Law on economic partnerships has been enacted

Federal Law "On Economic Partnerships" No. 380-FZ of 3 December 2011 introduces an economic partnership as a new legal form of a commercial legal entity.

An economic partnership may be established by two or more members (which is a distinctive feature of partnerships), however, number of members may not be more than fifty (which is a distinctive feature of a limited liability company). Both individuals and legal entities may become members of the partnership. However, it is not only prohibited for a sole member to form such a partnership, but also the situation when after formation of such partnership only one member remains in it is impermissible (in this event a mandatory liquidation or reorganization of partnership is provided for).

At the same time Law on Economic Partnerships serves to preserve the original list of the partnership's members as much as possible:

• As a general rule, exit of members from the partnership is not allowed (unless otherwise stipulated in the partnership management agreement).
• New members may be accepted in the partnership only subject to all other members' consent.
• Preemption right is provided for. Moreover, as a general rule preemption right is established not only for the members, but for the partnership also (in the regulations on economic partnerships it is set out that preemption right for an entity is applicable if such right is provided for by the entity's charter).
• Also it is prohibited to pledge an interest in the partnership. If such prohibition is lifted in the partnership management agreement, the pledge is permitted only subject to all other members' consent.

Law on Economic Partnerships attempts to introduce specific measures for partnership property protection which are not established for other legal forms. So rights to the results of intellectual activity shall be specially protected. When it is required to levy execution on intellectual property rights in order to fulfill the partnership's obligations, (a) member(s) of the partnership may independently fulfill the partnership's obligations and contractors are obliged to accept such fulfillment of obligations.

A rule is also established according to which it is possible to levy execution on a partnership member's interest in connection with separate debts of such partnership member only pursuant to a court decision if other property of the obliged member is insufficient to repay such indebtedness. Moreover, the member's creditors may not claim for the interest in kind. Only payment of the interest's value by the partnership or its members is allowed.

The principal difference of economic partnership management is that only general director may act as its chief executive body. Only an individual who is a member of the partnership may be elected as its general director. Authority of the general director is typical for the same of a director of a business entity.

There are certain restrictions on the partnership activity. For example, the partnership is prohibited to advertise its activity, issue securities. The partnership is also not permitted to act as a founder of or a participant in other legal entities, save for associations. Therefore, under the aegis of this legal form one should carry out activity which does not require promotion to be successful.

An economic partnership may be transformed into a joint stock company only.

Law on Economic Partnerships shall become effective on 1 July 2012.