
Law Messenger
Transactions under economic restrictive measures: overview for clients
10.12.2024
At present, in connection with unfriendly and contrary to international law actions of the United States of America and the foreign states and international organizations that joined them, related to the introduction of restrictive measures against the citizens of the Russian Federation and Russian legal entities, in order to protect the national interests of the Russian Federation, a large number of temporary measures of economic nature have been taken to ensure the financial stability of the Russian Federation (hereinafter – “Restrictive Measures”). Restrictive Measures affect most of all transactions with assets, in particular, real estate, shares/participatory interests in the authorized capitals of joint stock companies / limited liability companies owned by a foreign person committing unfriendly acts.
Before concluding a transaction, it is important to determine whether the relevant Restrictive Measures apply to it and what effect they have on the content of its terms and conditions.
The application of Restrictive Measures, as well as clarifications regarding their application are established by various legal acts: decrees of the President of the Russian Federation, letters of the Bank of Russia, decisions of the Board of Directors of the Bank of Russia and other authorized bodies of the Bank of Russia, decisions of the Government Commission on Control over Foreign Investments in the Russian Federation. This legal material is extensive and disparate, therefore it is often difficult to navigate.
B1 Group has extensive experience in legal support of various transactions with real estate, shares / participatory interests in authorized capitals of joint stock companies / limited liability companies, as well as other transactions under the Restrictive Measures. We are ready to offer you qualified assistance taking into account all the specificities of the Restrictive Measures and the terms and conditions of the transactions you are planning to enter into.
This overview summarizes the key Restrictive Measures in relation to transactions with real estate, shares / participatory interests in the authorized capitals of joint stock companies/limited liability companies. We hope that you will find this overview useful in evaluating the applicability of the Restrictive Measures to transactions you are planning to enter into.
If you have any questions about any aspect of the transactions reviewed in this overview or other transactions subject to the Restrictive Measures, please do not hesitate to contact us.
General restrictions on transactions
As a general rule, it is prohibited to carry out the following transactions without the approval of the Government Commission:
- Transactions between residents and Unfriendly persons involving participatory interests in LLCs (excluding banks and non-credit financial institutions), as well as other transactions that enable a person to determine the terms of the management of LLC and/or the conditions for the conduct of entrepreneurial activities
- Transactions between residents and Unfriendly persons involving more than 1% of shares (participatory interests) or more than 1% of the votes corresponding to such shares (participatory interests) in Russian credit institutions, insurance organizations, mutual investment funds, etc.
- Transactions between residents and Unfriendly persons resulting in the acquisition of ownership rights to securities and real property
- Transactions between residents and Friendly persons resulting in the acquisition of ownership rights to securities and real property acquired after February 22, 2022, by Friendly persons from Unfriendly Persons
- Transactions for the transfer to residents, certain non-residents and non-Unfriendly persons, of shares in a Russian joint-stock company acquired and credited from the accounts of foreign persons, the rights to which are centrally registered by a Russian depository, as well as investment units of a Russian mutual investment fund (PIF), including those acquired under an agreement concluded before March 1, 2022 (inclusive)
- Transactions on transfer after March 1, 2022 of shares of Russian issuers to residents, certain non-residents and non-residents who are not Unfriendly persons, received as a result of the redemption of securities of foreign issuers, certifying rights related to such shares (provided that the securities of foreign issuers certifying rights to such shares were received as a result of the termination (performance) of obligations under a foreign financial instrument acquired before March 1, 2022, inclusive).
Persons subject to restrictions
As a general rule, restrictions apply to the following persons (legal entities / individuals):
Unfriendly persons
- Foreign persons associated with foreign states[1], who engage in unfriendly actions against Russian legal entities and individuals (including where such foreign persons are citizens of these states, are registered in these states, predominantly carry out their business activities or derive the majority of their profit from activities in these states);
- Persons controlled by the aforementioned foreign persons, regardless of their place of registration or the location of their predominant business activity.
Friendly persons
- Friendly persons (persons who are not Unfriendly persons), if the subject of transactions (operations) are securities and real property acquired by Friendly persons after February 22, 2022, from Unfriendly persons.
Persons not subject to restrictions
Restrictions do not apply to the following persons (legal entities / individuals):
Transactions related to real property, participatory interests / shares
- Unfriendly persons who meet both of the following criteria:
- they are controlled by Russian legal entities or individuals (with the ultimate beneficiaries being the Russian Federation, Russian legal entities or individuals), including if this control is exercised through foreign legal entities related to Unfriendly states;
- information on control over them is disclosed by Russian legal entities or individuals to tax authorities.
- Unfriendly persons under the control of legal entities or individuals whose personal law is the law of a Friendly state, provided that such control was established before March 1, 2022.
- Unfriendly persons under the control of a Friendly state, provided that such control was established before March 1, 2022.
Real property transactions
- Citizens of the Russian Federation, including those with residence permit or citizenship of an Unfriendly state.
- Foreign citizens and stateless persons permanently residing in the Russian Federation on the basis of a residence permit.
- Other persons recognized as residents of the Russian Federation in accordance with currency legislation.
Share transactions[2]
Persons that are controlled by Unfriendly persons, if their place of registration is the Russian Federation.
Sale of assets at a discount
| Discount in the amount of not less than 60 % of the market value of assets specified in an independent evaluation report |
The obligation to voluntarily transfer funds to the federal budget
| Payment in the amount of not less than 35 % of the market value of assets specified in the independent evaluation report |
Schedule of fulfilment of the obligation to voluntarily transfer funds to the federal budget
|
|
Transactions for the sale and purchase of assets with a market value exceeding 50 billion rubles
| Approval from the President of the Russian Federation is required |
Exceptions
The Government Commission's approval is not required in the following cases:
Seller | Buyer | Special aspects of the transaction |
---|---|---|
Unfriendly person – Individual | Resident |
Transaction settlements are carried out through a “C” type account
|
Unfriendly person – Individual | Resident |
|
Unfriendly person – Individual | Resident – Individual |
Donation between spouses and close relatives in accordance with the Family Code of the Russian Federation
|
Resident – Individual | Unfriendly person – Individual |
Donation between spouses and close relatives in accordance with the Family Code of the Russian Federation
|
Resident | Unfriendly person – Individual |
The right of ownership to real estate arises for citizens of foreign states carrying out unfriendly actions
|
Resident | Unfriendly person – Legal entity and its controlled entities |
Except for transactions involving the alienation by residents of aircraft, marine vessels and inland waterway vessels
|
Resident | Unfriendly person – Individual / Legal entity |
|
Resident – Legal entity | Resident – Legal entity with “unfriendly” shareholding not exceeding the limit |
|
Unfriendly person – Individual / Legal entity | Resident – Individual |
Donation
|
Unfriendly person – Legal entity and its controlled entities | Resident |
|
Resident – Legal entity with “unfriendly” shareholding not exceeding the limit | Resident |
|
Unfriendly person, a Russian legal entity controlled by it | Resident |
Transaction regarding objects constructed under Law No. 214-FZ
|
Resident | Unfriendly person, a Russian legal entity controlled by it |
Transaction regarding objects constructed under Law No. 214-FZ
|
Resident – Developer | Unfriendly person and Russian legal entities controlled by it |
Shared Construction Participation Agreement executed in accordance with the requirements of Law No. 214-FZ
|
Resident – Developer | Unfriendly person |
Conclusion of Shared Construction Participation Agreement and fulfillment of obligations thereunder
|
Resident under control of an Unfriendly Person – Developer | Resident |
Execution of a transaction (operation) entailing title to real property
|
Resident – Financial institution under control of Unfriendly persons | Resident – Individual / Legal entity |
The transaction may be carried out on behalf of Russian credit and non-credit financial institutions by third parties
|
Resident – Individual / Legal entity | Resident – Financial institution under control of Unfriendly persons |
The transaction may be carried out on behalf of Russian credit and non-credit financial institutions by third parties
|
Seller | Buyer | Special aspects of the transaction |
---|---|---|
Resident | Resident – Issuer under control of Unfriendly persons |
|
Resident | Resident – Financial institution under control of Unfriendly persons |
|
Resident – Financial institution under control of Unfriendly persons | Resident |
|
Resident – Financial institution | Unfriendly person |
|
Resident | Unfriendly person |
|
Seller | Buyer | Special aspects of the transaction |
---|---|---|
Unfriendly person (Close relative / spouse) | Close relative / spouse |
|
Resident | Unfriendly person (in the same group of persons as the Resident) |
|
Resident | Unfriendly person |
|
Peculiarities of payment under transactions to the “C” type account
- Restrictive measures do not apply to transactions aimed at alienation of real property by Unfriendly persons and persons under their control (except for residents), provided that transactions settlements are carried out using a “C” type account.
- Funds from the “C” type account may be debited only for the purposes established by the Decision of the Board of Directors of the Bank of Russia.
- It is possible to terminate a resident's obligation on payment of the price of real estate in favor of an Unfriendly Person without crediting the performance to the “C” type account on the basis of the approval of the Bank of Russia or the Ministry of Finance of the Russian Federation in coordination with the Bank of Russia through the following means:
- set off;
- provision of a substitute performance;
- fulfilment of the obligation that arose under the novation.
- It is permitted to pay for participatory interests, contributions and units in the property of non-resident legal entities, as well as contributions in simple partnerships without obtaining individual permits from the Bank of Russia, provided that the following conditions are simultaneously met:
- a transaction in rubles or foreign currency for a total amount not exceeding the equivalent of 15 million rubles at the official exchange rate of the Bank of Russia on the date of payment;
- the aggregate volume of resident's transactions made in favor of one non-resident legal entity from April 1, 2024 must not exceed 15 million rubles.
Our services
- Transaction support and preparation of necessary documentation
- Assistance in obtaining transaction approval from the Government Commission
- Analysis of the transaction structure for the presence / absence of restrictive measures
This Overview is based on current Russian legislation, published clarifications and recommendations, and our practical experience. Legislation and / or official clarifications may be amended at any time. We cannot predict either the timing or the substance of such changes; however, at present, we are not aware of any planned amendments that could materially affect our comments.
We do not assume any obligations to update the Overview in connection with events, transactions or circumstances that may occur after the date of analysis.
The position we have expressed is not binding on Russian regulatory authorities or Russian courts. We cannot predict how particular governmental authorities may interpret the regulatory and other acts analyzed in the Overview.
Show references
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[1] The list of foreign states and territories that carry out unfriendly actions against the Russian Federation, Russian legal entities. and individuals, was approved by the Russian Government Order No. 430-r of March 5, 2022
-
[2] An exception is established in relation to transactions covered by Presidential Decree No. 138 of March 3, 2023
-
[3] Extract from the minutes of the meeting of the subcommittee of the Government Commission on Control over Foreign Investments in the Russian Federation dated October 15, 2024 No. 268/1 (does not apply to real property transactions)
Authors
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Georgy Kovalenko
B1 Partner
Legal Services Leader, Tax, Law and Business Support
Contact
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Konstantin Litovkin
B1 Partner
Legal Services, Real Estate, Construction and PPP in Russia, Tax, Law and Business Support
Contact
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Marina Malkova
B1 Senior Associate
Legal Services
Contact
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Alina Pestovskaya
B1 Associate
Legal Services
Contact

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