A subcommittee of the Ministry of Finance, which has been given the right to authorize transactions with foreign companies, has approved the criteria allowing foreigners to sell Russian assets.
As reported by RBC, the criteria include a voluntary contribution to the Russian budget, which will not be less than 10% of the transaction, or the possibility of installment payments for up to two years.
It should be noted that this decision applies to foreign companies from “unfriendly countries.” Four criteria are approved. In addition to the above mentioned, as RBC reports, there are citing sources in international companies, an obligatory independent evaluation of the value of assets being sold. Besides, assets may be sold at a discount of no less than 50% of the price established by experts after an independent appraisal. Key performance indicators (KPIs) have been approved for new owners.
This subcommittee under the Ministry of Finance of Russia was established in early March. It was commissioned to issue permits for transactions with owners of foreign companies. The subcommission was headed by the Minister of Finance Anton Siluanov.
Back on March 6, there was adopted a resolution according to which all transactions of Russian companies with companies and citizens of “unfriendly countries” should be approved by the governmental subcommittee. In September, Vladimir Putin signed a decree specifying a special procedure for transactions with stakes in Russian companies for persons who are citizens of “unfriendly countries.”
It should be reminded that in June, according to Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, foreigners were selling their business in Russia when the discount was at least 50%, taking into account “the latest official estimate.” This data, according to the media, was confirmed by Siluanov. But in October, according to the CSR data, this discount averaged 70%.
Clear criteria for the transfer of ownership of foreign companies adopted by the Government of the Russian Federation, are, according to the media, the “preferred option” in the current situation. Alena Kucher, a managing partner of the Kuleshov Maksimenko & Partners law firm, fully agrees with this.
Andrei Voronin, chairman of the Expert Council on Corporate Governance of the Institute of Economics of the Russian Academy of Sciences, believes that a 50% discount on the value of the business is clearly beneficial for the buyer. He specifies that foreigners often have shares and interests in Russian companies through established SPVs located in offshore jurisdictions. That is what will allow foreign buyers, Voronin suggests, to alienate shares of those SPVs quietly, reselling them among themselves without going into the Russian circuit. Meanwhile, there is a risk here, as RBC writes, that sellers and buyers during transactions may conclude additional agreements and make settlements outside Russian jurisdiction.
According to media reports, Japanese concern Mazda is transferring its stake in Mazda Sollers Manufacturing Rus, located in Vladivostok, to the Russian group Sollers. However, the documents stipulate the possibility of repurchasing these shares within three years from the date of sale.
It is known that the Russian government took such a step after the introduction of anti-Russian sanctions after the start of the special military operation in Ukraine. It is envisaged that a government commission may not issue permission for the sale of the company or may issue it with additional conditions. As a reminder, in March this year, the Russian government also approved a list of unfriendly countries, which, apart from the EU countries, included the US, Canada, Japan and the UK.