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The procedure of issuing permissions for transactions (operations) with respect to membership interests in llcs involving non-residents from hostile states

Pepeliaev Group advises that the Russian Government has determined the procedure for the Government Commission on Monitoring Foreign Investment in the Russian Federation (the ‘Government Commission’) to issue permissions for transactions (operations) with respect to membership interests in Russian LLCs involving non-residents (persons they control) from hostile states.

By its Resolution No. 1651 dated 19 September 2022[1] (the ‘Resolution’), the Russian Government has extended the operation of the previously adopted Rules for the issuing by the Government Commission of permissions for the purposes of implementing additional temporary measures of an economic nature to ensure the financial sustainability of the Russian Federation as well as other permissions provided for by certain Decrees of the Russian President[2] with regard to transactions (operations) with membership interests in Russian LLCs involving non-residents from hostile states.

The Resolution came into effect on 20 September 2022.

Please be reminded that the Russian President’s Decree No. 618[3] (the ‘Decree’) has introduced restrictions on closing transactions (operations) which directly and/or indirectly entail the establishment, modification or termination of rights of ownership, the use and/or disposal of membership interests, as well as other rights which allow for conditions to be determined subject to which an LLC should manage and/or carry out its entrepreneurial activities[4] (with certain exceptions).

Starting from 8 September 2022, such transactions can be carried out/performed only if permission to that effect has been obtained from the Government Commission.

To find out more about the Decree, please read this alert.

How should permission for a transaction (operation) with an LLC’s membership interests be obtained?

To obtain permission, an application in the established format[5] should be submitted to the Government Commission, attaching the following documents:

  • a request for permission addressed to the Government Commission, for which there is no set form, detailing the objective, subject matter, contents and material terms of the transaction, the number of votes attaching to the membership interest to be acquired as a result of the transaction (operation) and the expected validity period of the permission;

  • for an applicant that is a legal entity: a document confirming state registration or another document confirming that the entity was established, as well as its constituent documents;
    for an applicant that is a foreign organisation but not a legal entity: a document confirming the fact of incorporation under the laws of the state in which the organisation was incorporated;
    for an applicant that is an individual registered as an individual entrepreneur: a document confirming state registration;
    for an applicant that is an individual: an identification document;

  • a document that contains information with regard to beneficiaries, beneficial owners or a person who controls the non-resident from a hostile state (its controlled entity) which is a party to the transaction (involved in the operation), and the signs of such control;

  • an inventory of the documents.

Any party, a resident or a non-resident, from either a hostile or a friendly state, can submit the documents.[6]

The application and the documents enclosed with it should be drawn up in Russian. If originals of the documents are made in a foreign language, they should be submitted together with a notarised translation into Russian (attaching the apostille of the state in which the document was drafted).

The documents submitted should be stitched and certified by the seal (if any) of the applicant.

If the applicant is an individual, the documents should be certified by his signature, the authenticity of which must be evidenced by a notary.

The application can be submitted by an applicant’s representative, who must have a notarised power of attorney to do so.

What to think about and what to do

The Resolution does not regulate the timeframes for the Government Commission to review the documents submitted in order to obtain permission. Based on our experience of obtaining permissions of the Government Commission for transactions with shares, the process can take 2 to 3 months in practical terms.

Taking into account that there is no limitation on the maximum period for the review of the documents by the Government Commission and also considering the rather long list of transactions (operations) with respect to membership interests in an LLC which fall under the description of transactions that require permission from the Government Commission, it seems that it will not be a fast-track process to obtain such permissions. It should be further taken into consideration that, when issuing permission for a certain transaction (operation) to be carried out the Government Commission may determine conditions for such permission.[7] This needs to be borne in mind when such transactions are planned.

Please note that the Ministry of Finance is entitled to issue official clarifications on how the Ruling should be applied.[8] In addition, the way the Government Commission operates shows that permissions are sometimes issued for certain categories of transactions (operations) to be carried out which are addressed to public at large. We recommend that you monitor any issuance of such permissions by the Government Commission and the clarifications of the Ministry of Finance.

Help from your adviser

Pepeliaev Group’s specialists are keeping up to date with the latest developments in corporate legislation and have extensive experience in providing support within the scope of statutory corporate procedures. Pepeliaev Group's range of services includes providing legal support for various aspects of a company’s operations with regard to corporate legislation.


[1] The Russian Government’s Resolution No. 1651 “On amending Resolution No. 295 of the Russian Government dated 6 March 2022” dated 19 September 2022. To access the electronic version, please go to: http://publication.pravo.gov.ru/Document/View/0001202209200040.

[2] Have been approved by the Russian Government’s Resolution No. 295 dated 6 March 2022.

[3] The Russian President’s Decree No. 618 “On the special procedure for specific types of transactions (operations) to be carried out (performed) between certain parties” dated 8 September 2022. To access the electronic version, please go to:  http://publication.pravo.gov.ru/Document/View/0001202209080027.

[4] The list of hostile states has been determined by the Russian President’s Decree No. 81 “On additional temporary measures of an economic nature to ensure the financial stability of the Russian Federation” dated 1 March 2022.

[5] The recommended format of the application for permission to close a transaction has been approved at a meeting of a subcommittee of the Government Commission of 14 March 2022; excerpt from minutes No. 9 of the relevant meeting was brought to public attention by the Russian Ministry of Finance by document No. 05-06-10/VN-12520 dated 17 March 2022; to access the electronic version, please go to:

https://minfin.gov.ru/ru/permission/79-81?id_57=135694-forma_rassmotrenie_voprosov_podkomissiei_v_tselyakh_vydachi_razresheniya_pravitelstvennoi_komissiei

[6] Although the Rules for the Government Commission to issue permissions do not directly refer to non-residents from friendly states as potential applicants, we believe they are also able to apply for the permission to the Government Commission (for example, in a situation when a non-resident from a friendly state wishes to make a transaction with respect to a membership interest in a Russian LLC with a non-resident from a hostile state, with the obligation to obtain such permission being expressly stipulated by the Decree).

[7] Clause 2 of the Ruling expressly authorises the Government Commission to do so.

[8] Clause 7 of the Ruling.

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