Russia starts government lawlessness and raider attack on foreign business

3 minutes reading time (503 words)

The Bank of Russia has approved a bill from the Ministry of Economic Development of the Russian Federation on the external management and nationalization of companies and banks that are leaving the Russian Federation because of the aggressor's war against Ukraine.

The Central Bank of the Russian Federation has agreed on a document allowing the establishment of external management in large companies with foreign participation, which after February 24, 2022 announced the termination of activities. There are already about 400 such companies and the list is growing.

According to the project, external management can be established in organizations where the owner of 25% of shares or the controlling person is a non-resident associated with an unfriendly state.

As of March 5, 2022, the list of unfriendly countries for Russia includes: Australia, Austria, Albania, Andorra, Belgium, Bulgaria, Great Britain, British Virgin Islands, Gibraltar, Hungary, Germany, Greece, Denmark, Ireland, Iceland, Spain, Italy , Canada, Cyprus, Latvia, Lithuania, Lithuania, Liechtenstein, Luxembourg, Malta, Micronesia, Monaco, Netherlands, New Zealand, Norway, Poland, Portugal, Republic of Korea, Romania, San Marino, Northern Macedonia, Singapore, Slovakia, Slovenia, USA Taiwan, Finland, France, Croatia, Montenegro, the Czech Republic, Switzerland, Sweden, Estonia, Japan and of course Ukraine.

In such companies, the court will be able to appoint an external administration on behalf of the state corporation "WEB.RF" or the Deposit Insurance Agency (DIA).

After that, in 3-6 months, a new organization should be created on the basis of the assets of the previous structure and sold at auction under the obligation to retain 2/3 of the staff and continue to operate for at least a year. If there are no investors, the buyer will be the state of Russia.

However, the Central Bank of the Russian Federation insists on expanding the concept of external management to the possibility of temporarily infringing on the participation of foreigners in management.

Financial organizations may also be involved in external management, in which DIA will perform the functions of external administration. Under the project, when replacing the assets of the organization, taking into account its assets, a new business company is created, which is further sold at auction.

It will be recalled that the Russian prosecutor's office threatened Western companies, in particular McDonald's and IBM, with arrests of management and confiscation of property for leaving the country and criticizing the authorities.

On March 7, 2022, it became known that the United Russia party was proposing to nationalize the assets of companies announcing the closure of production in Russia due to the war in Ukraine. Subsequently, the Ministry of Economy of Russia proposed to introduce external management in companies owned by foreigners by at least 25% and left the Russian market.

Russia has even compiled a list of companies that can be nationalized, including Volkswagen, Apple, IKEA, Microsoft, IBM, Shell, McDonald's, Porsche, Toyota, H&M and others.

The United States warned against nationalizing foreign companies and said that "any illegal decision by Russia to seize the assets of these companies will eventually lead to even greater economic pain for Russia."

Related Posts