The draft law on external management of foreign companies was adopted in the first reading

The draft law on external management of foreign companies was adopted in the first reading.

The lower house of the Russian parliament considered and adopted in the first reading bill No. 104796-8 on the external management of foreign assets, introduced in April for its consideration by several deputies. It refers to the property left in the Russian Federation after the departure of foreign companies from unfriendly countries (their list was updated in March of this year, as a result, it includes all EU states, the USA, Great Britain, etc.). The new law, if approved, will apply to firms that declared after 24.02.2022. about the intention to stop or about the termination of activities in the country only for political reasons, without sufficiently compelling economic reasons.

According to the draft law, two ways of appointing an external administration are provided: direct change of management or transfer of all or part of the shares (shares) of the company to trust management. The procedure for the introduction is provided only by the court, the application for appointment can be submitted by ministries and heads of subjects.

External administration is introduced in relation to foreign legal entities (including branches) that are essential for ensuring the stability of the economy: the only manufacturer of certain goods, a city-forming enterprise, organizations whose suspension of activities can lead to emergencies, etc., the list is not closed , the commission under the Ministry of Economic Development can propose any organization. Also, the procedure can be introduced in relation to Russian legal entities in which foreigners own at least 25%.

External administration is introduced in the presence of at least one of the following grounds:

the company's activity was actually terminated, which led to a significant decrease in the value of assets;
management has taken action to terminate operations, announced their resignation, terminated leases and notified employees;
in three months, revenue decreased by a third or more;
without the introduction of external management, a threat to the company's activities is created;
there are indications that expenditures from the budget will be required to restore the activities of the organization.
External administration may be carried out by the state corporation VEP.RF or any other organization chosen by the Arbitration Court. The main decision she makes is to sell the enterprise at auction to a new owner or the state with a guarantee of retaining most jobs and continuing to operate on the territory of the Russian Federation (at least 1 year).

Foreign owners will have the opportunity to sell their shares and resume activities in the Russian Federation in the future, but they are not allowed to trade.

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