New restrictions for companies from "non-friendly" countries

29/12/2022

The Governmental Subcomission of foreign investment control (Subcomission) has issued preliminary draft protocol determining some important guidelines with regard to activities of Russian legal entities having shareholders from “non-friendly countries”.

The Subcomission should apply the following approaches when deciding on granting the approval for the sale of assets / shares in Russian companies owned by “non-friendly” shareholders:

  • Independent appraisal report on value of shares should be provided by the applicant;
  • Sales price must be determined with minimum 50% discount from the value determined by the independent appraisal report;
  • New shareholders must commit to achieve certain KPI;
  • Sales price must be paid as deferred payment within 1-2 years OR 10% of the sales price must be paid as voluntary donation to the state budget

The Subcomission should apply the following approaches when deciding on granting the approval for the distribution of dividends in Russian companies owned by “non-friendly” shareholders (the approval is needed only for distribution of the amount exceeding 10 Mio. RUB per month):

  • Amount of dividends to be distributed cannot exceed 50% of the total amount of the company’s net profit of the previous year;
  • Subcomission performs the retrospective analysis of dividends’ payments for previous years;
  • Foreign shareholders must commit to continue their commercial activities in the Russian Federation;
  • Federal authorities must provide to the Subcomission sufficient evidence of significance of the respective company's activities and assessment of its impact on technological and industrial sovereignty of the Russian Federation;
  • Federal authorities must determine quarterly KPIs for the respective company; and
  • Dividends distribution on a quarterly basis by such company is subject to meeting the quarterly KPI.

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