The Government approves long-awaited amendments potentially paving the way for resumption of approvals for dividend payments by the Sub-Commission
December 19, 2024
On December 17, the Government released the amendments to the Decree No. 295, expanding the powers of the Sub-Commission of the Government Commission for Monitoring Foreign Investment. The amendments adjust the procedure of issuing the approvals for payments of loans and dividends to persons of "unfriendly nations".
Until September this year, such approvals were formally granted by the Ministry of Finance in coordination with the Central Bank. However, the Presidential Decree No. 767 of September 9, 2024 transferred these powers to the Government Sub-Commission.
The amendments are expected to unblock the process of the Sub-Commission's review of applications for dividend payments, which had been on hold since January 2024. Such approvals may include special conditions for loan or dividend payments, including deadlines for fulfilling such obligations. This effectively removes the legal inconsistency between the federal corporate legislation, which sets up specific deadlines for payments of dividends, and the practice of the regulators to approve dividend payments on quarterly installments basis conditional to the execution of KPIs.
Additionally, the amendments formalize some of the requirements for such applications, previously governed by extracts from the Sub-Commission's protocol decisions. These include:
It is anticipated that starting from early 2025, the Sub-Commission may start reviewing applications for dividend payments.
It is important to note that the amendments enshrine the role of the industry regulator as a "first key" for getting the dividend or loan repayment approval. A positive recommendation of the industry regulator will continue to be necessary but insufficient condition to get the Sub-Commission approval.
Until September this year, such approvals were formally granted by the Ministry of Finance in coordination with the Central Bank. However, the Presidential Decree No. 767 of September 9, 2024 transferred these powers to the Government Sub-Commission.
The amendments are expected to unblock the process of the Sub-Commission's review of applications for dividend payments, which had been on hold since January 2024. Such approvals may include special conditions for loan or dividend payments, including deadlines for fulfilling such obligations. This effectively removes the legal inconsistency between the federal corporate legislation, which sets up specific deadlines for payments of dividends, and the practice of the regulators to approve dividend payments on quarterly installments basis conditional to the execution of KPIs.
Additionally, the amendments formalize some of the requirements for such applications, previously governed by extracts from the Sub-Commission's protocol decisions. These include:
- Information on the ultimate beneficiaries of the applicant
- Information on dividends (profits) paid over the past five years
- Details of the proposed KPIs that the applicant is willing to commit to as a condition for fulfilling the obligations.
It is anticipated that starting from early 2025, the Sub-Commission may start reviewing applications for dividend payments.
It is important to note that the amendments enshrine the role of the industry regulator as a "first key" for getting the dividend or loan repayment approval. A positive recommendation of the industry regulator will continue to be necessary but insufficient condition to get the Sub-Commission approval.
If you would like a consultation on these matters, please contact
Yury Panasik, Partner, at y.panasik@kesarev.com
Yury Panasik, Partner, at y.panasik@kesarev.com