Putin signs law on possibility to withdraw dividends from IIA-3

MOSCOW. Dec 28 (Interfax) - Russian President Vladimir Putin has signed a law allowing the transfer of dividends on shares recorded in type three individual investment accounts (IIA-3) to other accounts.

The State Duma adopted the law on December 17 and the Federation Council approved it on December 20.

The law amends Article 10.2-1 of the Law on the Securities Market, namely "Specifics to implement professional activities in the securities market related to the maintenance of individual investment accounts". The amendments indicate that the ban on "transferring income and payments arising from contracts concluded based on an agreement for the maintenance of an individual investment account without accounting for them in the individual investment account" no longer applies to dividends.

The amendments also apply to already opened IIA-3, the Central Bank of Russia said. "Moreover, the possibility to credit dividends, for example, to a bank account, must be stipulated in the terms and conditions of the IIA-3 of the broker or manager," the Central Bank said.

Putin proposed stipulating the possibility to transfer dividends from IIA-3 to other accounts during the VTB Russia Calling! forum in December. Deputy Finance Minister Ivan Chebeskov explained later that only dividends could be withdrawn, inasmuch as coupons are subject to a tax deduction. "The logic is that if there is a deduction, then this could be left for a long time. If you do not wish to receive a deduction or cannot, as there is no deduction regarding dividends, then there should be an opportunity to withdraw them," he said.

The CBR and the Russian National Association of Securities Market Participants (NAUFOR) previously proposed the initiative to allow withdrawing dividends and coupons from IIA-3 in order to improve the attractiveness of the instrument.

The law on the launch of IIA-3 entered into force on January 1, 2024. The instrument combines the tax incentives of IIA-1 and IIA-2 totaling funds contributed and totaling a positive financial result, though the minimum period to maintain an account to receive them has increased. This should be for five years in 2024-2026, and then the period gradually increases to ten years. Accounts of the first two types opened before 2024 may continue to be utilized under the same terms and conditions or transformed into IIA-3 accounting for the period of maintenance.