New response to Western sanctions

On December 6, 2023, the Russian State Duma passed in the third reading a Bill No. 471073-8, which amends Article 4.2 of Federal Law No. 127-FZ “On Measures to Influence (Counteract) Unfriendly Actions of the United States of America and Other Foreign States” and expands the list of special economic measures that the Russian President is entitled to establish to ensure the economic sovereignty and security of the country in response to Western sanctions.

Previously, the law provided a special procedure for transactions and operations with persons from so-called “unfriendly” foreign states, for currency transactions, as well as for the payment of profits to foreign shareholders.

Now the Federal Law has been supplemented with new measures. The President of the Russian Federation has the right to introduce temporary management in respect of movable and immovable property, stakes, shares and property rights belonging to persons from “unfriendly” states; to determine the procedure for foreclosure of funds and securities on special accounts; to establish the specifics of creation, reorganization, liquidation and legal status of Russian legal entities, including in terms of disclosure of information on their activities, as well as transactions, including their notarization and accounting. The Russian President determines the peculiarities of the legal status of issuers and professional participants of the securities market, as well as the peculiarities of accounting of information on securities. A special procedure may be established not only for the distribution of profits (dividends), but also for the payment to foreign shareholders of the actual value of a share in the authorized capital of a Russian legal entity.

The law applies to legal relations arising from February 24, 2022.

It’s worth noting that some measures are already in force. In particular, the Presidential Decree from April 25, 2023, N 302 in the edition of November 22, 2023, introduced temporary management of stakes and shares of some Russian companies owned by foreigners from “unfriendly” states.