Selling assets as a tool for reducing sanctions risks

Cases where a company has been able to get sanctions lifted by selling its business are rare. The main reason is that sanctions decisions are more often linked to geopolitics than to legal nuances.

In what cases does selling a business help to lift sanctions

One possible scenario is the transfer of control over an asset: if the business or a share of it is transferred to another owner who is not subject to sanctions, regulators may reconsider the restrictions. For example, the assets of one Russian bank were sold, and the sanctions were lifted after the previous owner lost their property interest. However, even this does not provide any guarantees: if the company itself is included in the sanctions list, the probability of exclusion remains very low.

Key risks and difficulties

•    The transaction must be carried out with a non-sanctioned buyer and be fully transparent – regulators will check the structure, origin of capital, and absence of fictitiousness.

•    The sale of assets by a sanctioned person is complicated: the property is frozen and can only be disposed of upon obtaining the appropriate license.

•    When selling a “toxic” asset, there is a risk that the proceeds will be recognized as related to sanctioned activities – banks and counterparties remain highly distrustful.

•    Without the consent of the main Western regulators, the transaction may not lead to the desired result.

Alternative options

If a full sale is not possible, companies may consider:

•    obtaining a special license permitting certain transactions with sanctioned persons;

•    preventive restructuring – a change of ownership or reorganization prior to the imposition of sanctions, with documentary evidence of economic feasibility;

•    changing jurisdiction or asset structure to minimize the impact of restrictions, although such schemes are often viewed by regulators as attempts to circumvent sanctions.

Selling the business can be a viable strategy, but only with ideal legal transparency and favorable sanctions status of the parties. In most cases, this is a risky path with a high degree of uncertainty. For companies facing sanctions, it is more important to build a clear compliance and structuring strategy than to hope for a simple removal of restrictions through a change of ownership.