By Decree No. 618 of 8 September 2022 (link) of Russian President Vladimir Putin, a special procedure was introduced to limit transactions involving shares of Russian limited liability companies (so-called “OOO”). 

The incipit of the Decree clarifies how the same represents an integration with the measures (that is, countermeasures to sanctions adopted primarily by the EU, USA and UK) adopted by the Russian Federation with Decrees No 81 of 1 March 2022 aimed at ensuring the financial stability of the country, and No 95 of 5 March 2022 aimed at regulating the arrangements for the fulfilment of obligations towards certain foreign creditors. 

Studio Padovan, from right to left Marco Padovan, Olga Manservigi Kichitskaia, Giulia Socci.

Studio Padovan, from right to left Marco Padovan, Olga Manservigi Kichitskaia, Giulia Socci.

The restriction introduced by the Russian President mainly affects the transfer of shares in the “OOOs” and any other transaction which directly and/or indirectly entails the creation, modification or cessation of ownership rights, right to use and/or transfer of shares in the share capital of limited liability companies (with the exclusion of credit institutions and non-credit financial organisations), as well as other rights from which the conditions for the management of such limited liability companies or the usual exercise of their commercial activities can be determined, when such operations are carried out between persons resident in the territory of the Russian Federation and natural or legal persons of citizenship or resident or registered in countries that have applied sanctions measures against the Russian Federation. 

Such transactions may therefore be carried out only after the authorisation of the Government Commission for the Control of Foreign Investments. Within 10 days of the entry into force of the decree, the Government of the Russian Federation must determine in detail the procedure for issuing the authorisation.

Among the other novelties introduced by the decree, it must be highlighted the power given to banks designated in the sanction lists of the “hostile countries” to return in rubles to legal persons established in the territory of the Russian Federation deposits on current accounts in foreign currency, provided that the amount is equivalent to the value of foreign currency bonds (regardless of the currency in which this value is expressed) and is calculated on the basis of the exchange rate determined by the Russian Central Bank. 

Finally, limited liability companies whose shares are held directly or indirectly by companies operating in the mining sector based in the territory of the Russian Federation are permitted not to make information on the activities carried out accessible to other members belonging to “hostile countries”.

GET TO KNOW THE AUTHORS: Marco Padovan, Giulia Socci, and Olga Manservigi Kichitskaia