9 September 2024 saw issue of Presidential Decree No. 767 amending the procedure for residents to obtain permit to fulfil their obligations to "unfriendly" foreign non-residents to pay dividends (profits) and repay loans (credits). Specifically, these amendments modify Presidential Decrees No. 95* of 5 March 2022 and No. 254* of 4 May 2022.

The most crucial change is that the Government Commission for Control over Foreign Investment in the Russian Federation (the "Government Commission") is now the competent authority responsible for issuing relevant permits to residents that are not financial institutions.

It is worth noting that such permits were previously issued by the Russian Ministry of Finance though, in practice, the Government Commission was always involved in the decision-making process, while the Ministry of Finance merely formalised Government Commission decisions.

Even so, for financial institution residents, the Bank of Russia retains its authority to issue relevant permits.

The amendments also empower the competent authorities (the Government Commission and the Bank of Russia) to establish conditions for residents to fulfil their obligations to "unfriendly" non-residents. For example, such conditions govern approval of dividend payments to "unfriendly" foreign shareholders, as stipulated in Government Commission decisions No. 171/5 of 12 July 2023 and No. 182/5 of 9 August 2023, which remain in force.

As for residents, excluding financial institutions, seeking a relevant permit, the Russian Government is expected to approve the application procedure shortly. We anticipate that the additions will be made to Russian Government Resolution No. 295 dated 6 March 2022, which regulates the main procedural aspects of applications to the Government Commission under the existing counter-sanction regulations. In practice, an application with supporting documents is submitted to the Government Commission via the relevant ministry, a process we expect to remain largely unchanged.

For completeness, we would also remind you that, under the current regulations (Decrees Nos. 95* and 254*), payment of dividends (distribution of profits) to an "unfriendly" foreign shareholder (participant) or repayment of loans to an "unfriendly" foreign creditor of up to RUB 10m per month (in aggregate with other payments to "unfriendly" foreign creditors), or payments into a special "C" type account may be made without obtaining permit. These rules and regulations remain in force and have not been modified.

We will continue monitoring further developments in the legal and regulatory framework and will provide updates as they become necessary.

* In Russian

Authors:

Maxim Boulba, Partner

Elena Andrianova, Senior Associate