Corporate law / M&A

The rules for localising seed production in Russia are coming into force

New items have been added to the existing conditions for performing transactions involving hostile non-residents disposing of shares of and membership interests in Russian Joint Stock and Limited Liability Companies

The Government Commission on Monitoring Foreign Investment in Russia has supplemented the list of conditions for carrying out transactions with a view to disposing of securities including shares of and membership interests in the issued capital of Russian business entities in which “hostile” non-residents participate.

A law has been adopted that expands the grounds for a “golden share” to be introduced Pepeliaev Group advises that on 11 January 2023 a Federal Law came into force that expands the opportunities for the state’s special right to be used to participate in the corporate governance of companies (a “golden share”).

The conditions of transactions involving a disposal of shares and membership interests of Russian companies by "hostile" non-residents and a payment of dividends by Russian JSCs and LLCs to foreign shareholders and participants have been published The Government Commission for Monitoring the Implementation of Foreign Investments in Russia has established a list of conditions for the carrying out (performance) of transactions (operations) aimed at the disposal of securities, including shares and membership interests in (contributions to) the issued capitals of Russian legal entities, with the participation of "hostile" non-residents and persons under their control, as well as payments of profit (dividends) by Russian legal entities to foreign members (shareholders), compliance with which will be assessed when the authorised entity makes decisions on whether to issue (refuse to issue) permits for the implementation of relevant transactions (operations).

The Ministry of Finance clarified certain issues regarding the application of the Presidential Decree on the introduction of a permissive procedure for transactions with LLC shares The Russian Ministry of Finance has published Official clarifications No. 1 relating to the implementation of Decree No. 618 dated 8 September 2022 as formalised in Letter No. 05-06-14RM/99138 dated 13. October 2022.

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

Restrictions have been introduced on transactions (operations) being completed in relation to membership interests in the charter capital of Russian LLCs Starting from 8 September 2022, Decree No. 618 of the Russian President dated 8 September 2022 has established new requirements for completing transactions (operations) the subject matter of which are membership interests in the charter capital of Russian limited liability companies (LLCs).

A simplified procedure for documenting the termination of activity of small and medium-sized companies may be introduced from 1 july 2023 The State Duma has adopted in the first reading a draft law  that enables companies classified as small and medium-sized enterprises that meet a number of criteria to terminate their activity in accordance with a simplified procedure without undergoing a lengthy procedure of voluntary liquidation. 

Restrictions have been introduced on the disposal by “hostile” non-residents of shares or membership interests in strategic enterprises, credit institutions and PSA Starting from 5 August 2022, new requirements were introduced by Decree of the Russian President with regard to transactions in in the most important sectors of the Russian economy.

The procedure for converting branches and representative offices of foreign legal entities into business entities has been established The Federal Law has been adopted, which establishes the procedure for converting branches (representative offices) of foreign legal entities into limited liability companies.

A law has been adopted that contains mechanisms for blocking the actions of foreign companies that may pose a threat to the uninterrupted and rational use of subsoil resources or of facilities of cross-border gas transportation infrastructure Pepeliaev Group advises that on 6 July 2022 the State Duma of the Federal Assembly of the Russian Federation adopted a Law that provides for a mechanism for the mandatory transformation of a branch (representative office) of a foreign company whose activity relates to using subsoil resources into a Russian limited liability company (an LLC), and for a mechanism limiting the rights of foreign investors having membership of a Russian company whose activity relates to using subsoil resources. 

Prosecutors are being vested with the right to challenge business entities’ transactions closed in violation of russian legislation The State Duma has passed the law to considerably extend the supervisory functions of prosecutors in controlling transactions in terms of their compliance with sanctions , anti-money laundering, customs, tax and currency legislation.