In the context of sanctions imposed by states taking unfriendly actions against Russia and reciprocal counter-sanctions by the Russian Federation—hindering the distribution of dividends to foreign shareholders and the sale of their shares—many companies with foreign participation registered in Russia have opted for liquidation. The current year is no exception: companies continue to cease operations and dissolve, yet this process is becoming increasingly complex.

Key difficulties encountered by companies

• Notaries routinely refuse to perform notarial acts related to liquidation without special authorization from the Government Commission.

• A limited number of banks are able to carry out foreign currency transactions to the required jurisdictions.

• Restrictions apply to the payment of dividends and the distribution of liquidation proceeds to legal entities with unfriendly foreign ownership.

• The inability of the company under liquidation to fulfill guarantee obligations may lead to claims from counterparties.

• Delivery of legalized/apostilled documents to Russia takes considerable time and often requires routing through friendly jurisdictions.

The most pressing issue — initiating the liquidation procedure

While issues related to post-liquidation cash distribution may be resolved through staggered payments over several months, and obligations to counterparties can often be settled through assignments or compensation, the initiation of liquidation and the appointment of a liquidator in the Unified State Register of Legal Entities (EGRUL) remains the most problematic aspect for most BBNP clients.

Regulatory barriers and legal uncertainty

Presidential Decree No. 618 of 8 September 2022 established a special procedure for certain types of transactions and operations involving shares in the charter capital of companies.

Paragraph 10 of the Russian Ministry of Finance Letter No. 05-06-14RM/99138 of 13 October 2022, titled "Official Clarifications No. 1 on the Application of Presidential Decree No. 618 of 8 September 2022," lists the types of transactions requiring approval from the Government Commission.

In particular, the document refers to:

“other transactions (operations) that directly and/or indirectly establish, alter, or terminate rights of ownership, use, and/or disposal of shares in the charter capital of limited liability companies, or other rights enabling one to influence management conditions or the conditions of business activity of such companies.”

Consequences of legal ambiguity — mass notarial refusals

Due to the absence of clear guidance on whether voluntary liquidation falls within the scope of the above transactions, notaries across Russia have developed a practice of refusing to certify signatures on liquidation-related filings and notifications without prior authorization from the Government Commission.

Out of several hundred notaries, only a few are willing to handle such matters.

BBNP’s legal position and case experience

This issue is observed across all regions of Russia. Among all the notaries BBNP has worked with, only two accepted the legal position that the initiation of liquidation and appointment of a liquidator do not require approval from the Government Commission and agreed to provide services accordingly.

This does not exempt the company from obtaining clearance for any post-liquidation payments to shareholders exceeding RUB 10 million per month. However, the liquidation procedure itself does not violate legal requirements.

Otherwise, such companies risk being abandoned by their shareholders and administratively struck from the register as inactive, or being liquidated through bankruptcy, which increases the judicial burden.

The Role of the notary and the order of actions

It is important to note that the registering authorities themselves do not require any additional permits upon receipt of the application initiating liquidation.

Although the situation may vary by region and change over time, the primary challenge at present lies with the notaries.

Furthermore, notarial involvement is required only at the initial stage of liquidation. Once the liquidator is appointed, there is no need for further notarial certification, as the liquidator may obtain a digital signature (ECP) and independently file documents related to the interim and final liquidation balance sheets.

Why legalization abroad is ineffective

It is equally important to understand that the notarization of liquidation protocols and the appointment of a liquidator abroad has no legal effect in Russia. This is due to the fact that Russian notaries issue a special certificate following a shareholders' meeting—something foreign notaries are not authorized to provide.

Thus, signing the protocol by power of attorney from participants is only possible if the company's Charter contains an alternative method for decision-making that bypasses the need for notarial certification of general meetings.

If the Charter lacks such provisions, they must first be adopted during a notarially certified meeting in Russia, which requires a broader package of documents and apostilled (or legalized) powers of attorney.

Once again, most notaries refuse to handle such meetings involving participants from unfriendly countries, given that their fees are not commensurate with the risk of potential disciplinary action by the notarial chamber.

BBNP in Practice: a real-world case

This legal environment recently prompted representatives of a foreign company registered in the Russian Far East to travel to Moscow to execute and certify the documents needed to commence liquidation.

Fortunately, the notary was able to electronically file the documents from Moscow with the competent registration authority.

As a result:

• the documents were certified by a notary,

• submitted to the registration authority,

• the relevant information was published on the Federal Resource,

• and the registration authority made an entry in EGRUL confirming the initiation of liquidation and appointment of the liquidator.

No additional approvals or authorizations were required, thereby confirming BBNP’s legal position on the matter.

Comment by Senior Associate Alexey Chichirenkov:

“The legal landscape surrounding the liquidation of companies with unfriendly foreign ownership is constantly evolving. New challenges and obstacles continue to emerge—both technical and strictly legal.

BBNP’s legal team consistently monitors legislative developments and procedural nuances, enabling us to provide high-level legal support to our clients throughout the entire liquidation process.”