Dear Colleagues,

This review is related to the analysis of recent amendments to the Russian legislation governing transactions involving foreign persons from unfriendly countries.

In recent years the regulatory framework has been dynamically developing towards tightening. In this review we examine the evolution of the terms for exiting assets (combining the historical context and current requirements) and separately highlight new corporate relief measures, as well as the mechanisms restricting share buybacks adopted in 2026.

Current situation

It should be reminded that transactions involving shares in companies with participants from unfriendly countries require approval from the Sub-Commission of the Government Commission for the Control of Foreign Investments in the Russian Federation.

The Sub-Commission is authorized to decide on granting permits to Russian residents for transactions with foreign persons from unfriendly countries, as well as for currency transactions.

It should be reminded that unfriendly states include, among others, Australia, the United Kingdom, Canada, the Republic of Korea, the United States, Ukraine, Switzerland, Japan and all member states of the European Union.

Initially the Presidential Decree No. 618 of the Russian Federation dated September 8, 2022 imposed restrictions on transactions entailing the establishment, modification or termination of rights of ownership, use and/or disposal of shares in the charter capitals of LLCs or other rights allowing control over the management of such companies. Primarily, these are transactions involving the alienation of shares in the charter capital of LLCs — such transactions may only be carried out on the basis of permits issued by the Government Commission.

Since the end of 2022 the alienation of a share held by an “unfriendly” participant in an LLC already required a voluntary contribution to the federal budget of the Russian Federation, as well as a mandatory discount on the transaction.

The latest update to the conditions for such transactions was issued at the end of October 2024, when the Russian Ministry of Finance published updated regulations (Extract from the Minutes of the Sub-Commission meeting No. 268/1 dated October 15, 2024). Under these regulations the following conditions became mandatory for obtaining approval (see a more detailed overview at the link):

1. A voluntary contribution to the federal budget in the amount of 35% of the market value of the asset. The payment of the contribution may be made in installments.

2. A mandatory discount. The transaction amount shall include a discount of at least 60% of the market value.

3. If the market value of the assets being alienated exceeds 50 billion rubles, the transaction requires additional approval from the President of the Russian Federation.

Simultaneously the authority to issue permits for the payment of dividends was transferred (previously this fell within the competence of the Russian Ministry of Finance). Since September 9, 2024 such permits are issued by the Government Commission, which may affect the procedure and terms for approving the distribution of profits to participants from unfriendly countries.

New clarifications — July 2026

In July 2026 two significant developments occurred, affecting both corporate procedures and the mechanisms for the return of foreign investors.

One of these developments introduced a procedural relief, while the other concerns the issue of options (the possibility of a buyback of assets by a foreign owner).

1) Official clarifications of the Ministry of Finance of Russia No. 5: relief for corporate procedures

On July 10, 2026 the Russian Ministry of Finance published official clarifications dated July 1, 2026, which eliminated uncertainty in a number of issues regarding the application of the Decree No. 618 and specified several cases in which the permission of the Government Commission is not required.

According to the clarifications, permission from the Government Commission is not required in the following cases:

1. Changes in the management of an LLC: when the general meeting of participants adopts a resolution to amend the charter regarding the establishment, determination (modification) of competence or termination of the powers of the LLC’s management bodies (e.g., the creation of a Board of Directors or termination of the powers of the Management Board).

2. Cancellation of a treasury share: change in the size of a participant’s share resulting from the cancellation of undistributed or unsold shares held by the LLC itself and the corresponding reduction of the charter capital.

These clarifications simplify standard corporate procedures and reduce the administrative burden on businesses by eliminating the necessity to obtain approvals in cases unrelated to the transfer of control to a foreign person.

2) Draft law on refusal of buyback

The State Duma adopted in the third reading a draft law that introduces a mechanism to restrict the right of foreign investors from unfriendly countries to buy back their previously sold Russian companies.

As of the publication date of this review, the draft law has passed the third reading and is pending approval by the Federation Council.

In case of adoption, the new law will allow current Russian owners of assets (or authorized state bodies) to refuse, through judicial proceedings, the former foreign owner the right to exercise a buyback. Claims will be considered by the Arbitration Court of the Moscow Region.

The court will be able to render a judgement to refuse the buyback provided that a number of conditions are met, including:

• public support by the former owner of anti-Russian sanctions or discreditation of the Armed Forces of the Russian Federation;
• the non-market nature of the sale transaction (the buyback price deviating from the market price by 25% or more);
• the existence of material investments made by the new owner in the asset, without which its operations would have been suspended.

A claim may be filed even if the foreign investor has not yet requested the buyback. Upon termination of the buyback right, the investor will have one year to demand compensation from the new owner. However, the court may reduce the amount of such compensation or deny it entirely (for example, in cases of terrorism financing).

According to the clarifications, the primary function of the law is not the mass cancellation of options, but primarily to increase certainty for current Russian owners.

We will be glad to answer your questions and help you understand the regulatory framework applicable to your specific issue.

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Read the full interview in the May issue of Russian Business Guide magazine, No. 21/354.

Dear Colleagues,

On June 22, 2026, the Supreme Court of the Russian Federation has published important clarifications (Thematic review No. 8/2026 dated June 17, 2026), which significantly refine and change the approach to assessing risks in settlements and transactions with foreign counterparties from countries included in the list of states unfriendly to the Russian Federation.

The document establishes the trend of judicial practice toward recognizing as void any legal structures aimed at circumventing special economic measures.

The document summarizes the approaches of courts to mechanisms such as payment splitting, cession, conclusion of settlement agreements or direct transactions with assets.

Below we provide a brief summary of some conclusions of the Review, however, we highly recommend you to review the full text of the document.

1. Payment splitting: a new direction in judicial practice

The key conclusion of the paragraph 4 of the Review concerns payments to foreign counterparties from unfriendly states.

The Supreme Court of the Russian Federation specified that the formal division of payments ("artificial splitting" according the text of the document) on credit obligations into tranches of up to 10 million rubles with the aim of circumventing the special settlement procedure (Presidential Decree No. 95) constitutes an abuse of rights.

It should be reminded that under the Presidential Decree No. 95 of the Russian Federation dated March 5, 2022, the special procedure (including the mechanism of type "С" accounts) applies when the limit of 10 million rubles per month (or the according equivalent in other currency) is exceeded in respect of obligations to a specific foreign creditor.

Position of the Supreme Court of the Russian Federation: formal compliance with the monthly limit for each individual payment does not provide business immunity from scrutiny.

If the totality of transactions indicates an intention to circumvent the requirements of the Decree No. 95, such actions may be qualified as void on the basis of the Articles 10 and 168 of the Civil Code of the Russian Federation (abuse of rights).

Risk area:

Although the clarification of the Supreme Court of the Russian Federation concerns only loan agreements, it is important to consider that the restrictions initially introduced by the Decree No. 95 and applicable to them were subsequently extended by additional Decrees (with reference to the rules introduced by the Decree No. 95) and effectively also apply to other types of payments in favor of foreign persons (such as dividends, royalties and others).

In this regard, it can be expected that the new position of the court may be relevant not only for the situation described in the Review regarding credit obligations but also for other types of payments, such as:

• Intra-group financing and loans;
• License fees and royalties;
• Payment of dividends to foreign participants;
• Any other periodic transactions to the persons from unfriendly jurisdictions.

The following factors are now critical for risk assessment: the economic purpose of the transaction, the total amount of aggregate obligations, control under payment recipients by unfriendly jurisdictions and interconnection of all payments made.

2. Other significant conclusions summarized in the Review

In addition to the issue of payment splitting, the Supreme Court has summarized its position on several other important matters that shape a comprehensive risk landscape for businesses. Below are given the examples of some conclusions of the Review:

1) Real estate transactions controlled by persons from unfriendly states

Essence: a real estate purchase and sale agreement concluded by a Russian company controlled by a foreign person from an unfriendly jurisdiction (i.e., where such person holds a share of more than 50%) is void if no permission from the Government Commission has been obtained (subclause "a" of the Decree No. 81).

Conclusion: even in the absence of any fact of funds being transferred abroad, the fact of concluding a transaction in circumvention of the permitting procedure itself is qualified as a violation of public interests (clause 2 of the Article 168 of the Civil Code of the Russian Federation) and results in the transaction being recognized void.

2) Establishment of foreign control over strategic assets

Essence: transactions for the acquisition of shares (interests) in strategic enterprises (the Review refers to a port) without prior approval from the Government Commission (in accordance with the Law No. 57-FZ) are void.

Consequences: in addition to bilateral restitution, the recovery of shares in favor of the Russian Federation may be applied as a consequence (Part 11 of the Article 15 of Law No. 57-FZ).

3) Assignment of claims to a friendly state

Essence: the assignment of a claim under a contract whereby a foreign creditor from an unfriendly country assigns the claim to a Russian or other friendly counterparty solely for the purpose of receiving money in circumvention of type "C" or "O" accounts, is void (Articles 10 and 168 of the Civil Code of the Russian Federation).

This applies both to loans (Decree No. 95) and to license fees (Decree No. 322).

4) Settlement agreement

Essence: a settlement agreement that provides for the payment of money (e.g., compensation for intellectual property infringement) not directly to a foreign rights holder from an unfriendly country, but to its Russian representative (or other person) in circumvention of the permitting procedure (in the situation described in the Review – the transfer of funds to a special type "O" account), cannot be approved by the court and is void.

Conclusion: a settlement agreement is considered as a transaction to which the permitting procedure applies on the basis of the current restrictive measures, in accordance with the underlying logic of the situation. Should violations be identified, the agreement may be declared void on the basis of the Articles 10 and 168 of the Civil Code of the Russian Federation.

5) Limitation of liability of banks

Essence: Russian bank that has debited a client's funds and sent them through an intermediary bank in an unfriendly country shall not be liable for the losses of the client if the transfer was blocked by the intermediary due to sanctions imposed at a later date, which the bank did not know and could not have known at the time of the transfer.

Conclusion: the risk of the transfer being blocked by the intermediary bank in an unfriendly country lies with the client, provided that the Russian sending bank proves that it acted in good faith and could not have foreseen the imposition of restrictions.

Conclusions and recommendations

The extracts given above do not summarize all the conclusions covered in the Review. We recommend you to review the full text of the document.

To minimize risks, we recommend companies making settlements with foreign counterparties to pay attention to the following factors:

• Conduct an audit of current obligations to counterparties from unfriendly countries and verify the need to comply with restrictive measures and apply the special settlement procedure;
• Analyze the economic purpose of their transactions and identify any signs of artificial splitting;
• Assess aggregate obligations. When reviewing consider the aggregate volume of obligations to a foreign recipient from an unfriendly state, not only the amount of a single payment order;
• Review the ownership structure of foreign counterparties to identify possible factors of control by persons from unfriendly states;

Our team is ready to conduct a comprehensive analysis of your situation promptly and, if necessary, help to adjust the logic of your settlement arrangements in the light of the latest judicial practice developments.

Contacts:

Maria Matrossowa, Partner, Project Leader: maria.matrossowa@swilar.ru

Daria Pogodina, Partner: daria.pogodina@swilar.ru

Dear colleagues,

we would like to draw your attention to the fact that Federal Law No. 168-FZ dated June 24, 2025 “On Amendments to Certain Legislative Acts of the Russian Federation” came into effect on March 1, 2026 (hereinafter referred to as Federal Law No. 168-FZ) and requires businesses to use Russian on all signs, signposts, boards, as well as on websites and in apps.

The state languages of the republics, other languages of the peoples of the Russian Federation and foreign languages may be used additionally, provided that the following conditions are met: identity of content and equivalence of placement and technical design (font, colour, size).

The following may remain untranslated into Russian:
• registered trademarks and service marks. If your logo is a trademark registered with the Russian Federal Service for Intellectual Property, it does not need to be changed. Otherwise, the logo must either be translated into Russian or duplicated in Russian as the primary language, subject to the above conditions;
• company names entered in the Unified State Register of Legal Entities.

Liability for non-compliance with Federal Law No. 168-FZ is provided for in Article 14.8 of the Code of Administrative Offences of the Russian Federation. Violation of the consumer’s right to receive necessary and reliable information about the goods, works, services, manufacturer, seller, contractor and their operating hours entails a warning or an administrative fine:
• for officials – from RUB 500 to RUB 1,000;
• for legal entities – from RUB 5,000 to RUB 10,000.

Compliance with these requirements is monitored by the Federal Service for the Oversight of Consumer Protection and Welfare, local administrations and the prosecutor’s office (based on complaints from citizens).

In this regard, businesses are advised to:
• audit all signs, signposts, websites, apps and other materials;
• register a trademark if it is necessary to retain a name in a foreign language (the process takes about a year);
• prepare duplicate Russian versions in compliance with the formatting rules or replace foreign words with Russian-language versions;
• adjust marketing and advertising processes.

We will be glad to assist you in analyzing your websites for compliance with Federal Law No. 168-FZ for the purpose of their subsequent Russification (if necessary).