Russia to require 20% payment in transactions with "localized" securities

MOSCOW. May 5 (Interfax) - The subcommittee of the Russian government commission for control over foreign investment will require a voluntary contribution to the federal budget in the amount of 20% when issuing permits for transactions with Russian securities (equities, bonds, OFZ government bonds, mutual fund shares) acquired after March 1, 2022 from entities of unfriendly countries and placed in an account at a Russian depository, excerpts from the minutes of a subcommittee meeting posted on the Finance Ministry's website said.

When issuing such permits, the subcommittee will, as a rule, consider the advisability of requiring a voluntary cash payment to the federal budget in the amount of 20% of the face value of OFZ and bonds of Russian issuers or the amount of a transaction, if it involves equities and investment fund shares, the minutes said.

This will apply to transactions to transfer shares in Russian companies, OFZ and bonds of Russian issuers the collective safe custody of which is handled by a Russian depository, as well as shares in Russian mutual funds acquired after March 1, 2022 from entities of unfriendly countries and placed in an account at a Russian depository.

Investors' transactions with securities acquired after March 1, 2022 and placed in an account at a Russian depository are subject to restrictions. The Central Bank issued an order last year imposing a six-month ban starting August 5 on transactions with securities purchased by "friendly" nonresidents from other nonresidents, as well as securities transferred from foreign custody infrastructure to Russian infrastructure after March 1. This order was later extended.

As of March 3, 2023, the Central Bank or the government commission can grant residents and nonresidents controlled by Russian legal entities or individuals, as well as "friendly" nonresidents permission to carry out transactions with such securities.