Leaving the Russian market: the Government Commission's approval
Background
We don't often write about what we've achieved and tell you about ourselves. However, today we would like to share with you the news of another transaction approval by the Russian Government Commission. As our recent communication with clients shows, this issue is still of interest to foreign shareholders and investors.
Recently MAGENTA Legal lawyers received approval from a subcommittee of the Government Commission (Pravkomissiya) of the Russian Federation for another transaction of one of our clients.
The German company exit from the Russian market and handover its business to the Russian partners. We accompanied the entire project from the very beginning, offered various options for withdrawal from the Russian market, including liquidation of the company, and explained the possible negative consequences of the option of a foreign participant ceasing to participate in the company's activities without any legal formalisation.
In this case, the client approved the use of the LLC exit procedure established by Russian law, and we prepared both the corporate documentation and a package of documents for approval by the Government Commission through the Russian Ministry of Industry and Trade, which is known for its well-established co-operation with businesses on this issue. Finally, after several iterations and lengthy approvals, the authorisation was granted to our client.
Key considerations
There are a number of things that a potential applicant wishing to sell shares in Russian companies should be aware of before applying to the Government Commission:
The process is a lengthy procedure: deadline is not regulated by law. A lot depends on the size of the business. For example, previous transaction in which we participated took about 10 months to be approved by the Government Commission.
One has to be ready to re-do a set of documents several times. Not because of lawyers' mistakes, but because of changes in the work of the Government Commission and in the legislation. It is mandatory to be ready to provide apostilled/legalised documents on behalf of a foreign participant, which will require active participation of foreign lawyers.
Internal corporate relations can also play an important role. This is particularly important as the state will require the company to meet a KPI in terms of tax payments and employment for the next few years after the licence is granted. It is necessary to set a separate and sufficient budget. First of all, for the so-called "voluntary" contribution to the state, as well as for business valuation and legal support of the whole procedure and transaction.
Any request from the Government Commission should be taken seriously and without delay - it is better to provide an excessive number of documents than not to provide what is requested and lose several months.
We also recommend our other news on Government Commission approvals: