Tatarstan approves the concept of family enterprises — what will it mean for business?
The Chamber of Commerce and Industry of the Republic of Tatarstan has explained when tangible support measures can be expected
This week, Tatarstan established a procedure under which an enterprise can be recognised as a family one — marking the first step towards supporting such businesses. At present, small and medium-sized enterprises that undergo the necessary procedure can only take pride in their new status, but specific support measures are expected to follow soon, the authors of the initiative told Realnoe Vremya. According to them, the new framework lays the groundwork for assisting such companies — more details in the report.
What family enterprises will receive
In Tatarstan, a procedure has been established under which certain medium or small businesses can be recognised as family enterprises. The corresponding decree was signed by the Prime Minister of the republic, Aleksey Pesoshin.
The new procedure is primarily intended to protect the small and medium-sized businesses themselves, emphasised Farid Abdulganiev, the Commissioner for the Protection of Entrepreneurs’ Rights in Tatarstan, in a conversation with Realnoe Vremya.
“The absence of a separate law creates a time bomb under such enterprises. For example, after the death of a company’s founder, there is a high likelihood that the family business may cease to exist due to disputes among heirs. This is not only a personal tragedy but also a blow to the economy,” said the Tatarstan business ombudsman.
According to the approved procedure, family enterprises will have to confirm their status annually, and the register of such companies will be maintained by the Chamber of Commerce and Industry of the republic.
As Shamil Ageev, Chairman of the Board of the Chamber of Commerce and Industry of Tatarstan, clarified in an interview with Realnoe Vremya, the new rules lay the foundation for the development and implementation of support measures for family businesses by the republic.
“At this stage, it gives businesses recognition and moral support. After changes in the tax structure, which will take place in the coming days, we will start considering specific support measures,” he told the publication.
Which businesses can be recognised as family enterprises
According to the decree, in order to obtain family status, a business must meet several key criteria. These include:
- More than 50% of shares (voting stock) in the authorised capital belonging to family members, and one family member being the sole executive or chairman of the board of directors;
- At least 50% of cooperative members or members of a farming enterprise belonging to the same family;
- At least 50% of employees of an individual entrepreneur being family members working in the enterprise as their primary place of employment.
Family members are recognised as spouses, parents and children, grandparents and grandchildren, brothers and sisters. To obtain family enterprise status, it is necessary to submit a package of documents to the Microcredit Company “Entrepreneurship Support Fund of the Republic of Tatarstan”.
According to the decree, the required documents include an extract from the Unified State Register of Legal Entities, documents confirming kinship, employment contracts, and insurance contribution reports. The document also defines the procedure for maintaining the register of family enterprises.
Why this matters
Family business is one of the key elements of small and medium-sized entrepreneurship in Russia. According to the Chamber of Commerce and Industry, there are about 4.5 million family companies in the country — nearly 74% of all organisations.
Despite the importance of family business, Russia still does not have a federal law that clearly defines the concept of “family business” and establishes measures of its support. This issue has been discussed at the federal level for several years, but no final decision has yet been made.
At the same time, the Ministry of Economic Development of Russia maintains a clear position: family business does not differ from other forms of business, and therefore, there is no need to create a separate regulatory framework for it.
“Meanwhile, the regions are not waiting: the parliaments of several federal subjects have already defined the concept of family business in their laws, opening access to support measures for such companies. Now Tatarstan has joined them,” noted Farid Abdulganiev.
The initiative to establish the status of family enterprises in Tatarstan was first proposed by the republic’s Chamber of Commerce and Industry in March. In June, the Cabinet of Ministers of Tatarstan published a document regulating the procedure for recognising small and medium-sized businesses as family enterprises. The procedure was officially approved by an October decree.