Russian Government approves the list of economically significant organisations

According to Federal Law No. 470-FZ dated 4 August 2023 “On the Specifics of Regulation of Corporate Relations in Business Companies that are Economically Significant Organisations” (“ESO Law”), an economically significant organisation (“ESO”) means a Russian business company which (i) is significant for the economic sovereignty and economic security of the Russian Federation, (ii) is included on the special list approved by the Government of the Russian Federation (“List”), and (iii) meets certain financial and other criteria set down in the ESO LawArticle 2(1) of the ESO Law.

In furtherance of the ESO attributes mentioned above, the Government of the Russian Federation approved the List on 1 March 2024, and the relevant resolutionResolution of the Government of the Russian Federation of 1 March 2024 No. 491-r was published on 4 March 2024.

The first version of the List includes six Russian business entities, including:

• AB Holding JSC (the parent company of Alfa-Bank);
• YUNS-Holding LLC (the beneficial owner of AlfaStrakhovanie JSC);
• X5 Corporate Center LLC (part of the X5 Group structure);
• Acron Group JSC (the fertilisers manufacturer)
• Gorodskoi Supermarket LLC (the management company of the Azbuka Vkusa supermarket chain); and
• Razrez Arshanovski LLC (the coal mining company).

If a Russian legal entity is classified as an ESO (i.e., is included on the List), it becomes possible to limit the corporate rights of its foreign holding company (“FHC”). In order to realise this possibility, an applicationArticle 5(1) of the ESO Law should be submitted to the Arbitrazh Court of the Moscow Region requesting to suspend the exercise by the IHC of its corporate rights in relation to the ESO.

Such applications may be submittedArticle 5(2) of the ESO Law by:

• a federal executive body authorised by the Government of the Russian Federation to do so;
• the ESO’s shareholders/participants, regardless of the number of shares/participation interest held by them;
• the ESO’s sole executive body or a member of its board of directors or supervisory board; and/or
• the ESO’s Russian beneficial owners.

The arbitrazh court’s decision to suspend the FHC’s corporate rights in respect of the ESO will, in turn, be the basisArticle 6(1)(5) of the ESO Law whereby the ESO’s beneficial owners may take direct ownership of the ESO shares or participation interest.

Please note that the decision to include a Russian entity on the List is takenThe rules for the Russian Government adopting the decision to include a Russian business entity on the List were approved by Resolution of the Russian Government No. 1836 dated 1 November 2023 by the Government of the Russian Federation on the proposal of the relevant federal executive authority, and such decision may notArticle 2(2) of the ESO Law be challenged in court. Therefore, the published List is not final and may be subsequently supplemented by the Government of the Russian Federation.

We will monitor further changes to the List and keep you updated.