Exiting Russia: A Guide for Companies from

A practical guide for foreign companies from unfriendly jurisdictions seeking to exit Russia — Government Commission approval process, mandatory…

Since early 2022, companies from jurisdictions that Russia designates as "unfriendly" — broadly the EU, US, UK, Canada, Japan, Australia, Switzerland, Singapore and others — have faced a heavily regulated and increasingly costly exit process. What began as an approval requirement has evolved into a comprehensive regime that extracts substantial value from any exit transaction: mandatory discounts, budget contributions, valuation constraints and, in some cases, presidential approval.

This article sets out the current framework in practical terms — what approvals are required, how the cost of exit is calculated, what alternatives exist to an outright sale, and what companies that have decided to remain should be doing to protect their position.

The legal framework

The restrictions on exit transactions were established by a series of Presidential Decrees issued from March 2022. The core mechanism is straightforward: any transaction involving the transfer of equity or other interests in Russian companies (or non-Russian companies with significant Russian assets) by persons connected with "unfriendly" states requires prior approval from the Government Sub-Commission on Foreign Investments Monitoring (the "Sub-Commission").

The "unfriendly" states list — formally approved by Government Directive No. 430-r — includes the United States, all EU member states, the United Kingdom, Canada, Australia, Japan, South Korea, Switzerland, Singapore, Norway, Iceland and others. The list is reviewed periodically and can be updated.

The restrictions apply not just to companies incorporated in unfriendly jurisdictions but to any person "connected with" such jurisdictions — which can include individuals who are citizens or residents of unfriendly states, and entities that are ultimately owned or controlled by persons from unfriendly jurisdictions, even if the immediate shareholder is incorporated elsewhere. The analysis is factual and looks through the corporate structure.

The Sub-Commission: what it is and how it works

The Government Sub-Commission on Foreign Investments Monitoring is a body within the Ministry of Finance that reviews and approves (or rejects) applications for exit transactions. It meets periodically and communicates its decisions through extracts from meeting minutes rather than formal decisions — which makes the process somewhat opaque and difficult to predict.

The Sub-Commission has wide discretion to impose conditions on any approval it grants. Over time, these conditions have been formalised into a set of standard requirements — the mandatory discount, the budget contribution, and various commitments regarding continued investment, employment and operations during a transition period. However, the Sub-Commission retains the ability to apply additional conditions or grant exceptions in individual cases.

What triggers the requirement for Sub-Commission approval

What may not require approval

Since October 2024, any transaction where the market value of the assets exceeds RUB 50 billion (approximately USD 512 million at current rates) requires personal approval from the President of the Russian Federation. Previously, presidential approval was required only for strategic sectors specifically listed by decree. This threshold has drawn more transactions into the presidential approval track, significantly increasing complexity and timelines.

The cost of exit: mandatory discount and exit tax

The financial cost of an approved exit from Russia has increased substantially since 2022. What began as a 10% budget contribution has become a structure that, in combination with mandatory valuation discounts, leaves departing investors with a fraction of their asset's book value.

How the asset is valued

The market value of the assets being sold must be determined by an independent appraisal conducted by an appraiser from the Ministry of Finance's approved list. The methodology must reflect the going-concern value of the business — appraisers cannot apply a "fire sale" or "distressed assets" discount to reflect the constrained market for foreign-owned Russian businesses. This means the base for calculating both the discount and the exit tax is the full market value, not the price actually receivable in the current market.

The combination of mandatory going-concern valuation and mandatory discount creates a significant challenge: the appraisal values the business as if it were freely marketable, but the exit conditions mean it is not. A business that might attract RUB 5 billion in a free market but is appraised at RUB 10 billion must be sold for no more than RUB 4 billion (40% of RUB 10 billion), with the buyer also paying RUB 3.5 billion to the federal budget. The total consideration absorbed is RUB 7.5 billion — but the seller only receives RUB 4 billion.

Regulatory timeline

The approval process in practice

Obtaining Sub-Commission approval is not simply a matter of filing an application. The process involves multiple ministries, is not subject to binding timelines, and the outcome is uncertain. Applications currently pending review number in the dozens, according to public statements by the Deputy Finance Minister.

Alternatives to outright sale

Given the cost and uncertainty of the Sub-Commission approval process, many companies have considered or pursued alternative routes. Each has its own risks and limitations.

If you are staying: protecting your position

For companies that have decided — or been forced by circumstances — to remain in Russia, the priority is managing the ongoing operational, regulatory and reputational risks of continued presence.