Re-Domiciliation: Window of Opportunity

The legal mechanism of re-domiciliation has existed in Russian law for almost 4 years. It was introduced in August 2018, when a series of laws was adopted to create special administrative regions (SAR) on Oktyabrsky and Russky islands in order to bring back Russian business there and to attract international companies to migrate from foreign jurisdictions. At that time, the main features for SAR residents included the possibility to apply foreign law to regulate internal corporate relations, as well as tax conditions comparable to popular international jurisdictions. Given that large Russian businesses have traditionally been arranged using foreign holding structures, the introduction of significant sanctions against Russian beneficiaries and their assets in 2022 led to a situation where many companies encountered serious difficulties in carrying out various operations in foreign jurisdictions. Under the new conditions, the logical choice for many was to relocate controlled foreign companies to the SARs. As a consequence, the number of SAR residents has increased significantly since the end of February. This was facilitated by significant changes in the SAR legal regime:
Thus, the order of relocation was updated to reflect the current conditions, as well as liberalization of some mandatory requirements for SAR residents;
In addition, SAR residents were given a new legal mechanism of asset protection: the possibility of registration of international personal funds (lifetime and posthumous) in the territory of SAR;
Next on the agenda is amending the Russian legislation with a famous foreign legal tool: issuance of shares with a different volume of rights. The corresponding bill has been submitted to the State Duma.