As expected, the Russian Government Commission has tightened the conditions for issuing authorizations for transactions with respect to shares/interests in companies.

Now, the discount must be at least 60% of the market value of an asset. Previously, it was at least 50%.

A voluntary contribution has been increased to 35% of the appraised market value of shares/interests and will have to be paid as follows:

• 25% within one (1) month from the transaction date;
• 5% within one (1) year from the transaction date; and
• 5% within two (2) years from the transaction date.

Previously, a voluntary contribution was 15% of the appraised market value of shares/interests.

Furthermore, selling or buying any assets valued at more than RUB 50 billion will require approval from the Russian President.

As you may remember, some transactions, such as the sale of interests in limited liability companies or shares in joint-stock companies where one of the parties is a person, whether an individual or a legal entity, from the approved list of ‘unfriendly’ countries, will require an authorization from the Russian Government Commission on Control over Foreign Investments in the Russian Federation that is issued subject to a number of conditions.

We would be pleased to advise you on how to obtain authorizations from the Russian Government Commission in more detail.

If you would like to discuss this matter further or have any questions, please write to Anton Kabakov or Alexandra Yudina.

Extensive changes to Russian migration laws[1] will take effect from February 5, 2025. They will, inter alia, affect the following.

 A register of controlled persons is to be introduced.

 The Russian Ministry of Internal Affairs will maintain a special online register of foreign citizens who are staying in Russia, but do not have any legal grounds for it. The Russian Ministry of Internal Affairs will, inter alia, include a foreign citizen in this register:

• where a visa is cancelled;
• where a decision is made on the reduction of the duration of temporary stay, deportation, undesirable stay (residence) in Russia, and the denial of entry to Russia; and
• upon the expiration of 72 hours of a foreign citizen’s stay as a passenger on board a cruise ship or ferry that holds a passenger transportation permit.

The Russian Ministry of Internal Affairs will independently identify such citizens and include them in the register. It should be noted that the Russian Ministry of Internal Affairs will not notify foreign citizens of their inclusion in the register. A foreign citizen will be considered to have been notified of his or her inclusion in the register from the time his or her details are entered into the online register. If the grounds for inclusion of a foreign citizen in the register are no longer valid, the Russian Ministry of Internal Affairs will exclude that foreign citizen from the register, of which he or she will not be notified, either.

Please note that from the time a foreign citizen is entered into the register, the following restrictions will apply to that foreign citizen:

• a ban on the state registration of legal entities and individual proprietorships;
• a ban on the purchase of real estate, motor vehicles, self-propelled vehicles, and other types of machinery;
• a ban on the state cadastral registration of real estate and/or the state registration of ownership rights;
• a ban on the state registration of motor vehicles, self-propelled vehicles, and other types of machinery;
• restrictions on the use of the right to drive motor vehicles;
• a refusal to admit to exams for the right to drive motor vehicles, to issue (replace, exchange) of a Russian national or international driver’s license;
• a refusal to open a bank account and make other banking transactions, except for money transfers to make compulsory payments stipulated by Russian laws, and money transfers to the bank account of a controlled person and the withdrawal of cash to a controlled person in the amount of not more than RUB 30,000 per month;
• a ban on marriage;
• a ban on the change of the place of residence or stay in Russian without permission from the Russian Ministry of Internal Affairs;
• a ban on travel outside the constituent entity of Russia, the municipality, in which a controlled person is staying (residing), except for departure from Russia; and
• other restrictions.

We recommend monitoring of whether or not a foreign citizen has been included in this register, especially if any significant events, transactions or other actions are planned that require the involvement of government agencies.

If, for any reason, a foreign citizen has been included in the register, we will be pleased to offer our recommendations on how to exclude that foreign citizen from the register and provide any assistance as may be necessary to do so.

 Procedure for migration registration of foreign citizens is to change (migration registration).

From February 2025, a foreign citizen can be registered with migration authorities for a maximum of 1 year (migration registration). Previously, foreign citizens could be registered with migration authorities for the entire period of validity of their visas (for example, for three (3) years at once). The registration period has now been limited to one (1) year, even if the visa is valid for a longer period.

If you would like to discuss this matter further or have any questions, please write to Julia Talagaeva or Alexandra Yudina.

[1] Federal Law No. 260-FZ dated August 8, 2024 On the Introduction of Amendments to Certain Legislative Acts of the Russian Federation.

There has been an intense discussion lately about increasing the amount of a voluntary contribution payable upon the sale of shares/interests in companies up to 40% of their market value.

As you may remember, where shares/interests in companies are sold involving entities/individuals from so-called ‘unfriendly’ countries, a voluntary contribution must be paid to the Russian budget, the amount of which is now at least 15% of the market value of the relevant assets as specified in a report on an independent appraisal of those assets. In other words, an authorization for the sale/purchase by such entities/individuals of shares/interests in companies is granted subject to payment to the Russian budget of 15% of the market value of the company, the shares/interests in which are being sold.

There have been more and more proposals put forward to increase the amount of a voluntary contribution to 40% of the appraised market value of shares/interests. We do not know whether this proposal will be realised in practice, but it is likely that the amount of a voluntary contribution may indeed be increased in the near future.

For this reason, we recommend that you should not delay submitting documents to the Russian Government Commission so that you may be able to obtain an authorization for the transaction before the amount of the voluntary contribution is increased.

We would be pleased to advise you on how to obtain authorizations from the Russian Government Commission in more detail.

If you would like to discuss this matter further or have any questions, please write to Anton Kabakov or Alexandra Yudina.

On July 30, 2024, the Russian State Duma passed, in its third and final reading, a draft law that alters, among other things, the procedure for documenting the change of the CEO of a company (for LLCs) and sets out rules for holding a general meeting remotely (Draft Law No. 103501-8). It is expected that the procedure for appointing a CEO will change as soon as September 1 this year, and the rules for holding a general meeting remotely (with several exceptions) will take effect March 1, 2025.

On July 23, 2024, the Russian State Duma passed, in its third reading, Draft Law No. 444871-8 that makes it possible to transfer certain matters that fall within the competence of the general meeting of shareholders of a non-public JSC and of members of an LLC to the board of directors or the management board.

On May 20, 2024, Decree No. 430 of the Russian President was published that has imposed restrictions on transactions involving the acquisition of exclusive rights to the results of intellectual activity or means of individualization. This Decree does not apply to the granting of rights to use intellectual property under license or other similar agreements that do not provide for the alienation of exclusive rights.

On May 17, 2024, the Russian Ministry of Finance published on the website a new extract from the minutes of a meeting of the subcommittee of the Russian Government Commission.

On May 23, 2024, the President of Russia signed Decree No. 442, establishing the procedure for compensating damages caused by decisions of US governmental bodies and courts to seize foreign assets of the Russian Federation and the Central Bank of Russia.

On April 26, 2024, the Russian Ministry of Justice registered Order No. 35н of the Russian Ministry of Finance dated March 28, 2024, which approved a Special List of States and Territories that provide Preferential Tax Treatment and/or do not require the Disclosure and Provision of Information when Financial Transactions are Conducted (Offshore Zones).

This time of the year has come again when companies need to approve their financial results for the previous year. Limited liability companies will have to approve their financial results for 2023 not later than April 30, 2024, and joint-stock companies not later than June 30, 2024 (unless otherwise provided by the company’s charter).