Important developments in regulation of small innovation enterprises

IMPORTANT DEVELOPMENTS IN REGULATION OF SMALL INNOVATION ENTERPRISES (hereinafter «MIPs»), FOUNDED BY THE BUDGETARY EDUCATIONAL INSTITUTIONS OF HIGHER EDUCATION, AUTONOMOUS INSTITUTIONS, THE BUDGETARY SCIENTIFIC INSTITUTIONS AND AUTONOMOUS SCIENTIFIC INSTITUTIONS (hereinafter «universities and scientific institutions») FOR THE PRACTICAL USE (IMPLEMENTATION) OF THEIR RESULTS OF INTELLECTUAL ACTIVITIES

Due to entering into force of Article 103 of the Federal Law No. 273-FZ “On Education in the Russian Federation” and adoption of the amendments to Article 5 of the Federal Law No. 127-FZ "On Science and State Science and Technology Policy" starting from 1^st of September 2013:

• MIPs can be established also in the form of business partnerships;

• abolished the restriction of the minimum participation share of universities and scientific institutions in MIPs in the amount more than 25% for joint-stock companies and more than 33,3% for limited liability companies;

• excluded the requirement for third parties to make cash contributions for not less than a half of their shares in MIPs;

• the intellectual activity results, the right to use which universities and scientific organizations contribute to the charter capitals of MIPs, may be owned by universities and scientific institutions jointly with other parties;

• lifted the ban for MIPs to  provide to third parties under a contract or otherwise the right to use the intellectual activity results received from universities and scientific institutions as a contribution to their charter capitals;

• excluded the requirement to record on a separate balance and to use revenues of universities and scientific institutions received from the disposal of shares and deposits (applies to business partnerships) in MIPs only for the purposes of legal protection of intellectual activity results, payment of royalties to authors and performance of statutory activities.

In summary, starting from September 1, 2013 universities and scientific institutions are allowed to establish MIPs, including in the form of business partnerships, with any size of participation shares and to engage third parties to participate in MIPs charter capital without the need to make cash contributions for not less than a half of their shares, with the ability for universities and scientific institutions to solely use revenues received from the sale of shares and deposits in MIPs.

MIPs have received an opportunity to transfer to third parties, including by way of sublicensing, the right to use the intellectual activity results provided to them by universities and scientific institutions.