Media & Resources

A Bill on the External Management of Businesses Leaving Russia Submitted to the State Duma

DATE: April 13, 2022 | AUTHOR: AT

A draft law “On external administration for the management of an organization” has been submitted to the State Duma of the Russian Federation regulating the appointment of external administration of organizations and their branches carrying out activities in the territory of Russia, if:

- a foreign person or entity associated with a state committing unfriendly acts in relation to the Russian Federation is a controlling party or owns directly or indirectly no less than 25% of the voting shares of an organization or stakes in its charter capital, and
- the organization is of major importance for the stability of the economy and civil turnover.

External administration is appointed in the event of termination, potential termination or suspending the the organization’s activity is terminated or suspended.

An application for the appointment of external administration is submitted by the Federal Tax Service of Russia to the Arbitration Court of the city of Moscow in accordance with the decision of the interdepartmental commission adopted independently or on the basis of a request from the head of the federal executive body or the highest official of the subject of the Russian Federation.

The application shall be considered by the court within up to 7 working days without a preliminary court session.

The state corporation for development “VEB.RF” or another organization. The powers of a representative of the external administration may include:
- the transfer of all or part of the shares or all or part of the shares or stakes in the authorized capital of the organization; or
- delegation of the powers of the head of the organization to the external administration.

The maximum period for which external administration can be appointed is 18 for a maximum term of 18 months. If the court decides to change the type of powers, the period for which external administration shall be re-calculated from the date of such appointment.

The draft law also provides for the possibility of replacing the assets of the organization and the sale of shares (stakes in the charter capital) in case of appointment of external administration.

If the bill is adopted, organizations of significance to ensure stability, in which foreign persons associated with “unfriendly” states directly or indirectly own more than 25 percent of the shares (stakes), risk being placed under an external administration, which could potentially lead to bankruptcy and the sale of the assets organization from bidding.

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