The Ministry of Finance of the Russian Federation updated the conditions for transactions with foreign persons from unfriendly states

The Ministry of Finance of the Russian Federation updated the conditions for transactions with foreign persons from unfriendly states

According to the minutes of the subcommittee meeting of the Government Commission for Control over Foreign Investments in the Russian Federation dated 15 October 2024 No. 268/1 (communicated by the Ministry of Finance of Russia on 18.10.2024 No. 05-06-09/ ВН-45106), the conditions for issuing permits for transactions aimed at the purchase, sale or other disposal of shares of JSC and LLC in the charter capitals of Russian legal entities owned by foreign persons - residents of unfriendly states (or persons related to them) were changed.

The current list of unfriendly states to the Russian Federation was approved by the Order of the Government of the Russian Federation No. 430-r dated 05.03.2022.

According to the novelties, the following conditions shall be met in order to obtain authorization from the Government Commission for Control over Foreign Investments in the Russian Federation to carry out such transactions:

1. The transaction shall necessarily be carried out with a discount of at least 60% of the market value stated in the independent valuation report;

2. At least 35% of the asset market value, as per the independent appraisal, must be contributed to the federal budget. The payment can be made either in a single instalment or according to the following schedule:

  • 25% of the market value of the relevant assets as indicated in the independent valuation report shall be sent within one month from the date of the transaction;
  • 5% of the market value of the relevant assets indicated in the independent appraisal report shall be sent within one year from the date of the transaction;
  • 5% of the market value of the relevant assets specified in the independent appraisal report shall be sent within two years from the date of the transaction.

3. The transactions with assets with a market value exceeding 50 billion rubles shall be mandatorily approved by the President of the Russian Federation.

Previously, until 15 October 2024, the mandatory discount was not less than 50% of the market value of the relevant assets as indicated in an independent appraisal report, and the amount of the mandatory voluntary contribution to the budget of the Russian Federation was not less than 15% of the market value of the relevant assets.

Marillion legal advisory team is always ready to advise clients on various issues of corporate law, including support in transactions’ s approval, as well as to provide practical support in various procedures.

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