The Bank of Russia Extended Restrictions on Payment by Residents for Shares in the Authorized Capital of Non-resident Legal Entities

22 March 2024
Kirill Evstifeev
Junior Associate

As a counter-sanctions measure, Russian President introduced1 and prolonged2 until 31 December 2024 a prohibition on the following transactions without the permission of the Central Bank of the Russian Federation:

  • payment by a resident of a share, contribution, share in the property of the cooperative (authorized or contributed capital, share fund of a cooperative) of a non-resident legal entity;

  • contribution by a resident to a non-resident within the framework of execution of a simple partnership agreement with investment in the form of capital investments (joint activity agreement).

The above measures were amended by the Decision of the working group of the Bank of Russia No. PRG-12-4/1383 dated 23 June 2022, the above measures were amended with exceptions. Thus, the permission of the Central Bank of the Russian Federation was not required in the presence of one of the following conditions:

  • the transaction is carried out in rubles or in foreign currency of “friendly” states;

  • the transaction is carried out in foreign currency of “unfriendly” states in an amount not exceed RUB 15 million.

However, the exceptions were amended by the Decision of the working group of the Bank of Russia No. PRG-12-3/534 dated 6 March 2024. Now the permission of the Central Bank of the Russian Federation will not be required for transactions if the following conditions are met simultaneously:

  • the transaction is carried out in rubles or foreign currency for a total amount not exceeding the equivalent of 15 million rubles at the exchange rate of the Central Bank of the Russian Federation as of the date of the transaction;

  • the total amount of resident’s transactions made from 1 April 2024 in favor of one non-resident legal entity should not exceed RUB 15 million.

Thus, the new rules introduce an amount limit for each of the above transactions in rubles or in foreign currency of “friendly” states and set limits on the total volume of such transactions.

The new rules will come into force on 1 April 2024.

1 Presidential Decree No. 126 of 18 March 2022 “On additional temporary measures of economic nature to ensure financial stability of the Russian Federation in the sphere of currency regulation”
2 Presidential Decree No. 958 of 18 March 2023 “On Amending Certain Decrees of the President of the Russian Federation”