The main issues on licensing

21st June 2013

Why do I need a license: the basic theoretical issues, general provisions

that regulates the licensing issue is the Federal Law dated May 4, 2011 № 99-FZ “On licensing certain types of activities”.

In accordance with this law, 50 types of activities require licensing.

In addition, the law has defines 11 areas of activity, for which it does not apply. Licensing in respect to them is carried out in a specific manner. These areas include banking, insurance, clearing and some others.

If the activity has been include in the list of licensed activities, further conduction of the activity is possible only after obtaining permission in government. Otherwise, an entrepreneur or a legal person may be held liable, including criminal liability. Administrative responsibility for conducting business without a license is regulated by Article 14.1 of the Administrative Code, and includes the following sanctions:

·        an administrative fine on citizens in the amount of two thousand to two thousand five hundred rubles with or without confiscation of manufactured products, tools, and raw materials;

·        for officials – from four thousand to five thousand rubles with or without confiscation of manufactured products, tools, and raw materials;

·        for legal entities – from forty thousand to fifty thousand rubles with or without confiscation of manufactured products, tools, and raw materials.

Conducting business without a license can result in attracting entrepreneurs to criminal liability for illegal business (Article 171 of the Criminal Code). The liability is the following:

a fine of up to three hundred thousand rubles or the salary or other income for a period of up to two years, a compulsory work for a period of one hundred and eighty to two hundred forty hours, or an arrest for a term of four to six months.

All entities that meet the licensing requirements and conditions have the right to obtain a license. At the same time, the law prohibits the employment in certain activities for individual entrepreneurs. As a rule, such activities include the development, manufacture and sale of military and dual-use narcotics, poisons, etc. Recently, production and sale of alcoholic beverages has become forbidden for individual entrepreneurs.

Obtaining a license

To get a license you need to write an application to the licensed agency, indicating the licensed activities.

The applicant’s (legal entity) statement must necessarily include brand name in full and in short, legal form and location of the entity.

If the applicant is an individual entrepreneur, the application shall contain details about him as a citizen: first name, last and middle names, place of residence, data from identification document. The application for a license must also include the details of the identity document of the applicant.

The applicant must attach a number of documents to the application for a license. Firstly, constitutive documents (for legal entities) – the original or a certified copy.

Secondly, documents showing the ability to meet their licensing requirements and conditions. The list of such document is defined by the relevant provision on licensing.

The license applicant must pay the state fee and attach this document (payment order, receipt) to the application. In accordance with the law of the Russian Federationthe fees for licensing is 2600 rubles, for reissuing of the document confirming the existence of a license – 200 rubles. However, a number of documents needed to obtain a license can be obtained only for a fee. Therefore, the final licensing costs are in the tens or even hundreds of times higher than the officially established charges.

A decision on issuing license is made within 45 days from the date of submitting the application for a license with all supporting documents. In addition, the licensing authority has to notify the license applicant of its decision during 45 days. Thus, within 45 days the licensing authority must inspect the documents submitted and carry out their decision about granting or not granting the license.

Perpetuity of license

Law on Licensing (Article 9) establishes perpetuity of a license.

Suspension of a license

The license shall be suspended by the licensing authority in the following cases:

1) imposing administrative on the licensee responsibility for failure to execute the order to eliminate gross violations of licensing requirements;

2) imposing administrative penalty on the licensee in the form of an administrative suspension for a flagrant violation of the licensing requirements.

In this case, the licensing authority suspends the license within 1 day.

In the first case, the suspended license can be resumed by the decision of the licensing authority from the day following the date of expiry of the re-issued regulation, or the day following the date of signing the audit report setting out the fact of early performance of the newly issued instruction.

In the second case, the suspended license can be resumed by the decision of the licensing authority from the day following the expiry date of the administrative suspension of the activities, or the day following the date of early termination of an administrative penalty in the form of an administrative suspension of the activities of the licensee by a court or officer federal of executive body exercising control and supervision in the field of safe operations, natural resources development, industrial safety and the safety of hydraulic structures.

Revocation of license

Law on Licensing provides for the possibility of revocation. The court has authority to revoke a license, which considers related appeals of the licensing authority.

The licensing authority appeals to the court in order to revoke the license if the licensee has not eliminated the violation of license terms and conditions in due time, which led to a suspension of the administrative activities of the licensee.

It should be noted that Law on licensing states that appealing to the court to revoke the license is a duty of a licensing authority, not the right. In this case, if the licensing authority failures to comply with of the order of an administrative license suspension (compliance with the terms of the license suspension, an indication of violations of license terms and conditions to the licensee indicating time-frames to eliminate them) the court can refuse to satisfy the appeal on license revocation (see, for instance, the Thirteenth Arbitration Court of Appeal dated June 7, 2007 on the case A56-342/2007).

The licensing control

The licensee will face with licensing control performed by the licensing authority when conducting its activities. License control is to verify compliance with license requirements and conditions stipulated by the regulation on licensing.

Licensing control is carried out in the manner provided by the Federal Law dated December 26, 2008 № 294-FZ “On the Protection of the rights of legal entities and individual entrepreneurs during state control (supervision) and municipal control” taking into account the characteristics of the organization and the nature of audits, regulated by licensing law.

 

 

 

 

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