In Letter No. 08-12-4/8271 from August 31, 2023, the Bank of Russia changed its position on the admissibility of set-off of counterclaims between residents and foreign creditors from “unfriendly” states in pursuance of Presidential Decree No. 95 from March 5, 2022, for the amount exceeding 10 million rubles or the equivalent of this amount in foreign currency per calendar month.
In this amended position, the Bank of Russia considers it inadmissible to circumvent the procedure established by this Decree No. 95 by means of set-off, taking into account the purposes for which Decree No. 95 was adopted and considering the common legal consequences for the fulfilment of obligations and set-off of counterclaims, which are expressed in the termination of such obligations. Accordingly, the termination of obligations by means other than the fulfilment of obligations requires authorization by the CB RF or the Ministry of Finance of Russia in consultation with the Bank of Russia.
Presidential Decree No. 95 from March 5, 2022 restricts the performance by residents of certain obligations to “unfriendly” non-residents in the amount exceeding 10 million rubles per calendar month, establishing a special regime for payments to the “C”-type account or a permissive regime with the permission of the Subcommission of the Government Commission for the Control over Foreign Investments under the Ministry of Finance of Russia in coordination with the Bank of Russia or the permission of the latter. Under the restriction fell repayment of loans and credits, payment of dividends of joint stock companies and distribution of net profits of limited liability companies (in conjunction with Presidential Decree No. 254 from May 4, 2022), fulfilments of other obligations under financial instruments.
Previously, the Bank of Russia allowed set-offs of counterclaims for obligations in pursuance of Presidential Decree No. 95 from March 5, 2022 as a method of terminating obligations without authorization. This position was set forth in paragraph 1.9. of the Official Explanations of the Bank of Russia from March 18, 2022 No. 2-OR.
In this amended position, the Bank of Russia considers it inadmissible to circumvent the procedure established by this Decree No. 95 by means of set-off, taking into account the purposes for which Decree No. 95 was adopted and considering the common legal consequences for the fulfilment of obligations and set-off of counterclaims, which are expressed in the termination of such obligations. Accordingly, the termination of obligations by means other than the fulfilment of obligations requires authorization by the CB RF or the Ministry of Finance of Russia in consultation with the Bank of Russia.
Presidential Decree No. 95 from March 5, 2022 restricts the performance by residents of certain obligations to “unfriendly” non-residents in the amount exceeding 10 million rubles per calendar month, establishing a special regime for payments to the “C”-type account or a permissive regime with the permission of the Subcommission of the Government Commission for the Control over Foreign Investments under the Ministry of Finance of Russia in coordination with the Bank of Russia or the permission of the latter. Under the restriction fell repayment of loans and credits, payment of dividends of joint stock companies and distribution of net profits of limited liability companies (in conjunction with Presidential Decree No. 254 from May 4, 2022), fulfilments of other obligations under financial instruments.
Previously, the Bank of Russia allowed set-offs of counterclaims for obligations in pursuance of Presidential Decree No. 95 from March 5, 2022 as a method of terminating obligations without authorization. This position was set forth in paragraph 1.9. of the Official Explanations of the Bank of Russia from March 18, 2022 No. 2-OR.