MOORE ST ESTABLISHES CRISIS TASKFORCE
The oil magnate John Paul Getty once said, “Without the element of uncertainty, the bringing off of even, the greatest business triumph would be dull, routine, and eminently unsatisfying.” If you agree with his sentiments, anybody currently running a business in Russia has amble opportunity for satisfaction although they may not see it that way.
The geo-political situation that has unfolded over the last month means the business environment in Russia is undergoing almost unprecedented change. With that change comes a high level of uncertainty and significant challenges. Western governments are imposing new sanctions every day and Russia is, of course, responding to those actions with its own laws and decrees. As a result businesses owners, whether they are Russian or foreign, are having to make important decisions quickly with very little idea of what the future will bring.
Volkswagen, Mercedes-Benz, Maersk, PepsiCo, IKEA and the German software manufacturer SAP, and many other foreign companies have already taken the decision to pull out. Similarly, BP, the British oil company, has announced its intention to sell a 19.75% stake in Rosneft and Shell has decided to withdraw from joint projects with Gazprom and stop participating in the Nord Stream 2 gas pipeline project. For companies like these the decision to withdraw from Russia was simple because the zeitgeist in their home countries makes it impossible to continue business here. However implementing the decision will not be easy and , in almost every case the process will take time.
At the same time, Russian companies, particularly those with activities abroad or supply chains involving countries on the list of “unfriendly” nations are having to make equally tough decisions. For companies in these situations, finding alternative suppliers and restructuring their international holdings are likely to be priorities.
Cyprus, which has for so long, been a central part of so many Russian owned groups, is, as an Eu member, a participant in the sanction regime and as a result is included on the list of “unfriendly” nations. This brings the danger of assets being frozen and banks refusing to carry out transactions. As a result many Russian business-owners are now looking to relocate away from Cyprus to more friendly territories.
For the Moore ST team, the well-being and prosperity of our clients is always of paramount importance. So, whatever issues you may be facing, we are here to help. To this end Moore ST has established a special Crisis Taskforce Talking about the taskforce, Elena Tikhnenko, Chair of Supervisory Board, said, “Our team includes lawyers, corporate structuring specialists, international tax experts and, of course, people with experience of a broad range of industries. We are monitoring legal and political developments on a daily basis and are actively helping clients find tailored solutions to the challenges they face.”
For those looking to close their businesses in Russia, careful planning is key. Each step in the process will have its own procedures and potential pitfalls. Practice shows, the key to avoiding these is experience and knowledge. It is also important to keep a focus on what is changing or may change soon. For example, a draft Presidential Decree currently being prepared may prohibit immediate withdrawal of certain foreign investors on the basis that “this will allow the business to make informed decisions” free from current political pressures they are experiencing.
Nonetheless, if you have taken the decision to leave the Russian market, we are ready to help you implement this decision using our many years of experience to organise the process quickly and with minimal losses. Several options exist:
1. Outright sale of the business as a going concern;
2. Transfer of ownership to an administrator/trustee with the option to repurchase at a fixed price at a later date if the situation in Russia changes;
3. Liquidation of the business – although this may not be the best option since the government has stated that such action will be treated as “intentional bankruptcy” and that as a result the state will intervene in liquidations.
But the Taskforce is not there just to help those wishing to leave Russia. For those looking to restructure their activities outside Russia we are ready to provide practical advice on alternative locations in which to base holding companies. In this context our research team has already produced a shortlist of jurisdictions that are not on the list of “unfriendly” nations but which potentially offer tax efficient alternatives to countries that are now problematic.
In addition to providing assistance with the planning of new international structures we can also help with their practical implementation.
Although the experience of Moore ST shows that every case is unique, Elena Tikhnenko is confident that the Moore ST Crisis Taskforce will be able to help anybody who needs our assistance saying, “It is the Moore ST philosophy that we should always face the future with a proactive and optimistic approach. Differences can be resolved; problems can be solved and even in difficult times businesses can thrive.”
For more information contact the Head of the Moore ST Crisis Taskforce - Maxim Sobokarev
T +7 495 589 3498