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Company reorganization. How to minimize migration risks?

Article prepared by Maria Komissarova, senior consultant of Confidence Group

Most companies, starting the process of reorganization, as a result of which, in particular, there is a change of the name of the organization or the legal form, do not even think that in addition to the procedures associated with the introduction of new data in the USRLE,they may have to provide permits for foreign employees of the company to full compliance with the migration legislation of the Russian Federation.And this process in the Russian Federation at the moment, unfortunately, is associated with enormous risks for both the company and foreign employees.

In this article we will consider what actions should be taken by the company if its legalform is changed.

There are two options for changing the legal form:

  1. In connection with changing the legal form of the organization in accordance with the provisions of Chapter 4 of the Civil code.
  2. In connection with the decision of the founders of the organization.

Let us consider the first option.

Since September 1, 2014 the Federal law of may 5, 2014 № 99-FZ "On amendments to Chapter 4 of part one of the Civil code of the Russian Federation and on the invalidation of certain provisions of legislative acts of the Russian Federation" excludes such form as a company with additional liability, as well as the division of joint-stock companies into open and closed – they were replaced by public and non-public companies (Art. 66.3, the civil code).

Under the provisions of paragraph 7, article 2, of 99-FZ, the names of organizations created before the entry into force of the discussed law and their constituent documents shall be put in accordance with the requirements specified above, the first change in the constituent documents of such legal entities (paragraph 7, article 2, of 99-FZ).

In this case, when changing the legal form of the organization in accordance with the provisions of Chapter 4 of the Civil code of the Russian Federation, it is not necessary to amend the title documents and other documents containing its previous company name.

I would like to draw attention again to the fact that this statement is true only in cases of transformation from a closed joint-stock company / open joint-stock company to a joint-stock company (or from Additional Liability Company to LLC / joint-stock company). A confirmation of this is the Letter of Rostekhnadzor dated 01/30/2015 N 00-01-34 / 48.

"The information letter on issues of license renewal in connection with the entry into force of the Federal law of May 5, 2014 №99-FZ regarding changes in the name of organizational and legal forms of organizations" indicates that according to point 7 of article 3 of the Federal law of May 5, 2014 №99-FZ "On amendments to Chapter 4 of part 1 of the Civil code of the Russian Federation on invalidation of certain provisions of legislative acts of the Russian Federation", changing the name of a legal entity in connection with bringing it into compliance with the norms of Chapter 4 of the Civil code of the Russian Federation, does not require changes to the title and other documents containing its former firm name.

Accordingly, there is no need to make any changes to the permits of foreign citizens.

The second option of changing the legal form of a legal entity implies that these changes are initiated not by law, but in connection with the decision of the founders of the organization.

Such reorganization can occur either with a change in the name of the organization and the organization's details (TIN and OGRN), or without them. However, in any of these cases, it is necessary to make appropriate changes to all documents containing the former name and details, including the permission to attract foreign labor and work permits of foreign citizens, since the moment of reorganization of the organizational and legal form, the information specified in these documents will become unreliable. Accordingly, the use of pre-reorganized documents may be considered as a violation of migration law, so changes should be made to all the above-mentioned documents.

You can initiate the registration procedure only after making the appropriate changes in the Unified State Register of Legal Entities and receiving documents confirming the change of the company's legal form.

At the moment, the existing legal acts do not provide for the possibility of correcting employment permits, work permits, and visas of foreign citizens due to changes in the organizational and legal form of the organization.

At the same time, there is still an option to align permits for attracting foreign citizens, which excludes migration and labor risks, but is associated with the following significant factors:

  • dismissal of foreign citizens with breaks in their employment (from 1 to 3 months);
  • appointment (with entering information in the USRLE) of a person who has the right to act on behalf of a legal entity without a power of attorney, if it is an individual, it must have the right to carry out work without permits (for example, a citizen of the Russian Federation, a foreign citizen from the EEU country or having the status of a resident in the Russian Federation).

The procedure in this case will be as follows:

  • before changing the legal form of the enterprise, it is necessary to designate the person entitled to act without power of attorney, legal entity, citizen of the Russian Federation or a foreign citizen having the right to work in Russia without permits. Make a note about this in the unified state register.
  • before changing the legal form of the enterprise, it is necessary to terminate employment relations with foreign citizens working on the basis of a work permit, by agreement of the parties. Notify the Ministry of internal Affairs.
  • next, you need to get documents confirming the change of the company's legal form and making a note in the unified state register.
  • then issue new permits with a new legal form and company name. Sign employment contracts with foreign citizens. Notify the Ministry of internal Affairs.

When planning these processes, keep in mind that if the old information about the company specified in the work visas of foreign employees differs from the updated ones, the work visas can only be reissued by highly qualified specialists. Existing regulations do not allow you to make changes to the visas of other employees. You will need to issue invitations and visas at the Consular Department of the Russian Embassy abroad, i.e. entry to the Russian Federation for work purposes will be available only after they are issued new permits with a new legal form and company name.

Of course, the above-described option of bringing permits into compliance is difficult to call attractive also because:

  • the need to terminate employment relations with foreign citizens;
  • the need to leave the Russian Federation for non-highly qualified employees (working under a standard work permit) from the moment of termination of employment contracts;
  • unwillingness of foreign citizens to terminate employment contracts by agreement of the parties.

And if foreign employees do not show their "own desire" to leave, this option becomes impossible.

For this reason, in practice, there are often other options for bringing the permits of foreign employees into compliance. According to the fact that the legal regulations are not developed, employees of various units of the Ministry of internal Affairs of the Russian Federation do not have consensus and offer at its discretion, various options conform to the above documents.

We suggest to consider one of the solutions that is often offered, but only if the company changes only the legal form, and the name and details remain the same (for convenience, consider the example of reorganization from a CJSC to an LLC) - the algorithm of actions is as follows:

  • after the change in the legal form of the company from CJSC to LLC is made in the Unified State Register of Legal Entities, you must write a letter to the Department of Internal Affairs of the Russian Federation with a request to make changes to previously issued documents (permission to attract foreign labor and work permit);
  • in response to such a request, employees of the Department of the Ministry of Internal Affairs will start internal processes aimed at making appropriate changes to the database of the Ministry of Internal Affairs about the company, which may take from a few hours to 2 months;
  • after changes are made to the database of the Ministry of internal Affairs, employees of the Department of Internal Affairs of the Russian Federation will have the technical ability to make changes to previously issued documents. Only then you need to apply for changes to the permit to attract foreign labor and work permits.
  • if the old information about the company specified in the work visas of foreign employees differs from the updated ones, the visas should be reissued. The features of this process, which we described above, are absolutely true for this situation.

Once again, we would like to draw your attention to the fact that the scheme described above is not applicable in practice if, in addition to the organizational and legal form of the company, any other details (company name, OGRN, TIN, etc.) are changed during the reorganization process.

Below, we will consider another scheme proposed by employees of another regional division of the Ministry of internal Affairs to bring permits into compliance, also using the example of converting from a CJSC to an LLC. In this case, it does not matter whether the organization will change any other details in addition to the legal form.

The procedure in this case will be as follows:

  1. Get documents confirming the change of the company's legal form.
  2. Issue new permits indicating the new legal form.
  3. Sign additional agreements to employment contracts with foreign citizens in order to enter information about updates in the employer's data and in the details of permits.
  4. If the old information about the company specified in the work visas of foreign employees differs from the updated ones, the visas should be reissued. The features of this process that we described above are absolutely true for this situation, too.

Both proposed solutions are not ideal from the point of view of risks. Here are some of them:

Risk 1

Since the reorganization of the company (since the date of changes in the Unified State Register of Legal Entities to the time of actual receipt of the revised permit to attract foreign labor and work permits), foreign employees of the company will work on the work permit contains incorrect information in the column "Name of employer" that the Ministry of Internal Affairs could be construed as illegal attraction to labour activity. The employer may be subjected to administrative punishment under part 4 of article 18.15 administrative Code of the Russian Federation in the form of an administrative fine:

  • for citizens-in the amount of five to seven thousand rubles;
  • for officials - from thirty to seventy thousand rubles;
  • for legal entities-from four hundred thousand to one million rubles or administrative suspension of activity for a period of fourteen to ninety days.

In this case, the specified administrative responsibility occurs in relation to each foreign citizen separately.

In our opinion, the imposition of liability under this article is unlikely, since there are no legal acts regulating the procedure for making changes to the permit to attract foreign labor, work permits and visas of a foreign citizen in connection with the change of the legal form of the employer. And if the organization is still brought to this responsibility, it can be appealed in court.

Risk 2

The discrepancy of name in the permit for attracting foreign labor and work permits can be deemed a violation of the provisions of the Federal law № 115-FZ of 25.07.2002 "On the legal status of foreign citizens" that can lead to suspension of the permit for attracting foreign labor on the basis of paragraph 11, article 18, № 115 FZ of 25.07.2002 "On the legal status of foreign citizens" if the employer or customer of works (services) has violated the provisions of this Federal law, the Federal Executive authority in sphere of Internal Affairs or its territorial body may suspend the permit for attracting foreign labor and work permits to eliminate such persons within the prescribed period of irregularities.

Moreover, if the validity of a permit to attract foreign labor or a work permit is suspended on the basis of article 327.6, chapter 50.1 of the Labor code of the Russian Federation, the employer must terminate the employment contract with the foreign employee.

We draw your attention to the fact that all previously issued documents permit to attract foreign labor, work permit, as well as work visas of employees of the company CJSC do not stop to be valid (not canceled), there are no grounds for suspending foreign citizens from work or termination of employment contracts.

Just as in the first, in the second version of registration, an important point is the need to make changes to the valid VMI issued to foreign employees of the company under the insurance contract between the employer and the insurance company.

From the point of view of labor legislation, we do not see any risks in the fact that foreign employees will continue to work in the company until they receive a permit to attract foreign labor and a work permit indicating the correct organizational and legal form.

However, we do not exclude the possibility that the staff of the Ministry of Internal Affairs in various regions of the Russian Federation will be ready to offer alternative ways of solving the task of aligning permits with the change of the legal form. However, their proposals will be associated with migration risks, as the current legal acts do not describe this procedure.

Whether to accept the migration risks described in this article is an individual decision of the employer.

In conclusion, I would like to note once again that due to the lack of regulatory legal acts and the lack of consensus between the different Ministry of Internal Affairs' departments in the process of amending permits may be unforeseen technical difficulties, which may lead to changes in the above behavior.

For our part, we are always ready to support you in completing the necessary documents when changing the legal form of your organization.