The Russian Federation may allow the withdrawal of part of the funds received in the form of dividends from “C” accounts

(The material was created in Russia, where the legislation restricts coverage of the special military operation of the Russian Federation in Ukraine) (Added statements of the First Deputy Prime Minister of the Russian Federation Andrei Belousov and supplementary data at the end of the text)

MOSCOW, March 16 (Reuters) – Russian President Vladimir Putin will instruct the government to consider a more flexible mechanism for funds in C accounts with the option of paying out part of the money received as dividends.

“The decision … related to directing dividends to the ‘C’ accounts of foreign companies from those countries that impose sanctions on us … was dictated to protect the interests of our economy and our business,” Putin said at the RUIE congress.

The funds of non-residents from Russia’s “unfriendly” jurisdictions are blocked on special type “C” accounts, including proceeds from securities belonging to them. It is possible to exchange them for currency only with the consent of the Russian authorities.

According to the Bank of Russia, by the end of 2022, about three hundred billion rubles were accumulated on type C accounts.

The blocking of funds on these accounts “limits the possibilities of our diligent friends and partners” who worked in Russia, “work and want to continue working,” Putin said.

“Today we have to correct our position, I will ask the government to think about it,” he added.

“Perhaps, think of a more flexible situation where dividends could be paid out and partially paid out, but on condition that these funds will be directed, among others, to and perhaps primarily for the development of business inside Russia,” the president said.

According to the First Deputy Prime Minister of the Russian Federation Andrei Belousov, the payment of dividends from type “C” accounts is possible by decision of the government commission chaired by Finance Minister Anton Siluanov.

“Nobody forbids dividends to be paid, it’s just that now they really accumulate in C accounts, but we have, it’s clear that life is varied and there are quite a few cases where dividends have to be withdrawn for a company in Russia to function,” he said.

“We speak more clearly, I understand, about establishing criteria and working procedures. That is, to clarify the rules by which appropriate decisions are made. It probably should be done, ”said Belousov.

He promised at Thursday’s meeting between Putin and the government that he would discuss a proposal, backed by the Ministry of Finance and the Bank of Russia, to loosen capital controls for many investors.

“We have investors whose investments went to Russia after the launch of the special operation and after the introduction of sanctions. And for this type of investment, we propose a significant relaxation of the existing restrictions,” Belousov said.

Since February, Russian officials have been discussing the lifting of capital restrictions on new foreign investments in order to stimulate their inflow from “friendly” jurisdictions, said Ivan Chebeskov, director of the Finance Ministry’s financial policy department.

Russia imposed capital restrictions in February/March 2022 to prevent capital flight from an economy hit by unprecedented Western sanctions after Russia launched a “special military operation” in Ukraine.

According to the Ministry of Finance, many Russian investors still hold their capital abroad, but they are ready to invest the exported money in the Russian economy, being able to dispose of it freely if the funds need to be withdrawn again abroad. (Anastasia Lyrchikova, Olesya Astakhova, Elena Fabrichnaya)