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On December 12 – 13, 2006, OAO Gazpromregiongaz, in association with the Federal Antimonopoly Service of Russia, the RF Supreme Court of Arbitration and the Federal Registration Service held the conference “Current Legal Issues of Gas-Distribution System”. Vegas-Lex Law firm acted as coordinator and advisor of the conference.

The event was attended by over a hundred representatives of Russian gas distribution companies, government bodies, industry media etc.

The conference dealt with the issues of interest pertaining to the operations of gas distribution companies: property relations, changes to antimonopoly procedures due to enactment of the Law “On Protection of Competition”, main problem points of intrabuilding gas-distribution equipment, new rules of circulation of large blocks of shares etc.

The opening speech addressed to the participants was delivered by Mr. Anatoly P. Epishev, Deputy General Director for corporate and property relations of OAO Gazpromregiongaz.

The first speaker to take the floor was Mr. Vladimir I. Konovalov, Head of Department for state registration of rights to enterprises as property complexes and line structures of the Federal Registration Service, Honored Jurist of the Russian Federation.

In his report Mr. Konovalov considered current issues related to the registration of rights to pipelines, pointing out dividing these facilities into movable and immovable property. The speaker noted the formal lack of a uniform methodology for dividing gas-distribution facilities into movable and immovable property, as well as the fact that the notion of the “production and technological complex” widely used in practice, was lacking in the Civil Code of the Russian Federation. At the same time, Mr. Konovalov pointed out the criteria under which facilities of the gas distribution system may be classified as immovable property (with appropriate statutory regulations being applied to them): the facility is a production and technological complex, and the legal provisions of the RF Civil Code on the complex thing are to be applied to it (Article 134 of the Civil Code); the object’s characteristics evidence its strong attachment to the land (as treated in Article 130 of the Civil Code).

The speaker emphasized that it was necessary for the rights holders to collect and present the documents with information on the characteristics of objects to classify them as immovable property, as well as documents confirming lawful use of the land plot. In conclusion of his speech, Mr. Konovalov answered numerous questions asked by the conference attendees.

The topic of property and land relations was continued by Ms Inessa I. Polubenina, Judge of the Supreme Arbitration Court of the Russian Federation who gave a detailed review and analysis of judicial and arbitration practice with regard to disputes related to application of land laws. Ms. Polubenina discussed, in particular, the legal consequences of incompliance with certain provisions of the Law “On the Enactment of the Land Code of the Russian Federation” on the part of parties of legal relations; explained the position of the Supreme Court authority on application of the Land Code regulations, including the legal relations arising between land plot owners and owners of properties situated thereon, and acquisition of rights to land plots.

Then the floor was given to Mr. Roman Y. Domaschenko, Director of the Southern Department of Vegas-Lex Law firm, told the audience about the specifics of state registration of property rights to gas-distribution networks, drawing on the Firm’s practical experience. The speaker described the existing procedure of state registration and gave practical advice on how to document and confirm the rights to pipelines, apply to the Federal Registration Service, ascertain the lawfulness of a registration authority’s actions, and carry out state registration on the basis of a court ruling.

Mr. Alexander A. Pirozhenko, Head of the Department for supervision and control over fuel and energy complex of the Federal Antimonopoly Service of Russia, presented the complex vision of the Federal Antimonopoly Service of Russia in respect of antimonopoly regulation of gas distribution networks. Mr. Pirozhenko reviewed the development of competition in the gas supply sector, problems faced by gas distribution business, and explained the position of the Federal Antimonopoly Service of Russia on the most common transactions with gas distribution assets (the subject of some controversy between the networks and the Federal Antimonopoly Service of Russia).

Ms Tatiana S. Boiko, senior specialist of the gas and coal industry division of the Department for supervision and control over fuel and energy complex of the Federal Antimonopoly Service of Russia, talked about novelties of the new Law ”On Protection of Competition” including deal approval matters. A certain part of Ms. Boiko’s report was devoted to the main types of antimonopoly breaches on the part of gas distribution networks, instances of abuse of domineering position.

Alexandra P. Vasukhnova, deputy head of Vegas-Lex corporate practice spoke about an important and insufficiently studied novelty of lawmakers – formalization of the natural monopolies’ duty to hold open auctions (tenders) for financial services. The report dealt with the history, organizational problems related to the inception of the respective regulation and the prospects of extending the existing open procedure to a wider range of goods, works and services.

During the discussion the attendees had the opportunity to pose their questions to the representatives of the Federal Antimonopoly Service of Russia.

Day two of the conference began with the speech Mr. Mikhail N. Karasev, J.D., Senior Professor of public law at the School of International Law of the All-Russian Academy of Foreign Trade, Advisor to the Department for general economic, industry development and financial legislation of the Legal Department of the RF Government, who spoke about the main problem points of intrabuilding gas equipment.

A number of issues related to the new rules of circulation of large stocks of shares was covered by Mr. Alexander A. Chernishev, senior associate at Corporate Law Practice of Vegas-Lex and Ms Olga Yu. Shishlannikova, legal advisor to the Center for Stock Market Development, expert of the Federal Service for Financial Markets of Russia.

Mr. Chernishev outlined the main provisions of the new rules for acquiring large stocks of shares of open joint-stock companies. Special attention was given to the requirements for voluntary and mandatory offers contemplated by Chapter XI.1 of the Federal Law “On Joint-Stock Companies” as well as changes to the competence of company bodies in connection with such offers.

In her report Ms Shishliannikova described the most complex aspects of minority shareholder squeeze-out from the viewpoint of lawmakers and pointed to certain aspects causing particular difficulties in implementing squeeze-outs. Being one of the lawmakers, Ms. Shishliannikova, informed the audience of proposed amendments to the Law “On Joint-Stock Companies” pertaining to the procedure for acquisition of large stocks of shares and minority shareholder squeeze-out.

In his closing speech, Mikhail A. Smirnov, Head of the corporate and legal division of the Legal Department of OAO Gazpromregiongaz thanked the conference participants, emphasized the importance and urgency of the legal issues related to functioning of gas distribution system and noted that it was necessary to prepare a uniform legal position.