LLC transactions

On September 20, 2022, Government Resolution No.1651 dated September 19, 2022 "On amendments to Government Resolution No. 295 dated March 6, 2022" (hereinafter the "Resolution No.1651") was published, which approves the rules for obtaining a permission from the Government Commission for Control over Foreign Investments in the Russian Federation for transactions involving shares, real estate, etc. (hereinafter the "Rules").

APPROVAL OF TRANSACTIONS WITH STAKES IN CHARTER CAPITAL OF LIMITED LIABILITY COMPANIES BY THE GOVERNMENT COMMISSION

Under Resolution No.1651, the Rules will be supplemented by provisions for the enforcement of Presidential Decree No.618 dated September 8, 2022 governing transactions and operations in respect of stakes (participatory interest) in the charter capital of LLCs between the following persons:

1. between residents and "unfriendly" persons;
2. between "friendly" non-residents and "unfriendly" persons;
3. between "unfriendly" persons.”

The term "unfriendly" means both residents of "unfriendly" states and entities they control, regardless of their place of incorporation (i.e. including Russian subsidiaries of "unfriendly" entities).

The procedure for obtaining permissionsfrom the Government Commission for transactions with stakes (participatory interest) in the charter capital of LLCs is the same as for transactions with shares in joint stock companies, namely:

1. An application for obtaining a permissionfor a transaction with the necessary documents attached must be submitted to the Government Commission.
2. The Government Commission considers the application and the documents submitted with it (the time period for the application review is not legally defined).
3. As a result of the consideration, the Government Commission may adopt one of the following decisions:

• Allow the transaction;
• Allow the transaction subject to certain conditions;
• Deny the permission.

Particularly notable is that the Government Commission may decide to give the transaction permission to an unspecified number of persons.

The decision on granting a permission for a transaction shall be issued in the form of an extract from minutes of the meeting of the relevant sub-commission of the Government Commission for the Control over Foreign Investment in the Russian Federation.

RESTRICTIONS ON FOREIGN CURRENCY TRANSACTIONS AND MONEY TRANSFERS

Resolution No.1651 extends the scope of the Rules. In particular, the Rules now allow the Commission to enact restrictions:

• on foreign currency transfers by residents to their accounts/deposits in banks located outsidethe Russian Federation;
• on making money transfers without opening a bank account using electronic means of payment provided by foreign suppliers of payment services in accordance with Presidential Decree No.430 dated July 5, 2022.

At the same time, Resolution No.295 introduces paragraph 13 (2) which provides that the decision of the Commission to impose the aforementioned restrictions shall be a decision of the sub-commission executed by an authorized body.

The text of the Resolution (in Russian) can be found here.