Obtaining permission from the government commission for transactions

In 2022,
restrictions were imposed on certain transactions (operations) to which
residents of “unfriendly” countries are a party.

For the first time,
the concept of an “unfriendly country” appeared in 2018 with the
approval of the federal law “On Measures to influence (counteract)
unfriendly actions of the United States and other foreign states.”

At the moment, the
list of “unfriendly” countries includes the European Union, the USA,
Japan, South Korea and a number of other countries, the list of which has been
approved by the Government.

The need to obtain
a permit applies to the following transactions with a person from an
“unfriendly” state:

• Transactions with shares/stocks in business entities
• Granting a loan in foreign currency to a foreign partner
• Transfer of Dollars, Euros or currencies of third-country banks to accounts registered with financial institutions under the jurisdiction of countries disloyal to Russia
• Money transactions through foreign electronic transfer systems
• Transactions with bonds, real estate and other property

For following
transactions the commission’s permission is not required:

1. A resident of an unfriendly country is controlled by Russian legal entities or individuals (the final beneficiaries are the Russian Federation, Russian legal entities or individuals). In this case, such control should be disclosed to the tax authorities of the Russian Federation.
2. Gratuitous transactions with securities or shares between spouses or close relatives.
3. Transactions on the sale of securities between an individual from unfriendly states and citizen of the Russian Federation, if they are spouses or close relatives.

Permission from the
government commission must be obtained before making such transactions.

The Russian
Ministry of Finance is responsible for issuing permits for transactions with
unfriendly states. For its registration, the interested person must contact the
relevant department (depending on the type of activity of the company / subject
of the transaction) with an appropriate application and a list of documents
that will subsequently be forwarded to the subcommittee of the Ministry of
Finance.

Documents for the
issuance of a transaction permit can be submitted by either a Russian
individual or a company, or by a person from an “unfriendly” state.

To obtain a permit
for a transaction (operation), the following documents are provided:

• Application for a permit
• Applicants – legal entities submit constituent documents
• Applicants – individuals registered as sole proprietors – a document confirming state registration
• Applicants – individuals – an identity document (copy of passport)
• A document containing information about the beneficiaries, beneficial owners, the person exercising control over an unfriendly non-resident (its controlled person) who is a party to the transaction (participating in the operation) and the signs of such control
• An independent appraiser’s assessment of the value of the assets that are the subject of the transaction
• Performance indicators of the company – for purchasers of shares
• The company’s balance sheet for the last reporting period
• Bank statements with information on accounts in foreign currency from the applicant
• A letter on the voluntary payment of the amount of the market value of assets to the budget (currently 15%)

The Sub-Commission
in the protocols decides on the issuance or refusal to issue a permit for the
transaction. The period for issuing a permit is not regulated, but, as a rule,
it is about 2-6 months.