Updated approval criteria for transactions involving the sale of Russian assets

On July 12, 2023, the Ministry of Finance made an announcement regarding updates to the approval criteria for transactions involving the sale of Russian assets owned by foreign companies with affiliations to "unfriendly" States. The key revisions to these criteria encompass several significant changes:

• Independent Asset Valuation: A new requirement mandates an independent assessment of the market value of these assets.

• Minimum 50% Discount: In such transactions, assets must be sold at a minimum 50% discount from their market value.

• Public Joint-Stock Company Shares: For those acquiring shares of a public joint-stock company, it is now stipulated that up to 20% of the acquired shares must be placed at organized auctions within a one to three-year timeframe.

• Key Performance Indicators: Key performance indicators for buyers and the acquired business entity will be established to gauge the transaction's success.

• Payment via "Type C" Accounts or Russian Rubles: The purchase price for these transactions must be paid through type "C" accounts or in Russian rubles within the Russian banking system.

• Funds Transfer: If funds are transferred to the accounts of individuals in foreign banks, this is only permissible if an installment plan is in effect.

Moreover, the Subcommittee also conducted a review of the procedure for the payment of dividends to foreign creditors from "unfriendly" states. The conditions for such dividend payments include:

• Dividend Limit: Dividends should not exceed 50% of the previous year's net profit.

• Continuation of Business Activities: Foreign creditor participants (shareholders) must express a willingness to continue their business activities within the Russian Federation.

• Impact Considerations: Consideration will be given to the organization's impact on technological and production sovereignty, socio-economic development, and the fulfillment of key performance indicators.

• Quarterly Dividends: The ability to pay dividends quarterly is contingent upon meeting the established key performance indicators.

• Type:

  • Treatment and operation (Capital transfer and FOREX, Operational conditions )

• Industry:

  • Not industry specific

• Sources:

  • minfin.gov.ru, Выписка из решения подкомиссии Правительственной комиссии по контролю за осуществлением иностранных инвестиций в Российской Федерации от 7 июля 2023 года № 171/5, https://minfin.gov.ru/ru/permission/618?id_57=302853-vypiska_iz_resheniya_podkomissii_pravitelstvennoi_komissii_po_kontrolyu_za_osushchestvleniem_inostrannykh_investitsii_v_rossiiskoi_federatsii_ot_7_iyulya_2023_goda__1715, 12 Jul 2023
  • Stonebridge Legal, Новое в контрсанкционном регулировании, https://stonebridgelegal.ru/ru/analytics/novoe-v-kontrsanktsionnom-regulirovaniikzh, 14 Jul 2023