Business with a foreign ownership structure was complicated by any transactions

As Kommersant found out, the new requirements for the approval of transactions by companies controlled by persons from unfriendly states prevented a deal from being carried out within the Russian market. It was about the sale and purchase of several real estate objects between legal entities, which, according to Kommersant, in fact, belong to the same holding – SUEK (they deny the connection there). Rosreestr refused to register the contract without the permission of the government commission, since the seller and buyer belong to Cypriot legal entities, and the parties did not disclose the beneficiaries. The court upheld this position. Lawyers say that the rules for coordinating transactions of residents are unclear, so we need to wait for clarifications from the legal commission or the development of a unified position in judicial practice.

On July 6, the Arbitration Court of the Kemerovo Region recognized as legal the suspension of the registration of the transaction on the purchase of real estate by SUEK-Kuzbass JSC from Energoservice LLC. The decision of the court about this “Kommersant” found in the filing cabinet of arbitration cases. We are talking about the sale of nine facilities in the Kemerovo region, including facilities for power supply, substations and land plots with a total area of ​​about 2 thousand square meters. m.

Having signed the agreement in December 2022, SUEK-Kuzbass applied to Rosreestr to register its ownership of the property. But the service in February 2023 suspended registration “due to failure to submit the necessary documents.” SUEK-Kuzbass attached additional documents and explanations, but this did not help.

The fact is that legally the seller and the buyer are controlled by organizations from Cyprus recognized as unfriendly: 92% of the shares of SUEK-Kuzbass belong to JSC SUEK, which is owned by AIM Capital Se, and Energoservice is wholly owned by Erglis Ltd. In this regard, Rosreestr referred to the Decree of the President of the Russian Federation of March 1, 2022 No. 81, which obliges to obtain permission from the government commission for a transaction with foreign persons associated with unfriendly countries. These include transactions on the alienation of real estate, but the parties to the agreement did not receive such approval.

SUEK-Kuzbass appealed against the actions of Rosreestr, but the court recognized them as “legal and justified.” The decision states that while the seller and buyer have resident status, “both are under the control of legal entities” associated with unfriendly countries, so permission from the regulatory commission is necessary.

According to the company, from the minutes of the meeting of the government commission dated September 7, 2022, it follows that “any resident has the right to conclude transactions with any foreign and controlled persons without any restrictions and additional requirements.”

The court considered this a “subjective interpretation”, indicating that it was possible to avoid agreement if it was confirmed that the companies were actually controlled by Russian citizens or legal entities. But, according to the court order, the company decided “not to disclose persons exercising control over the buyer and seller through foreign legal entities,” despite the fact that, according to indirect data from official disclosures and information from three independent sources, Kommersant on the market, which owns Energoservice » Erglis, “essentially belongs to SUEK” and is controlled by the Melnichenko family.

However, the coal company itself denies the connection. A SUEK representative told Kommersant that “the seller in the transaction is not a member of the group.” He added that now “the parties are discussing the need to obtain additional documents for the purposes of the transaction, and also analyze the possibility of appealing the court’s decision.”

Julius Tai, managing partner of AB Bartolius, says that he has not seen similar litigation. He clarifies that “deals involving offshore companies, when the real beneficiaries are Russian and very famous citizens, are found everywhere.” However, new requirements for transactions with residents of unfriendly countries may indeed require additional actions from asset owners, the lawyer admits.

PB Legal partner Alexander Panin notes that companies have two options: still get permission from the legal commission or disclose to the Federal Tax Service information that the seller and buyer are controlled by Russian entities. “The mere fact of having a Russian beneficiary is not enough to avoid agreement. Even if all participants in the transaction belong to one beneficiary, without proper disclosure of control, government agencies will not attach importance to this fact, ”explains Mr. Panin.

Such regulation, according to Ekaterina Baranova, senior lawyer at BGP Litigation, “promotes the disclosure of information about Russian-controlled foreign companies (CFCs) and helps government agencies streamline the process of monitoring transactions with unfriendly persons.”

Ms. Baranova notes that the government commission can make decisions on issuing permits for transactions to an indefinite circle of persons – this was precisely the September protocol referred to by SUEK-Kuzbass. But it is not clear from the document whether the resident himself, who makes a deal with a foreigner, can be under hostile control, she clarifies. Due to vague wording, Rosreestr and the courts may consider this a violation of the conditions, as happened in this dispute, Yuliy Tai believes. What measures can be taken to eliminate the risks of blocking the transaction, further judicial practice will show, Mr. Panin believes.

However, there is a third option – the company can “exclude unfriendly non-residents from the corporate structure, for example, through redomiciliation to the SAR,” says Mr. Panin. “In this regard, presidential decrees embody the policy of deoffshorization of the Russian economy and create an incentive to transfer business to the Russian Federation,” adds the lawyer.

“If the Russian Federation wants to transfer all its citizens to investing only through direct ownership, the state must clearly express its position, and entrepreneurs can then agree or “vote with their feet.” Another thing is that in the current conditions of isolation and sanctions, they can find themselves between a rock and a hard place,” says Mr. Tai.

In the case of SUEK, the situation is complicated by the fact that, although it was previously directly controlled by Russian citizen Andrei Melnichenko, the current beneficiary of the company is his wife Alexandra, who has only Serbian and Croatian (unfriendly) citizenship. Alexander Panin notes that the procedure for disclosing information about a CFC is provided for Russians, not foreigners. According to Mrs. Baranova, there is a high probability that a person with the citizenship of a friendly and unfriendly state will not be exempted from approval. In this regard, lawyers believe that SUEK will have to obtain permission from the governing commission for transactions between the holding companies, at least until control over it returns to Andrey Melnichenko, who told Forbes in April that he plans to do this.

Anna Zanina, Ekaterina Volkova, Dmitry Kozlov, Evgeny Zainullin