With effect from 20 May 2024, the Decree imposes restrictions on transactions involving the acquisition of exclusive rights to the results of intellectual activity or means of individualisation between acquirers (that are Russian residents) and rightholders (that are residents of unfriendly states or persons under their control, including Russian ones), and on the performance and/or ensuring the performance of monetary obligations under such transactions.
These transactions may only be made pursuant to obtaining permission from the Government Commission on Monitoring Foreign Investment in the Russian Federation. Importantly, such permission may, as a condition for the transaction, require that payments relating to the transaction be credited to a special O-Type rouble account.
It is worth noting that the Decree also envisages separate regulation for payments relating to transactions made before the date of its entry into force which are not performed, in full or in part, as at that date. Such transactions are to be performed by a funds transfer to a special O-type account opened in the name of a rightholder from an unfriendly state. It is possible to request the Government Commission on Monitoring Foreign Investment in the Russian Federation to move funds from the O-type account to another account, including a foreign one.
The Decree does not apply to transactions:
- providing for the acquisition of exclusive rights to works of science, literature and art, to the results of performing activities (performances), phonograms, on-air and cable broadcasts;
- where the amount of the acquirer’s liabilities under such transactions does not exceed RUB15 million or an amount in a foreign currency equivalent to RUB15 million.
At the same time, the Decree does not contain a rule, typical for other restrictive regulations, that foreign entities from unfriendly jurisdictions but controlled by Russian residents and disclosed as CFCs are not to be deemed unfriendly.
Like other regulations introducing restrictive measures, the text of the Decree leaves quite a few questions unanswered, which are likely to be addressed in official clarifications.
Clarifications in relation to the Decree will be within the remit of an agency to be determined by the Government of the Russian Federation. It is likely that this will be the Ministry of Economic Development of the Russian Federation, which has previously provided clarifications on the application of other restrictive measures relating to payments of fees for using the results of intellectual activity.
