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Russian authorities have determined criteria for foreign companies’ Russian subsidiaries’ rights authorization to pay dividends to their parent companies.

14 December 2022

According to the draft of Minutes of meeting of Russian Governmental Commission for Overseeing of International Investments, December 12, 2022 it was discussed whether Russian subsidiaries of international companies (located in ‘hostile states’) may continue their operations in Russia has released criteria for grant of authorization for Russian subsidiaries of foreign companies from non-friendly jurisdictions to pay dividends to their parent companies abroad. Without such authorization, according to the 2022 legislation enacted following Russian invasion in Ukraine,  such dividends are to be deposited into special restricted accounts in Russian currency.

It was held, inter alia, that such subsidiaries should be allowed to continue their work in Russiapay the dividends on the following conditions:

  • The funds determined to be paid as dividends should not exceed 50% of the previous year’s net revenue; the rest should be reinvested in Russia;
  • Foreign shareholders of a subsidiary are ready to continue their Russian business activity;
  • The retroactive analysis of previous years’ dividend payment dynamic supports the payment;
  • Russian federal authorities (depending on exact industry the subsidiary is involved in) have determined confirmed a criteria of the significance of this the company and its influence in on ‘technological and industrial sovereignty of Russia’;
  • Russian authorities have set a quarterly KPI indexes for such companies;
  • The subsidiary will be authorized to pay dividends on a quarterly basis, considering subject to compliance with the said KPI indexes.