Putin allows Seizure of Russian assets of Foreign Companies
By Decree No. 302 dated 25 April 2023 (“Decree 302”) the Russian President allowed to introduce external management over specific assets located in Russia, which are owned or controlled by legal entities and individuals from so called “unfriendly” countries (“Unfriendly Persons”). Such assets include shares in Russian companies, movable and immovable property as well as property rights (“Seized Assets”).
As per Decree 302 any Seized Asset will be managed by the Russian Federal Agency For State Property Management (Rosimushestvo) or, upon a decision of the Russian President, by a different authority (“External Manager”). The External Manager is entitled to exercise all the powers/rights over the Seized Asset save for the right to dispose of it. The external management ceases upon the decision of the Russian President. The costs of the External Manager will be compensated at the expense of the income from the Seized Assets.
Decree 302 establishes as the only “pre-condition” for the seizure that assets of Russian owners have been seized or frozen, or anyhow restricted, or are threatened to be seized/frozen/restricted in the country of the Unfriendly Person, or that there is any threat to the Russian Federation. This extensively (and vaguely) worded pre-condition is actually already fulfilled in a large number of countries, e.g. in every EU country, the US and the UK. Therefore, effectively Decree 302 allows the Russian President to seize any Russian asset owned by western companies or their Russian subsidiaries in Russia.
The current list of the Seized Assets adopted by Decree 302 includes:
- the shares in JSC Unipro owned by Uniper SE;
- the shares in JSC Fortum owned by Fortum Russia B.V. and Fortum Holding B.V
It can be extended any time by a decision of the Russian President.
In contrast to the draft Russian law “On External Management” which was prepared by the Russian authorities in March 2022 but not adopted and which provided for certain criteria to be fulfilled for the introduction of external management over Russia assets held by foreign owners, the external management under Decree 302 is introduced and conducted upon the sole and unlimited discretion of the Russian President.