Introduction of temporary external management of foreign assets in Russia
On April 25th, 2023, Decree No. 302 of the President of Russia of the same date “On temporary management of specific assets” entered into force. The Decree establishes a basis for temporary management of assets of foreign legal entities and individuals from unfriendly states in Russia.
According to Decree No. 302, temporary management of property of persons from unfriendly states in Russia can now be introduced in case of deprivation or restriction of property rights of Russian persons abroad or threat to Russia's national security. The unfriendly states include practically all western states.
Such external management may extend to movable and immovable property of foreign persons from unfriendly states in Russia, their securities, shares or stock in Russian companies, and other property rights. According to Decree No. 302, external management is carried out for an indefinite period of time and is terminated by a decision of the President of Russia.
In accordance with the Decree, its necessity is to be understood to be caused by the seizure or restriction of rights to Russian property abroad. Last year, Russian lawmakers had already considered introducing external management for Russian companies with foreign participation. However, the corresponding Draft Law No. 104796-8 was never adopted, it was also aimed, however, only at cases where foreign companies planned to leave the Russian market. Decree No. 302 does not link to this factual feature and can therefore be applied more broadly – always as a mirror reaction to the impairment of Russian property abroad.
“Rosimuschestvo”, the federal agency for managing state property, has been designated as the temporary manager. However, the President may appoint other managers upon Rosimuschestvo's proposal.
The temporary manager may exercise all the powers of the owner of the assets in question, i.e., manage and use them and exercise voting rights. However, it cannot dispose of the property itself or sell it. Thus, the decree is not a basis for expropriation of foreign property.
The temporary manager is also responsible for inventory checking of the property and for its “safekeeping”. The costs of the external management are financed from the assets themselves or from the proceeds of their use, i.e., not by the state itself.
Pursuant to its annex, Decree No. 302 immediately applied external management to 83.73% of the shares in the joint stock company “Unipro” owned by Uniper SE and approximately 98% of the shares in the joint stock company Fortum owned by Fortum Russia B.V. and Fortum Holding B.V., respectively.
