Against the background of the introduction of tough sanctions against the Russian Federation related to military actions in Ukraine, a number of foreign companies announced their withdrawal from the country, suspension or "transfer" of business. Kommersant discussed with lawyers what this might mean, what legal mechanisms exist and whether foreigners can create conditions in advance to return to the Russian market.
After the start of the military operation in Ukraine, many international companies announced the suspension of work in Russia or complete withdrawal, new names appear in the list of refuseniks every day. Some at the same time clarified that they plan to "transfer Russian business."
In particular, on March 15, the British tobacco company Imperial Brands (Davidoff, Richmond and Gitanes brands) explained that it had "begun negotiations with a Russian legal entity on the transfer of business in Russia," would take measures to preserve the "continuous operation" of the enterprise and would continue to pay salaries to employees "until the completion of all transfer processes."
British American Tobacco (BAT, Dunhill, Lucky Strike and Rothmans brands) also announced its withdrawal from the Russian Federation: "We have started the process of rapid transfer of our Russian business in full compliance with international and local legislation. We will continue to pay salaries to 2,500 employees and will do everything possible to ensure that they have a job in the future." As Kommersant found out, the distributor and long—time partner of BAT - GC SNS, which promises to keep production and supplies at the same level, will manage the business.
Philip Morris International announced on March 24 that it was considering restructuring options, including a possible transfer of assets. The Dutch brewing company Heineken also announced the search for a new owner for the Russian business on March 28.
The transfer of business usually means any transaction involving the transfer of ownership of shares, shares, assets, says Anton Samokhvalov, partner of the KIAP law office. The main method is the sale of a share or shares of a legal entity through which a foreign business carries out its activities in the Russian Federation, adds lawyer of KSK Group Alexander Sharapov. Thus, persons related to the so-called unfriendly countries are removed from the management structure of the Russian company, the lawyer clarifies, as well as foreign business owners "hedge reputational losses from cooperation with the Russian Federation." According to Elena Gladysheva, managing partner of RI-Consulting, we can talk about both a full sale and a reduction in the share of a foreign participant to a minority.
Nominal risks
If the purpose of the exit is purely reputational or related to sanctions, you can transfer the shares (share) to a nominee or a friendly person. Alina Khammatova, Project Manager at S&K Vertical, explains that in this case, formal legal ties between a Russian company and a foreign person are terminated, however, "taking into account the degree of influence on the nominal owner, the foreign person retains the opportunity to manage the company's activities."
This mechanism is well known and understandable to Russian business, as it has been used for many years in response to Western sanctions. "Businessmen in the Russian Federation have experience when they "suspended" assets on persons who were not subject to sanctions," explains Lenar Wealth Management Managing partner Lenar Rakhmanov.— The first wave of such "broadcasts" was back in 2014."
According to Artem Denisov, managing partner of the Genesis law firm, in most cases the decision of foreign companies to transfer assets is "explained by pressure" and they really "have a desire to sit on two chairs, that is, formally leave, but keep the business." Therefore, the lawyer believes, "they will probably look for options for anonymous ownership."
However, the transfer of an asset to a nominal owner carries great risks and may have "unpredictable consequences," lawyers warn. The "nominal value" may die or lose its legal capacity, and simply begin to withdraw assets. Asset transfer transactions can be invalidated as fake, and it will be difficult for the beneficiary to confirm his status, including for obtaining corporate loans, there are also tax risks, Anton Samokhvalov lists: "There are tools to reduce each risk, but any artificial construction entails the occurrence of such dangers. Beneficiaries will have to find a balance."
Exit paths
If a Russian company is organized in the form of an LLC (according to Anton Samokhvalov, this is basically how subsidiaries of foreign investors in the Russian Federation were created), a simple "exit from the company" is possible. "Upon leaving the company, the participant must be paid the actual value of his share in the authorized capital or, with his consent, property of the same value can be issued in kind," Alexander Sharapov clarifies.
The actual value of the share under Article 23 of the law on LLC is determined on the basis of accounting data for the last reporting period preceding the release date. However, there may be difficulties with the payment to the exited foreign participant if the LLC has an account with a bank that has been sanctioned, and the exited non-resident participant does not have an account in the Russian Federation, warns Delcredere partner Denis Yurov.
Alina Khammatova calls "the creation of new legal entities in offshore and the sale of shares in Russian organizations to them" as a possible mechanism for the transfer of business: "Participation in management through offshore makes it difficult to disclose the ultimate beneficiaries of the business while maintaining corporate control." In addition, it is possible to reorganize the company through the allocation of a new legal entity, to which part or most of the assets will be transferred, Elena Gladysheva notes.
Another option is to transfer the business to management. Ms. Gladysheva explains that a number of companies already had options to encourage top management through the possibility of obtaining shares and participant status when certain indicators were achieved. Now, the lawyer believes, the options can be implemented.
Return ticket
According to lawyers, the option of a real exit with the connection of the legal mechanism of return looks more reliable. So, simultaneously with the sale of a share, it is possible to conclude a repurchase option agreement upon the occurrence of certain conditions, Denis Yurov clarifies.
"The option allows its holder to purchase a share in the company at any time without involving the person who issued the option," explains Artem Barinov, head of the Savina Legal Dispute Resolution practice. In his opinion, the mechanism will be most attractive for foreign beneficiaries who expect to get their assets back "when the opportunity to do business returns to the Russian Federation."
Instead of an option, simultaneously with the sale of shares, you can sign a corporate contract with the buyer. But this is more risky, Denis Yurov believes, since the corporate agreement with the former shareholder does not exclude the risk of the sale of shares by the new owner in favor of other persons. According to Article 67.2 of the Civil Code of the Russian Federation, it is possible to challenge a transaction concluded in violation of a corporate agreement only if the new buyer of shares (shares) knew about this violation. Another option may be the conclusion of a repo agreement (sale of shares with the obligation to sell them back after a certain period), adds Mr. Yurov.
Finally, a foreign owner may not sell a stake in a Russian company, but only transfer executive powers to a management company, suggests Alina Khammatova. Thus, the foreign person will be removed from the direct management of the Russian business. However, the corporate participation of a foreign person remains (through ownership of shares or shares), which, according to Ms. Khammatova, does not solve the problem of "destroying formal legal ties with Russia."
Vague share
The analysis of the legal mechanisms of foreigners' exit from business in Russia is complicated by the constantly updated regulation, openly designed to prevent this. Thus, by Decree of the President of the Russian Federation No. 81 of March 1, Government Resolution No. 295 of March 6 was adopted (entered into force on March 7), requiring permission from the government commission for the Control of Foreign Investments to make transactions by residents of the Russian Federation with foreign persons who are associated with unfriendly countries. It is required to coordinate, in particular, transactions on the alienation of securities and real estate. Lawyers say that there are already the first cases of issuing permits, but they do not name specific companies.
Denis Yurov emphasizes that all options for the transfer of business with the transfer of ownership of shares are subject to coordination with the legal commission if a foreign person is associated with an unfriendly country. "It is necessary to obtain preliminary approval of any transactions related to the acquisition of shares," confirms Alina Khammatova.
Regarding the need to coordinate the alienation of a share in an LLC, the opinions of lawyers differ. If you follow the letter of the new rules, the permission of the Board of Directors is required only for transactions with shares, says Elena Gladysheva, and it is still necessary to coordinate the sale of a stake in an LLC only if the organization belongs to strategic (according to the law on foreign investment in strategic enterprises). "Formally, the shares in the LLC are not securities, therefore, it can be concluded that the requirement does not apply to them," agrees Denis Yurov.— Indirectly, this is confirmed by the explanations of the Federal Notary Chamber (FNP)." On March 16, the FNP announced on its website a new procedure for certifying transactions for the alienation of real estate or securities, where one of the parties is a non-resident. It follows from the explanations that if the applicant's country of citizenship is included in the list of unfriendly, the notary must request the applicant's permission from the legal commission for the transaction. At the same time, it is clarified on the FNP website, "the described procedure does not apply to the registration of inheritance rights, transactions on the alienation of shares in the authorized capital of LLC, as well as the issuance of powers of attorney."
Source:
kommersant.ru