Restrictions imposed on intellectual property transactions
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[1]. 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.
According to the Decree, a Russian resident (an acquirer) and a person from a so-called ‘unfriendly’ country (a right holder) will need authorization from the Russian Government Commission for Control over Foreign Investments in the Russian Federation in order to enter into a transaction involving the alienation of the exclusive rights to intellectual property items and to perform monetary obligations—i.e., to make payments—under such a transaction.
This procedure will also apply to persons who have already transferred their exclusive rights before May 20, 2024 (i.e., the date of the Decree), since payment for the transferred right itself also requires authorization from the Russian Government Commission.
An exception is made to the above rule where:
- The transaction value does not exceed RUB 15 million, or a foreign currency equivalent;
- A transaction does not involve the acquisition of the exclusive rights to works of science, literature and art, results of performing activities (performance), phonograms, or programs transmitted by over-the-air or cable broadcasting organizations.
In those two cases, no authorization will be required from the Russian Government Commission for a transaction or payment under such a transaction.
According to the Decree, when issuing authorization for a transaction, the Russian Government Commission may, inter alia, impose a condition that funds payable for the rights transferred by an ‘unfriendly’ seller must be transferred to a special Russian Ruble type ‘O’ account.
As you may remember, the general rule is that an acquirer will open a special type ‘O’ account in the name of a right holder (a person controlled by that right holder), and no funds may be debited from that account without authorization from the Russian Government Commission[2].
The Forte Tax & Law team has amassed considerable experience in obtaining various authorizations from the Russian Government Commission and knows all of the ins and outs of doing it quickly and effectively. We would be pleased to assist you in obtaining authorizations and approvals for your transactions from the Russian Government Commission.
If you have any questions or you would like to discuss this further, please send an email to Julia Talagaeva or Artem Eretenko.
Sincerely,
[1] Decree No. 430 of the Russian President dated May 20, 2024
[2] Decree No. 322 of the Russian President dated May 27, 2022 and the Resolution of the Board of Directors of the Bank of Russia dated June 10, 2022