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. Last Updated: 07/27/2016

Building Licenses: Worth the Trouble

The vast amount of construction and reconstruction being done in Moscow -- much of it by foreign companies -- has prompted authorities in both the federal and Moscow city governments to regulate basic standards for the work and for the companies involved. The result has been a detailed, wide-ranging process of paperwork and licensing -- tedious, perhaps, but necessary. Decree No. 593 of the Russian Council of Ministers, dated Nov. 8, 1991 and entitled "On the Introduction of State Licensing of Construction Activities on the Territory of the Russian Federation," provides the legislative framework. Moscow, however, has its own licensing center: The vast amount of construction and reconstruction being done in Moscow -- much of it by foreign companies -- has prompted authorities in both the federal and Moscow city governments to regulate basic standards for the work and for the companies involved. The result has been a detailed, wide-ranging process of paperwork and licensing -- tedious, perhaps, but necessary.


Decree No. 593 of the Russian Council of Ministers, dated Nov. 8, 1991 and entitled "On the Introduction of State Licensing of Construction Activities on the Territory of the Russian Federation," provides the legislative framework. Moscow, however, has its own licensing center: Mosstroylitsenziya, a subdivision of the Moscow Licensing Chamber. This is the body that considers applications and issues licenses. It also maintains a register of licenses issued to enterprises operating in the Moscow region.


With so many companies participating at all stages of the construction process, who then needs a license? The net is wide. The scope of construction activities that cannot be undertaken without a license is defined as "construction and assembly works, design works, engineering projects, manufacture of building materials, finished products and structures."


If your company is one that perhaps should but does not have a license, what should you do? Applications can be made by both Russian and foreign companies, although the issuing criteria do seem to be more strictly applied to applications made by foreign entities. There is a specified form, and supporting documentation is also required. You will need to provide the applicant company's charter (duly notarized), data on staff qualifications, information on technical matters and details of the applicant's internal quality control system.


Provided the paperwork is in order, the license should be issued within 30 to 60 days. It will last for up to five years, subject to payment of an annual fee. The Moscow city government has a formula for calculating this fee, but it is complicated and depends upon the nature of the activity licensed. Annual fees between $1,000 and $9,000 have been quoted.


The risks of operating without a license probably outweigh the cost of obtaining one. Enterprises conducting their activities in breach of the licensing requirements not only face fines but could be liquidated altogether, leaving projects stalled halfway to completion. If your enterprise is in breach of the provisions, or if you are involved with an enterprise that is not complying, you should consider bringing the arrangement in line with the law.





Adrian Moore, an attorney with Norton Rose, has been practicing law in Moscow for 16 months.