A New Corporate Form for Legal Entities: State Company Avtodor
Legal Update No. 51
Goltsblat BLP advises that Federal Law No. 145-FZ “On State Company ‘Russian Highways’ and Amendments to Certain Legislative Acts of the Russian Federation” (the Federal Law) was adopted on 17 July 2009 and came into effect on 20 July 2009.
A new option has been added to the list of corporate forms available for Russian legal entities – a state company that is a non-profit and non-membership organisation established by virtue of a federal law on the basis of asset contributions by the Russian Federation for the purposes of rendering public services and exercising other functions using state property on the grounds of trust management.
The first legal entity of this type is State Company Russian Highways (short name – State Company Avtodor). Avtodor’s property consists of asset contributions from the Russian Federation, other moveable property and real estate. At the same time, Avtodor does not own public highways of federal significance that are toll roads or include toll road sections or highways it builds or rebuilds; all these roads were transferred to Avtodor under a 99-year trust management arrangement. The list of roads originally to be handed over to Avtodor for trust management and the timelines for such transfer are to be established by the Government of the Russian Federation within 180 days of the Federal Law coming into effect. Land plots in federal ownership or undelimited state ownership that are assigned to Avtodor for its activities under lease agreements are not the state company’s property either.
As the trustee, Avtodor acts as the customer under contractual arrangements for maintenance, overhaul and repair of the relevant roads, operates the roads, collects tolls from vehicles and fees for transportation of heavy or large-size loads, enters into concession agreements with regard to the roads and manages relevant investment projects.
In the role of road building and rebuilding sponsor, Avtodor fulfils the functions of the customer in arranging for engineering surveys and architectural and construction design, building, rebuilding, maintenance, overhaul and repair of specific roads, exercises certain powers with respect to related lands and other real estate, enters into concession agreements and acts as the concedent thereunder.
In addition to the Federal Law, State Company Avtodor is governed by Regulations approved by the Russian Government and stipulating the manner and rules for the company to exercise its powers and fulfil its functions.
Avtodor’s governing bodies include a Supervisory Board (the superior body), a Management Board (collegiate executive body) and the Chairman of the Management Board (sole executive body). The Supervisory Board is to be approved by the Government of the Russian Federation for a four-year period and shall consist of 12 members. The Board shall ratify Avtodor’s activity programmes, approve its finance plan, exercise control over its operations, execution of decisions and use of funds by Avtodor.
Audit and control over the company’s business is to be carried out by independent auditors, Avtodor’s internal auditing committee and its structural division for internal auditing.
A requirement has been introduced for mandatory preliminary approval by Avtodor’s Supervisory Board of major transactions (worth more than 10 per cent of the total asset value of the company) and interested-party transactions.
Reorganisation or liquidation of State Company Avtodor is only possible on the basis of the relevant federal law.
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