On 16 December 2024, the Resolution of the Russian Government No. 1772 of 13.12.2024 (“Resolution No. 1772”) was officially published, containing amendments to the Rules for the Issuance of permits by the Government Commission for Control over Foreign Investments in the Russian Federation under “countersanctions” Presidential Decrees established by the Resolution of the Russian Government No. 295 of 06.03.2022 (“Rules”).
We would like to recollect that the Presidential Decree No. 767 of 09.09.2024 amended Decrees No. 95 and No. 254, which transferred the authority to issue permits without complying the procedure established by the decrees from the Ministry of Finance to the Government Commission. These decrees, in particular, regulate the issues of permits to dividends payouts (profit distribution) to “unfriendly” shareholders (participants) of Russian companies.
At the same time, Decree No. 767 provides for the possibility of setting special conditions for debtors to fulfill their obligations in the permits issued.
It should be noted that despite the existing possibility to obtain permits to pay dividends to “unfriendly” participants and shareholders, in fact, according to publicly available information, no such permits were issued during 2024.
Resolution No. 1772 is intended to regulate the issuance of such permits by the Government Commission by supplementing the Rules with relevant provisions.
It is stipulated that an application for a permit for operations stipulated by Decrees No. 95 and No. 254 shall be submitted to the authorized body (i.e. Ministry of Finance) and to the supervising body that performs the functions of elaboration and implementation of state policy and legal regulation in the field of activity of the applicant (as a rule, it is determined by the main OKVED). The supervising body sends to the Ministry of Finance a motivated position on the expediency or inexpediency of issuing a permit (no time limits for preparation of such a position are established).
Importantly, Resolution No. 1772 formalizes the requirements for an application for dividend payout transactions permits obtaining:
1) a free-form application containing information on:
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purpose, subject, content and material conditions of fulfillment of such obligations (making payment), including conditions on payment of remuneration and other payments (including forfeits (fines) and other financial sanctions;
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planned terms of validity of such permit, schedule of fulfillment of obligations (making payment),
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documents confirming the existence of obligations (making payment);
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currency of payment (including information on the necessity to purchase foreign currency);
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full name of banks in which accounts are opened, which are used for fulfillment of obligations (making payment);
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information on persons in respect of whom it is planned to fulfill obligations (make payment);
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amount of obligations (payment).
2) information on the amounts of dividend (profit) payments for previous periods for at least 5 years preceding the date of application for a permit;
3) information on key performance indicators (KPIs) and their target values (if any) for the debtor proposed as conditions for fulfillment of obligations (payment);
4) other information necessary for consideration of the issue.
The amendments introduced by Resolution No. 1772 have entered into force from the date of official publication, i.e. from 17 December 2024.
We believe that the clarification of the Rules completes the formalized process of transferring the authority to issue permits for dividends payouts (distribution of profits) in favor of “unfriendly” shareholders to the Government Commission, accordingly, in 2025 we may expect the process of issuing permits for such operations to be reactivated.