the property handed over in the registered (shared) capital, the exemption for these amounts of the tax in the tax period of the transfer must be reduced where it pertains to the cost of the property not included through amortisation deductions in the commodities (works, services) production and/or sales expenses or non-sales expenses taken into account in the determination of the profit tax.