The Government Commission for the Control of Foreign Investment in the Russian Federation has outlined conditions for the sale of certain Russian assets by foreign persons from countries that enacted sanctions against Russia. These conditions apply to sale of assets that currently require prior approval of the Government Commission. The Commission has now clarified that parties to such contracts will be expected to make a contribution to the Russian budget calculated as 5 to 10 percent of the value of assets sold. Other recommendations of the Governmental Commission, including the recommended discount of 50% of the market value of assets sold (as determined by an independent appraiser) and the deferred payment scheme, also remain effective.

In connection with foreign sanctions against Russia, in 2022 Russian law began requiring prior approval of the Government Commission for the Control of Foreign Investment in the Russian Federation to enter into a number of transactions with persons associated with foreign states that enacted sanctions against Russia, including transactions with securities and real estate.

In December 2022, the Government Commission published guidance on conditions of sale that foreign investors should in its view normally comply with in order to obtain the approval to sell shares in Russian companies. These conditions included a discount from the share price equivalent to at least 50% of their market value, deferral of payments for one or two years and setting a KPI. The Governmental Commission also stated that a voluntary contribution to the Russian budget in the amount of at least 10% of the transaction price could be provided in addition to these conditions or instead of the deferral of payments.

It appears that the Governmental Commission has now changed its stance and now views the contribution to the Russian budget as the general rule and not merely as a recommended addition. The amount of the contribution, in turn, will depend on the amount of the discount to the price of assets sold. As a general rule, the contribution will be at least 10% of the discounted market value of the assets indicated in the evaluation report (i.e. not less than 5% of the market value of the assets, if the discount is 50%). However, if the discount is more than 90%, the contribution to the budget cannot be less than 10% of the market value of the assets. The other recommended conditions for obtaining the approval of the Government Commission remain unchanged.

In addition, it is now recommended that applicants provide expert opinions prepared by experts of a self-regulated organization of evaluators simultaneously with the report on the assessment of the market̆ value of assets (see Extract from the minutes of the meeting of the subcommittee of the Government Commission for the Control over Foreign Investment in the Russian Federation dated 2 March 2023 No. 143/4).