Development of corporate governance institutions

The Ministry of Economic Development of Russia performs the functions of state policy in entrepreneurship, including those with regard to regulating the business activities conducted in the form of a legal entity.

At present the main objectives of such regulation are:

• protection of property rights and balancing the interests of participants of corporate relations (stakeholders), including creditors and the state;
• reducing transaction costs of participants of corporate relations;
• development of M & A market;
• reducing barriers for creation of legal entities.

Evaluation activity

Evaluation activity is an important institution of the market economy and represents an essential and integral part in creating an infrastructure, crucial for further change in our country. Estimating the cost has become an indispensable tool in the arsenal of the modern Russian businessman, financier, banker, manager and government officer. Even for the ordinary citizen it is difficult to get by without an understanding of the valuation in the market economy.

One of the activities of the Ministry of the Development of Russia is conducting the functions of working out the state policy and normative legal regulation in the assessment activities, these being as follows:

• approval of Federal appraisal standards, as well as the development and adoption of guidelines for state cadastral valuation;
• analysis and monitoring of accounting and reporting system organizations in Russia and in foreign countries;
• interaction with the National Council for assessment activities - non-state regulation of the body of the branch set up today by all existing self-regulatory organizations of appraisers.

An important role in the activities of the Ministry of Economic Development of Russia is assigned to the coordination and control of the activities of the Federal Property Management Agency in relation to how it exercises the functions of the authorized Federal executive authority in the cases stipulated by the Federal law of 26 December, 1995, No 208-FZ "On Joint Stock Companies”, and about functions of Federal executive authorities authorized to prepare findings on the appraiser's report in the cases stipulated by Federal law of October 26, 2002, № 127-FZ "On Insolvency (Bankruptcy)". Execution of these powers, in essence, implies that the department should conduct a certain type of expert evaluation reports (which affect the property interests of the state) in order to estimate to what degree they conform with Russian legislation in the field of evaluation.

The Russian Economic Development Ministry is also responsible for the development of:

• requirements, conditions and procedures of involving appraisers in state needs;
• proposals on the procedure of state regulation of self-regulating organizations of appraisers, including the supervision over their compliance with requirements of the Federal Law On Valuation Activities in the Russian Federation;
• measures aimed at improving disclosure of information about Russian organizations, investors, creditors and other interested parties in corporate governance and proposals to improve the quality of accounting (financial) reporting of organizations.

Within the structure of the Ministry there is a department for the normative legal regulation of the evaluation activities of the Department of Corporate Governance.

Insolvency (bankruptcy) and financial recovery

The adoption in 2002 of the Bankruptcy Law was the beginning of the third stage in the development of bankruptcy legislation in Russia. The aim of the reform pursued since 2002, was not a change in the conceptual foundations of bankruptcy law, but the adjustment of existing mechanisms taking into consideration law enforcement practice. Activities of the Ministry in this area are aimed at performing the following tasks:

• improving self-regulatory mechanisms;
• improving the efficiency of rehabilitation procedures applied in bankruptcy proceedings against legal persons;
• improving standards of responsibility of the management body of the debtor and protection of property interests in bankruptcy;
• improving mechanisms to protect the interests of secured creditors in the procedures applied in the bankruptcy case;
• improving mechanisms to prevent the bankruptcy of non-bank financial institutions;
• legal regulation of the insolvency of entrepreneurship groups;
• introduction of the specificities of bankruptcy proceedings and investigation, complicated by a foreign element (cross-border insolvency);
• improving the procedures of bankruptcy of strategic organizations;
• establishment of the specificities of bankruptcy of developers which are carrying out shared construction of apartment buildings.

One of the separate tasks in the field of insolvency law which is specifically designated in the situation of anti-crisis actions of the Government of the Russian Federation is the introduction of mechanisms for rehabilitation procedures which will apply to citizens-debtors in order to resolve a large amount of arrears on consumer and mortgage loans.