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The RF publishes a new Presidential Decree which restricts distribution of profits

RF President Vladimir Putin signed Decree No. 254 on May 4th, 2022 “On interval procedures for the fulfilment of corporate finance obligations towards certain foreign creditors”. The new Decree sets out fresh prohibitions on distribution of profits (such as dividends) by LLC’s (limited liability companies), partnerships and production cooperatives while also clarifying some prior imposed restrictions.

The new prohibition on the distribution of profits by the aforementioned legal bodies applies to such distribution to shareholders from unfriendly countries. The restrictions establish that such distributions must be carried out only within specific limits, especially through S-type bank account and need to be made in RUB.

In addition, the new Decree defines the foreign persons which are excluded from the definition of foreign persons from unfriendly countries to which RF sanctions apply. These persons are those under the control of individuals or legal entities whose personal law is that of a country not listed in the set of unfriendly countries, and persons under the control of a foreign country not on the unfriendly country list, provided that in both cases such control was established prior to March 1st, 2022. More information on the measures imposed by the RF on May 4th, 2022, can be found here (in Russian).