Marillion informs on the adoption of new restrictions on transactions with persons from "non-friendly" countries. A special temporary procedure for transactions involving the acquisition by residents of exclusive rights to the results of intellectual property and means of individualization from right holders who are persons from "non-friendly" countries was established by the Decree of the President of the Russian Federation No. 430 of 20 May 2024.
Approval of transactions involving the acquisition by residents of exclusive intellectual property rights and means of individualization from right holders – persons from "non-friendly" countries after 20 May 2024
The Decree of the President of the Russian Federation No. 430 of 20 May 2024 (hereinafter referred to as "Decree No. 430") provides for restrictions on transactions involving the acquisition by residents of the Russian Federation of rights to certain intellectual property results and means of individualization from right holders - persons from “non-friendly” countries, which include:
- right holders from "non-friendly" countries;
- foreign "friendly" right holders controlled by persons from non-friendly" countries;
- Russian right holders controlled by persons from "non-friendly" countries.
The restrictions apply to the acquisition of exclusive rights to trademarks, inventions, utility models, industrial designs, know-how, selection achievements and other alienable objects not covered by the exceptions listed below (hereinafter referred to as "RID").
From the date of entry into force of the Decree No. 430 (20 May 2024) these transactions can be made only on the basis of a permit from the Government Commission for the Control of Foreign Investments in the Russian Federation (hereinafter referred to as the "Government Commission").
The permission of the Government Commission, if necessary, may contain:
- a condition requiring the payment of remuneration and other payments for such transactions using a special ruble "O" type account (hereinafter referred to as the "O" account) opened in an authorized Russian bank in accordance with Decree of the President of the Russian Federation dated 27 May 2022 No. 322 (hereinafter referred to as the Decree No. 322). At the same time, a subsequent transfer from type "O" account to the account of the right holder will also be possible only on the basis of a separate permit from the Government Commission.
- other conditions for the execution of these transactions.
The procedure for issuing permits by the Government Commission has not yet been approved.
Fulfillment of monetary obligations under transactions for the acquisition by residents of exclusive rights from right holders – persons from "non-friendly" countries, concluded before 20 May 2024, but not executed by that date.
The Decree No. 430 extends its effect to monetary obligations under transactions concluded before the date when the Decree entered into force (20 May 2024), but under which monetary obligations have not been fulfilled (in whole or in part) by the date when the Decree entered into force (20 May 2024).
Based on the provisions of the Decree No. 430, it clearly follows that this requirement applies to those monetary obligations that have not been fulfilled due to delay. Such obligations must be fulfilled by transferring funds to an account of type "O".
It does not clearly follow from the provisions of the Decree No. 430 whether the requirement for execution to an account of type "O" should apply to monetary obligations that are not fulfilled due to other circumstances unrelated to the delay (for example, due to the deferred payment provided for in the transaction).
Before official clarifications on this issue, we consider reasonable to adhere to a conservative approach and rely upon the fact that the fulfillment of a monetary obligation to an account of type "O" is mandatory for all transactions, regardless of the reasons why the monetary obligation was not fulfilled before the date when the Decree No. 430 entered into force.
Fulfillment of obligations under guarantees and sureties on transactions for the acquisition of exclusive rights to RID
In addition, there are funds to be transferred to a special "O" type account opened in the name of a foreign creditor or a person controlled by him:
- funds transferred by purchasers in order to fulfill monetary obligations to foreign creditors and persons controlled by them arising from independent guarantees (counter-guarantees) or sureties;
- funds transferred by guarantors (counterparties) who are not foreign creditors or persons controlled by them in order to fulfill monetary obligations to foreign creditors and persons controlled by them arising from independent guarantees (counter-guarantees).
Exceptions to the application of restrictions established by the Decree No. 430
The procedure established by the Decree No. 430 does not apply:
- to transactions involving the acquisition of exclusive rights to works of science, literature and art, to the results of performing activities (performance), to phonograms, to messages from broadcasting or cable broadcasting organizations;
- for transactions where the amount of the purchaser's obligations does not exceed RUB 15 million or an amount in a foreign currency equivalent to RUB 15 million.
Marillion experts have experience in advising clients on the structuring and execution of transactions, including those related to the alienation of rights to intellectual property and means of individualization, as well as obtaining the necessary permits/approvals from government authorities to perform actions/transactions.
We are ready to provide support on any issues related to transactions and settlements under restrictive measures.
