Dividend Payments: Western Companies Face Retroactive Sanctions
Presidential Decree No. 95 of March 5, 2022 (“On the Temporary Procedure for Fulfilling Obligations to Certain Foreign Creditors”) and other decrees regarding dividends and profit distributions were introduced in response to Western sanctions and the freezing of Russian Central Bank funds. The decrees established a special regime for dividend payments and loan repayments to the parent companies of European subsidiaries in Russia.
Decree No. 95 set the applicable threshold at 10 million rubles (100,000 euros) per calendar month. If the obligations covered by the decree exceed this threshold, the payments can generally no longer be transferred abroad through regular channels. Instead, they must be deposited in Russia into a Type C account opened in the creditor’s name. Direct payment by other means is only possible with the appropriate authorization from the Subcommittee of the Government Commission for the Control of Foreign Investments in Russia.
Frozen Capital as a Bargaining Chip?
Since 2022, approximately 210 billion euros in assets belonging to the Russian Central Bank have been frozen in the EU alone. The Russian Central Bank has indicated on several occasions that the assets blocked on both sides could one day become the subject of negotiations. Central Bank Governor Elvira Nabiullina confirmed in 2023 that models for an exchange of frozen assets were being examined—including the possibility of using funds from C-accounts. In 2024, Deputy Finance Minister Ivan Chebeskov stated that Moscow considered an exchange based on the “asset-for-asset” principle to be feasible in principle.
In April 2024, former Russian President and current Deputy Head of the Security Council Dmitry Medvedev acknowledged that Russia did not have sufficient U.S. government assets to respond in kind to a confiscation of Russian state reserves. Therefore, Russia may have to resort to the private assets of foreign investors if necessary. “The reason is clear: We do not possess a significant amount of U.S. government property, including money, rights, and other U.S. assets. Therefore, the response can only be asymmetrical. That does not mean, however, that it will be any less painful,” Medvedev wrote on his Telegram channel.
The exact amount of foreign capital frozen in C-accounts is not officially disclosed. However, Deputy Finance Minister Alexei Moiseyev stated that the volume is comparable to the amount of Russian assets frozen abroad. The Gaidar Institute estimates the total value of non-residents’ assets frozen in Russia—primarily shares in Russian companies—at 10 to 15 trillion rubles, equivalent to approximately 104 to 156 billion euros.
Important Changes
The statement by the Presidium of the Supreme Court of the Russian Federation, as reported this week by the business portal RBC, has led to drastic changes. Until now, many companies assumed that they could regularly meet financial obligations to individuals or companies from so-called “unfriendly states”—such as dividends, interest payments, and principal repayments—up to this limit of 10 million rubles (100,000 euros) per month.
However, the Supreme Court’s document now indicates a change in this approach. Paragraph 4 states that the 10 million ruble threshold applies to the obligations themselves. Presidential Decree No. 95, on the other hand, refers to the fulfillment of obligations.
The key point here is the absence of the word “fulfillment”: thus, the 10 million ruble threshold does not refer to the payments actually made, but to the underlying obligation itself. If this obligation exceeds 10 million rubles, payments can no longer be regularly transferred to the foreign creditor.
Example: A company has liabilities to an “unfriendly” recipient in the amount of 50 million rubles (500,000 euros) per calendar month. According to the Supreme Court’s new interpretation, the company cannot simply divide this obligation into installments and transfer 10 million rubles to the foreign recipient each month. Such a payment requires approval from the relevant government commission responsible for monitoring foreign investments. Without this approval, the amount in question must be deposited into a Type C account.
Consequences for Companies
Particular risks arise for companies that have previously spread larger obligations across multiple payments. Under the Supreme Court’s interpretation, this may be deemed an impermissible artificial splitting.
The Supreme Court’s opinion clarifies the application of Presidential Decree No. 95, issued in 2022. As a result, payments made in the past may also be retroactively challenged and contested in court.
The Glawprodukt Case
A prominent case involves the food manufacturer Glawprodukt, which was formerly owned by U.S. citizen Leonid Smirnov. In 2025, the company was confiscated—effectively nationalized—in favor of the state as part of proceedings regarding the circumvention of Russian counter-sanctions. According to the business newspaper RBC, approximately 1.4 billion rubles (14.5 million euros) were reportedly transferred to accounts at JPMorgan Chase between 2022 and 2024. The payments were declared as distributions of net profits.
Another case involves OOO “Universam 11.” The Russian company had liabilities of approximately 33 million euros with a foreign bank. A supplementary agreement capped the monthly loan installment at 120,000 euros, but no more than 10 million rubles. A Russian court ruled that this constituted an impermissible splitting of payments.
Sources: Decree No. 95 of March 5, 2022, RBC, Supreme Court (all RU)
Source: German-Russian Chamber of Foreign Trade, Dividend Payments: Western Companies Face Retroactive Sanctions, September 24, 2026.
This article was prepared for the German-Russian Chamber of Foreign Trade.