Prohibitions established by Edict No. 520
Persons connected with unfriendly countries and persons controlled by them are banned until 31 December 2022
from entering into transactions involving securities and interests held by them in Russian legal entities and participating interests, rights and obligations belonging to participants in production sharing agreements, joint activity agreements or other agreements on the basis of which investment projects are carried out in the territory of Russia.
The prohibition introduced by Edict No. 520 applies to transactions:
- involving shares in joint stock companies included in the list of strategic enterprises and strategic joint stock companies ("the List")
- involving shares and interests in business companies in which joint stock companies included in the List directly or indirectly own shares or interests
- involving participating interests, rights and obligations belonging to participants in the "Sakhalin-1" Production Sharing Agreement and the Agreement on Oil Development and Production at the Kharyaginskoye Field
- involving shares and interests in business companies which manufacture, service and repair equipment for fuel and energy companies
- involving shares and interests in business companies which generate and supply thermal power and (or) electricity
- involving shares and interests in business companies engaged in the refinement of oil and petroleum feedstocks and the manufacture of refined products thereof
- involving shares and interests in Russian banks
- involving shares and interests in business companies which are users of subsurface sites containing deposits of oil, gas, coal, uranium, copper, gold, diamonds and other minerals meeting certain criteria
For the purposes of Edict No. 520, transactions are broadly defined to include any arrangements that result directly or indirectly in the establishment, variation, termination or encumbrance of rights of possession, use or disposal of securities, interests in the charter capitals of Russian legal entities, rights and obligations under PSAs and joint activity agreements, etc.
It should also be noted that the criteria governing the prohibition of transactions involving and shares and interests in subsurface users are less restrictive for certain types of minerals and deposits, such as gas and oil, than for deposits of federal significance.
The transactions listed above may take place only upon receipt of a special permit from the President of Russia. Transactions made without a special permit will be deemed void, and shares and interests transferred in violation of the rules will not confer corresponding rights on their new owners.
In the near future, the President of Russia will approve lists of fuel and energy companies and Russian banks that are subject to the restrictions introduced by Edict No. 520.