Sanctions Developments Resulting From the Conflict in Ukraine - Russia

August 22, 2022

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Following the U.S., EU and UK developments, the Russian Federation has announced a series of measures that impose sanctions-like restrictions on certain kinds of transactions related to Russia.

Currency Controls and Restrictions on the Entry into Certain Transactions under Presidential Decrees

Presidential Decree No. 79

On February 28, 2022, Russian President Putin signed Presidential Decree No. 79, “On the Application of Special Economic Measures in Relation to Unfriendly Actions of the United States of America and Allied Foreign States and International Organizations” (“Decree 1”).[1]  Decree 1 provides, among other things, that:

  • Russian residents[2] – participants in foreign economic activities – shall sell 80% of foreign currency[3] credited from January 1, 2022 to their accounts in Russian banks under foreign trade contracts with non-residents not later than 3 business days from the effective date of Decree 1 (until September 1, 2022, the deadline for the compulsory sale of 80% of foreign currency credited to exporters starting from April 19, 2022 is extended to 60 business days from the date of crediting;[4]
  • Beginning February 28, 2022, Russian residents – participants in foreign economic activities – were obliged to sell 80% (from May 24, 2022 – 50%)[5] of foreign currency credited to their accounts in Russian banks under foreign trade contracts with non-residents not later than 3 business days from the date when such foreign currency has been so credited (from May 26, 2022, this period was extended to 120 business days from the date of crediting such foreign currency);[6]

Starting from June 9, 2022, the compulsory sale of foreign currency proceeds shall be carried out in the amount determined by the Russian Governmental Commission for Control over Foreign Investment (the “Governmental Commission”) on the date set by the Board of Directors of the Bank of Russia[7] – on June 10, 2022, the Governmental Commission has abolished the above requirement for exporters to sell foreign currency proceeds[8] (including foreign currency proceeds credited to the accounts of residents – participants in foreign economic activities from February 28, 2022 to June 9, 2022 and not sold).[9]

In accordance with Presidential Decree of July 5, 2022 No. 430 “On repatriation of foreign currency and Russian currency by residents – participants in foreign economic activities” (“Decree 10”), the requirements for repatriation of foreign currency and rubles by residents – participants in foreign economic activities (under the terms of foreign trade agreements (contracts) concluded with non-residents and providing for transfer of goods, works and services to non-residents, transfer of information and intellectual products to them, including exclusive rights thereto) apply in an amount determined by the Governmental Commission (in accordance with Decree 1), but not less than the amount of foreign currency subject to mandatory sale. [10] Accordingly, under Decree 1 residents should now repatriate 0% of foreign currency proceeds and the requirement is actually abolished.[11]

  • Beginning March 1, 2022, the following operations shall be prohibited:

(1) the provision of foreign currency by Russian residents to non-residents under loan agreements (excluding the restructuring of loans[12]),

(2) the transfer of foreign currency by residents to their own accounts (deposits) opened with banks and other financial market organizations located outside the territory of the Russian Federation and the transfer of funds without opening a bank account using electronic means of payment provided by foreign payment service providers:

    • the prohibition applies to funds received in the form of dividends on Russian JSCs shares or distributed profits of Russian LLCs, business partnerships and production cooperatives;[13]
    • the prohibition does not apply to transfers of rubles by residents to their own accounts (deposits) in rubles opened with foreign banks, including transfers resulting in conversion of rubles credited to such accounts into foreign currency and their transfer to residents’ bank accounts (deposits) in foreign currency opened with foreign banks, or their further transfer to such bank accounts (deposits) of other persons)[14];

under to Decree 10, the Governmental Commission is entitled to impose additional restrictions on foreign currency transfers by residents to their accounts (deposits) abroad;

    • however, the transactions described in (1) - (2) in this bullet point may be made on the basis of permits issued by the Governmental Commission.[15] In particular, on March 10, 2022, with respect to residents’ transfers of foreign currency (via deposits) to their own accounts opened with banks and other financial market organizations located outside the territory of the Russian Federation, the Governmental Commission generally licensed:
      • transfers made for the purpose of financing the operational activities of foreign branches and representative offices of residents in an amount not exceeding the financing provided to them last year;
      • individuals’ transfers of funds received from non-residents in the form of wages, rent, coupons, and dividends on securities and other interest payments; and
      • individuals’ transfers of funds from their foreign accounts opened before March 1, 2022, to other foreign accounts reported to Russian tax authorities.[16]
    • further, the prohibition does not apply to transfers of funds to foreign accounts of foreign representative offices and branches of Russian legal entities or their employees.[17]

Presidential Decree No. 81

On March 1, 2022, Russian President Putin signed Presidential Decree No. 81, “On additional temporary economic measures to ensure financial stability in Russia,” which goes into effect from March 2, 2022 (“Decree 2”).[18]  Decree 2, among other things, introduces a special procedure for Russian residents to follow to engage in the following transactions with “persons of foreign states committing unfriendly acts” against Russia, a term defined to include persons associated with foreign states that commit unfriendly acts in relation to Russian legal entities and individuals[19] (including foreign persons that have their citizenship, their place of registration, their place of predominant business activity or their place of primary profit derived in such states) and with persons who are under the control[20] of such foreign persons, regardless of such persons’ places of their registration or places of predominant business activity:

  • transactions on granting loans and credits in Russian ruble (unless such loans or credits are granted to residents that are under the control of foreign persons associated with unfriendly states)[21]; and
  • transactions creating the right of ownership in securities and immovable property (including any transactions with other persons to the extent such other persons acquired said securities and immovable property from “persons of foreign states committing unfriendly acts” after February 22, 2022).

Such transactions may be made on the basis of permits issued by the Governmental Commission,[22] in particular:

  • on March 9, 2022, the Governmental Commission generally licensed the provision of loans by Russian credit institutions to Russian residents for the purpose of financing their business in Russia;[23]
  • on March 17, 2022, the Governmental Commission generally licensed (1) the purchase of immovable property by a foreign individual associated with unfriendly states, and (2) the sale of immovable property by a foreign individual associated with unfriendly states so long as the proceeds go into a C-type account;[24]
  • on April 4, 2022, the Governmental Commission generally licensed (1) gratuitous transactions involving transfer of ownership rights to immovable property with Russian residents and foreign persons associated with unfriendly states, provided that the parties to such transactions are spouses or close relatives, and (2) transactions at the expense of the property constituting mutual investment funds involving transfer of ownership rights to securities and real estate with Russian residents and residents-managing companies of such mutual investment funds, which investment units are held, among others, by foreign persons associated with unfriendly states or controlled by them;[25]
  • on, April 11, 2022, the Governmental Commission generally licensed (1) transactions involving transfer of ownership rights to securities and immovable property between a Russian resident and a Russian resident that is a financial organization under the control of foreign persons associated with unfriendly made on their own behalf and at their own expense or at the expense of clients who are not foreign persons associated with unfriendly states, and (2) transactions involving transfer of ownership rights to immovable property acquired (disposed of) by Russian legal entities with a direct or indirect shareholding of foreign persons associated with unfriendly states (or persons under their control) in the share capital of such entities: (i) for public JSCs (PJSCs) – not more than 50% minus 1 share; (ii) for other joint stock companies (JSCs) – not more than 25% minus 1 share; (iii) for LLCs - not more than 25% minus 1 vote;[26]
  • on April 19, 2022, the Governmental Commission generally licensed, until July 1, 2022, sale of securities of foreign issuers, including foreign investment funds, constituting the mutual investment funds as of February 22, 2022 by residents-managing companies of such mutual investment funds to foreign persons associated with unfriendly states and (or) persons controlled by such foreign persons, provided that the funds received for the transactions (operations) are credited in full to bank accounts opened with Russian credit institutions;[27]
  • on April 21, 2022, the Governmental Commission generally licensed transactions involving transfer of the rights to securities issued by Russian issuers controlled by foreign persons associated with unfriendly states (or persons under their control) from Russian residents to such issuers;[28]
  • on May 23, 2022, the Governmental Commission generally licensed gratuitous transactions and transactions in an amount not exceeding 1 ruble involving transfer of ownership rights to securities by foreign persons associated with unfriendly states to Russian residents, provided that the parties to such transactions are spouses or close relatives;[29]
  • on May 23, 2022, the Governmental Commission generally licensed, until September 1, 2022, crediting of foreign currency received from non-resident legal entities controlled by Russian entities (which ultimate beneficiaries are Russian individuals) information on control over which has been disclosed to the Russian tax authorities by residents to their foreign accounts (deposits) if such credited foreign currency is a refund of amounts under loan agreements concluded between such residents and non-residents and loans were granted by residents from their foreign accounts (deposits);[30]
  • on May 30, 2022, the Governmental Commission generally licensed transfer of funds in foreign currency by residents – individuals to their accounts (deposits) opened with banks and other financial market organisations located in the territory of friendly states as a result of transfers from their foreign accounts, provided that information on such accounts has been disclosed to Russian tax authorities;[31]
  • on June 8, 2022, the Governmental Commission generally licensed, until September 1, 2022, transactions carried out (executed) by Russian credit institutions and non-credit financial institutions that involve transfer of the rights to foreign securities alienated to persons associated with unfriendly states which, as of February 22, 2022, belonged to such credit institutions and non-credit financial institutions as well as to their residents – clients, provided that the funds are credited to a bank account opened with a Russian credit institution;[32]
  • on June 14, 2022, the Governmental Commission generally licensed transactions to credit foreign accounts (deposits) of residents – individuals with funds in foreign currency received from non-residents (a) under transactions involving transfer of the rights to immovable property located outside the Russian Federation, and (b) under transactions involving transfer of the rights to securities, or (c) as a result of redemption of securities held with a foreign depository, foreign bank or other organisation abroad;[33]
  • on June 15, 2022, the Governmental Commission generally licensed transactions (operations) carried out (executed) by residents that entail title to immovable property sold at auction and belonging to bankrupt residents – legal entities controlled by foreign entities associated with unfriendly states;[34]
  • on June 21, 2022, the Governmental Commission generally licensed transactions (operations) carried out (executed) by residents that involve transfer of the rights to immovable property alienated by legal entities – foreign persons associated with unfriendly states and (or) persons controlled by such foreign persons and not incorporated in the Russian Federation, provided that settlements are made using a C-type account;[35]
  • on June 21, 2022, the Governmental Commission generally licensed crediting of foreign currency proceeds by residents – participants in foreign economic activities to their accounts (deposits) opened abroad;[36]
  • on July 1, 2022, the Governmental Commission generally licensed transfers by residents – individuals of foreign currency (a) under loan agreements – to non-residents under the control of Russian individuals (in case information on such control is properly disclosed to the Russian tax authorities), provided that funds are transferred to maintain a property owned by non-residents – borrowers and located abroad; (b) to their accounts (deposits) abroad to maintain a property owned by the relevant residents and located abroad, or to pay their expenses (or expenses of spouses and close relatives) for education and medical services;[37]
  • on July 1, 2022, the Governmental Commission generally licensed transfers of foreign currency received from non–residents by residents – individuals to their accounts (deposits) opened with banks located on the territory of the EAEU member states or states with which the automatic exchange of financial information is carried out, as a refund of amounts under loan agreements concluded between such residents and non-residents before April 14, 2018 (except for agreements, the essential terms of which were amended after April 14, 2018);[38]
  • on July 7, 2022, the Governmental Commission generally licensed, until September 1, 2022, fulfillment of loan obligations in the foreign currency of the loan provided by foreign banks – by residents – borrowers under the control of Russian entities, subject to early discharge of such an obligation to the extent of not less than 20% of the outstanding loan;[39]
  • on July 20, 2022, the Governmental Commission generally licensed, until October 1, 2022, foreign exchange transactions carried out by residents and relating to the granting of loans in foreign currency to non-residents that are not foreign persons associated with unfriendly states and foreign persons under the control of such persons;[40]
  • on August 10, 2022, the Governmental Commission generally licensed crediting of funds relating to dividends on shares of Russian JSCs or profits of Russian LLCs, business partnerships and production cooperatives by residents to accounts (deposits) opened with foreign banks that are subsidiaries of authorised banks (Russian credit institutions licensed by the Bank of Russia to conduct banking operations with funds in foreign currency) within the general limits established by the Bank of Russia.[41]

On April 8, 2022, the Governmental Commission supported proposals of the Ministry of Finance of the Russian Federation and the Bank of Russia (a) to terminate the issuance of permits for payments on Eurobonds in the manner set out in the issue documentation, and (b) to recommend to borrowers/issuers of Eurobonds to make payments to Russian holders of Eurobonds holding them through the Russian accounting infrastructure by transferring an equivalent amount in rubles (through Russian depositories without transferring funds to C-type accounts) or to make early redemption of Eurobonds with settlement in rubles through the Russian securities market infrastructure.[42]

No license is required if a transaction does not involve the transfer of funds, including the conversion of depositary receipts for shares of a Russian issuer into such shares, provided that the shares are credited to a depositary account of the holder of the respective depositary receipts.[43]

In addition, transactions creating the right of ownership of securities may be carried out at organized trades on the basis of permits issued by the Russian Central Bank upon agreement with the Russian Ministry of Finance.  The restrictions do not apply to transactions to which the Russian Central Bank or state bodies are parties.

Further, under Presidential Decree No. 254 “On temporary order of settlement of financial obligations in the field of corporate relations to certain foreign creditors” the following transactions have been exempted from the restrictions of Decree 2:

  • purchase of immovable property by citizens of unfriendly states;
  • sale of immovable property by citizens of unfriendly states, provided that the proceeds are credited to a C-type account;
  • gratuitous transfer of immovable property from citizens of unfriendly states to spouses or close relatives;
  • issuance of new shares and bonds by Russian legal entities to foreign persons from unfriendly states or persons under their control provided that (a) the issuer is 50% or more owned by, or is a 50% or more owner of, such person and such shares and bonds are paid for in rubles, or (b) upon such issuance such person will own no more than 25% of the issuer’s shares. [44]

Presidential Decree No. 95

On March 5, 2022, Russian President Putin signed Presidential Decree No. 95, “On Temporary Order of Settlement of Obligations to Certain Foreign Lenders” (“Decree 3”).[45]  Decree 3 establishes a special temporary debt settlement procedure by which:

  • creditors who are residents of the Russian Federation and creditors from states which are not unfriendly states will be able to receive funds due to them under existing debt obligations from residents of the Russian Federation in rubles; and
  • creditors from unfriendly states will be able to receive funds due to them under existing debt obligations from residents of the Russian Federation in rubles in special, so called “C-type” accounts at Russian and non-Russian credit institutions (the Russian Central Bank is expected to issue further guidance on these “C-type accounts” in due course), and may be able to engage in transactions involving securities registered in “C-type accounts” and make tax payments and engage in other transactions between “C-type accounts.”
  • For the purposes of Decree 3, such obligations of residents include, inter alia, dividends, coupons (interest) on securities (e.g., eurobonds).[46]
  • Further, under Presidential Decree No. 254 “On temporary order of settlement of financial obligations in the field of corporate relations to certain foreign creditors” it has been clarified that the special debt repayment regime established by Decree 3 also extends to guarantees provided by Russian residents to secure debt owed to foreign persons from unfriendly states or persons under their control. [47]
  • The Russian Central Bank and the Russian Ministry of Finance may issue special exceptions from the above-described Decree 3 procedures.
  • On June 24, 2022, (subject to amendments as of July 22, 2022)[48] the Russian Central Bank issued additional guidance regarding the C-type accounts opened for residents and non-residents:
    • funds may be credited to C-type accounts opened for non-residents:
      • from Russia residents – (a) for operations (i.e., transactions) listed in Decree 3, (b) pursuant to the obligations of residents listed in Presidential Decree No. 179, (c) for making payments in accordance with Presidential Decree No. 254 (i.e. for operations that are subject to the procedure for the obligations fulfilment under Decree 3), and (d) for operations (i.e., transactions) licensed by a subcommittee of the Governmental Commission;
      • from C-type accounts, brokerage, special brokerage, clearing and trading bank accounts; or
      • if such funds were erroneously debited from a C-type bank account;
    • funds may be debited from C-type accounts opened for non-residents:
      • to make mandatory payments;
      • for the purchase of OFZs (Russian sovereign bonds), as well as when trading such bonds;
      • to C-type accounts, brokerage, special brokerage, clearing and trading bank accounts;
      • for payment of commissions to the bank servicing the account, the broker that opened the C-type special brokerage account, the depository servicing the C-type depositary account, and other commissions related to transactions with securities credited to С-type depositary accounts;
      • for transfers to residents in connection with transfer of securities belonging to residents and accounted for in a C-type depositary accounts of foreign nominee holders, opened to foreign organisations accounting securities rights in Russian depositories, to depositary accounts of residents opened in Russian depositories;
      • for payment of penalties on operations (i.e., transactions) that are subject to the procedure for the obligations fulfilment under Decree 3;
      • for return of funds credited to a C-type bank account of the relevant payer, provided that such funds were credited under an obligation fulfilled in any other way not contradicting the legislation of the Russian Federation; or
      • if such funds were erroneously credited to a C-type bank account;
    • funds may be credited to C-type accounts opened for residents:
      • from residents – debtors under operations (i.e., transactions) that are subject to the procedure for obligations fulfilment under Presidential Decree No. 95, in cases of claims assignment to residents by foreign creditors associated with unfriendly states or by persons controlled by such foreign persons and not incorporated in the Russian Federation; or
      • if such funds were erroneously debited from a C-type bank account;
      • funds may be debited from C-type accounts opened for residents:
      • to make mandatory payments (e.g., taxes, duties, levies);
      • for payment of commissions to the bank servicing a C-type bank account; or
      • if such funds were erroneously debited from a C-type bank account.[49]

On April 4, 2022, the Russian Central Bank clarified that the performance of the obligations regulated by Decree 3 in accordance with the foregoing procedure shall be recognised as a proper performance of such obligations and shall not be deemed an event of default on this ground. If a foreign creditor claims that an event of default has occurred, Russian creditors cannot consider it as grounds for invoking cross-default provisions with respect to other obligations of the Russian debtor.[50]

Obligations of Russian legal entities related to the issue of eurobonds are also deemed properly performed if the payment is made to a C-type bank account, except for the following transactions with payments made in rubles in an amount equivalent to the amount in foreign currency, without using a C-type bank account:

  • transfer of funds on the basis of an application of a resident or a foreign creditor which is not a person of an unfriendly state to the bank account of the respective creditor;
  • transfer of funds to the bank account of a depositary which in accordance with the debtor’s request provides information on the persons exercising the rights on eurobonds, for further transfer of such funds in favour of such persons;

in each of the above cases – provided that securities are recorded on depositary accounts with a nominee holder and information on such creditors is received by the debtor from the depositary pursuant to its request.[51]

Presidential Decree No. 126

On March 18, 2022, Russian President Putin signed Presidential Decree No. 126, “On additional temporary economic measures to ensure the financial stability of the Russian Federation in the sphere of currency regulation” (“Decree 5”).[52]  Decree 5 authorizes the Russian Central Bank to limit the maximum value of the following transactions:

  • pre-payment or advance payment by residents to non-resident foreign persons under certain contracts;
  • transfer of funds from Russian accounts of non-resident foreign legal entities incorporated in unfriendly states to accounts of non-resident foreign legal entities that are not persons of unfriendly states;
  • transfer of funds from Russian accounts of non-resident foreign legal entities that are not persons of unfriendly states to accounts opened in unfriendly states;
  • transfer (without opening accounts) of funds, including electronic money, by foreign persons of unfriendly states to non-resident foreign legal entities that are not persons of unfriendly states;
  • transfer (without opening accounts) of funds, including electronic money, by non-resident foreign legal entities that are not persons of unfriendly states to banks and other financial market organizations located in unfriendly states; and
  • purchase of foreign currency by non-resident legal entities on the internal currency market of the Russian Federation.

On April 1, 2022, the Board of Directors of the Bank of Russia limited certain transactions as follows:

  • pre-payment or advance payment by residents (except for individuals who are not individual entrepreneurs, credit institutions and state development corporation “VEB.RF”) to foreign persons is capped at 30% of the amount of obligations under each contract relating to provision of services or performance of works, transfer of information, intellectual property rights by non-residents (on July 19, 2022, the Bank of Russia abolished the restriction)[53];
  • purchases of foreign currency by non-resident legal entities from unfriendly states on the internal currency market of the Russian Federation are suspended (on July 19, 2022, the Bank of Russia allowed non-resident banks from unfriendly states to carry out purchase and sale transactions related to exchange of one foreign currency for another foreign currency on the internal currency market of the Russian Federation, as well as the relevant delivery currency forwards and swap contracts, provided that prices in such agreements shall not deviate by more than 2% from prices for similar instruments on Russian stock exchange trading and international markets).[54]

The Governmental Commission is authorized to except transactions from the relevant value limits set by the Russian Central Bank.

In addition, until December 31, 2022, Decree 5 provides that the following transactions will require a permit from the Russian Central Bank:

  • payment by a Russian resident for subscribed shares or another form of equity of a non-resident legal entity;

from April 1, 2022 (subject to amended requirements for residents to pay for equity of a non-resident legal entity from June 1, 2022)[55], the restriction does not apply to transactions related to payment for subscribed shares or another form of equity of a non-resident legal entity that is not a resident of an unfriendly state, if (a) the transaction is in rubles or in foreign currency of a non-unfriendly state, and (b) the amount of subscribed shares or another form of equity does not exceed 15 million rubles or its equivalent in foreign currency at the Bank of Russia’s official exchange rate as of the payment date;[56]

  • contribution by a Russian resident to a non-resident in the form of capital investment under a general partnership agreement.

Lastly, until September 1, 2022, Decree 5 provides that obligations denominated in foreign currency under bank or deposit account agreements between sanctioned Russian credit institutions may be performed in rubles at the official exchange rate of the Russian Central Bank (provided that the obligations arose before the relevant sanctions were imposed).

Presidential Decree No. 252

On May 3, 2022, Russian President Putin signed Presidential Decree No. 252, “On the application of response special economic measures in connection with unfriendly actions of certain foreign states and international organisations” (“Decree 6”).[57] Decree 6 basically establishes a framework for Russian blocking sanctions:

  • Decree 6 prohibits Russian state and local authorities, as well as “organisations and individuals under the jurisdiction of the Russian Federation” (i) to enter into transactions with sanctioned persons, (ii) to perform obligations under transactions with sanctioned persons, and (iii) to execute financial operations to which sanctioned persons are beneficiaries (the sanctions also extend to entities under control of sanctioned persons)[58];
  • Decree 6 prohibits to export outside the territory of the Russian Federation products and raw materials which production or extraction takes place in the Russian Federation if such products and raw materials are supplied for the benefit of sanctioned persons or by sanctioned persons for the benefit of other persons.

On May 11, 2022, in accordance with Decree 6 the Russian Government adopted Governmental Decree No. 851[59] that, among other things, establishes:

  • a list of sanctioned persons – 31 legal entities, most of which belong to the Gazprom Germania group of companies;
  • additional criteria for prohibited transactions:
    • transactions involving the entry into Russian ports of vessels owned and/or chartered by, for or on behalf of sanctioned persons;
    • transactions for the benefit of sanctioned persons;
    • transactions involving payments, securities transfers (and other operations) with and/or for the benefit of sanctioned persons; and
  • the Ministry of Finance of the Russian Federation as the body authorized for submitting proposals to the Russian Government to amend the list of sanctioned persons, as well as to issue temporary licenses for certain transactions with sanctioned persons.

Presidential Decree No. 254

On May 4, 2022, Russian President Putin signed Presidential Decree No. 254, “On temporary order of settlement of financial obligations in the field of corporate relations to certain foreign creditors” (“Decree 7”).[60] Among other things:

  • Decree 7 restricts payment of dividends by Russian LLCs to foreign persons associated with unfriendly states and persons under their control. Dividends, if declared, may be paid to such persons only in rubles to C-type accounts, where they will be under a restricted regime. A license authorizing payment of dividends in the ordinary manner may be issued by the Bank of Russia (for LLCs that are credit institutions and financial organizations) or the Ministry of Finance, as agreed with the Bank of Russia (for other LLCs);
  • under Decree 7, a person shall not be deemed a person associated with unfriendly states (for the purposes of previously issued Decree 2 and Decree 3) if:
    • such person is under control of a person whose lex societatis is the law of a foreign state other than an unfriendly state; or
    • such person is under control of a foreign state other than an unfriendly state,

in each case provided that such control was established before March 1, 2022.

Presidential Decree No. 322

On May 27, 2022, President Putin signed Presidential Decree No. 322 “On temporary procedure for fulfilling obligations to certain rights holders (licensors)” (“Decree 8”), which introduces a temporary procedure for fulfilling obligations (notwithstanding the period of time when the obligation arises and the payment is required to be made, the nature of the obligation or the type of agreement (obligation)) arising from the use of the results of intellectual activity and/or means of individualisation, the exclusive rights to which belong to, among others, the following licensors:

  • licensors that are persons of unfriendly states or controlled by such persons (unless such licensors (i) continue to duly perform their obligations under the license agreements or (ii) are controlled by Russian persons and information on such control has been disclosed to the tax authorities of the Russian Federation);
  • licensors that have publicly supported or called for imposition of sanctions against Russia; and
  • licensors that, after February 23, 2022, prohibited the use of their intellectual property in Russia (including for certain Russian persons only), or ceased, suspended or substantially restricted the manufacture or supply of goods, provision of services or performance of works in Russia where such actions were motivated by reasons unrelated to economic feasibility.

Decree 8 provides that Russian legal entities and individuals which have license agreements with such licensors are required to make payments under such agreements in rubles only to special O-type accounts, opened with Russian banks. Russian licensees who have made payments in this way will be able to continue to use the relevant intellectual property even if the licensor has revoked the license.

The licensor will be able to withdraw funds from its O-type account only with the license of the Governmental Commission.[61]

Among other things, Decree 8 may apply to legal relations arising from the granting of sublicenses by a Russian person, as well as distribution, commercial concession and other similar agreements concluded with a Russian person, provided that the licensor is subject to the provisions of Decree 8 (as the debtor considers) and the debtor informs the relevant Russian person (a sublicensor or distributor) about it – in such case, the procedure for fulfilling monetary obligations under Decree 8 applies only to payments between the licensor and the Russian person (a sublicensor or distributor) with respect to which the debtor has notified that settlements are required to be made under the procedure established in Decree 8.[62]

On June 10, 2022, the Board of Directors of the Bank of Russia decided to establish the following regime for special ruble O-type accounts:

  • funds may be credited to O-type accounts:
    • if such funds are received by right holders (licensors) from debtors in cases listed in Decree 8; or
    • if such funds were erroneously debited from an O-type bank account;
  • funds may be debited from O-type accounts:
    • to bank accounts or other accounts of right holders (licensors), including accounts opened with banks located outside the territory of the Russian Federation, provided that a license permitting such operations has been issued by the Governmental Commission; or
    • for payment of commissions to the authorized bank servicing an O-type account;
    • if such funds were erroneously credited to an O-type bank account.[63]

Presidential Decree No. 394

On June 22, 2022, President Putin signed Presidential Decree No. 394 “On temporary procedure for the execution of Russian sovereign debt obligations to residents and foreign creditors, expressed in sovereign securities with nominal value indicated in foreign currency” (“Decree 9”), which introduces a temporary procedure for the execution of Russian sovereign debt obligations expressed in Russian Eurobonds.

Decree 9, among other things, establishes the following:

  • to Eurobond holders whose holding rights are accounted for in NCO JSC National Settlement Depository (“NSD”) or by Russian depositories without the participation of foreign depositories (Group I holders), funds will be paid out in the ordinary manner provided for by the Federal Law “On the securities market” (“cascade payments”);
  • to Eurobond holders whose holding rights are accounted for in Russian depositories with the participation of foreign depositories (Group II holders), funds will be paid out by NSD through Russian securities depositories (without the participation of foreign intermediaries) upon disclosure by the relevant Russian depositories of information on the number of Eurobonds held in respect of their depositors at NSD’s request;
  • funds remaining after transfers in favor of Group I and Group II holders are credited by NSD to the special ruble I-type account from which payments will be made to Eurobond holders who cannot transfer funds under the standard procedures due to defaults of foreign settlement and clearing institutions (Group III holders);

in each of the above cases – the amount of coupon on Russian Eurobonds or the amount of funds to be paid on Russian Eurobonds is determined taking into account the indexation at the exchange rate of the Russian domestic currency market (payments are made in rubles at the relevant exchange rate),[64] and payments are made without C-type accounts.[65]

Presidential Decree No. 520

On August 5, 2022, President Putin signed Presidential Decree No. 520 “On the application of special economic measures in the financial and fuel-energy sectors in connection with unfriendly actions of certain foreign states and international organisations” (“Decree 11”).

Decree 11 prohibits, among other things, until December 31, 2022, any transactions which result in, directly or indirectly, creation, modification or termination of ownership rights or encumbrances with respect to:

  • shares of Russian strategic entities (JSCs);
  • shares, participation interests of Russian companies in which the strategic entities referred to above own, directly or indirectly, shares, participation interests;
  • shares, participation interests of Russian companies which produce equipment for energy sector or provide maintenance or repair services of such equipment, or produce and supply heat and/or electric energy, or refine oil, oil raw materials and produce the relevant refined products (list of such companies will be determined by the Russian President);
  • shares, participation interests of Russian credit institutions (list of such institutions will be determined by the Russian President); and
  • shares, participation interests of Russian subsoil users meeting certain criteria,

in each case owned by foreign persons of unfriendly states or persons controlled by them.

Transactions made in violation of Decree 11 shall be null and void, and the person who acquired the relevant shares, participation interests shall have no rights attaching to them.

The Russian President may, however, issue a special license permitting a transaction falling within the scope of Decree 11.[66]

Presidential Decree No. 529

On August 8, 2022, President Putin signed Presidential Decree No. 529 “On the temporary procedure for the performance of obligations under bank account (deposit) agreements denominated in foreign currency and obligations under bonds issued by foreign entities” (“Decree 12”).

Decree 12 provides for, among other things:

  • certain exemptions from the requirements set out in the Russian currency legislation (the exemptions are valid unless the Russian Federal Law “On Currency Regulation and Currency Control” is amended):
    • within implementing Decree 10, the limit on foreign currency transfers by resident individuals to foreign accounts of other resident individuals is not applicable (the daily limit of USD 5,000 and the equivalent in another currency is abolished);
    • within carrying out foreign trade activities and/or granting and repaying loans by Russian legal entities and individual entrepreneurs:

(a) the requirements to carry out settlements through bank accounts at authorised banks do not apply;

(b) requirements to repatriate foreign currency proceeds do not apply; and

(c) unless otherwise provided by the Russian Presidential decrees, the relevant Russian persons are entitled to offset their claims against liabilities to non-residents, or to replace obligations of non-residents with new obligations (except for cases determined by the Russian Government as agreed with the Bank of Russia);

  • a special procedure for obligations performance by Russian credit institutions subject to sanctions (restrictive measures):
    • if sanctions have been imposed on a Russian credit institution and such sanctions prevent the exercise of its rights of claim under bank account (deposit) agreements concluded with a foreign credit institution in foreign currency, such Russian credit institution is entitled to:

(a) suspend (unless sanctions are lifted) the fulfillment of obligations under bank account (deposit) agreements with its clients – legal entities or individual entrepreneurs in terms of conducting transactions with monetary funds received after August 8, 2022 (provided that such obligations are nominated in the same foreign currency as the obligations under the bank account (deposit) agreements concluded with the foreign credit institution); or

(b) as agreed with a client, to transfer rights of claim under the bank account (deposit) agreement concluded with the foreign credit institution to the client – legal entity or individual entrepreneur (against its obligations to the client);

  • a special procedure for obligations performance by Russian debtors to Eurobonds holders:
    • in order to perform obligations to Eurobonds holders, an obliged Russian legal entity may, on the basis of licenses granted by the Bank of Russia (in relation to the obligations performance by credit institutions and non-credit financial institutions) or the Governmental Commission (in relation to the obligations performance by other debtors), submit to a Russian credit institution an application to open a D-type ruble account on behalf of one or more Eurobonds holders (non-residents and/or residents) whose Eurobond rights are accounted by a foreign depositary;
    • payments on Eurobonds to D-type accounts are made to Eurobonds holders (non-residents and/or residents) who have consented to accept obligations performance using D-type accounts, in rubles at the official exchange rate of the Bank of Russia on the payment date;
    • the Russian debtor’s obligations to resident Eurobond holders, whose Eurobond rights are accounted by a foreign depositary, and non-residents not associated with unfriendly states (and not under control of such foreign persons), are allowed to be performed by crediting money in rubles to bank accounts opened with Russian credit institutions;
    • a resident Eurobonds holder who has not received payments under Eurobonds due to a foreign depositary defaulting on its obligations as a result of sanctions, has the right to assign or otherwise transfer its rights of claim to a foreign depositary in favour of a foreign creditor against its obligations to such creditor (on the basis of a license granted by the Bank of Russia (for credit institutions and non-credit financial institutions) or the Russian Ministry of Finance as agreed with the Bank of Russia (in relation to other debtors), and subject to confirmation of relevant claims and obligations by the Russian depositary).[67]

On August 11, the Bank of Russia issued additional guidance regarding D-type accounts opened for residents and non-residents:

  • funds may be credited to D-type accounts:
    • if the funds are transferred in accordance with Decree 12; or
    • if the funds were erroneously debited from the D-type account;
  • funds may be debited from D-type accounts:
    • for crediting to a bank account of the respective Eurobond holder;
    • for converting the funds into foreign currency for further transfer to a bank account of the respective Eurobond holder;
    • for return of the funds to a Russian debtor if the obligation, for which the funds have been credited, is fulfilled in any other way not contradicting the Russian law;
    • for payment of fees and commissions of the Russian bank servicing respective D-type account; or
    • if the funds were erroneously credited to the D-type account.[68]

Additional Currency Controls Introduced by the Bank of Russia

On May 16, 2022 (subject to amended thresholds for funds transfers made by individuals to accounts opened abroad from July 1, 2022)[69], the Bank of Russia established the following restrictions on the amounts of money transfers made to accounts opened abroad, until September 30, 2022:

  • residents of Russia and non-residents from friendly countries may transfer up to one million US dollars or the equivalent in any other foreign currency per calendar month from their accounts with Russian banks to their accounts or other individuals abroad;
  • Russian residents and non-residents from friendly countries can still transfer no more than 10,000 US dollars or the equivalent in any other currency per month if money transfers are made through companies that provide money transfer services without opening an account;
  • non-resident individuals from friendly countries working in Russia under labour or civil law contracts may additionally transfer funds from Russian accounts abroad in rubles and foreign currency in the amount of their wages or fees for works done and services provided and make the same transfers without opening an account;
  • non-residents from unfriendly countries working in Russia under labour or civil law contracts are allowed to transfer funds from Russian accounts abroad in rubles and foreign currency in the amount of their wages or fees for works done and services provided and transfer these funds abroad without opening an account.

Until September 30, 2022, money transfers by individuals from unfriendly countries not working in Russia and legal entities from these countries to accounts opened abroad remain restricted.[70]

On March 9, 2022, the Russian Central Bank circulated instructions introducing the following limitations on cash withdrawals from currency accounts and deposits by individuals until March 9, 2023 (subject to an extension of the limitation period)[71]:

  • a client may withdraw cash from currency accounts or deposits opened before the introduction of the limitations in an aggregate amount of up to USD 10,000, with any additional cash being withdrawn in rubles at the market rate;
  • a client may withdraw cash from currency accounts and deposits opened after the introduction of the limitations only in rubles at the market rate;
  • a client may withdraw cash from currency accounts and deposits only in USD or rubles, other foreign currencies will be converted upon withdrawal into USD at the market rate (starting from April 11, 2022, citizens who opened foreign currency accounts or deposits before March 9, 2022 and have not yet exceeded the currency withdrawal limit may withdraw cash also in euros);[72]
  • the sale of foreign cash currency to individuals is suspended, however, banks have partially resumed it:
    • from April 18, 2022 – banks have resumed the sale of foreign cash currency credited to banks’ cash offices on or after April 9, 2022;[73]
    • from May 20, 2022 – banks have resumed the sale of any foreign cash currency other than US dollars and euros without the above restrictions.[74][75]

Relatedly, on March 10, 2022, the Bank of Russia circulated instructions introducing the following limitations on cash withdrawals for legal entities and individual entrepreneurs until March 9, 2023 (subject to an extension of the limitation period)[76]:

  • Legal entities and individual entrepreneurs that are Russian residents may withdraw cash in USD, Japanese yen, pounds sterling, and EUR in an amount of up to USD $5,000, but only to pay for expenses on foreign business trips (this amount may be increased through a reasonable request by the respective bank to the Bank of Russia); and
  • Legal entities and individual entrepreneurs that are non-residents may not withdraw cash in USD, Japanese yen, pounds sterling, and EUR.[77]

On March 18, 2022, the Russian Central Bank clarified that all depositary accounts opened for non-residents before March 5, 2022 shall be deemed C-type depositary accounts and transactions with securities held in depositary accounts shall be made by non-residents using C-type depositary accounts only.[78]

Moratorium on Delisting of Russian-origin Foreign Securities

On March 23, 2022, the Bank of Russia introduced measures expected to allow foreign issuers (including issuers with a majority of their business in Russia) to retain listing on the Russian stock exchange. Until January 1, 2023, if securities issued by foreign companies (as well as respective depositary receipts) are delisted from a foreign exchange, such securities will not be delisted from the Russian stock exchange.[79]

Delisting of Depositary Receipts Representing Shares of Russian Companies from Foreign Markets

On April 16, 2022, Russian President Putin signed Federal Law No. 114-FZ which provides for mandatory delisting of depositary receipts representing shares of Russian companies from foreign markets with subsequent conversion into Russian securities. The amendments will take effect on April 27, 2022.

The law provides, among other things, that:

  • placement and organization of trading of depository receipts for shares of Russian issuers abroad is not allowed, and the trading of depository receipts issued before April 27, 2022 is also ceased;
  • Russian issuers, before May 6, 2022, will be required to take all necessary and sufficient actions to terminate agreements on the placement of depositary receipts and, within following 5 business days (before May 17, 2022), to provide supporting documents to the Bank of Russia. The approval of the board of directors (supervisory board) or the general meeting of shareholders is not required for transactions, other actions and decisions that are necessary to fulfill the new requirements (regardless of the provisions of the Russian issuer’s charter);
  • as an exception, by the Governmental Commission at its own discretion (i.e., in the absence of any application) or on the basis of an application from a Russian issuer – the procedure is established by Governmental Decree of April 16, 2022 672. [80]

On April 27, 2022, the Bank of Russia instructed depositories to keep separate records of shares of Russian issuers received as a result of the conversion of foreign depositary receipts and to limit the volume of debiting of such securities to 0.2% of their quantity during the day. These measures limit the possibility of an accelerated sale of foreign depository receipts converted into shares, but do not apply if the foreign depository receipts were acquired before March 1, 2022 or if the holder of the securities has a license from the Governmental Commission.[81]

The Bank of Russia Has Restricted Certain Transactions for Debiting Securities from Depositary Accounts

On April 28, 2022, the Bank of Russia instructed depositaries to restrict the following transactions with securities acquired after February 18, 2022:

  • transactions for debiting securities held on depositary accounts of a foreign nominee holder or a foreign authorised holder pursuant to order of the persons to whom such depositary accounts are opened;
  • transactions for debiting foreign securities held on depositary accounts opened for foreign persons, as well as nominee holders and trustees acting for foreign persons, pursuant to their order (if such securities are debited from accounts of persons acting for other persons that are opened for depositaries in foreign organisations recording rights to securities).

These transactions can only be made with a license issued in accordance with Decree 2 or Decree 3 (license from the Governmental Commission). The restrictions are effective until October 28, 2022.[82]

The Bank of Russia Has Established Requirements for the Transfer of Dividends Paid on Shares of Russian JSCs by Depositories

On June 10, 2022, the Bank of Russia established requirements for the transfer of dividends paid on shares of Russian JSCs by depositories, in particular:

  • if a depositary’s depositor is a foreign nominee holder (or a person to whom a depositary account for depository programs is opened), the depositary shall, no later than one business day after receipt of funds for dividend payout, send to the relevant depositors, among other things, requests for information on the persons entitled to receive dividends (including information on the details of the securities holder’s C-type bank accounts (if any) to which the dividends shall be credited);
  • the depositary shall, within 3 business days of receipt of all requested information, transfer dividends payable to securities holders, provided that such information has been received within 70 days of the request made by the depositary;
  • if, upon expiration of the dividend payout deadline in accordance with the above procedure, the depositary does not pay out all funds received by it for dividend payout, the remaining dividends will be paid upon request of security holders received within 10 business days following the dividend payout deadline – in this case the depositary shall pay out the dividends to the security holders who are foreign creditors only to C-type bank accounts within 5 business days following the dividend payout deadline;
  • if, after the dividend payout, the depositary has not transferred all funds for dividend payout, the depositary shall, within 10 days following the expiration of one month from the above dividend payout period deadlines, return the remaining funds to the JSC which shares were subject to dividend payout.[83]

The Bank of Russia Has Restricted Exchange Trading in Foreign Securities Blocked by International Depositories

The Bank of Russia has decided to restrict from May 30, 2022 exchange trading in foreign securities blocked by international settlement and clearing organisations, except for securities of foreign issuers with production and economic activities mainly in Russia (HeadHunter, Yandex, Ozon, Cian, TCS and Fix Price).[84]

Despite the measures introduced by the regulator, the holders’ ownership of such foreign securities remains intact. Organised trades in such foreign securities will resume as usual once the restrictions are lifted. Owners will then be able to dispose of the proceeds from the securities, which is now complicated due to the actions of international depositories.[85]

From August 10, 2022, the Saint Petersburg Stock Exchange (SPB Exchange) resumed trading (from 10:00 a.m. Moscow time) in 200 foreign securities and subsequently,[86] from August 17, 2022, increased the number of such foreign securities to 350.[87]

The Bank of Russia has Limited Certain Speculative Transactions in Stock Market

On August 8, 2022, the Bank of Russia introduced additional restrictions to prevent speculative operations in stock market. Among other things, depositories and registrars will not be able to conduct operations securities transferred from foreign depository or custodian accounts, other than those purchased prior to March 1, 2022, within 6 months. Such 6-month “lock-up period” is also applicable to securities purchased by non-residents from friendly states and controlled by foreign companies (except for residents of the Republic of Belarus) from other non-residents in the period from June 25, 2022 to the date when their C-type depo account is reclassified into an ordinary depo account.

The restrictions are inapplicable to: (a) shares owned by an investor as a result of the cancellation of DR programs, provided that the investor was holding such DRs before March 1, 2022; (b) shares arising from the execution of a securities loan agreement or the second stage of a repo if the first stage provides for a transfer of depositary receipts proving the rights to such shares; and (c) transactions authorised by the Governmental Commission.[88]

The Russian Government Has Permitted Limited Disclosure and Provision of Information in 2022

In accordance with Governmental Decree of March 12, 2022 No. 351, if the disclosure or provision of information required in accordance with the Federal Law “On joint-stock companies” and the Federal Law “On the securities market” may lead to the imposition of sanctions against an issuer or other persons, the issuer of securities has the right to:

  • disclose or provide information in a limited composition or amount; or
  • refuse to disclose or provide information.

The same right is granted to insiders in relation to the disclosure of insider information.[89]

In addition, pursuant to Governmental Decree of March 18, 2022 No. 395, organizations have the right to restrict, fully or partially, the access to their financial statements contained in the state information resource of accounting (financial) statements for third parties (with the exception of state bodies, local government, state off-budget funds and the Bank of Russia).[90]

Moratorium on Bankruptcy

Pursuant to Decree of the Russian Government dated as of March 28, 2022 No. 497, since April 1, 2022, a moratorium has been imposed on the initiation of bankruptcy on applications filed by creditors against legal entities and citizens, including individual entrepreneurs. The moratorium will remain in effect until October 1, 2022.[91][92]

Trade Restrictions

On March 8, 2022, Russian President Putin signed Presidential Decree No. 100, “On the Application of Special Economic Measures in the Sphere of Foreign Economic Activity to Ensure the Security of the Russian Federation” (“Decree 4”), pursuant to which the Russian government will issue lists of products and raw materials that cannot be exported from or imported into Russia until October 31, 2022.[93]

On March 9, 2022, in accordance with Decree 4, the Russian Government adopted Governmental Decree No. 311, “On measures to implement the Decree of the President of the Russian Federation dated as of March 8, 2022 No. 100” (“Governmental Decree 1”)[94] and Governmental Decree No. 312, “On establishment on temporary basis of permissive procedure for export of certain types of goods outside the territory of Russian Federation” (Governmental Decree 2),[95] under which, until December 31, 2022:

  • export of certain pharmaceutical products, equipment, electronics, vehicles and other goods is prohibited; and
  • export of certain agricultural machinery, vehicles, industrial products, equipment and other goods requires an approval.

Governmental Decree No. 850 of May 11, 2022 and Governmental Decree No. 1174 of June 30, 2022 amended the lists of goods which export is prohibited or requires a license, as established by Governmental Decrees 1 and 2.[96][97]

In addition, pursuant to Governmental Decree No. 506 of March 29, 2022, the import of certain original goods to Russia has been legalized without the consent of the trademark holders (parallel import).[98] The broad list of such goods is set out in Order of the Russian Ministry of Industry and Trade (the “Minpromtorg”) dated as of April 19, 2022 No. 1532[99] and amended in Order of the Minpromtorg dated as of June 3, 2022 No. 2299[100] and Order of the Minpromtorg dated as of July 21, 2022 No. 3042.[101]

Relatedly, on June 28, 2022, Russian President Putin signed Federal Law No. 213-FZ  “On amendments to Article 18 of the Federal Law “On amendments to certain legislative acts of the Russian Federation”. The law permits the use of the results of intellectual activity expressed in goods for parallel import and means of individualization with which such goods are marked.[102]

On July 14, 2022, Russian President Putin signed Federal Law No. 341-FZ “On amendments to Article 8 of the Federal Law “On the principles of state regulation of trade activities in the Russian Federation” empowering the Russian Government, until December 31, 2022, to establish a procedure for introducing, circulating and removing out of circulation goods subject to mandatory marking with identification means – without such marking in certain cases.[103]

Restrictions on Intellectual Property Rights Protection

On March 6, 2022, the Russian Government introduced amendments to the methodology for determining the compensation due to patent holders when the Russian Government uses an invention, utility model or industrial design covered by a patent without the patent holder’s consent.  Under the amendments, compensation will not be paid to patent holders from “unfriendly states.”[104]

On March 8, 2022, the Russian Government introduced Federal Law No. 46-FZ which authorizes the Russian Government to suspend certain intellectual property rights, including certain exclusivity-related protections.[105]

Draft Law on Appointment of External Administration for Foreign Companies Leaving Russia

On April 12, 2022, a revised draft federal law “On the External Administration for the Management of a Company” was submitted to the Russian State Duma. On May 24, 2022, the draft law was adopted by the Russian State Duma in the first reading.

Grounds for the appointment of an external administration

Under the draft law, an external administration may be appointed for a company (or its certain branch) if both of the following conditions (the “Initial Conditions”) are satisfied:

  • the company is controlled or at least 25% owned, directly or indirectly, by one or several persons of unfriendly states, unless the company is controlled by the Russian Federation or is beneficially owned by citizens of the Russian Federation that are not related to unfriendly states; and
  • the company is essential for ensuring the stability of the economy and civil turnover and protection of the rights and legitimate interests of citizens in the Russian Federation or the relevant region of the Russian Federation, in particular if:
    • the company produces or sells socially important goods (works, services) of prime necessity or goods (works, services) the prices for which are subject to state regulation;
    • the company is a natural monopoly or holds a dominant position on the market;
    • the company is the sole producer of certain types of goods (such as medical products) or the sole producer of goods that have no Russian substitutes;
    • the company’s personnel constitute 25% or more of the relevant town’s working population;
    • the suspension of the company’s operations may result in a technological accident or environmental disaster, loss of life, disruption of the operation of life support, transportation, social infrastructure, energy, industrial or communication facilities or other socially important facilities;
    • the suspension of the company’s operations may result in destabilization or unjustified increase in retail prices for goods (works, services) produced (performed, rendered) by the company or other organizations for consumers in the Russian Federation or in the relevant region of the Russian Federation;
    • the company participates in a chain of significant productions and the suspension of the company’s operations may result in disruption of the operations of other organizations; or
    • a special interdepartmental commission of the Ministry of Economic Development of Russia (the “Commission”) so decides, regardless of the criteria above.

Provided that both Initial Conditions are met, an external administration can be appointed for the company if any of the following conditions (the “Triggering Conditions”) is also satisfied:

(a) the company’s CEO, other management bodies or shareholders (participants) have actually ceased to manage the company in violation of the requirements of Russian laws, in particular, if, after February 24, 2022:

  • they have left Russia abandoning their duties and leaving the company without management, contrary to its interests; or
  • they have committed actions (or omissions) resulting in a significant decrease in the value of the company’s assets, its inability to perform its obligations or termination of the company’s business in violation of the requirements of Russian laws;

(b) the company’s CEO, other management bodies or shareholders (participants) are taking actions that may lead to unjustified termination of the company’s business, its liquidation or bankruptcy, in particular, if, after February 24, 2022:

  • the company has publicly announced the termination of the company’s business in the absence of obvious economic grounds for doing so;
  • the company has terminated contracts that are material to the company’s business; or
  • the company has sent to more than one-third of the employees a redundancy notice (notice of dismissal);

(c) the company’s business activities have been discontinued or suspended, in full or in part, or the volume of production and sales of goods (works, services) has significantly decreased (in particular if the revenue from sales for three months has decreased by 30% or more as compared to the previous three months or the same three months of the previous year);

(d) continuation of the company’s business activities without the appointment of an external administration may create grounds for the appointment of an external administration under Triggering Condition (c) or lead to certain other consequences; or

(e) removal of the grounds for the appointment of an external administration under Triggering Conditions (c) and (d) would require expenditure of budgetary funds.

Procedure for the appointment of an external administration

A petition for the appointment of an external administration for a company is submitted to the Arbitration Court of the City of Moscow by the tax authorities in accordance with the decision of the Commission. The company shall be notified of the petition on the day of its filing with the court. Upon acceptance of the petition, the court may take interim measures, including prohibition on:

  • entry into transactions involving disposal of the company’s assets;
  • dismissal of employees;
  • termination of material contracts; and
  • disposal of the shares (participation interests) in the company by its shareholders (participants).

Upon acceptance of the petition, the court appoints a court hearing on a date no earlier than five and no later than seven business days from the date of acceptance of the petition to decide whether an external administration shall be appointed. Before the date of the court hearing, the CEO or shareholders (participants) holding (each individually or collectively) more than 50% of the voting shares (participation interests) may submit to the court a motion to dismiss the proceedings if they commit to resume/continue the company’s business operations, including if the shares (participation interests) in the company are transferred to another person or placed in another person’s trust management. If such a motion is filed, the court shall deny the appointment of an external administration if convincing evidence is presented of the reality of the intention to remedy the circumstances that gave rise to the proceedings.

Under the court’s decision, the state-owned corporation VEB.RF or another organization selected by the Commission may be appointed to act as an external administration.

An external administration is appointed for a term not exceeding 18 months, subject to potential extension.

External administration’s mandate

The appointment of an external administration results in either:

  • placing of all or part of the shares (participation interests) in the company in trust management by the external administration (the “Trust Management Regime”); or
  • transfer of the powers of the company’s CEO to the external administration (the “Executive Regime”),

and during the term for which the external administration is appointed the court may decide to switch between these two regimes.

Under the Trust Management Regime, the external administration exercises all rights attaching to shares (participation interests) in the company, with certain exceptions. In particular, the company’s shareholders (participants) remain entitled to receive all dividends declared by the company (if any) upon completion of the external administration procedure.

Under the Executive Regime, among other things:

  • powers of the CEO transfer to the external administration and powers of other management bodies are suspended;
  • all issued powers of attorney are considered revoked;
  • previously adopted decisions on voluntary liquidation, reorganization, dividends, acquisition and sale of shares, and amendments to the charter are revoked;
  • no dividends can be paid and no share buyback is allowed;
  • no loans provided to the company by shareholders that are persons of unfriendly states can be repaid;
  • counterparties are not allowed to unilaterally terminate or amend contracts out of court; and
  • license agreements under which the company uses intellectual property of persons of unfriendly states or persons controlled by them cannot be terminated (and if such agreements have been terminated after February 24, 2022, they shall be deemed reinstated) and royalty payments under such agreements shall not be made.

The aim of the external administration under the Executive Regime is to manage the company, including resume/continue its business activities and secure its assets and the employees’ jobs.

However, Commission may, at the external administration’s request, decide to reorganize the company so that a new entity is spun off to which the company’s business and assets are transferred. After the reorganization is completed, the new entity is sold at an auction, in which the company’s shareholders and their affiliates are not allowed to participate while the external administration has the pre-emptive right to buy the new entity at the highest offered price. The proceeds of the sale are transferred to the company’s shareholders after deduction of the expenses on the external administration and the repayment of the company’s debts.

Alternatively, the Commission may, at the external administration’s request, decide to apply to the court to liquidate the company or initiate insolvency proceedings with respect to the company.

Applicability to credit institutions

The draft law is generally not applicable to, among others, credit institutions (including banks). However, the court may, at the request of the Russian Central Bank, initiate the procedure involving the spin-off of a new entity with its subsequent sale at an auction to a credit institution if it is already under liquidation or insolvency proceedings.[106]

Draft Law on Performance of Obligations

On March 22, 2022, a draft federal law “On amendments to certain legislative acts of the Russian Federation” was submitted to the Russian State Duma for consideration. The draft law provides, among other things, that:

  • if the performance of an obligation is objectively and definitively impossible as a result of sanctions imposed against Russia, the obligation shall terminate in whole or in respective part;
  • if the proper performance of an obligation is objectively and temporarily impossible as a result of sanctions imposed against Russia, the obligor which fails to perform or improperly performs the obligation shall not be deemed to be in breach;
  • if an obligor has not performed or improperly performed its obligation as a result of sanctions imposed against Russia, the creditor be entitled to unilaterally terminate the contract;
  • a loan provided to a Russian JSC by the foreign legal entity controlling the JSC may, instead of repayment, be settled by the issue of additional shares to the lender (and for this purpose, by derogation of the general rule, the issue of preferred shares with nominal value exceeding 25% of the JSC`s authorized capital is permitted);
  • the unilateral amendment or termination of agreements relating to intellectual property shall be suspended, unless there has been a material breach of such agreement;
  • the term of an agreement under which Russian persons can use intellectual property is extended for as long as sanctions imposed against Russia remain in effect, unless such Russian person unilaterally terminates the agreement.[107]

The amendments are expected to apply retroactively from February 24, 2022.

Draft Law on Criminal Liability for Compliance with Sanctions

On April 7, 2022, a draft federal law “On amendments to article 201 of the Criminal Code of the Russian Federation” was submitted to the Russian State Duma for consideration.

According to the draft law, it is proposed to amend part 2 of article 201 of the Criminal Code of the Russian Federation “Abuse of authority” so that acts committed in order to comply with a decision of a foreign state, union of foreign states or international organization to impose sanctions against the Russian Federation shall be recognised as a criminal offence. Acts committed for the purpose of compliance with foreign sanctions shall be qualified under part 2 of article 201 of the Criminal Code of the Russian Federation if such acts:

  • are committed by a person who performs managerial functions in a commercial or other organization, using authority contrary to the legitimate interests of such organization;
  • are aimed at deriving benefits and advantages for such person (offender) or other persons or causing harm to other persons;
  • and resulted in substantial harm to the rights and legitimate interests of citizens or organizations or to the legally protected interests of society or the state.

Such acts will be punishable by:

  • a fine of up to one million rubles or in the amount of the offender’s income for a period of up to 5 years or without such; or
  • compulsory labor for up to 5 years with or without deprivation of the right to hold certain positions or engage in certain activities for a period of up to 3 years; or
  • imprisonment for up to 10 years with disqualification from holding certain positions or engaging in certain activities for up to 3 years.[108]

The statute of limitations on prosecution for compliance with foreign sanctions will be 10 years. Criminal cases will be initiated by officials of investigation authorities regardless of the receipt of crime reports from third parties.

The law will enter into force from the date of its official publication and will not apply to acts committed before such date.

Draft Law on Compulsory Seizure of Property Owned by Foreign States and Persons of Unfriendly States

On April 8, 2022, a draft federal law “On amendments to article 235 of part one of the Civil Code of the Russian Federation and regulation of certain legal relations on compulsory seizure of property” was submitted to the Russian State Duma for consideration.

The draft law provides for compulsory seizure of property (including cash, bank deposits, securities and corporate rights) from the owner if such property is located in the Russian Federation and belonged as of February 24, 2022 to foreign states or foreign persons of unfriendly states as well as to their beneficiaries and entities which are under control of such foreign persons.

Under the draft law, the property will be transferred to constituent entities (regions) of the Russian Federation in which territory such property is located under decisions of such constituent entities without compensation.[109]

Russian State Duma Adopted a Law on the Right of Prosecutors to Challenge Transactions in Violation of Sanctions Retaliation

On June 8, 2022, the Russian State Duma adopted Federal Law “On amendments to article 52 of the Arbitration Procedure Code of the Russian Federation and to article 45 of the Civil Procedure Code of the Russian Federation”.

The amendments to the Arbitration Procedure Code and the Civil Procedure Code of the Russian Federation provide that prosecutors will be able to bring lawsuits to invalidate transactions made in violation of legislation establishing special economic measures, counter-measures to unfriendly acts of foreign states, and to apply the consequences of invalidity of such transactions.[110]

On June 22, 2022, the Federation Council rejected the law with a proposal to convene a conciliation commission to reconsider it in the Russian State Duma.

Law on Additional Powers of the Russian President to Ensure Financial Stability

On June 28, 2022, Russian President Putin signed Federal Law No. 212-FZ “On amendments to certain legislative acts of the Russian Federation”.

In accordance with the law, among other things, the Russian President has the right to establish a special procedure for certain transactions (operations) involving foreign persons related to unfriendly states, payment of distributed profits (dividends) to such persons, currency regulation and currency control, as well as other temporary economic measures to ensure financial stability in Russia.[111]

Law on Special Regulation of the Financial Market and Corporate Relations

 

On July 14, 2022, Russian President Putin signed Federal Law No. 292-FZ “On amendments to certain legislative acts of the Russian Federation, invalidation of paragraph 6 of part 1 of Article 7 of the Russian Law “On State Secrets”, suspension of certain provisions of Russian legislative acts, and establishing special regulation of corporate relations in 2022 and 2023”.

The law provides, among other things:

  • possibility of including in foreign currency deposit agreements, under which depositors are legal entities (including agreements concluded before the effective date of the law), terms on charging a commission by the bank, the amount of which may exceed the amount of interest to be paid (i.e., the possibility to introduce negative interest rates);
  • in 2022 – extension of the term for JSCs annual general meetings until and including September 30, 2022;
  • until December 31, 2022 – suspension of the requirement for annual update of the securities prospectus;
  • until December 31, 2022 – retaining the powers of the previously elected members of the JSC’s Board of Directors / Supervisory Board (“Board”) (until the general meeting of shareholders decides to elect new Board) in case some of its members resign, provided that the number of the Board’s members does not become less than 3;
  • until December 31, 2023 – possibility not to form the Board of companies (JSCs, LLCs) if sanctions are applied to such companies, based on a decision of the general meeting of shareholders;
  • increasing to two years (instead of one year) the term for selling own shares admitted for trading and purchased by the PJSC under the simplified procedure in 2022;
  • the possibility of including investment units as collateral for collateralised bonds;
  • introduction of restrictions on the occurrence of grounds for cross-defaults on foreign bonds placed by subsidiaries of Russian companies outside the Russian Federation (due to inability to pay income on them, occurrence of circumstances constituting grounds for their early acquisition or redemption – in conditions of unfriendly actions of foreign states); and
  • introduction of special rules for placing Russian bonds to redeem relevant foreign bonds (the issue is carried out without the registration of a prospectus, provided that the amount and term of interest payments, maturity and nominal value of Russian bonds comply with similar Eurobonds terms);[112]

    Decree 10 also states that obligations to Eurobonds holders and persons exercising rights thereunder shall be recognised as properly discharged, provided that:
    • Russian legal entities with obligations related to Eurobonds have placed – in favor of Eurobond holders – bonds, the payment of which is made by Eurobonds upon their placement (including in case of transfer (assignment) of all property and other rights under Eurobonds to Russian legal entities), provided that the amount and term of interest payments, maturity and nominal value of Russian bonds comply with similar Eurobonds terms;
    • Russian legal entities purchased Eurobonds using the proceeds of the bonds placement;

accordingly, Russian legal entities with obligations related to Eurobonds are required to transfer cash (through a Russian depositary)[113] or place bonds to Eurobonds holders whose rights are accounted by Russian depositories.

Law on Conversion of Depositary Receipts (DRs) Representing Shares of Russian Issuers Blocked due to Sanctions

On July 14, 2022, Russian President Putin signed Federal Law No. 319-FZ “On amendments to certain legislative acts of the Russian Federation”.

The law provides, among other things, the following:

  • automatic conversion of DRs – DRs which are accounted for in Russian depositories will be automatically converted into underlying Russian shares without recourse to foreign infrastructure:
    • Russian issuers of such DRs, within 5 business days following August 15, 2022 (no later than August 19, 2022), shall notify the Russian custodians of their DRs programs that actions need to be taken to ensure conversion of such DRs into underlying Russian shares;
    • based on such notifications received from the issuers, the custodians and depositaries shall carry out operations for the purposes of automatic conversion in accordance with the procedure and within the time limits established by Decision of the Board of Directors of the Bank of Russia dated as of July 22, 2022;[114]
    • issuers that were previously allowed to keep DRs listed on foreign exchanges are entitled to apply, within 3 business days following August 15, 2022 (no later than August 17, 2022), to the Bank of Russia for their exemption from the automatic conversion or for its deferral;
  • compulsory conversion of DRs – DRs which are accounted for by foreign depositories and transactions with which are blocked due to sanctions will be compulsory converted as follows:
    • holders of such DRs are entitled, within 90 days following July 14, 2022 (no later than October 11, 2022), to apply to the Russian custodian of the DR program with a request for compulsory conversion of their DRs, accompanied by documents available in the circumstances which indicate that the holder holds the relevant number of DRs;
    • the custodian shall, within 10 business days following the above 90-day period (no later than 25 October 2022), debit the underlying Russian shares from the depositary account and credit them to the DR holders’ accounts;
    • the custodian may refuse to do so if it has reasonable doubts with respect to the title of a DR holder to its DRs as demonstrated by the provided documents;

the automatic conversion process will take 2.5 – 3 weeks (the Bank of Russia recommends for issuers to disclose the start of the conversion as a material fact);[115]

  • compulsory transfer of accounting of securities – when Russian securities are accounted for in the depositary account of a foreign nominee holder and transactions with such securities are blocked due to sanctions:
    • holders of such securities are entitled, within 90 days following July 14, 2022 (no later than October 11, 2022), to apply to the Russian depository where the foreign nominee holder’s depository account is opened with a request for compulsory transfer of accounting of such securities, accompanied by documents available in the circumstances which indicate that such holder holds the relevant number of such securities;
    • the depositary shall, within 10 business days following the above 90-day period (no later than 25 October 2022), debit the Russian securities from the foreign nominee holder’s depository account and credit them to the holder’s depository account;
    • the depositary may refuse to do so if it has reasonable doubts with respect to title of a securities holder to its securities as demonstrated by the provided documents.

in each of the above cases – encumbered DRs and securities also subject to conversion as well but the encumbrance will extend to the converted underlying shares and securities for which accounting has been transferred;

  • replacement of Eurobonds – a Russian company which has obligations relating to Eurobonds of a foreign issuer that cannot be transferred to such Russian company due to sanctions may, until December 31, 2022, issue Russian bonds to the holders of such Eurobonds in their replacement on the condition that the rights and interests under the Eurobonds are transferred to such Russian company.[116]

Draft Law on Exclusive Jurisdiction of Russian Courts for Disputes with Unfriendly Foreigners

On June 10, 2022, a draft federal law “On amendments to the Civil Procedure Code and the Arbitration Procedure Code of the Russian Federation in respect of regulation of the grounds for dismissal of claims and in respect of establishment of exclusive jurisdiction for disputes involving foreign persons” was submitted to the Russian State Duma for consideration.

The draft law provides, among other things, certain amendments to the civil and arbitration procedure codes providing for the exclusive jurisdiction of Russian courts of general jurisdiction and Russian arbitration courts for disputes involving foreign persons incorporated (registered) or residing in unfriendly states.[117]

Registration of Leased Foreign Aircraft

On March 14, 2022, Russian President Putin signed Federal Law No. 56-FZ which allows Russian airlines to retain their aircraft fleets and to continue operating leased foreign aircraft by permitting the registration by Russian airlines of their rights in leased foreign aircraft and for the applicable Russian government authority to issue Russian airworthiness certificates for such aircraft.[118]

Personal Sanctions Against Citizens of Unfriendly States

The Russian Ministry of Foreign Affairs has announced that following “official persons” and other citizens of unfriendly states are banned from entering Russian territory:

  • on March 15, April 13 and 21, May 21, June 27, and August 5, 2022 – 1,374 (in total) U.S. “official persons” and other citizens, including President Biden, Secretary of State Antony Blinken, Secretary of Defense Lloyd Austin[119] and American congressmen,[120][121] and 592 (in total) Canadian citizens, including Justin Trudeau,[122] Canadian senators,[123] military and media persons;[124][125][126][127]
  • on March 31, 2022 – top officials of the European Union, including European Commissioners, heads of military structures, as well as the majority of deputies of the European Parliament;[128]
  • on April 7, June 16, 202, July 21 and 30, 2022 – top officials[129] and representatives of the armed forces of Australia[130][131], and top officials, representatives of the armed forces and journalists of New Zealand;[132][133]
  • on April 16 and 27, and August 1, 2022 – top officials of the United Kingdom[134] (including members of the House of Commons[135] and the House of Lords[136] in the UK Parliament), as well as some other politicians and representatives of the armed forces, heads and correspondents of several major media, businessmen;[137]
  • on April 29, 2022 – representatives of Iceland, Norway, Greenland and the Faroe Islands;[138]
  • on May 4 and July 14, 2022 – top officials of Japan;[139][140]
  • on June 14, 2022 – heads and correspondents of several major media, as well as representatives of the armed forces of the United Kingdom.[141]

It is expected that the Russian Government will designate other foreign officials, businessmen, military personnel and media persons considered to be involved in the imposition of sanctions against Russia for similar designations.


[1] Russian Federation Presidential Decree No. 79 (Feb. 28, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202202280049.

[2] Under Russian currency laws, among others, the following persons are considered residents:  (1) citizens of the Russian Federation, (2) foreign citizens and stateless persons permanently residing in the Russian Federation on the basis of a permanent residence permit, and (3) legal entities established in the Russian Federation and their branches, representative offices and other subdivisions.

[3] Currencies other than Russian ruble.

[4] Press release of the Russian Central Bank (Apr. 21, 2022), available at http://www.cbr.ru/press/event/?id=12849

[5] Russian Federation Presidential Decree No. 303 “On amendments to Presidential Decree of February 28, 2022                             No. 79 “On the application of special economic measures in relation to unfriendly actions of the United States of America and allied foreign states and international organisations” (May 23, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202205240001.

[6] Russian Central Bank, “Decision of the Board of Directors on establishing the due dates for the sale of foreign currency by residents participating in foreign economic activity” (May 26, 2022), available at https://www.cbr.ru/about_br/dir/rsd_2022-05-26_35_01/.  

[7] Russian Federation Presidential Decree No. 360 “On amendments to Presidential Decree of February 28, 2022 No. 79 “On the application of special economic measures in relation to unfriendly actions of the United States of America and allied foreign states and international organisations”, and Presidential Decree of March 18, 2022 No. 126 “On additional temporary economic measures to ensure the financial stability of the Russian Federation in the sphere of currency regulation” (June 9, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202206090006?index=1&rangeSize=1.

[8] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 61 (June 9, 2022), available at https://minfin.gov.ru/common/upload/library/2022/06/main/10_06_2022__05-06-05_VN-29704.pdf.

[9] Clarification of the Bank of Russia No. 7-OP (June 27, 2022), available at https://www.cbr.ru/Crosscut/LawActs/File/5929.

[10] Russian Federation Presidential Decree No. 430 “On repatriation of foreign currency and Russian currency by residents – participants in foreign economic activities” (July 5, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202207050011?index=0&rangeSize=1.  

[11] In accordance with Russian Federation Presidential Decree of August 8, 2022 No. 529, the requirement to repatriate foreign currency proceeds does not apply to Russian legal entities and individual entrepreneurs carrying out foreign trade activities and (or) granting and repaying loans (unless the Federal Law “On Currency Regulation and Currency Control” is amended).

[12] Clarification of the Bank of Russia No. 2-OP (Mar. 18, 2022), available at http://www.consultant.ru/document/cons_doc_LAW_411988/.

[13] Russian Federation Presidential Decree No. 430 “On repatriation of foreign currency and Russian currency by residents – participants in foreign economic activities” (July 5, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202207050011?index=0&rangeSize=1.  

[14] Clarification of the Bank of Russia No. 4-OP (Apr. 16, 2022), available at https://www.cbr.ru/Crosscut/LawActs/File/5867.

[15] The procedure for the issuance of such permits is set out in the Russian Federal Government Decree No. 295 (Mar. 6, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203070002.

[16] At the time of publication of this blog post, the license is not publicly available.  

[17] Russian Federation Presidential Decree No. 126 (Mar. 18, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203180017.

[18] Russian Federation Presidential Decree No. 81 (Mar. 1, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203010083.

[19] Order of the Government of the Russian Federation of March 5, 2022, No. 430-r defines such unfriendly states to include Albania, Andorra, Australia, the United Kingdom (including Jersey, Anguilla, the British Virgin Islands, and Gibraltar), member states of the European Union, Iceland, Japan, Liechtenstein, Canada, Micronesia, Monaco, New Zealand, Norway, South Korea, San Marino, North Macedonia, Singapore, Switzerland, Taiwan, Ukraine and the United States. Order of the Government of the Russian Federation of July 20, 2022 No. 1998-r added Greece, Denmark, Slovenia, Croatia and Slovakia to unfriendly states. Order of the Government of the Russian Federation of July 23, 2022 No. 2018-r added Guernsey, the Isle of Man and the Bahamas to unfriendly states.

[20] The Russian Central Bank, in its Clarification No. 2-OP of March 18, 2022, has clarified that, for the purposes of Decree 2 and Decree 3, control is defined in accordance with Article 5 of the Federal Law of April 29, 2008 No. 57-FZ, “On the procedure for foreign investment in business entities of strategic importance for the defense of the country and national security.”

[21] Russian Federation Presidential Decree No. 126 (Mar. 18, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203180017.  

[22] The issuance of permits in respect of strategic companies is carried out by prior approval in accordance with the Federal Law of April 29, 2008, N 57-FZ, “On the procedure for foreign investment in business entities of strategic importance for the defense of the country and national security.”

[23] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 5 (Mar. 9, 2022), available at https://minfin.gov.ru/common/upload/library/2022/03/main/11_03_2022__05-06-10_VN-10925.pdf.

[24] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 12 (Mar. 17, 2022), available at https://minfin.gov.ru/common/upload/library/2022/03/main/vypiska_N_12.pdf.

[25] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 24 (Apr. 4, 2022), available at https://minfin.gov.ru/common/upload/library/2022/04/main/Vypiska_iz_protokola_N_24.pdf.

[26] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 30 (Apr. 11, 2022), available at https://minfin.gov.ru/common/upload/library/2022/04/main/Vypiska_iz_protokola_N_30.pdf.

[27] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 35 (Apr. 19, 2022), available at https://minfin.gov.ru/common/upload/library/2022/05/main/04_05_2022__05-06-10_VN-23021.pdf.  

[28] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 36 (Apr. 21, 2022), available at https://minfin.gov.ru/common/upload/library/2022/05/main/04_05_2022__05-06-10_VN-23012.pdf.

[29] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 52/2 (May 23, 2022), available at https://minfin.gov.ru/common/upload/library/2022/06/main/31_05_2022__05-06-10_VN-27545.pdf.

[30] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 52/3 (May 23, 2022), available at https://minfin.gov.ru/common/upload/library/2022/06/main/10_06_2022__05-06-10_VN-29954.pdf.

[31] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 56/1 (May 30, 2022), available at https://minfin.gov.ru/common/upload/library/2022/06/main/10_06_2022__05-06-10_VN-29991.pdf.

[32] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 60 (June 8, 2022), available at https://minfin.gov.ru/common/upload/library/2022/06/main/16_06_2022__05-06-10_VN-30447.pdf.  

[33] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 62/1 (June 14, 2022), available at https://minfin.gov.ru/common/upload/library/2022/06/main/21_06_2022__05-06-10_VN-31422.pdf.  

[34] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 63 (June 15, 2022), available at https://minfin.gov.ru/common/upload/library/2022/06/main/24_06_2022__05-06-10_VN-32262.pdf.  

[35] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 64/1 (June 21, 2022), available at https://minfin.gov.ru/common/upload/library/2022/06/main/22_06_2022__05-06-10_VN-31554.pdf.  

[36] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 64/4 (June 21, 2022), available at https://minfin.gov.ru/common/upload/library/2022/06/main/29_06_2022__05-06-10_VN-32847.pdf.  

[37] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 52/2 (May 23, 2022), available at https://m.minfin.gov.ru/common/upload/library/2022/07/main/01_07_2022__05-06-10_VN-33507.pdf.  

[38] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 65/1 (June 23, 2022), available at https://m.minfin.gov.ru/common/upload/library/2022/07/main/01_07_2022__05-06-10_VN-33510.pdf

[39] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 69/2 (July 1, 2022), available at https://minfin.gov.ru/ru/permission/79-81/?id_65=136791-vypiska_iz_protokola_zasedaniya_podkomissii_pravitelstvennoi_komissii_po_kontrolyu_za_osushchestvleniem_inostrannykh_investitsii_v_rossiiskoi_federatsii_ot_01_iyulya

[40] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 75/3 (July 20, 2022), available at https://minfin.gov.ru/common/upload/library/2022/08/main/15_08_2022__05-06-10_VN-41524.pdf.  

[41] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 78/1 (Aug. 10, 2022), available at https://minfin.gov.ru/common/upload/library/2022/08/main/17_08_2022__05-06-10_VN-42064.pdf.  

[42] Extract from the minutes of the meeting of the Russian Governmental Commission for Control over Foreign Investment No. 28 (Apr. 8, 2022), available at https://minfin.gov.ru/common/upload/library/2022/04/main/Vypiska_iz_protokola_N_28.pdf.

[43] Clarification of the Bank of Russia No. 2-OP (Mar. 18, 2022), available at http://www.consultant.ru/document/cons_doc_LAW_411988/.

[44] Russian Federation Presidential Decree No. 254 (May 4, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202205040017.  

[45] Russian Federation Presidential Decree No. 95 (Mar. 5, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203050062.

[46] In accordance with the information published on the official website of the Ministry of Finance of the Russian Federation – “Issuing of licenses (Decree No 95)”, available at https://m.minfin.gov.ru/ru/permission/95/.  

[47] Russian Federation Presidential Decree No. 254 (May 4, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202205040017.  

[48] Russian Central Bank, “Decision of the Board of Directors on amendments to Decision of the Board of Directors of the Bank of Russia of June 24, 2022” (July 22, 2022), available at https://www.cbr.ru/about_br/dir/rsd_2022-07-22_31_01/.

[49] Russian Central Bank, “Decision of the Board of Directors” (June 24, 2022), available at  https://www.cbr.ru/about_br/dir/rsd_2022-06-24_31_01/.  

[50] Clarification of the Bank of Russia No. 3-OP (Apr. 4, 2022), available at https://www.cbr.ru/Crosscut/LawActs/File/5856.

[51] Clarification of the Bank of Russia No. 6-OP (May 20, 2022), available at https://www.cbr.ru/Crosscut/LawActs/File/5894.  

[52] Russian Federation Presidential Decree No. 126 (Mar. 18, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203180017.  

[53] Russian Central Bank, “Decision of the Board of Directors on permitting non-resident foreign banks to carry out certain foreign currency transactions on the internal currency market of the Russian Federation and on abolishing the limit on the amount of advance payment under resident contracts (agreements) with non-residents” (July 19, 2022), available at https://www.cbr.ru/about_br/dir/rsd_2022-07-20_19-12_01/

[54] Russian Central Bank, “Decision of the Board of Directors on permitting non-resident foreign banks to carry out certain foreign currency transactions on the internal currency market of the Russian Federation and on abolishing the limit on the amount of advance payment under resident contracts (agreements) with non-residents” (July 19, 2022), available at https://www.cbr.ru/about_br/dir/rsd_2022-07-20_19-12_01/.  

[55] Russian Central Bank’s Working Group, “Decision No. PRG-12-4/1383 for consideration of issues related to licenses to execute operations (transactions) by residents and non-residents for which restrictive measures (sanctions) have been imposed due to unfriendly actions of foreign states” (June 23, 2022), available at https://www.cbr.ru/Content/Document/File/138679/20220623_prg.pdf.

[56] Russian Central Bank’s Working Group, “Decision No. PRG-12-4/1113 for consideration of issues related to licenses issuing to execute operations (transactions) by residents and non-residents for which restrictive measures (sanctions) have been imposed due to unfriendly actions of foreign states” (May 27, 2022), available at http://www.cbr.ru/Content/Document/File/136078/20220527_prg.pdf.

[57] Russian Federation Presidential Decree No. 252 (May 3, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202205030001?index=0&rangeSize=1.

[58] In accordance with Russian Federation Governmental Decree No. 851 (May 11, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202205110017.

[59] Russian Federation Governmental Decree No. 851 (May 11, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202205110017.

[60] Russian Federation Presidential Decree No. 254 (May 4, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202205040017.  

[61] The procedure of issuing licenses for settlements with rights holders (licensors) from unfriendly countries is regulated by Governmental Decree No. 1031 “On implementation of certain provisions of Presidential Decree of May 27, 2022 No. 322 “On temporary procedure for fulfilling obligations to certain rights holders (licensors)”, and amendments to the Rules for issuing licenses by the Russian Governmental Commission for Control Over Foreign Investment to implement additional temporary economic measures ensuing the financial stability of the Russian Federation and other licenses provided for by certain Presidential decrees (June 6, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202206070002?index=1&rangeSize=1.

[62] Letter of the Ministry of Economic Development of the Russian Federation No. 26614-KM/D01i “On clarification of Decree of the President of the Russian Federation of May 27, 2022 No. 322” (July 19, 2022), available at https://rospatent.gov.ru/content/uploadfiles/mineco-19072022.pdf.

[63] Russian Central Bank, “Decision of the Board of Directors on establishing the regime for special ruble O-type accounts” (June 10, 2022), available at https://www.cbr.ru/about_br/dir/rsd_2022-06-10-31_01/.

[64] Russian Federation Presidential Decree No. 394 (June 22, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202206220017?index=3&rangeSize=1

[65] Official Clarification of the Ministry of Finance on the application of Presidential Decree of June 22, 2022 No. 394 (June 24, 2022), available at https://minfin.gov.ru/ru/press-center/?id_4=38003-ofitsialnoe_razyasnenie_minfina_rossii_po_voprosam_primeneniya_ukaza_prezidenta_rossiiskoi_federatsii_ot_22_iyunya_2022_g.__394.

[66] Russian Federation Presidential Decree No. 520 (Aug. 5, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202208050002.  

[67] Russian Federation Presidential Decree No. 529 (Aug. 8, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202208080050

[68] Russian Central Bank, “Decision of the Board of Directors on establishing of a D-type ruble account regime” (Aug. 11, 2022), available at https://www.cbr.ru/about_br/dir/rsd_2022-08-11_31_01/.  

[69] Press release of the Russian Central Bank (June 30, 2022), available at https://www.cbr.ru/press/event/?id=13976

[70] Press release of the Russian Central Bank (May 16, 2022), available at https://www.cbr.ru/eng/press/event/?id=12880

[71] Press release of the Russian Central Bank (Aug. 1, 2022), available at https://www.cbr.ru/press/event/?id=14059.

[72] Press release of the Russian Central Bank (Apr. 8, 2022), available at https://www.cbr.ru/press/event/?id=12801.  

[73] Press release of the Russian Central Bank (Apr. 8, 2022), available at https://www.cbr.ru/press/event/?id=12801.  

[74] Press release of the Russian Central Bank (May 19, 2022), available at https://www.cbr.ru/press/event/?id=12885

[75] At the time of publication of this blog post, the text of the relevant instructions is not publicly available.  It appears that the instructions were sent only to banks.

[76] Press release of the Russian Central Bank (Aug. 1, 2022), available at https://www.cbr.ru/press/event/?id=14059.

[77] At the time of publication of this blog post, the text of the relevant instructions is not publicly available.  It appears that the instructions were sent only to banks.

[78] Clarification of the Bank of Russia No. 2-OP (Mar. 18, 2022), available at http://www.consultant.ru/document/cons_doc_LAW_411988/.

[79] Draft Law No. 19912-8 “On amendments to the Federal Law “On joint-stock companies” and certain legislative acts of the Russian Federation” (last amendments as of Mar. 22, 2022), available at https://sozd.duma.gov.ru/bill/19912-8.

[80] Russian Federation Governmental Decree No. 672 (Apr. 16, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202204180036

[81] Press release of the Russian Central Bank (Apr. 27, 2022), available at http://www.cbr.ru/press/pr/?file=27042022_174522INFR27042022_154920.htm.  

[82] Instruction of the Russian Central Bank No. 018-34-2/3733 (Apr. 28, 2022). At the time of publication of this blog post, the instruction is not publicly available.  

[83] Russian Central Bank, “Decision of the Board of Directors on establishing requirements for the activities of professional securities market participants conducting depositary activities when transferring dividends paid on shares of Russian joint stock companies” (June 10, 2022), available at https://www.cbr.ru/about_br/dir/rsd_2022-06-10-28_02/.

[84] On May 30, 2022, SPB Exchange published a list of 990 shares of foreign companies trading in which was blocked by the Russian Central Bank, available at https://spbexchange.ru/upload/news300522.pdf.  

[85] Press-release of the Bank of Russia of May 30, 2022, available at https://www.cbr.ru/press/event/?id=12911.

[86] Press-release of the SPB Exchange of August 8, 2022, available at https://spbexchange.ru/ru/about/news.aspx?bid=25&news=29968.

[87] Press-release of the SPB Exchange of August 15, 2022, available at https://spbexchange.ru/ru/about/news.aspx?bid=25&news=30061.

[88] Press-release of the Bank of Russia of August 8, 2022, available at https://www.cbr.ru/press/event/?id=14067.

[89] Russian Federation Governmental Decree No. 351 (Mar. 12, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203140028.

[90] Russian Federation Governmental Decree No. 395 (Mar. 18, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203180028?index=1&rangeSize=1.

[91] Russian Federation Governmental Decree No. 497 (Mar. 28, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202204010040.  

[92] The term of the bankruptcy moratorium is clarified in Letter of the Federal Tax Service of the Russian Federation of July 18, 2022 No. 18-2-05/0211@.

[93] Russian Federation Presidential Decree No. 100 (Mar. 8, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203080005?index=1&rangeSize=1.

[94] Russian Federation Governmental Decree No. 311 (Mar. 9, 2022), available at http://static.government.ru/media/files/KQum4rAMExMRTNzT6QD7Ab1usArjzePT.pdf.

[95] Russian Federation Governmental Decree No. 312 (Mar. 9, 2022), available at http://static.government.ru/media/files/JOhvHYuj24vKijHD2wSA1KByLkMDJMXv.pdf.

[96] Russian Federation Governmental Decree No. 850 (May 11, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202205120011.

[97] Russian Federation Governmental Decree No. 1174 (June 30, 2022), available at http://government.ru/docs/all/141791/.

[98] Russian Federation Governmental Decree No. 506 (Mar. 29, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203300003.

[99] Order of the Russian Ministry of Industry and Trade No. 1532 (Apr. 19, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202205060001.  

[100] Order of the Russian Ministry of Industry and Trade No. 2299 (June 3, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202207040023.  

[101] Order of the Russian Ministry of Industry and Trade No. 3042 (July 21, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202208040011.

[102] Federal Law No. 213-FZ (June 28, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202206280053.

[103] Federal Law No. 341-FZ (July 14, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202207140127.

[104] Decree of the Russian Government No. 299 (Mar. 6, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203070005.

[105] Federal Law No. 46-FZ (Mar. 8, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203080001.

[106] Draft Law No. 104796-8 “On the external administration for the management of a company” (Apr. 12, 2022), available at https://sozd.duma.gov.ru/bill/104796-8.

[107] Draft Law No. 92282-8 “On amendments to certain legislative acts of the Russian Federation” (Mar. 22, 2022), available at https://sozd.duma.gov.ru/bill/92282-8#bh_hron.

[108] Draft Law No. 102053-8 “On amendments to article 201 of the Criminal Code of the Russian Federation” (Apr. 7, 2022), available at https://sozd.duma.gov.ru/bill/102053-8.  

[109] Draft Law No. 103072-8 “On amendments to article 235 of part one of the Civil Code of the Russian Federation and regulation of certain legal relations on compulsory seizure of property” (Apr. 8, 2022), available at https://sozd.duma.gov.ru/bill/103072-8

[110] Federal Law “On amendments to article 52 of the Arbitration Procedure Code of the Russian Federation and to article 45 of the Civil Procedure Code of the Russian Federation”, available at https://sozd.duma.gov.ru/bill/1192314-7

[111] Federal Law No. 212-FZ (June 28, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202206280040.  

[112] Federal Law No. 292-FZ (July 14, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202207140051?index=1&rangeSize=1

[113] Russian Central Bank, “Decision of the Board of Directors on the procedure for Russian legal entities with obligations related to Eurobonds to transfer funds to Eurobond holders” (July 8, 2022), available at https://www.cbr.ru/about_br/dir/rsd_2022-07-08_2/.  

[114] Russian Central Bank, “Decision of the Board of Directors on establishing the procedure for automatic conversion of foreign issuers’ securities representing shares of Russian issuers into shares of Russian issuers” (July 22, 2022), available at https://www.cbr.ru/about_br/dir/rsd_2022-07-22_28_01/.

[115] Press-release of the Bank of Russia of August 15, 2022, available at https://www.cbr.ru/press/event/?id=14089.

[116] Federal Law No. 319-FZ (July 14, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202207140088.  

[117] Draft Law No. 141547-8 “On amendments to the Civil Procedure Code and the Arbitration Procedure Code of the Russian Federation in respect of regulation of the grounds for dismissal of claims and in respect of establishment of exclusive jurisdiction for disputes involving foreign persons” (June 10, 2022), available at https://sozd.duma.gov.ru/bill/141547-8.  

[118] Federal Law No. 56-FZ (Mar. 14, 2022), available at http://publication.pravo.gov.ru/Document/View/0001202203140013.

[119] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/foreign_policy/news/1804365/.

[120] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/press_service/spokesman/official_statement/1809216/.

[121] Russian Ministry of Foreign Affairs, Announcement, available at

https://www.mid.ru/ru/maps/us/1814243/.

[122] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/foreign_policy/news/1804374/.

[123] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/press_service/spokesman/official_statement/1809221/.

[124] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/foreign_policy/news/1810343/.  

[125] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/foreign_policy/news/1814238/.

[126] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/press_service/spokesman/official_statement/1819555/.

[127] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/press_service/spokesman/official_statement/1825294/.

[128] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/foreign_policy/news/1807424/.

[129] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/foreign_policy/news/1808465/.

[130] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/foreign_policy/news/1818118/.  

[131] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/press_service/spokesman/official_statement/1823204/.

[132] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/foreign_policy/news/1808470/.

[133] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/press_service/spokesman/official_statement/1824556/.

[134] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/foreign_policy/news/1809607/.

[135] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/foreign_policy/news/1810980/.

[136] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/foreign_policy/news/1814588/.  

[137] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/press_service/spokesman/official_statement/1824627/.

[138] Russian Ministry of Foreign Affairs, Announcement, available at https://mid.ru/ru/foreign_policy/news/1811482/#sel=4:1:y,4:1:y.

[139] Russian Ministry of Foreign Affairs, Announcement, available at

https://mid.ru/ru/foreign_policy/news/1811646/.  

[140] Russian Ministry of Foreign Affairs, Announcement, available at https://mid.ru/ru/foreign_policy/news/1822249/

[141] Russian Ministry of Foreign Affairs, Announcement, available at https://www.mid.ru/ru/foreign_policy/news/1817712/.