The Government Commission Has Unified the Requirements for Transactions on Sale of Shares in Russian Companies and Payment of Dividends, Which Carried Out with Shareholders from Unfriendly States

Alienation of shares in Russian companies by foreign persons from unfriendly states

Payment of dividends by Russian companies to foreign shareholders from unfriendly states

1) report on an independent market valuation of assets conducted by an appraiser included in the recommended list ;

2) conclusion of the self-regulatory organization (SRO) of appraisers;

3) sale of assets at a discount of at least 50% of their market value;

4) readiness to make a voluntary contribution to the federal budget in the amount of 5% - 10% of the market value of assets within 3 months after the transaction[1];

5) in respect of PJSC stocks:

• in case of acquisition of shares in PJSC: - up to 20% of stocks from the acquired stake must be placed at auctions;
• in case of a merger of a company with a PJSC - up to 20% of stocks of the merged company, taking into account the conversion coefficient, must be placed at auctions;
• in case of termination of the public status of a PJSC or its liquidation – up to 20% of stocks of a PJSC (newly created or as a result of acquisition of the public status by a JSC), with the term of acquisition of the public status by a JSC and such placement being no more than 3 years from the date of the deal (operation);

6) setting key performance indicators (“KPIs”) for buyers and/or the Company whose assets are sold. The KPIs should provide for preservation of the technological potential and the main economic activity of the Company, preservation of jobs and fulfillment of obligations under existing contracts. The relevant ministry (agency) should control the fulfillment of KPIs;

7) buy-back of the assets at market value on the date of exercise of such call option. the maximum term for buy-back option is 2 years from the date of the transaction;

8) installment payments and transfer of funds under transaction to parties from unfriendly states:

• to type “C” accounts, or
• in rubles in the banking system of the Russian Federation without transfer of funds outside the Russian Federation, or
• to the seller’s accounts opened in banks located outside of the Russian Federation

9) whether the applicant has already obtained other necessary consents and approvals (e.g., FAS consent, etc.)

1) the amount of dividends subject to distribution shall not exceed 50% of the company's net profit for the previous year;

2) consideration of the amount of dividends and the procedure for their payment for the previous periods;

3) readiness of foreign shareholders to continue commercial activities in Russia;

4) consideration of the reports of the relevant ministries (agencies) and the Bank of Russia regarding the significance of the Company's activities for the technological and production sovereignty of the Russian Federation, social and economic development of the Russian Federation and/or its constituent entities;

5) fulfillment by the Company of key performance indicators confirmed by federal executive authorities (or Bank of Russia);

6) the possibility to pay dividends on a quarterly basis.