Russia has adopted the first countermeasures
to the sanctions issued against it by the EU, the US and other Western countries in reaction to the Ukrainian conflict.
On February 28th, 2022, the Presidential Decree No. 79 was published “On application of Special Economic Measures in connection with Unfriendly Actions of the United States of America and Foreign Countries and International Organizations that have joined them“.
While constituting an economic and political counter-offensive against the Western countries that have issued such sanctions targeting Russia, these first “special economic and coercive measures” are primarily aimed at limiting the impact of Western sanctions on the Russian Federation’s economy and financial system.
In fact, the Presidential Decree in question intervenes both for the protection of the local currency, imposing some obligations and prohibitions for residents of the Russian Federation with reference to transactions in foreign currency, and for the protection of Russian listed companies, which will be able to buy back their own securities under certain conditions.
In particular, the Decree provides for the following:
- within 3 business days of the publication of the Decree (i.e. by March 3rd, 2022) Russian resident subjects that have received foreign currency as payment for goods sold or services performed in execution of cross-border contracts entered into with foreign subjects shall sell or convert into Rubles at least 80% of the amounts so received as of January 1st, 2022. The same obligation will apply also with respect to foreign currency received as price for the sale of goods to foreign persons as of February 28th, 2022, which shall mandatorily be sold or converted into Rubles within 3 business days from the date on which the related amounts are credited on one’s bank account. These obligations apply to all subjects resident in Russia who are parties to commercial contracts with foreign subjects, regardless of the fact that such contracts have been registered pursuant to Order No. 181-I issued by the Central Bank of the Russian Federation on August 16th, 2017. The foreign currency sale procedure will be defined by the Russian Central Bank;
- as of March 1st, 2022 the transfer of foreign currency by Russian residents to foreign subjects in execution of loan or financing contracts, is prohibited; with the consequence that such loans may be, respectively issued or repaid by Russian residents only in Rubles;
- as from March 1st, 2022 it will also be forbidden for Russian residents to transfer foreign currency to their bank accounts opened abroad and/or to so-called intangible wallets (or similar instruments);
- as of the publication of the Decree and until December 31st, 2022, Russian joint stock public companies will be authorized to buy-back their own shares previously issued on the market, if certain conditions are met (including, an average quarterly depreciation equal to or greater than 20% compared to the same quarter of 2021, etc.). The Decree regulates in detail the procedure for the buy-back of securities and the respective obligations to be fulfilled by the interested companies.
Russian authorities anticipated the issuance of additional restrictive measures and countersanctions in the coming days.
Head of the East European Desk