The President signed law on penalties for failure to repurchase stocks of foreign entities

On June 22, amendments concerning administrative liability for Russian owners of shares of foreign organizations who refuse to fulfill the mandatory condition for redemption became effective.

The bill, introduced by senators and deputies in November 2023, was signed by the President of Russia. The new rules provide for the introduction into the Administrative Code of Article 15.23.2 “Violation of the requirements for the regulation of corporate relations in economically significant organizations (ESOs)”.

Foreign owners may be penalized for refusing to carry out the process of deoffshorization of their organization.

The Explanatory Note notes that the introduction of administrative liability in this area is justified by sanctions pressure on large economically significant organizations with more than 4,000 employees and a total annual revenue of 75 billion rubles.

The new regulations establish fines of 200,000 to 400,000 rubles for citizens, 300,000 to 500,000 rubles for officials and 500,000 to 700,000 rubles for companies for failure to fulfill the obligation to deoffshorize business.

It is stipulated that these fines apply not only to indirect owners, but also to the most economically significant company. The statute of limitations for the possibility of administrative liability is set at two years from the date of the offense.