Temporary management of foreign companies introduced in Russia

On April 25, 2023, a Presidential Decree was published allowing to introduce a provisional administration in respect of property and property rights of foreign “unfriendly” entities located in Russia. According to the text of the document, this measure can be applied in response to the seizure of Russian assets abroad and restrictions on property rights.

The external manager of foreign assets will be the Federal agency for state property management (Rosimuschestvo) or another person appointed by the Russian President. The temporary manager will exercise ownership powers, conduct an inventory of the property and ensure its safety, but will not have the right to dispose of it. The decision on the termination of temporary management will also be made by the head of state.

Currently, external management has been imposed on the shares of two energy companies, Unipro and Fortum. The foreign owners of these PJSCs announced their intention to leave the Russian market back in the spring of 2022, but later these companies were included in the list of fuel and energy companies, transactions with shares of which require a special order.

According to Rosimuschestvo, external management is imposed on assets that are of paramount importance for the stable functioning of the Russian energy sector to ensure the uninterrupted operation of companies that are significant to the national economy. Besides, this measure helps to preserve the investment climate in Russia and reduce capital outflow from the country.

The agency stressed that the decree “does not concern ownership issues and does not deprive owners of their assets”, but only means that “the original owner has no right to make management decisions” on a temporary basis. In addition, Rosimuschestvo does not rule out the expansion of the list of externally managed enterprises.