Changes in the rights to purchase and sell shares in foreign companies

LEGAL DIGEST, NEWS \ 19.12.2022

The President of the Russian Federation has signed a Decree that extends restrictions on transactions for the purchase of shares in foreign companies.

According to the text of the Decree, until December 31, 2023, Russian companies are prohibited from paying shares in the authorized capital of a non-resident – foreign company without the permission of the Central Bank of Russia (hereinafter – the CB RF). Previously, this restriction was in effect until December 31 of the current year.

To obtain the appropriate permission, Russian company needs to draw up an application in the form of Appendix 3, approved by the Decision of the Board of Directors of the CB RF dated March 25, 2022. The completed application can be submitted to the CB RF in both paper and electronic form, attaching the following documents:

1. copy of the constituent documents (if the applicant is a legal entity) or identity documents (if the applicant is a natural person);
2. copies of the contract, agreement, disclosing the essential terms of the operation and its content;
3. extract from the minutes of the general meeting of a legal entity having the appropriate authority to make a decision in the authorized capital of a non-resident;
4. copies of documents on the state registration of a non-resident legal entity under the legislation of the country where this entity is established, with information about the founders;
5. documents containing information about the beneficial owners of a non-resident;
6. information about the sufficiency of funds in foreign currency in the bank account through which the operation will be carried out;
7. information about the source of funds in foreign currency for the operation;
8. other documents contributing to the decision of the CB RF.

The deadline for submitting documents to the CB RF is not later than 10 working days from the date of the transaction for the payment of the share. The deadline for consideration of the application and making a decision by the CB RF is not more than 10 working days from the date of receipt of the application and documents.

The exception when obtaining permission from the CB RF is not required are operations:

• which are carried out in rubles or in foreign currency of states that are not included in the list of countries and territories that commit unfriendly actions against Russia, its legal entities and individuals.
• which are carried out in the currency of countries included in the list of foreign states and territories that commit unfriendly actions against Russia, its legal entities and individuals, in the amount of not more than the equivalent of 15,000,000 rubles at the exchange rate of the CB RF on the date of payment.

Please be reminded that the list of “unfriendly” countries is indicated in the Order No. 430-r approved by the Government of the Russian Federation dated March 5, 2022. If a resident company of a foreign state participates in the transaction, which is not at such Order, then it is possible to pay for a share in the business without obtaining permission from the CB RF.

Acsour carefully monitors these legislative changes and will inform you about the latest news on this topic.