What to Do If Foreign Law Does Not Allow Relocating a Business to Russia?

International Company in Russian Law

An international company is a foreign company registered in one of the two special administrative regions (“Russian offshore zones”). The introduction of this institution is part of the course toward deoffshorization of the economy, largely driven by sanctions-related restrictions.

New Registration Mechanism

Previously, establishing an international company was only possible through redomiciliation. The law now allows registration in Russia of companies that cannot change their governing law due to restrictions under foreign legislation (so-called outward redomiciliation). For example, Singaporean law allows companies to redomicile to Singapore, but not from it.

Conditions for Registration

For a foreign company to “reincarnate” in Russia, the following conditions must be met:

• The company was registered before March 1, 2022;

• Securities were listed (admitted to organized trading) in Russia before March 1, 2022;

• Shareholders of the foreign company committed to transfer assets of a certain value to the newly created company.

Legal Consequences

After registration, the company is obliged to operate under Russian law, taking into account the specifics of share placement and turnover, management structure, and other requirements.

Economic Significance

The new regulations pursue two main goals:

• To expand the possibilities of bypassing sanctions restrictions;

• To promote the deoffshorization of the Russian economy.

Practical Recommendation

Relocating to a special administrative region permanently changes the structure of your business. Therefore, such a decision requires careful planning with a full team of specialists from various branches of law to assess whether this instrument is suitable for your specific situation.