Russian Finance Ministry Tightens Rules for Foreign Exit from Russian Business
The Russian Ministry of Finance has halved the validity period of asset valuation reports required for approving buyout deals from foreign investors – from six months to three months. Now, no more than three months may pass between the preparation of a valuation report and the meeting of the relevant sub-commission under the Ministry of Finance, RBC has learned.
This concerns the “market value of the transaction object, determined by an independent appraiser”, with the valuation report to be attached to the application.
Due to this change, approximately 90 companies that had prepared a report on the valuation of assets of non-residents in autumn 2024 have been excluded from the approval process, according to a source in one of the companies that submitted an application under the previous rules. These applicants will now have to carry out a new business valuation and prepare a fresh report.
According to lawyers interviewed by RBC, the number of rejections for companies that have applied for deals to buy back shares (stakes) from foreigners has significantly increased in recent months, with the rejections being related, among other things, to missed valuation deadlines.
In addition to the market value of the asset being acquired, the current application form for obtaining permission for a transaction with non-residents must include information on the sources of financing for the transaction, the payment currency, the presence of deferred payments, the establishment of key performance indicators (KPIs) for new owners, the ultimate beneficiaries of the transaction parties, and so on.
According to data from the AK&M agency, in 2024, there were 58 deals involving the buyout of assets from foreign owners located in Russia. The total volume of these transactions amounted to $3.38 billion. Contributions to the federal budget from such foreign business sales totalled 161.8 billion roubles in 2024.