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Currency repatriation canceled

6 июля 2022

The Presidential Decree canceled the repatriation of foreign exchange earnings, prohibited the transfer of dividends to foreign accounts, provided the Government Commission with the opportunity to impose restrictions on the transfer of currency, secured the possibility of issuing "substitute" bonds by Russian borrowers, and also established the procedure for making payments under syndicated loan agreements.

On July 5, 2022, the President of the Russian Federation issued Decree No. 430 on the repatriation of foreign currency and the currency of the Russian Federation by residents participating in foreign economic activity:

1. The volume of repatriation of foreign exchange earnings is determined by the amount of the mandatory sale of foreign exchange earnings. The amount of the currency to be sold is determined by the Government Commission for the Control of Foreign Investments in the Russian Federation and has been 0% since June 10.

At the moment, in fact, this means the abolition of repatriation (until the government commission determines a different amount of currency sales).

2. Transfers in foreign currency or transfers of funds to accounts in foreign banks are prohibited if they are associated with the transfer of funds received in the form of dividends on shares of Russian JSCs or in the distribution of profits of Russian LLCs, business partnerships and production cooperatives.

3. The government commission received the authority to introduce restrictions on crediting foreign currency to foreign accounts and making money transfers without opening a bank account.

4. The possibility of issuing "substitute" bonds by Russian borrowers has been established. Obligations to holders of Eurobonds and holders of Eurobonds shall be recognized as duly fulfilled if:

  • Russian legal entities liable under Eurobonds have placed bonds in favor of holders, the payment for which upon their placement is made in Eurobonds. At the same time, the amount of income on bonds, the period of payment of such income, the maturity of bonds and their nominal value must be with similar conditions;
  • Russian legal entities redeemed Eurobonds with funds received from the placement of bonds.

These legal entities are obliged to ensure the fulfillment of obligations to holders of Eurobonds, whose rights are recorded by Russian depositories, by transferring funds in the manner determined by the Board of Directors of the Central Bank of the Russian Federation, or by transferring placed bonds to such holders.

5. Russian legal entities that are borrowers under syndicated loan agreements, to which payment agents associated with foreign states that engage in hostile actions against the Russian Federation, are parties, are obliged to fulfill obligations under such agreements to resident creditors in the currency established by the agreement, or at the request of the creditor - in rubles or in the currency stipulated by the agreement between the debtor and the creditor, bypassing foreign paying agents.

Nadmitov, Ivanov and Partners Law Firm actively advises clients in the field of currency law.

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