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Government Commission Approval for the Acquisition of Real Estate: Where the Misunderstanding Comes From

Key takeaway

If a Russian seller is not controlled by persons from “unfriendly” states, while the Russian buyer is subject to such control, no separate individual approval from the Government Commission is required under Presidential Decree No. 81, provided that the transaction fully complies with the general approval granted under Subcommission Protocol No. 232/9 dated March 7, 2024 and is not subject to any other special regulatory regime.

Following the publication of Thematic Review No. 8/2026 of the Supreme Court of the Russian Federation, the market once again began discussing the view that a Russian company with a participant or parent company from an “unfriendly” jurisdiction allegedly requires an individual approval from the Government Commission in all cases when acquiring real estate in Russia.

The concern is understandable. The Supreme Court expressly linked a violation of the special procedure to the nullity of the transaction and bilateral restitution. However, some market participants have gone beyond what the Review actually says and have turned a broad interpretation into a purported rule: that any approval must now be obtained individually, that previously issued general approvals are no longer relevant, and that transactions in which the buyer is an “unfriendly” person – including a Russian company with “unfriendly” foreign ownership – are null and void unless a specific approval has been obtained for the transaction.

Below, we examine this issue in detail.

The Transaction Structure in Question

The analysis concerns a basic and common transaction structure:

• the seller is a Russian legal entity or another Russian resident that is not controlled by persons from “unfriendly” states;
• the buyer is a Russian legal entity that is subject to such control;
• the subject matter of the transaction is real estate located in Russia.

For this structure, the conclusion is straightforward: provided that the transaction meets the conditions of Protocol No. 232/9, no separate individual approval under Presidential Decree No. 81 is required. This follows not only from the wording of the general approval itself, but also from the published position of the Russian Ministry of Finance, which was communicated to state registration authorities.

How the Special Procedure under Presidential Decree No. 81 Works

Subparagraph “a” of Paragraph 1 of Presidential Decree No. 81 dated March 1, 2022 establishes a special procedure for certain transactions by Russian residents with foreign persons from “unfriendly” states and persons controlled by such foreign persons. This regime covers, among other things, transactions resulting in the acquisition of ownership rights to real estate.

Subparagraph “b” of the same paragraph provides that such transactions may be carried out on the basis of approvals issued by the Government Commission. The Decree does not require every approval to be issued exclusively in response to an individual application concerning a particular buyer or seller.

Moreover, Paragraph 16 of the Rules approved by Resolution of the Government of the Russian Federation No. 295 dated March 6, 2022 expressly allows the Subcommission to grant approval for transactions involving an indefinite range of persons. The regulatory framework therefore provides for both individual and general approvals.

Disregarding the latter would mean disregarding an express provision of the Government's own regulatory framework.

What Protocol No. 232/9 Permits

On March 7, 2024, the Subcommission of the Government Commission adopted a decision formalized by Protocol No. 232/9. The decision permits Russian residents to enter into transactions resulting in the acquisition of ownership rights to real estate by foreign legal entities from “unfriendly” states and/or legal entities controlled by such foreign persons, irrespective of their place of incorporation or principal place of business.

The general approval excludes aircraft and seagoing vessels, as well as inland waterway vessels. For ordinary real estate – including buildings, premises, structures and land plots, subject to applicable restrictions on land – the wording of the approval expressly covers the transfer of ownership to a controlled buyer.

The Protocol itself does not specify an expiry date for the approval. In 2025, the Ministry of Finance additionally described the decision under Protocol No. 232/9 as being “valid without a time limit.”

The Ministry of Finance Has Already Addressed This Specific Issue in Writing

Questions concerning the scope of Protocol No. 232/9 had arisen before, including at Rosreestr, Russia’s Federal Service for State Registration, Cadastre and Cartography. The issue arose in connection with an inquiry from a Russian company that was 99% owned by an Austrian company. Rosreestr sought the Ministry of Finance’s position in order to ensure a consistent approach to state registration.

In Letter No. 05-06-05/33795 dated April 4, 2025, the Ministry of Finance clarified that where ownership of real estate is acquired by a legal entity subject to “unfriendly” foreign control, while the property is transferred by a Russian resident not subject to such control, the relevant decision is the Subcommission’s decision of March 7, 2024, formalized by Protocol No. 232/9.

On April 23, 2025, Rosreestr circulated the Ministry of Finance’s letter to the heads of its territorial offices and instructed them to communicate the relevant information to state registrars responsible for registering rights.

The Ministry of Finance’s letter is not a regulatory legal act and does not eliminate the need to assess the specific circumstances of each transaction. Nevertheless, as the publicly stated position of the competent authority, issued in response to a request from Rosreestr, it is of considerable practical significance.

What the Supreme Court Actually Said

In Paragraph 1 of Thematic Review No. 8/2026, the Supreme Court took a strict position: a sale and purchase agreement concerning Russian real estate, concluded with a Russian entity subject to foreign control without the approval of the Government Commission, is null and void pursuant to Paragraph 2 of Article 168 of the Civil Code of the Russian Federation. Such a violation may result in bilateral restitution.

However, the factual circumstances of the case considered by the Supreme Court were the opposite of those examined in this article.

In that case, the Russian company subject to foreign control was the seller of the real estate, while the buyer was a Russian individual entrepreneur. At the time of the transaction, 100% of the seller’s shares were owned by a German company. The agreement was entered into on August 19, 2022.

The general approval under Protocol No. 232/9 was issued only on March 7, 2024. It therefore could not, as a matter of fact or law, have served as the basis for a transaction entered into in 2022.

The Supreme Court itself emphasized that the agreement violated the legal acts in force at the time it was entered into. The Review contains no finding that the general approval granted in 2024 had been cancelled, suspended or narrowed.

The Supreme Court’s position and Protocol No. 232/9 therefore address different questions. The Review establishes the consequences of entering into a transaction without an applicable approval. The Protocol establishes circumstances in which approval has already been granted to an indefinite range of persons.

There is no legal contradiction between the two.

The correct way to frame the risk: If a transaction falls within the scope of the special regulatory regime and is carried out without an applicable general or individual approval, it may be deemed null and void. This does not mean that a general approval has ceased to be effective.

Has the Position Changed Following the Supreme Court Review?

Following the publication of Review No. 8/2026, we revisited the issue. We compared the current versions of Presidential Decree No. 81 and Rules No. 295, the text of Protocol No. 232/9, the published letter of the Ministry of Finance, and Rosreestr’s communication concerning state registration. None of these sources indicates that the general approval has been cancelled or its scope narrowed.

We also discussed this transaction structure with experienced practitioners, including attorneys and notaries, as well as with a business association that checked the position through its working channels with representatives of the relevant government authority.

The oral confirmation we received was consistent with the Ministry of Finance’s previously published position: where a Russian company subject to foreign control acquires real estate from a Russian seller that is not subject to such control, no separate individual approval is required; Protocol No. 232/9 applies.

An oral position does not constitute an official written clarification and therefore is not relied upon by us as an independent legal source. It is relevant only as an additional indication that the administrative understanding of this transaction structure has not changed following publication of the Supreme Court Review.

Anton Shamatonov, Managing Partner at MAGENTA Legal, Comments

“We understand why market participants and their lawyers may prefer to take the most conservative approach and seek individual approval even for a transaction that appears to fall within the scope of the general approval. Today, the risks have evolved beyond the traditional civil-law risk of a transaction being declared invalid – which in itself can result in significant financial losses and even bankruptcy – into public-law risks that may personally affect a company’s management and owners. Prosecutors and other law enforcement authorities are becoming increasingly involved in such matters. This is why the Supreme Court’s position has caused such concern. But the Supreme Court did not say that the general approval under Protocol No. 232/9 had ceased to be effective or no longer applied.

The Court addressed the consequences of a transaction entered into without the required approval. Protocol No. 232/9 is itself an approval granted to an indefinite range of persons. It remains valid without a time limit and covers the acquisition of real estate by a company subject to foreign control from an ordinary Russian resident. One might argue that the Supreme Court expressed its position too broadly or without sufficient caution. From the perspective of how the statement has been perceived by the market, there is some basis for that view. At the same time, the Supreme Court Review will remain in effect for an indefinite period, whereas Approval No. 232/9 may be cancelled or amended in the meantime.The highest judicial authority cannot, and should not, continuously update its published positions to reflect subsequent changes made by the administrative authority responsible for granting such approvals – namely, the Government Commission.”

Frequently Asked Questions

1) Is approval required if a Russian company is controlled by a European or US group?

Not automatically. The first step is to determine whether control exists under the criteria set out in Bank of Russia Clarification No. 3-OR.

If the company is indeed subject to such control and is acquiring real estate from a Russian resident that is not subject to such control, no separate individual approval under Presidential Decree No. 81 is required, provided that the conditions of Protocol No. 232/9 are met.

2) Did the Supreme Court Review cancel Protocol No. 232/9?

No. The Review contains no such conclusion.

The transaction considered by the Supreme Court was entered into in 2022, before the general approval was issued, and the company subject to foreign control was the seller. The Review addresses the consequences of entering into a transaction without the required approval; it does not cancel approvals that are already in force.

3) Can the transaction nevertheless be deemed null and void?

Yes. This may be the case if the actual transaction structure falls outside the scope of the general approval, if the parties have incorrectly determined whether control exists, or if another mandatory regulatory regime has been breached.

4) What should be done if a notary or registrar takes a more conservative position?

A structured legal opinion should be provided, setting out the transaction structure and attaching Protocol No. 232/9, the Ministry of Finance’s letter and Rosreestr’s letter.

If the concerns remain, the specific legal and regulatory grounds for the more restrictive position should be clarified and addressed.

How we can help?

MAGENTA Legal assists clients in structuring real estate transactions involving foreign ownership: we determine whether general or individual approvals are required, assess the applicability of Federal Law No. 57-FZ and applicable antimonopoly thresholds, analyze land-related restrictions, prepare legal opinions, and support transactions through the registration of the transfer of ownership.

Legal Disclaimer

This material reflects our general understanding of the applicable regulatory framework as of September 3, 2026 and does not constitute a legal opinion in relation to any specific transaction. The final assessment depends on the ownership and control structure, the status of both parties, the characteristics of the property, the date of the transaction, and the applicability of any other special regulatory regimes.