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12. Investment Laws

This law is aimed at increasing investment activity in St. Petersburg and creating favourable con-ditions for defending the rights, interests and property of participants in investment activity; in creat-ing a healthy environment of competition; in developing the city infrastructure in St. Petersburg.

Article 1. Principles of St. Petersburg Investment Policy.

St. Petersburg Investment Policy is based on the following:

  • Goodwill toward the investor;
  • Presumption of the goodwill of investors;
  • Balance of public and private interests;
  • Openness and access for all investors to information necessary for carrying out investment activity;
  • Clear and simple investment processes in St. Petersburg;
  • Equal rights of investors and unified public procedures;
  • Objectivity and economic common sense in decision-making;
  • Consistency of decisions made;
  • Mutual responsibility of St. Petersburg and investors.
Article 4. Forms of State Support for Investment Activity

State support of investment activity on the territory of St. Petersburg is carried out in the following forms:

  • investors are guaranteed by the city of St. Petersburg that the money attracted by the investor to engage in investment activity will be returned based on the amount of funds intended for this purpose every year in the St. Petersburg budget;
  • investors receive tax privileges within the limits of those sums contributed to the St. Petersburg budget in accordance with acting legislation;
  • banks and credit institutions providing investment loans for engaging in investment activities receive tax privileges for enterprises and organisations within the limits of those sums contributed to the St. Petersburg budget in accordance with acting legislation;
  • investors receive privileges when leasing St. Petersburg real estate property with the goal of carrying out investment activity using the leased property;
  • investors receive deferments and extensions for periods of no more than 5 years on payments for use of real estate owned by the city of St. Petersburg, and rights to these real estate objects based on investment conditions according to procedures established by the St. Petersburg administration;
  • investors receive support based on St. Petersburg budget resources;
  • St. Petersburg participates in developing, providing expert opinions on and carrying out city investment programs, as well as individual investment projects.

    Article 5. Investor Rights

    All investors have the right to receive state support of investment activity carried out by them in cases, according to procedures and conditions established by current legislation, and also according to other legal acts made in accordance with these laws.

    All investors have equal rights to receive information necessary to make decisions regarding placement of investments and carrying out investment activity, as well as equal rights to receive, freely use and repatriate profits received from the use of results of investment activity remaining at the disposal of the investor after payment of taxes and other mandatory payments in accordance with current legislation.

    Article 6. Investor Responsibilities

    All investors are responsible for observing the conditions that served as a basis for their receiving state support, and also to fulfil all the requirements of the legislation of the Russian Federation, normative legal acts of St. Petersburg and legal acts of the St. Petersburg administration regarding regulation of investment activity.

    Article 10. Conditions for Providing Guarantees

    St. Petersburg guarantees are granted with the stipulation that the investor observes the following conditions:

    • the portion of borrowed funds attracted by the investor under the St. Petersburg guarantee may not exceed 50% of the total sum of investments;
    • the investor must not have any debt obligations to the St. Petersburg budget or non-budgetary funds according to results of the most recent fiscal period;
    • the investor must show no signs of bankruptcy, as determined by federal law;
    • the settlement period of recoupment of the total amount of investment must not exceed six years from the start of investment activity.
    With all other conditions being equal, investment projects with shorter terms of guarantee requested and shorter investment recoupment terms receive priority for receipt of St. Petersburg guarantees.

    Article 11. Forms of Budgetary Support Provided to Investors

    Support is provided to investors using St. Petersburg budgetary funds on the following bases:

    • granting of loans according to procedures and conditions provided for by St. Petersburg laws regarding loans from the St. Petersburg budget and concerning the St. Petersburg budget during the year in question;
    • participation in creating economic partnerships and societies in cases and according to procedures established by Russian Federation legislation and St. Petersburg legal acts;
    • St. Petersburg government procurement according to procedures established by acting legislation;
    • Provision of compensation payments provided for in the St. Petersburg budget and in accordance with procedures established by the St. Petersburg administration to persons intending to engage in investment activity directed toward realising investment programs considered of high priority for the city of St. Petersburg but with estimated negative cumulative profits in amounts ensuring sufficient profitability on investments calculated according to methods indicated in Article 9 of the present law.

    Article 12. Tax Privileges

    Tax privileges in parts of sums contributed to the St. Petersburg budget are granted to any investor on the basis of St. Petersburg laws regulating tax relations according to procedures regulated by the St. Petersburg law concerning the procedure and conditions for granting and revoking tax privileges.

    Article 13. Benefits for Lease of Land

    Investors leasing plots of land being the property of the city of St. Petersburg and in order to carry out new construction or reconstruction of real estate objects located on the leased plots of land, receive lease payment privileges for these plots of land for the period of planning and research work, capital construction or reconstruction.

    Chapter II. Means of Presenting Objects of Investment

    Article 5. Presenting Objects of Investment

    bjects of investment may be presented by the investor according to procedures established by the present law at public sales (auctions, tenders) or directly (direct presentation).

    The decision to place an object of investment on auction or to present the object of investment directly is made at the initiative of the St. Petersburg administration or at the initiative of the potential investor and expressed in the form of an investment proposal.

    The decision to present objects of investment directly or to place objects of investment on auction is made by the governor of St. Petersburg according to procedures established by the present law, and is recorded in the governor's order (hereafter St. Petersburg governor's order).

    Presentation of objects of investment to investors is carried out in accordance with the investment agreement concluded by the agency of the St. Petersburg administration empowered to dispose of St. Petersburg state property (hereafter, the agency for management of state property) according to the results of auctions or on the basis of the decision to present an object of investment directly.

    Public sales are carried out by a corporate body empowered by the St. Petersburg administration to perform functions connected with organising and conducting auctions (hereafter, the Public Sale Organiser).

    Article 9. Consideration of Investment Proposals from Potential Investors

    In accordance with the requirements of the present law each investment proposal from a potential investor presented by the investor to the commissioning agency of the St. Petersburg administration must be con-sidered in full with one of the following decisions taken:

    • on preparation of the necessary documentation for consideration of the investment proposal from the potential investor by the ITC;
    • concerning refusal of the investment proposal on grounds provided for by the present law.

    Article 10. Expert Evaluation of the Investment Proposal

    In cases when the object indicated in the investment proposal is not included in the investment address list, then the commissioning agency of the St. Petersburg administration carries out an expert evaluation o the investment proposal from the potential investor to ascertain whether the investment proposal corre spends to the functional purpose of the object of investment (in accordance with the urban planning and/o. land use documentation).

    The procedures and conditions for carrying out the expert evaluation of the investment proposals are established by the St. Petersburg governor.

    Chapter IV. Statement of Investment Conditions and Holding Public Sale

    Article 13. Investment Conditions

    The following are investment conditions in accordance with the present law:

    • the legal form of presenting the object and result of investment:
    • presenting a plot of land on investment conditions with the right to build on this land in long-term lease or as property and with the possibility of obtaining ownership rights by the investor to the result of investment;
    • presenting buildings, objects or their parts requiring reconstruction or completion of construction for carrying out investment activity with the goal of creating a new object of real estate property: with further transfer to ownership of the investor of the result of investment by purchasing the St. Petersburg share or with further transfer to ownership of the city of St. Petersburg of the result of investment by giving over the investor's share while the investor retains the right to either lease or use the result of investment without compensatior or engage in trust management;

    Article 17. Carrying out Public Sale

    Tender is open in terms of composition of participants and is carried out in the form of auction or tender. The sale may be closed in terms of forms of submitting price offers.

    The winner of the sale by decision of the auction commission is that party who has offered the highest price for the subject of tender.

    The winner of tender is that party who, according to the conclusion of the tender commission, has offered the best conditions (participation in development of infrastructure, architecture and planning solutions, etc.).

    Article 18. Terms for Concluding the Investment Agreement

    The investment agreement is concluded by the agency managing state property with the winner of public sale within twenty days:

    • from the date the decision regarding the winner of public sale is made;
    • from the date of issuance of the St. Petersburg governor's order concerning the approval of the decision of the ITC regarding direct presentation of the object of investment to the investor;

    Article 19. Conditions of the investment agreement for a land plot presented for building up

    In addition to the conditions regarding legal form of providing a land plot for building up, and also other investment conditions undertaken by the investor, if a land plot is presented for building up then the investment agreement must contain the following conditions:

    • regarding the consequences of improper execution of the investment conditions contained in the investment agreement;
    • if a land plot is presented for lease:
    • the terms of lease of the land plot, not to exceed 49 years;
    • conditions of issuing approval for guarantee of the right to lease the land plot.

    Article 21. Consequences of Non-Execution of Improper Execution of the Investment Agreement

    If either of the parties do not execute or execute improperly conditions of the investment agreement, then the investment agreement may be changed or dissolved in accordance with current civil legislation of the Russian Federation and the conditions of the investment agreement.

    Article 23. Measures Pursued by Agencies of the Saint Petersburg Government to Support Investment Activity on the Territory of St. Petersburg

    In order to stimulate investment activity on the territory of St. Petersburg, the legislation of St. Petersburg establishes additional measures for support by agencies of the St. Petersburg government of investors and investment activity in addition to those covered by the current legislation of the Russian Federation.

(c) 2000