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. Last Updated: 07/27/2016

Russia's Legal Future, Without a Crystal Ball

Trying to predict the future in Russia is like changing a flat tire on a moving car. However, Russian law has been developing with some consistency and so it may be possible to anticipate the legal developments that the new year will bring.

1. Constitution: Efforts to amend the Russian Constitution wholesale have been going on for some time. This is controversial, because reformers want to revamp the system that gives the conservative Congress of People's Deputies so much power. At the last Congress session, President Boris Yeltsin threatened the deputies with a referendum to change the constitution, and, while that will not happen as quickly as he said, it most likely will occur in the first half of the year. The new constitution should introduce many changes, in the government system, in land ownership, the role of the Central Bank and other matters.

2. Land Ownership: Various changes in recent months have made it possible to own land without having to farm it, although much of this is still theoretical. The process of splitting up collective and state farms, also is underway. Private land ownership would represent a nearly irreversible departure from Communist economics, and its time may have come. It would be a big boost to business, enabling easier borrowing from foreign banks, if companies could own land connected with their operations.

3. Banking: Russian business also is awaiting new regulations from the Central Bank. Rules on doing business in foreign currency between two Russian companies will make a big difference in the short-term possibilities of many companies. Allowing this business will stimulate trade in the short term, although delaying the day when the ruble reigns supreme. Rules on opening offshore bank accounts will enable Russian companies to obtain loans from foreign banks, unless the rules are too strict. The Central Bank also must restore the clearing system among Russian banks so that money can flow freely and keep the economy running.

4. Company Law: Russian companies continue to operate based on a few old and inadequate laws which the Supreme Soviet has been trying to replace for some time. A new law on companies might permit shares that would be issued, but unsubscribed, which could then be used in financing investments, as well as clarifying shareholder rights and corporate management. If large enterprises are indeed privatized on schedule this year, such a law would be vital in the control and operation of the new companies. Systems for registering and transferring shares will have to develop to cope with what soon may be a real stock market.