Under a new Decree No. 529 "On the temporary procedure for the performance of obligations under bank account (deposit) agreements denominated in foreign currency and obligations under bonds issued by foreign entities" several amendments were made to the way credit institutions and entities could fulfil their obligations.
1. Bank account (deposit) agreements
If due to economic restrictions (sanctions) credit institution could not request fulfilment of obligations from foreign credit institutions under the bank account (deposit) agreements, Russian credit institution has a right to:
- suspend fulfillment of obligations to its clients (entities and individual entrepreneurs) until those restrictions are lifted, but under the following circumstances:
(a) monetary funds were credited to the bank accounts after 8 August 2022
(b) currency of obligation of the credit institution owed to the client is the same as the currency of the contract between Russian credit institution and foreign one
(c) it is in fact impossible to enforce the claim until restrictions are lifted
- assign their claims against foreign credit institutions to their clients against Russian credit institution obligations owed to them
Under the Decree:
- interest do not accrue on the monetary funds credited to the bank accounts after 8 August 2022
- credit institution could not be brought to liability for non-performance of its obligations (in the form of penalty, fine, late payment interest)
In general, the amount of obligation credit institution could choose not to perform is limited by the amount of obligations foreign credit institution could not perform.
2. Eurobond obligations
Under the Decree a Russian entity could file an application with a Russian credit institution to open a special bank account (type “D”), but only if authorized by the Central Bank. The “D” type bank account is used to fulfil obligations to owners of foreign bonds, issued by foreign entities, and to persons, exercising rights from the Eurobonds. Those accounts could be opened both in favor of resident and non-resident.
Currency of account “D” is roubles. Obligations under the Eurobonds are performed in roubles as well, based on the official currency course as of the date of performance of the transaction established by the Central Bank. Foreign currency conversion does not require any additional authorization.
Resident who owns Eurobonds has a right to assign or transfer their rights from the Eurobonds to foreign creditors to set off mutual obligations. Such operations should be authorized by the Central Bank or the Ministry of Finance under the additional authorization of the Central Bank.
3. Other novelties
Until amendments are made to the Law on foreign exchange regulation and currency control:
- restrictions are lifted as to the limit of transaction sum in foreign currency from one individual (resident) to another individual (resident) to their foreign bank accounts
- requirements for the mandatory form of settlements and repatriation of currency for entities and individual entrepreneurs engaged in foreign trade activities and (or) activities for the provision and repayment of loans are canceled
- Russian entities and individual entrepreneurs when carrying out foreign trade activities and (or) when granting and repaying loans have the right to offset their claims or replace obligations against non-residents