Selling Shares in a Russian Company

Russia has always been an attractive country for foreign investors because the Government makes no differences between local and foreign enterprisers. Moreover, foreign companies are also welcome to create strategic partnerships or joint ventures with Russian companies. However, there is also another category of investors: those buying shares in a Russian company. The sale of shares in Russian companies is permitted by several laws, among which:

• – the Federal Law on Limited Liability Companies;
• –          the Civil Code;
• –          The Joint Stock Companies Act.

The last mentioned law refers to the sale of shares in public companies in Russia.

Selling shares in private company in Russia

The Russian Civil Code provides for share sales in public and non-public companies, the two terms being introduced recently in the business language. Public companies are joint stock companies whose shares are publicly traded, while the non-public ones are non-public joint stock companies and the private limited liability companies.

Share sales in private companies in Russia are divided into two categories:

• –          the direct sale of the company, which is also known as a ‘one-tier structure’;
• –          the sale of shares in a holding company with Russian subsidiaries, which is known as a ‘two-tier structure’.

No matter the type of sale, it is necessary for the parties (the seller and the buyer) to draft a sale-purchase agreement based on which the transaction will be concluded. The main advantage of selling shares in a Russian company is that the transaction does not require additional business permits, as in the case of assets sales. Share sales in Russia are also VAT-free.

You can also watch the video below for information on how to sell shares in a Russian company:

Restrictions on sale shares in Russia

Even if selling shares in a company has more advantages than selling the whole Russian company, one must know there are also certain restrictions attached to the possible deal. The most important ones appear in the Articles of Association of the company and may imply the preemptive rights of the shareholders. Other restrictions apply under the Joint Stock Companies Act and the Securities Market Law to share sales in public companies, however since 2022 deals involving persons from “unfriendly” countries generally need approval of the Government Commission on Monitoring Foreign Investment.

For complete information about the legal requirements for selling shares in a company, please contact our law firm in Russia.