Introduces legal framework to release and exchange foreign blocked assets

On 8 November 2023, the President of the Russian Federation issued Decree No. 844, introducing an investment exchange mechanism that enables foreign investors to purchase blocked foreign securities held by Russian investors using cash held in frozen Type-C accounts in the Russian Federation. Transactions will be conducted within the Russian depository infrastructure, initially targeting small Russian assets blocked abroad. The aggregate initial value of foreign securities that can be sold by a single Russian investor under the new procedure is capped at 100,000 rubles (approx. $1'000) and will not require separate approvals from the Government Commission on Control over Foreign Investments.

The FDI Commission will develop the bidding procedure, specifying transaction terms between Russian and foreign investors. Foreign securities purchased will be credited to "special transit custody accounts" with Russian depositories, remaining blocked under European Union sanctions initially. The process for transferring these securities from special accounts to foreign brokers will be introduced separately by the Central Bank of the Russian Federation (CBR). The decree comes into effect on 8 November 2023.

On 2 February 2024, the Government Commission on Control over Foreign Investments (FDI Commission) sanctioned the terms and conditions for the bidding process, as well as the procedure for transactions involving foreign securities. Furthermore, LLC "Investitsionnaya Palata" was appointed as the official organizer for these transactions (Transaction Organizer). Subsequently, on 11 March 2024, the Transaction Organizer formally released the detailed Terms and Conditions of the Bidding Process.

• Type:

  • Treatment and operation (Operational conditions )

• Industry:

  • Not industry specific

• Sources:

  • Ministry of Finance, Определены условия для обмена заблокированными активами в соответствии с Указом № 844, https://minfin.gov.ru/ru/press-center/?id_4=38896-opredeleny_usloviya_dlya_obmena_zablokirovannymi_aktivami_v_sootvetstvii_s_ukazom__844, 11 Mar 2024
  • publication.pravo.gov.ru, Указ Президента Российской Федерации от 08.11.2023 № 844 "О дополнительных временных мерах экономического характера, связанных с обращением иностранных ценных бумаг", http://publication.pravo.gov.ru/document/0001202311080023?index=4, 08 Nov 2023
  • Jdsupra, Russia Introduces Mechanism to Release Blocked Foreign Investments, https://www.jdsupra.com/legalnews/russia-introduces-mechanism-to-release-6681937/?origin=CEG&utm_source=CEG&utm_medium=email&utm_campaign=CustomEmailDigest&utm_term=jds-article&utm_content=article-link, 10 Nov 2023