New russian presidential anti-sanctions decree

On July 5, the President signed a new anti-sanctions decree No.430 (the “Decree No.430”), which eases the existing restrictions in currency regulation, but also introduces some new ones.

1. TEMPORARY ANULLMENT OF REQUIREMENT FOR INCOME REPATRIATION ON FOREIGN TRADE CONTRACTS
Pursuant to Decree No.430, residents are to fulfill the obligation to repatriate funds in the amount no less than the sum of foreign currency income that is subject to mandatory sale. The amount is determined by the Government Commission and at present comprises 0%, which actually means a temporary annulment of the requirement for income repatriation in respect to foreign trade contracts.

In particular, this benefit applies to contracts involving transfer of goods, information and intellectual property (including exclusive rights) and provision of services to non-residents. Meanwhile, in relation to loans and return of funds paid by non-residents for undelivered goods (or services not rendered), the requirement for repatriation remains in place.

2. BAN ON TRANSFERING DIVIDENDS TO RESIDENTS’ FOREIGN ACCOUNTS
Residents are not allowed to transfer foreign currency to their foreign accounts if the money was received as income from participation in Russian companies (constitutes dividends). This restriction can adversely affect the speed of transfers made by residents to their foreign accounts, as banks now must examine the source of the money more closely.

The new regulation only applies to transfer of funds to foreign accounts of Russian residents. A special procedure and limits established by previously mentioned anti-sanctions Decrees (about Decree No.95, about Decree No.254, on relevant clarifications by the Russian Central Bank) remains for payment of dividends to foreign individuals. In distributing dividends, one also needs to keep in mind the need to waive the moratorium on bankruptcy.

3. EXPANSION OF GOVERNMENT COMMISSION POWERS
The Government Commission is authorized to introduce restrictions in relation to the possibility of residents transferring foreign currency to their foreign accounts.

4. SPECIAL PROCEDURE FOR FULFILLING OBLIGATIONS RELATED TO EUROBONDS
Russian legal entities, if they have obligations related to Eurobonds, are recognized as duly fulfilling such obligations if they placed their bonds which are similar to Eurobonds in term, income and face value in favor of Eurobonds holders.
If the rights of Eurobond holders are on record in Russian depositories, residents who have obligations related to Eurobonds must ensure their fulfillment to the holders by transferring the placed bonds or by transferring money in the manner determined by the Board of Directors of the Russian Central Bank.

5. FULFILLMENT OF OBLIGATIONS ON SYNDICATED CREDITS
Russian debtors under syndicated credit/loan agreements with paying agents of "non-friendly" states must fulfill their obligations directly to Russian creditor legal entities in the currency of payment under the agreement, in rubles (on request of the creditor) or in another currency that the debtor and the creditor agree on. The procedure also applies to agreements securing the fulfillment of the borrower's obligations.