Previously, such permission was required for foreigners from unfriendly countries when selling participatory shares in the authorized capital of Russian LLC with assets in real estate, energy and finance. Now it is mandatory for all transactions concerning the sale of participatory shares by foreigners from unfriendly countries.
Decree of the President of the Russian Federation of 8 September 2022 No. 618 established the rules for transactions with participatory shares in the authorized capital of LLC with individuals and legal entities from unfriendly countries.
The procedure established by the Decree applies to the following transactions:
1) Transactions that entail directly and (or) indirectly the establishment, change or termination of the rights of ownership, use and (or) disposal of participatory shares in the authorized capital of LLC or other rights that allow to determine the conditions for managing such LLCs and (or) the conditions for their business activities;
2) A party to the transaction is an individual or a legal entity of a foreign country that commits unfriendly actions against Russia.
Thus, the Decree’s transaction procedure applies to transactions with the following criteria:
a) transactions between residents and individuals or legal entities of foreign countries that commit unfriendly actions in relation to Russia;
b) between individuals or legal entities from unfriendly countries;
c) between individuals or legal entities from unfriendly countries and individuals or legal entities from other foreign countries.
Transactions that meet the above criteria may be carried out on the basis of permits issued by the Government Commission on Monitoring Foreign Investment and, if necessary, containing conditions for the implementation (execution) of such transactions.
Clause 12 of Decree of the President No. 95 also applies to these transactions. According to Decree No. 95 individuals or legal entities who simultaneously meet the following requirements are not recognized as individuals or legal entities from unfriendly countries:
a) they are under the control of Russian individuals or legal entities, including cases when the control is exercised through foreign legal entities incorporated in unfriendly countries;
b) information about such a control is disclosed to Russian tax authorities by controlling Russian individuals or legal entities.
The procedure for issuance of permits for such transactions by the Government Commission on Monitoring Foreign Investment must be approved by the Russian Government within 10 days from the date of issuance of the Decree. This procedure does not apply to transactions in the fuel and energy and financial sectors.
The Ministry of Finance of the Russian Federation has the right to give official clarifications with regard to the application of this Decree.
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