Current Situation with Obtaining Authorizations from the Russian Government Commission
Dear clients,
We would like to inform you of the latest developments regarding obtaining approvals (pre-authorization) from the Government Commission for Control over Foreign Investments in the Russian Federation (hereafter referred to as the Government Commission) for the sale of companies in Russia.
As you are aware, exiting Russia through the sale of Russian subsidiaries for foreign investors from so-called unfriendly jurisdictions has become a complex and lengthy procedure. Pre-authorization (approval) from the Government Commission is now required. This pre-authorization is subject to conditions such as (a) payment of a voluntary contribution to the Russian Budget of 5% or 10% (depending on the purchase price) of the appraisal value of the shares in the Russian subsidiaries being sold, or (b) significant deferment of the purchase price. More information on this can be found here and here.
The application for pre-authorization is filed with the ministry responsible for the industry in which the target company operates. If the ministry is satisfied with the application, it is then forwarded to the Government Commission for consideration.
Recently, we received unofficial information from the Ministry of Industry and Trade indicating that applications with a voluntary contribution of less than 15% of the estimated value are unlikely to be submitted to the Government Commission for consideration, regardless of purchase price deferment. However, we are not aware of any official changes implemented by the Government Commission.
We cannot rule out the possibility of additional obstacles or even blockages arising in the near future.
Given the dynamics of the legal landscape in Russia, it is the last moment for companies considering exiting the Russian market to take measures. Taking proactive measures is especially important in the light of the increasing complexity and costs associated with exiting the Russian market.
Should you have any questions or require further assistance, please do not hesitate to contact us.
Sincerely,
Partner