Nationalization in Russia

Privatization in Russia

Main article: Privatization in Russia

Chronicle

2024

Sevastopol nationalized the largest gas company Sevastopolgaz

On October 17, 2024, the government of Sevastopol decided to transfer PJSC Sevastopolgaz to state ownership. The company has a temporary administration formed by the authorities. At the same time, as emphasized, nothing will change for the labor collective. Read more here

Moscow shopping center "Gorbushkin Dvor" nationalized

On October 2, 2024, it became known that the Gorbushkin Dvor shopping center came under state control. The facility was nationalized in connection with the debts of Alexei Khotin, the former owner of the bankrupt bank Ugra. Read more here

State corporations in Russia will be obliged to return to the budget 50% of the value of nationalized assets

The Russian government has initiated amendments to the Budget Code aimed at implementing the "quasi-privatization" mechanism for assets transferred to state corporations after their return to state ownership by a court decision. According to the proposed amendments, from 2025, state corporations will be required to transfer 50% of the market value of assets obtained as a result of nationalization to the federal budget. This became known on September 30, 2024. The new mechanism of "quasi-privatization" will make it possible to ensure budget revenues even in the event of a formal gratuitous transfer of nationalized assets to the balance of state corporations.

According to Interfax, bill No. 727327-8, submitted to the State Duma of Russia as part of the budget package, provides for a new procedure for transferring assets to state corporations. If the government decides to donate to a state corporation or company assets received by federal ownership on the basis of court decisions, the recipient will be obliged to transfer funds to the budget in the amount of 50% of the market value of these assets.

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Freepik

The initiative is aimed at protecting the interests of the state treasury and is being implemented in pursuance of the instructions of the President of Russia dated March 15, 2024 No. Pr-494. The market value of the transferred asset will be determined based on the report of the independent appraiser. State corporations will have to make a payment within three months from the date of receipt of the asset in ownership.

The head of the Ministry of Finance Anton Siluanov previously noted that the sale of assets that passed into the ownership of the state by a court decision in 2023-2024 could become a significant source of budget replenishment. According to his estimates, annual revenues from the sale of such assets can amount to at least ₽100 billion.^[1]

In Russia, 84 cases were carried out on the nationalization of companies from 2022

Since 2022, 84 cases related to the nationalization of business have been initiated in Russia. This is evidenced by the results of a study by the law firm Nektorov, Saveliev & Partners (NSP), published on August 12, 2024.

According to NSP, in 85% of cases, owners have already lost the right to assets or control over the business. In 72 cases, out of 84 assets were seized from owners, while in 10 disputes the fight to keep the business going continues. In two more cases, court hearings took place, but the final decisions have not yet been made public.

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Unsplash

Authorities use eight legal instruments to seize assets. The most common category was deprivation, covering 28 disputes. As part of this procedure, the legality of ownership of assets previously owned by the state is challenged.

The second largest category is the seizure of corruption assets, including 17 cases. The Prosecutor General's Office of Russia uses the opportunity to recover property received by civil servants and their loved ones through corruption, based on law No. 230 and Article 235 of the Civil Code of Russia.

The nationalization of companies directly affected 12 cases. Four of them ended with the forced sale of their assets by foreigners, and eight with decisions to seize property, most often due to the recognition of foreign owners as members of criminal and extremist communities.

Nine cases are related to the transfer of assets of foreign companies under the temporary management of the Federal Property Management Agency in accordance with presidential decree No. 302. In three cases, the reason for the seizure of assets was forced liquidation or bankruptcy.

According to the Prosecutor General of Russia Igor Krasnov, by June 2024, more than 100 enterprises estimated at ₽1,3 trillion were turned into state revenue under the claims of the department. At the same time, Krasnov stressed that "there is no revision of the results of privatization in Russia," and the work of the department does not concern the bona fide owners of privatized enterprises.^[2]

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