The Foreign Investment Commission will present recommendations for Putin on transactions
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Russian President Vladimir Putin has given the government commission on foreign investment the right to make recommendations on transactions with foreign shares in Russian companies. Corresponding decree was published on the legal information website.
The document amends presidential decree No. 520 of August 5, 2022 “On the application of special economic measures in the financial and fuel and energy sectors in connection with the unfriendly actions of some foreign states and international organizations.” It prohibits until the end of 2025 transactions with shares of Russian companies that belong to persons from “unfriendly countries” without the consent of the President of Russia.
The new decree gives the government commission on foreign investment the power to make recommendations to the president on the feasibility of such transactions. It is also indicated that the president may not rely in his decision on the opinion of the commission.
From October 2022, transactions involving non-residents from unfriendly countries with more than 1% of the shares of Russian financial organizations must receive approval from a government commission. Later, a subcommittee of the Ministry of Finance introduced four criteria that must be met for such transactions.
To complete a transaction, it is necessary to conduct an independent assessment of assets, sell the asset at a discount of at least 50% of the amount specified in the asset assessment, and establish key performance indicators (KPIs) for new shareholders. Also, the conditions of the Ministry of Finance include installment payments for the buyer for a period of up to two years or the obligation of the seller to make a one-time contribution to the state budget of at least 10% of the transaction amount.
In 2023, Vladimir Putin allowed Russian companies that meet certain criteria not to rely on the opinions of foreign co-owners in their management decisions. The president’s decision was valid for a year, but was extended until the end of 2024.
Read more about the contradictions in the sphere of control over Russian business in the material “Guillotine for yourself”.
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