20 Apr 2022 11:17

Russian IT cos seeking subsidized credit must forego dividends

MOSCOW. April 20 (Interfax) - Russian information technology companies accredited by the Digital Development Ministry that apply to receive subsidized credit will have to forego paying dividends for the duration of the credit agreement under a resolution posted on the website for legal information.

"The credit contract (agreement) under which subsidized credit is extended at a rate of no more than 3% annually will have to stipulate a condition to prohibit the declaration and payment of dividends (distribution of profit) for the duration of the credit contract (agreement), with the exception of cases determined by separate decisions of the government of the RF," the resolution, which approves the rules for giving subsidies to banks to provide discounted financing for digital transformation projects.

Another condition of the subsidized financing is that recipients must retain 85% of their average staff numbers as of March 1, 2022 for the duration of the credit agreement. Such companies will also have to index wages for inflation at least once a year.

Companies receiving subsidized credit at 3% cannot hold deposits or other financial instruments earning a return greater than the subsidized lending rate, and the subsidized credit cannot be used to refinance previously raised credit and loans, or placed in bank deposits or other financial instruments.

Credit funds also cannot be used for incentive payments to employees, including bonuses; to pay taxes on which there is no deferment of payment or that are not yet due; to lease premises and equipment not involved in the borrower's business operations; to conduct forex transactions; to provide loans to third parties, and so on.

Decisions on whether companies comply with the requirements for receiving subsidized credit will be made by the Digital Development Ministry based on assessments made by the Informatization Assessment and Coordination Center.

The Russian government approved a resolution at the beginning of April to allocate 3 billion rubles to the Digital Development Ministry in 2022 to provide subsidies to authorized banks for low-interest loans to finance digital transformation projects based on Russian IT solutions. This funding is expected to ensure the provision of subsidized credit for at least 75 such projects.

The government will also allocate another 3 billion rubles to the Digital Development Ministry from the Reserve Fund to compensate banks for foregone income on subsidized 3% loans to systemically important, accredited organizations in the IT sector. This is expected to support the provision of 54.5 billion rubles in subsidized loans in 2022 to bolster working capital at systemic IT companies. Loans will be provided both to systemic companies accredited by the ministry and organizations that are part of the same group as them.

President Vladimir Putin signed a decrease on March 2 on measures to support the IT sectors, including subsidized credit at up to 3% interest for continued operations and new projects.