Under the Russian Civil Code the value of the net assets of any company incorporated in Russia must, from the end of the second fiscal year after its incorporation and for every subsequent fiscal year, remain not less than the company’s charter capital. If this condition is not fulfilled, the company will be required to either increase its net assets at least up to the amount of its charter capital, or to register a decrease in its charter capital as prescribed by the law. Further, where a company’s net assets become less than the minimum charter capital required by the law, this company will become subject to liquidation.
In light of this requirement, we recommend calculating the value of your Russian companies’ net assets based on their balance sheets for the third quarter of the current year as soon as possible to determine whether they have a sufficient net assets value.
Please let us know if you would like to discuss any issues raised by this legal alert.