In response to the fact that the majority of foreign companies have decided to withdraw from the Russian market, the Government has implemented various restrictions on operations and transactions involving non-residents, especially from the so-called "unfriendly" states.
In May 2022, the Russian President has signed two more decrees that significantly affect existing contractual relationships between Russian entities and their foreign counterparties.
- Presidential Decree 252 introduces special
economic measures in relation to legal entities, individuals and
organizations under their control (“Sanctioned
Persons”) included into a special list.
The list was approved by the Decree of the Russian Government No. 851 dated 11 May 2022 (the “Sanctions List”) and includes foreign companies operating in the energy sector across the Europe, UK, USA, Singapore, and Switzerland.
Special economic measures include:
- A prohibition for federal and regional governmental bodies,
municipalities, natural persons and legal entities under the
jurisdiction of the Russian Federations to:
- enter into transactions (including foreign trade contracts)
with Sanctioned Persons;
- perform obligations under contracts with Sanctioned
Persons;
- carry out financial transactions, if beneficiaries of such
transactions are Sanctioned
- enter into transactions (including foreign trade contracts)
with Sanctioned Persons;
- A prohibition to export products and raw materials produced in
Russia, provided that such products are supplied to Sanctioned
Persons, and/or by Sanctioned Persons to other persons.
- By the Decree of the Russian Government No. 851 dated
11 May 2022 additional criteria for classifying transactions
as prohibited were added:
- transactions made in favor of Sanctioned Persons;
- transactions involving the entry into Russian ports of ships
owned and (or) chartered by Sanctioned Persons, in their interest
or on their behalf;
- transactions involving payments, securities with a participation of, or to the benefit of Sanctioned Persons.
- transactions made in favor of Sanctioned Persons;
- A prohibition for federal and regional governmental bodies,
municipalities, natural persons and legal entities under the
jurisdiction of the Russian Federations to:
- Presidential Decree 254 establishes a special
procedure for payments of dividends.
Payments by an LLC to foreign shareholders from “unfriendly” states are now subject to a special procedure established in the Presidential Decree No. 95. It means that all transactions related to payments of dividends must be operated by means of a special account “C”.
The Central Bank and Ministry of Finance are authorized to determine a procedure different from the procedure prescribed by the Presidential Decree No. 95.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.