News

Russia’s temporary management framework for assets owned by foreign companies, introduced into by Presidential decree in 2023, has exposed a number of shortcomings that are harming the investment climate and creating what foreign business representatives described as a “nervous environment”. The concerns were raised at a meeting of the International Council for Cooperation and Investment in Moscow on April 28, RBC reported, citing representatives of AmCham Russia, the Russian-German Chamber of Commerce Abroad and the Association of European Businesses.

In particular, participants highlighted concerns over the lack of transparency surrounding the grounds for imposing external management, decision-making based on unreliable information, and the insufficient competence and limited transparency of appointed temporary managers.

Senior executives at foreign companies that have remained in Russia never know whether their businesses could become potential targets for temporary management or not, said Vladimir Yefremov, a board member of AmCham Russia, adding that this creates a “highly nervous environment”. If a company "has firmly decided" to continue operating in Russia, and temporary management is suddenly imposed, that becomes a troubling signal for the investment climate, said Matthias Schepp, head of the Russian-German Chamber of Commerce Abroad.

In addition, Yefremov said decisions to impose temporary management were often based on inaccurate information. He further noted that media reports suggesting companies had been “withdrawing funds” from Russia carried negative connotations, even though such capital transfers would not have been possible without prior approval from the relevant Finance Ministry’s subcommission.

Schepp said that the grounds used to justify taking control of foreign companies were often “entirely created out of thin air”.“I personally attended negotiations where it was claimed that a company was investing in the Ukrainian economy,” he said. “In reality, ladies and gentlemen, the exact opposite had happened: at the start of the conflict, the company had decided to remain in Russia while winding down its business in Ukraine.”

Yefremov also noted that some of the entities appointed as temporary managers appeared questionable. “The business community knows nothing about them — they were set up only shortly before temporary management was introduced,” he said. Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, also acknowledged the existence of this issue at the same meeting, RBC reported.