The Governmental Commission has formalised conditions for the payment of dividends/profits to shareholders from "unfriendly" countries and for transactions involving shares/interests held by them

23 December 2022
Law Messenger
On 12 December 2022, a subcommittee of the Governmental Commission for the Monitoring of Foreign Investments in the Russian Federation issued draft Minutes No. 116/1, in which it officially set out the conditions that affect decisions regarding the approval of transactions involving shares/interests held by persons from "unfriendly" countries and the payment of dividends to such persons.
Conditions of transactions involving shares/interests which influence decisions on granting permission to carry out such transactions

In the case of transactions amounting to more than USD 100 million, the Governmental Commission must consider whether the following conditions for carrying out such transactions are met:
  1. The existence of an independent assessment of the market price of the assets;
  2. The sale of the assets at a discount of at least 50% of the market value of the assets;
  3. The setting of key performance indicators (KPIs) for the new shareholders/participants;
  4. The facility to pay by instalments over 1−2 years and/or
  5. The voluntary remittance of funds to the federal budget amounting to at least 10% of the transaction amount.

By decision of the Governmental Commission or on the basis of a petition from a federal executive body, the above conditions may be applied to smaller transactions.

We should point out that the need to obtain advance approval for transactions from the Governmental Commission was established by Edicts No. 81, No. 618 and No. 737 of the President of Russia. At the same time, transactions involving shares/interests in some legal entities may require a special decision of the President (Presidential Edict No. 520). More details about this can be found in our alert here. We do not rule out the possibility of conditions similar to those set out in Minutes No. 116/1 being applied to transactions involving companies listed in Presidential Edict No. 520.
Conditions of profit payments which influence decisions on granting permission to make such payments

It will be recalled that Edicts No. 95 and No. 254 of the President of Russia imposed restrictions on the payment of dividends/profits to foreign shareholders from unfriendly countries. However, alternative arrangements for making payments are available subject to permission being received from the Bank of Russia in the case of financial organisations or from the Ministry of Finance in the case of other organisations.

The following conditions must be taken into consideration when making decisions regarding dividend/profit payments:
  1. The amount of profits payable is no more than 50% of the amount of net profit for the preceding year;
  2. The results of a retrospective analysis of profit payments for prior periods;
  3. The willingness of shareholders to continue commercial activities in Russia;
  4. Assessments by federal executive bodies and the Bank of Russia of the importance of an organisation’s activities and the extent to which those activities affect the technological and industrial sovereignty of Russia or regions of Russia;
  5. The setting of KPIs for organisations by federal executive bodies;
  6. The possibility for profit payments to be made on a quarterly basis (subject to the achievement of set KPIs).

It should be pointed out that it is not yet clear what KPIs will be set either for the approval of transactions or for profit distributions.


The above conditions have previously been informally cited by state officials in deciding whether to approve transactions and profit payments. However, even if the conditions set out in Minutes No. 116/1 are fully met, there are no guarantees of a positive decision being obtained for a transaction or dividend payment.

  • Georgy Kovalenko
    Law Group
  • Alexei Kuznetsov
    Financial Services Group
  • Vasily Makovkin
    Law Group
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