Russified loans – Newspaper Kommersant No. 238 (7439) dated 12/22/2022

The Financial Support Center (FSC) is changing ownership from a Cypriot holding to its Russian owners. This is not the first MFI to go through the redomiciliation process. The point is to make it easier for Russian owners to pay dividends and access finance.

CFP changes shareholder, follows from disclosure data. The decision on this was made on December 12, and on December 21 the transaction was completed. Until now, the Cypriot company Guinford Management Limited has been a shareholder of the CFP. Now she transfers the shares to the new owner, and 90% of the shares are donated, the rest are sold at a symbolic price.

“The sale is planned to be carried out by residents of Russia, who are the current owners of the Cypriot company,” explained Andrey Cherpalyuk, general director of the CFP. “The purpose of the transaction is to leave the jurisdiction of an unfriendly state.”

Among large MFIs, foreign shareholders are not uncommon, and mostly from hostile jurisdictions. So redomiciliation (transition to another jurisdiction) is a general trend for the sector, says Dmitry Alexandrov, Executive Director of Ivolga Capital. “Control by unfriendly non-residents significantly reduces business and financing opportunities, and MFIs are no exception,” he explains. “In particular, it is difficult for such companies to work with securities, and compliance procedures with counterparties take longer.” Finally, in such an ownership structure, no dividends can be paid and corporate governance opportunities are often limited. Of the large MFIs, it has already transferred ownership from the Cypriot holding MoneyMan, MigCredit is in the process.

“Cyprus is one of the unfriendly countries, cross-border transactions associated with joint-stock companies registered in it are significantly limited,” explains Pavel Ickert, managing partner of Ickert and Partners Law Firm. However, it is now extremely difficult to “relocate” any assets from an unfriendly country. In the case of CFP, we are talking about the transfer of shares belonging to the Cyprus offshore, the company already has a Russian legal entity. So, probably, the CFP thus fulfills the requirements of 151-FZ to reduce the share of persons registered in offshore companies below 10% in the capital, the lawyer believes. “Western sanctions may influence the decision to leave an unfriendly jurisdiction. The US, EU and UK prohibit their persons from carrying out a number of services, for example, accounting, consulting,” adds Anton Imennov, Senior Partner at Pen & Paper Bar Association.

In the US and UK there is a complete ban on new investments in Russia. “Restrictions for such companies are also introduced by Russian law. Such measures affect export-import transactions, requirements for foreign exchange transactions, provide for a special procedure for providing debt financing and restrictions on transactions with shares and shares in the authorized capital of Russian entities,” Mr. Imennov notes. For example, Presidential Decree No. 126 of March 18 prohibits transactions involving payment by a Russian resident of a share, contribution, share in the property (authorized or share capital, unit fund of a cooperative) of a non-resident legal entity. Decree No. 81 dated March 1 introduced additional prohibitions and restrictions on issuing loans in foreign currency to non-residents. And this, the lawyer notes, is only “separate examples of the response measures of the Russian Federation, taken in response to the sanctions of Western jurisdictions.” In his opinion, discussing the reasons for leaving unfriendly jurisdictions “is appropriate in each specific case, since there can be quite a lot of factors influencing such a decision.”

Polina Trifonova