We have previously analysed the provisions the ESO Law and amendments to it.
We consider the main provisions of Law
Grounds for administrative liability (article 15.23.2 of the Code of Administrative Offences of the Russian Federation)
Failure to fulfil the obligation to take direct ownership of the shares/participation interestThe ESO Law providesESO Law, article 7, clause 1 that following a decision of the Moscow Region Arbitrazh Court to suspend the exercise of corporate rights by a foreign holding company (“FHC”) in respect of an ESO (“Decision”), persons (i) who indirectly hold shares (or participation interest) in the ESO owned by FHC and (ii) who are citizens and/or residents of the Russian Federation (“Russian Beneficial Owners”) are required to take direct ownership of such shares (or participation interest) (“Direct Ownership”).
The algorithm for taking Direct Ownership could be summed up as followsESO Law, article 7, clauses
- the ESO will, within 20 business days of the date of the Decision, give notice to that effect to all Russian beneficial owners known to it;
- Russian Beneficial Owners shall, within three months of the date of receiving such notice, send to the ESO an application containing the information required to take Direct Ownership;
- if the Russian Beneficial Owners fail to fulfil such obligation, the ESO shall, within 10 business days after the expiry of the abovementioned deadline, notify the Russian Federal Financial Monitoring Service (“Rosfinmonitoring”); and
- upon a review of such notice, Rosfinmonitoring will send the Russian Beneficial Owners an order to eliminate the identified violations specifying the deadline for compliance (“Order”).
However, until recently, Russian laws did not provide for any liability for
In this connection, Law
- on citizens: in the amount of RUB200,000 to RUB400,000;
- on officers: in the amount of RUB300,000 to RUB500,000; and
- on legal entities: in the amount of RUB500,000 to RUB700,000.
The ESO Law providesESO Law, article 12 for the obligation of an ESO’s governing bodies to submit applications and perform other acts stipulated under the ESO Law. Such actsESO Law, article 5, clause 2 may include, for example, the obligation of the sole executive body or a member of the board of directors of an ESO to file an application with the Moscow Region Arbitrazh Court to suspend the exercise of the FHC’s corporate rights in relation to the ESO.
Rosfinmonitoring will superviseESO Law, article 12 the fulfilment of the obligations of the ESO governing bodies provided under the ESO Law.
Law
- on citizens: in the amount of RUB200,000 to RUB400,000;
- on officers: in the amount of RUB300,000 to RUB500,000; and
- on legal entities: in the amount of RUB500,000 to RUB700,000.