I. The need to provide documents to the Bank is reasoned by the following.
Bank GPB (JSC) (hereinafter referred to as the Bank), being a financial market participant, is obliged to ensure compliance with the requirements and restrictions in the framework of financial market protection measures established by:
− Executive Orders of the President of the Russian Federation, including, but not limited to, Executive Order of the President of the Russian Federation No. 81 "On Additional Temporary Economic Measures to Ensure the Financial Stability of the Russian Federation" dated 01.03.2022 (hereinafter, Executive Order No. 81), Executive Order of the President of the Russian Federation No. 95 "On Temporary Procedure for Meeting Loan Obligations to Certain Foreign Creditors" dated 05.03.2022 (hereinafter – Executive Order No. 95), Executive Order of the President of the Russian Federation No. 254 "On Provisional Procedure for Meeting Financial Obligations in Corporate Relations to Certain Foreign Creditors" dated 04.05.2022 (hereinafter – Executive Order No. 254), Executive Order of the President of the Russian Federation No. 737 "On Certain Issues of Implementation (Execution) of Certain Types of Transactions (Operations)" dated 15.10.2022 (hereinafter, Executive Order No. 737), Executive Order of the President of the Russian Federation No. 138 "On Additional Temporary Economic Measures Related to the Circulation of Securities" dated 03.03.2023 (hereinafter, Executive Order No. 138) and others (hereinafter collectively referred to as "Executive Orders");
− other regulatory acts of the Central Bank of the Russian Federation (hereinafter, the Bank of Russia) adopted in connection with the Executive Orders.
Decrees and other legal acts of the Bank of Russia adopted in connection with the Executive Orders, among other things, establish restrictions on consummation (execution) of certain types of transactions (operations) between certain persons or in favor of them.
According to paragraph 1 of Executive Order No. 95, "Foreign creditors” include the following:
− foreign persons related to foreign states who perform unfriendly actions against the Russian Federation, Russian legal entities and individuals, specifically if such foreign persons have the citizenship of such states or such states are the place of their registration, principal place of business or the place where they preferentially derive profits from their business;
− persons that are controlled by these foreign persons, regardless of the place of their registration (unless the place of their registration is the Russian Federation) or principal place of business.
According to paragraph 1 of the Interpretative Act of the Bank of Russia No. 3-OP dated 02.06.2023 "On Application of Certain Provisions of Executive Order of the President of the Russian Federation No. 81 dated 01.03.2022 "On Additional Temporary Economic Measures to Ensure the Financial Stability of the Russian Federation", Executive Order of the President of the Russian Federation No. 95 dated 05.03.2022 "On Temporary Procedure for Meeting Loan Obligations to Certain Foreign Creditors", Executive Order of the President of the Russian Federation No. 254 dated 04.05.2022 "On Provisional Procedure for Meeting Financial Obligations in Corporate Relations to Certain Foreign Creditors", Executive Order of the President of the Russian Federation No. 737 dated 15.10.2022 "On Certain Issues of Implementation (Execution) of Certain Types of Transactions (Operations)", Executive Order of the President of the Russian Federation No. 138 dated 03.03.2023 "On Additional Temporary Economic Measures Related to the Circulation of Securities", a person is considered to be under control if there is one of the signs specified in Parts 1 to 2.1 of Article 5 of Federal Law No. 57-FZ dated 29.04.2008 "On the Procedures for Foreign Investments in the Business Entities of Strategic Importance for Russian National Defense and State Security" (hereinafter, Federal Law No. 57-FZ). However, the ability to block decision-making on the basis of a law, statute or contract cannot be considered as a sign of being under control for the purposes of applying paragraph 1 of Executive Order No. 81, paragraph 1 of Executive Order No. 95, paragraph 1 of Executive Order No. 254, paragraph 1 of Executive Order No. 737, paragraphs 11 and 12 of Executive Order No. 138.
One of the signs of control provided for in Parts 1–2.1. of Article 5 of Federal Law No. 57‑FZ is that the controlling person is entitled to directly or indirectly dispose (including on the basis of a property asset management agreement, simple partnership agreement, engagement agreement or as a result of other transactions or on other grounds) of more than fifty percent of the total number of votes attributable to voting shares (stakes) constituting the authorized capital of the controlled person (including in situations where such right is temporarily transferred to another person (persons) on the basis of a property asset management agreement, a pledge agreement, a repo agreement, a security payment or another agreement or transaction).
Thus, in order to fulfill legal requirements when making (executing) certain transactions (operations), the Bank must have information and relevant supporting documents not only about the person (customer, counterparty) itself, but also about persons who directly or indirectly control it.
II. Documents that depositors (non-resident legal entities) shall submit to the Bank. Upon review of the documents submitted by the depositors, the Bank may request other documents and information (in a form acceptable to the Bank) in order to fulfill the requirements of the legislation.
Only the documents issued by the competent authorities (persons) of the jurisdiction where a controlled person and controlling persons are registered can confirm that a controlled person is under the control of the controlling person as stipulated in Parts 1–2.1. of Article 5 of Federal Law No. 57-FZ.
Subject to the aforesaid, in order to fulfill the requirements of the legislation, depositors (non-resident legal entities) shall provide, with reasonable advance, the following documents to the Bank:
− documents confirming the rights of shareholders (members) to dispose of the number of votes assigned to voting shares (stakes) constituting the authorized capital of a non-resident as of the date not earlier than 30 calendar days prior to the date of submission of such document to the Bank (for example, Extract from the Trade Register, Extract from the Register of Shareholders, Certificate of Shareholders, Certificate of Incumbency, etc.);
− similar documents in respect of persons controlling a non-resident (directly or indirectly);
− other documents that can confirm:
a) connection (or absence of such connection) of a non-resident with foreign states performing unfriendly actions against Russian legal entities and individuals, specifically if such foreign persons have citizenship of these states or such states are the place of their registration, principal place of business, or the place where they preferentially derive profits from their business;
b) control (or absence of such control) over the non-resident by these foreign persons.
Documents issued by competent authorities (persons) of foreign jurisdictions shall be legalized/apostilled and shall be submitted to the Bank with a translation into Russian certified by a notary of the Russian Federation or a consular service of the Russian Federation.
III. Additional documents provided by the depositors (non-resident legal entities) defined in paragraph 12 of Executive Order No. 95. Upon review of the documents submitted by the depositors, the Bank may request other documents and information (in a form acceptable to the Bank) in order to fulfill the requirements of the legislation.
According to paragraph 12 of Executive Order No. 95, for the purposes of applying the Executive Order, persons are not qualified as foreign creditors named in paragraph 1 of Executive Order No. 95 if they simultaneously meet the following requirements:
a) they are controlled by Russian legal entities or individuals (the ultimate beneficiaries are the Russian Federation, Russian legal entities or individuals), including if such control is exercised through foreign legal entities related to such foreign states;
b) information on the control over them is disclosed by the Russian legal entities or individuals named in paragraph "a" above to the Russian Federation tax authorities in accordance with the requirements of the Russian laws.
The existence of control by the persons referred to in paragraph "a" above can be confirmed by the documents referred to in Section II of this communication.
The fact that a beneficiary has disclosed the control to the Russian tax authorities as required by law may be confirmed by one of the following documents:
− Controlled Foreign Company Notification in the form approved by the Russian Federation Federal Tax Service Order No. ЕД-7-13/671@ dated 19.07.2021 (hereinafter, the CFC Notification), with confirmation of its receipt by the tax authority on paper or via electronic communication channels;
− Confirmation on submission of a CFC Notification in respect of foreign persons, issued by a tax authority in accordance with the procedure provided for by the Russian Federation Federal Tax Service Letter No. ШЮ-4-13/13043@ dated 30.09.2022 (hereinafter, the Confirmation);
− Notification of participation in foreign organizations in the form approved by the Russian Federation Federal Tax Service Order No. ММВ-7-13/338@ dated 05.07.2019 (hereinafter, Notification of Participation), with confirmation of its receipt by the tax authority on paper or via electronic communication channels. The Notification of Participation is accepted by the Bank if the CFC Notification was not legally submitted by the controlling person to the tax authorities of the Russian Federation.
IV. Additional documents provided by the depositors (non-resident legal entities) defined in paragraph 4 of Executive Order No. 254. Upon review of the documents submitted by the depositors, the Bank may request other documents and information (in a form acceptable to the Bank) in order to fulfill the requirements of the legislation.
According to paragraph 4 of Executive Order No. 254, for the purposes of applying Executive Order No. 95, the following foreign persons are not qualified as connected with foreign states performing unfriendly acts against Russia, Russian legal entities and individuals (hereinafter, “foreign states performing unfriendly acts”):
a) persons controlled by legal entities or individuals whose personal law is the law of a foreign state other than a foreign state performing unfriendly acts, provided that such control was established before 1 March 2022;
b) persons under the control of a foreign state other than a foreign state performing unfriendly acts, provided that such control was established before 1 March 2022.
The existence of control by the persons referred to in paragraphs "a" and "b” above can be confirmed by the documents referred to in Section II of this communication.
The fact that such control was established prior to 1 March 2022 shall be confirmed by documents specified in Section II of this communication but issued prior to 1 March 2022.
V. Consequences of not submitting (late submission of) documents to the Bank.
If the documents specified in Sections II–IV of this communication are not submitted (untimely submitted) to the Bank, the latter will be obliged to transfer the income on securities due to the customers that are non-resident legal entities to type C bank accounts.
The procedure for settlements on type C bank accounts is established by the Resolution of the Board of Directors of the Bank of Russia dated 29.12.2022 "On Organization of Settlements on Type C Bank Accounts".
If you have any questions, please contact your depositary services manager.
[1] The term "non-resident" in this communication is used in the sense of the provisions of Article 1 of Federal Law No. 173-FZ dated 10.12.2003 "On Currency Regulation and Currency Control".
