New requirements for transactions with shares in the MC of Russian companies

Legal Digest News
The Government Commission for the Control of Foreign Investments in the Russian Federation has supplemented the conditions for agreeing transactions with shares and stocks of Russian companies. The changes affected transactions that are carried out with the participation of organizations from "unfriendly" countries.

According to the decision of the Government Commission, the list of requirements was supplemented with the following provisions:

  1. The obligation to transfer funds to the budget of Russian Federation in an amount not less than 10% of half the market value of the assets indicated in the independent appraisal report within three months from the date of the transaction (applicable if the sale of assets occurred at a discount of less than 90% of the market value of the assets indicated in the independent appraisal report).
  2. Establishment of key performance indicators (KPIs) for buyers and/or the acquired company which provide for the preservation of the technological potential core business activities and jobs, as well as the fulfillment of obligations under contracts concluded with counterparties.
  3. Placement at organized auctions for up to 20% of the acquired stake in the charter capital of a public joint-stock company (PJSC). The term for starting such placement is no more than one year from the date of the transaction. In case of reorganization of the PJSC by merging with another legal entity, the term for placing shares at auctions is three years from the date of the transaction.
  4. Repurchase of an option at market value on the date of its exercise. It is necessary for the asset holder, who is a resident, to have an economic benefit. The validity period of the permit is limited to no more than two years from the date of the initial transaction.
  5. Making calculations when conducting transactions with foreign states that engage in hostile actions against the Russian Federation, its legal or natural persons, using the following methods:

  • transfer of funds into "Type C" accounts;
  • payment in Russian rubles within the banking system of the Russian Federation without transferring money abroad;
  • payment deferral when transferring funds to foreign accounts.

Please note that despite the Protocols of the meetings of the subcommittee of the Government Commission of December 22, 2022, No. 118/1 and March 2, 2023, No. 143/4, which have lost their validity, the following conditions, which companies must comply with when conducting transactions, remain unchanged:

  1. independent valuation of market value of assets and expert conclusion based on such valuation;
  2. sale of assets at a discount of less than 50% of the market value of the corresponding assets indicated in the asset valuation report;
  3. compliance with other requirements for the issuance of dividends, in accordance with the guidelines of the Russian Ministry of Finance and the Central Bank of Russia. For more information on these requirements, please follow the appropriate link.

If you have any questions regarding transactions with shares in the management company of the company, please contact the legal department of Acsour. Our experts will provide consultation on this topic.