Application of Decree No. 618 for transactions with the authority of sole executive bodies of LLC: clarifications of the Ministry of Finance of the Russian Federation

Given the dynamic changes in legislation in Russia, especially in the areas of business and corporate governance, it is important to keep up-to-date explanations from government agencies.

One of these documents is Decree №618 of the President of the Russian Federation dated September 8, 2022, which regulates the procedure for transactions with residents of “unfriendly” countries.

In this context, the Ministry of Finance of the Russian Federation provided additional clarifications regarding the application of this Decree to cases of appointment of sole executive bodies of limited liability companies.

The main provisions of Decree №618

Decree №618 was introduced in order to strengthen control over certain transactions and transactions with residents of “unfriendly” countries that may affect the economic security of the country. In particular, it requires obtaining permission from the Government Commission of the Ministry of Finance of the Russian Federation to carry out a number of transactions, including:

1. Transfer of a share/part of a share in the authorized capital of a limited liability company to other participants or third parties

2. Purchase/sale of shares in a joint-stock company

3. Withdrawal of the participant from the society, etc.

However, as indicated in the official explanations of the Ministry of Finance of the Russian Federation (No. 3 dated 02/03/2025), not all transactions are subject to Decree №618.

Exceptions to the application of Decree №618

According to the explanations, Decree №618 does not apply to cases of appointment or termination of powers of the sole executive body of the company (for example, the General Director).

This procedure is regulated by the Labor Code of the Russian Federation and does not require obtaining permits from a Government Commission.

This is important to ensure legal clarity and stability in the management of the LLC, as the process of appointing and dismissing the sole executive body should not be hindered by additional administrative barriers.

Transfer of authority transactions

Nevertheless, Decree №618 still applies to transactions involving the transfer of powers of the sole executive body of a commercial organization or individual entrepreneur. This means that in such cases it is necessary to follow the procedure established by the Decree and obtain the appropriate permission.