Purchase of a share in a Russian company (LLC or JSC) by a citizen from an unfriendly country in 2024

May, 23 2024

If the buyer of shares or shares in Russian organizations in the form of an LLC or JSC is a person from an unfriendly state, it is necessary to follow a special procedure defined in Presidential Decrees No. 81, 618 and 737.

According to the above-mentioned decrees, in order to make transactions involving parties from unfriendly states, it is necessary to obtain the permission of the sub-commission.

The position on the need to obtain permission from the sub-commission when persons from unfriendly states participate in transactions was also confirmed by the Bank of Russia.

In accordance with the decrees, regardless of whether the purchase of shares or the foundation of new LLC or JSC to persons from an unfriendly state takes place, such an action will require the permission of the sub-commission, this is also confirmed in letters of the Ministry of Finance of the Russian Federation No. 05-05-05/113005 dated 11/24/2023 and 05-06-11/12558 dated 02/14/2024.

The procedure for obtaining a permit is regulated in the Decree of the Government of the Russian Federation No. 295 dated 03/06/2022, as well as in the protocols of the subcommission.

The requirements in the Government Decree are largely limited to a list of mandatory documents that must be attached to the application in order to obtain permission to deal with a person from an “unfriendly” state.

In order to successfully obtain consent from the sub-commission to make a transaction to purchase a share from a foreign participant, these requirements must be strictly observed.

Such requirements include:

 1. Report on the independent assessment of the market value of assets, expert opinion.

2. The price of an asset does not exceed 50% of its market value.

3. Voluntary transfer of at least 15% of the market value of assets to the federal budget.

4. Setting KPIs for buyers of shares (shares) from unfriendly entities.

5. Payments for transactions are made in one of the ways specified in the Decrees of the President of the Russian Federation and the requirements of the Ministry of Finance.

6. The applicant has the remaining permits required by Russian law for the transaction, etc.

 As a result, the probability of issuing a positive decision from the subcommittee of the Ministry of Finance depends more on the fulfillment of the above requirements.

Author of the article
Purchase of a share in a Russian company (LLC or JSC) by a citizen from an unfriendly country in 2024
Valentina Khlavich
Managing Partner
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