‘Deoffshorization’ of Russian companies

26 Mar 2024, 16 mins ago

The Kremlin’s aim to bring big companies and investment back to Russia has been pursued in earnest for the last decade. On 1 March 2024, the government finally approved a list of “economically significant organisations”, giving them a range of new powers, including the ability to restrict the rights of foreigners and withhold certain information.

In order for a company to be designated as one of these special entities, it needs to reach a specific annual revenue threshold and be at least 50% owned by Russian beneficiaries holding these shares outside of Russia.

If a company has been listed as an “economically significant organisation”, the government can bring a case to the Moscow Arbitration Court to suspend the rights of the foreign owners in that company. If and when this happens, all of that company’s shares would be transferred to the Russian beneficiaries who hold those shares within the Russian jurisdiction. 

This new law comes as part of the Kremlin’s attempt to counter the impact of sanctions as Russia aims to isolate itself and its economy away from the West.

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The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

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