Corporate Document Requests From a Russian Entity (United States)

This Wisdom of the Crowd (ACC member discussion) addresses corporate document requests from a Russian entity, under US law. This resource was compiled from questions and responses posted on the forum of the Small Law Departments ACC Network.*

*(Permission was received from the ACC members quoted below prior to publishing their forum comments in this Wisdom of the Crowd resource.)

I. RESPONSES TO VARIOUS CORPORATE DOCUMENT REQUESTS

Question:

I am negotiating a contract with an entity in Russia. They are asking to provide a list of the following documents:

1. Memorandum and Articles of Association (By-laws) Certificate of Incumbency (if applicable) - list of officers with the power to sign documents Power of Attorney issued for an employee's authorization to sign contractual documents

My proposed response is that these requirements are not applicable in the U.S. All these requests seem to address the issue of proper authority to execute contractual documents. An officer of a corporation is able to bind the company and no further proof should be necessary. Does anyone have any thoughts on what can be provided, if anything, as a satisfactory answer to these requests?

Wisdom of the Crowd:

• Response #1: For a commercial contract it should be sufficient to provide a certificate of good standing (or comparable to prove corporate existence) from the state of incorporation in lieu of the company's memorandum or articles. The particular authority of an officer to sign contracts can be murky, notwithstanding the company possibly being bound by "apparent authority", so I can understand the request for a power of attorney to prove authority of a person to execute a particular contract or types of contracts. With that in hand, the other party should not need a certificate of incumbency to list all officers and their authority. However, it would not be unusual for the other party to request a certificate of incumbency from the corporate secretary to support the position and authority of the officer who signs the power of attorney, but you could wait for them to ask for this.ⁱ

• Response #2: My admittedly minimal experience in dealing with Russian entities is that you just give up and find documents such as they are asking for -- they have a different concept of formality (just be glad they aren't demanding your corporate seal on the document as well, and even better that you aren't being asked to provide an apostille to authenticate the three documents you are being asked to provide!), as well as a basic unwillingness to draw those conclusions of authority we'd typically have in the States. At some point it was easier just to get them what they wanted versus trying to argue the point.Which certainly doesn't make the 'simple solution' person within me happy, but eventually practicalities take over.ⁱⁱ

• Response #3: My employer, a manufacturer of printing presses, has a Russian distributor who sells a large volume for us, and when we began doing business with them 4 years ago, were asked for the same documents.

• Our CEO wanted the business so much (and because he makes many decisions without consultation), he agreed. I provided those items, believing as you apparently do that they were unnecessary and intrusive.

• The good news is that they have not come back to bite us yet (I am referring to the POA) - and I have found other companies that do business with Russian entities that have been asked to provide the same documents, with no repercussions.

• Bottom line is that I agree that the requests are unnecessary, but if you find yourself in the position that your management gives in, it won't be more than an aggravation to you, if my experience is any indicator.

• By the way, our Russian distributor requested annual renewal of all three items, and while they insisted upon an updated POA, they settled for certificates of good standing to satisfy numbers 1 and 2.ⁱⁱⁱ

• Response #4: With the exception of the power of attorney, in my experience, these other requirements are rather standard and we certainly provide them when we are dealing with institutions such as lenders. While it is somewhat unusual to require them in a contractual setting, given that you are dealing with a transnational situation, it is not surprising.^iv

• Response #5: 1. Just because we don't need these documents in the US, that doesn't mean that a Russian transaction doesn't need them especially if they don't know your company. Since I know nothing about Russian law and practice I don't know. If you have Russian counsel or someone that can answer the question that might help. 2. Is there harm in providing them? I don't think so, but you would have to decide whether there is any risk or not. 3. Assuming there is no harm in providing them, how much time do you want to spend debating the need with the Russian company instead of taking the 20 or so minutes it would likely take to create the last one if something like it doesn't exist.^v

II. POWER OF ATTORNEY FORM FOR RUSSIAN ENTITY

Question:

On another note, other Russian entities have been insisting that we use a corporate stamp when executing documents. We finally gave in and created one for use only in Russia and the CIS.

• Response #1: I have also received similar requests from the other side in transactions in Russia. I agree with the other comments that if there is no harm providing the documents it is easier to spend the 20 minutes to prepare an incumbency certificate signed by the secretary then to pay your lawyers to educate the other side about US signature requirements for an hour. So long as the POA is to your employee, to give power to the other side to sign documents on your behalf (I've seen this request too). It should be fine. It sounds like they are just asking to document the authority of the person signing to actually sign on behalf of the company. As for the corporate seal, I have successfully explained to foreign counsel that US companies don't have corporate seals. They usually are satisfied with a notarized signature, with the seal of the notary on it.^vi