Restrictions on transactions with shares in the authorized capitals of Russian companies

LEGAL DIGEST, NEWS \ 21.10.2022

The President of the Russian Federation signed a Decree determining a special procedure for carrying out transactions with shares in the authorized capitals of Russian companies.

According to the text of the Decree, transactions with shares in the authorized capitals of Russian LLC can be carried out only on the basis of special permits of the Government Commission for the Control of Foreign Investments in the Russian Federation. This refers to transactions involving:

• residents – Russian companies and foreign legal entities – residents of foreign states that commit unfriendly acts regarding Russia;
• residents from “unfriendly” states;
• residents from “unfriendly” states and residents of other countries.

The restriction is applied to transactions that directly and (or) indirectly entail the establishment, modification or termination of the rights of ownership, use or disposal of shares in the authorized capital of Russian LLC. Therefore, depending on the provisions of an agreement, it may be necessary to obtain permit from a Government commission, including for the conclusion of corporate contracts, options, and collateral shares.

At the same time, the new rules are not applied to:

• transactions (operations) with respect to shares in the authorized capital of credit and non-credit financial organizations;
• legal relations in the field of implementation of the Sakhalin-2 project, which are regulated by Decree No. 416 of the President of the Russian Federation dated June 30, 2022,
• legal relations in the financial and fuel and energy spheres, which are regulated by Decree No. 520 of the President dated August 5, 2022.

The Government of the Russian Federation will determine the procedure for issuing permits separately in its Resolution.

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