Governmental approval on transactions with Russian shares

Barriers for foreign investors on the way out of the Russian market –

Mandatory Government Approval for transactions with Russian shares

On September this year Presidential Decree No. 618 introduced restrictions for foreign investors trying to sell their Russian businesses in order to slow down the outflow of investments from Russia. Since the issuance of the Decree it is required to obtain a mandatory approval of the Government Commission for transactions with shares of Russian limited liability companies (hereinafter LLC) where at least one of the parties involved is registered in or controlled from an “unfriendly” country[1].

You can find more about the Decree No. 618 in our previous article https://www.juralink.nl/en/new-obstacles-for-foreign-exit-strategies-from-the-russian-market/  

The Decree affects transactions that result in direct or indirect establishment, modification or termination of:

  1. rights to own, use or dispose of shares in an LLC
  2. other rights that allow determining the conditions for the management of LLCs or their entrepreneurial activities.

Subject of the approval[2]:

  • Transfer of LLC shares to one (several) member(s) of this company or to a third party;
  • Acquisition by an LLC of a share in its own authorized capital;
  • Exit of the shareholder from an LLC by way of alienation of his share to the LLC or demanding such acquisition by the LLC;
  • Transfer of LLC shares to an investment fund;
  • Management contract on the transfer of powers of the sole executive body of a LLC;
  • Corporate (Shareholder) agreement;
  • Convertible loan agreement;
  • Share pledge agreement;
  • Pledge management agreement;
  • Voluntary reorganization of an LLC;
  • Joint Venture Agreements, concluded by an LLC;
  • Trust or fiduciary agreement, or any other agreement, the subject of which is the exercise of rights on shares of an LLC;
  • Other transactions (operations) entailing directly and (or) indirectly establishing, changing or terminating the rights of possession, use and (or) disposal of shares in the authorized capitals of an LLC or other rights that allow to determine the management conditions of an LLC and (or) conditions their business activities

Hereto the list of transactions is open for broad interpretation and can for example include option agreements, any introduction of changes into the LLC’s authorized capital (capital increase or decrease) or even amendments into the LLC’s Articles of Association, if such addresses the management /approval rights of shareholders.

The Application procedure is stipulated by the Governmental Decree dd. 6.03.2022 N 295

Applicant: both residents and non-residents from unfriendly states (any party)

Approval term: is not stipulated. There is no clear rule so far when and how often the commission meets. According to an official publication at one meeting of the Government commission, no more than 10 applications can be considered[3]. Based on our experience the application approval takes considerable time (at least 1 to 3 months).

Required documents and data:

  1. Application in the form prescribed by the Ministry of Finance;
  2. Petition in a free from, containing information about the planned transaction (purpose, subject, content, all essential terms of the transaction (including the price and payment terms), the planned duration of the consent, the number of votes for the shares that are the subject of the transaction);
  3. Documents confirming the state registration of the applicant;
  4. Constituent documents of the applicant;
  5. Applicant ID, if it is an individual;
  6. Information about the beneficiaries, beneficiaries and controlling persons of a non-resident associated with unfriendly countries;
  7. Independent appraisal report on the market value of alienated shares (in some cases the Government commission advises on 50% discount to the established market value)
  8. Information about the Russian and foreign accounts of the applicant and amount of funds on them;
  9. Information about the order of transfer and use of funds received from the implementation of the transaction;
  10. Shares and votes distribution after the transaction;
  11. Rational for approval grant and consequences of refusal to grant permission for the applicant as well as for the socio-economic development of the Russian Federation

Nota bene: The Presidential Decree No. 618 does not affect transactions involving credit institutions and non-credit financial institutions, which are regulated separately.

Furthermore, the obtainment of Government approval in accordance with the Presidential Decree No. 618 does not eliminate the obligation for antitrust clearance, in case an envisaged SPA-transaction is also subject to FAS approval in line with general rules of Competition law.

In the event a strategic clearance is required, the rules of the Strategic Law No. 57-FZ dd. 29.04.2008[4] have primacy over the Government Commission approval.

If you are evaluating an exit strategy from the Russian market our M&A experts would be glad to assist you with the transaction structuring and implementation, accompany the procedure for obtaining permission from the Government Commission and complete all necessary registration actions.


[1] The list of unfriendly countries is determined in the Government Decree dd. 5.03.2022 N 430-r

[2] Official explanations No. 1 of the Ministry of Finance as of 13.10.2022 No 05-06-14PM/99138

[3] Clause 2.2 Extracts from the Minutes of the meeting of the subcommittee of the Government Commission for the Control of Foreign Investments in the Russian Federation dd. 14.03.2022 No. 9, released by the Ministry of Finance on 17.03.2022 No. 05-06-10 / BH-12520

[4] On the procedure for making foreign investments in business entities of strategic importance for ensuring the defense of the country and the security of the state

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16 december 2022

Governmental approval on transactions with Russian shares


Barriers for foreign investors on the way out of the Russian market -



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