Companies relocated to Russian SARs are entitled to funds on type C accounts once no longer subject to restrictions - CBR
MOSCOW. Dec 6 (Interfax) - Companies that have redomiciled to Russian special administrative regions (SARs) are not subject to rules on type-C accounts and are entitled to receive funds from them if they were opened prior to a company relocating, the Central Bank of Russia (CBR) has clarified.
The relevant clarifications are contained in an information letter published on Tuesday on the application of type C accounts, the creation of which is stipulated by Russian Presidential Decree No. 95 from March 5, 2022. They are opened in Russia to settle accounts with foreign creditors from "unfriendly" jurisdictions, which may formally include organizations with Russian ultimate beneficiaries registered abroad.
They could also have opened type C accounts, but in the event of their relocation to SARs, as the CBR explains, "a lender, if it has confirmation that a foreign legal entity has acquired the status of an international company [SAR resident], has the right to assume that there is no need to continue maintaining the type C account previously opened for this entity. In this case, the funds may be transferred to another account of the client, and if there is no agreement on its maintenance, the regulator considers it "possible to transfer the balance of funds to a new balance sheet account in the accounting" so that the client can dispose of the money without the restrictions that apply to type C accounts.
Securities belonging to "unfriendly" residents, including those with Russian roots, were also transferred to type C depositary accounts. Now, in case of redomiciliation of the latter in SARs, depositories, upon confirmation of receipt by the depositor of the status of an international company, must terminate the type C status for its depo account. "This termination of the type C depo account regime may be carried out by changing the status of the type C depo account to a depo account of another type," the information letter indicates.
In October, Economic Development Minister Maxim Reshetnikov said that 141 companies has become residents of the SAR in 2023. The number of residents began to grow sharply in 2022 after sanctions were imposed on Russia due to the start of the military operation in Ukraine. Prior to that, SARs gained new residents slowly - in 2019 there were 22, in October 2020 - 36.
SARs were established on the Russkiy and Oktyabrsky islands in the Primorye Territory and Kaliningrad Region in August 2018. The main purpose of their creation was de-offshorization of foreign holdings controlled by Russian citizens and owning assets in Russia, including as an anti-sanctions measure.