Laura M. Brank
London +44 20 7184 7870
Washington, D.C. +1 202 261 3484
Russia continues to introduce restrictive and other measures following the imposition of sanctions by the USA, EU, UK and other countries on Russia. Below is a summary of key regulations adopted in recent days (for more details on measures introduced on February 28 and March 1, 2022, to address the economic impact of sanctions against Russia, please see our last OnPoint.
(1) Procedure for Repayment of Debts to Certain Foreign Persons in Russian Rubles
On March 5, 2022, Russian President Putin signed Decree No. 95 "On Temporary Procedure for Performing Obligations to Certain Foreign Creditors" allowing Russian residents to repay debts to foreign creditors in Russian rubles ("Decree No. 95").
Decree No. 95 provides for a special temporary procedure for the payment of debts under credit facilities, loans and other financial instruments in the amount of more than RUB 10,000,000 per month (or the equivalent in foreign currency at the exchange rate set out by the Russian Central Bank on the first day of each month)
According to Decree No. 95 and further clarifications from the Russian Central Bank, the Debtor may submit to a bank or any other credit organization an application for opening a special bank account (account type "C") in the name of a creditor or foreign nominee holder and repay the debt to Creditors by transferring the amount in Russian rubles to such bank account. The legal regime of such accounts is to be determined by the Russian Central Bank. No further guidance has been issued.
The above procedure is also applicable to debts assigned by Persons from Unfriendly Countries to other foreign persons or Russian residents after March 1, 2022.
Regarding the debt owed to other foreign creditors (i.e. who are not Persons from Unfriendly Countries), the debt would be considered repaid in a proper manner if the Debtor transfers funds in Russian rubles in the amount equivalent to the amount in foreign currency at the exchange rate set out by the Russian Central Bank (or in foreign currency subject to a special approval).
The Russian Central Bank and Ministry of Finance are entitled to (i) provide for a different procedure for repaying the above debts; and (ii) issue individual permits allowing a party to be exempt from the above procedure.
(2) New Measures to Support Russian IT Companies
On March 2, 2022, Decree No. 83 “On Measures to Ensure the Accelerated Development of the Information Technology Industry in the Russian Federation” was adopted, according to which Russian companies performing activities in the field of information technology and accredited by the Russian Ministry of Digital Development, Communications and Mass Communications (“Accredited IT Companies”) have been granted certain tax and other incentives.
In particular, Accredited IT Companies:
(3) Criminal/Administrative Liability for Dissemination of False Information
On March 4, 2022, President Putin signed into law two bills on amendments to the Russian Criminal Code and Code on Administrative Offenses.
The Criminal Code has been amended to impose criminal liability for the following:
Criminal liability for items (2) – (3) is imposed only if a person was subject to administrative liability for a similar action during the preceding year.
Consequences can include: monetary fines and imprisonment, among other measures. If the violations are made by a group, the consequences would be more severe.
The Code on Administrative Offenses has been amended to impose administrative liability for violations set out in items (2) – (3) above and some other non-related clauses (on operations with property which was unlawfully obtained etc.).
The bill previously contained provisions providing for liability on individuals for complying with foreign sanctions (blocking law), however, those provisions were removed in the last reading.
(4) Restrictions on Foreign Persons
On March 4, 2022, amendments to the Law "On Measures to Influence Persons Involved in Violations of Fundamental Human Rights and Freedoms, the Rights and Freedoms of Citizens of the Russian Federation” were introduced. These amendments grant the Ministry of Foreign Affairs the right to impose restrictions on foreign persons, in particular:
The above restrictions may be imposed on any foreign citizens. The previous version of the Law "On Measures to Influence Persons Involved in Violations of Fundamental Human Rights and Freedoms, the Rights and Freedoms of Citizens of the Russian Federation” (i.e. before amendments of March 4, 2022) contained similar restrictions in relation to US citizens only. The law was expanded to expand/clarify certain measures and cover all foreigners. Such measures can be imposed on a person by decision of “officials” (the law does not set out clear grounds on when such restrictions may be imposed on a person).
(5) Bill on "Nationalization" of Foreign Companies’ Assets
On March 9, 2022, the Commission of the Russian Government on Legislative Activity approved a bill on "nationalization" of assets of foreign companies.” The bill was planned to be introduced to the State Duma (lower house of Russian parliament) on March 10, 2022, but as of March 11, 2022, it had not yet been introduced.
The bill would provide for the following:
On March 10, 2022, Russian media reported that the Social Consumer Initiative Organization prepared a list of departing companies (at that time, 59 companies) whose property may potentially be nationalized, bank accounts are arrested and external administration may be introduced. Such list (not publicly available yet) was sent for consideration to the Russian Government and the General Prosecutor’s Office.
(6) Other Measures
In addition, on March 5, 2022, Russian media reported that the Russian Central Bank had limited transfers from the bank accounts of Russian individuals to bank accounts of their relatives (spouses, parents, children, grandparents, grandchildren, etc.) in an amount equal to USD 5,000 per month.
Earlier, on March 4, 2022, the Russian Central Bank announced that the charge for purchasing foreign currency (currency exchange) would be 12% of the sum to be purchased by individuals (through brokers) and legal entities (previously, the Russian Central Bank had set out a 30% charge for purchasing foreign currency by individuals through brokers).
On March 10, 2022, the Russian Government compiled a list of goods that are prohibited from being exported from Russia until the end of 2022. The list includes technological, telecommunications, medical equipment, vehicles, agricultural machinery, electrical equipment – more than 200 items in total.