Decree No. 618: getting a Government Commission permit for a transaction with a Russian LLC interest

What the decree covers

Decree No. 618 of 8 September 2022 made subject to a permit of the sub-commission of the Government Commission for Control over Foreign Investment any transaction or operation that directly or indirectly establishes, changes or terminates rights of ownership, use or disposal over a participation interest in a Russian limited liability company, or other rights that allow a person to determine how the company is managed, where a party to the transaction is a person connected with an unfriendly state. The Ministry of Finance's Clarifications No. 1 of 13 October 2022 (letter No. 05-06-14RM/99138) list the usual cases: sale and purchase, gift, exchange, pledge, trust management, options and other preliminary arrangements, a participant's withdrawal, the company's acquisition of its own interest, and corporate agreements that shift control. The rule applies whichever side the unfriendly person is on — an unfriendly seller to a Russian buyer needs the permit as much as the reverse — and regardless of the size of the interest; there is no monetary threshold.

Joint-stock companies are governed by the earlier Decree No. 81 of 1 March 2022 (shares, securities, real estate), with the same sub-commission and the same procedure, so in practice counsel treat the two together.

When no permit is needed

The exemptions have accumulated over four years, and the ones that matter most are not in the decree itself.

• Russian control, disclosed. A company registered in an unfriendly state but controlled by Russian legal entities or individuals is not treated as unfriendly for the purposes of Decrees No. 81, 95, 254 and 618, provided the control has been disclosed to the Russian tax authorities. The disclosure is the CFC notification under Article 25.14 of the Tax Code confirmed by the tax office — see the separate guide. This is the single most used exemption.
• Friendly control established before 1 March 2022. A person controlled by individuals, companies or a state from a non-unfriendly jurisdiction, where the control predates 1 March 2022, is likewise outside the regime (Decree No. 254).
• Special regimes. Transactions under Decrees No. 416 (Sakhalin-2) and No. 520 (strategic sectors) follow their own rules; interests in banks and other financial institutions fall under Decree No. 737, which has its own threshold.
• Economically significant organisations. Clarifications No. 4 of 24 February 2025 (letter No. 05-06-13RM/17701) exempted the taking of direct ownership of interests in an ESO under Federal Law No. 470-FZ by persons who previously held them through a foreign holding company, and by Russian persons to whom that right was transferred.
• Charter changes and redemption of undistributed interests. Clarifications No. 5 of 1 July 2026 (letter No. 05-06-13RM/56768) took two further situations out of the regime: amendments to the charter adopted by the general meeting that create, redefine or abolish the competence of company bodies, even though they change how the company is managed; and a change in a participant's percentage caused solely by the redemption of an undistributed or unsold interest under Article 24 of the LLC Law with a corresponding reduction of charter capital. Neither affects the unfriendly participant's own rights, which is the test the Ministry applied.
• General permits. The sub-commission has issued a small number of blanket permits — notably, in November 2022, for gratuitous transfers between resident individuals who are spouses or close relatives. A transaction that fits a general permit needs no individual application.

What is not exempt, despite frequent assumptions: a capital increase that admits an unfriendly person or changes its share; a transfer within the same unfriendly group; and a pledge in favour of an unfriendly lender. Each needs its own permit.

The application

Government Resolution No. 295 of 6 March 2022 sets the procedure. The application is addressed to the sub-commission and filed through the Ministry of Finance as its secretariat (in practice by e-mail to the Ministry's dedicated address, with scanned originals). Either party may apply, resident or non-resident. The file contains: a statement describing the transaction — its purpose, subject matter, price and material terms, the number of votes transferred, the planned timing; the applicant's registration and constitutional documents (for a foreign applicant, an extract from the commercial register with apostille and certified Russian translation; for an individual, a notarised signature); information on the beneficial owners and controlling persons of both parties; the latest balance sheet of the target; and, for an exit transaction, an independent appraisal report with an expert review by a self-regulatory organisation of appraisers, dated no more than three months before the meeting (since February 2025). All documents are in Russian or with a certified translation, and the file ends with an inventory.

For a sale by an unfriendly participant the sub-commission applies the published exit conditions — a discount of at least 60% to the appraised value, a contribution to the federal budget of at least 35%, KPIs for the buyer and, where the seller insists on one, a buy-back option whose fate is now uncertain under Law No. 319-FZ. The exit-cost guide sets these out; the point here is that an application that does not already build them in will not be considered.

Timing and the decision

There is no statutory deadline, and the sub-commission does not correspond about pending files. Routine permits for interests in operating companies take two to three months; exits with an appraisal, KPIs and a budget contribution take six to eight, sometimes longer. The decision takes the form of an extract from the minutes of the sub-commission meeting, communicated by the Ministry of Finance. It may be conditional, and any conditions must be reproduced in the transaction documents; it may also be time-limited, which matters where the deal was signed subject to permit — if the permit lapses before closing, the application is made again. Decisions are challengeable in the arbitrazh courts under Chapter 24 of the Arbitrazh Procedure Code, though no challenge has yet succeeded.

Without a permit

A notary certifying a transfer of an LLC interest must establish whether either party is connected with an unfriendly state and, if so, must see the permit; without it, certification is refused, and in practice most notaries refuse to certify even ancillary documents such as a liquidation decision when an unfriendly participant is involved. The tax registrar refuses to record a transfer that lacks a permit (upheld, for example, by the 21st Arbitrazh Court of Appeal in case No. A83-20705/2022). A transaction completed in breach is void, and attempts to achieve the same result by other means — a claim to “restore” a former participant, a sham loan converted into an interest — have been rejected by the courts as circumvention (Moscow Arbitrazh Court, case No. A40-256109/22).

Checklist

1. Is either party connected with an unfriendly state, and does a control exception apply? If Russian control: is the CFC notification filed and the tax office confirmation in hand?
2. Does the operation fall within one of the 2025–2026 exemptions (ESO direct ownership, charter competence changes, redemption of undistributed interests) or a general permit?
3. If not: is the transaction an exit? Then the 60% / 35% conditions, an appraisal less than three months old, and six-plus months.
4. Sign subject to permit, with the sub-commission's conditions built into the SPA, and brief the notary before the meeting.