Over the past year and a half, the St. Petersburg Prosecutor's Office has conducted four inspections of construction companies and found about 230 violations of equity holders' rights, according to a statement from its press service. In particular, 139 equity participation agreements that had not been registered with the state were found in the Most-Prom company, which is carrying out construction on Morskoy Pekhoty Street. The prosecutor's office found another 70 unregistered agreements in the Absolut-Stroy company, whose construction site is located northwest of building 7, letter A, on Trefoleva Street.

The inspections resulted in the submission of representations to the management of these companies, according to a statement from the city prosecutor’s office.

Head of the investment projects department of the Absolut-Stroy company Dmitry Yarukov confirmed the fact that the company was inspected by the prosecutor's office. However, the company did not receive any representations, he claims. The management of the Most-Prom company declined to comment. However, according to a source familiar with the situation in the company, the company's facility does not fall under the 214th law. "The order for its construction was received more than a year before the law came into force. Probably, we are talking about some kind of misunderstanding, but just in case, the company has already transferred all contracts to the Federal Registration Service for state registration," says the interlocutor of Vedomosti.

Andrey Tetysh, Chairman of the Board of Directors of the Agency for Development and Research in Real Estate, regards inspections by law enforcement agencies as one of the forms of the authorities' appeal to business. "By taking on small companies, the prosecutor's office simply warns large developers: we are starting to check," Tetysh explains. These were planned inspections, the prosecutor's office press service reported.

The idea of eliminating violations of the law does not imply any sanctions in itself, explains Konstantin Afanasyev, a lawyer at the Grigoryev and Partners law firm. They can be applied if the company refuses to eliminate the violations. In this case, an official of the organization can be fined 20-30 minimum wages, a fine of 100-200 minimum wages can be issued to a legal entity. The prosecutor's office can transfer the case to Rospotrebnadzor, which, in turn, can impose a fine of 1,000-2,000 minimum wages. It is unlikely that the violating company will lose its license, because the violation does not directly concern construction, the lawyer believes.

The prosecutor's office's claims against the gray schemes of registering equity participation agreements are quite natural, believes Mark Lerner, CEO of the investment and construction company "Petropol". According to him, not many developers fully comply with the requirements of Law 214. According to him, the registration of agreements lasts about a month and a half, and the incoming cash flow is delayed for the same period.

Individual companies register equity holders' agreements with the Federal Registration Service (FRS), the vast majority continue to operate under schemes that circumvent the law, Tetysh agrees. For example, they conclude preliminary purchase and sale agreements or accept payment by bills of exchange.

Tetysh doubts that the signal from the supervisory authorities will be heard. “There are strong enough lawyers in the construction business to defend their schemes in court. At the same time, it is unknown whether the authorities are ready to take tough measures, close companies and collapse the market,” he says.

Lerner also believes that excessive harshness from the security forces could scare away buyers from the primary market. “This is not the most desirable scenario for the market,” he says. According to him, companies cannot yet do without funds from equity holders.

They do not have enough working capital, nor do they have enough property to secure a loan to finance the entire project, the developer explains.

According to his estimates, about 50% of the cost of housing construction projects is financed by equity holders, the rest of the funds the companies raise in the form of loans. Before the adoption of Law 214, equity holders' funds provided 80-90% of housing construction.

The prosecutor's office is for the shareholders