SANCTIONS: Russian govt to keep jobs in companies that ceased operations in country

The Ministry of Economic Development offers external management for companies with a foreign share of 25 percent or more that left the Russian Federation

The Ministry of Economic Development of Russia proposes to introduce external management in companies that have left the Russian Federation and are owned by foreigners by at least 25 percent, the press service of the Ministry of Economic Development of the Russian Federation reports.

At the end of the temporary administration, Russian News Agency, TASS says, the block of shares of the new organization will be sold at auction.

“The Ministry of Economic Development has proposed introducing external management into companies that have left the Russian market, more than 25% of which are owned by foreign persons. The project is aimed at encouraging organizations under foreign control not to abandon their activities on the territory of the Russian Federation. According to the document, external administration can be introduced if in violation of the requirements of the legislation of the Russian Federation, the management of the organization’s activities by the head or other management bodies, including shareholders, was actually terminated,” the press service of the Ministry of Economic Development noted.

The ministry emphasized that the Russian government intends to keep jobs in foreign enterprises that have announced the suspension or termination of activities in Russia. External management, according to the plan of the Ministry of Economic Development, will be able to be carried out by VEB.RF, or the Deposit Insurance Agency, if it is a financial institution.

Provisional administration procedure

According to the ministry, one of the factors indicating that the company left the Russian market is the departure of its management from the Russian Federation, starting from February 24, as well as the withdrawal of the organization’s property, which makes it impossible to fulfill its obligations.

“According to the proposals of the Ministry of Economic Development, any member of the Board of Directors or the Federal Tax Service of Russia can apply to the Moscow Arbitration Court to introduce external management in an organization by decision of the Interdepartmental Commission under the Ministry of Economic Development. In turn, the Federal Tax Service, Rostrud, the head or the prosecutor subject of the Russian Federation at the location of the organization, or the head of the branch federal executive authority,” the Ministry of Economic Development of the Russian Federation explained.

In turn, the court will introduce measures to preserve property, the number of employees and freeze shares. In this case, the owner will have the right to declare to the court about his intention to resume activities, transfer his share to trust management or sell it within five working days. The measure proposed by the Ministry of Economic Development does not apply to entities for which there is already a procedure for the prompt introduction of a temporary administration, in particular credit, pension and insurance organizations.

Three months after the introduction of external management, a block of shares in a new company will be put up for auction. The pre-emptive right to purchase will be given to a buyer with a similar type of business, the press service of the Ministry of Economic Development added.

“Mandatory requirements will be established for the new owner: maintaining at least 2/3 of jobs and continuing the activities carried out by the organization on the territory of the Russian Federation for at least 1 year. During this time, the fulfillment of obligations will be monitored by an external administration that will be able to terminate the contract in in case of violation of these conditions and hold new auctions,” the ministry explained.

In addition, external management for six months is provided for cases where the governing bodies commit “actions that may lead to unreasonable termination of the organization, its liquidation or bankruptcy,” the Ministry of Economic Development noted.

TASS