Decree on the exchange of “frozen” assets of Russian and foreign investors signed

On November 8, 2023, the President of the Russian Federation signed Decree No. 844 on the procedure for the sale of foreign securities owned by Russians to non-residents, including “unfriendly” ones. The latter will be able to pay for the purchase with funds held in Russian banks on “C”-type ruble accounts. Importantly, regardless of the “(un)friendliness” of the non-resident, such transactions will not require authorization from the Government Commission.

According to the Presidential Decree, a Russian investor is entitled to sell his foreign securities with an aggregate initial value of up to one hundred thousand rubles, and the transactions themselves will be concluded by auction. The procedure for calculating the initial value of alienated securities, as well as the terms and conditions of bidding and transactions will be determined by the Government Commission for Control over Foreign Investments in the Russian Federation.

Broker will also be involved in the transaction. The procedure for their interaction with clients will be regulated by decisions of the Board of Directors of the Central Bank of the Russian Federation, but it is already known that Russian residents will not pay them a commission for the execution of the deals (however, the collection of the relevant fee from foreign investors is implied).

The purchased securities will be credited to a special transit depo account of a non-resident opened by Russian depositories and may be debited on the basis of orders of foreign buyers to their accounts in foreign banks. The regime of such a depo account and the peculiarities of identification of foreign investors will also be established by the Central Bank of Russia.

The projects on exchange of blocked assets of Russian and foreign investors were discussed already in August 2023, and even then there were doubts about the readiness of foreigners to purchase such securities. Although the Government Commission's permission for the transaction itself will no longer be required, after the change of ownership such assets will still be blocked on the accounts of the sanctioned National Settlement Depository. Thus, any deals with these securities will still require a license from European regulators.

Source: Decree of the President of the Russian Federation No. 844 from November 8, 2023 “On Additional Temporary Economic Measures Related to the Circulation of Foreign Securities”