Private companies may also transfer assets to Special Administrative Regions from abroad - Economic Development Minister

ST. PETERSBURG. May 11 (Interfax) - The right to transfer assets to Russian Special Administrative Regions (SAR) by creating a new company will be available to foreign structures without listings on stock exchanges, First Deputy Minister of Economic Development Ilya Torosov said at the eleventh St. Petersburg International Legal Forum.

"We will definitely deal with the mechanism for forming these companies in an SAR from scratch," Torosov said. Such an initiative "is on the table," he added.

Earlier, deputies submitted a bill to the State Duma that allows the creation of new Russian organizations in the form of international companies in the SAR, provided that the assets of their foreign founders are transferred to them. In the draft law, this mechanism is called the procedure of incorporation. It states that a foreign structure that had stocks traded on stock exchanges as of March 1, 2022, for which redomiciliation in the SAR "is not provided for or prohibited by the personal laws of the foreign organization," can become the founder of the international company which is created. A prerequisite for incorporation: the foreign founder will have to transfer his assets to the company at the time of its registration, but not less than 800 million rubles, within a year.

However, the changes may turn out to be broader than those proposed by the deputies.

"We realized that we need to remove the requirement for the listing of securities for foreign legal entities so that they can move, incorporate. This restriction is not needed," Torosov said.

In addition, the Ministry believes that this sort of opportunity should be provided for the transfer of assets from any jurisdiction, and not just from one that does not provide such an opportunity.

SAR appeared in Russia in August 2018 on the Russky (Primorsky Territory) and Oktyabrsky (Kaliningrad Region) Islands. The main purpose of their creation was the de-offshorization of foreign holdings controlled by Russian citizens which own assets in Russia, including as an anti-sanctions measure.

The number of residents of the districts began to grow sharply in 2022 after the introduction of anti-Russian sanctions. Before that, residents appeared in them slowly. In 2019 there were 22, in October 2020, 36. According to the Ministry of Economic Development, now the number of residents of SAR territories has reached 190 and about 40 more applications for re-registration is in progress.