Additions to the restrictions on transactions involving shares/equity interests in fuel and energy companies

Edict No. 520 of 5 August 2022 (“Edict No. 520”)[1] imposed a ban on transactions involving shares and equity interests in strategic enterprises, certain fuel and energy companies and related service companies, users of subsurface sites containing deposits of hydrocarbons and other minerals, and certain banks, except with special permission from the President of Russia. The lists of such fuel and energy companies, related service companies and banks were to be approved by the President of Russia.

The restrictions are broadly worded and affect both direct and indirect transactions involving shares and equity interests as well as transactions and operations such as changes in the scope of rights (for example, as a result of changes in charter capital), the pledging of shares and equity interests, and others.

On 9 November 2022, the President of Russia signed Directive No. 372-rp[2] (“Directive No. 372-rp”) in implementation of clause 2 d) of Edict No. 520, which establishes the list of fuel and energy companies that require special permission from the President of Russia to enter into certain transactions (operations).

It will be recalled that the restrictions are in place until 31 December 2022 (the effective period may be extended multiple times).

Deals made without special permission from the President of Russia are void. It should be said that Edict No. 520 does not lay down detailed procedures for obtaining special permissions. Nonetheless, such permissions are being issued[3].

For more information on other provisions of Edict No. 520, see our alert here.

We should point out that, where special permission from the President of Russia is required for a transaction, it is not necessary to seek the consent of the Governmental Commission[4].

Companies included in Directive No. 372-rp

Under clause 2 d) of Edict No. 520, the following companies could be included in the list to be approved by the President:

• manufacturers of equipment for fuel and energy companies
• providers of maintenance and repair services for fuel and energy companies
• producers and suppliers of thermal energy and electricity
• refiners of oil and petroleum feedstocks
• manufacturers of refined products of oil and petroleum feedstocks

The list approved by Directive No. 372-rp includes 191 legal entities, including such companies as NaftaGaz JSC, Bashneftegeofizika JSC, Yugra Territorial Energy Company JSC, Baker Hughes JSC, Siemens LLC, Schlumberger Vostok LLC, Fortum PJSC, Enel Russia PJSC and others.

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We recommend checking every transaction involving shares/equity interests in fuel and energy companies to determine whether it requires special permission from the President of Russia or the Governmental Commission. We also invite you to read about the similar restrictions for financial companies in our alert here.