New conditions for obtaining the Sub-Commission approval for the transactions

We would like to inform you that the Extract1 from the decision of the Sub-Commission No. 171/5 as of July 07, 2023 was published on July 12, 2023.

In accordance with the Sub-Commission's decision, the following amendments are made to the conditions for carrying out transactions (operations) aimed at alienating securities, including shares, participatory interests (contributions) in the authorized (share) capital of Russian companies (“Assets”) by foreign persons associated with unfriendly foreign states or persons under the control of such foreign persons (“Unfriendly persons”), which should be fulfilled in order to obtain the Sub-Commission's approval:

• Voluntary contribution to the federal budget (“Exit tax”) must be paid within 3 months from the date of implementation (execution) of the transaction (operation);

• In case of acquisition of shares constituting the authorized capital of a public joint stock company, public offering of up to 20% of the acquired share, provided that:
  
  

  • {{✓}}date of commencement of such offer may not exceed 1 year from the date of execution of the transaction (operation), and the term of such offer may not exceed 3 years from the date of commencement of such offer;

  • {{✓}} in case of reorganization of a company in the form of merger with a public joint stock company - public offering of shares of the public joint stock company in the amount of up to 20% of the shares of the merged company, taking into account the exchange ratio of the shares of these companies in case of merger, within 3 years from the date of implementation (execution) of the transaction (operation).

• In case of termination of public status of a joint stock company or liquidation of such company as a result of implementation (execution) of a transaction (operation) - public offering of up to 20% of shares of a public joint stock company (newly established or as a result of obtaining public status of the joint stock company), with the term of obtaining public status of the joint stock company and implementation of such public offering not exceeding 3 years from the date of implementation (execution) of the transaction (operation).

• Establishment of KPIs for the acquirer and/or the acquired company, which should provide, inter alia, for the preservation of the technological potential and the main type of economic activity of such company, preservation of jobs and the fulfilment of obligations under contracts concluded by it with other entities, with a recommendation to the federal executive body to exercise control over the achievement of such indicators.

• Buy back of asset at the market value on the day of exercising such option, existence of economic benefit for the resident owner of the asset and limitation of the term of validity of the permit (as a general rule, not more than 2 years from the date of implementation (execution) of the initial transaction (operation))- for a transaction (operation) providing for the possibility of buy back of the asset.

• Transfer of funds in the course of transactions (operations) with unfriendly persons to 'C' type accounts, or settlement of transactions (operations) in RUB in the banking system of the Russian Federation without transfer of funds outside the Russian Federation, or in case of transfer of funds in the course of transactions (operations) with foreign persons to accounts of such persons opened in banks and other financial market organizations located outside the territory of the Russian Federation, the availability of installment payments.

• Presence of other approvals granted to the applicant provided for by the legislation of the Russian Federation, necessary for the implementation (execution) of the transaction (operation), the information on which is provided by the applicant.

The extract also introduces a new condition for the payment of profits (dividends) to foreign creditors in cases established by counter-sanctions decrees of the Russian President, which supplements previously existing conditions that should be met to obtain the approval of the Sub-Commission:

Fulfillment by the applicants of their obligations to achieve KPIs, confirmed by federal executive bodies (Bank of Russia).

Separately, please note that the Extracts from the previous minutes of the Sub-Commission’s meetings No. 118/1 of December 22, 2022 and No. 143/4 of March 02, 2023 are no longer in force.

You can read the Extract by clicking here.